TIDMPEN
RNS Number : 1189K
Pennant International Group PLC
20 April 2020
FOR IMMEDIATE RELEASE 20 April 2020
PENNANT INTERNATIONAL GROUP PLC
Preliminary Results for the Year Ended 31 December 2019
A challenging year but grounds for optimism
Pennant International Group plc ("Pennant", the "Group", or the
"Company"), the AIM quoted supplier of integrated training and
support solutions, products and services which train and assist
operators and maintainers in the defence and regulated civilian
sectors, announces Preliminary Results for the Financial Year Ended
31 December 2019.
Commenting on the Group's performance, Simon Moore, Chairman,
said :
"2019 was a challenging year for Pennant. Delays to expected
contract awards and a drawn-out re-basing of a key programme, all
conspired to reduce activity levels, slow progress and place
margins under increasing pressure.
During the year, the necessary steps were taken to mitigate
these issues including implementation of a wide-ranging cost
reduction and restructuring exercise.
Despite these challenges, the Group has continued to deliver its
key services contracts and successfully achieved acceptance of
products on the Qatar contract, recognising budgeted revenues and
profits during the second half of the year.
The Group is posting a consolidated loss before tax of GBP1.62
million (2018: profit before tax GBP3.18 million) which is stated
after significant non-underlying costs. Underlying earnings for
2019 before interest, tax and amortisation (EBITA) were GBP1.6m
(2018: GBP.3.3m) and underlying EBITDA was GBP2.4m (2018:
GBP3.7m)."
Financial Summary
-- Group revenues of GBP20.4 million (2018: GBP21.1 million);
-- Gross profit margin of 36% (2018: 39%)
-- Loss before tax of GBP1.62 million (2018: profit before tax of GBP3.2 million);
-- Underlying EBITA of GBP1.6 million (2018: GBP3.3 million);
-- Loss for the year attributable to shareholders of GBP1.49
million (2018: profit of GBP3.15 million);
-- Basic loss per share of 4.6p (2018: earnings of 9.49p);
-- Unutilised UK tax losses of GBP2.8 million (2018: GBP5.3 million);
-- Group net assets at year-end of GBP14.8 million (2018: GBP14.04 million);
-- Net debt at year-end of GBP2.2 million (2018: net cash of GBP1.85 million);
-- No final dividend recommended (2018: GBPNIL);
-- Three-year order book at year-end stood at GBP33 million (2018: GBP37 million).
Operational Summary
Contracts
-- The successful completion and customer acceptance, on or
ahead of schedule, of various training devices for the Qatar
contract, realising revenues of circa GBP7 million in the second
half.
The award by a UK OEM of a GBP3.4 million contract for the
design and build of a helicopter training aid which will comprise a
full-size representation of the relevant airframe to enable UK
military training on 'anti-surface' weapons systems.
-- Award of a new contract for the provision of additional
training aids to the Middle East, including two new training
solutions, worth circa GBP1.5 million, deliverable predominantly in
2020.
-- Successful rescoping of the Group's key contract with General
Dynamics for electromechanical trainers and computer-based training
for the Ajax vehicle programme, with the contract value increased
by GBP1.5 million to circa GBP13.5 million.
-- Ongoing delivery of the key contract with the Canadian
government, worth circa C$30 million over five years.
Investment and Innovation
-- Acquisitions of Aviation Skills Partnership and Track Access
Services, expanding routes into training in the civil aviation and
rail sectors respectively, as part of the Group's diversification
strategy.
-- Completion of the development of eight new generic products
(part of a development strategy commenced in 2018), all of which
had secured orders by the end of 2019.
-- Completion of capital investment in upgrades and
refurbishments to a number of production facilities in readiness
for new contract awards and the commencement of the build phase for
the electromechanical trainers referred to above.
Management
The end of the period saw the promotion of Mervyn Skates to
Operations Director, in recognition of his achievements in ensuring
successful contract deliveries across the Technical Training
business, a key step in readiness for the build phase of the
electro-mechanical trainers and the expected award of the major
programme.
On current trading and prospects, Mr Moore concluded:
"In light of the ongoing Covid-19 pandemic, the economic outlook
across the globe remains highly uncertain. Much will depend on the
stimulus packages that governments make available to support
impacted businesses and the wider economy.
Indeed, the uncertainty caused by Covid-19 affects Pennant too.
However, with a three-year contracted order book, valued at more
than GBP33 million, the Board is confident that the Group's
underlying strengths - our long-term customer relationships with
governments and major OEMs, our specialist services and our
quality-assured reputation - will continue to provide a solid
foundation for our long-term success."
Enquiries:
Pennant International Group plc www.pennantplc.co.uk
Philip Walker, CEO
David Clements, Commercial &
Risk Director +44 (0) 1452 714 914
WH Ireland Limited www.whirelandcb.com
Mike Coe +44 (0) 207 220 1666
Walbrook PR (Financial PR) paul.vann@walbrookpr.com
+44 (0)20 7933 8780;
Paul Vann / Tom Cooper +44 (0)7768 807631
CHAIRMAN'S STATEMENT
A challenging year but grounds for optimism
In last year's Annual Report, following an excellent set of
results in 2018, I stated that the Group's 2019 financial
performance was expected to be significantly weighted in favour of
the second half, with the majority of revenues (and all of the
profits) forecast to be realised towards the end of the year.
This was dependent upon the achievement of certain performance
milestones on the Qatar contract combined with a strong second half
weighted Order Book. I can report that these revenues and profits
have indeed been recognised, in large part due to the continued
successful delivery of the Qatar programme.
Key financials
For the year ended 31 December 2019, the Group recorded
consolidated revenues of GBP20.4 million (2018: GBP21.1 million),
underpinned by both the continued delivery of the Group's services
contracts and successful ongoing acceptance of products on the
Qatar contract.
The Group posted a consolidated loss before tax of GBP1.62
million (2018: profit before tax GBP3.18 million) which is stated
after significant non-underlying costs. These non-underlying costs
are explained in detail in the Annual Report and the Chief
Executive's Review below. Underlying earnings before interest, tax
and amortisation (EBITA) were GBP1.6m (2018: GBP.3.3m) and EBITDA
GBP2.4m (2018: GBP3.7m).
Review of operations and re-structuring
During the period under review, a number of significant
customer-driven challenges developed which slowed progress,
incurred additional costs and impacted our overall financial
performance. Most notably the re-basing of the contract for
electro-mechanical trainers for the General Dynamics armoured
vehicle programme and delays to the award of the major programme
first announced in August 2018 which, together, had a negative
impact on revenues, cashflow and profits for the year as a
whole.
I can confirm that the necessary steps have been taken to
address these challenges including a wide-ranging cost reduction
and restructuring exercise.
Post period-end, the successful rebasing and uplift of the
General Dynamics programme, and the announcement of the acquisition
of Absolute Data Group and its complementary R4i suite of software
products (which will increase our penetration of the US market),
and which will be earnings enhancing in the first year, have
underpinned our optimism and confidence for 2020 and beyond.
Board changes
During 2019 there were a number of Board changes.
With effect from 14 June 2019 Philip Cotton was appointed
Non-Executive Director and Chair of the Audit & Risk
Committee.
On 22 November 2019 the Group confirmed the appointment of
Mervyn Skates as Operations Director, with effect from 1 January
2020.
On 22 November 2019 Gary Barnes, Finance Director, stepped down
from the Board. On behalf of the Board, I would like to take this
opportunity to recognise Gary's significant contribution to the
Company and thank him for his 22 years' service.
Dividends
Taking account of the Group's 2019 financial performance, the
trading outlook (including potential Covid-19 challenges) and the
Group's cash position, the Directors believe that it is both
prudent and in the Company's and shareholders' current best
interests to retain cash for working capital.
The Board will therefore not be recommending the payment of a
final dividend for the year ended 31 December 2019. However, it
will continue to review dividend policy throughout 2020 based on
trading performance and working capital requirements.
Governance
The Board is committed to maintaining robust corporate
governance. It has worked closely with its advisors and in 2020
will continue to strengthen governance frameworks to ensure strong,
proportionate governance throughout the Group. The Board has
established appropriate risk management procedures and keeps key
risks to the Group under regular review.
Culture
The Board is likewise committed to embodying and promoting a
strong corporate culture and has endorsed various policies which
require ethical behaviour of staff and relevant counterparties
(such as those mandating anti-corruption, anti-counterfeiting, fair
treatment and equality of opportunity).
The Directors, in consultation with employees, have established
a clear set of 'Core Values' for the Company that encapsulate the
ethical and cultural expectations of the Company, and which will
guide and inform the actions of the Company (and to which its staff
can be held accountable). These values are aligned with the
Company's strategic objectives.
Our people
As always, I would like to take this opportunity to thank all
Pennant staff across the Group for their hard work and dedication
throughout what has been a challenging year. Their continued
commitment and drive to ensure that the business delivers the
high-quality solutions that our customers require and expect,
operating under tight timescales, are key factors in maintaining
and enhancing the ongoing and longstanding relationships we have
with our customers.
Brexit
The Board has carried out a review of its customer and supplier
base and continues to monitor developments in relation to Brexit
and its potential impact on the Group.
Pennant has no significant contracts with customers in EU member
states, and no material direct suppliers within the EU.
The Group presently expects that Brexit will have minimal effect
on its trading but is keeping this under review as the political
and economic situation develops and the potential impact of Brexit
on the wider supply chain and the business environment generally
becomes clearer.
Coronavirus (Covid-19)
Current Risks
The Group continues to assess and manage the impact of Covid-19
on its business. Three key risks to trading and prospects have been
identified so far.
The first is the challenge of holding review events with
customers. Such review events are held, as physical meetings,
through the lifecycle of an engineering programme and frequently
have milestone payments attached (paid by the customer to Pennant
upon successful completion of the review). If the review cannot be
held due to Covid-19 restrictions, cash and revenue associated with
completion of the milestone may be delayed.
The second risk is the inability to gain access to customer
facilities to deliver services. Our 'integrated logistics support'
consultancy services are typically delivered at a customer's site;
if we cannot access the relevant site due to Covid-19 restrictions,
the ability to deliver the services is severely hampered.
Lastly, there is the broader risk that governments and major
OEMs which award contracts to Pennant are, in the shorter term at
least, consumed by their own efforts to deal with Covid-19 and
therefore expected contract awards are consequently delayed until
the pandemic has abated.
Actions Taken
With the first two risks set out above, we are working closely
with the applicable customers to establish solutions so that
reviews and services can be held and provided via remote means. We
are confident that workarounds will be possible (and in some cases,
these are already being implemented) but the impact on the timing
and amount of any affected revenues is not yet clear. The third,
macro risk is less easy for Pennant to directly influence, but we
remain in close contact with key stakeholders to ensure we are
well-informed and remain well-placed for awards.
Simultaneously, we are prioritising the safety and well-being of
our employees and other stakeholders and have implemented
near-total homeworking.
Financial Position
We are actively focused on cash and cost management across the
business and retain undrawn facilities.
We have welcomed certain governmental initiatives to support
businesses in these exceptional times, and we have already utilised
the UK Government's Coronavirus Job Retention Scheme to protect
(and part-fund) the jobs of those employees who are currently
unable to carry out their usual duties due to Covid-19
interruption.
We are also investigating other potential financial options,
including the Coronavirus Business Interruption Loan Scheme, with a
view to securing access to further funding should it be
required.
Strategy and outlook
A key objective of the Board's stated strategy for future growth
is to increase the visibility and recurrence of earnings,
especially those derived from software and services, and to develop
new products and services complemented by strategic
acquisitions.
Notwithstanding the ongoing uncertainties surrounding the
Covid-19 pandemic, revenues and profits for 2020 are again expected
to be second-half weighted due to the mix of products and the
application of IFRS 15.
With our contracted three-year order book, valued at more than
GBP33 million, the Board is confident that the Group's underlying
strengths - our long-term customer relationships with governments
and major OEMs, specialist services and our quality-assured
reputation - will continue to provide a solid foundation for our
long-term success.
Simon Moore
Chairman
CHIEF EXECUTIVE'S REVIEW
Restructuring and repositioning for future growth
The year under review was a challenging one for both management
and staff with a number of issues involving significant customer
driven changes to contracts, delays to the award of the major
programme, underperformance in the Aviation Skills business and
adverse freehold property valuations, combined to produce an
outcome for the year which was below management's original
expectations.
However, decisive action was taken during the period to
restructure and reposition the business which has involved a
wide-ranging cost reduction exercise, resulting in net annualised
savings of over GBP0.6 million.
Notwithstanding these challenges (and the additional challenges
now presented by Covid-19), the Group continues to focus on its
strategic objective of increasing the proportion of its revenues
which derive from software and services, particularly those of a
recurring nature
Financial review
The results for the year are set out in detail in the Annual
Report and Accounts, with the key financial performance indicators
set out below.
Performance
The gross profit margin for the period was 36% (2018: 39%)
reflecting the broadly consistent mix of products and services
delivered across the two years.
The operating margin has, however, significantly decreased to a
loss of GBP1.5m (2018: 15%). This was due to 'gearing up' (through
investment in people and facilities) for the major programme for
which Pennant was down selected in August 2018, recognition of the
revaluation of certain freehold properties in line with the current
market, the goodwill impairment of Aviation Skills Partnership, and
increased overheads and restructuring expenses, which together
contributed to a consolidated loss before tax of GBP1.6
million.
Underlying EBITA, excluding non-underlying costs, was GBP1.6
million. Details are given below:
GBP000
---------------------------------------------- --------
Operating Loss (1,517)
Impairment of Freehold Properties 819
Restructuring Expense 654
Amortisation (including Goodwill Impairment) 1,638
ADG Acquisition costs 54
---------------------------------------------- --------
Underlying EBITA 1,648
Impairment of freehold properties
In order to gear up for major contracts, the Group invested over
GBP3 million in freehold property. The properties acquired are
currently being utilised on the Qatar programme and on the
helicopter trainer contract announced on 31 October 2019 and they
are essential for the further expansion of the business.
Following a revaluation for the purposes of the annual accounts,
it has become apparent that, due to the general softening of the
commercial property market both locally and more broadly, certain
of the properties were overvalued in the Company's balance sheet.
While the net effect of the revaluation across Pennant's entire
freehold portfolio is a reduction of GBP0.4 million (being an
impairment of GBP0.8 million against certain properties and an
increase in value of GBP0.4 million against others), due to
applicable accounting standards the Group is required to expense
the gross amount of the impairment (GBP0.8 million), which is
regarded as non-underlying, with the upwards revaluations being
credited to reserves.
Restructuring expense
During the year, the Group implemented a wide-ranging cost
reduction exercise and various roles were removed from the
business. The aggregate cost associated with terminations of
employment resulting from this exercise was GBP0.7 million which is
regarded as a non-underlying expense.
It is anticipated that this programme will realise gross
annualised savings of over GBP1 million. Taking into account new
roles and capabilities implemented in the revised structure, the
net annualised cost saving will be circa GBP0.6 million.
Goodwill impairment
On 6 February 2019, the Company acquired the entire issued share
capital of Aviation Skills Holdings Limited, the parent company of
The Aviation Skills Partnership Limited ("ASP").
During the period it became apparent that commercialisation of
the ASP model would be significantly slower and more challenging
than expected.
Whilst opportunities to develop new academies are still being
progressed it is not anticipated that any will come to fruition nor
generate sustainable revenue within the next two years.
Following consultation with various stakeholders, the elements
of the ASP business related to campaigning and delivering aviation
skills (for young people and more broadly) were transferred to a
newly-incorporated not-for-profit entity, Aviation Skills
Foundation Limited. The 'NFP' status of this new entity is
perceived to be critical to 'unlocking' the wider participation of
key OEMs, primes and education sector participants. The commercial
activities of ASP continue to be carried on by Pennant.
Based on its assessment of the short-term prospects of realising
new academies, and the aforementioned restructuring, the Board has
concluded that a full write-off of the GBP1.2m ASP goodwill is
appropriate.
Year-end Order Book
At the end of the period, the year-end order book stood at GBP33
million (2018: GBP37 million), of which GBP16 million of revenue
(2018: GBP19 million) is scheduled for recognition within one year
based on anticipated completion of generic products and progress
made on engineered-to-order contracts. Of the total order book, 61%
(2018: 51%) is denominated in sterling and 28% (2018: 36%) is
denominated in Canadian dollars. Any movement of sterling to the
Canadian dollar would potentially impact the OmegaPS business.
Taxation
The Group's tax position shows a tax credit of GBP133,812 (2018:
tax charge GBP32,712), representing an effective tax rate of nil
(2018: 1%). The Group has unrelieved UK tax losses carried forward
of GBP2.9 million (2018: GBP5.3 million).
Research & Development
Research and Development tax credits claimed in the UK during
the year amounted to GBP2.2 million (2018: GBP1.9 million) with
further claims on current projects expected to be made during
2020.
Cashflow
Cash used in operations amounted to GBP2.2 million (2018: cash
generated in operations GBP5.0 million), reflecting the position on
major programmes and the significant movement in working capital
with many products reaching completion in the final quarter of
2019.
The Group had net borrowings at the year-end of GBP2.2 million
(2018: Net cash of GBP1.5 million).
Divisional performance
Divisional financial performance is set out below and further
information about the business of each division is provided in the
Annual Report.
Technical Training
The Group's Technical Training division (formerly known as
Training Systems) is focused on the design and build of generic and
platform-specific training solutions and the provision of related
technical and support services.
During the period, the Group made significant investment in
products, people and infrastructure in preparation for further
growth expected to be driven by potential future contract
awards.
The Technical Training division continues to be the main driver
of revenues within the Group and has delivered a satisfactory
performance given the challenges set out previously. Revenues for
the year, which were significantly H2 weighted, were strong at
GBP16.1 million (2018: GBP16.8 million) as a direct result of the
successful delivery of major Middle East contracts.
2019 2018
GBPm GBPm
------------------------- ------ ------
Revenue 16.1 16.8
Divisional Contribution (1.6) 2.9
Revenues from the Technical Training division were predominantly
generated from product sales, which accounted for 70% of the
divisional revenues, with the balance generated from technical and
support services.
The underlying contribution from Technical Training, ignoring
non-underlying costs, accounted for 100% of the Group's underlying
EBITDA for the period (2018: 90%).
Track Access Services
During the period the Group acquired the assets of Track Access
Services ("TAS"). TAS provides safety-critical services to train
operating companies and rail infrastructure providers. TAS's
current capabilities include rail driver training, rail survey
services, laser and video scanning, 3D track models, signal siting
and a subscription-based route video and mapping service. Customers
include Network Rail and DB Cargo. It is anticipated that TAS will
provide the Group with additional opportunities to increase
recurring revenues.
Integrated Logistics Support (ILS)
The Group's ILS division (formerly known as Software Services)
focuses on the development of the OmegaPS LSAR software product and
the provision of consultancy, training and support services in
relation thereto.
2019 2018
GBPm GBPm
------------------------- ------ ------
Revenue 4.3 4.3
Divisional Contribution - 0.3
Revenues from the ILS division in both 2019 and 2018 were
primarily generated from consultancy services 80% and long-term
software maintenance agreements 20%. This contracted, recurring
revenue is integral to the Group's forward visibility and quality
of earnings and forms a key component of Group Strategy.
Absolute Data Group
Post year end the Group announced the completion of the purchase
of Absolute Data Group ("ADG"), based in Brisbane, Australia. ADG
owns the R4i suite of technical documentation software. The
acquisition will enable the integration of R4i with the Group's
OmegaPS suite of products and provide much greater traction in two
of the Group's principal target markets, the United States and
Australia.
Strategic & Operational review
Our mission is to generate sustainable long-term growth for the
business. In order to deliver this objective, we continue to invest
in areas that we consider are the main drivers for business success
and to ensure the business has the tools and flexible skilled
workforce required to deliver new, major and complex contracts.
Innovation
In line with the Group's core strategic objective, investment in
innovation has been targeted to expand the Group's market coverage,
addressing gaps in the product range and improving the overall
customer proposition. During the period, the Group invested over
GBP2m in the development of new and enhanced solutions.
To date eight new products have been successfully launched and
orders have been secured for all of these solutions:
-- Crew Escape & Safety Systems Trainer;
-- Omega Rail software tool;
-- Basic Helicopter Maintenance Trainer;
-- Generic Stores Loading Trainer;
-- Generic Fastener Installation Trainer;
-- Genskills Mk 2;
-- Virtual Aircraft Training System; and
-- Virtual Loadmaster Training System.
The Company anticipates that it will continue to invest in new
solutions during 2020 and beyond. The Group has an active pipeline
of potential product innovations and improvements that are going
through an assessment process with a view to obtaining funding
approval if a business case is proven. Together, these new products
offer the potential for further significant growth.
Infrastructure
The Group has continued to modernise and improve both production
and administrative facilities with investment in a planned
programme to upgrade our operations. During 2019 the Group invested
GBP0.4 million in modernising and improving production
capability.
These new facilities provide the capability to deliver complex
and larger scale engineering programmes in the future.
People
Our employees remain core to our future business success.
Without talented people, there are no product innovations or
technical solutions.
During the early part of 2019, we strengthened and grew the
teams across our UK, Canadian and Australian operations with
significant investment made in senior skills and we made a number
of strategic appointments designed to improve operational delivery,
manage risk and gear up for the major programme.
However, following delays to certain contract awards and other
costs incurred, the necessary wide-ranging cost reduction exercise
implemented during the year has resulted in a number of other roles
being removed from the business, thereby streamlining operations
without compromising the ability to deliver.
Across the Group, we have implemented various measures
(including wide-spread homeworking) to protect our people during
the Covid-19 pandemic.
Contracts
New contract awards, amendments and achievements during the year
are set out below:
-- Award of a new contract in October 2019 to design and build a
full-size representation of a helicopter training aid for Leonardo
Helicopters worth approximately GBP3.4 million, deliverable across
2020 and 2021.
-- The successful completion and customer acceptance of devices
on the Qatar contract delivering strong second half revenues.
-- Successful rescoping of the Group's key contract for
electromechanical trainers and computer-based training for General
Dynamics, with contract value increased by GBP1.5 million to circa
GBP13.5 million.
-- Award of a new contract for the provision of additional
training aids to the Middle East, including two new training
solutions, worth circa GBP1.5 million, deliverable predominantly in
2020.
-- A new contract for the supply of training aids and associated
services for aviation technician training for the Australian
Defence Force, valued undisclosed.
-- An order from a Middle East customer for two software products, worth circa GBP500,000.
-- An order from BAE Systems Australia for 50 Generic Fastening
Instruments Trainers, a new solution created under the Groups
product development strategy.
-- Additional orders secured for multiple Genskills devices (marks 1 and 2).
-- A renewed contract in the Middle East for technical and
support services to be provided in region.
Implementing the strategy
The underlying strengths of Pennant - our long-term customer
relationships, our specialist services and our quality-assured
reputation - remain the solid foundations of our proposition.
In accordance with our stated strategy, the focus remains firmly
on increasing the proportion of the Group's revenues which derive
from the sale of software and services, particularly those of a
recurring nature.
Steps taken this year include:
-- the acquisition of Track Access Services at the start of the Second Half;
-- the ongoing development of a new variant of OmegaPS
(deployable on a 'software-as-a-service' basis);
-- promoting unique VR software products in North America
(deployable on a 'software-as-a-service' basis);
-- our focus on securing additional, long-term product support contracts;
-- the post period-end acquisition of Absolute Data Group and
its R4i suite of software products; and
-- continued investment and development of a training delivery capability.
The Group continues to progress other strategic opportunities to
partner with or acquire complementary businesses.
The restructuring and repositioning of the business through the
year, together with operational improvements implemented across the
Group and our strong order book, provide a firm platform for future
success.
Philip Walker
Group CEO
CONSOLIDATED INCOME STATEMENT
FOR THE YEARED 31 December 2019
Notes 2019 2018
Continuing operations GBP GBP
Revenue 20,429,990 21,069,223
Cost of sales (13,079,052) (12,806,223)
-------------- -----------------
Gross profit 7,350,938 8,263,000
Land & buildings impairment (819,496) -
Goodwill impairment (1,169,072) -
Restructuring expenses (654,248) -
Other Administration expenses (6,545,440) (5,093,520)
-------------- -----------------
Administrative Expenses (9,188,256) (5,093,520)
Other Income 319,663 -
Operating (Loss)/Profit (1,517,655) 3,169,480
Finance costs (110,655) (1,700)
Finance income 156 10,857
-------------- -----------------
(Loss)/Profit before taxation (1,628,154) 3,178,637
Taxation (charge) / credit 1 133,812 (32,712)
-------------- -----------------
(Loss)/Profit for the year attributable
to the equity
holders of the parent (1,494,342) 3,145,925
============== =================
Earnings per share
Basic (4.16p) 9.49p
Diluted (4.16p) 8.67p
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEARED 31 DECEMBER 2019
Notes 2019 2018
GBP GBP
(Loss)/Profit for the year attributable
to the equity
holders of the parent (1,494,342) 3,145,925
Items that may be reclassified to
profit or loss
Exchange differences on translation
of foreign operations (49,259) (34,086)
Deferred tax charge - share based (102,762) -
payments
Items that will not be reclassified 370,197 -
to profit or loss
Net revaluation gain
Deferred tax credit - property, (62,933) -
plant and equipment and intangibles
-------------- ------------
Total comprehensive income for the
period attributable to the equity
holders of the parent (1,339,099) 3,111,839
============== ============
CONSOLIDATED STATEMENT OF FINANCIAL POSITION AT 31 DECEMBER
2019
Notes 2019 2018
GBP GBP
Non-current assets
Goodwill 923,349 951,939
Other intangible assets 3,391,411 1,660,292
Property, plant and equipment 6,284,769 6,889,346
Right-of-use assets 971,296 -
Deferred tax assets - 198,432
----------- -------------
Total non-current assets 11,570,825 9,700,009
----------- -------------
Current assets
Inventories 570,724 1,923,639
Trade and other receivables 9,372,767 5,184,533
Corporation tax recoverable 869,247 -
Cash and cash equivalents 497,039 1,848,954
Total current assets 11,309,777 8,957,126
Total assets 22,880,602 18,657,135
Current liabilities
Trade and other payables 3,929,527 4,478,039
Bank overdraft 2,739,278 -
Current tax liabilities - 42,247
Obligations under finance leases 209,113 5,350
Total current liabilities 6,877,918 4,525,636
Net current assets 4,431,859 4,431,490
Non-current liabilities
Obligations under finance leases 833,616 20,383
Trade and other payables - 23,105
Deferred tax liabilities 325,215 -
Warranty provisions - 50,000
----------- -------------
Total non-current liabilities 1,158,831 93,488
----------- -------------
Total liabilities 8,036,749 4,619,124
Net assets 14,843,853 14,038,011
=========== =============
Equity
Share capital 1,805,730 1,685,177
Share premium account 5,100,253 3,168,870
Capital redemption reserve 200,000 200,000
Retained earnings 6,686,581 8,225,321
Translation reserve 248,667 297,926
Revaluation reserve 802,622 460,717
Total equity 14,843,853 14,038,011
=========== =============
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE YEARED 31 DECEMBER 2019
Capital
Share Share red-emption Retained Translation Revaluation Total equity
capital Premium reserve earnings reserve reserve
---------- ---------- ------------- ------------- ------------- ------------- -----------------
GBP GBP GBP GBP GBP GBP GBP
At 1 January
2018 1,647,177 2,677,571 200,000 7,982,360 332,012 489,007 13,328,127
Total
Comprehensive
Income for
the year - - - 3,145,925 - - 3,145,925
Adjustment
on initial
application
of IFRS 15 - - - (3,151,644) - - (3,151,644)
Other
comprehensive
income - - - - (34,086) - (34,086)
---------- ---------- ------------- ------------- ------------- ------------- -----------------
Total
comprehensive
income 1,647,177 2,677,571 200,000 7,976,641 297,926 489,007 13,288,322
Issue of New
Ordinary
Shares 38,000 491,299 - - - - 529,299
Recognition
of share
based
payment - - - 103,983 - - 103,983
Deferred tax
on share
options - - - 116,407 116,407
Transfer from
revaluation
reserve - - - 28,290 - (28,290) -
At 31 December
2018 1,685,177 3,168,870 200,000 8,225,321 297,926 460,717 14,038,011
(Loss) for
the year - - - (1,494,342) - - (1,494,342)
Other
comprehensive
income - - - (165,695) (49,259) 370,197 155,243
---------- ---------- ------------- ------------- ------------- ------------- -----------------
Total
comprehensive
income 1,685,177 3,168,870 200,000 6,565,284 248,667 830,914 12,698,912
Issue of New
Ordinary
Shares 120,553 1,931,383 - - - - 2,051,936
Recognition
of share
based
payment - - - 93,005 - - 93,005
Transfer from
revaluation
reserve - - - 28,292 - (28,292) -
-----------------
At 31 December
2019 1,805,730 5,100,253 200,000 6,686,581 248,667 802,622 14,843,853
========== ========== ============= ============= ============= ============= =================
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 31 DECEMBER 2019
Notes 2019 2018
GBP GBP
Net cash from operations (2,210,706) 5,012,123
------------ ------------
Investing activities
Interest received 156 10,857
Payment for acquisition of subsidiary, (406,496) -
net of cash acquired
Purchase of intangible assets (2,200,775) (1,583,760)
Purchase of property, plant and equipment (405,095) (3,561,439)
Proceeds on disposal of property, plant
& equipment - 1,600
Net cash used in investing activities (3,012,210) (5,132,742)
------------ ------------
Financing activities
Proceeds from sale of ordinary shares 2,051,936 529,299
Cancellation of B & C Shares (598,776) -
Net funds from obligations under finance
leases (272,178) (4,647)
Net cash from/(used in) financing activities 1,180,982 524,652
------------ ------------
Net increase/(decrease) in cash and cash
equivalents (4,041,934) 404,033
Cash and cash equivalents at beginning
of year 1,848,954 1,502,655
Effect of foreign exchange rates (49,259) (57,734)
Cash and cash equivalents at end of year (2,242,239) 1,848,954
============ ============
Abbreviated notes to the consolidated financial statements
for the year ended 31 December 2019
1. Taxation
2019 2018
GBP GBP
Recognised in the income statement
Current UK tax expense 303,891 -
Foreign tax (30,978) (103,819)
Adjustment in respect of prior tax years
foreign 7,722 (9,770)
In respect of prior years 211,129 (5)
----------------------------- ----------------------------
491,764 (113,594)
Deferred tax expense relating to origination
and reversal of temporary differences
Deferred tax prior year adjustment (235,500) 84,463
(121,175) -
Exchange rate difference (1,277) (3,581)
----------------------------- ----------------------------
Total P&L tax credit / (expense) 133,812 (32,712)
----------------------------- ----------------------------
Other Comprehensive Income charge for (165,695) -
the period - Deferred tax
----------------------------- ----------------------------
Reconciliation of effective tax rate
----------------------------- ----------------------------
(Loss)/Profit before tax (1,628,154) 3,178,641
----------------------------- ----------------------------
Tax at the applicable rate of 19.00%
(2018: 19.00%) 309,348 (604,199)
Fixed asset differences (206,322) -
Income not taxable for tax purposes - 598,812
Tax effect of expenses not deductible
in determining taxable profit (262,322) (88,885)
Surrender of tax losses for R&D expenditure (94,311) -
R&D expenditure credits 31,342 -
Additional deduction for R&D expenditure 233,489 365,604
Foreign tax credits (25,495) 30,125
Share Option deduction 27,392 79,933
Effect of different tax rates of subsidiaries
operating in other jurisdictions 74 (21,329)
Effect of lower rate of deferred tax 38,765 9,852
Deferred tax not recognised (68,017) (340,001)
Effect of adjustments for prior years 218,851 (13,351)
Effect of adjustments for prior years (121,175) -
- deferred tax
Deferred tax charged directly to equity 165,695 -
Temporary differences not recognised
in computation (113,564) 10,977
Total tax expense 133,812 (32,712)
============================= ============================
2. Publication of non-statutory accounts
The financial information presented in this announcement does
not constitute the Group's financial statements for either the year
ended 31 December 2019 or the year ended 31 December 2018, but is
derived from those financial statements. The Group's statutory
financial statements for 2018 have been delivered to the Registrar
of Companies and those for 2019 will be delivered following the
Company's annual general meeting. The auditors' reports on both the
2018 and 2019 financial statements were not qualified or modified,
however the 2019 financial statements drew attention to a material
uncertainty in respect of going concern arising from the impact of
the Covid-19 pandemic. The directors' assessment of the uncertainty
is set out in note 3 of the notes to the financial statements as
contained the 2019 Annual Report and Accounts. Following such
assessment, the Directors concluded that it was appropriate to
prepare the financial statements using the 'going concern'
basis.
Copies of the 2019 Annual Report and Accounts will be
distributed to shareholders shortly in accordance with notified
communications preferences and will be available on the Company's
website from 20 April 2020: www.pennantplc.co.uk. Further copies
may be obtained by contacting the Company Secretary at Pennant
Court, Staverton Technology Park, Cheltenham GL51 6TL.
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
FR KKCBKBBKBKQD
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April 20, 2020 02:00 ET (06:00 GMT)
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