TIDMPEG
RNS Number : 7203K
Petards Group PLC
24 April 2020
24 April 2020
PETARDS GROUP PLC ("Petards" or the "Group")
COVID-19 Update
Petards, the AIM quoted developer of advanced security and
surveillance systems, issues the following COVID-19 update.
Business Operations
The priority of the Group remains the health and wellbeing of
its staff, customers and their families during these unprecedented
times and the Group is following government guidance on working
practices to ensure their safety.
The Group's offices and facilities remain open and are operating
effectively with a variety of safety measures to ensure social
distancing and enhanced cleaning regimes. All members of staff who
can work from home have been doing so since mid-March. For those
staff who are unable to work from home the Group has extended the
opening hours of its main facilities, thereby enabling overall
on-site daily activity levels to be maintained.
Petards is a critical supplier to many of its customers and
supports the UK's police and armed forces as well as the safe
operation of the railways. The demands on those customers to
deliver services to the public at the present time mean that in
most cases they themselves are still operating at their pre
COVID-19 activity levels. However, this does vary from customer to
customer.
One of the Group's larger train building customers paused
production at the end of March for just over two weeks, but has
since recommenced production activities. While this will have a
short-term impact, present indications are that this will be
recovered over the course of the year.
RTS, which provides software solutions and services to support
the UK rail network, is actively negotiating a new contract with an
existing customer to extend support services for a further four
years, which if successful, will result in its budgeted revenue for
the year being achieved.
Activity levels at QRO, which supplies the Group's Traffic
products, were higher than expected in the first quarter of 2020,
with March's order intake from UK Police forces being particularly
strong. In order that QRO can support them during the pandemic, its
field service engineers have been designated as critical workers by
its police customers in support of their operational
activities.
The Group's Defence activities in 2020 have so far performed to
management expectations, although there is a risk that usual
engineering services provided to the MOD may reduce in the short
term, with MOD project managers being redeployed to the MOD's COVID
Support Force. Petards has been a long-standing supplier of
communication equipment and related services to the MOD and was
pleased its recent offer of support was accepted by the MOD. In
conjunction with one of the Group's radio equipment partners,
Petards is providing the free loan and technical support of 500
radios for 3 months to assist the COVID Support Force. These will
be used by military personnel in their work, including supporting
the new NHS Nightingale Hospitals and delivering supplies around
the UK.
The Group's supply chain is being closely monitored and has not
experienced any significant issues to date. However, there is
evidence that a few suppliers are switching some of their
production to support the supply of medical products for the UK
Government's COVID-19 response and while this is not presently
proving to be an issue, this may well change in what is a fluid
situation.
Financial Position
Cash and cost management is always a key area of focus for the
Board and is particularly so in the present environment. The
Group's cash balances at 31 March 2020 were GBP0.6m and included
R&D tax credits received in the first quarter of 2020. A
further R&D tax credit of GBP0.5m is anticipated to be received
before the end of April. In addition to its cash resources, the
Board is pleased that the Group's bankers have recently confirmed
that the expiring facilities of GBP0.75m, which were undrawn at the
year end, will be renewed for a further two years at the same level
and terms. The Group's net debt at 31 March 2020 was GBP0.3m
(excluding IFRS 16 lease liabilities of GBP0.4m).
The Group is fortunate that its customer base comprises blue
chip companies, the UK Government and its agencies. Petards'
customers are continuing to pay to terms and its exposure to credit
risk is low.
The Board welcomes the UK Government initiatives to support
businesses in these exceptional times and the Group has now
utilised the Coronavirus Job Retention Scheme for some of its
employees who are currently unable to carry out their usual duties
due to COVID-19 interruption.
Results for the year ended 31 December 2019
With the COVID-19 pandemic worsening, the Board is mindful of
the Financial Reporting Council's most recent guidance recognising
that additional time may be required to complete financial
reporting and related audit activity. The Board has therefore
decided to reschedule the announcement of the Company's full
audited results for 2019, the timing of which is now expected to be
towards the end of May.
The Board anticipates that the full results will be consistent
with the Group's Trading Update of 4 February 2020.
Outlook
The Company is unable to provide forward guidance in the present
challenging circumstances, with the main uncertainty presently
concerning the risk that, in the short term, contract awards that
the Group was expecting to secure for revenue in 2020 may be
re-phased or delayed. With the Department for Transport, the MOD
and train operating companies focusing their efforts on dealing
with COVID-19, the timing of these may not become clearer until the
pandemic within the UK has abated. The Board is keeping this under
close review and intends to provide a further update when it
announces the Group's final audited results for 2019.
The UK Government has stated its commitment to further
investment in the railways, law enforcement and security, areas in
which the Group enjoys long-standing customer relationships. This
together with the Group's current order book (31 March 2020:
GBP13.2m), provide the Board with confidence for the Group's future
prospects.
Certain information contained in this announcement would have
constituted inside information (as defined by Article 7 of
Regulation (EU) No 596/2014) ("MAR") prior to its release as part
of this announcement and is disclosed in accordance with the
Company's obligations under Article 17 of MAR.
Contacts:
Petards Group plc www.petards.com
Raschid Abdullah, Chairman Mb: 07768 905 004
WH Ireland Limited, Nomad and www.wh-ireland.co.uk
Joint Broker
Mike Coe / Chris Savidge Tel: 0117 945 3470
Hybridan LLP, Joint Broker www.hybridan.com
Claire Louise Noyce Tel: 020 3764 2341
claire.noyce@hybridan.com
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END
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