Pennant International Announcements

RNS Number : 4526E Pennant International Group PLC 29 September 2008  
?                                                                                                                       29 September 2008
PENNANT INTERNATIONAL GROUP plc
Interim Results for the six months ended 30 June 2008

Pennant International Group plc ('Pennant' or 'the Company'), the AIM listed supplier of integrated logistic support solutions principally to the defence, rail, aerospace and naval markets, and products and services to a number of Government Departments, announces interim results for the 6 months ended 30 June 2008.

Commenting on the results, Chairman Christopher Powell said:

"I am pleased to report that the Group has remained profitable despite the adverse effects of the current economic climate. Importantly, the Group has continued to win new contracts which will provide good revenue streams going forward."

Highlights:

Turnover for the period of £5.4 million (2007: £6.5 million).
Gross margin increased to 37% (2007: 35%).
Operating profit of £108,000 (2007: £437,000).
Pre-tax profit of £55,000 (2007: £375,000).
Earnings per Share (basic) of 0.14 pence (2007: 1.10 pence).
Net Cash at period end of £48,000 (2007: Net Debt of £868,000).
Maintained Interim Dividend per Share of 0.22p (2007: 0.22p).
Major new contract award expected from DND in Canada worth up to C$15 million over 2-5 years.
Further contract renewals/extensions with DWP, HMRC, MoD (Type 45 Destroyer), BAE Systems (Hawk).
New OmegaPS licence sales to Alenia of Italy and Gentex Corporation of US.

On current trading and prospects, Mr. Powell added:

"Although current global economic conditions will continue to have an impact on trading, all operating divisions within the Group are well positioned to take advantage of opportunities as they arise.

"With a positive net cash position and a strong balance sheet, your Board remains confident for the future."

 
Enquiries:

Pennant International Group plc
Chris Snook, Chief Executive             Tel: 01452 714881

W.H. Ireland    
Katy Birkin                                        Tel: 0121 265 6330

Winningtons Financial 
Paul Vann / Tom Cooper                   Tel: 0117 920 0092
Chairman's Statement

I am pleased to report that the Group has remained profitable despite the adverse effects of the current global economic climate which, as highlighted in my statement in the 2007 Annual Report, has caused delays to the letting of contracts and pressure on budgets. Importantly, the Group has continued to win new long-term contracts which provide good revenue streams going forward. The Group's balance sheet remains strong and the cash position is positive.

Results and Dividend

Turnover for the period was £5.4million (June 2007: £6.5 million). The gross margin achieved was 37%, a 2% improvement over the first half of 2007. Operating profit was £108,000 (June 2007: £437,000) and earnings were £44,000 (June 2007: £345,000), equating to basic earnings per share of 0.14p (June 2007: 1.10p)

During the period, cash was absorbed into working capital as the result of the timing of certain milestone payments. Cash used in operating activities totalled £477,000, whilst net cash at the end of the period was £48,000 (June 2007: net debt of £868,000). Stage payments and a substantial software maintenance annual renewal payment due in the second half are expected to increase the net cash position by the year end.

Your Board is maintaining the interim cash dividend at 0.22p per share. The dividend will be paid on 7 November 2008 to shareholders on the register at close of business on 10 October 2008. The shares are expected to go ex-dividend on 8 October 2008.

Current Trading 

The principal activities and achievements in the period include:
A major new contract in Canada:Negotiations are in progress with the Department of National Defence ('DND') in respect of the non-competitive award of a major new contract (replacing an existing contract that has run its term) for training, installation and specialist consultant support to maximise the effective use of OmegaPS within the DND. This is a significant contract having a term of 2 years with options for 3 one-year extensions. The value is considerably higher than the current contract with the potential to reach C$15 million. 
A new contract with Specialist Computer Centres plc for the development of Her Majesty's Revenue and Custom's  CD-ROM that brings together a wide range of guidance booklets and interactive forms to help employers carry out their payroll responsibilities and which will be issued to all 1.7 million employers and agents. The contract is expected to run for up to 3 years. 
An extension to April 2010 of the contract to support the Learning Highway Blended Learning Solution for the Department of Work and Pensions.
The successful completion of a 2 year contract with Kawasaki Heavy Industries in Japan to provide maintenance manuals and training for the Taipei Subway EMU project.
The extension of a draughting services contract with TOTAL E&P UK Limited to September 2010.
The successful continuation of two major Hawk programmes for BAE Systems. The order value of both programmes has increased and they are now expected to extend well into 2009.
Continuation of a major data services contract for the Type 45 destroyer
Completion of the development of a major upgrade to OmegaPS, Pennant's world-leading logistics support analysis software package.
Sale of new OmegaPS licences to Alenia in Italy and Gentex Corporation in the USA.

 
Joint Venture

Ongoing difficulties and delays at Airbus continue to adversely affect the joint venture with Sonovision-ITEP which made a loss of £31,000 in the period. Whilst these delays continue to affect performance,  other sources of revenue are actively being pursued.

Outlook

Although global economic conditions are expected to continue to have an impact on trading, all operating divisions enjoy good relationships with customers and are well positioned to take advantage of opportunities as they arise from the Group's established pipeline of prospects.

With the foundation of a positive net cash position and a strong balance sheet your Board remains confident for the future.
C C Powell
Chairman
29 September 2008

PENNANT INTERNATIONAL GROUP plc
CONSOLIDATED INCOME STATEMENT for the six months ended 30 June 2008
 
Notes
Six months ended 30 June 2008
Six months ended 30 June 2007
Year ended 31 December 2007
 
 
£
£
£
Revenue
 
5,408,658
6,495,123
12,349,683
Cost of sales
 
(3,357,548)
(4,225,355)
(7,936,361)
 
 
 
 
 
Gross profit
 
2,051,110
2,269,768
4,413,322
 
 
 
 
 
Administrative expenses
 
(1,943,226)
(1,832,645)
(3,555,765)
Profit on sale of assets held for sale
 
 
-
 
-
 
375,997
 
 
 
 
 
Operating profit
 
107,884
437,123
1,233,554
 
 
 
 
 
Share of results of Joint Venture
 
 
(31,611)
 
(20,720)
 
(33,070)
 
 
 
 
 
 
 
76,273
416,403
1,200,484
 
 
 
 
 
Finance costs
 
(23,176)
(41,900)
(92,292)
Finance income
 
1,790
96
9,991
 
 
 
 
 
Profit before taxation
 
54,887
374,599
1,118,183
 
 
 
 
 
Taxation
2
(10,489)
(30,000)
(104,924)
 
 
 
 
 
Profit for the period
 
44,398
344,599
1,013,259
 
 
 
 
 
Earnings per share
3
 
 
 
Basic
 
0.14p
1.10p
3.23p
Diluted
 
0.13p
1.02p
3.02p

 

 

PENNANT INTERNATIONAL GROUP plc
CONSOLIDATED BALANCE SHEET as at 30 June 2008 
 
30 June 2008
30 June 2007
31 December 2007
 
£
£
£
Non-current assets
 
 
 
Goodwill
901,249
902,373
909,697
Other intangible assets
148,717
30,115
117,731
Property plant and equ
ipment
1,987,525
2,102,094
2,051,477
Interest in Joint Venture
5,345
69,307
16,956
Available-for-sale investments
6,135
6,135
6,135
Deferred tax asset
19,430
12,966
19,629
Total non-current assets
3,068,401
3,122,990
3,121,625
 
 
 
 
Current assets
 
 
 
Inventories
29,823
90,297
27,378
Trade and other receivables
3,644,223
3,986,080
3,161,595
Cash and cash equivalents
735,847
278,802
1,568,620
Assets held for sale
-
372,522
-
Total current assets
4,409,893
4,727,701
4,757,593
 
 
 
 
Total assets
7,478,294
7,850,691
7,879,218
 
 
 
 
Current liabilities
 
 
 
Trade and other payables
1,412,218
1,771,168
1,445,520
Current tax liabilities
10,000
24,729
104,779
Obligations under finance leases
836
0
1,089
Bank overdraft and loan
156,725
454,134
147,559
Deferred revenue
383,086
351,393
414,838
Total current liabilities
1,962,865
2,601,424
2,113,785
 
 
 
 
Net current assets
2,447,028
2,126,277
2,643,808
 
 
 
 
Non current liabilities
 
 
 
Bank loan
528,736
692,770
614,430
Obligations under finance leases
1,691
0
1,532
Deferred tax liabilities
32,000
32,000
32,000
Deferred revenue
12,890
2,598
25,781
Total non-current liabilities
575,317
727,368
673,743
 
 
 
 
Total liabilities
2,538,182
3,328,792
2,787,528
 
 
 
 
Net assets
4,940,112
4,521,899
5,091,690
 
 
 
 
Equity
 
 
 
Share capital
1,600,000
1,600,000
1,600,000
Share premium account
3,582,329
3,582,329
3,582,329
Retained earnings
(273,557)
(631,128)
(128,594)
Translation reserve
31,340
(29,302)
37,955
Total equity
4,940,112
4,521,899
5,091,690
 
 
PENNANT INTERNATIONAL GROUP plc
CONSOLIDATED CASH FLOW STATEMENT for the six months ended 30 June 2008 
 
Notes
Six months ended 30 June 2008
Six months ended 30 June 2007
Year ended 31 December 2007
 
 
£
£
£
Net cash (used in)/generated from operating activities
 
4
 
(477,070)
 
(502,715)
 
563,799
 
 
 
 
 
Investing activities
 
 
 
 
Interest received
 
1,790
96
9,991
Proceeds of sale of assets held for sale
 
-
-
748,519
Proceeds from sale of property, plant and equipment
 
 
959
 
-
 
-
Purchase of intangible assets
 
(48,900)
(11,576)
(107,542)
Purchase of property plant and equipment
 
(19,449)
(120,639)
(154,120)
Loan to Joint Venture
 
(20,000)
(30,000)
10,000
Net cash used in investing activities
 
(85,600)
(162,119)
506,848
 
 
 
 
 
Financing activities
 
 
 
 
Dividends paid
 
(134,143)
(125,828)
(194,098)
Transactions in own shares
 
(61,218)
(117,975)
(176,225)
Repayment of borrowings
 
(76,528)
(71,182)
(143,301)
Repayment of obligations under finance leases
 
 
(94)
 
(2,798)
 
(177)
Increase in bank overdrafts
 
-
312,796
-
Net cash used in financing activities
 
(271,983)
(4,987)
(513,801)
 
 
 
 
 
Net (decrease)/increase in cash and cash equivalents
 
 
(834,653)
 
(669,821)
 
556,846
 
 
 
 
 
Cash and cash equivalents at beginning of period
 
 
1,568,620
 
909,609
 
909,609
 
 
 
 
 
Effect of foreign exchange rates
 
1,880
39,014
102,165
 
 
 
 
 
Cash and cash equivalents at end of period
 
 
735,847
 
278,802
 
1,568,620
 
 
 
 
 
 

 PENNANT INTERNATIONAL GROUP plc
STATEMENT OF CHANGES IN EQUITY for the six months ended 30 June 2008 
 
Share capital
Share premium account
Retained earnings
Translation reserve
Total equity
 
£
£
£
£
£
At 1 January 2007
1,600,000
3,582,329
(744,302)
(63,905)
4,374,122
Profit for the year
-
-
1,013,259
-
1,013,259
Dividends paid
-
-
(194,098)
-
(194,098)
Transactions in treasury shares
 
-
 
-
 
(176,225)
 
-
 
(176,225)
Share based payment
-
-
(27,228)
-
(27,228)
Currency translation differences on foreign currency net investments
 
 
-
 
 
-
 
 
-
 
 
101,860
 
 
101,860
At 31 December 2007
1,600,000
3,582,329
(128,594)
37,955
5,091,690
Profit for the half year
-
-
44,398
-
44,398
Dividends paid
-
-
(134,143)
-
(134,143)
Transactions in treasury shares
 
-
 
-
 
(61,218)
 
-
 
(61,218)
Share based payment
-
-
6,000
-
6,000
Currency translation differences on foreign currency net investments
 
 
-
 
 
-
 
 
-
 
 
(6,615)
 
 
(6,615)
At 30 June 2008
1,600,000
3,582,329
(273,557)
31,340
4,940,112

 
 
NOTES TO THE FINANCIAL INFORMATION for the six months ended 30 June 2008

1.  Basis of preparation

This interim statement, which is neither audited nor reviewed, has been prepared on the basis of the accounting policies set out in the Group's 2007 annual report. It does not comply with IAS 34 'Interim Financial Reporting' as is permissible under the rules of the AIM Market ("AIM").

The balance sheet at 31 December 2007 and the results for the year then ended do not constitute full financial statements within the meaning of s240 of the Companies Act 1985. The annual report has been filed with the Registrar of Companies; the auditors' opinion on the financial statements was unqualified and did not contain a statement under s237(2) or s237(3) of the Companies Act 1985.
 2.  Taxation

The taxation charge for the period is based on the estimated rate of tax that is likely to be effective for the full year to 31 December 2008.

3. Earnings per share

Basic earnings per share is calculated by dividing the profit for the period attributable to the shareholders by the weighted average number of shares in issue. The calculation of diluted earnings per share assumes conversion of all potentially dilutive ordinary shares, all of which arise from share options. 
 
Six months ended 30 June 2008
Six months ended 30 June 2007
Year ended 31 December 2007
 
£
£
£
Earnings
 
 
 
Net profit attributable to equity shareholders
 
44,398
 
344,599
 
1,013,259
 
 
 
 
Number of shares
 
 
 
Weighted average number of ordinary shares
 
30,769,156
 
31,426,167
 
31,349,821
Number of dilutive shares under option
 
2,250,000
 
2,247,500
 
2,230,000
Weighted average number of ordinary shares for the purpose of dilutive earnings per share
 
 
33,019,156
 
 
 
33,673,667
 
 
33,579,821

 
4.  Cash (used in) /generated from operations
 
Six months ended 30 June 2008
Six months ended 30 June 2007
Year ended 31 December 2007
 
£
£
£
Profit for the period
44,398
344,599
1,013,259
Share of results of Joint Venture
31,611
20,720
33,070
Finance income
(1,790)
(96)
(9,991)
Finance costs
23,175
41,900
92,292
Income tax expense
10,489
30,000
104,924
Share-based payment
6,000
12,378
(27,228)
Depreciation charge
101,430
117,401
210,613
Profit on sale of assets
(959)
-
(375,997)
 
 
 
 
Operating cash flows before movement in working capital
 
214,354
 
566,902
 
1,040,942
 
 
 
 
(Increase)/decrease in receivables
(482,628)
(1,191,946)
(367,319)
(Increase)/decrease in inventories
(2,445)
22,642
85,561
(Decrease)/increase in payables
(33,302)
241,164
(84,484)
(Decrease)/increase in deferred revenue
 
(44,643)
 
(41,927)
 
44,701
Cash (used in)/ generated from operations
 
(348,664)
 
(403,165)
 
719,401
 
 
 
 
Tax paid
(105,231)
(57,650)
(63,310)
Interest paid
(23,175)
(41,900)
(92,292)
 
 
 
 
Net cash (used in)/generated from operations
 
(477,070)
 
(502,715)
 
563,799
 

Copies of this statement will be sent to shareholders and will be available on the Group's website (www.pennantplc.co.uk) and from Pennant International Group plc,
Pennant Court, Staverton Technology Park, Cheltenham, GL51 6TL.

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