RNS Number:2550V
Petards Group PLC
07 December 2005
7 December 2005
PETARDS GROUP PLC:
PRELIMINARY ANNOUNCEMENT OF REVISED AUDITED ACCOUNTS FOR THE YEAR ENDED 31
DECEMBER 2004
CHAIRMAN'S STATEMENT
Revised Accounts
The revised Report and Accounts for the year ended 31 December 2004 replace the
original Report and Accounts that were approved by the Board on 19 May 2005,
circulated to shareholders on 10 June 2005 but withdrawn before the planned AGM.
The revised Report and Accounts were approved by the Board on 6 December 2005
and are now the statutory accounts of the Company for that financial year.
The directors became aware after the original Report and Accounts had been
published that they contained material errors and therefore did not comply with
the requirements of the Companies Act 1985. The revised Report and Accounts for
the year ended 31 December 2004 have been prepared as at 19 May 2005, the date
that the original Report and Accounts were approved, and not at the date of
revision. Accordingly they do not deal with events between those two dates.
The errors discovered were the result of a breakdown in accounting controls at
Joyce-Loebl Limited. They concerned the accounting for costs incurred on
long-term contracts, and the recording of work in progress and advance payments
from customers over a number of years. The correction of the errors relating to
2003 and before, have been adjusted by way of a prior year adjustment, details
of which are set out in note 7 to this statement. The majority of the contracts
concerned had been completed prior to 31 December 2004 and the remainder have
been completed during the first half of 2005. Contracts awarded during 2005 are
not affected. The breakdown in accounting controls is specific to Joyce-Loebl
and does not impact the Group's other operations. Action has been taken to
rectify the control shortcomings and the processes by which long-term contracts
are monitored and accounted for by Joyce-Loebl.
Operations
During 2004 we achieved many of the further steps necessary to make the Petards
Group a successful and profitable company in the future. All the
rationalisation in the Petards division has been completed and the division is
operating from one location at Sunbury-on-Thames. The overheads have been
reduced correspondingly. Product quality and customer service levels are
improving and this will continue to be an aspect of strong focus.
We have greatly strengthened the board level executive team as reported below
and the senior management team is now made up of experienced and technically
strong people who are committed to the future success of the Company. In
particular the new team has a commerciality that was previously lacking and
which was at the root of many of the Group's problems.
Financial strength
We have led a hand to mouth existence since the Company breached its banking
covenants when its shares were suspended in 2002. Although we have had the
support of our bankers throughout, the lack of capital has severely hampered our
operations. The Board has kept this matter constantly under review.
The impact of the accounting errors at Joyce-Loebl is that previously reported
consolidated losses after tax for each of the years back to 2002 and prior were
understated and consequently Consolidated Shareholders' Funds at 31 December
2004 shown in the original Report and Accounts were overstated by #6.4m.
During the second half of 2004, the Board had been seeking to strengthen the
balance sheet by making a merger or acquisition of a company with trading
synergies in order to provide greater critical mass. In the event, discussions
with two suitable businesses came to nothing. The Board therefore decided to
raise additional capital and its proposals were sent to shareholders in December
2004. Following the share placing and restructured banking facilities, which
were completed in January, we began 2005 with a stronger financial base, which
has since benefited the Group's operations.
Profit and loss account
The trading performance in 2004 showed an improvement in all the key measures.
Turnover for the year ended 31 December 2004 was #22.6m, an increase of 9% over
the figure of #20.8m in the previous year. Gross profit grew by 30% to #6.5m
(2003: #5.0m) and the gross margin improved from 24% to 29%. Administration
expenses before exceptional items were lower by 7% at #9.4m (2003: #10.1m). The
operating loss for the year amounted to #3,325,000 an improvement on the 2003
loss of #5,713,000. After net finance charges of #223,000 (2003: #4,000 credit)
the loss before tax for the year was #3,570,000 (2003: #5,709,000 loss). The
loss per share was 5.5 pence (2003: 9.0 pence).
Balance sheet
At 31 December 2004 Consolidated Shareholders' Funds were in deficit by #6.6m
(31 December 2003: deficit of #3.0m). Total net borrowings were #7.4m (31
December 2003: #5.8m). The Company wrote to shareholders on 20 December 2004
setting out proposals for an increase in share capital for consideration at an
extraordinary general meeting that was held on 24 January 2005.
Post balance sheet events
On 28 January 2005 the Company announced that it had raised #5.1m of capital
(net of expenses) by means of a placing of 557m new ordinary shares. On the
same date it entered into a new #5m five-year term loan and #1m working capital
facility with its bankers, Bank of Scotland.
Dividends
The Board is not recommending the payment of a dividend.
Name change
On 10 February 2005 the Company changed its name from Screen PLC to Petards
Group plc. The Petards brand has been used for the Group's security and
surveillance products for many years and is well known within the industry in
the UK and abroad. We plan to build the business going forward on this name and
to retain the Joyce-Loebl name within Joyce-Loebl's traditional defence markets.
The Board
On 14 September 2004 Geoff Carswell resigned as a director and as Managing
Director of Joyce-Loebl Limited. He was succeeded as Managing Director of
Joyce-Loebl by Bill Conn, who was appointed a director of the Company on 1
February 2005. Chris Langridge resigned as a director on 1 February 2005 and
was succeeded as Finance Director by Andy Wonnacott FCA who was appointed on 7
March 2005. On 24 March 2005 David Hayes was appointed Chief Executive and I
reverted to non-executive Chairman.
Staff
I should like to express my thanks to all the Group's employees who have
contributed strongly to the changes and improvements which we have seen in the
Company over the last twelve months.
Tim Wightman
6 December 2005
PETARDS GROUP PLC
CONSOLIDATED PROFIT AND LOSS ACCOUNT
For the year ended 31 December 2004
Before Exceptional After Restated (note
exceptional exceptional 7)
items items (note 2) items
Year ended Year ended Year ended Year ended
Note 31 December 2004 31 December 2004 31 December 2004 31 December 2003
#'000 #'000 #'000 #'000
Turnover
Continuing operations 22,162 - 22,162 18,048
Discontinued operations 443 - 443 2,754
22,605 - 22,605 20,802
Cost of sales (16,153) - (16,153) (15,835)
Gross profit 6,452 - 6,452 4,967
Exceptional items 2 - (402) (402) (314)
Goodwill amortisation and
impairment (25) - (25) (278)
Other administrative (9,350) - (9,350) (10,088)
expenses
Total administrative (9,375) (402) (9,777) (10,680)
expenses
Operating loss
Continuing operations (2,870) (402) (3,272) (5,956)
Discontinued operations (53) - (53) 243
Total operating loss (2,923) (402) (3,325) (5,713)
Profit on disposal of
discontinued operations 702 -
Costs of fundamental
reorganisation (724) -
Loss on ordinary activities (3,347) (5,713)
before interest
Net interest (payable)/ (223) 4
receivable
Loss on ordinary activities (3,570) (5,709)
before taxation
Taxation - 144
Loss on ordinary activities
after taxation being loss
for the financial year (3,570) (5,565)
Loss per share
Basic and diluted 4 (5.5p) (9.0p)
PETARDS GROUP PLC
CONSOLIDATED BALANCE SHEET
As at 31 December 2004
31 December 2004 Restated (note 7)
31 December 2003
#'000 #'000
Fixed assets
Intangible assets 365 616
Tangible assets 969 942
1,334 1,558
Current assets
Stocks 3,539 4,915
Debtors 4,577 5,857
Cash at bank and in hand 249 -
8,365 10,772
Creditors: amounts falling due within one year (16,278) (15,185)
Net current liabilities (7,913) (4,413)
Total assets less current liabilities (6,579) (2,855)
Creditors: amounts falling due after more than one (25) (158)
year
Net liabilities (6,604) (3,013)
Capital and reserves
Called up share capital 654 654
Share premium account 23,660 23,660
Profit and loss account deficit (30,918) (27,327)
Equity shareholders' deficit (6,604) (3,013)
PETARDS GROUP PLC
CONSOLIDATED CASH FLOW STATEMENT
For the year ended 31 December 2004
Year ended Year ended
31 December 2004 31 December 2003
Note #'000 #'000 #'000 #'000
Net cash outflow from operating activities 5 (1,819) (2,729)
Returns on investments and servicing of finance
Interest received 294 288
Interest paid (503) (259)
Finance lease interest paid (14) (25)
Net cash (outflow) / inflow from returns on (223) 4
investments and servicing of finance
Taxation
UK corporation tax - 144
Capital expenditure
Purchase of tangible fixed assets (541) (333)
Sale of tangible fixed assets 97 16
Net cash outflow from capital expenditure (444) (317)
Acquisitions and disposals
Sale of business 835 -
Net cash outflow before financing (1,651) (2,898)
Financing
Issue of shares - 1,048
Repayment of principal under finance leases (114) (137)
Net cash (outflow) / inflow from financing (114) 911
Decrease in cash in the year (1,765) (1,987)
PETARDS GROUP PLC
CONSOLIDATED STATEMENT OF TOTAL RECOGNISED GAINS AND LOSSES
For the year ended 31 December 2004
Restated (note 7)
31 December 31 December
2004 2003
#'000 #'000
Loss for the financial year (3,570) (5,565)
Currency translation difference on foreign currency net investments (21) (50)
Total recognised losses relating to the year (3,591) (5,615)
Prior year adjustment (as explained in note 7) (5,225)
Total losses recognised since last annual report (8,816)
RECONCILIATION OF MOVEMENTS IN EQUITY SHAREHOLDERS' FUNDS
For the year ended 31 December 2004
Year ended Restated (note 7)
31 December 2004 Year ended
31 December 2003
#'000 #'000
Loss for the financial year (3,570) (5,565)
Other recognised gains and losses (21) (50)
New share issues - 1,092
Expenses of share issues - (44)
Opening equity shareholders' (deficit) / funds (originally (3,013) 1,554
#2,212,000 before prior year adjustment of #5,225,000)
Closing equity shareholders' deficit (6,604) (3,013)
1. Basis of preparation
These financial statements do not constitute financial statements within the
meaning of Section 240 of the Companies Act 1985.
The financial information set out above does not constitute the company's
statutory accounts for the years ended 31 December 2003 or 2004. Statutory
accounts for 2003 have been delivered to the Registrar of Companies, and those
for 2004 will be delivered. The auditors have reported on those accounts; their
reports were unqualified and did not contain statements under section 237(2) or
(3) of the Companies Act 1985.
The financial statements have been prepared in accordance with UK generally
accepted accounting practice and on the basis of accounting policies consistent
with those applied in previous periods.
2. Exceptional items
2004 2003
Operating exceptional items #'000 #'000
Costs of aborted acquisitions 113 -
Warranty costs 289 -
Goodwill impairment - 229
Reorganisation costs - 314
402 543
During the year the group incurred professional fees in connection with the
acquisition of businesses that did not proceed to completion. In addition, in
the first half year remedial costs were incurred to rectify issues with the
original version of the Advantage.Net software at existing customer sites.
2004 2003
Non-operating exceptional items #'000 #'000
Profit on disposal of discontinued business (702) -
Costs of fundamental restructuring 724 -
22 -
In March 2004, the net assets and business of Petards Emergency Services Ltd
were sold for a cash consideration of #866,000. The profit is shown net of
goodwill of #226,000 and associated costs.
The costs of the fundamental reorganisation arose from the integration of six
businesses at six locations into one company at one location.
3. Dividend
The Board of directors does not recommend the declaration of a dividend for the
year ended 31 December 2004.
4. Loss per share
The calculation of the basic loss per share is based on the loss for the year on
ordinary activities after taxation of #3,570,000 (2003 loss #5,565,000) divided
by the weighted average number of ordinary 1p shares of 65,420,479 (2003 -
61,777,457).
Due to the group's loss for the year the diluted loss per share is the same as
the basic loss per share.
5. Net cash outflow from operating activities
2004 2003
#'000 #'000
Operating loss (3,325) (5,713)
Goodwill amortisation and provision for impairment 25 278
Depreciation of tangible fixed assets 387 613
(Profit) / loss on sale of tangible fixed assets (15) 16
Cash flows relating to fundamental reorganisation (383) -
Decrease in stocks and work in progress 1,219 416
Decrease / (increase) in debtors 878 (2,753)
(Decrease) / increase in creditors (596) 4,414
Exchange differences (9) -
Net cash outflow from operating activities (1,819) (2,729)
6. Post balance sheet events
On 28 January 2005 the company announced that it had raised #5.1m of capital,
net of expenses, by means of a placing of 557m new ordinary shares. On the same
date it entered into a new #5m five-year term loan and a #1m working capital
facility with its bankers, Bank of Scotland. The table below illustrates the
impact of these transactions as if they were completed on 31 December 2004:
As reported at Adjustments Proforma at
31 Dec 2004 31 Dec 2004
#'000 #'000 #'000
Fixed assets 1,334 - 1,334
Net current liabilities excluding cash and bank loans and (569) - (569)
overdrafts
Cash 249 2,402 2,651
Bank loans and overdrafts (7,593) 6,593 (1,000)
Net current assets / (liabilities) (7,913) 8,995 1,082
Creditors: amounts falling due after one year (25) (3,925) (3,950)
Net liabilities (6,604) 5,070 (1,534)
Called up share capital 654 5,570 6,224
Share premium account 23,660 (500) 23,160
Profit and loss account deficit (30,918) - (30,918)
Equity shareholders' deficit (6,604) 5,070 (1,534)
7. Prior year adjustment
The prior year adjustment relates to fundamental errors arising as a result of a
breakdown in accounting controls at one of the company's subsidiary
undertakings, Joyce-Loebl Limited. Those errors concerned the accounting for
costs incurred on long-term contracts, and the recording of work in progress and
advance payments from customers over a number of years.
The prior year adjustment has the following impact on the 2003 profit and loss
account:
As previously Prior year
reported adjustment As restated
#'000 #'000 #'000
Turnover 21,253 (451) 20,802
Cost of sales (12,535) (3,300) (15,835)
Gross profit 8,718 (3,751) 4,967
Administrative expenses (10,680) - (10,680)
Operating loss (1,962) (3,751) (5,713)
Net interest receivable 4 - 4
Loss before taxation (1,958) (3,751) (5,709)
The prior year adjustment impacts the following 2003 balance sheet captions:
As previously Prior year
reported adjustment As restated
#'000 #'000 #'000
Stocks 6,490 (1,575) 4,915
Debtors 5,927 (70) 5,857
Creditors due within one year (11,605) (3,580) (15,185)
Net current assets / (liabilities) 812 (5,225) (4,413)
8. Revised report and accounts
As set out in the Chairman's Statement, errors arose as a result of a breakdown
of internal controls at one of the company's subsidiary undertakings, Joyce-
Loebl Limited. They concerned the accounting for costs incurred on long-term
contracts, and the recording of work in progress and advance payments from
customers over a number of years.
The impact of the errors is that previously reported consolidated losses after
tax for the year ended 31 December 2003 were understated by #3.8m, and those for
2004 were understated by #1.1m. Losses in the years ended 2002 and prior were
understated by a total of #1.5m. Consequently shareholders' funds at 31
December 2004 shown in the original Report and Accounts were overstated by
#6.4m.
Copies of the Revised Report and Accounts will be sent to shareholders in the
week ending 16 December 2005.
9. Announcement
Copies of this announcement will be available from the Nominated Adviser:
Collins Stewart, 9th Floor, Wood Street, London, EC2V 7QR for 14 days from the
date of this announcement.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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