TIDMPEG
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 GBP10,872,000 (2021: GBP13,574,000)
o Gross profit margin increased to 51.0% (2021: 44.9%)
o Adjusted EBITDA* GBP1,161,000 (2021: GBP1,534,000)
o Operating profit GBP225,000 (2021: GBP570,000)
o Profit after tax GBP524,000 (2021: GBP865,000)
o Continued strong cash generation from operating activities
GBP583,000 (2021: GBP745,000)
o Total net funds (cash less debt) GBP1,677,000 (31 Dec 2021:
GBP1,510,000)
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: GBP4 million (31 Dec 2021:
GBP7 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
GBP5 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 GBP4
million (31 December 2021: GBP7 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
Raschid Abdullah, Chairman Mb: 07768 905004
WH Ireland Limited, Nomad and https://www.whirelandplc.com/capital-markets
Joint Broker
Mike Coe, Sarah Mather Tel: 020 7220 1666
Hybridan LLP, Joint Broker www.hybridan.com
Claire Louise Noyce Tel: 020 3764 2341
claire.noyce@hybridan.com
Chairman's statement
I am pleased to report that 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 GBP10.9
million (2021: GBP13.6 million), with adjusted EBITDA of GBP1.16
million (2021: GBP1.53 million), and profit after tax GBP0.52
million (2021: GBP0.86 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 GBP1.68 million (31 December 2021:
GBP1.51 million). Net cash generated from operating activities was
GBP0.58 million (2021: GBP0.75 million), and after capital
expenditure of GBP0.3 million (2021: GBP0.12 million) and debt and
finance repayments of GBP0.55 million (2021: GBP0.55 million), cash
balances at 31 December 2022 closed at GBP2.02 million (31 December
2021: GBP2.28 million).
The Group's balance sheet and finances continued to improve with
shareholders' funds up 7% to GBP8.25 million (31 December 2021:
GBP7.72 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 GBP4
million (31 December 2021: GBP7 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 GBP5 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 GBP10,872,000 (2021: GBP13,574,000),
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 GBP207,000 to
GBP5,323,000 (2021: GBP5,530,000).
Earnings before interest, tax, depreciation, amortisation,
exceptional items, acquisition costs and share based payment
charges ("adjusted EBITDA"), reduced from GBP1,534,000 in 2021 to
GBP1,161,000 in 2022.
Net financial expenses reduced to GBP47,000 (2021: GBP68,000)
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 GBP6,000 shown as
other income.
The tax credit of GBP346,000 (2021: GBP363,000 credit) comprised
net credits of GBP64,000 in respect of the current year and
GBP280,000 in respect of prior years. The GBP280,000 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
GBP182,000, 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 GBP524,000 (2021: GBP865,000) 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
GBP247,000 in 2022 amounting to 2.3% of revenues (2021:
GBP553,000), of which GBP164,000 was capitalised (2021: GBP17,000).
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 GBP583,000 (2021: GBP745,000). This was despite working
capital increasing by a net GBP563,000 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
GBP298,000 net cash outflows from investing activities (2021:
GBP127,000). The net financing outflows of GBP546,000 (2021:
GBP545,000) 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
GBP125,000.
At 31 December 2022 the Group's cash and cash equivalents were
GBP2,016,000 (2021: GBP2,277,000) and net funds at 31 December 2022
were GBP1,677,000 (2021: GBP1,510,000) after deducting IFRS 16
lease liabilities of GBP214,000 (2021: GBP392,000).
The Group retains a GBP2.5 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
GBP000 GBP000
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
Share Share Treasury Equity Retained Total
capital premium shares reserve earnings equity
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
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
GBP000 GBP000
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
GBP000 GBP000
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 GBP2.5 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 GBP0.13
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
GBP2.2 million and the GBP2.5 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
GBP000 GBP000
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
GBP000 GBP000
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
GBP000 GBP000
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
GBP000 GBP000 GBP000 GBP000
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 GBP224,000 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
GBP000 GBP000
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 (GBP000) 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 (GBP000) 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
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
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
GBP000 GBP000
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
GBP000 GBP000 GBP000
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
GBP000 GBP000 GBP000
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
GBP000 GBP000
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 GBP2.5 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 Current
loans and loans and Lease
borrowings borrowings liabilities
GBP000 GBP000 GBP000
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 Current
loans and loans and Lease
borrowings borrowings liabilities
GBP000 GBP000 GBP000
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
2022 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
GBP000 GBP000
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
.
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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END
FR AFMRTMTMMBLJ
(END) Dow Jones Newswires
May 09, 2023 02:00 ET (06:00 GMT)
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