REG - Petards Group PLC - Final Results
09/05/2023 07:15
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RNS Number : 6561Y Petards Group PLC 09 May 2023
9 May 2023
Petards Group plc
("Petards", "the Group" or "the Company")
Final results for the year ended 31 December 2022
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 2022.
Key Highlights:
· Financial
o Total revenues £10,872,000 (2021: £13,574,000)
o Gross profit margin increased to 51.0% (2021: 44.9%)
o Adjusted EBITDA* £1,161,000 (2021: £1,534,000)
o Operating profit £225,000 (2021: £570,000)
o Profit after tax £524,000 (2021: £865,000)
o Continued strong cash generation from operating activities £583,000
(2021: £745,000)
o Total net funds (cash less debt) £1,677,000 (31 Dec 2021: £1,510,000)
o Basic EPS 0.93p and diluted EPS 0.91p (2021: basic 1.51p and diluted
1.47p)
· Operational
o Order book at 31 December 2022: £4 million (31 Dec 2021: £7 million)
o Excellent performance from QRO's ANPR solutions with revenues up 17%
o Recurring revenues from licencing, maintenance, support, spares,
engineering support and similar activities up 11% to around £5 million
o Gross profit margin benefitted from operational efficiencies and higher
recurring revenues
o New product launches included QRO's QBOX, new eyeBOS and various on-going
on-train trials of utilising analytics software
*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 performed well in 2022 generating profits and cash from operations
in challenging conditions, particularly in the Rail market. The current
financial year has started satisfactorily with the Group continuing to trade
cash generatively.
The focus of the Group's business in 2022 was on shorter delivery, lower value
but higher margin contracts, due to market conditions in the UK rail market
which affected order book levels. A significant proportion of the Group's
revenues were derived from such contracts and from our high and growing base
of service related revenues, much of which is contracted on a month-to-month
basis. These service revenues are expected to continue their increasing
trend as the installed base grows.
At 31 December 2022 the order book stood at just over £4 million (31 December
2021: £7 million), most of which is scheduled for delivery in 2023. We are
now seeing encouraging signs for new projects, particularly in the new build
and retrofit rail rolling stock market, for some of which we are currently in
active negotiations.
Management is continuing to drive the Group's development forward, and the
Board's objectives for 2023 are for improved results, strong cash generation
and to further strengthen the Group's portfolio of businesses."
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 in the second half of 2022 the Group continued to
trade profitably on similar levels of revenue as achieved in the first half of
the year. While lower than the previous year, profits were in line with
market expectations.
Revenues for the year ended 31 December 2022 totalled £10.9 million (2021:
£13.6 million), with adjusted EBITDA of £1.16 million (2021: £1.53
million), and profit after tax £0.52 million (2021: £0.86 million).
Reduced sales into the rail market led to Group revenues and profits being
lower than those achieved in 2021. However, gross profit margins for the
year improved to 51% (2021: 44.9%) and were up on the first half of 2022.
This reflected the full year effect of efficiencies made in operations as well
as a focus on higher margin spares, repairs, and engineering services across
the Group.
Net funds (cash less debt including IFRS 16 lease liabilities) at 31 December
2022 increased to £1.68 million (31 December 2021: £1.51 million). Net
cash generated from operating activities was £0.58 million (2021: £0.75
million), and after capital expenditure of £0.3 million (2021: £0.12
million) and debt and finance repayments of £0.55 million (2021: £0.55
million), cash balances at 31 December 2022 closed at £2.02 million (31
December 2021: £2.28 million).
The Group's balance sheet and finances continued to improve with shareholders'
funds up 7% to £8.25 million (31 December 2021: £7.72 million) with 20.3%
being held in net funds at the year end (2021: 19.6%).
Market conditions remained much the same for the second half of the year as
those I reported in my interim statement last September. In the second half
year, strong demand for the Group's ANPR solutions continued, and since the
final quarter of 2022 the UK rail market for our core eyeTrain systems has
shown signs of recovery, with significantly higher bid levels than have been
seen over the last two years.
The Strategic Report provides details of the performance of the Group's
operations during the year.
The Board
We were delighted to appoint John Wakefield as a second independent
non-executive director to the Board post the year end in February 2023. John's
appointment has strengthened the Group's governance..
Environmental Social Governance ("ESG")
The Group continues to develop its strategies and targets for ESG activities
as well as making some specific progress in certain areas.
Petards will continue to embrace ESG considerations in partnership with all
stakeholders including its customers, suppliers, and the communities in which
it operates.
Personnel
Petards success is very much due to the individual efforts and contributions
of its personnel at all levels. That has been particularly the case in the
challenging macroeconomic environment experienced in recent years.
On behalf of the Board and shareholders, I am delighted to express our thanks
to them all for their continued support and dedication throughout the year and
would also like to take the opportunity to welcome recently joined employees
to the Group.
Acquisitions
We are seeing more acquisition opportunities with owners deciding that the
time is now right to sell their businesses at valuations that more
realistically reflect the current economic environment.
The Board believes that the Company is presently well placed to make the right
acquisitions and has some potential targets under review, together with a
pipeline of other businesses of interest. I hope to be able to update
shareholders on progress made in this area during the course of the coming
year.
Outlook
The Group performed well in 2022 generating profits and cash from operations
in challenging conditions, particularly in the Rail market. The current
financial year has started satisfactorily with the Group continuing to trade
cash generatively.
The focus of the Group's business in 2022 was on shorter delivery, lower value
but higher margin contracts, due to market conditions in the UK rail market
which affected order book levels. A significant proportion of the Group's
revenues were derived from such contracts and from our high and growing base
of service related revenues, much of which is contracted on a month-to-month
basis. These service revenues are expected to continue their increasing
trend as the installed base grows.
At 31 December 2022 the order book stood at just over £4 million (31 December
2021: £7 million), most of which is scheduled for delivery in 2023. We are
now seeing encouraging signs for new projects, particularly in the new build
and retrofit rail rolling stock market, for some of which we are currently in
active negotiations.
Management is continuing to drive the Group's development forward, and the
Board's objectives for 2023 are for improved results, strong cash generation
and to further strengthen the Group's portfolio of businesses.
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 - engineering services relating to electronic countermeasure
protection systems, threat simulation systems, mobile radio systems, and other
defence related equipment sold predominantly to the UK Ministry of Defence
("MOD").
Our objective is to develop and grow our businesses on a sustainable basis
through increasing profitability and free cash flow for re-investment
throughout the Group through the fair treatment, ingenuity and efforts of our
primary asset, our people, working ethically and in close partnership with our
customers, suppliers and stakeholders with the objective of delivering above
average returns for our investors.
Operating review
We were pleased that our strategy to grow recurring revenues from licencing,
maintenance, spares and engineering support and similar activities continued
to have a positive effect. While total Group revenues were lower than the
prior year, overall revenues from these activities grew by 11% in 2022 to over
£5 million, accounting for almost half of total Group revenues for the year.
The postponements concerning the transfer of contracts to Great British
Railways impacted the wider UK rail market resulting in "maintain and operate"
contracts being let by the Department for Transport throughout the year.
This affected the acquisition of new clients and orders for both eyeTrain
systems and RTS's Ops Suite software. The UK rail market accounts for a
significant proportion of the Group's activities and while market conditions
remained difficult, we believe Petards is well positioned for growth once the
new contracts are in place.
The Group has invested significantly in developing its eyeTrain technologies
in recent years and we were pleased that during the year the final delivery of
systems and software for the Greater Anglia CL745 and CL755 fleets were
achieved. This included the fleet implementation of Petards' on-cloud eyeBos
back-office system. This enables operators to access and retrieve video
footage and update train software remotely and helps train operators to
improve their timetable adherence, while reducing their operating costs.
Our strategy for the eyeTrain portfolio has been, wherever possible, to
continue to develop its software in a way that makes enhancements to
functionality as cost effective as possible while retaining the proven "core"
that has undergone many years operation both in-the-field and on test rigs.
This enables customers to benefit from the reliability that comes from a wide
installed base operating across different train types and the opportunity to
increase functionality of their systems cost effectively to take account of
changes in operational circumstances and new technologies.
At InnoTrans in Berlin, the world's leading international trade fair for
transport technology, Petards was able to present its development plans to the
industry. In partnership with UK rail industry companies and various
technology partners, the Group has embarked on several trials using analytics
software and Petards eyeTrain systems which we expect will successfully
address a number of different safety and operational challenges faced by rail
and train operators. We believe Petards is exceptionally well placed, with
its large installed UK base of on-train cameras, to provide competitive and
cost effective solutions to these challenges.
As referred to above, market conditions restricted RTS in its ambitions to
grow its customer base for its software solutions such as Ops Suite and Asset
Management Services. However, during the year it secured the renewal of
all its existing software licence and maintenance contracts that came up for
renewal in the period and was successful in increasing the number of SaaS user
licences sold. It also progressed the development of its mobile solution for
its existing software offering. Investment was made in the year in both
sales and marketing resource and later in the period, product development
personnel.
Our Defence activities contributed slightly lower revenues than the prior
year, but still made a very good contribution to the overall Group's results.
The Group has a long history as a supplier to the MOD and UK prime defence
contractors and it continued to operate as provider of specialist engineering
services and value-added reseller to those customers. While the conflict in
Ukraine has increased the UK Government's focus on overall defence spending,
little benefit has yet to be seen in the volumes of the engineering services
we provide.
Alongside its existing offerings, the Group continued to develop opportunities
for its own Defence products. Further progress was made during the year in
the development of the Group's eyeCraft360 situational awareness system by
incorporating enhanced video technology from the eyeTrain portfolio. We
expect eyeCraft360 to undergo further trials with the UK MOD and overseas
customers during 2023.
The results delivered by our QRO ANPR products were extremely pleasing despite
the challenges presented earlier in the year by extremely long lead times on
microprocessors used in those systems. Revenues and contribution have grown
each year since the QRO brand became part of the Group in 2016 and revenues in
2022 were three times those achieved in the first full year of Petards
ownership.
The issue of critical electronic component long lead times was addressed by
the decision to design a new dedicated ANPR platform for mobile use, QBOX.
This was largely based on a common hardware platform used in the QRO's
existing successful NASBOX system. The compact design, cost effectiveness,
operational performance and combination with the QRO Android based Instant
Alerting Console, allowed a significant number of shipments to be made to UK
police forces that might otherwise have been delayed. This new platform
accounted for almost 40% of QRO systems revenues in 2022. The success of the
product culminated in a presentation by two police forces at the UK National
ANPR conference in November attended by key decision makers from all UK police
forces, which has led to an increasing number of inquiries.
Building on the success of the QBOX and in response to customer demand, a
mobile digital video surveillance product that runs on the QBOX platform has
been developed and was launched in March 2023 with a first order for a trial
system received that month.
The QRO brand continues to increase market share and QRO has become one of the
UK's leading suppliers of ANPR solutions in this field.
In terms of its supply chain, as noted above, the Group has not been immune to
the on-going effects of Brexit, Covid-19 and the war in Ukraine on its supply
chain and on its business more generally. While global component shortages are
easing, management has had to work hard to mitigate the effect these had on
delivery timescales.
We have not seen any supply chain or inflationary pressures specific to the
Ukrainian conflict and the Group does not have any customers or direct supply
chain dependencies in Ukraine. While the situation remains concerning, we
are not expecting any specific supply chain inflation attributable to these
factors.
However, the general geo-political risk of the Group's supply chain is an area
of increased focus for management and action has been taken in terms of both
new product development and revenue protection. Management also continues to
be proactive in enhancing measures to reduce its exposure to cyber threats.
Financial review
Operating performance
Group revenues decreased to £10,872,000 (2021: £13,574,000), largely as a
result of the delays in order placement for new-build and refurbishment train
programmes experienced in the transitioning to the new organisational
structure and operating model of the UK's railways referred to above. QRO
ANPR products and services revenues grew by 17% year-on-year continuing to
increase the Group's share of the UK ANPR market.
The increase in overall gross profit margin seen at the half year stage
continued into the second half of 2022. All product areas saw their gross
profit margins at either similar or increased levels as compared with those in
2021.
Higher levels of recurring, licencing, maintenance and support revenues across
all of the Group's activities contributed to higher overall gross profit
margin which improved to 51.0% (2021: 44.9%).
The Group did experience some inflationary pressure in its overheads and
during the year increased spending on sales and marketing resources and
activities, including exhibitions and travel. However, these increases were
offset by reducing costs in other areas and administrative expenses reduced by
£207,000 to £5,323,000 (2021: £5,530,000).
Earnings before interest, tax, depreciation, amortisation, exceptional items,
acquisition costs and share based payment charges ("adjusted EBITDA"), reduced
from £1,534,000 in 2021 to £1,161,000 in 2022.
Net financial expenses reduced to £47,000 (2021: £68,000) due to reduced
interest cost on lease liabilities and lower interest on the Group's CBILs
term loan as that loan reduced through repayments of principal during the
year. The loan was interest free for the first year to May 2022, the
interest charge has been shown gross and the interest saving of £6,000 shown
as other income.
The tax credit of £346,000 (2021: £363,000 credit) comprised net credits of
£64,000 in respect of the current year and £280,000 in respect of prior
years. The £280,000 prior year credit largely arose from SME R&D
reliefs relating to 2021 that were claimed and recognised in 2022. Some of
the tax losses arising were able to be surrendered for R&D tax credits
totalling £182,000, the cash for which has been received post year-end.
Claims for 2022 R&D activities will be made and recognised in 2023. The
balance of the 2022 tax credit related mainly to the offset of 2022 profits
against previously unrecognised tax losses and from net credits arising
between the differential tax rates between current and deferred tax of 19% and
25% respectively.
The overall result for the Group for the year was a profit after tax of
£524,000 (2021: £865,000) and represented diluted earnings per share of
0.91p (2021: 1.47p).
Research and development
The Group continued to invest in its internally developed software and
hardware solutions. That investment totalled £247,000 in 2022 amounting to
2.3% of revenues (2021: £553,000), of which £164,000 was capitalised (2021:
£17,000). The capitalised development costs related to enhanced functionality
for the QBOX ANPR system launched in the year and the Group's eyeTrain
advanced on-train sensing software and systems.
Cash, cash flow and net debt
The Group again recorded a strong cash generative operating performance with
net cash inflows from operating activities totaling £583,000 (2021:
£745,000). This was despite working capital increasing by a net £563,000
in the year. This increase was primarily driven by an increase in ANPR related
inventories to address lead times and higher trade receivables following
strong ANPR system revenues in the last few weeks of the year compared to the
prior year.
Capitalised development expenditure and a new IT environment and significant
ERP software upgrade accounted for the majority of the £298,000 net cash
outflows from investing activities (2021: £127,000). The net financing
outflows of £546,000 (2021: £545,000) related to repayments of the 5-year
term loan and the principal paid on lease liabilities. At 31 December 2022
the term loan had only two remaining quarterly instalments, totaling
£125,000.
At 31 December 2022 the Group's cash and cash equivalents were £2,016,000
(2021: £2,277,000) and net funds at 31 December 2022 were £1,677,000 (2021:
£1,510,000) after deducting IFRS 16 lease liabilities of £214,000 (2021:
£392,000).
The Group retains a £2.5 million overdraft facility, not due for renewal
until May 2024, providing the Group with additional capacity to finance
investment as appropriate, although this was not utilised in 2022 or
subsequently to date.
Osman Abdullah
Group Chief Executive
Consolidated income statement
for year ended 31 December 2022
Note 2022 2021
£000 £000
Revenue 2 10,872 13,574
Cost of sales (5,330) (7,482)
Gross profit 5,542 6,092
Administrative expenses (5,323) (5,530)
Other income 6 8
Adjusted EBITDA* 1,161 1,534
Amortisation of intangibles (586) (603)
Depreciation of property, plant and equipment (149) (193)
Amortisation of right-of-use assets (200) (136)
Share based payment charges (1) (32)
Operating profit 225 570
Finance income 1 -
Finance expenses 3 (48) (68)
Profit before tax 178 502
Income tax 4 346 363
Profit for the year attributable to equity shareholders
of the parent 524 865
Other comprehensive income - -
Total comprehensive income for the year 524 865
Profit per ordinary share (pence)
Basic 5 0.93 1.51
Diluted 5 0.91 1.47
* 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 2022
Treasury Equity
Share Share shares reserve Retained Total
capital premium earnings equity
£000 £000 £000 £000 £000 £000
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
Exercise of share options - - (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
At 1 January 2022 575 1,624 (103) 14 5,612 7,722
Profit for the year - - - - 524 524
Total comprehensive income for the year - - - - 524 524
Contributions by and distributions to owners
Equity-settled share based payments - - - - 1 1
Total contributions by and distributions to owners - - - - 1 1
At 31 December 2022 575 1,624 (103) 14 6,137 8,247
Consolidated balance sheet
at 31 December 2022
Note
2022 2021
£000 £000
ASSETS
Non-current assets
Property, plant and equipment 593 686
Right of use assets 236 366
Intangible assets 3,829 4,031
Investments in subsidiary undertakings 5 5
Deferred tax assets 6 519 396
5,182 5,484
Current assets
Inventories 1,841 1,659
Trade and other receivables 2,502 1,989
Cash and cash equivalents 2,016 2,277
6,359 5,925
Total assets 11,541 11,409
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) (103)
Equity reserve 14 14
Retained earnings 6,137 5,612
Total equity 8,247 7,722
Non-current liabilities
Interest-bearing loans and borrowings 7 105 284
Current liabilities
Interest-bearing loans and borrowings 7 234 483
Trade and other payables 2,955 2,920
3,189 3,403
Total liabilities 3,294 3,687
Total equity and liabilities 11,541 11,409
Consolidated statement of cash flows
for year ended 31 December 2022
Note
2022 2021
£000 £000
Cash flows from operating activities
Profit/(loss) for the year 524 865
Adjustments for:
Depreciation of property, plant and equipment 149 193
Amortisation of right of use assets 200 136
Amortisation of intangible assets 586 603
Profit on disposal of property, plant and equipment (15) -
Profit on disposal of right of use assets - (8)
Financial income (1) -
Financial expenses 3 48 68
Equity settled share-based payment expenses 1 32
Income tax credit 4 (346) (363)
Operating cash flows before movement in
working capital 1,146 1,526
Change in inventories (182) 713
Change in trade and other receivables (334) 641
Change in trade and other payables (47) (2,596)
Cash generated from operations 583 284
Tax received - 461
Net cash from operating activities 583 745
Cash flows from investing activities
Acquisition of property, plant and equipment (61) (118)
Acquisition of intangible assets (93) -
Sale of right of use assets - 8
Sale of property plant and equipment 20 -
Capitalised development expenditure (164) (17)
Net cash outflow from investing activities (298) (127)
Cash flows from financing activities
Bank loan repaid (250) (250)
Interest paid on loans and borrowings (12) (18)
Principal paid on lease liabilities (248) (122)
Interest paid on lease liabilities (24) (27)
Other interest and foreign exchange 3 (12) (25)
Purchase of treasury shares - (103)
Net cash outflow from financing activities (546) (545)
Net increase in cash and cash equivalents (261) 73
Total movement in cash and cash equivalents in the year (261) 73
Cash and cash equivalents at 1 January 2,277 2,204
Cash and cash equivalents at 31 December 2,016 2,277
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 2022 or 31 December 2021 but is derived from
those accounts. Statutory accounts for 2021 have been delivered to the
Registrar of Companies and those for 2022 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 £0.13 million at the year-end.
The Group has prepared working capital forecasts based on the 2023 budget and
2024 forecast. The time period reviewed is to 31 December 2024. At 31 March
2023 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 2024. 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:
2022 2021
£000 £000
United Kingdom 10,524 12,162
Continental Europe 276 834
Rest of World 72 578
10,872 13,574
The timing of revenue recognition can be analysed as follows:
2022 2021
£000 £000
Products and services transferred at a point in time 6,990 11,370
Products and services transferred over time 3,882 2,204
10,872 13,574
3 Finance expenses
2022 2021
£000 £000
Interest expense on financial liabilities at amortised cost 6 16
Interest expense on lease liabilities 24 27
Other interest payable 6 20
Other exchange loss 12 5
Financial expenses 48 68
4 Taxation
Recognised in the income statement
2022 2022 2021 2021
£000 £000 £000 £000
Current tax (credit)/expense
Current tax charge 116 43
Adjustments in respect of prior years (224) (532)
Total current tax (108) (489)
Deferred tax (credit)/expense
Origination and reversal of temporary differences (144) (90)
Utilisation of recognised tax losses 27 76
Recognition of tax losses (65) -
Adjustment in respect of prior years (56) 234
Effect of change in rate of corporation tax - (94)
Total deferred tax (238) 126
Total tax credit in income statement (346) (363)
The £224,000 credit to current tax in respect of prior years predominantly
relates 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.
Reconciliation of effective tax rate
2022 2021
£000 £000
Profit before tax 178 502
Tax using the UK corporation tax rate of 19% (2021: 19%) 34 95
Non-deductible expenses 8 9
Non-taxable income (1) (10)
Utilisation of previously unrecognised tax losses (64) (65)
Adjustments in respect of prior years (280) (298)
Effect of differential tax rate for deferred tax (43) -
Effect of change in rate of corporation tax - (94)
Total tax credit (346) (363)
Factors that may affect future current and total tax charges
The main rate of UK corporation tax, which was 19% for the year, changed 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 and 31 December 2022.
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.
2022 2021
Earnings
Profit for the year (£000) 524 865
Number of shares
Weighted average number of ordinary shares ('000) 56,528 57,441
Basic profit per share (pence) 0.93 1.51
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.
2022 2021
Adjusted earnings
Profit for the year (£000) 524 865
Number of shares
Weighted average number of ordinary shares ('000) 57,830 58,744
Diluted profit per share (pence) 0.91 1.47
6 Deferred tax assets and liabilities
Recognised deferred tax assets and liabilities are attributable to the following:
Assets Liabilities Net
2022 2021 2022 2021 2022 2021
£000 £000 £000 £000 £000 £000
Property, plant and equipment - - (66) (81) (66) (81)
Provisions 7 6 - - 7 6
Tax value of loss carry-forwards 931 926 - - 931 926
Intangible fixed assets - - (353) (455) (353) (455)
Tax assets/(liabilities) 938 932 (419) (536) 519 396
Offset of tax (419) (536) 419 536 - -
Net tax assets 519 396 - - 519 396
Unrecognised deferred tax assets are attributable to the following:
Assets Assets
2022 2021
£000 £000
Property, plant and equipment 306 365
Provisions 2 5
Tax value of loss carry-forwards 1,829 1,856
Tax assets 2,137 2,226
There is no expiry date on the above unrecognised deferred tax assets.
Movement in deferred tax during the year
1 January Recognised 31 December
2022 in income 2022
£000 £000 £000
Property, plant and equipment (81) 15 (66)
Provisions 6 1 7
Tax value of loss carry-forwards 926 5 931
Intangible fixed assets (455) 102 (353)
396 123 519
Movement in deferred tax during the prior 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
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.
2022 2021
£000 £000
Non-current liabilities
Bank loan - 125
Lease liabilities 105 159
105 284
Current liabilities
Bank loan 125 250
Current portion of lease liabilities 109 233
234 483
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 2022.
Changes in liabilities from financing activities
Non-current loans and borrowings Current
loans and borrowings Lease
liabilities
£000 £000 £000
Balance at 1 January 2022 125 250 392
Cash items:
Repayment of bank loan and interest - (256) -
Payment of lease liabilities - - (272)
Non-cash items:
New lease liabilities - - 70
Interest expense - 6 24
Re-classified from non-current to in year (125) 125
Balance at 31 December 2022 - 125 214
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 current to non-current in year (250) 250 -
Balance at 31 December 2021 125 250 392
8 Share capital
At 31 At 31
December December
2021
2022
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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