TIDMPEG
RNS Number : 1082A
Petards Group PLC
28 May 2021
28 May 2021
Petards Group plc
("Petards", "the Group" or "the Company")
Final results for the year ended 31 December 2020
Petards Group plc (AIM: PEG), the AIM quoted developer of
advanced security and surveillance systems, is pleased to report
its final results for the year ended 31 December 2020.
Key Highlights:
-- Operational
o Order book at 31 December 2020: GBP12 million (31 Dec 2019:
GBP15 million)
o 2020 year end order book coverage for 2021 in excess of GBP10
million
o Covid-19 related factors inevitably impacted the year, but
solid progress was made in most areas of the Group
o Accelerated restructuring resulting in a significant reduction
in the on-going cost base
o Q4 order intake recovered to over GBP4 million with the award
of delayed eyeTrain orders from Porterbrook and Bombardier and a
GBP0.8 million ANPR order from a UK police force
o Focus on developing eyeTrain through-life support activities
rewarded with orders for first two support contracts and investment
made to drive forward this area of business
o Record trading performance from QRO which has continued into
2021
o QRO acquisition of NASBox ANPR technology rights for
GBP150,000 cash
o Establishment of Petards Virtual Technology Centre to
capitalise upon the Group's technical and development expertise
-- Financial
o Total revenues GBP13.0 million (2019: GBP15.7 million)
o Gross profit margin 36.4% (2019: 30.8%)
o Adjusted EBITDA* GBP320,000 profit (2019: GBP281,000 loss)
o Operating loss GBP1,145,000 (2019: GBP1,287,000 loss)
o Loss after tax GBP583,000 (2019: GBP193,000 loss)
o Strong cash generation from operating activities GBP2,398,000
(2019: GBP142,000)
o Total net funds (cash less debt) GBP1,179,000 (31 Dec 2019:
GBP525,000 net debt)
o Basic and diluted EPS 1.01p loss (2019: basic and diluted
0.34p loss)
o Post year end secured undrawn GBP2.5 million 3-year CBILS
overdraft facility to May 2024
* Adjusted EBITDA comprises operating profit adjusted to remove
the impact of depreciation, amortisation, exceptional items,
acquisition costs and share based payments. A reconciliation of
Adjusted EBITDA to operating profit is included on the face of the
consolidated income statement.
Commenting on the current outlook, Raschid Abdullah, Chairman,
said:
" The Group entered 2021 in good shape with a reduced cost base
and a strong, cash positive balance sheet. This was recently
supplemented by the replacement of its existing GBP0.75 million
revolving credit facility with an undrawn GBP2.5 million CBILS
3-year overdraft facility, that provides ample capacity to finance
any increased working capital requirements arising from a recovery
in customer new business activity.
"The first four months of 2021 have started well with all
businesses broadly in line or slightly ahead of management
expectations in terms of profitability, and revenues are
anticipated to be weighted towards the first half of the year.
"On 31 December 2020, the Group's order book stood at over GBP12
million, of which GBP10 million is forecast to be delivered this
year giving the Board confidence that 2021 will prove to be a
better year for the Group. "
This announcement includes inside information as defined in
Article 7 of the Market Abuse Regulation No. 596/2014 and is
disclosed in accordance with the Company's obligations under
Article 17 of those Regulations.
Contacts:
Petards Group plc www.petards.com
Raschid Abdullah, Chairman Mb: 07768 905004
WH Ireland Limited, Nomad and www.whirelandcb.com
Joint Broker
Mike Coe, Chris Savidge Tel: 0117 945 3470
Hybridan LLP, Joint Broker www.hybridan.com
Claire Louise Noyce Tel: 020 3764 2341
claire.noyce@hybridan.com
Chairman's statement
As reported in my interim statement of 24 September 2020,
trading was proving extremely challenging, in particular for the
Group's eyeTrain operations, which continued to be the case for the
remainder of the year. However, after a difficult couple of years,
the Board entered 2021 with a high degree of optimism given the
strength of the Group's order book and the expected benefits from
the cost alignment programme commenced in 2019.
Revenues for 2020 were GBP13.0 million (2019: GBP15.7 million),
on which the Group made an adjusted EBITDA* profit of GBP320,000
(2019: GBP281,000 loss), a loss before tax of GBP1,238,000 (2019:
GBP1,462,000 loss) and a loss after tax of GBP583,000 (2019:
GBP193,000 loss).
Net cash generated from operating activities in the year
totalled GBP2,398,000 (2019: GBP142,000) leading to closing cash
balances at 31 December 2020 of GBP2,204,000 (31 Dec 2019:
GBP827,000) and net funds of GBP1,179,000 (31 Dec 2019: GBP525,000
net debt).
Like so many businesses, customers and suppliers alike, it took
a while for the implications of the impact of Covid-19 to be fully
appreciated with customers temporarily closing operational units
and re-scheduling previously committed delivery dates, both often
at very short notice. For Petards, it meant the Board accelerating
its cost alignment programme, but doing so judiciously mindful of
the importance of maintaining the core and essential skill base of
its operations to remain in a position to benefit from a recovery
in customer activity levels. This was particularly relevant for
eyeTrain operations where the workforce reduced by 40% during the
year.
New order opportunities for the Group's eyeTrain products have
been increasingly weighted towards those for the modernisation of
existing rolling stock rather than new build trains. This is
providing the opportunity for the Group to expand the installed
base of its recently developed technically advanced on-train
sensing systems. It also meets management's objective to achieve a
better balance between larger longer term, new build train
contracts and shorter term retrofit projects requiring little new
product development expenditure.
QRO Solutions (QRO) and RTS Solutions (RTS) each had a good year
with QRO producing its best financial performance in its history
and RTS securing a 4-year renewal of a significant support contract
and with the potential for renewing others in the current year, in
turn providing visibility for future revenues. These acquired
businesses have become significant profit and cash flow
contributors to the Group, and the Board believes that both have
significant potential for organic growth.
The Board remains open to further expanding the Group through
quality acquisitions and the acquisition of rights to product, such
as those of NASBox acquired by QRO in April 2020, with meaningful
returns on investment and strong cash generation coupled with
growth potential being the key determinates.
Petards defence services business continued to have difficulty
in securing larger equipment contracts for which it tendered, any
of which would have been transformational for the business. This
led to the Board taking the decision early this year that, in the
absence of compelling reasons for doing so, it would not pursue
such contracts, but would instead focus on smaller engineering
support projects, primarily for the MOD, in areas for which it is
already well known and regarded.
Personnel
Covid-19, lockdown, outworking and furlough led to considerable
uncertainty in the workplace and in this Petards was no different.
Necessary cuts in the number of employees have been made and sadly,
people have left the business under the reorganisation.
Against this background what can be said is that the performance
of the businesses throughout 2020 and into 2021 is a reflection of
the professionalism and the support provided by personnel at all
levels, including those who knew they would be leaving as a
consequence.
The Board would like to thank all personnel for their efforts
and wishes those that have left, every success with their careers,
and to those who remain it looks forward to their continued support
and contribution in developing and building Petards into a
successful growth company.
Environmental, Social and Corporate Governance (ESG)
The Board recognises the importance and the value of ESG and
seeks wherever possible to comply with its requirements and in
instances where it is not able to do so fully, then it seeks to
observe compliance appropriate to its available resources and to
the best of its ability.
The Future
Petards Virtual Technology Centre
A significant development since the year-end has been the
establishment of Petards Virtual Technology Centre (PVTC) to
capitalise upon the wider Group's technical and development
expertise. Included in its initial brief is the enhancement of
eyeTrain on-train sensing systems through use of "best of breed"
third party applications, particularly those related to data
capture, transmission and analytics. The first of these
developments is progressing to plan and is expected to enter
preliminary trials in the near future.
The Board envisages the PVTC becoming an increasingly important
element of the Group's development through a combination of new
product development, the evolution and improvement of existing
products and the evaluation of third-party products that might in
some cases prove to be acquisition opportunities.
Acquisitions
The Board believes its operations in the sectors of Rail,
Traffic and Defence possess the springboard from which to broaden
its activities and grow its businesses whether organically, by
acquisition or by a combination of both, with Rail and Traffic
having the best growth potential.
It is expected that organic growth will be achieved through
developing the business where appropriate to do so, into new
markets both home and export and product development; hence the
importance of the establishment of the PVTC.
Where the Board feels that growth can be accelerated through
acquisition, it will look to do so. Any acquisition will be judged
on its quality and what it does for the Group and its existing
business, or in special circumstances if it gives the Group a
strategic position in a field within the Group's current area of
expertise.
While the Group's business may best be described as electronic
engineering and software, by their very nature and the sectors to
which they are allied, this opens the potential for development
into the areas of artificial intelligence (AI), data gathering and
Big Data, and cyber security.
The Board also believes that at this stage of the Group's
development, an acquisition may well open doors for collaboration
with larger companies.
Negotiating acquisitions is a long process with many, for a
variety of reasons, never coming to fruition. Currently discussions
are taking place with potential vendors of their businesses, any of
which, if terms can be agreed and the businesses satisfy the due
diligence process, would positively benefit the Group.
Outlook
The Group entered 2021 in good shape with a reduced cost base
and a strong, cash positive balance sheet. This was recently
supplemented by the replacement of its existing GBP0.75 million
revolving credit facility with an undrawn GBP2.5 million CBILS
3-year overdraft facility, which provides ample capacity to finance
any increased working capital requirements arising from a recovery
in customer new business activity.
To reflect uncertainty as to how Government's near term rail
investment plans would affect the Group's order intake, the Board
adopted a cautious approach to the revenue budget for this
activity, basing it on already secured systems orders with a de
minimis contribution from new business other than on-going orders
for spares and repairs. While the outlook for 2021 order intake is
now looking more promising, it remains too early to say whether
such prospective orders might make a meaningful contribution to
2021 revenues.
The first four months of 2021 have started well with all
businesses broadly in line or slightly ahead of management
expectations in terms of profitability, and revenues are
anticipated to be weighted towards the first half of the year.
On 31 December 2020 the Group's order book stood at over GBP12
million, of which GBP10 million is forecast to be delivered this
year giving the Board confidence that 2021 will prove to be a
better year for the Group.
Raschid Abdullah
Chairman
*See Alternative Performance Measures Glossary at the end of
this RNS.
Strategic Report
Business review
Petards' operations continue to be focused upon the development,
supply and maintenance of technologies used in advanced security,
surveillance and ruggedised electronic applications, the main
markets for which are:
-- Rail - software driven video and other sensing systems for
on-train applications sold under the eyeTrain brand to global train
builders, integrators and rail operators, and web-based real-time
safety critical integrated software applications supporting the UK
rail network infrastructure sold under the RTS brand;
-- Traffic - Automatic Number Plate Recognition ("ANPR") systems
for lane and speed enforcement and other applications, and UK Home
Office approved mobile speed enforcement systems, sold under the
QRO and ProVida brands to UK and overseas law enforcement agencies
and commercial customers; and
-- Defence - electronic countermeasure protection systems,
mobile radio systems and related engineering services sold
predominantly to the UK Ministry of Defence ("MOD").
Operating review
Despite the adverse impact of Covid-19 in some areas of its
business, the Group made solid progress during the year, returning
an adjusted EBITDA profit, strong cash generation and accelerating
its restructuring plans, putting it in a much stronger position to
benefit profitably from any recovery in business levels in 2021 and
beyond. Progress was also made in the growth and development of the
Group's Traffic solutions and a breakthrough was achieved in
respect of the sale of maintenance support contracts for some of
the Group's rail customers.
The main concerns identified in the early days of the pandemic
were that train building customers' production levels would be
adversely affected, orders for new train programmes delayed, and
orders for defence engineering services reduced in the short term,
with MOD project managers being redeployed to Covid support
activities. In the event all three proved to be the case although
the expected recovery in train production programmes later in the
year did not transpire. Additionally, with UK rail services being
drastically reduced, revenues from spares and repairs in the year
were lower than expected, although with the subsequent increase in
train services these appear to be recovering towards pre-pandemic
levels.
The Group's eyeTrain operations coped with the customer driven
changes to delivery schedules and the margin percentage generated
increased from that achieved in 2019. While the 2020 margin
included the effect of two contracts with lower profitability
brought forward from 2019, this effect diminished as one was
completed in the first half of the year and as the other drew to a
close. However, the majority of 2020 eyeTrain system deliveries
were supply only and were repeats of previously supplied equipment,
so margins on these were not diluted by the non-recurring costs
that can often affect new projects.
We were pleased that a long-standing objective to persuade
eyeTrain customers and end-users of the benefits of long-term
support contracts bore fruit with Siemens Mobility UK placing an
initial two-year maintenance contract for the provision of
technical and software support, servicing and repairs for systems
fitted to Siemens Desiro City trains used on Thameslink and
Moorgate services. This was followed later in the year by a similar
contract for one of the Group's train operating customers and we
are hopeful that further such contracts will be secured. Increased
focus was placed on developing eyeTrain service and support
activities and in the latter part of the year a senior appointment
was made to drive this area of our business.
While orders for new eyeTrain systems were delayed, it was
encouraging that in October two supply only orders that had been
expected earlier in the year were awarded to Petards. The first
worth GBP1.3 million from Porterbrook Maintenance was for systems
to be retro-fitted to the UK's first tri-mode trains (overhead
electric, third rail electric and diesel) all of which have been
delivered in 2021. The second smaller order, from Bombardier
Transportation, was to enhance the video and data collection
capability of Porterbrook owned Electrostar trains by retrofitting
eyeTrain Track Debris/Third Rail cameras with deliveries starting
in 2021 and expected to be complete by early 2023.
The prospects for new systems orders are presently better than
had been anticipated at year end but it is too early to judge the
timing both of order awards and their related deliveries.
Nevertheless, we are hopeful that customers and Government will
continue to progress their plans for new and refurbished rolling
stock projects.
While RTS's planned growth was affected by customers delaying
capital-based expenditure to both develop and expand their systems,
its strong base of recurring software maintenance and support
revenues enabled it to continue to generate a valuable contribution
to the Group's results, albeit slightly behind that achieved in
2019. In the first half year it secured the renewal of one of its
larger software support services contracts for a further four years
to June 2024. Since year end other existing licensing and support
agreements for its WMS software have been renewed for a further
three years and we expect a key customer to take up the option of
extending another large support contract in the near future.
The Board is supportive of proposals presented by RTS management
to grow its business and it recently approved incremental
investment plans to develop new functionality for RTS's software
solutions, the benefits of which are expected to be seen in
2022.
Defence services achieved higher revenues than in 2019, most of
the increase being driven by the delivery of approximately 60% of
the hardware relating to a GBP1.1 million contract for electronic
countermeasures equipment for an MOD programme. The balance of that
equipment is scheduled to be delivered during 2021. Core MOD
engineering service contracts continued to provide most of the
Group's other defence related revenues.
In recent times the Group has been seeking to grow its presence
in defence through two main channels. The first has been to secure
larger projects for which the Group has the heritage and capability
to successfully execute, and the second to develop its own
products.
While the Group has submitted several tenders for larger
projects, these have involved competing with major prime
contractors to the MOD. While it has come close, the Group has
missed out on each one of these opportunities to such primes.
Consequently, we have decided to focus on smaller, defence related
support opportunities, rather than larger equipment supply
projects, unless specific opportunities arise for which the Group's
niche expertise would give it a compelling competitive edge.
In terms of developing its own product, in the second half of
2020 the MOD confirmed that the eyeCraft360 spherical video systems
developed by Petards had successfully completed trials in
partnership with the British Army's Armoured Trials and Development
Unit. This was clearly a step forward in eyeCraft360 being
potentially specified for fitment to one or more MOD vehicle types.
Commercialisation activities with potential overseas customers were
significantly curtailed by Covid-19 international travel
restrictions which are presently delayed into the second half of
2021. An interesting development since year end has been an order
from a large international prime contractor for a trial unit to
integrate eyeCraft360 onto one of its own mobile platforms.
While the Group's operations suffered from the impact that
Covid-19 had on its customers in the rail and defence markets, in
the Traffic sector QRO's strong performance in the first half year
continued and it posted record revenues and results for the year.
Since its acquisition in 2016 QRO has developed into a larger, more
broadly based business and having relocated to new premises in
2019, it further increased capacity in July by leasing an adjacent
unit.
Following the decision in 2019 to increase the value-added
content of QRO's revenues by developing its own hardware as well as
software solutions, in April 2020 it acquired the software and
hardware intellectual property rights to Nexus ANPR Smart Box
("NASBox") for GBP150,000 cash plus an on-going royalty. The NASBox
solution creates a fully compliant and cost effective roadside ANPR
system when interfaced with commercial off-the-shelf cameras, such
as QRO's competitively priced ANPR camera offering. Orders and
sales in 2020 met management's expectations and the indications are
that it is a valuable addition and will provide opportunities for
further growth.
QRO ended the year strongly when in December, Northamptonshire
Police awarded it a GBP0.8 million order to provide an enhanced and
extended fixed ANPR camera infrastructure on many strategic
arterial and rural roads within its region. This was the largest
single order ever awarded to QRO, and 2021 has also started
well.
Brexit
The Board continues to monitor the ongoing impact of Brexit on
its customer and supplier base, and its current assessment remains
that the specific sectors in which the Group operates are not
significantly exposed to particular Brexit risk. The Group's EU
export revenues comprised only 6% of total revenues in 2020 and
mainly relates to trains destined for UK rail projects. While the
Group does source components from EU based suppliers, both directly
and indirectly, it has not seen any significant Brexit-related
impact in its supply chain. Therefore, the Group believes that any
impact of Brexit on its activities to be minimal. Considering the
much wider impact of the Covid-19 pandemic on the global economy
and supply chains, any Brexit impact on the Group that might arise
would be increasingly difficult to specifically identify.
Financial review
Operating performance
2020 deliveries were affected by the impact of customer order
placement delays and production re-scheduling, which were in large
part Covid-19 related and revenues for the year were lower at
GBP13.0 million (2019: GBP15.7 million). While the Group's Traffic
and Defence operations saw large percentage increases in revenue
over the prior year, these were only able to mitigate the impact of
a significant reduction in eyeTrain equipment deliveries, and lower
associated spares and repairs volumes with fewer train services
running post lock down following the dramatic reduction in
passenger numbers.
The gross margin for the year increased to 36.4% from 30.8% in
2019, which together with that for 2018, had been affected by two
lower margin projects. While these also had some impact on 2020,
the Group showed improved margins across most activities.
Before exceptional restructuring costs of GBP425,000,
administrative expenses fell by 11% to GBP5,454,000 (2019:
GBP6,130,000), reflecting the benefits of the cost realignment
programme undertaken in respect of the Group's eyeTrain, and to a
lesser extent, its Defence activities. Administrative expenses
included amortisation and depreciation charges of GBP1,014,000,
slightly up on the GBP976,000 charged in 2019, and are stated net
of Job Retention Scheme grants received of GBP141,000.
Earnings before interest, tax, depreciation, amortisation,
exceptional items, acquisition costs and share based payment
charges ("adjusted EBITDA") improved to a profit of GBP320,000
compared with a 2019 loss of GBP281,000.
Net financial expenses reduced to GBP93,000 (2019: GBP176,000)
mainly due to a lower foreign exchange charge, but also due to
lower interest on the Group's term loan, that financed its
acquisition of RTS, as the loan reduces.
The tax credit of GBP655,000 for the year (2019: GBP1,269,000
credit) includes R&D tax credits totalling GBP748,000, relating
to prior years' R&D activities. The cash refunds received in
the year were GBP1,660,000 of which GBP733,000 relates to tax
credits recognised in 2020 and a further GBP927,000 to those
recognised in 2019. The balance of the 2020 tax credit was a net
charge of GBP93,000 comprising a deferred tax charge arising from
the surrender of previously recognised losses for R&D tax
credits offset by deferred tax credits from the recognition of 2020
losses and the change in tax rate from 17% to 19%.
The overall result for the Group for the year was a loss after
tax of GBP583,000 (2019: GBP193,000 loss) and a basic and diluted
loss per share of 1.01p (2019: 0.34p loss).
Research and development
The Group continues to invest in its software and hardware
solutions developed both internally and externally . Overall
investment totalled GBP1,434,000 (2019: GBP1,386,000) with
GBP150,000 related to the acquisition of the intellectual property
rights of NASBox and GBP1,284,000 to the Group's own development
activities, of which GBP371,000 was capitalised (2019: GBP696,000).
The capitalised development costs related predominantly to the
Group's eyeTrain advanced on-train sensing software and systems. In
addition to eyeTrain, the Group continued to invest in the
development roadmaps of QRO, RTS and eyeCraft360.
Cash, cash flow and net debt
Net cash inflows from operating activities for the year, after
restructuring costs, were GBP2,398,000 (2019: GBP142,000), of which
GBP1,660,000 related to R&D tax credits arising from the
substantial investment in product development over the period 2017
to 2019.
Net cash outflows from investing activities were GBP543,000
(2019: GBP963,000) and arose from the investment in capitalised
product development and the acquisition of NASBox intellectual
property rights. As was the case in 2019, the main net financing
outflows of GBP478,000 (2019: GBP469,000) related to repayments of
the 5-year term loan and the principal paid on lease
liabilities.
At 31 December 2020, the Group's cash and cash equivalents were
GBP2,204,000 (2019: GBP827,000). While the Group incurred a
significant loss before tax in the year, the receipt of substantial
R&D tax credits and reductions in working capital resulted in
the net increase in cash and cash equivalents of GBP1,377,000.
Net funds at 31 December 2020 were GBP1,179,000 (2019:
GBP525,000 net debt) after deducting IFRS 16 lease liabilities of
GBP398,000 (2019: GBP471,000).
During the year the Group had available to it a GBP0.75 million
revolving credit facility although this has never been drawn. Post
year-end the Group's bankers agreed that this be replaced with a
3-year GBP2.5 million CBILS overdraft facility to provide the Group
with the capacity to finance additional working capital should that
be required.
Osman Abdullah
Group Chief Executive
Consolidated income statement
for year ended 31 December 2020
Note 2020 2019
GBP000 GBP000
Revenue 2 13,001 15,706
Cost of sales (8,267) (10,863)
Gross profit 4,734 4,843
Administrative expenses (5,879) (6,130)
Adjusted EBITDA* 320 (281)
Amortisation of intangibles (637) (639)
Depreciation of property, plant and
equipment (244) (204)
Amortisation of right of use assets (133) (133)
Share based payment charges (26) (30)
Exceptional restructuring costs (425) -
----------------------------------------- ---- ------- --------
Operating (loss)/profit (1,145) (1,287)
Finance income 3 - 1
Finance expenses 3 (93) (176)
Loss before tax (1,238) (1,462)
Income tax 4 655 1,269
Loss for the year attributable to equity
shareholders
of the parent (583) (193)
Other comprehensive income - -
Total comprehensive expense for the
year (583) (193)
Loss per ordinary share (pence)
Basic 5 (1.01) (0.34)
Diluted 5 (1.01) (0.34)
* Earnings before financial income and expenses, tax,
depreciation, amortisation, exceptional items, acquisition costs
and share based payment charges. See Alternative Performance
Measures Glossary at the end of this document.
Statements of changes in equity
for year ended 31 December 2020
Share Share Equity Retained Total
capital premium reserve earnings equity
GBP000 GBP000 GBP000 GBP000 GBP000
At 1 January 2019 575 1,617 14 5,435 7,641
Loss for the year - - - (193) (193)
Total comprehensive expense
for the year - - - (193) (193)
Contributions by and distributions
to owners
Equity-settled share based payments - - - 30 30
Total contributions by and distributions
to owners - - - 30 30
At 31 December 2019 575 1,617 14 5,272 7,478
At 1 January 2020 575 1,617 14 5,272 7,478
Loss for the year - - - (583) (583)
Total comprehensive expense
for the year - - - (583) (583)
Contributions by and distributions
to owners
Equity-settled share based payments - - - 26 26
Exercise of share options - 7 - - 7
Total contributions by and distributions
to owners - 7 - 26 33
At 31 December 2020 575 1,624 14 4,715 6,928
Consolidated balance sheet
at 31 December 2020
Note
2020 2019
GBP000 GBP000
ASSETS
Non-current assets
Property, plant and equipment 761 973
Right of use assets 387 466
Intangible assets 4,617 4,733
Investments in subsidiary
undertakings 5 -
Deferred tax assets 6 522 528
6,292 6,700
Current assets
Inventories 2,372 2,430
Trade and other receivables 2,645 3,798
Cash and cash equivalents 2,204 827
7,221 7,055
Total assets 13,513 13,755
EQUITY AND LIABILITIES
Equity attributable to equity holders of
the parent
Share capital 8 575 575
Share premium 1,624 1,617
Equity reserve 14 14
Retained earnings 4,715 5,272
Total equity 6,928 7,478
Non-current liabilities
Interest-bearing loans
and borrowings 7 649 338
Trade and other payables - -
649 338
Current liabilities
Interest-bearing loans
and borrowings 7 376 1,014
Trade and other payables 5,560 4,925
5,936 5,939
Total liabilities 6,585 6,277
Total equity and liabilities 13,513 13,755
Consolidated statement of cash flows
for year ended 31 December 2020
Note
2020 2019
GBP000 GBP000
Cash flows from operating activities
Loss for the year (583) (193)
Adjustments for:
Depreciation of property, plant
and equipment 244 204
Amortisation of right of use
assets 133 133
Amortisation of intangible assets 637 639
Loss on disposal of property,
plant and equipment 1 -
Profit on disposal of right of
use assets (5) -
Financial income 3 - (1)
Financial expenses 3 93 176
Equity settled share-based payment
expenses 26 30
Income tax credit 4 (655) (1,269)
Operating cash flows before movement
in
working capital (109) (281)
Change in inventories 58 1,118
Change in trade and other receivables 226 (379)
Change in trade and other payables 563 (425)
Cash generated from operations 738 33
Tax received 1,660 109
Net cash from operating activities 2,398 142
Cash flows from investing activities
Acquisition of property, plant
and equipment (33) (263)
Acquisition of right of use assets - (5)
Sale of right of use assets 16 -
Acquisition of intangible assets (150) -
Capitalised development expenditure (371) (696)
Acquisition of investments (5) -
Interest received - 1
Net cash outflow from investing
activities (543) (963)
Cash flows from financing activities
Bank loan repaid 7 (250) (250)
Interest paid on loans and borrowings 7 (33) (53)
Principal paid on lease liabilities 7 (138) (117)
Interest paid on lease liabilities 7 (20) (25)
Other interest and foreign exchange (44) (24)
Proceeds from exercise of share
options 8 7 -
Net cash outflow from financing
activities (478) (469)
Net increase/(decrease) in cash
and cash equivalents 1,377 (1,290)
Total movement in cash and cash equivalents
in the year 1,377 (1,290)
Cash and cash equivalents at
1 January 827 2,117
Cash and cash equivalents at
31 December 2,204 827
Notes
1 Basis of preparation
The financial information set out in this statement has been
prepared in accordance with the recognition and measurement
principles of International Financial Reporting Standards
("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 does not constitute the Company's
statutory accounts for the years ended 31 December 2020 or 31
December 2019 but is derived from those accounts. Statutory
accounts for 2019 have been delivered to the Registrar of Companies
and those for 2020 will be delivered in due course. The Auditor has
reported on those accounts; his reports (i) were unqualified, (ii)
did not include a reference to any matters to which the Auditor
drew attention by way of emphasis without qualifying his report and
(iii) did not contain a statement under section 498 (2) or (3) of
the Companies Act 2006.
Going concern
Petards is a critical supplier to many of its customers
supporting the UK's police and armed forces as well as the safe
running of the railways. The main risks to the Group's cash flows
identified are firstly, that customers may delay or re-schedule
deliveries for orders already in the Group's order book and
secondly that, in the short term, contract awards that the Group
was expecting to secure for revenue in 2021 may be delayed. By
their nature these risks are difficult for the Group to directly
influence or control, but by keeping in close contact with our
customers we are seeking to ensure that we are well-informed about
their plans and prepared to secure contracts awards as and when the
opportunities arise. The Group is fortunate that its customer base
comprises blue chip companies, the UK Government and its agencies
and its exposure to credit risk is low.
The Group currently meets its day to day working capital
requirements through its own cash resources and since the year end
has entered into a 3-year overdraft facility of GBP2.5 million
which is available until May 2024. Interest bearing loans and
borrowings total GBP1.03 million at the year-end (note 7).
The Group has prepared working capital forecasts based on the
2021 budget updated for material known changes since it was
prepared and the 2021 management accounts to 31 March 2021. The
time period reviewed is to 30 June 2022. At 30 April 2021 the Group
had cash balances of GBP2.9 million and its available working
capital facilities were undrawn. The model also considers the
potential impact of rail contract awards that the Group is
expecting to secure for revenue during the period that may be
delayed or cancelled.
The Board has concluded, after reviewing the work performed and
detailed above that there is a reasonable expectation that the
Group has adequate resources to continue in operation until at
least 31 May 2022. Accordingly, they have adopted the going concern
basis in preparing these financial statements.
2 Segmental information
The analysis by geographic segment below 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, to monitor performance and allocate
resources.
The Board regularly reviews the Group's performance and balance
sheet position for its entire operations as a whole. The Board
receives financial information, assesses performance and makes
resource allocation decisions for its UK based business as a whole,
therefore 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 ruggedized electronic applications.
As the Board of Directors receives revenue, Adjusted EBITDA and
operating profit on the same basis as set out in the consolidated
income statement no further reconciliation or disclosure is
considered necessary.
Revenue by geographical destination can be analysed as
follows:
2020 2019
GBP000 GBP000
United Kingdom 12,080 13,145
Continental Europe 837 2,493
Rest of World 84 68
13,001 15,706
The timing of revenue recognition can be analysed as
follows:
2020 2019
GBP000 GBP000
Products and services transferred at a point
in time 11,118 14,075
Products and services transferred over time 1,883 1,631
13,001 15,706
3 Finance income and expenses
2020 2019
GBP000 GBP000
Recognised in profit or loss
Interest on bank deposits - 1
Financial income - 1
2020 2019
GBP000 GBP000
Interest expense on financial liabilities
at amortised cost 29 51
Interest expense on lease liabilities 20 25
Other interest payable 23 14
Other exchange loss 21 86
Financial expenses 93 176
4 Taxation
Recognised in the income statement
2020 2020 2019 2019
GBP000 GBP000 GBP000 GBP000
Current tax (credit)/expense
Current tax charge 87 36
Adjustments in respect of
prior years (748) (1,167)
Total current tax (661) (1,131)
Deferred tax (credit)/expense
Origination and reversal
of temporary differences (358) (429)
Recognition of previously
unrecognised tax losses - 84
Utilisation of recognised
tax losses 13 16
Adjustment in respect of
prior years 412 166
Effect of change in rate
of corporation tax (61) -
Effect of differential tax
rate for deferred tax - 25
Total deferred tax 6 (138)
Total tax credit in income
statement (655) (1,269)
The GBP748,000 credit to current tax in respect of prior years
related to enhanced tax deductions for R&D tax claims and
losses surrendered for R&D tax credits in respect of prior
years. These claims are recognised when receipt is determined to be
probable.
Following an announcement in the Budget on 11 March 2020, which
was substantively enacted on 17 March 2020, the UK corporation tax
rate applicable from 1 April 2020 remained at 19%, rather than the
previously enacted reduction to 17%. The 17% rate was applied to
the closing deferred tax balances at 31 December 2019 whereas the
19% rate has been applied to the closing deferred tax balances at
31 December 2020.
Reconciliation of effective tax rate
2020 2019
GBP000 GBP000
Loss before tax (1,238) (1,462)
Tax using the UK corporation tax rate of 19%
(2019: 19%) (236) (278)
Non-deductible expenses 18 44
Recognition of previously unrecognised tax
losses (41) (59)
Adjustments in respect of prior years (336) (1,001)
Effect of change in rate of corporation tax (61) -
Effect of differential tax rate for deferred
tax - 25
Other reconciling items 1 -
Total tax credit (655) (1,269)
5 Earnings per share
Basic earnings per share
Basic earnings per share is calculated by dividing the
profit/(loss) for the year attributable to the shareholders by the
weighted average number of shares in issue.
2020 2019
Earnings
Loss for the year (GBP000) (583) (193)
Number of shares
Weighted average number of ordinary shares ('000) 57,526 57,468
Basic loss per share (pence) (1.01) (0.34)
Diluted earnings per share
Diluted earnings per share assumes conversion of all potentially
dilutive ordinary shares, which arise from share options that would
decrease earnings per share or increase loss per share from
continuing operations, and is calculated by dividing the adjusted
profit for the year attributable to the shareholders by the assumed
weighted average number of shares in issue. Due to the loss in 2019
and 2020, the share options in issue had an anti-dilutive
effect.
2020 2019
Adjusted earnings
Loss for the year (GBP000) (583) (193)
Number of shares
Weighted average number of ordinary shares ('000) 57,526 57,468
Diluted loss per share (pence) (1.01) (0.34)
6 Deferred tax assets and liabilities
Recognised deferred tax assets and liabilities are attributable
to the following:
Assets Liabilities Net
2020 2019 2020 2019 2020 2019
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
Property, plant
and equipment - - (48) (80) (48) (80)
Provisions 5 5 - - 5 5
Tax value of loss
carry-forwards 937 919 - - 937 919
Intangible fixed
assets - - (372) (328) (372) (328)
Initial application
of IFRS 15 - 12 - - - 12
Tax assets/(liabilities) 942 936 (420) (408) 522 528
Offset of tax (420) (408) 420 408 - -
Net tax assets 522 528 - - 522 528
Unrecognised deferred tax assets are attributable to the
following:
Assets Assets
2020 2019
GBP000 GBP000
Property, plant and equipment 278 248
Provisions 2 2
Tax value of loss carry-forwards 1,475 1,356
Tax assets 1,755 1,606
There is no expiry date on the above unrecognised deferred tax
assets.
Movement in deferred tax during the year
1 January Recognised 31 December
2020 in income 2020
GBP000 GBP000 GBP000
Property, plant and
equipment (80) 32 (48)
Provisions 5 - 5
Tax value of loss carry-forwards 919 18 937
Intangible fixed assets (328) (44) (372)
Initial application
of IFRS 15 12 (12) -
528 (6) 522
Movement in deferred tax during the prior year
1 January Recognised 31 December
2019 in income 2019
GBP000 GBP000 GBP000
Property, plant
and equipment (46) (34) (80)
Provisions 5 - 5
Tax value of loss
carry-forwards 524 395 919
Intangible fixed
assets (103) (225) (328)
Initial application
of IFRS 15 10 2 12
390 138 528
7 Interest-bearing loans and borrowings
This note provides information about the contractual terms of
the Group's interest-bearing loans and borrowings, which are
measured at amortised cost.
2020 2019
GBP000 GBP000
Non-current liabilities
Bank loan 375 -
Lease liabilities 274 338
649 338
Current liabilities
Bank loan 252 881
Current portion of lease liabilities 124 133
376 1,014
The interest rate was set at LIBOR plus 3.19% and the loan is
secured by a fixed and floating charge over the assets of the
Group. In May 2021 the bank loan was re-financed as a CBILS term
loan over the existing term and no interest is payable for the
first year. The Group had available a revolving credit facility of
up to GBP750,000 which was undrawn at both 31 December 2020 and 31
December 2019. Post year end that facility was replaced with a
GBP2,500,000 3-year CBILS overdraft facility which expires in May
2024.
Changes in liabilities from financing activities
Non-current Current
loans and loans and Lease
borrowings borrowings liabilities
GBP000 GBP000 GBP000
Balance at 1 January 2020 - 881 471
Cash items:
Repayment of bank loan
and interest - (283) -
Payment of lease liabilities - - (158)
Non-cash items:
New lease liabilities - - 65
Interest expense - 29 20
Re-classified from current
to non-current in year 375 (375) -
Balance at 31 December
2020 375 252 398
Non-current Current
loans and loans and Lease
borrowings borrowings liabilities
GBP000 GBP000 GBP000
Balance at 1 January 2019 875 258 404
Cash items:
Repayment of bank loan
and interest - (303) -
Payment of lease liabilities - - (142)
Non-cash items:
New lease liabilities - - 184
Interest expense - 51 25
Re-classified from current
to non-current in year (875) 875 -
Balance at 31 December
2019 - 881 471
8 Share capital
At 31 At 31
December December
2020 2019
Number Number
Number of shares in issue - allotted,
called up and fully paid
Ordinary shares of 1p each 57,528,229 57,468,229
GBP000 GBP000
Value of shares in issue - allotted, called
up and fully paid
Ordinary shares of 1p each 575 575
The Company's issued share capital comprises 57,528,229 ordinary
shares of 1p each, all of which have equal voting rights.
On 13 January 2020 the Company issued 60,000 ordinary 1p shares
at a price of 12.25p each on the exercise of employee share options.
9 Annual Report and Accounts
The Annual Report and Accounts will be sent to shareholders shortly
and will be available to download on the Company's website www.petards.com
.
Alternative Performance Measures Glossary
This report provides alternative performance measures ("APMs"),
which are not defined or specified under the requirements of
International Financial Reporting Standards. The Board believes
that these APMs provide management with useful performance
measurement indicators and readers with important additional
information on the business.
Adjusted EBITDA
Adjusted EBITDA is earnings before financial income and
expenses, tax, depreciation, amortisation, exceptional items,
acquisition costs and share based payment charges. Adjusted EBITDA
is considered useful by the Board since by removing exceptional
items, acquisition costs and share based payments, the year on year
operational performance comparison is more comparable.
Order intake
The value of contractual orders received from customers during
any period for the delivery of performance obligations. This allows
management to monitor the performance of the business.
Order book
The value of contractual orders received from customers yet to
be recognised as revenue. This allows management to monitor the
performance of the business and provides forward visibility of
potential earnings.
Net funds
Total net funds comprise cash and cash equivalents less interest
bearing loans and borrowings. This allows management to monitor the
indebtedness of the Group.
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.
RNS may use your IP address to confirm compliance with the terms
and conditions, to analyse how you engage with the information
contained in this communication, and to share such analysis on an
anonymised basis with others as part of our commercial services.
For further information about how RNS and the London Stock Exchange
use the personal data you provide us, please see our Privacy
Policy.
END
FR ARMRTMTITBIB
(END) Dow Jones Newswires
May 28, 2021 02:00 ET (06:00 GMT)
Petards (AQSE:PEG.GB)
Graphique Historique de l'Action
De Oct 2024 à Déc 2024
Petards (AQSE:PEG.GB)
Graphique Historique de l'Action
De Déc 2023 à Déc 2024
