As a consequence of brought forward losses from previous years,
there is no tax payable in respect of the Group's profit for the
year (2013 - GBP0.1 million credit) resulting in a profit after tax
of GBP0.6 million (2013: GBP2.3 million loss).
The profits generated in the year served to further strengthen
the balance sheet and shareholders' funds increased to GBP2.4
million (2013: GBP1.7 million). While working capital increased
slightly in the second half year the Group generated an operating
cash inflow for the year of GBP0.8 million (2013: GBP1.3 million
cash outflow). After investing activities, primarily related to
product development, net debt remained at GBP0.1 million (2013:
GBP0.1 million) and comprised convertible loan notes which mature
in September 2018 of GBP1.5 million net of cash balances of GBP1.4
million.
Dividends
The Board is conscious of the value of dividends to investors.
While the return to profitability is encouraging and the balance
sheet is in good shape, the Board would wish to see further
evidence of the Group's recovery before recommending joining the
dividend list. In addition, the Company has a considerable
deficiency on its distributable reserves which in any event
presently prevents the payment of dividends.
In anticipation that the Group's recovery will prove sustainable
during 2015 and beyond, it is the intention of the Board to review
how best to address this matter. Any solution to clear the way for
dividend payments at the appropriate time is likely to require the
consent of both shareholders and the Court.
Product Development
The Board recognises the importance of the Group investing to
develop its portfolio of products and services to both maintain its
competitive position and to grow revenues. Costs for product
development for the year that totalled almost GBP0.75 million, were
predominantly focussed on the development of the Petards eyeTrain
product which the Board believes is an area of the Group's business
that offers significant growth potential. While remaining a key
area of focus for both eyeTrain and Provida, the level of
development expenditure required in 2015 to achieve this is
anticipated to be significantly lower.
Personnel
While directors formulate strategy and set capital allocation,
performance objectives and key management rewards for the Group,
delivery thereon is very much the result of the efforts and
commitment of our people at operational level. Over the past 18
months, Petards Joyce-Loebl, the Company's operational unit located
in Gateshead, has undergone considerable change in operating
structure and personnel with approximately 35% either having moved
on or been replaced and others taking broader roles and more
responsibility coupled with accountability.
On behalf of the Board I welcome those who have joined the
Company during 2014 and thank all our people for their valued
contribution to the delivery of a significant improvement in the
Group's operating performance. The Board looks forward to their
continued support and contribution in 2015 which it believes has
the ingredients to be an exciting period in the Group's
development.
Strategy
The Board believes that Petards operates in growth areas and
that it has the products and services plus available technical and
technological skills to develop new products as well as the sales
and marketing abilities to become a larger and more successful
operator in each of the sectors in which it operates.
The Group's relationships with its predominantly international
'blue chip' and government agency customer base and their strength,
often global, in the sectors which the Company serves gives rise to
the opportunity to develop Petards business through the provision
of good quality professional service in support of its existing and
future product ranges.
While the Board is mindful of economic cycles and the impact
they can have on businesses and business plans, and the risks
associated with over expansion, it believes that in the short to
medium term the current management structure coupled with the
balance sheet and financial stability of the Group, is capable of
continued implementation of the strategy in pursuit of the
achievement of its strategic objectives.
Outlook
Investment in new rail transport rolling stock has continued to
benefit from government initiatives around the world and there is
no obvious sign that this is to likely change in the foreseeable
future. The directors are confident that UK rail operating
franchise renewals over the coming years will result in new
opportunities for Petards' products and services.
Petards position as a long established specialist "value added"
re-seller within the UK defence industry is expected to continue to
provide a platform to develop this area of the Group's business.
While defence budgets remain under scrutiny the areas in which the
Group operates are niche and are not expected to be materially
affected. Further, the Board believes that with additional
management attention and resource being devoted to it, the
Emergency Services will make a larger contribution to Group sales
and profits in 2015.
I am pleased to say for the year to date the Group has traded in
line with expectations and that it remains well placed to add to
the achievements of 2014. The visibility provided by the Group's
current forward order book and its pipeline of order prospects
provides the Board with confidence that further progress will be
made in 2015.
Raschid Abdullah
Chairman
Consolidated Income Statement
for year ended 31 December 2014
Note 2014 2013
GBP000 GBP000
Revenue 2 13,462 6,259
Cost of sales (9,370) (3,733)
Gross profit 4,092 2,526
Administrative expenses (3,323) (3,856)
Operating profit/(loss) 769 (1,330)
------------------------------------- ---- ------- --------
Analysed as:
Earnings before interest,
tax, depreciation and amortisation
('EBITDA') 1,015 (716)
Depreciation and amortisation (246) (308)
Restructuring costs - (306)
769 (1,330)
Financial income 3 3 20
Financial expenses 3 (152) (1,078)
Profit/(loss) before tax 620 (2,388)
Income tax 4 - 95
Profit/(loss) for the year
attributable to equity shareholders
of the parent 620 (2,293)
Earnings per share (pence)
Basic 7 1.80 (15.87)
Diluted 7 1.37 (15.87)
Consolidated Statement of Comprehensive Income
for year ended 31 December 2014
2014 2013
GBP000 GBP000
Profit/(loss) for the
year 620 (2,293)
Other comprehensive
income
Items that may be reclassified
to profit:
Currency translation on foreign
currency net investments - (13)
Total comprehensive
income for the year 620 (2,306)
Statements of Changes in Equity
for year ended 31 December 2014
Share Share Merger Retained Currency Total
capital premium reserve Equity earnings translation equity
reserve differences
Group GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
Balance at 1
January 2013 6,412 24,152 - - (28,849) (198) 1,517
Loss for the
year - - - - (2,293) - (2,293)
Other comprehensive
income - - - - - (13) (13)
Total comprehensive
income for the
year - - - - (2,293) (13) (2,306)
Purchase of own
shares (592) - - - - - (592)
Sale of own shares 592 - - - 3 - 595
Water Hall transaction
(note 3) 110 - 1,112 213 - - 1,435
Share issue:
placing 115 1,035 - - - - 1,150
Expenses of share
issue - (87) (37) - - - (124)
Conversion of
convertible loan
notes 8 53 - (7) 7 - 61
Balance at 31
December 2013 6,645 25,153 1,075 206 (31,132) (211) 1,736
Balance at 1
January 2014 6,645 25,153 1,075 206 (31,132) (211) 1,736
Profit for the
year - - - - 620 - 620
Other comprehensive - - - - - - -
income
Total comprehensive
income for the
year - - - - 620 - 620
Conversion of
convertible loan
notes 4 23 - (2) 2 - 27
Exercise of share
options 2 16 - - - - 18
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