TIDMPEG
RNS Number : 5034Z
Petards Group PLC
15 September 2022
15 September 2022
Petards Group plc
("Petards", "the Group" or "the Company")
Interim results for the six months ended 30 June 2022
Petards Group plc (AIM: PEG), the AIM quoted developer of
advanced security and surveillance systems, is pleased to report
its interim results for the six months ended 30 June 2022.
Key Highlights:
-- Financial
o Revenue GBP5.5 million (H1 2021: GBP7.7 million)
o Gross profit margin 49.3% (H1 2021: 39.6%)
o Adjusted EBITDA GBP606,000 (H1 2021: GBP929,000)(1)
o Post-tax profit GBP101,000 (H1 2021: GBP430,000)
o Cash generated from operating activities GBP1,120,000 (H1
2021: GBP1,669,000)
o Net funds at 30 June 2022 increased to GBP2.5 million (31 Dec
2021: net funds GBP1.5 million)(2)
o Diluted EPS 0.17p earnings (H1 2021: 0.74p)
-- Operational
o Continued strong cash generative performance
o Significant growth at QRO with revenues up over 30%
o Rail market challenging but spares, repairs services revenues
back to pre-Covid levels
o Significantly improved gross profit margin reflects increased
content of higher margin engineering and support services and lower
cost base
o All expiring RTS software licenses and support renewed with
increased number of users
o Order book at 30 June 2022 GBP6 million (31 Dec 2021: GBP7
million)
(1. Earnings before financial income and expenses, tax,
depreciation, amortisation, and share based payment charges)
2. Total net funds comprise cash and cash equivalents less
interest-bearing loans and borrowings (including lease
liabilities)
Commenting on the current outlook, Raschid Abdullah, Chairman,
said:
"The Board anticipates the Group will make further progress in
the second half year and deliver a satisfactory and cash generative
performance for year"
This announcement contains inside information for the purposes
of Article 7 of the UK version of Regulation (EU) No 596/2014 which
is part of UK law by virtue of the European Union (Withdrawal) Act
2018, as amended ("MAR"). Upon the publication of this announcement
via a Regulatory Information Service, this inside information is
now considered to be in the public domain.
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, Sarah Mather Tel: 0207 220 1666
Hybridan LLP, Joint Broker www.hybridan.com
Claire Louise Noyce Tel: 020 3764 2341
claire.noyce@hybridan.com
Chairman's statement
I am pleased to report that for the six months to 30 June 2022
the Group continued to trade both profitably and cash generatively.
While lower than the corresponding period in 2021, revenues for the
six months to 30 June 2022 were GBP5.5 million (H1 2021: GBP7.7
million).
Adjusted EBITDA for the period was GBP606,000 (H1 2021:
929,000), and profit after tax GBP101,000 (H1 2021: GBP430,000).
The Group generated net cash from operations of GBP1.1 million (H1
2021: GBP1.7 million) with cash balances closing at GBP3.0 million
(31 Dec 21: GBP2.3 million) with net funds of GBP2.5 million (31
Dec 21: GBP1.5 million).
These results reflect the present challenging conditions within
the UK market rail market that I outlined in my last Chairman's
Statement, and that last year's revenues were weighted towards the
first six months.
Business overview
Petards continues to focus upon the development, supply and
maintenance of technologies used in advanced security, surveillance
and ruggedised electronic applications, the principal markets for
which are;
-- Rail
- eyeTrain software driven video camera and sensor-based systems
for on-train applications marketed to global train builders and UK
rolling stock owners and operators, providing critical data on and
off-train to improve operational and rail safety performance;
and
- RTS real-time safety critical software supporting the UK rail
network, and infrastructure rail asset management, logistics,
planning and business workflow SaaS software for UK rail prime
contractors using the RTS Rail Ops and Asset Management Services
suite of applications.
-- Traffic
Systems marketed under the QRO name whose brands include
ProVida, NASBox and Q-Box, to UK and overseas law enforcement
agencies:
- Automatic Number Plate Recognition (ANPR) for intelligence-led
policing on a national and cross border level, and other ANPR
applications, and
- UK Home Office approved mobile speed enforcement systems.
-- Defence
Electronic countermeasure protection systems, mobile radio
systems and related engineering services sold predominantly to the
UK Ministry of Defence (MOD).
Operating review
The Group results for the first half of 2022 represent the third
consecutive reporting period that the Group has returned a pre-tax
profit, improved the gross profit margin, and been cash
generative.
The rail sector continues to be challenging and the first half
year saw a marked reduction in eyeTrain revenues, although those
from spares, repairs and services recovered to levels last seen
pre-Covid. However, we are experiencing a higher level of activity
in enquiries and tenders for rolling stock refurbishment and
upgrade programmes, which is increasing our order prospects.
Refurbishment and upgrade contracts are anticipated to be the
precursor to securing future larger contract awards.
This month will be the first time since 2018 that InnoTrans, the
world's largest trade fair focused on the rail transport industry,
will be held in Berlin. As in the past, Petards will be exhibiting
and fielding a strong team encompassing both eyeTrain and RTS. We
are pleased with the resumption of this event and look forward to
welcoming both existing and potential new customers to our
stand.
Our rail-based customers continue to be cautious in the
placement of new business, which is delaying orders and is against
a background of gradually recovering passenger numbers, together
with the complexities relating to the implementation of the UK's
new rail operating model, Great British Railways, and its
funding.
RTS continued to progress and is investing in additional
business development resource and software engineering capability
to pave the way for planned new product launches. During the first
six months it secured the renewal of all its existing software
licence and maintenance contracts expiring in the period and
increased the number of SaaS user licences.
Our investment strategy to expand the RTS portfolio of rail
infrastructure related software products has progressed according
to plan, and in the fourth quarter of 2022 it will be launching its
newly developed real-time remote working and reporting modules.
These will extend its Rail Operations and Asset Management Services
suites of software and will significantly enhance the ease and
speed of reporting by on-site and trackside field service rail
personnel, increasing efficiency and safety.
QRO continued to perform well achieving revenue growth of 31%
over the comparable period in 2021, and a highly satisfactory
result. Q-Box, a cost effective in-vehicle ANPR solution launched
by QRO earlier in the year, has attracted a high level of customer
interest and over GBP750k of Q-Box orders were secured by the half
year end.
Although QRO's first half was affected by supply chain capacity
issues, action has been taken to address this and another strong
performance is expected for the full year.
Our defence business traded above expectations in terms of
revenue and margins and delivered a good result for the first half
of the year. Activities in the period included the delivery of new
equipment to the RAF as part of the JETS threat simulator systems
five-year framework contract secured last year. Specialist
engineering services provided included the Challenger 2 VICS engine
and transmission management system survey programme, and the
support of vital MOD communication equipment in the UK and
overseas.
Following overseas trials earlier this year and building upon
previous work with the British Army's Armoured Trials and
Development Unit, further trials of Petards' eyeCraft 360 are
planned for later this year and into 2023.
Financial review
Operating performance
Revenues for the six months ended 30 June 2022 totalled GBP5.5
million (H1 2021: GBP7.7 million). Revenues for the period were
only slightly below those achieved in the second half of 2021,
whereas the first half of 2021 had benefitted from revenues of
GBP1.8 million from two individual shipments of equipment, one
relating to Rail and one to Defence.
The Group's overall gross profit margin increased significantly
to 49.3% (H1 2021: 39.6%), sustaining the improvements achieved
over the past two years or so since management acted to re-align
eyeTrain's cost base. The improvement in the first six months of
2022 reflected those cost reductions as well as the growth in
revenues of higher margin spares, repairs, and engineering services
across the Group.
Administrative expenses were broadly unchanged at GBP2.6 million
(H1 2021: GBP2.6 million).
Adjusted EBITDA for the period was GBP606,000 (H1 2021:
GBP929,000), and with amortisation and depreciation charges at
similar levels to the comparable period in 2021, the Group
generated an operating profit of GBP125,000 (H1 2021: GBP454,000).
Net financial expenses, which predominantly relate to the Group's
term loan and lease liabilities, remained at GBP24,000 (H1 2021:
GBP24,000).
After a nil tax charge (H1 2021: nil), the Group's profit after
tax was GBP101,000 (H1 2021: GBP430,000) and the basic and diluted
earnings per share were 0.18p and 0.17p respectively (H1 2021:
basic and diluted profit of 0.75p and 0.74p respectively).
Cash, cash flow and net debt
The Group continued its recent record of strong cash generative
performance, generating net cash from operating activities in the
period of GBP1.1 million (H1 2021: GBP1.7 million).
After repayment of debt and interest of GBP0.1 million, cash
balances increased to GBP3.0 million (31 December 2021: GBP2.3
million). Net funds at 30 June 2022, after deducting term loan and
lease liabilities, grew to GBP2.5 million from GBP1.5 million at 31
December 2021.
With two years remaining on its undrawn GBP2.5 million 3-year
overdraft facility and with its existing cash resources, the Group
has sufficient capacity to fund organic growth and its working
capital requirements.
Acquisitions
Acquisitions continue to be a part of the board's strategy and
we have reviewed several businesses which would complement the
Group activities. Some of these companies have yet to recover to
their pre-Covid earnings levels and as a result agreeing values
remains the challenge in the present climate.
Outlook
The Group's activities generally performed well during the
period to 30 June 2022, apart from eyeTrain where delays in order
placement for new systems reduced revenues. The Group's order book
at 30 June 2022 of GBP6 million reflects this lower eyeTrain order
intake.
While UK rail passenger journeys have recovered from the extreme
lows of 2020 and doubled in the year to March 2022, they were still
less than two thirds of those undertaken pre-Covid. We believe that
until such time as the Great British Railways model is operational,
UK train operators are likely to remain restricted in the placement
of new business, particularly for larger orders. However, there are
smaller opportunities which are presently under discussion with
existing customers.
Despite this background, the Board anticipates the Group will
make further progress in the second half year and deliver a
satisfactory and cash generative performance for year.
Raschid Abdullah
15 September 2022
Condensed Consolidated Income Statement
for the six months ended 30 June 2022
Unaudited Unaudited
6 months 6 months Audited
ended 30 ended 30 Year ended
June June 31 December
Note 2022 2021 2021
GBP000 GBP000 GBP000
Revenue 5,521 7,692 13,574
Cost of sales (2,801) (4,647) (7,482)
Gross profit 2,720 3,045 6,092
Administrative expenses (2,601) (2,591) (5,530)
Other income 6 - 8
---------- --------- ------------
Adjusted EBITDA* 606 929 1,534
Amortisation of intangibles (313) (297) (603)
Depreciation of property,
plant and equipment (77) (99) (193)
Amortisation of right of
use assets (91) (63) (136)
Share based payment charges - (16) (32)
Operating profit 125 454 570
Financial expenses (24) (24) (68)
Profit before tax 101 430 502
Income tax 4 - - 363
Profit for the period
attributable to equity
shareholders of the company 101 430 865
Other comprehensive income - - -
Total comprehensive income
for the period 101 430 865
========== ========= ============
Earnings per ordinary
share (pence)
Basic 9 0.18 0.75 1.51
Diluted 9 0.17 0.74 1.47
---------- --------- ------------
* Earnings before financial income and expenses, tax,
depreciation, amortisation and share based payment charges
Condensed Consolidated Statement of Changes in Equity
for the six months ended 30 June 2022
Share Share Treasury Equity Retained Total
capital premium shares reserve earnings equity
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
At 1 January 2021 (audited) 575 1,624 - 14 4,715 6,928
Profit for the period - - - - 430 430
Total comprehensive income
for the period - - - - 430 430
Equity settled share based
payments - - - - 16 16
At 30 June 2021 (unaudited) 575 1,624 - 14 5,161 7,374
-------- -------- ---------- -------- --------- -------
At 1 January 2021 (audited) 575 1,624 - 14 4,715 6,928
Profit for the year - - - - 865 865
Total comprehensive income
for the year - - - - 865 865
Purchase of treasury shares - - (103) - - (103)
Equity settled share based
payments - - - - 32 32
At 31 December 2021 (audited) 575 1,624 (103) 14 5,612 7,722
-------- -------- ---------- -------- --------- -------
At 1 January 2022 (audited) 575 1,624 (103) 14 5,612 7,722
Profit for the period - - - - 101 101
Total comprehensive income
for the period - - - - 101 101
At 30 June 2022 (unaudited) 575 1,624 (103) 14 5,713 7,823
======== ======== ========== ======== ========= =======
Condensed Consolidated Statement of Financial Position
at 30 June 2022
Unaudited Unaudited
30 June 30 June Audited
2022 2021 31 December 2021
GBP000 GBP000 GBP000
ASSETS
Non-current assets
Property, plant and equipment 656 761 686
Right of use assets 316 324 366
Intangible assets 3,720 4,341 4,031
Investments 5 5 5
Deferred tax assets 396 522 396
------- --------- -----------------
5,093 5,953 5,484
------- --------- -----------------
Current assets
Inventories 1,488 2,738 1,659
Trade and other receivables 5 2,285 1,890 1,989
Cash and cash equivalents 3,019 3,549 2,277
------- --------- -----------------
6,792 8,177 5,925
------- --------- -----------------
Total assets 11,885 14,130 11,409
======= ========= =================
EQUITY AND LIABILITIES
Equity attributable to equity
holders
of the parent
Share capital 575 575 575
Share premium 1,624 1,624 1,624
Treasury shares (103) - (103)
Equity reserve 14 14 14
Retained earnings 5,713 5,161 5,612
Total equity 7,823 7,374 7,722
------- --------- -----------------
Non-current liabilities
Interest-bearing loans and
borrowings 8 120 463 284
------- --------- -----------------
120 463 284
------- --------- -----------------
Current liabilities
Interest-bearing loans and
borrowings 8 382 374 483
Trade and other payables 6 3,560 5,919 2,920
------- --------- -----------------
3,942 6,293 3,403
------- --------- -----------------
Total liabilities 4,062 6,756 3,687
------- --------- -----------------
Total equity and liabilities 11,885 14,130 11,409
======= ========= =================
Condensed Consolidated Statement of Cash Flows
for the six months ended 30 June 2022
Unaudited
6 months Unaudited Audited
ended 30 6 months Year ended
June ended 30 June 31 December
2022 2021 2021
GBP000 GBP000 GBP000
Cash flows from operating activities
Profit for the period 101 430 865
Adjustments for:
Depreciation of property, plant
and equipment 73 99 193
Amortisation of right of use
assets 95 63 136
Amortisation of intangible assets 313 297 603
Profit on disposal of right
of use assets - (8) (8)
Financial expenses 24 24 68
Equity settled share-based payment
expenses - 16 32
Income tax charge/(credit) - - (363)
Operating cash flows before
movement in
working capital 606 921 1,526
Change in inventories 170 (366) 713
Change in trade and other receivables (296) 740 641
Change in trade and other payables 640 359 (2,596)
Cash generated from operations 1,120 1,654 284
Tax received - 15 461
Net cash from operating activities 1,120 1,669 745
Cash flows from investing activities
Acquisition of property, plant
and equipment (43) (99) (118)
Sale of right of use assets - 8 8
Capitalised development expenditure - (21) (17)
Net cash outflow from investing
activities (43) (112) (127)
Cash flows from financing activities
Bank loan repaid (125) (125) (250)
Interest paid on lease liabilities (12) (14) (18)
Interest paid on loans and borrowings (7) (10) (122)
Principal paid on lease liabilities (185) (61) (27)
Other interest and foreign exchange
losses (6) (2) (25)
Purchase of treasury shares - - (103)
Net cash outflow from financing
activities (335) (212) (545)
Net increase in cash and cash
equivalents 742 1,345 73
Total movement in cash and cash
equivalents
in the period 742 1,345 73
Cash and cash equivalents at
1 January 2,277 2,204 2,204
Cash and cash equivalents 3,019 3,549 2,277
Notes to the financial statements
1. Reporting entity
Petards Group plc (the 'Company') is incorporated and domiciled
in England and its shares are publicly traded on AIM, a market
operated by the London Stock Exchange. These condensed consolidated
interim financial statements ('interim financial statements') as at
and for the six months ended 30 June 2022 comprise the Company and
its subsidiaries (together referred to as the 'Group').
Copies of these interim financial statements will be available
on the Company's website (www.petards.com) and from the Company's
registered office at Parallel House, 32 London Road, Guildford, GU1
2AB.
2. Basis of preparation
As permitted, these interim financial statements have been
prepared in accordance with AIM Rules for Companies and are not
required to comply with IAS 34 'Interim Financial Reporting' to
maintain compliance with IFRS. They should be read in conjunction
with the Group's last annual consolidated financial statements as
at and for the financial year ended 31 December 2021 ('last annual
financial statements'). They do not include all of the financial
information required for a complete set of IFRS financial
statements, however selected explanatory notes are included to
explain events and transactions that are significant to the
understanding of the changes in the Group's financial position and
performance since the last annual financial statements. This
financial information does not constitute statutory accounts as
defined in Section 435 of the Companies Act 2006.
The comparative figures for the financial year ended 31 December
2021 set out in these interim statements are not the Group's
statutory accounts for that financial year. Those accounts have
been reported on by the Company's auditors and delivered to the
Registrar of Companies. The report of the auditors was (i)
unqualified, (ii) did not include a reference to any matters to
which the auditor drew attention by way of emphasis without
qualifying their report, and (iii) did not contain a statement
under section 498 (2) or (3) of the Companies Act 2006.
3. Use of judgements and estimates
In preparing these interim financial statements, management has
made judgements and estimates that affect the application of
accounting policies and the reported amounts of assets,
liabilities, income and expense. Actual amounts may differ from
these estimates.
The significant judgements made by management in applying the
Group's accounting policies and the key sources of estimation
uncertainty were the same as those described in the last annual
financial statements.
4. Taxation
No provision for taxation has been made in the Condensed
Consolidated Income Statement for the six months to 30 June 2022
based on the estimated tax provision required for the year ending
31 December 2022 (H1 2021: nil).
5. Trade and other receivables
Unaudited Unaudited
6 months 6 months Audited
ended 30 ended 30 Year ended
June June 31 December
2022 2021 2021
GBP000 GBP000 GBP000
Trade receivables 1,974 1,734 1,683
Other receivables and prepayments 311 156 306
2,285 1,890 1,989
========== ========== =============
6. Trade and other payables
Unaudited Unaudited
6 months 6 months Audited
ended 30 ended 30 Year ended
June June 31 December
2022 2021 2021
GBP000 GBP000 GBP000
Trade payables 843 1,487 606
Contract liabilities 1,366 1,621 69
Non-trade payables and accrued
expenses 1,351 2,811 2,245
3,560 5,919 2,920
========== ========== =============
7. Interest-bearing loans and borrowings
Current liabilities
Unaudited Unaudited
6 months 6 months Audited
ended 30 ended 30 Year ended
June June 31 December
2022 2021 2021
GBP000 GBP000 GBP000
Bank loan 250 250 250
Lease liabilities 132 124 233
---------- ---------- -------------
382 374 483
========== ========== =============
Non-current liabilities
Unaudited
6 months Unaudited Audited
ended 30 6 months Year ended
June ended 30 31 December
2022 June 2021 2021
GBP000 GBP000 GBP000
Bank loan - 250 125
Lease liabilities 120 213 159
---------- ----------- -------------
120 463 284
========== =========== =============
8. Earnings per share
Basic earnings per share
Basic earnings per share is calculated by dividing the profit
for the period attributable to the shareholders by the weighted
average number of shares in issue.
Unaudited Unaudited
6 months 6 months Audited
ended 30 ended 30 Year ended
June June 31 December
2022 2021 2021
Earnings
Profit+ for the period (GBP000) 101 430 865
========= ========= =============
Number of shares
Weighted average number of
ordinary shares ('000) 56,528 57,528 57,441
========= ========= =============
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 period attributable to the shareholders by the
assumed weighted average number of shares in issue.
Unaudited Unaudited
6 months 6 months Audited
ended 30 ended 30 Year ended
June June 31 December
2022 2021 2021
Earnings
Profit for the period (GBP000) 101 430 865
========= ========= ============
Number of shares
Weighted average number of ordinary
shares ('000) 57,832 57,791 58,744
========= ========= ============
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