TIDMPEG
RNS Number : 5802N
Petards Group PLC
26 September 2023
26 September 2023
Petards Group plc
("Petards", "the Group" or "the Company")
Interim results for the six months ended 30 June 2023
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 2023 (the
"Period").
Key Highlights:
-- Financial
o Revenue GBP4.4 million (H1 2022: GBP5.5 million)
o Gross profit margin 47.3% (H1 2022: 49.3%)
o Adjusted EBITDA loss of GBP59,000 (H1 2022: GBP606,000 profit)
(1)
o Post-tax loss GBP301,000 (H1 2022: GBP101,000 profit)
o Cash generated from operating activities GBP250,000 (H1 2022:
GBP1,120,000)
o Net funds at 30 June 2023 GBP1.7 million (31 December 2022:
net funds GBP1.7 million)(2)
o Diluted EPS loss of 0.53p (H1 2022: earnings of 0.17p)
-- Operational
o Continued cash generative operating performance
o Rail and defence markets remained challenging but Rail
tendering activities were significantly higher in the Period than
in recent years
o Recent new product launches with first orders already received
which include:
-- QRO's new mobile digital video surveillance product on QBOX
platform
-- OWL IP ANPR system; and
-- RTS's Mobile digital solution
o Further QRO and Petards Rail products scheduled to launch in
the coming months and 2024
o Order book at 30 June 2023 of GBP4 million (31 December 2022:
GBP4 million)
o The board is encouraged by the fact that vendors' value
aspirations are now showing a new realism and it continues to seek
and review acquisition opportunities.
(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 first half of 2023 proved to be challenging, and while the
board is confident of an improved performance in second half year,
it now believes that it is likely that the outturn for the year
will be below current market expectations.
The Group's businesses have good management teams with strategic
plans in place, to achieve growth in 2024 and 2025 with an ungeared
balance sheet and the financial resources to support. These include
plans for the launch of exciting new products over the coming
months, many of which incorporate artificial intelligence and data
solutions with increased functionality. The successful deployment
of these new products and the improved prospects for acquisitions
mean the board remains confident for the future."
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 (Corporate Tel: 0207 220 1666
Finance)
Fraser Marshall (Corporate Broking)
Hybridan LLP, Joint Broker www.hybridan.com
Claire Louise Noyce Tel: 020 3764 2341
claire.noyce@hybridan.com
Chairman's statement
Petards 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 - 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 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 - engineering services relating to electronic
countermeasure protection systems, threat simulation systems and
mobile radio systems and other defence related engineering
equipment sold predominantly to the UK Ministry of Defence
(MOD).
Trading
Trading for the Period proved to be most challenging with good
performances from QRO and RTS being offset by disappointing
performances from Rail and Defence. The overall result for the
Group was a loss after tax of GBP301,000 (H1 2022: GBP101,000
profit) on revenues of GBP4.4 million (H1 2022: GBP5.5
million).
Adjusted EBITDA for the Period was a loss of GBP59,000 (H1 2022:
GBP606,000 profit). The Group generated net cash from operations of
GBP0.3 million (H1 2022: GBP1.1 million), with cash balances
closing at GBP1.8 million (31 December 2022: GBP2.0 million) and
net funds of GBP1.7 million (31 December 2022: GBP1.7 million).
Operating Review
Of the Group's businesses, Rail found trading conditions
challenging with only one major UK order of note available to be
won during the Period within its sector, for which the train
builder opted to remain with its incumbent supplier rather than
change to Petards Rail. The Rail division relies on the central
government budgets and policy at a time when government expenditure
has been constrained and delays in finalising the implementation of
strategic policies for Great British Rail (GBR). Slightly against
this trend was RTS where demand for its software for trackside
working remained at a reasonable level.
The level of activity within the Defence business weakened as
the MOD's focus and budget has been on supporting Ukraine in its
war with Russia rather than on the types of defence services
provided by Petards.
QRO, whose law enforcement customers are also dependant on
public expenditure funding, started the year more slowly following
its exceptional performance last year. Nevertheless, it has
continued to perform well, launching new products and has a strong
pipeline of near term order opportunities. It continues to grow its
market presence and has recently received a GBP0.2 million order
from a new UK police force customer, further consolidating its
position in the UK ANPR market.
During the Period Petards Rail experienced a significant
increase in new business opportunities and has issued tenders of
GBP16 million so far this year. Nearly GBP6 million of this relates
to opportunities for which customers are presently indicating first
deliveries in 2024 and these are either for upgrades to our
existing eyeTrain systems or where Petards has the advantage of
being the current supplier.
While there can be no certainty as to how many of these tenders
will convert into new business, we anticipate an improving
situation, and the board believes that 2024 will be a year of
recovery in Petards Rail's financial performance. This is against
the background of our lower cost base which has maintained our core
operational capabilities whilst supporting our expanding customer
service level agreements.
Petards continues to invest in the new products for which there
is customer driven support. Recent new product launches for which
initial orders have already been received include those from both
RTS and QRO. RTS has launched its mobile solution which increases
the efficiency of engineering teams by securely providing real time
digitised reporting of trackside workers activities back to
base.
In addition to QRO's launch in March 2023, of its mobile digital
video surveillance product running on its QBOX platform, QRO has
added a new UK designed OWL IP ANPR system to its product range.
Recognising an increasing desire for UK built cameras, QRO has
developed a UK designed and built AI Smart camera that it expects
to launch during the fourth quarter of this year.
Working with customers, Petards Rail's new product developments
include initiatives designed to improve passenger train door safety
and new AI ready cameras. These developments are well advanced with
planned launches in early 2024.
Financial Review
Operating performance
Revenues for the Period totalled GBP4.4 million (H1 2022: GBP5.5
million), with lower Defence revenues accounting for the majority
of the reduction compared with the first half of 2022.
The Group's overall gross profit margin remained robust, albeit
that it was down slightly at 47.3% (H1 2022: 49.3%) resulting from
higher materials costs at QRO due to inflation. These are kept
under constant review by local management and margin improvements
are sought through re-design and new product introductions.
Administrative expenses were broadly unchanged at GBP2.6 million
(H1 2022: GBP2.6 million).
Adjusted EBITDA for the Period was a loss of GBP59,000 (H1 2022:
GBP606,000 profit), and with amortisation and depreciation charges
reducing slightly compared to the first half of 2022, this gave
rise to an operating loss of GBP489,000 (H1 2022: GBP125,000
profit).
After net financial expenses of GBP11,000 (H1 2022: GBP24,000)
and a tax credit of GBP199,000 (H1 2022: nil), arising from the
recent confirmation of R&D credits relating to the prior year,
the Group's loss after tax for the Period was GBP301,000 (H1 2022:
GBP101,000 profit). The basic and diluted loss per share was 0.53p
(H1 2022: basic and fully diluted profit of 0.18p and 0.17p
respectively).
Cash, cash flow and net debt
The Group generated net cash from operating activities in the
Period of GBP0.25 million (H1 2022: GBP1.1 million).
After repayment of debt and interest of GBP0.1 million, cash
balances at 30 June 2023 were GBP1.8 million (31 December 2022:
GBP2.0 million). Net funds at 30 June 2023, after deducting lease
liabilities, were GBP1.7 million (31 December 2022: GBP1.7
million).
The Group presently has an undrawn GBP2.5 million overdraft
facility which along with existing cash resources, gives the Group
sufficient capacity to fund organic growth, product development and
its working capital requirements.
During the Period the final instalments of the five year loan
that funded the acquisition of RTS Solutions in 2018 were made
resulting in the Group becoming ungeared with no bank debt.
Acquisitions
The board believes that significant growth for Petards will best
be achieved through a combination of organic revenue growth,
improved operational performance and selective acquisitions. As I
reported in May this year, several businesses have been reviewed
which would complement the Group's activities and support its
growth. The board is encouraged by the fact that vendors' value
aspirations are now showing a new realism and it continues to seek
and review acquisition opportunities.
Outlook
The first half of 2023 proved to be challenging, and while the
board is confident of an improved performance in second half year,
it now believes that it is likely that the outturn for the year
will be below current market expectations.
The Group's businesses have good management teams with strategic
plans in place, to achieve growth in 2024 and 2025 with an ungeared
balance sheet and the financial resources to support. These include
plans for the launch of exciting new products over the coming
months, many of which incorporate artificial intelligence and data
solutions with increased functionality. The successful deployment
of these new products and the improved prospects for acquisitions
mean the board remains confident for the future.
Raschid Abdullah
26 September 2023
Condensed Consolidated Income Statement
for the six months ended 30 June 2023
Unaudited Unaudited
6 months 6 months Audited
ended 30 ended 30 Year ended
June June 31 December
Note 2023 2022 2022
GBP000 GBP000 GBP000
Revenue 4,403 5,521 10,872
Cost of sales (2,320) (2,801) (5,330)
Gross profit 2,083 2,720 5,542
Administrative expenses (2,572) (2,601) (5,323)
Other income - 6 6
---------- --------- ------------
Adjusted EBITDA* (59) 606 1,161
Amortisation of intangibles (254) (313) (586)
Depreciation of property,
plant and equipment (69) (77) (149)
Amortisation of right of
use assets (107) (91) (200)
Share based payment charges - - (1)
Operating (loss)/profit (489) 125 225
Finance income 7 - 1
Financial expenses (18) (24) (48)
(Loss)/profit before tax (500) 101 178
Income tax 4 199 - 346
(Loss)/profit for the
period attributable to
equity shareholders of
the company (301) 101 524
Other comprehensive income - - -
Total comprehensive (expense)/income
for the period (301) 101 524
========== ========= ============
Earnings per ordinary
share (pence)
Basic 8 (0.53) 0.18 0.93
Diluted 8 (0.53) 0.17 0.91
---------- --------- ------------
* 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 2023
Share Share Treasury Equity Retained Total
capital premium shares reserve earnings equity
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
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
-------- -------- ---------- -------- --------- -------
At 1 January 2022 (audited) 575 1,624 (103) 14 5,612 7,722
Profit for the year - - - - 524 524
Total comprehensive income
for the year - - - - 524 524
Equity settled share based
payments - - - - 1 1
At 31 December 2022 (audited) 575 1,624 (103) 14 6,137 8,247
-------- -------- ---------- -------- --------- -------
At 1 January 2023 (audited) 575 1,624 (103) 14 6,137 8,247
Loss for the period - - - - (301) (301)
Total comprehensive income
for the period - - - - (301) (301)
At 30 June 2023 (unaudited) 575 1,624 (103) 14 5,836 7,946
======== ======== ========== ======== ========= =======
Condensed Consolidated Statement of Financial Position
at 30 June 2023
Unaudited Unaudited Audited
30 June 30 June 31 December
2023 2022 2022
GBP000 GBP000 GBP000
ASSETS
Non-current assets
Property, plant and equipment 604 656 593
Right of use assets 129 316 236
Intangible assets 3,740 3,720 3,829
Investments 5 5 5
Deferred tax assets 407 396 519
------- --------- ------------
4,885 5,093 5,182
------- --------- ------------
Current assets
Inventories 1,776 1,488 1,841
Trade and other receivables 5 2,201 2,285 2,502
Cash and cash equivalents 1,804 3,019 2,016
------- --------- ------------
5,781 6,792 6,359
------- --------- ------------
Total assets 10,666 11,885 11,541
======= ========= ============
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) (103)
Equity reserve 14 14 14
Retained earnings 5,836 5,713 6,137
Total equity 7,946 7,823 8,247
------- --------- ------------
Non-current liabilities
Interest-bearing loans and
borrowings 7 78 120 105
------- --------- ------------
78 120 105
------- --------- ------------
Current liabilities
Interest-bearing loans and
borrowings 7 53 382 234
Trade and other payables 6 2,589 3,560 2,955
------- --------- ------------
2,642 3,942 3,189
------- --------- ------------
Total liabilities 2,720 4,062 3,294
------- --------- ------------
Total equity and liabilities 10,666 11,885 11,541
======= ========= ============
Condensed Consolidated Statement of Cash Flows
for the six months ended 30 June 2023
Unaudited
6 months Unaudited Audited
ended 30 6 months Year ended
June ended 30 June 31 December
2023 2022 2022
GBP000 GBP000 GBP000
Cash flows from operating activities
(Loss)/profit for the period (301) 101 524
Adjustments for:
Depreciation of property, plant
and equipment 69 73 149
Amortisation of right of use
assets 107 95 200
Amortisation of intangible assets 254 313 586
Profit on disposal of property,
plant and equipment - - (15)
Financial income (7) - (1)
Financial expenses 18 24 48
Equity settled share-based payment
expenses - - 1
Income tax charge/(credit) (199) - (346)
Operating cash flows before
movement in
working capital (59) 606 1,146
Change in inventories 65 170 (182)
Change in trade and other receivables 431 (296) (334)
Change in trade and other payables (366) 640 (47)
Cash generated from operations 71 1,120 583
Tax received 179 - -
Net cash from operating activities 250 1,120 583
Cash flows from investing activities
Acquisition of property, plant
and equipment (79) (43) (61)
Acquisition of intangible assets - - (93)
Sale of property, plant and
equipment - - 20
Interest received 7 - -
Capitalised development expenditure (164) - (164)
Net cash outflow from investing
activities (236) (43) (298)
Cash flows from financing activities
Bank loan repaid (125) (125) (250)
Interest paid on lease liabilities (9) (12) (24)
Interest paid on loans and borrowings (3) (7) (12)
Principal paid on lease liabilities (83) (185) (248)
Other interest and foreign exchange
losses (6) (6) (12)
Net cash outflow from financing
activities (226) (335) (546)
Net (decrease)/increase in cash
and cash equivalents (212) 742 (261)
Total movement in cash and cash
equivalents
in the period (212) 742 (261)
Cash and cash equivalents at
1 January 2,016 2,277 2,277
Cash and cash equivalents 1,804 3,019 2,016
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 2023 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
2022 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
The GBP199,000 credit in the Period predominantly relates to
enhanced tax deductions for R&D tax claims and losses
surrendered for R&D tax credits in respect of the prior year.
These claims are recognised when receipt is determined to be
probable. No provision for taxation has been made in the Condensed
Consolidated Income Statement for the six months to 30 June 2023
based on the estimated tax provision required for the year ending
31 December 2023 (H1 2022: nil).
5. Trade and other receivables
Unaudited Unaudited
6 months 6 months Audited
ended 30 ended 30 Year ended
June June 31 December
2023 2022 2022
GBP000 GBP000 GBP000
Trade receivables 1,160 1,974 1,957
Corporation tax recoverable 308 - 179
Other receivables and prepayments 733 311 366
2,201 2,285 2,502
========== ========== =============
6. Trade and other payables
Unaudited Unaudited Audited
6 months 6 months Year ended
ended 30 June ended 30 June 31 December
2023 2022 2022
GBP000 GBP000 GBP000
Trade payables 506 843 782
Contract liabilities 1,031 1,366 671
Non-trade payables
and accrued
expenses 1,052 1,351 1,502
2,589 3,560 2,955
=============== =============== =============
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
2023 2022 2022
GBP000 GBP000 GBP000
Bank loan - 250 125
Lease liabilities 53 132 109
---------- ---------- -------------
53 382 234
========== ========== =============
Non-current liabilities
Unaudited
6 months Unaudited Audited
ended 30 6 months Year ended
June ended 30 31 December
2023 June 2022 2022
GBP000 GBP000 GBP000
Lease liabilities 78 120 105
---------- ----------- -------------
78 120 105
========== =========== =============
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
2023 2022 2022
Earnings
(Loss)/profit for the period
(GBP000) (301) 101 865
========= ========= =============
Number of shares
Weighted average number of
ordinary shares ('000) 56,528 56,528 56,528
========= ========= =============
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. Due to the loss
in the first half of 2023 the share options in issue had an
anti-dilutive effect.
Unaudited Unaudited
6 months 6 months Audited
ended 30 ended 30 Year ended
June June 31 December
2023 2022 2022
Earnings
(Loss)/profit for the period
(GBP000) (301) 101 524
========= ========= ============
Number of shares
Weighted average number of ordinary
shares ('000) 57,829 57,832 57,830
========= ========= ============
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IR SEMFMIEDSESU
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