REG - Petards Group PLC - Final Results
05/05/2022 07:00
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RNS Number : 3775K Petards Group PLC 05 May 2022
5 May 2022
Petards Group plc
("Petards", "the Group" or "the Company")
Final results for the year ended 31 December 2021
Petards Group plc (AIM: PEG), the AIM quoted developer of advanced security
and surveillance systems, is pleased to report its audited final results for
the year ended 31 December 2021.
Key Highlights:
· Financial
o Total revenues £13,574,000 (2020: £13,001,000)
o Gross profit margin increased to 44.9% (2020: 36.4%)
o Adjusted EBITDA* £1,534,000 profit (2020: £320,000 profit)
o Operating profit £570,000 (2020: £1,145,000 loss)
o Profit after tax £865,000 (2020: £583,000 loss)
o Continued strong cash generation from operating activities £745,000
(2020: £2,398,000)
o Total net funds (cash less debt) £1,510,000 (31 Dec 2020: £1,179,000)
o Basic EPS 1.51p earnings and diluted EPS 1.47p earnings (2020: basic and
diluted 1.01p loss)
o Secured undrawn £2.5 million 3-year CBILS overdraft facility to May 2024
· Operational
o Order book at 31 December 2021: circa £7 million (30 June 2021: circa
£9 million)
o £8 million revenue coverage for FY 2022 from deliveries and orders on
hand at 31 March 2022
o Margins improved significantly following restructuring undertaken in prior
year
o Another record trading performance from QRO which is continuing into 2022
o On-train trials of AI technology solution arising from work of Petards'
Virtual Technology Centre
*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 closed the year with an order book of around £7 million and
trading for the first three months of 2022 has started well, with the Group
trading slightly ahead of management's expectations. At present this is
thought to be timing related rather than an indication of a better than
expected performance for the year. With scheduled deliveries of £8 million
already secured for the current year by the end of the first quarter, the
Board has confidence that the Group is positioned to make further progress in
2022."
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 (http://www.petards.com)
Raschid Abdullah, Chairman Mb: 07768 905004
WH Ireland Limited, Nomad and Joint Broker https://www.whirelandplc.com/capital-markets
Mike Coe, Sarah Mather Tel: 020 7220 1666
Hybridan LLP, Joint Broker www.hybridan.com (http://www.hybridan.com)
Claire Louise Noyce Tel: 020 3764 2341
claire.noyce@hybridan.com (mailto:claire.noyce@hybridan.com)
Chairman's statement
I am pleased to report that the results for the year again showed a
significant improvement against those reported in the prior year. Against a
background of economic uncertainty arising from the legacy of Covid-19 and its
various successor strains, and inflationary fears becoming a reality, the
Group traded in line with market expectations with revenues increasing to
£13,574,000 (2020: £13,001,000) and adjusted EBITDA* increasing almost
five-fold to a profit of £1,534,000 (2020: £320,000).
This improvement was seen across all other profit measures with profit before
tax increasing to £502,000 from a loss of £1,238,000, and profit after tax
to £865,000 from a £583,000 loss.
Net cash generated from operating activities in the year totalled £745,000
(2020: £2,398,000) leading to closing cash balances at 31 December 2021 of
£2,277,000 (31 December 2020: £2,204,000) and net funds of £1,510,000 (31
December 2020: £1,179,000).
As anticipated in my statement of last September, revenues and profitability
were weighted towards the first half of the year. However, given the
challenges outlined above facing the Group's businesses, the Board considers
the result to be creditable with both the first and second half of the year
being profitable, and justified its decision in 2020 to realign its cost base,
a process which continued into 2021.
While the last couple of years have been difficult for smaller businesses such
as Petards, I am pleased to report that the Group's balance sheet is in good
shape. Net assets at 31 December 2021 increased to £7,722,000 (2020:
£6,928,000) including cash balances of £2,277,000 (2020: £2,204,000) and
with minimal debt.
Personnel
The success arising out of the reorganisation of the Group's eyeTrain
operations in 2020 and other cost realignments undertaken in 2021, has been
very much to the credit of our management and their respective teams. They
have all demonstrated commitment and resilience during this period of
significant change.
We very much appreciate the key role all personnel have played and continue to
play in developing the Group, especially through the difficult times of the
last couple of years, and I and the Board on behalf of shareholders extend our
thanks to each and every one of them.
I am also pleased to welcome to the Group, Ben Gillam as Company Secretary and
Group Financial Controller who joined us earlier this year. Ben is an
experienced chartered accountant and joins us from TT Electronics plc where he
spent the last 15 years in a variety of head office and operational finance
roles.
Environmental Social Governance ("ESG")
The Board has continued to work towards relevant proportionate long term ESG
goals within the Group's operations. The on-going development of our
operations and product offerings will continue to embrace ESG considerations
in partnership with our customers, suppliers, and the communities in which we
operate.
Petards Virtual Technology Centre ("PVTC")
I am pleased to report that our PVTC has been successful in providing a
focussed technical forum to drive forward the Group's product development
plans. As a result of work carried out through the PVTC, we are presently
trialling with a major train operator, an artificial intelligence ("AI") and
machine learning solution which utilises Petards' existing technology. If
successful, this on-train solution would provide rail operators with the
potential for real time data analytics to identify on-track hazards and safety
improvements to their rail networks.
Acquisitions
The Board has reviewed a number of potential acquisitions, both in the rail
and surveillance infrastructure markets. Agreeing fair value with the
vendors of these businesses has proved challenging, particularly those who
depend heavily on the government purse for their revenue at a time when many
forecast projects are being deferred.
Despite this background, ,the Company will continue to review relevant
opportunities.
Outlook
The Group enters 2022 with its reduced cost base, improved productivity and a
strong, cash positive balance sheet.
The strong financial performance delivered for 2021 was achieved against the
backdrop of the continuing effects of the pandemic on government spending in
certain sectors, and the state of flux experienced by the UK rail industry in
recent times, including the formation of Great British Railways. Both these
factors are likely to influence the outcome for the current financial year.
While there has been increasing bid activity in recent months, primarily for
smaller projects, the timing of order placements is still difficult to
predict. For the immediate future, the eyeTrain order book is likely to
comprise smaller projects with shorter delivery cycles. This contrasts with
the larger multi-year deliveries for new rolling stock projects that have
comprised a significant element of the Group's order book in recent years.
Such smaller retrofit and refurbishment orders are often delivered in the same
year they are received.
The Group closed the year with an order book of around £7 million and trading
for the first three months of 2022 has started well, with the Group trading
slightly ahead of management's expectations. At present this is thought to
be timing related rather than an indication of a better than expected
performance for the year. With scheduled deliveries of £8 million already
secured for the current year by the end of the first quarter, the Board has
confidence that the Group is positioned to make further progress in 2022.
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
The significant increase in adjusted EBITDA profit in 2021 reflected the full
year benefit of the restructuring of the Group's eyeTrain operations in 2020,
and the continued growth of the Group's Traffic solutions. Higher levels of
maintenance and support activities from rail and defence customers also
contributed to the stronger performance.
Notable achievements within the Group's eyeTrain operation included the
delivery of systems for fitment by Porterbrook Maintenance to the UK's first
tri-mode trains, capable of running on overhead and third rail electric lines
as well as under their own diesel power. This £1 million project was
delivered in full, on schedule and only a few months from when the contract
was awarded.
Management also continued to have to manage a much higher level of
re-scheduling of deliveries by customers than was the case pre-pandemic.
However, with the volume of train services increasing, revenues from the
provision of engineering support, spares and repairs for our existing
installed base recovered to almost pre-pandemic levels.
In May 2021, the long awaited government policy paper on the UK railways,
"Great British Railways: Williams-Shapps Plan for Rail" ("the Plan") was
published, based on a 'root and branch' review of the structure of the UK rail
industry. The Plan is wide ranging covering the sector's recovery post
pandemic, passenger experience, safe and secure railways for all, growth not
contraction of the network while seeking to retain the best elements of the
private sector. In addition to the impact the Plan has had on short term
investment decisions by central government, the demise of the independent
Train Operating Companies ("TOCs") has further affected UK rail investment and
decision making, at least in the shorter term.
Recognising that the Plan was imminent and the impact this was starting to
have on the Group's rail customers when it came to decisions concerning new
investment, the Board took the view in 2020 to plan based on there being
little new business available from major new build or refurbishment rolling
stock projects in the near term and planned accordingly. This approach proved
justified with the completion of the acquisition of Bombardier Transportation
by Alstom during the early part of 2021 compounding the degree of change
experienced in the sector.
Nevertheless, while no significant projects were secured in the period, we are
starting to see a higher level of eyeTrain opportunities both for the UK and
overseas markets. These are predominantly for smaller retrofit and upgrade
projects rather than larger new train build projects with lead times from
first enquiry to first delivery for the former being much shorter than new
build projects which have dominated the Group's order book in the last ten
years.
While, when available, suitable larger contracts will be tendered for,
management's focus will be on securing contracts where it is able to protect
its margins through quality of product, systems and delivery performance over
shorter contract delivery time periods.
Elsewhere in rail, RTS Solutions ("RTS") had another solid year in terms of
its revenue, profitability and cash flow and licence and maintenance contract
renewals totalling £0.8 million were received for its rail infrastructure
focussed software offering.
At the outset of the year, the Board approved a strategy proposal involving
investment in new software offerings and services for RTS's customers and in
marketing and business development resources, including the development and
launch of the new RTS website www.rts-solutions.net
(http://www.rts-solutions.net) in December. The Board views RTS as having
the potential to further develop in the trackside management and rail health
& safety segment, and with this in mind has embarked on a review of this
sub-sector for opportunities as well as acquisitions that might reduce the
timeframe of route to market.
QRO Solutions ("QRO") had another record year in terms of revenue, cash flow
and profitability. Of particular note was the on-time delivery of an export
order worth in excess of £500,000 to a new customer for ProVida speed
enforcement systems, and increasing sales of the NASBox, whose rights were
acquired in 2020, with 400 units being delivered in 2021.
We are expecting the coming year for QRO to continue strongly, with the
addition of six new UK police forces to QRO's customer list and the launch of
several new products. These include the Q-Box, a cost effective in-vehicle
ANPR solution for which there has been a high level of customer interest and
revenues in the first quarter of 2022.
Petards' Defence made an increased contribution to the Group's profitability
in the year. It is primarily a provider of specialist engineering services
and value added reseller, for which it is well known to the MOD and UK prime
defence contractors. Following the Board's decision in 2020 to focus on
securing smaller orders, order intake increased in 2021 and it is hoped that
the securing of a 5-year framework contract in June from the MOD for the
support of threat simulator systems will give rise to additional order flow in
the coming years. Management is seeking to develop its Defence offering,
playing to its strength and experience of providing customers with high
value-add support and engineering services.
During the year Petards was not totally immune to the impact of Brexit and
Covid-19 on its supply chain. Global component shortages have meant that
management have had to work hard to mitigate any implications these had on
delivery timescales. Where practicable certain components have been
purchased ahead of time, and inventory levels increased, and the situation
continues to be closely monitored.
So far, we have not seen any supply chain or inflationary pressures specific
to the Ukrainian conflict. The Group does not have any customers or direct
supply chain dependencies in Ukraine and while the situation is concerning,
the Board is not expecting any specific supply chain inflation.
The growing risk of cyber threats is an area of focus for the Group's
customers. This may well present sales opportunities in due course, but with
regard to the resilience of the Group's own systems, during and since the year
end it has been proactive in enhancing the measures taken to reduce exposure
to such threats.
Financial review
Operating performance
Group revenues increased by 4% to £13,574,000 (2020: £13,001,000). The
main driver for the increased revenues in 2021 was the Group's Traffic
products, with QRO continuing its strong growth record since its acquisition
five years ago. Revenues from Rail and Defence products were at similar
levels to those achieved in the prior year.
The increase in overall gross profit margin seen at the half year stage
continued into the second half of 2021. All product areas saw their gross
profit margins at either similar or increased levels as compared with those in
2020 with the cost base reductions made in 2020 feeding through to higher
gross profit margin. This, coupled with higher levels of service and licence
income, and significantly lower non-recurring eyeTrain project costs, resulted
in gross profit margins improving year-on-year to 44.9% (2020: 36.4%).
While administrative costs, fell by £349,000 to £5,530,000 (2020:
£5,879,000), the like-for-like reduction was small as the prior year included
exceptional restructuring costs of £425,000 and Job Retention Scheme grants
received of £141,000. QRO saw some growth in its overheads related to its
growing revenues, but this was offset by reductions in other operations.
There was a very significant increase in earnings before interest, tax,
depreciation, amortisation, exceptional items, acquisition costs and share
based payment charges ("adjusted EBITDA"), which rose from a profit of
£320,000 in 2020 to a profit of £1,534,000 in 2021.
Net financial expenses reduced to £68,000 (2020: £93,000) mainly due to a
lower foreign exchange charge, and lower interest on the Group's CBILs term
loan as that loan reduced through repayments. While that loan is interest
free for the first year to May 2022, the interest charge has been shown gross
and the interest saving of £8,000 shown as other income.
The tax credit of £363,000 (2020: £655,000 credit) largely reflected R&D
tax credits of £532,000 claimed and recognised in 2021, relating to 2020,
with the related cash refunds of £461,000 being received in the year.
Claims for 2021 R&D activities will be made and recognised in 2022. The
balance of the 2021 tax credit included a deferred tax charge of £126,000
arising from the surrender of previously recognised losses for R&D tax
credits and the utilisation of previously recognised tax losses, net of a
£94,000 credit from the recognition of net deferred tax assets at the
corporation tax rate of 25% effective from 1 April 2023.
The overall result for the Group for the year was a profit after tax of
£865,000 (2020: £583,000 loss) and represented diluted earnings per share of
1.47p (2020: 1.01p loss).
Research and development
The Group continued to invest in its internally developed software and
hardware solutions. That investment totalled £553,000 in 2021 amounting to
4% of revenues (2020: £1,284,000), of which only £17,000 was capitalised
(2020: £371,000). The capitalised development costs related to the Group's
eyeTrain advanced on-train sensing software and systems. In addition to
eyeTrain, the other R&D costs incurred related to the enhancement of the
software and hardware solutions of QRO and RTS.
Cash, cash flow and net debt
The Group again recorded a strong cash generative performance with net cash
inflows from operating activities totaling £745,000 (2020: £2,398,000).
This was despite working capital increasing by a net £1,242,000 in the year
much of which related to the unwinding in the second half year of a very
favorable working capital position on a large project that arose in 2020.
The operating cash inflows included £461,000 in respect of R&D tax
credits arising from product development undertaken in 2020. The prior
year's R&D tax receipts of £1,660,000 were much higher as they included
R&D tax credits relating to more than one year.
Capital equipment purchases for QRO accounted for the majority of the
£127,000 net cash outflows from investing activities (2020: £543,000). In
addition to repayments of the 5-year term loan and the principal paid on lease
liabilities, the net financing outflows of £545,000 (2020: £478,000)
included £103,000 in respect of the Company's purchase of 1,000,000 of its
own ordinary shares which are presently held as treasury shares.
At 31 December 2021 the Group's cash and cash equivalents were £2,277,000
(2020: £2,204,000) and net funds at 31 December 2021 were £1,510,000 (2020:
£1,179,000 net debt) after deducting IFRS 16 lease liabilities of £392,000
(2020: £398,000).
In May 2021 the Group entered into a 3-year 2.5 million CBILs overdraft
facility to provide the Group with the capacity to finance additional working
capital should that be required, although to date this has not been drawn.
Osman Abdullah
Group Chief Executive
Consolidated income statement
for year ended 31 December 2021
Note 2021 2020
£000 £000
Revenue 2 13,574 13,001
Cost of sales (7,482) (8,267)
Gross profit 6,092 4,734
Administrative expenses (5,530) (5,879)
Other income 8 -
Adjusted EBITDA* 1,534 320
Amortisation of intangibles (603) (637)
Depreciation of property, plant and equipment (193) (244)
Amortisation of right of use assets (136) (133)
Share based payment charges (32) (26)
Exceptional restructuring costs - (425)
Operating profit/(loss) 570 (1,145)
Finance income 3 - -
Finance expenses 3 (68) (93)
Profit/(loss) before tax 502 (1,238)
Income tax 4 363 655
Profit/(loss) for the year attributable to equity shareholders
of the parent 865 (583)
Other comprehensive income - -
Total comprehensive income/(expense) for the year 865 (583)
Earnings/(loss) per ordinary share (pence)
Basic 5 1.51 (1.01)
Diluted 5 1.47 (1.01)
* 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 2021
Equity
Share Share Treasury reserve Retained Total
capital premium shares earnings equity
£000 £000 £000 £000 £000 £000
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
At 1 January 2021 575 1,624 - 14 4,715 6,928
Profit for the year - - - - 865 865
Total comprehensive income for the year - - - - 865 865
Contributions by and distributions to owners
Equity-settled share based payments - - - - 32 32
Purchase of treasury shares - - (103) - - (103)
Total contributions by and distributions to owners - - (103) - 32 (71)
At 31 December 2021 575 1,624 (103) 14 5,612 7,722
Consolidated balance sheet
at 31 December 2021
Note
2021 2020
£000 £000
ASSETS
Non-current assets
Property, plant and equipment 686 761
Right of use assets 366 387
Intangible assets 4,031 4,617
Investments in subsidiary undertakings 5 5
Deferred tax assets 6 396 522
5,484 6,292
Current assets
Inventories 1,659 2,372
Trade and other receivables 1,989 2,645
Cash and cash equivalents 2,277 2,204
5,925 7,221
Total assets 11,409 13,513
EQUITY AND LIABILITIES
Equity attributable to equity holders of the parent
Share capital 8 575 575
Share premium 1,624 1,624
Treasury shares (103) -
Equity reserve 14 14
Retained earnings 5,612 4,715
Total equity 7,722 6,928
Non-current liabilities
Interest-bearing loans and borrowings 7 284 649
Current liabilities
Interest-bearing loans and borrowings 7 483 376
Trade and other payables 2,920 5,560
3,403 5,936
Total liabilities 3,687 6,585
Total equity and liabilities 11,409 13,513
Consolidated statement of cash flows
for year ended 31 December 2021
Note
2021 2020
£000 £000
Cash flows from operating activities
Profit/(loss) for the year 865 (583)
Adjustments for:
Depreciation of property, plant and equipment 193 244
Amortisation of right of use assets 136 133
Amortisation of intangible assets 603 637
Loss on disposal of property, plant and equipment - 1
Profit on disposal of right of use assets (8) (5)
Financial expenses 3 68 93
Equity settled share-based payment expenses 32 26
Income tax credit 4 (363) (655)
Operating cash flows before movement in
working capital 1,526 (109)
Change in inventories 713 58
Change in trade and other receivables 641 226
Change in trade and other payables (2,596) 563
Cash generated from operations 284 738
Tax received 461 1,660
Net cash from operating activities 745 2,398
Cash flows from investing activities
Acquisition of property, plant and equipment (118) (33)
Sale of right of use assets 8 16
Acquisition of intangible assets - (150)
Capitalised development expenditure (17) (371)
Acquisition of investments - (5)
Net cash outflow from investing activities (127) (543)
Cash flows from financing activities
Bank loan repaid 7 (250) (250)
Interest paid on loans and borrowings 7 (18) (33)
Principal paid on lease liabilities 7 (122) (138)
Interest paid on lease liabilities 7 (27) (20)
Other interest and foreign exchange 3 (25) (44)
Proceeds from exercise of share options - 7
Purchase of treasury shares (103) -
Net cash outflow from financing activities (545) (478)
Net increase in cash and cash equivalents 73 1,377
Total movement in cash and cash equivalents in the year 73 1,377
Cash and cash equivalents at 1 January 2,204 827
Cash and cash equivalents at 31 December 2,277 2,204
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 2021 or 31 December 2020 but is derived from
those accounts. Statutory accounts for 2020 have been delivered to the
Registrar of Companies and those for 2021 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 2022 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 a 3-year overdraft facility of £2.5 million which
is available until May 2024. The overdraft facility was not drawn during the
year. Interest bearing loans and borrowings, excluding lease liabilities,
totalled £0.38 million at the year-end.
The Group has prepared working capital forecasts based on the 2022 budget
updated for material known changes since it was prepared and the 2022
management accounts to 31 March 2022. The time period reviewed is to 31 May
2023. At 31 March 2022 the Group had cash balances of £2.2 million and the
£2.5 million overdraft facility was 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 30 April 2023. 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:
2021 2020
£000 £000
United Kingdom 12,162 12,080
Continental Europe 834 837
Rest of World 578 84
13,574 13,001
The timing of revenue recognition can be analysed as follows:
2021 2020
£000 £000
Products and services transferred at a point in time 11,370 11,118
Products and services transferred over time 2,204 1,883
13,574 13,001
3 Finance expenses
2021 2020
£000 £000
Interest expense on financial liabilities at amortised cost 16 29
Interest expense on lease liabilities 27 20
Other interest payable 20 23
Other exchange loss 5 21
Financial expenses 68 93
4 Taxation
Recognised in the income statement
2021 2021 2020 2020
£000 £000 £000 £000
Current tax (credit)/expense
Current tax charge 43 87
Adjustments in respect of prior years (532) (748)
Total current tax (489) (661)
Deferred tax (credit)/expense
Origination and reversal of temporary differences (90) (358)
Utilisation of recognised tax losses 76 13
Adjustment in respect of prior years 234 412
Effect of change in rate of corporation tax (94) (61)
Total deferred tax 126 6
Total tax credit in income statement (363) (655)
The £532,000 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. The £234,000 deferred tax
expense in respect of prior years, predominantly relates to previously
recognised losses surrendered for the above R&D tax credits.
The main rate of UK corporation tax, which was 19% for the year, will change
to 25% with effect from 1 April 2023. That change was substantively enacted on
24 May 2021 and therefore the effect of this rate reduction has been applied
to the deferred tax balances as at 31 December 2021.
Reconciliation of effective tax rate
2021 2020
£000 £000
Profit/(loss) before tax 502 (1,238)
Tax using the UK corporation tax rate of 19% (2019: 19%) 95 (236)
Non-deductible expenses 9 18
Non-taxable income (10) -
Recognition of previously unrecognised tax losses (65) (41)
Adjustments in respect of prior years (298) (336)
Effect of change in rate of corporation tax (94) (61)
Other reconciling items - 1
Total tax credit (363) (655)
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, which exclude treasury shares.
2021 2020
Earnings
Profit/(loss) for the year (£000) 865 (583)
Number of shares
Weighted average number of ordinary shares ('000) 57,441 57,526
Basic earnings/(loss) per share (pence) 1.51 (1.01)
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. In
2020, the share options in issue had an anti-dilutive effect due to the loss
in that year.
2021 2020
Adjusted earnings
Profit/(loss) for the year (£000) 865 (583)
Number of shares
Weighted average number of ordinary shares ('000) 58,744 57,526
Diluted earnings/(loss) per share (pence) 1.47 (1.01)
6 Deferred tax assets and liabilities
Recognised deferred tax assets and liabilities are attributable to the following:
Assets Liabilities Net
2021 2020 2021 2020 2021 2020
£000 £000 £000 £000 £000 £000
Property, plant and equipment - - (81) (48) (81) (48)
Provisions 6 5 - - 6 5
Tax value of loss carry-forwards 926 937 - - 926 937
Intangible fixed assets - - (455) (372) (455) (372)
Tax assets/(liabilities) 932 942 (536) (420) 396 522
Offset of tax (536) (420) 536 420 - -
Net tax assets 396 522 - - 396 522
Unrecognised deferred tax assets are attributable to the following:
Assets Assets
2021 2020
£000 £000
Property, plant and equipment 365 278
Provisions 5 2
Tax value of loss carry-forwards 1,856 1,475
Tax assets 2,226 1,755
There is no expiry date on the above unrecognised deferred tax assets.
Movement in deferred tax during the year
1 January Recognised 31 December
2021 in income 2021
£000 £000 £000
Property, plant and equipment (48) (33) (81)
Provisions 5 1 6
Tax value of loss carry-forwards 937 (11) 926
Intangible fixed assets (372) (83) (455)
522 (126) 396
Movement in deferred tax during the prior year
1 January Recognised 31 December
2020 in income 2020
£000 £000 £000
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
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.
2021 2020
£000 £000
Non-current liabilities
Bank loan 125 375
Lease liabilities 159 274
284 649
Current liabilities
Bank loan 250 252
Current portion of lease liabilities 233 124
483 376
The interest rate on the bank loan is set at The Bank of England bank rate
plus 3.25% 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 has available a £2.5 million 3-year CBILS overdraft facility which
expires in May 2024, and which was undrawn at 31 December 2021.
Changes in liabilities from financing activities
Non-current loans and borrowings Current
loans and borrowings Lease
liabilities
£000 £000 £000
Balance at 1 January 2021 375 252 398
Cash items:
Repayment of bank loan and interest - (268) -
Payment of lease liabilities - - (148)
Non-cash items:
New lease liabilities - - 115
Interest expense - 16 27
Re-classified from non-current to in year (250) 250 -
Balance at 31 December 2021 125 250 392
Non-current loans and borrowings Current
loans and borrowings Lease
liabilities
£000 £000 £000
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
8 Share capital
At 31 At 31
December December
2020
2021
Number
Number
Number of shares in issue - allotted, called up and fully paid
Ordinary shares of 1p each 57,528,229 57,528,229
£000 £000
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 of which 1,000,000 are held in treasury. Therefore, the total number of
voting rights in the Company is 56,528,229.
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
(http://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.
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