Final Results

 

TIDMPEG 
 
RNS Number : 7297K 
Petards Group PLC 
26 April 2010 
 

 
 
                                PETARDS GROUP PLC 
 
                        PRELIMINARY RESULTS ANNOUNCEMENT 
 
Petards Group plc ('Petards'), the AIM quoted developer of advanced security and 
surveillance systems, announces preliminary audited results for the year ended 
31 December 2009, which report a significant growth in profits and cash 
generation. 
 
 
Financial results 
·       Operating profits up 34% to GBP1.3m (2008: GBP0.9m) 
·       Profit before tax up 45% to GBP1.0m (2008: GBP0.7m) 
·       Gross margins up to 38% (2008: 32%) 
·       Strong operating cash inflows GBP2.0m (2008: GBP0.5m) 
·       Net debt significantly reduced to GBP0.7m as at 31 December 2009 (Dec 
2008: GBP2.2m) 
·       Basic and diluted EPS of 0.17p (2008: 0.16p) 
·       Term of GBP1.45m bank loan now extended through to December 2012 
 
Other highlights 
·      Orders worth GBP4m from train builders for eyeTrain on new build trains 
·      GBP3m eyeTrain order from East Coast Trains for major train refurbishment 
project 
·      Growing penetration of new geographic markets including mainland Europe 
and the Middle East 
·      GBP2.5m order for electronic countermeasures for MoD helicopters 
substantially completed 
·      Continued investment in eyeTrain and ProVida product ranges 
 
Commenting on the current outlook, Tim Wightman, Chairman, said: 
"Our pipeline of sales opportunities across our business continues to increase 
and we are confident that the markets in which we operate will continue to 
expand. 
 
The degree of uncertainty over UK Government actions that may be taken post the 
forthcoming election may well affect spending by our UK customers. 
While your Board remains confident for the future, its expectation is for modest 
progress in 2010". 
 
Contacts 
+------------------------------+------------------------------+ 
| Petards Group plc            | www.petards.com              | 
+------------------------------+------------------------------+ 
| Andy Wonnacott, Finance      | Tel: [phone]           | 
| Director                     |                              | 
+------------------------------+------------------------------+ 
|                              |                              | 
+------------------------------+------------------------------+ 
| WH Ireland Limited           | www.wh-ireland.co.uk         | 
+------------------------------+------------------------------+ 
| Mike Coe, Marc Davies        | Tel:  [phone]          | 
+------------------------------+------------------------------+ 
|                              |                              | 
+------------------------------+------------------------------+ 
| Walbrook PR Limited          | Tel: [phone]           | 
+------------------------------+------------------------------+ 
| Paul McManus                 | Mob: [phone]           | 
+------------------------------+------------------------------+ 
|                              | [e-mail]  | 
+------------------------------+------------------------------+ 
 
 
Chairman's statement 
 
Overview 
 
It is my pleasure to report on the continued progress made over the course of 
the past financial year in which the Group made a profit before tax of GBP1.0m 
(2008: GBP0.7m) and generated an operating cash inflow of GBP2.0m (2008: 
GBP0.5m). 
 
Results 
 
Operating profitability for the year was significantly ahead of the previous 
year at GBP1.3m (2008: GBP0.9m) albeit on lower revenues of GBP15.9m (2008: 
GBP18.9m). 
 
The increase in operating profits arose from an improvement in gross margins 
over both 2008 and the first half of 2009.  Gross margins for the year were 38% 
(2008: 32%).  This more than offset the year-on-year reduction in revenues which 
was due to a different phasing of customer deliveries for eyeTrain products 
influenced by train refurbishment programme schedules. 
 
Overall administrative expenses reduced by 5% to GBP4.8m (2008: GBP5.0m) 
reflecting the full year benefit of actions taken in 2008. 
 
Net financial expenses were GBP0.2m (2008: GBP0.2m) and included a foreign 
exchange loss of GBP0.1m (2008: GBP0.1m foreign exchange gain). 
 
Profits after tax were GBP1.1m (2008: GBP1.0m) and included a net tax credit of 
GBP0.1m (2008: GBP0.3m). 
 
Cash and Balance Sheet 
 
The strong operating cashflow achieved in the first half of the year continued 
and the Group generated an operating cash inflow of GBP2.0m for the year (2008: 
GBP0.5m).  This exceptional performance was aided by the early receipt of over 
GBP1m of customer payments related to December revenues.  Consequently net debt 
at 31 December 2009 was lower than expected at GBP0.7m (2008: GBP2.2m). 
 
Our financial position was further strengthened by new banking arrangements that 
were put in place in December 2009.  Our existing term loan was extended and now 
expires on 31 December 2012.  Total repayments in 2010 under the revised loan 
facility will be GBP0.4m as compared with GBP1.45m under the previous 
arrangement.  At the same time, our GBP1.75m working capital facility was 
renewed for a further year.  Interest margins on both facilities remain the same 
as before.  The additional working capital that is now available will help the 
Group realise its future plans. 
 
The work to improve the Group's balance sheet continues and by 31 December 2009 
the deficit on equity had reduced to GBP0.3m (2008: GBP1.6m deficit). 
 
Business review 
 
We were pleased with the progress that was made during the year towards our 
objectives of growing our overseas customer base and to invest in developing our 
products. 
 
During 2009 our UK business was successful in growing both its revenues and 
orders won from customers outside of the UK for its eyeTrain and ProVida product 
ranges.  Revenues from overseas customers increased from 12% to 18% of total 
revenue and the momentum is steadily growing. 
 
Our current generation of eyeTrain digital CCTV systems were developed with a 
view to them being equally competitive for use on new build trains, metro and 
tram vehicles. Hyundai Rotem's GBP1m order was the first we received for these 
systems, which are to be fitted to their new Matangi Electrical Multiple Unit 
(EMU) cars being sold to New Zealand.  When I last reported to you in September 
I said that I hoped to be able to report further progress in penetrating the new 
build market.  Since then we have announced that we have secured further orders 
totalling approximately GBP2.5m for systems to be fitted to new build vehicles 
from Bombardier Transportation for their Electrostar EMU trains, Construcciones 
y Auxiliar de Ferrocarriles S.A (CAF) of Spain for their Class 4000 trains and 
Alstom Ferroviaria S.p.A of Italy for their Pendalino trains. 
 
We have been providing digital onboard CCTV systems for the mainline rail market 
for many years and have a leading presence in the UK for such systems being 
fitted to trains undergoing refurbishment.  Our continued success was 
demonstrated by the order from East Coast Trains for over GBP3m in the first 
half year for the supply and installation of eyeTrain systems to over 390 
passenger vehicles as well as forward facing cameras on two classes of 
locomotives. 
 
In addition to the GBP0.4m order for Provida systems for the Italian Carabinieri 
that was received in the first half of the year, orders taken included our first 
major sale to the Gulf State region for Automatic Number Plate Recognition 
("ANPR") cameras to be fitted on a new fleet of police traffic cars.  The order, 
worth over GBP0.5m, will result in each of the cars having Petards cameras 
fitted providing a 360  reading capability. 
 
The common thread throughout our product range is our expertise in the provision 
of ruggedised specialist electronic systems.  Our products and services for 
defence applications are no different.  Although there have been notable 
exceptions in the past with large one off sales to France and Norway, these are 
mainly sold to UK customers.  However we have started to identify opportunities 
with overseas suppliers of military equipment and we hope that this will 
translate into orders over the medium term. 
 
While we expected revenues from electronic countermeasures systems to be lower 
in 2009, a GBP2.5m order from the MoD for systems that they are retrofitting to 
helicopters in their fleet was substantially completed during the period.  Sales 
to non-MoD customers such as Agusta Westland were also made in the year. 
 
Post design engineering services provided to the MoD by the business for both 
electronic warfare and communications applications continue to provide a useful 
ongoing revenue stream. 
 
As well as continuing to develop eyeTrainand broaden our offering of similar 
electrical on-board sub-systems, we expect to make sales later in 2010 of new 
products in our ProVida range that were developed in 2009.  These include a new 
in-car speed detection and video system and new digital recording systems. 
 
Our US operation, which was restructured in 2008 following the disposal of our 
UK software products business, continues to support its existing UVMS customers 
under our license agreement with BAE Systems.  We do not anticipate this will be 
a significant area of our business going forward. 
 
The Board 
 
After serving as a non-executive director for over six years, David Mills is 
retiring by rotation at the Annual General Meeting and will not be seeking 
re-election as a director.  I should like to thank David for his contribution 
during his time with Petards and we wish him every success in the future. 
 
Employees 
 
Once again, our employees' hard work and commitment enabled us to make good 
progress towards our objectives and I would like to thank all of them for their 
efforts, and in particular for their achievements in a very busy final quarter 
of 2009. 
 
Share capital 
 
The Board has been considering proposals to rationalise the Company's share 
capital by way of a simple share consolidation and sub-division and will issue 
proposals shortly for consideration by shareholders at the time of the Annual 
General Meeting in June. 
 
Outlook 
 
The outcome for 2009 was ahead of our expectations, our pipeline of sales 
opportunities across our business continues to increase and we are confident 
that the markets in which we operate will continue to expand.  However, the poor 
state of government finances around the world and low economic growth is of 
concern.  Recent examples of programmes being delayed by the UK government are 
the Intercity Express rail programme and the Warrior (armoured vehicle) 
Capability Sustainment Programme both of which are projects in which we would 
hope to participate. 
 
The degree of uncertainty over UK Government actions that may be taken post the 
forthcoming election may well affect spending by our UK customers. Overseas we 
are seeing a less marked effect, perhaps because we are growing from a small 
historic base and the markets are large.  In order to be in a position to 
capitalise on these and other opportunities when they present themselves, we 
shall continue to invest in our business and product development activities over 
the course of 2010. 
 
While your Board remains confident for the future, its expectation is for modest 
progress in 2010. 
 
Tim Wightman 
Chairman 
 
                    23 April 2010 
 
Consolidated Income Statement 
for year ended 31 December 2009 
+-----------------------------------------------+------+---------+----------+ 
|                                               | Note |    2009 |     2008 | 
+-----------------------------------------------+------+---------+----------+ 
|                                               |      |  GBP000 |   GBP000 | 
+-----------------------------------------------+------+---------+----------+ 
|                                               |      |         |          | 
+-----------------------------------------------+------+---------+----------+ 
| Revenue                                       |    2 |  15,946 |   18,862 | 
+-----------------------------------------------+------+---------+----------+ 
| Cost of sales                                 |      | (9,908) | (12,887) | 
+-----------------------------------------------+------+---------+----------+ 
|                                               |      |         |          | 
+-----------------------------------------------+------+---------+----------+ 
| Gross profit                                  |      |   6,038 |    5,975 | 
+-----------------------------------------------+------+---------+----------+ 
| Administrative expenses                       |      | (4,770) |  (5,031) | 
+-----------------------------------------------+------+---------+----------+ 
|                                               |      |         |          | 
+-----------------------------------------------+------+---------+----------+ 
| Operating profit                              |      |   1,268 |      944 | 
+-----------------------------------------------+------+---------+----------+ 
| Financial income                              |      |      14 |      147 | 
+-----------------------------------------------+------+---------+----------+ 
| Financial expenses                            |      |   (262) |    (387) | 
+-----------------------------------------------+------+---------+----------+ 
|                                               |      |         |          | 
+-----------------------------------------------+------+---------+----------+ 
| Profit before tax                             |      |   1,020 |      704 | 
+-----------------------------------------------+------+---------+----------+ 
| Income tax                                    |    3 |      88 |      296 | 
+-----------------------------------------------+------+---------+----------+ 
|                                               |      |         |          | 
+-----------------------------------------------+------+---------+----------+ 
| Profit for the year attributable to equity    |      |   1,108 |    1,000 | 
| shareholders of the parent                    |      |         |          | 
+-----------------------------------------------+------+---------+----------+ 
|                                               |      |         |          | 
+-----------------------------------------------+------+---------+----------+ 
|                                               |      |         |          | 
+-----------------------------------------------+------+---------+----------+ 
| Basic and diluted earnings per share (pence)  |    4 |    0.17 |     0.16 | 
+-----------------------------------------------+------+---------+----------+ 
|                                               |      |         |          | 
+-----------------------------------------------+------+---------+----------+ 
|                                               |      |         |          | 
+-----------------------------------------------+------+---------+----------+ 
 
Consolidated Statement of Comprehensive Income 
for year ended 31 December 2009 
 
+-------------------------------+--+----+----+----+----+--------+--------+ 
|                               |  |    |    |    |    |   2009 |   2008 | 
+-------------------------------+--+----+----+----+----+--------+--------+ 
|                               |  |    |    |    |    | GBP000 | GBP000 | 
+-------------------------------+--+----+----+----+----+--------+--------+ 
|                               |  |    |    |    |    |        |        | 
+-------------------------------+--+----+----+----+----+--------+--------+ 
| Profit for the year           |  |    |    |    |    |  1,108 |  1,000 | 
+-------------------------------+--+----+----+----+----+--------+--------+ 
|                               |  |    |    |    |    |        |        | 
+-------------------------------+--+----+----+----+----+--------+--------+ 
| Other comprehensive income    |  |    |    |    |    |        |        | 
+-------------------------------+--+----+----+----+----+--------+--------+ 
| Currency translation on       |  |    |    |    |    |    127 |  (317) | 
| foreign currency net          |  |    |    |    |    |        |        | 
| investments                   |  |    |    |    |    |        |        | 
+-------------------------------+--+----+----+----+----+--------+--------+ 
|                               |  |    |    |    |    |        |        | 
+-------------------------------+--+----+----+----+----+--------+--------+ 
| Total comprehensive income    |  |    |    |    |    |  1,235 |    683 | 
| for the year                  |  |    |    |    |    |        |        | 
+-------------------------------+--+----+----+----+----+--------+--------+ 
|                               |  |    |    |    |    |        |        | 
+-------------------------------+--+----+----+----+----+--------+--------+ 
 
 
 
Statements of Changes in Equity 
for year ended 31 December 2009 
+--------------------------+---------+---------+----------+-------------+---------+ 
|                          |         |         |          |    Currency |         | 
|                          |   Share |   Share | Retained | translation |   Total | 
|                          | capital | premium | earnings | differences |  equity | 
+--------------------------+---------+---------+----------+-------------+---------+ 
|                          |  GBP000 |  GBP000 |   GBP000 |      GBP000 |  GBP000 | 
+--------------------------+---------+---------+----------+-------------+---------+ 
|                          |         |         |          |             |         | 
+--------------------------+---------+---------+----------+-------------+---------+ 
| Balance at 1 January     |   6,367 |  23,255 | (31,907) |           - | (2,285) | 
| 2008                     |         |         |          |             |         | 
+--------------------------+---------+---------+----------+-------------+---------+ 
|                          |         |         |          |             |         | 
+--------------------------+---------+---------+----------+-------------+---------+ 
| Profit for the year      |       - |       - |    1,000 |           - |   1,000 | 
+--------------------------+---------+---------+----------+-------------+---------+ 
| Other comprehensive      |       - |       - |        - |       (317) |   (317) | 
| income                   |         |         |          |             |         | 
+--------------------------+---------+---------+----------+-------------+---------+ 
|                          |         |         |          |             |         | 
+--------------------------+---------+---------+----------+-------------+---------+ 
| Total comprehensive      |       - |       - |    1,000 |       (317) |     683 | 
| income for the year      |         |         |          |             |         | 
+--------------------------+---------+---------+----------+-------------+---------+ 
| Equity-settled share     |       - |       - |       41 |           - |      41 | 
| based payments           |         |         |          |             |         | 
+--------------------------+---------+---------+----------+-------------+---------+ 
|                          |         |         |          |             |         | 
+--------------------------+---------+---------+----------+-------------+---------+ 
| Balance at 31 December   |   6,367 |  23,255 | (30,866) |       (317) | (1,561) | 
| 2008                     |         |         |          |             |         | 
+--------------------------+---------+---------+----------+-------------+---------+ 
|                          |         |         |          |             |         | 
+--------------------------+---------+---------+----------+-------------+---------+ 
|                          |         |         |          |             |         | 
+--------------------------+---------+---------+----------+-------------+---------+ 
| Balance at 1 January     |   6,367 |  23,255 | (30,866) |       (317) | (1,561) | 
| 2009                     |         |         |          |             |         | 
+--------------------------+---------+---------+----------+-------------+---------+ 
|                          |         |         |          |             |         | 
+--------------------------+---------+---------+----------+-------------+---------+ 
| Profit for the year      |       - |       - |    1,108 |           - |   1,108 | 
+--------------------------+---------+---------+----------+-------------+---------+ 
| Other comprehensive      |       - |       - |        - |         127 |     127 | 
| income                   |         |         |          |             |         | 
+--------------------------+---------+---------+----------+-------------+---------+ 
|                          |         |         |          |             |         | 
+--------------------------+---------+---------+----------+-------------+---------+ 
| Total comprehensive      |       - |       - |    1,108 |         127 |   1,235 | 
| income for the year      |         |         |          |             |         | 
+--------------------------+---------+---------+----------+-------------+---------+ 
| Equity-settled share     |       - |       - |       34 |           - |      34 | 
| based payments           |         |         |          |             |         | 
+--------------------------+---------+---------+----------+-------------+---------+ 
|                          |         |         |          |             |         | 
+--------------------------+---------+---------+----------+-------------+---------+ 
| Balance at 31 December   |   6,367 |  23,255 | (29,724) |       (190) |   (292) | 
| 2009                     |         |         |          |             |         | 
+--------------------------+---------+---------+----------+-------------+---------+ 
|                          |         |         |          |             |         | 
+--------------------------+---------+---------+----------+-------------+---------+ 
Consolidated Balance Sheet 
at 31 December 2009 
+-----------------------------+-----+--------+--------+----------+----------+ 
|                             |     |        |        |    2009  |     2008 | 
+-----------------------------+-----+--------+--------+----------+----------+ 
|                             |     |        |        |   GBP000 |   GBP000 | 
+-----------------------------+-----+--------+--------+----------+----------+ 
|                             |     |        |        |          |          | 
+-----------------------------+-----+--------+--------+----------+----------+ 
| ASSETS                      |     |        |        |          |          | 
+-----------------------------+-----+--------+--------+----------+----------+ 
| Non-current assets          |     |        |        |          |          | 
+-----------------------------+-----+--------+--------+----------+----------+ 
| Property, plant and         |     |        |        |      267 |      339 | 
| equipment                   |     |        |        |          |          | 
+-----------------------------+-----+--------+--------+----------+----------+ 
| Goodwill                    |     |        |        |      401 |      401 | 
+-----------------------------+-----+--------+--------+----------+----------+ 
| Development costs           |     |        |        |      621 |      345 | 
+-----------------------------+-----+--------+--------+----------+----------+ 
| Deferred tax assets         |     |        |        |      356 |      310 | 
+-----------------------------+-----+--------+--------+----------+----------+ 
|                             |     |        |        |          |          | 
+-----------------------------+-----+--------+--------+----------+----------+ 
|                             |     |        |        |    1,645 |    1,395 | 
+-----------------------------+-----+--------+--------+----------+----------+ 
|                             |     |        |        |          |          | 
+-----------------------------+-----+--------+--------+----------+----------+ 
| Current assets              |     |        |        |          |          | 
+-----------------------------+-----+--------+--------+----------+----------+ 
| Inventories                 |     |        |        |      941 |    1,373 | 
+-----------------------------+-----+--------+--------+----------+----------+ 
| Trade and other receivables |     |        |        |    3,450 |    2,635 | 
+-----------------------------+-----+--------+--------+----------+----------+ 
| Cash and cash equivalents   |     |        |        |      701 |      268 | 
+-----------------------------+-----+--------+--------+----------+----------+ 
|                             |     |        |        |          |          | 
+-----------------------------+-----+--------+--------+----------+----------+ 
|                             |     |        |        |    5,092 |    4,276 | 
+-----------------------------+-----+--------+--------+----------+----------+ 
|                             |     |        |        |          |          | 
+-----------------------------+-----+--------+--------+----------+----------+ 
| Total assets                |     |        |        |    6,737 |    5,671 | 
+-----------------------------+-----+--------+--------+----------+----------+ 
|                             |     |        |        |          |          | 
+-----------------------------+-----+--------+--------+----------+----------+ 
| EQUITY AND LIABILITIES      |     |        |        |          |          | 
+-----------------------------+-----+--------+--------+----------+----------+ 
| Equity attributable to equity     |        |        |          |          | 
| holders of the parent             |        |        |          |          | 
+-----------------------------------+--------+--------+----------+----------+ 
| Share capital               |     |        |        |    6,367 |    6,367 | 
+-----------------------------+-----+--------+--------+----------+----------+ 
| Share premium               |     |        |        |   23,255 |   23,255 | 
+-----------------------------+-----+--------+--------+----------+----------+ 
| Currency translation        |     |        |        |    (190) |    (317) | 
| reserve                     |     |        |        |          |          | 
+-----------------------------+-----+--------+--------+----------+----------+ 
| Retained earnings deficit   |     |        |        | (29,724) | (30,866) | 
+-----------------------------+-----+--------+--------+----------+----------+ 
|                             |     |        |        |          |          | 
+-----------------------------+-----+--------+--------+----------+----------+ 
| Total equity                |     |        |        |    (292) |  (1,561) | 
+-----------------------------+-----+--------+--------+----------+----------+ 
|                             |     |        |        |          |          | 
+-----------------------------+-----+--------+--------+----------+----------+ 
| Non-current liabilities     |     |        |        |          |          | 
+-----------------------------+-----+--------+--------+----------+----------+ 
| Interest-bearing loans and  |     |        |        |    1,050 |    1,756 | 
| borrowings                  |     |        |        |          |          | 
+-----------------------------+-----+--------+--------+----------+----------+ 
| Deferred tax liabilities    |     |        |        |       66 |        - | 
+-----------------------------+-----+--------+--------+----------+----------+ 
|                             |     |        |        |          |          | 
+-----------------------------+-----+--------+--------+----------+----------+ 
|                             |     |        |        |    1,116 |    1,756 | 
+-----------------------------+-----+--------+--------+----------+----------+ 
|                             |     |        |        |          |          | 
+-----------------------------+-----+--------+--------+----------+----------+ 
| Current liabilities         |     |        |        |          |          | 
+-----------------------------+-----+--------+--------+----------+----------+ 
| Interest-bearing loans and  |     |        |        |      400 |      675 | 
| borrowings                  |     |        |        |          |          | 
+-----------------------------+-----+--------+--------+----------+----------+ 
| Trade and other payables    |     |        |        |    5,513 |    4,801 | 
+-----------------------------+-----+--------+--------+----------+----------+ 
|                             |     |        |        |          |          | 
+-----------------------------+-----+--------+--------+----------+----------+ 
|                             |     |        |        |    5,913 |    5,476 | 
+-----------------------------+-----+--------+--------+----------+----------+ 
|                             |     |        |        |          |          | 
+-----------------------------+-----+--------+--------+----------+----------+ 
| Total liabilities           |     |        |        |    7,029 |    7,232 | 
+-----------------------------+-----+--------+--------+----------+----------+ 
|                             |     |        |        |          |          | 
+-----------------------------+-----+--------+--------+----------+----------+ 
| Total equity and            |     |        |        |    6,737 |    5,671 | 
| liabilities                 |     |        |        |          |          | 
+-----------------------------+-----+--------+--------+----------+----------+ 
|                             |     |        |        |          |          | 
+-----------------------------+-----+--------+--------+----------+----------+ 
Consolidated Statement of Cash Flows 
for year ended 31 December 2009 
+----------------------------+------+------+-+-----+--+--------+----------+--------+----------+ 
|                            |      |        |        |   2009 |              2008 |          | 
+----------------------------+------+--------+--------+--------+-------------------+----------+ 
|                            |      |        |        | GBP000 |            GBP000 |          | 
+----------------------------+------+--------+--------+--------+-------------------+----------+ 
|                            |      |        |        |        |                   |          | 
+----------------------------+------+--------+--------+--------+-------------------+----------+ 
| Cash flows from operating  |      |        |        |        |                   |          | 
| activities                 |      |        |        |        |                   |          | 
+----------------------------+------+--------+--------+--------+-------------------+----------+ 
| Profit for the year        |      |        |        |  1,108 |             1,000 |          | 
+----------------------------+------+--------+--------+--------+-------------------+----------+ 
| Adjustments for:           |      |        |        |        |                   |          | 
+----------------------------+------+--------+--------+--------+-------------------+----------+ 
| Depreciation               |      |        |        |    180 |               208 |          | 
+----------------------------+------+--------+--------+--------+-------------------+----------+ 
| Amortisation of intangible |      |        |        |    206 |                73 |          | 
| assets                     |      |        |        |        |                   |          | 
+----------------------------+------+--------+--------+--------+-------------------+----------+ 
| Financial income           |      |        |        |   (14) |             (147) |          | 
+----------------------------+------+--------+--------+--------+-------------------+----------+ 
| Financial expense          |      |        |        |    262 |               387 |          | 
+----------------------------+------+--------+--------+--------+-------------------+----------+ 
| Loss on sale of property,  |      |        |        |      - |                 9 |          | 
| plant and equipment        |      |        |        |        |                   |          | 
+----------------------------+------+--------+--------+--------+-------------------+----------+ 
| Equity settled share-based |      |        |        |     34 |                41 |          | 
| payment expenses           |      |        |        |        |                   |          | 
+----------------------------+------+--------+--------+--------+-------------------+----------+ 
| Income tax credit          |      |        |        |   (88) |             (296) |          | 
+----------------------------+------+--------+--------+--------+-------------------+----------+ 
|                            |      |        |        |        |                   |          | 
+----------------------------+------+--------+--------+--------+-------------------+----------+ 
|                            |      |        |        |  1,688 |             1,275 |          | 
+----------------------------+------+--------+--------+--------+-------------------+----------+ 
| Change in trade and other  |      |        |        |  (822) |               746 |          | 
| receivables                |      |        |        |        |                   |          | 
+----------------------------+------+--------+--------+--------+-------------------+----------+ 
| Change in inventories      |      |        |        |    432 |                46 |          | 
+----------------------------+------+--------+--------+--------+-------------------+----------+ 
| Change in trade and other  |      |        |        |    800 |           (1,389) |          | 
| payables                   |      |        |        |        |                   |          | 
+----------------------------+------+--------+--------+--------+-------------------+----------+ 
| Change in provisions       |      |        |        |      - |              (11) |          | 
+----------------------------+------+--------+--------+--------+-------------------+----------+ 
|                            |      |        |        |        |                   |          | 
+----------------------------+------+--------+--------+--------+-------------------+----------+ 
|                            |      |        |        |  2,098 |               667 |          | 
+----------------------------+------+--------+--------+--------+-------------------+----------+ 
| Interest received          |      |        |        |     14 |               147 |          | 
+----------------------------+------+--------+--------+--------+-------------------+----------+ 
| Interest paid              |      |        |        |  (287) |             (407) |          | 
+----------------------------+------+--------+--------+--------+-------------------+----------+ 
| Income tax received        |      |        |        |    205 |                56 |          | 
+----------------------------+------+--------+--------+--------+-------------------+----------+ 
|                            |      |        |        |        |                   |          | 
+----------------------------+------+--------+--------+--------+-------------------+----------+ 
| Net cash generated from    |      |        |        |  2,030 |               463 |          | 
| operating activities       |      |        |        |        |                   |          | 
+----------------------------+------+--------+--------+--------+-------------------+----------+ 
|                            |      |        |        |        |                   |          | 
+----------------------------+------+--------+--------+--------+-------------------+----------+ 
| Cash flows from investing  |      |        |        |        |                   |          | 
| activities                 |      |        |        |        |                   |          | 
+----------------------------+------+--------+--------+--------+-------------------+----------+ 
| Proceeds from sale of      |      |        |        |        |                   |          | 
| property, plant and        |      |        |        |      - |                 5 |          | 
| equipment                  |      |        |        |        |                   |          | 
+----------------------------+------+--------+--------+--------+-------------------+----------+ 
| Disposal of business (see  |      |        |        |      - |             2,400 |          | 
| below)                     |      |        |        |        |                   |          | 
+----------------------------+------+--------+--------+--------+-------------------+----------+ 
| Acquisition of property,   |      |        |        |  (110) |              (99) |          | 
| plant and equipment        |      |        |        |        |                   |          | 
+----------------------------+------+--------+--------+--------+-------------------+----------+ 
| Capitalised development    |      |        |        |  (482) |             (358) |          | 
| expenditure                |      |        |        |        |                   |          | 
+----------------------------+------+--------+--------+--------+-------------------+----------+ 
|                            |      |        |        |        |                   |          | 
+----------------------------+------+--------+--------+--------+-------------------+----------+ 
| Net cash (outflow)/inflow  |      |        |        |        |                   |          | 
| from investing             |      |        |        |  (592) |             1,948 |          | 
|    activities              |      |        |        |        |                   |          | 
+----------------------------+------+--------+--------+--------+-------------------+----------+ 
|                            |      |        |        |        |                   |          | 
+----------------------------+------+--------+--------+--------+-------------------+----------+ 
| Cash flows from financing  |      |      |       |                      |                   | 
| activities                 |      |      |       |                      |                   | 
+----------------------------+------+------+-------+----------------------+-------------------+ 
| (Decrease)/increase on     |      |      |       |                      |                   | 
| committed overdraft        |      |      |       |                (356) |               356 | 
| facility                   |      |      |       |                      |                   | 
+----------------------------+------+------+-------+----------------------+-------------------+ 
| Repayment of borrowings    |      |      |       |                (625) |           (1,990) | 
+----------------------------+------+------+-------+----------------------+-------------------+ 
| Payment of finance lease   |      |      |       |                    - |               (8) | 
| liabilities                |      |      |       |                      |                   | 
+----------------------------+------+------+-------+----------------------+-------------------+ 
|                            |      |      |       |                      |                   | 
+----------------------------+------+------+-------+----------------------+-------------------+ 
| Net cash outflow from      |      |      |       |                (981) |           (1,642) | 
| financing activities       |      |      |       |                      |                   | 
+----------------------------+------+------+-------+----------------------+-------------------+ 
|                            |      |      |       |                      |                   | 
+----------------------------+------+------+-------+----------------------+-------------------+ 
| Net increase in cash and   |      |      |       |                  457 |               769 | 
| cash equivalents           |      |      |       |                      |                   | 
+----------------------------+------+------+-------+----------------------+-------------------+ 
| Cash and cash equivalents  |      |      |       |                  268 |             (580) | 
| at 1 January               |      |      |       |                      |                   | 
+----------------------------+------+------+-------+----------------------+-------------------+ 
| Effect of exchange rate    |      |      |       |                 (24) |                79 | 
| fluctuations on cash held  |      |      |       |                      |                   | 
+----------------------------+------+------+-------+----------------------+-------------------+ 
|                            |      |      |       |                      |                   | 
+----------------------------+------+------+-------+----------------------+-------------------+ 
| Cash and cash equivalents  |      |      |       |                  701 |               268 | 
| at 31 December             |      |      |       |                      |                   | 
+----------------------------+------+------+-------+----------------------+-------------------+ 
|                            |      |      |       |                      |                   | 
+----------------------------+------+------+-------+----------------------+-------------------+ 
|                            |      |      | |     |  |        |          |        |          | 
+----------------------------+------+------+-+-----+--+--------+----------+--------+----------+ 
The receipt of GBP2,400,000 from the disposal of the UK software products 
business on 21 December 2007 was held in a separate bank account at 31 December 
2007 and was not available for use by the Group or Company at that time.  This 
amount was excluded from cash and cash equivalents as disclosed in the 2007 
Consolidated Statement of Cash Flows on the basis that it was not available for 
use by either the Group or Company at that time.  The GBP2,400,000 was 
recognised as a cash inflow in the 2008 Consolidated Statement of Cash Flows 
when it was released from escrow. 
1              Basis of preparation and status of financial information 
The preliminary announcement has been prepared in accordance with the 
recognition and measurement principles of International Financial Reporting 
Standards as adopted by the EU ("adopted IFRSs"), IFRIC interpretations and the 
Companies Act 2006 applicable to companies reporting under IFRS. It does not 
include all the information required for full annual accounts. 
The financial information set out below does not constitute the Company's 
statutory accounts for the years ended 31 December 2009 or 31 December 2008. The 
financial information for 2008 is derived from the statutory accounts for 2008 
which have been delivered to the registrar of companies, and those for 2009 will 
be delivered in due course. The auditors have reported on those accounts; their 
reports were (i) unqualified, (ii) did not include a reference to any matters to 
which the auditors drew attention by way of emphasis without qualifying their 
report and (iii) did not contain a statement under section 237 (2) or (3) of the 
Companies Act 1985 in respect of the accounts for 2008 nor a statement under 
section 498 (2) or (3) of the Companies Act 2006 in respect of the accounts for 
2009. 
 
2              Segmental information 
The introduction of IFRS 8 Operating segments, which is effective for accounting 
periods beginning on or after 1 January 2009, has required a reassessment of the 
reportable segments within the Group. The analysis by geographic segment is 
presented in accordance with IFRS 8 on the basis of those segments whose 
operating results are regularly reviewed by the Board of Directors (the Chief 
Operating Decision Maker as defined by IFRS 8) to make strategic decisions. 
 
The Board of Directors consider the business from a geographic perspective, with 
consideration of the performance of its UK and US operations. 
 
The directors consider the Group to have only one segment in terms of products 
and services, being the development, supply and maintenance of technologies used 
in advanced security, surveillance and ruggedised electronic applications.   An 
analysis of segmental information by geographical component is set out below. 
This information is presented by geography of revenue by source.  There are no 
inter segment transactions. 
 
As the Board of Directors receives segment revenue and operating profit/(loss) 
on the same basis as for the statutory financial statements no further 
reconciliation is considered to be necessary. 
 
+------------------------+------------------+---------------------+---------+--------------------+---------+--------------------+ 
|                        |                      UK                |                   USA        |               Total          | 
+------------------------+----------------------------------------+------------------------------+------------------------------+ 
|                        |             2009 |                2008 |    2009 |               2008 |    2009 |               2008 | 
+------------------------+------------------+---------------------+---------+--------------------+---------+--------------------+ 
|                        |           GBP000 |              GBP000 |  GBP000 |             GBP000 |  GBP000 |             GBP000 | 
+------------------------+------------------+---------------------+---------+--------------------+---------+--------------------+ 
|                        |                  |                     |         |                    |         |                    | 
+------------------------+------------------+---------------------+---------+--------------------+---------+--------------------+ 
| Segment revenue        |           15,783 |              18,056 |     163 |                806 |  15,946 |             18,862 | 
+------------------------+------------------+---------------------+---------+--------------------+---------+--------------------+ 
|                        |                  |                     |         |                    |         |                    | 
+------------------------+------------------+---------------------+---------+--------------------+---------+--------------------+ 
| Segment operating      |                  |                     |         |                    |         |                    | 
| profit/(loss) before   |            1,660 |               1,214 |     (6) |                 11 |   1,654 |              1,225 | 
| amortisation and       |                  |                     |         |                    |         |                    | 
| depreciation           |                  |                     |         |                    |         |                    | 
+------------------------+------------------+---------------------+---------+--------------------+---------+--------------------+ 
| Depreciation of        |            (173) |               (173) |     (7) |               (35) |   (180) |              (208) | 
| tangible fixed assets  |                  |                     |         |                    |         |                    | 
+------------------------+------------------+---------------------+---------+--------------------+---------+--------------------+ 
| Amortisation of        |            (206) |                (73) |       - |                  - |   (206) |               (73) | 
| intangible fixed       |                  |                     |         |                    |         |                    | 
| assets                 |                  |                     |         |                    |         |                    | 
+------------------------+------------------+---------------------+---------+--------------------+---------+--------------------+ 
|                        |                  |                     |         |                    |         |                    | 
+------------------------+------------------+---------------------+---------+--------------------+---------+--------------------+ 
| Segment operating      |            1,281 |                 968 |    (13) |               (24) |   1,268 |                944 | 
| profit/(loss)          |                  |                     |         |                    |         |                    | 
+------------------------+------------------+---------------------+---------+--------------------+---------+--------------------+ 
|                        |                  |                     |         |                    |         |                    | 
+------------------------+------------------+---------------------+---------+--------------------+---------+--------------------+ 
| Financial income       |                  |                     |         |                    |      14 |                147 | 
+------------------------+------------------+---------------------+---------+--------------------+---------+--------------------+ 
| Financial expenses     |                  |                     |         |                    |   (262) |              (387) | 
+------------------------+------------------+---------------------+---------+--------------------+---------+--------------------+ 
|                        |                  |                     |         |                    |         |                    | 
+------------------------+------------------+---------------------+---------+--------------------+---------+--------------------+ 
| Statutory profit       |                  |                     |         |                    |   1,020 |                704 | 
| before tax             |                  |                     |         |                    |         |                    | 
+------------------------+------------------+---------------------+---------+--------------------+---------+--------------------+ 
|                        |                  |                     |         |                    |         |                    | 
+------------------------+------------------+---------------------+---------+--------------------+---------+--------------------+ 
| Segment assets         |            6,534 |               5,245 |     203 |                426 |   6,737 |              5,671 | 
+------------------------+------------------+---------------------+---------+--------------------+---------+--------------------+ 
| Segment liabilities    |          (5,851) |             (5,755) | (1,178) |            (1,477) | (7,029) |            (7,232) | 
+------------------------+------------------+---------------------+---------+--------------------+---------+--------------------+ 
|                        |                  |                     |         |                    |         |                    | 
+------------------------+------------------+---------------------+---------+--------------------+---------+--------------------+ 
| Segment net assets /   |         683      |               (510) |   (975) |            (1,051) |   (292) |            (1,561) | 
| (liabilities)          |                  |                     |         |                    |         |                    | 
+------------------------+------------------+---------------------+---------+--------------------+---------+--------------------+ 
|                        |                  |                     |         |                    |         |                    | 
+------------------------+------------------+---------------------+---------+--------------------+---------+--------------------+ 
 
 
 
 
Revenue by geographical destination can be analysed as follows: 
+--------------------------------------------------+--------+----------+-----------+ 
|                                                  |   2009 |          |      2008 | 
+--------------------------------------------------+--------+----------+-----------+ 
|                                                  | GBP000 |          |    GBP000 | 
+--------------------------------------------------+--------+----------+-----------+ 
|                                                  |        |          |           | 
+--------------------------------------------------+--------+----------+-----------+ 
| United Kingdom                                   | 12,993 |          |    15,909 | 
+--------------------------------------------------+--------+----------+-----------+ 
| Continental Europe                               |  1,798 |          |     2,067 | 
+--------------------------------------------------+--------+----------+-----------+ 
| Rest of World                                    |  1,155 |          |       886 | 
+--------------------------------------------------+--------+----------+-----------+ 
|                                                  |        |          |           | 
+--------------------------------------------------+--------+----------+-----------+ 
|                                                  | 15,946 |          |    18,862 | 
+--------------------------------------------------+--------+----------+-----------+ 
|                                                  |        |          |           | 
+--------------------------------------------------+--------+----------+-----------+ 
Included in the above amounts are revenues of GBP3,052,000 (2008: GBP5,073,000) 
in respect of construction contracts.  The balance comprises revenue from sales 
of goods and services. 
 
3              Taxation 
Recognised in the income statement 
+---------------------------+-----------------------+----------+-----------------+----------+ 
|                           |                            2009  |                      2008  | 
+---------------------------+----------------------------------+----------------------------+ 
|                           |                GBP000 |   GBP000 |          GBP000 |   GBP000 | 
+---------------------------+-----------------------+----------+-----------------+----------+ 
|                           |                       |          |                 |          | 
+---------------------------+-----------------------+----------+-----------------+----------+ 
| Current tax               |                       |          |                 |          | 
+---------------------------+-----------------------+----------+-----------------+----------+ 
| Current year tax credit   |                  (52) |          |               - |          | 
+---------------------------+-----------------------+----------+-----------------+----------+ 
| Adjustments in respect of |                  (56) |          |           (231) |          | 
| prior years               |                       |          |                 |          | 
+---------------------------+-----------------------+----------+-----------------+----------+ 
|                           |                       |          |                 |          | 
+---------------------------+-----------------------+----------+-----------------+----------+ 
| Total current tax         |                       |    (108) |                 |    (231) | 
+---------------------------+-----------------------+----------+-----------------+----------+ 
|                           |                       |          |                 |          | 
+---------------------------+-----------------------+----------+-----------------+----------+ 
| Deferred tax              |                       |          |                 |          | 
+---------------------------+-----------------------+----------+-----------------+----------+ 
| Origination and reversal  |                   148 |          |             (8) |          | 
| of temporary differences  |                       |          |                 |          | 
+---------------------------+-----------------------+----------+-----------------+----------+ 
| Recognition of previously |                 (184) |          |            (57) |          | 
| unrecognised tax losses   |                       |          |                 |          | 
+---------------------------+-----------------------+----------+-----------------+----------+ 
| Adjustment in respect of  |                    56 |          |               - |          | 
| prior years               |                       |          |                 |          | 
+---------------------------+-----------------------+----------+-----------------+----------+ 
|                           |                       |          |                 |          | 
+---------------------------+-----------------------+----------+-----------------+----------+ 
| Total deferred tax        |                       |       20 |                 |     (65) | 
+---------------------------+-----------------------+----------+-----------------+----------+ 
|                           |                       |          |                 |          | 
+---------------------------+-----------------------+----------+-----------------+----------+ 
| Total tax credit in       |                       |     (88) |                 |    (296) | 
| income statement          |                       |          |                 |          | 
+---------------------------+-----------------------+----------+-----------------+----------+ 
|                           |                       |          |                 |          | 
+---------------------------+-----------------------+----------+-----------------+----------+ 
The adjustments in respect of prior years principally arise from Research and 
Development tax credits. Claims for these were submitted in 2008 and 2009 but 
related to expenditure in earlier years. 
Reconciliation of effective tax rate 
+-----------------------------------------------+----------+----------+ 
|                                               |    2009  |     2008 | 
+-----------------------------------------------+----------+----------+ 
|                                               |   GBP000 |   GBP000 | 
+-----------------------------------------------+----------+----------+ 
|                                               |          |          | 
+-----------------------------------------------+----------+----------+ 
| Profit for the period                         |    1,020 |      704 | 
+-----------------------------------------------+----------+----------+ 
|                                               |          |          | 
+-----------------------------------------------+----------+----------+ 
| Tax using the UK corporation tax rate of 28%  |      286 |      201 | 
| (2008: 28.5%)                                 |          |          | 
+-----------------------------------------------+----------+----------+ 
| Non-deductible expenses                       |       64 |       37 | 
+-----------------------------------------------+----------+----------+ 
| Non-taxable income                            |     (14) |    (103) | 
+-----------------------------------------------+----------+----------+ 
| Effect of tax losses generated in year not    |        - |       70 | 
| provided for in deferred tax                  |          |          | 
+-----------------------------------------------+----------+----------+ 
| Recognition of previously unrecognised tax    |    (184) |     (57) | 
| losses                                        |          |          | 
+-----------------------------------------------+----------+----------+ 
| Utilisation of tax losses                     |     (58) |     (45) | 
+-----------------------------------------------+----------+----------+ 
| Change in unrecognised temporary differences  |    (111) |    (168) | 
+-----------------------------------------------+----------+----------+ 
| Adjustments in respect of prior years         |        - |    (231) | 
+-----------------------------------------------+----------+----------+ 
| Enhanced deduction for R&D expenditure        |     (71) |        - | 
+-----------------------------------------------+----------+----------+ 
|                                               |          |          | 
+-----------------------------------------------+----------+----------+ 
| Total tax credit                              |     (88) |    (296) | 
+-----------------------------------------------+----------+----------+ 
|                                               |          |          | 
+-----------------------------------------------+----------+----------+ 
For the year ended 31 December 2008, the Group was subject to UK corporation tax 
at a base rate of 30% during the 3 months to 31 March 2008 and 28% from 1 April 
2008 to 31 December 2008. 
 
4              Earnings per share 
The calculation of basic earnings per share for 2009 was based on the profit 
attributable to ordinary shareholders of GBP1,108,000 (2008: GBP1,000,000) 
divided by the weighted average number of ordinary shares outstanding during the 
year ended 31 December 2009 of 636,706,423 (2008: 636,706,423). 
Diluted earnings per share is identical to the basic earnings per share.  None 
of the share options are dilutive as the exercise prices are higher than the 
average market price of the shares. 
 
 
This information is provided by RNS 
            The company news service from the London Stock Exchange 
   END 
 
 FR IJMATMBBTBAM