TIDMPEG
RNS Number : 2985Q
Petards Group PLC
18 June 2020
18 June 2020
Petards Group plc
("Petards", "the Group" or "the Company")
Final results for the year ended 31 December 2019
Petards Group plc (AIM: PEG), the AIM quoted developer of
advanced security and surveillance systems, is pleased to report
its final results for the year ended 31 December 2019.
Key Highlights:
-- Operational
o Order book at 31 December 2019 GBP15 million (31 Dec 2018:
GBP19 million)
o 2019 year end order book coverage for 2020 in excess of GBP10
million
o Continued to receive significant orders for eyeTrain
systems
o Good traction being gained from focus on eyeTrain through-life
support activities with revenues up 9% and post year-end award of
first software support contract
o 2019 affected by customer re-scheduling eyeTrain system
deliveries into 2020, and much lower than forecast profitability on
two other rail projects
o Growth in Traffic Technology customer base and product
offering
o Both QRO and RTS moved to new premises to support growth
o Action taken to reduce the cost base has continued into 2020
in line with the eyeTrain development strategy
-- Financial
o Total revenues GBP15.7 million (2018: GBP20.0 million)
o Gross margins 30.8% (2018 restated: 31.7%)
o Adjusted EBITDA* GBP281,000 loss (2018 restated: GBP1,501,000
profit)
o Operating loss GBP1,287,000 (2018 restated: GBP600,000
profit)
o Loss after tax GBP193,000 (2018 restated: GBP693,000
profit)
o Total net debt (debt less cash GBP525,000** (31 Dec 2018:
GBP969,000 net funds)
o Basic and diluted EPS 0.34p loss (2018: basic 1.22p profit;
diluted 1.18p profit)
o Group's Bankers renewed GBP0.75 million revolving credit
facility to June 2022
o GBP1 million post year-end cash receipts in respect of
pre-2019 investment in R&D
* 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.
** Includes GBP426,000 debt relating to lease liabilities on
adoption of IFRS 16 at 1 January 2019. Net funds of GBP969,000 at
31 December 2018 excluded these liabilities.
Commenting on the current outlook, Raschid Abdullah, Chairman,
said:
" While progress is being made throughout the Group and new
business is being secured, the provision of forward guidance in the
current circumstances remains extremely challenging. Following the
initial effects of the Covid-19 lock-down on their businesses,
customers have been adapting their operations and revising delivery
schedules accordingly, which has obviously had an impact on the
Group's recent trading. With the Department for Transport, the MOD
and train operating companies focussing their efforts on dealing
with Covid-19, the timing of contract awards previously anticipated
for 2020 revenues are unlikely to become clearer until the pandemic
within the UK has abated. The Board continues to keep this under
close review and will provide further updates when
appropriate."
"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 order book at 31 May 2020 of over GBP13
million, provide the Board with confidence for the Group's future
prospects."
This announcement includes inside information as defined in
Article 7 of the Market Abuse Regulation No. 596/2014 and is
disclosed in accordance with the Company's obligations under
Article 17 of those Regulations.
Contacts:
Petards Group plc www.petards.com
Raschid Abdullah, Chairman Mb: 07768 905004
WH Ireland Limited, Nomad and www.whirelandcb.com
Joint Broker
Mike Coe, Chris Savidge Tel: 0117 945 3470
Hybridan LLP, Joint Broker www.hybridan.com
Claire Louise Noyce Tel: 020 3764 2341
claire.noyce@hybridan.com
Chairman's statement
In the 2019 Interim Report, I stated that the Group's 2019
financial performance was expected to be lower than previously
anticipated. However, as reported in the market update of 4
February 2020, the final months of the year were disappointing.
The Group closed the year with revenues of GBP15.7 million
(2018: GBP20.0 million), an adjusted EBITDA* loss of GBP281,000
(2018 restated: GBP1,501,000 profit) and a loss after tax of
GBP193,000 (2018 restated: GBP693,000 profit). The order book at 31
December 2019 totalled GBP15 million of which over GBP10 million is
scheduled for delivery in 2020. As set out at note 2, following the
adoption of IFRS 16: Leases the Group's net debt at 31 December
2019 was GBP525,000, including GBP426,000 relating to leases
liabilities previously classified off-balance sheet as 'operating
leases'.
This outcome was primarily due to a major customer re-scheduling
eyeTrain system deliveries in the last quarter into 2020, and much
lower than forecast profitability on two other rail projects. While
the re-scheduled deliveries have deferred revenues into 2020, the
reduction in profitability for the two rail projects was of more
concern. Both these projects remained profitable, but with
substantially reduced margins for 2019. One project has now been
fully installed and the second project is in final stages of
completion.
These issues have no impact on any other projects in the current
order book or future order pipeline. However, as the majority of
revenues on these projects had already been recognised in 2018 and
2019, with the majority of project and engineering costs having
been incurred, a material one-off provision was required at
year-end to reduce profits previously recognised and related
contract work-in-progress. As explained at note 3, these provisions
included an adjustment to the prior year, reducing 2018 profit
after tax from GBP1,143,000 to a profit of GBP693,000.
On a more positive note, I am pleased to say that the Group has
continued to win major orders from train builders such as those
from Bombardier Transportation worth GBP3 million announced during
the year. The Board is confident that the Group will benefit from
the significant investment made in the development of its eyeTrain
systems. This encompasses Driver Controlled Operation and Automatic
Selective Door Opening both of which are critical safety systems
that are becoming increasingly important for train operating
companies.
Revenues relating to eyeTrain through-life support activities
such as the provision of spares and repairs continued to grow and
were up 9% on the previous year. A key element of the Group's
strategy for growing eyeTrain revenues is the expansion of customer
and product support activities for its installed base. As this now
includes a significantly higher content of safety critical software
applications, this provides the opportunity for the Group to enter
into long term customer agreements for system support. We are
hopeful that the two-year Services Support Agreement recently
entered into with Siemens Mobility for their Desiro City fleet will
prove to be the first of several such agreements.
Since the acquisition of RTS in May 2018 its operations have
been relocated to modern offices in Leeds city centre providing
modern facilities to grow and develop the business. RTS is now
fully embedded within the Group and has continued to enjoy high
levels of recurring revenues for its track side software safety
support systems. We are pleased with its progress during its first
full year as a member of the Group, making an increased revenue and
profits contribution. RTS had been in negotiations to renew one of
its two largest long-term support contracts and I am pleased to say
an extension for a further four years to June 2024 has now been
secured.
Revenues from QRO's Traffic products and support services were
up 12% year-on-year and made a good profit contribution to the
Group. In order to facilitate further growth, QRO relocated to
larger and more suitable premises and has settled in well. Further
police forces were added to the customer base and a new competitive
ANPR camera entered trials with UK police forces and it is pleasing
that both initiatives are resulting in new orders. This has helped
QRO to get off to a strong start to 2020 which presently has a
record order book.
The composition of Defence revenues has been changing over
recent years with fewer large contracts being awarded and therefore
revenues and profits for 2019 were lower than the previous year.
However, the Group's core engineering services contracts with the
MOD continue to provide a good profitable workload. Order intake
improved during 2019 with the award of a GBP1.1 million contract
for electronic countermeasures equipment supporting a MOD programme
for delivery in the second half of 2020, which is expected to
improve that year's profitability. Looking forward, several new
tenders have recently been submitted that have yet to be awarded
and further tenders are in preparation.
Petards' eyeCraft360 situational awareness system launched in
September at DSEI 2019, attracted considerable interest from both
the UK and overseas. Following the exhibition, the UK Army placed
an order for two units which are presently being trialled and we
have been working closely with them to support this process. The
exposure from the launch of this new product has also demonstrated
our Defence capabilities to both new and existing customers.
As always, I would like to take this opportunity on behalf of
the Board and shareholders to thank all Petards staff for their
hard work, dedication, and professionalism throughout what was a
challenging year. Their contribution and commitment are key factors
in the Group continuing the longstanding relationships it has with
its customers. We look forward to their continued support in 2020,
which has brought with it the added challenges of the measures to
ensure a safe working environment for them and their colleagues
during the present Covid-19 pandemic.
The Group continues to manage the impact of Covid-19 on its
business. 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 Group's facilities remain open for
business and are operating with the benefit of a variety of
measures that have been introduced to ensure a safe working
environment. Since mid-March 2020 employees able to work
effectively from home have been doing so, using conference
facilities to communicate with their teams and customers. Following
the Covid-19 lockdown, management conducted a full review of all
operations and the effect it has had on customers' operations. This
has led to some staff being furloughed under the Job Retention
Scheme which is being kept under constant review.
The main risks to the Group from Covid-19 identified so far 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 2020 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.
Cash and cost management remains an embedded area of the Board's
focus, particularly in the present business climate. Action was
taken during 2019 to realign the Group's cost base in line with its
strategic development programme, and planned cost reductions have
continued in 2020. The Group's cash balances at 31 May 2020 were
GBP1.4 million and included R&D tax credits, relating to
development work carried out in 2017 and 2018, of GBP965,000
received since the year end. In addition, the Group's GBP0.75
million revolving credit facility, which is undrawn and was undrawn
at the year end, has recently been renewed for a further two years
to June 2022. The Group's bankers also confirmed that at 31
December 2019, GBP625,000 of the Group's RTS acquisition loan is a
non-current liability that falls due beyond the end of 2020.
In the current circumstances the provision of forward guidance
remains extremely challenging. Following the initial effects of the
Covid-19 lock-down on their businesses, customers have been
adapting their operations and revising delivery schedules
accordingly, which has obviously had an impact on the Group's
recent trading. With the Department for Transport, the MOD and
train operating companies focussing their efforts on dealing with
Covid-19, the timing of contract awards previously anticipated for
2020 revenues is unlikely to become clearer until the pandemic
within the UK has abated. While the Board continues to keep this
under close review it is pleasing that progress is being made
throughout the Group, and new business is still being secured.
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 order book at 31 May 2020 of over GBP13
million, provide the Board with confidence for the Group's future
prospects.
Raschid Abdullah
Chairman
*See Alternative Performance Measures Glossary at the end of
this document.
Strategic Report
Business review
Petards' operations continue to be focused upon the development,
supply and maintenance of technologies used in advanced security,
surveillance and ruggedized 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 year under review was a challenging one for Petards, with
eyeTrain products being particularly affected by customer driven
re-scheduling of deliveries, delays in contract awards and
under-performance on two projects in their final stages of
delivery. This when coupled with a lower level of Defence revenues,
combined to produce an outcome for 2019 that was below management's
original expectations.
However, the year was also one of transition with action being
taken to reduce the cost base, particularly that relating to
eyeTrain, to one that reflects the much lower levels of software
and hardware development required following the significant
investment programme of recent years in next generation
products.
The Group's eyeTrain products comprised two thirds of Group
revenues with the majority relating to new systems and the balance
from the support of in-service systems. Revenues from spares and
repairs continued an upward trend, with 2019 showing growth of 9%
and the vast majority of these have tended to derive from on-going
customer requirements rather than from long-term support contracts.
Management has long believed that such contracts would be
beneficial to customers by increasing operational efficiency and
better protection of their train asset values, while providing the
Group with certainty of contracted recurring revenues. With a
typical train life of 35 years and with eyeTrain systems presently
installed in over 12,000 vehicles, the Group is hopeful that recent
interest in long-term support contracts, such as that placed
recently by Siemens Mobility, will lead to more users adopting this
maintenance model.
The significantly lower profitability on the two eyeTrain
contracts identified at the close of the year was particularly
disappointing. Action has been taken to address the lapses that
occurred in the Group's project review procedures that led to these
issues not coming to light sooner. The Board also instigated a
comprehensive review of all projects which confirmed that no other
projects were similarly affected. While the two projects concerned
required significant reductions in their reported profitability and
provisions against contract work-in-progress held, importantly both
remained profitable. They also differed in nature from those
usually undertaken by the Group and management is now confident
that these issues have not impacted upon any other projects in the
order book or pipeline.
The first project related to a supply and install contract, the
Group's first in over ten years. The Group usually contracts on a
system supply-only basis, and the installation costs in this
instance proved to be significantly higher than anticipated. The
second project experienced delays in train commissioning that fell
outside of Petards' control. Consequently, additional project and
engineering costs have been incurred by the Group and the overall
forecast project outcome re-assessed.
A more satisfying feature of 2019 was the continued development
of recent additions to the Group, with RTS completing its first
full year under Petards ownership, and QRO recording another good
performance with revenues up over 15%.
Strategic report (continued)
Operating review (continued)
RTS, which the Group acquired in May 2018, develops, and
supports web-based real-time safety critical integrated software
applications used on Network Rail's infrastructure. In 2019 it
recorded a bigger contribution to the Group's results, continuing
to enjoy the benefit of a strong base of recurring revenues
generated from supporting these systems, supplemented by
development projects to provide system enhancements for Network
Rail and its first-tier contractors. The order book for these
recurring revenues was boosted in May 2020 by the four-year
extension of one of RTS's long held software support contracts. In
September, Leeds based RTS relocated to new modern offices
providing a more appropriate environment from which to deliver its
solutions and generate future growth and is well placed to continue
to increase its contribution to the Group going forward.
QRO is now the entity through which the Group delivers all its
Traffic Technology solutions and it has consistently grown its
revenues and profits since its acquisition in April 2016. It also
benefits from a strong base of recurring revenues, providing ANPR
software and hardware support to its customers. Having relocated to
new premises in the early part of 2019 QRO is already undertaking
further expansion at that site as a result of its strong sales
performance. During the year management sought to further increase
the value-added content of its revenues and took the opportunity to
add two experienced hardware and software developers to its team.
Both come with a strong ANPR pedigree and their addition will help
QRO increase the proportion of its own product in its future
projects.
The Group's heritage stems from defence sector and this area
continued to make a valuable, albeit much reduced, contribution to
revenues and profits in the year. The opportunity exists for this
contribution to increase, and the Group retains the high regard of
its customers for the specialist expertise and experience of its
staff. In recent years, the Group's Defence revenues have primarily
derived from value-added reselling of mobile radio systems and of
electronic countermeasure systems. The MOD's delayed re-tendering
of its radio catalogue, fewer upgrades to electronic countermeasure
systems of the MOD's aircraft fleet, and UK armed forces not
presently being engaged in significant active operations, all
contributed to the lower revenues earned in the year. While the
radio catalogue may be re-tendered and electronic countermeasure
upgrade levels increased, management has been looking to other
areas to which its expertise can be applied. During the year, a
prototype 360-degree situational awareness system, eyeCraft360, was
developed for use on military vehicles, which while at an early
stage, has received a positive response from customers. The Group
is also targeting to supply other vehicle systems like those
designed and built in the past, for which opportunities in recent
years have been limited. While working to take advantage of these,
management is also structuring the business on the assumption that
a significant proportion of Defence revenues will come from higher
margin engineering services under core framework contracts held
with the MOD.
It was pleasing that during 2019 the Group continued to secure
important contract awards and orders including:
-- Bombardier's award in April 2019 of a contract worth over
GBP1.5 million for the supply of eyeTrain systems for fitment to
new Aventra trains, with deliveries now scheduled to recommence in
2021;
-- Framework agreements held by QRO with Thames Valley Police
and Cheshire Police generated orders for ANPR systems and support
from a number of UK police forces totalling GBP1.1 million;
-- Network Rail awarded RTS a GBP0.3 million project in July
2019 to provide additional functionality to a software safety
system which RTS already supports;
-- In September 2019, a major UK defence systems contractor
awarded Petards a GBP1.1 million contract to provide electronic
countermeasures equipment to be delivered in the second half of
2020 that will form part of an integrated defensive aids suite for
MOD aircraft; and
-- Bombardier awarded a GBP1.3 million contract for eyeTrain
systems in October 2019, to be retrofitted to Electrostar trains,
owned by Porterbrook and operated by Govia Thameslink Railway, to
enhance the trains' video and data collection capability with
forward facing CCTV and track debris/third rail cameras systems.
Equipment deliveries are scheduled from Q3 2020 and throughout
2021.
Following these awards, the Group closed the year with an order
book of GBP15 million (2018: GBP19 million), providing forward
revenue coverage of over GBP10 million scheduled for recognition
during 2020 and a further GBP3 million for 2021.
Strategic report (continued)
Financial review
Operating performance
Revenues for the year were GBP15.7 million, against GBP20.0
million in 2018, although 2018 included the benefit of a one-off
adjustment arising on the implementation of IFRS 15 "Revenue from
contracts with customers". Two thirds of revenues related to the
Group's Rail products, a slightly higher proportion than was the
case in 2018. Exports continued to largely relate to shipments of
eyeTrain systems to European train builders, predominantly in
respect of trains for UK operation, and at GBP2.6 million (16% of
revenues) were down on the previous year (2018: GBP4.7 million;
23%). Global train builders are increasingly opening facilities in
the UK to manufacture trains built for the UK rail network and this
will likely further reduce the proportion of Petards' future export
revenues.
The gross margin for the year was 30.8%, down slightly on the
restated 31.7% now reported for 2018. Both years margins were
significantly affected by the increased eyeTrain project costs that
came to light towards the end of 2019. Both projects continued to
be profitable, but the provisions required to correct margins taken
on revenues in prior years totalled GBP0.9 million. Of this
GBP560,000 has been accounted for as a prior year adjustment and
2018's results restated accordingly, as it arose from a project
costing error. The balance of GBP340,000 has been booked to 2019
cost of sales, reducing the year's margin from 33.0% to 30.8%.
Administrative expenses increased by 7% to GBP6,130,000, with
87% of the increase arising from RTS being a member of the Group
for a full year, QRO's investment in new premises and development
team, and higher amortisation charges. The implementation from 1
January 2019 of IFRS 16 "Leases" had little effect on overheads as
the increased depreciation charges were offset by lower operating
lease rentals.
Earnings before interest, tax, depreciation, amortisation,
exceptional items, acquisition costs and share based payment
charges ("adjusted EBITDA") were a loss of GBP281,000 (2018
restated: GBP1,501,000 profit).
Net financial expenses increased to GBP175,000 from GBP30,000 in
2018. Most of this increase related to a foreign exchange contract
marked to market at the year end. The balance arose from a full
year's charge on the Group's term loan that financed its
acquisition of RTS and interest charges from the utilisation of
working capital facilities during the year.
The tax credit of GBP1,269,000 for the year, (2018 restated:
GBP123,000 credit), includes R&D tax credits totalling
GBP965,000, relating to prior years' R&D activities. The cash
refunds for these credits have been received since the year end.
The remainder relates mainly to the tax credit arising from the
recognition of deferred tax assets in respect of losses incurred in
the year.
This all culminated in the Group recording a loss after tax of
GBP193,000 (2018 restated: GBP693,000 profit) and basic and diluted
loss per share of 0.34p (2018 restated: 1.22p earnings basic; 1.18p
earnings diluted).
Research and development
The Group continues to invest in developing its software and
hardware products, albeit that the rate of capitalised investment
in 2019 reduced on the prior year to pre-2017 levels. Overall
investment totalled GBP1,386,000 (2018: GBP1,608,000) of which
GBP696,000 was capitalised (2018: GBP1,444,000). The capitalised
costs predominantly relate to the Group's next generation of
eyeTrain software products that support future sales of all ASDO
systems, retrofitted DCO systems and integrated APC systems. In
addition to eyeTrain, the Group invested to support the development
roadmaps of QRO, RTS and eyeCraft360.
Cash, cash flow and net debt
Net cash inflows from operating activities for the year were
GBP142,000 (2018: GBP2,570,000).
Net cash outflows from investing activities were GBP1 million
and arose from investment in capitalised product development and
test equipment. This was significantly lower than the 2018 cash
outflow of GBP3 million which included both the cost of the RTS
acquisition and higher investment in product development. The
majority of net financing outflows of GBP0.4 million related to
repayments of the 5-year term loan taken out in 2018 to finance
RTS's acquisition.
At 31 December 2019 the Group's cash and cash equivalents were
GBP827,000 (2018: GBP2,117,000). The fact that the Group incurred a
significant loss before tax in the year, as compared with a profit
in 2018, accounts for GBP2.032,000 of the reduction in cash inflows
over that achieved in 2018.
Strategic report (continued)
Financial review (continued)
Operating performance (continued)
The Group also has available to it a GBP0.75 million revolving
credit facility that was renewed post year-end for a further two
years. Also, while at 31 December 2019 the Group's GBP875,000 term
loan is classified in the balance sheet as all due within one year,
subsequent to the year-end the Group's bankers confirmed that it is
repayable in equal quarterly instalments of GBP62,500 and therefore
GBP625,000 now falls due in after more than one year.
With effect from 1 January 2019 the Group adopted IFRS 16
'Leases' using the modified retrospective approach to transition,
from which time leases which had previously been classified as
'operating leases' under IAS 17 were recognised on the balance
sheet as lease liabilities. At 31 December 2019 the impact has been
to increase both the Group's tangible fixed assets and net debt by
GBP409,000 and GBP426,000, respectively. The comparative figures at
31 December 2018 exclude these assets and liabilities and therefore
the 2018 and 2019 debt figures are not directly comparable.
The Group's net debt at 31 December 2019 including that relating
to IFRS 16 was GBP525,000. Net debt excluding IFRS 16 liabilities
was GBP99,000 (2018: GBP969,000 net cash).
Covid-19
Details of the Board's assessment of the impacts on the Group
identified so far from Covid-19 are addressed in the Chairman's
Statement.
Brexit
In common with most UK companies, Petards would not be immune to
any potential adverse impact that a disorderly Brexit might have on
the wider economy. However, the Board's current assessment is that
the specific sectors in which the Group operates are not
significantly exposed to particular Brexit risk, but it is keeping
this under review as the political and economic situation develops
and the potential impact of Brexit on the wider supply chain and
the business environment generally becomes clearer.
Rail products are the main contributor to Group revenues and
while 16% of the Group's revenues for 2019 were exported to the EU,
the majority related to UK rail projects. The market sectors to
which Petards supplies tend to be highly regulated and the Group
does not anticipate Brexit to change existing regulations
significantly. Like most businesses it is affected by any
inflationary pressures in the supply chain but again these are not
considered to be specific to the sectors in which the Group
operates. Neither the Group's current order book nor the orders it
expects to receive during 2020 contain significant foreign currency
exposures. The Group is aware that its major suppliers take
additional measures, such as stocking, to ensure continuity of
supply.
Osman Abdullah
Group Chief Executive
Consolidated income statement
for year ended 31 December 2019
Note 2019 2018
GBP000 GBP000
Restated *
Revenue 4 15,706 19,973
Cost of sales (10,863) (13,645)
Gross profit 4,843 6,328
Administrative expenses (6,130) (5,728)
Adjusted EBITDA** (281) 1,501
Amortisation of intangibles (639) (590)
Depreciation of property, plant and
equipment (204) (209)
Amortisation of right-of-use assets (133) -
Acquisition costs - (77)
Share based payment charges (30) (25)
---------------------------------------- ---- -------- -----------
Operating (loss)/profit (1,287) 600
Finance income 5 1 3
Finance expenses 5 (176) (33)
(Loss)/profit before tax (1,462) 570
Income tax 6 1,269 123
(Loss)/profit for the year attributable
to equity shareholders
of the parent (193) 693
Other comprehensive income - -
Total comprehensive (expense)/income
for the year (193) 693
(Loss)/earnings per ordinary share
(pence)
Basic 7 (0.34) 1.22
Diluted 7 (0.34) 1.18
* Further details of the prior year restatement are provided at
Note 3.
** 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 2019
Share Share Retained Total
capital premium Equity earnings equity
Reserve
GBP000 GBP000 GBP000 GBP000 GBP000
At 1 January 2018 558 1,473 25 5,174 7,230
Adjustment on initial application
of IFRS 15, net of tax * - - - (468) (468)
Adjusted balance at 1 January
2018 558 1,473 25 4,706 6,762
Profit for the year as previously
stated - - - 1,143 1,143
Prior year adjustment, net of
tax ** - - - (450) (450)
Total comprehensive income for
the year as restated - - - 693 693
Contributions by and distributions
to owners
Equity-settled share based payments - - - 25 25
Exercise of share options 17 144 (11) 11 161
Total contributions by and distributions
to owners 17 144 (11) 36 186
At 31 December 2018 as restated 575 1,617 14 5,435 7,641
At 1 January 2019 (as restated) 575 1,617 14 5,435 7,641
Loss for the year - - - (193) (193)
Total comprehensive expense
for the year - - - (193) (193)
Contributions by and distributions
to owners
Equity-settled share based payments - - - 30 30
Total contributions by and distributions
to owners - - - 30 30
At 31 December 2019 575 1,617 14 5,272 7,478
* The Group adopted IFRS 15 using the cumulative effect method,
under which the comparative information was not restated. The
cumulative effect of adopting IFRS 15 is recognised in equity at
the date of first adoption on 1 January 2018.
** Further details of the prior year restatement are provided at
Note 3.
Consolidated balance sheet
at 31 December 2019
Note
2019 2018
GBP000 GBP000
Restated
*
ASSETS
Non-current assets
Property, plant and equipment 973 943
Right of use assets 8 466 -
Intangible assets 4,733 4,676
Investments in subsidiary - -
undertakings
Deferred tax assets 9 528 390
6,700 6,009
Current assets
Inventories 2,430 3,548
Trade and other receivables 3,798 2,553
Cash and cash equivalents 827 2,117
7,055 8,218
Total assets 13,755 14,227
EQUITY AND LIABILITIES
Equity attributable to equity holders of
the parent
Share capital 11 575 575
Share premium 1,617 1,617
Equity reserve 14 14
Retained earnings 5,272 5,435
Total equity 7,478 7,641
Non-current liabilities
Interest-bearing loans
and borrowings 10 338 883
Trade and other payables - -
338 883
Current liabilities
Interest-bearing loans
and borrowings 10 1,014 273
Trade and other payables 4,925 5,430
5,939 5,703
Total liabilities 6,277 6,586
Total equity and liabilities 13,755 14,227
* Further details of the prior year restatement are provided at
Note 3.
Consolidated statement of cash flows
for year ended 31 December 2019
Note
2019 2018
GBP000 GBP000
Restated
*
Cash flows from operating activities
(Loss)/profit for the year (193) 693
Adjustments for:
Depreciation of property, plant
and equipment 204 209
Amortisation of right of use
assets 8 133 -
Amortisation of intangible assets 639 590
Financial income 5 (1) (3)
Financial expenses 5 176 33
Equity settled share-based payment
expenses 30 25
Income tax (credit)/charge 6 (1,269) (123)
Operating cash flows before movement
in
working capital (281) 1,424
Change in inventories 1,118 1,580
Change in trade and other receivables (379) 1,344
Change in trade and other payables (425) (1,834)
Cash generated from operations 33 2,514
Tax received 109 56
Net cash from operating activities 142 2,570
Cash flows from investing activities
Acquisition of property, plant
and equipment (263) (325)
Acquisition of right-of-use assets 8 (5) -
Capitalised development expenditure (696) (1,444)
Acquisition of subsidiary - (1,224)
Interest received 1 3
Net cash outflow from investing
activities (963) (2,990)
Cash flows from financing activities
Bank loan received 10 - 1,250
Bank loan repaid 10 (250) (125)
Interest paid on lease liabilities
(2018: interest paid on finance
leases) 10 (25) (1)
Interest paid on loans and borrowings 10 (53) (23)
Principal paid on lease liabilities
(2018: principal paid on finance
leases) 10 (117) (15)
Other interest and foreign exchange (24) (34)
Proceeds from exercise of share
options - 161
Net cash (outflow)/inflow from
financing activities (469) 1,213
Net (decrease)/increase in cash
and cash equivalents (1,290) 793
Total movement in cash and cash equivalents
in the year (1,290) 793
Cash and cash equivalents at
1 January 2,117 1,324
Cash and cash equivalents at
31 December 827 2,117
* Further details of the prior year restatement are provided at
Note 3.
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 as
adopted by the EU ("adopted 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 2019 or 31
December 2018 but is derived from those accounts. Statutory
accounts for 2018 have been delivered to the Registrar of Companies
and those for 2019 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
The Group continues to manage the impact of Covid-19 on its
business. 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 Group's facilities remain open for
business and are operating, through a variety of measures that have
been introduced to ensure a safe working environment. The main
risks to the Group from Covid-19 identified so far 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 2020 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 has available a
revolving credit facility of GBP0.75 million which is available
until 21 June 2022. Interest bearing loans and borrowings total
GBP1.35 million at the year-end.
Due to the uncertainty created by COVID-19, the Group created a
working capital model focused on the potential impacts of COVID-19
and the actions that the Board has taken and can take to mitigate
those impacts. This uses as its basis the budget for 2020 updated
for known changes since it was prepared, and 2020 management
accounts to 30 April 2020. The time period reviewed is from 1 May
2020 to 30 June 2021. At 31 May 2020 the Group had cash balances of
GBP1.4 million.
Cash and cost management is always a key area of focus for the
Board and is particularly so in the present environment. Management
have reviewed the budgeted cost base in detail considering the
impact of COVID-19 and other factors and identified savings in both
cost of sales and general administrative expenses. It is estimated
that, with the support of our employees and by reshaping the focus
of the business during this period, that significant savings can be
achieved. The model also assumes that all discretionary capital
expenditure is suspended for the period under review. Any such
expenditure will only be made if it is clear it can be
afforded.
The model assumes that all payments due to HMRC will be made as
they fall due, with the exception of the VAT payments due in the
period 1 April 2020 to 30 June 2020, which under the Covid-19 VAT
deferral scheme will be deferred to 31 March 2021. Forecast R&D
tax credit receipts are also included, claims for which are
anticipated to be submitted early in the third quarter of 2020. The
model also considers the potential impact of rail contract awards
that the Group was 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 June 2021. Accordingly, they have adopted the going
concern basis in preparing these financial statements.
2 Changes in significant accounting policies
IFRS 16 Leases
The Group adopted IFRS 16 'Leases' with effect from 1 January
2019 using the modified retrospective approach to transition. The
new standard requires that the Group's leased assets are recorded
as right-of-use assets together with their corresponding lease
liabilities. Adoption of the new standard has had a material impact
on the Group's financial statements, with right-of-use assets of
GBP381,000 recognised on transition together with a corresponding
lease liability. As at 31 December 2019 right-of-use assets were
GBP466,000 and lease liabilities were GBP471,000.
Notes (continued)
2 Changes in significant accounting policies (continued)
Included in lease liabilities are liabilities of GBP426,000
which would previously been classified off-balance sheet as
operating leases and a lease of GBP45,000, in respect of an asset
acquired during the year, which would previously have been
classified as a finance lease.
There was no impact on the application of IFRS 16 on opening
reserves on 1 January 2019.
Under IFRS 16, the operating lease expense previously recorded
in operating costs of GBP119,000 has been replaced by an additional
depreciation charge of GBP112,000, which is lower than the
operating lease expense recognised under IAS 17, the previous
accounting standard for leases, and a separate additional interest
expense of GBP23,000 has been recorded in finance expense. Reported
EBITDA is therefore GBP119,000 higher than would otherwise have
been reported and profit before tax is GBP16,000 lower than would
have otherwise been reported.
On transition the lease liabilities have been measured at the
present value of the remaining lease payments, discounted using the
incremental borrowing rate on the date of transition. The
incremental borrowing rate applied to the Group's lease portfolio
on 1 January 2019 was 4.25%.
In addition, the Group applied the following available practical
expedients permitted by the standard:
-- the exclusion of leases relating to low-value assets (less than GBP5,000 when new);
-- the exclusion of short-term leases, being those with a lease term of 12 months or less;
-- the use of hindsight in determining the lease term where the
contract contains options to extend or terminate the lease; and
-- reliance on its assessment of whether leases are onerous
immediately prior to the date of transition.
The following table presents the impact of adopting IFRS 16 on
the consolidated balance sheet position as at 1 January 2019:
Adjustments 31 December IFRS 16 1 January
2018 as originally 2019
presented
GBP000 GBP000 GBP000
Assets
Property, plant & equipment
- motor vehicles (a) 32 (28) 3
Right-of-use assets (b) - 410 410
Liabilities
Loans and borrowings (c) 23 (23) -
Lease liabilities (d) 404 404
Equity
-------------------- --------- -----------
Retained earnings (e) 5,435 - 5,435
-------------------- --------- -----------
Adjustments:
(a) Property, plant and equipment was adjusted to reclassify
assets previously acquired under finance lease as right-of-use
assets. The adjustment reduced the cost of property, plant and
equipment by GBP57,000 and accumulated depreciation by GBP28,000
resulting in a net adjustment of GBP29,000.
(b) The adjustment to right-of-use assets is as follows:
GBP000
Adjustment noted at (a) - finance type leases 29
Operating type leases 381
------------------
Right-of-use assets 410
------------------
(c) Loans and borrowings were adjusted to reclassify leases
previously classified as finance leases to lease liabilities.
Notes (continued)
2 Changes in significant accounting policies (continued)
(d) The following table reconciles the minimum lease commitments
disclosed in the Group's 31 December 2018 annual financial
statements with the amount of lease liabilities recognised on 1
January 2019.
GBP000
Minimum operating lease commitment at 31
December 2018 472
Less: short-term leases not recognised under
IFRS 16 (33)
Less: low value leases not recognised under
IFRS 16 (12)
------------------
Undiscounted lease payments 427
Less: effect of discounting using the incremental
borrowing rate
as at the date of initial application (46)
------------------
Lease liabilities for leases classified
as operating type under IAS 17 381
Plus: leases previously classified as finance
type under IAS 17 23
------------------
Lease liability as at 1 January 2019 404
------------------
(e) There was no impact on opening retained earnings from the adoption of IFRS 16.
The impact of the adoption of IFRS 16 on the consolidated income
statement, EBITDA and the consolidated cash flow statement is shown
in the table below.
Year ended Reversal IFRS Year ended
31 December of IAS 16 31 December
2019 under 17 entries 2019 as
IAS 17 reported
Reason for change GBP000 GBP000 GBP000 GBP000
Removal of IAS 17
lease costs and recording
Operating of depreciation of
loss right-of-use assets (1,294) 119 (112) (1,287)
Recording on interest
Finance expense on lease liability (153) 2 (25) (176)
Loss before
tax Net of above changes (1,446) 121 (137) (1,462)
Removal of IAS 17
lease costs from operating
Adjusted EBITDA expenses (162) (119) - (281)
Net cash inflow Lease cost payments
from operating recorded within financing
activities activities 284 142 - 142
Net cash used
in financing Recognition of lease
activities payments (344) 17 (142) (469)
------------- ------------- ------- -------------
3 Prior year adjustment
During the 2019 year-end accounts close process, a costing error
was identified in respect of the installation element of a project
that had been on-going since the latter part of 2016. While the
overall project remained profitable, as substantial revenues and
profits were recognised in prior years in respect of this project,
this error led to the profits taken at 31 December 2018 to be
overstated. The impact has been to reduce the prior year's
previously reported gross profit by GBP556,000 with a corresponding
reduction to work in progress. The related income tax credit was
GBP106,000 with a corresponding increase to the deferred tax asset.
The overall effect of this prior year adjustment is to reduce 2018
profits by GBP450,000 to GBP693,000, and to reduce equity by the
same amount.
Notes (continued)
4 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:
2019 2018
GBP000 GBP000
United Kingdom 13,145 15,285
Continental Europe 2,493 4,250
Rest of World 68 438
15,706 19,973
The timing of revenue recognition can be analysed as
follows:
2019 2018
GBP000 GBP000
Products and services transferred at a point
in time 14,075 19,058
Products and services transferred over time 1,631 915
15,706 19,973
5 Finance income and expenses
2019 2018
GBP000 GBP000
Recognised in profit or loss
Interest on bank deposits 1 1
Other exchange gain - 2
Financial income 1 3
2019 2018
GBP000 GBP000
Interest expense on financial liabilities
at amortised cost 51 31
Interest expense on lease liabilities (2018:
finance leases) 25 1
Other interest payable 14 1
Other exchange loss * 86 -
Financial expenses 176 33
* Includes GBP76,000 in respect of two USD forward currency
contracts maturing in 2020.
Notes (continued)
6 Taxation
Recognised in the income statement
2019 2019 2018 2018
GBP000 GBP000 GBP000 GBP000
Restated Restated
* *
Current tax (credit)/expense
Current tax charge 36 (72)
Adjustments in respect of
prior years (1,167) (113)
Total current tax (1,131) (185)
Deferred tax (credit)/expense
Origination and reversal
of temporary differences (429) 105
Derecognition of previously
recognised tax losses - 73
Recognition of previously
unrecognised tax losses 84 (56)
Utilisation of recognised
tax losses 16 75
Adjustment in respect of
prior years 166 (145)
Effect of differential tax
rate for deferred tax 25 10
Total deferred tax (138) 62
Total tax credit in income
statement (1,269) (123)
The GBP1,167,000 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.
Factors that may affect future current and total tax charges
The main rate of UK corporation tax changed from 20% to 19% with
effect from 1 April 2017.
These tax changes were substantively enacted on 26 October 2016
and therefore the effect of this rate reduction has been applied to
the deferred tax balances as at 31 December 2019 and 31 December
2018. Following an announcement in the Budget on 11 March 2020,
which was substantively enacted on 17 March 2020, the UK
corporation tax rate applicable from 1 April 2020 now remains at
19%, rather than the previously enacted reduction to 17%. If this
tax rate was applied to the closing deferred tax balances at the 31
December 2019, the impact would be an increase in the deferred tax
asset and liability of GBP110,000 and GBP48,000, respectively.
Reconciliation of effective tax rate
2019 2018
GBP000 GBP000
Restated
*
(Loss)/profit before tax (1,462) 570
Tax using the UK corporation tax rate of 19%
(2018: 19%) (278) 108
Non-deductible expenses 44 42
Non-taxable income - (21)
Derecognition of previously recognised tax
losses - 73
Recognition of previously unrecognised tax
losses (59) (56)
Adjustments in respect of prior years (1,001) (258)
Effect of differential tax rate for deferred
tax 25 10
Other reconciling items - (21)
Total tax credit (1,269) (123)
* Further details of the prior year restatement are provided at
Note 3.
Notes (continued)
7 Earnings per share
Basic earnings per share
Basic earnings per share is calculated by dividing the profit
for the year attributable to the shareholders by the weighted
average number of shares in issue.
2019 2018
Restated
*
Earnings
(Loss)/profit for the year (GBP000) (193) 693
Number of shares
Weighted average number of ordinary shares ('000) 57,468 56,752
Basic (loss)/earnings per share (pence) (0.34) 1.22
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. Due to the loss for the
year, the share options in issue in 2019 had an anti-dilutive
effect.
2019 2018
Restated
*
Adjusted earnings
(Loss)/profit for the year (GBP000) (193) 693
Number of shares
Weighted average number of ordinary shares ('000) 57,468 58,627
Diluted (loss)/earnings per share (pence) (0.34) 1.18
* Further details of the prior year restatement are provided at
Note 3.
Notes (continued)
8 Right of use assets
Land
and Motor
Vehicles
buildings * Total
GBP'000 GBP'000 GBP'000
Cost
Balance at 1 January 2019 * 381 29 410
Acquisitions 129 60 189
Balance at 31 December 2019 510 89 599
Balance as 1 January 2019 - - -
Amortisation charge for the year 110 23 133
Balance at 31 December 2019 110 23 133
Net book value
At 1 January 2019 381 29 410
At 31 December 2019 400 66 466
* Reclassification from property, plant and equipment due to the
adoption of IFRS 16. Motor vehicle acquisitions include a cash
deposit of GBP5,000.
Land
Lease liabilities and Motor
buildings Vehicles Total
GBP'000 GBP'000 GBP'000
Balance at 1 January 2019 381 23 404
Acquisitions 129 55 184
Interest expense 23 2 25
Lease payments (116) (26) (142)
Balance at 31 December 2019 417 54 471
Payable within one year 113 20 133
Payable after more than one year 304 34 338
Balance at 31 December 2019 417 54 471
Notes (continued)
9 Deferred tax assets and liabilities
Recognised deferred tax assets and liabilities are attributable
to the following:
Assets Liabilities Net
2019 2018 2019 2018 2019 2018
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
Restated Restated
* *
Property, plant
and equipment - - (80) (46) (80) (46)
Provisions 5 5 - - 5 5
Tax value of loss
carry-forwards 919 524 - - 919 524
Intangible fixed
assets - - (328) (103) (328) (103)
Initial application
of IFRS 15 12 10 - - 12 10
Tax assets/(liabilities) 936 539 (408) (149) 528 390
Offset of tax (408) (149) 408 149 - -
Net tax assets 528 390 - - 528 390
Unrecognised deferred tax assets are attributable to the
following:
Assets Assets
2019 2018
GBP000 GBP000
Property, plant and equipment 248 209
Provisions 2 3
Tax value of loss carry-forwards 1,356 1,424
Tax assets 1,606 1,636
* Further details of the prior year adjustment are provided at
Note 3.
There is no expiry date on the above unrecognised deferred tax
assets.
Following an announcement in the Budget on 11 March 2020, which
was substantively enacted on 17 March 2020, the UK corporation tax
rate applicable from 1 April 2020 now remains at 19%, rather than
the previously enacted reduction to 17%. If this tax rate was
applied to the closing deferred tax balances at the 31 December
2019, the impact would be an increase in the deferred tax assets
and liability of GBP110,000 and GBP48,000, respectively.
Movement in deferred tax during the year
31 December Prior year 1 January Recognised 31 December
2018 adjustment 2019 in income 2019
As previously As
stated restated
GBP000 GBP000 GBP000 GBP000 GBP000
Property, plant and
equipment (46) - (46) (34) (80)
Provisions 5 - 5 - 5
Tax value of loss carry-forwards 418 106 524 395 919
Intangible fixed assets (103) - (103) (225) (328)
Initial application
of IFRS 15 10 - 10 2 12
284 106 390 138 528
Notes (continued)
9 Deferred tax assets and liabilities (continued)
Movement in deferred tax during the prior year
31 December Initial
2017 application Arising
of IFRS 1 January on Recognised 31 December
15 2018 acquisitions in income 2018
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
Property, plant
and equipment (45) - (45) - (1) (46)
Provisions 5 - 5 - - 5
Tax value of loss
carry-forwards 401 - 401 - 17 418
Intangible fixed
assets (17) - (17) (94) 8 (103)
Initial application
of IFRS 15 - 96 96 - (86) 10
344 96 440 (94) (62) 284
10 Interest-bearing loans and borrowings
This note provides information about the contractual terms of
the Group's and Company's interest-bearing loans and borrowings,
which are measured at amortised cost.
2019 2018
GBP000 GBP000
Non-current liabilities
Bank loan - 875
Lease liabilities 338 8
338 883
Current liabilities
Bank loan 881 258
Current portion of lease liabilities 133 15
1,014 273
Subsequent to 31 December 2019, the Group's bankers confirmed
that the bank loan is repayable by equal quarterly instalments
of GBP62,500 and that GBP625,000 falls due after more than one
year. The interest rate is set at LIBOR plus 3.19% and the loan
is secured by a fixed and floating charge over the assets of the
Group.
The Group has available a revolving credit facility of up to GBP750,000
which was undrawn at both 31 December 2019 and 31 December 2018,
and which has been renewed subsequent to the year end and now
expires in June 2022. The interest rate on amounts drawn is set
at LIBOR plus 3.19%.
Lease liabilities include non-current liabilities of GBP29,000
and current liabilities of GBP16,000 which would previously have
been classified as finance leases.
Notes (continued)
10 Interest-bearing loans and borrowings (continued)
Changes in liabilities from financing activities
Non-current loans and borrowings Current loans and borrowings Lease
liabilities
GBP000 GBP000 GBP000
Balance at 1 January 2019 875 258 404
New lease liabilities (Note 8) - - 184
Interest expense - 51 25
Repayment of bank loan - (303) -
Payment of lease liabilities - - (142)
Classified as non-current at 31
December 2018 becoming
current at 31 December 2019 (875) 875 -
Total changes from financing cash
flows (875) 623 (67)
Balance at 31 December 2019 - 881 471
Lease
Non-current loans and borrowings Current loans and borrowings liabilities
GBP000 GBP000 GBP000
Balance at 1 January 2018 - - 38
New bank loan 875 375 -
Interest expense - 31 1
Repayment of bank loan - (148) -
Payment of lease liabilities - - (16)
Total changes from financing cash
flows 875 258 (15)
Balance at 31 December 2018 875 258 23
11 Share capital
At 31 At 31
December December
2019 2018
Number Number
Number of shares in issue - allotted,
called up and fully paid
Ordinary shares of 1p each 57,468,229 57,468,229
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 57,468,229 ordinary
shares of 1p each, all of which have equal voting rights.
Notes (continued)
12 Post balance sheet events
Covid 19
The Group continues to manage the impact of Covid-19 on its
business. 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 Group's facilities remain open for
business and are operating, through a variety of measures that have
been introduced to ensure a safe working environment. Since
mid-March 2020 employees able to work effectively from home have
been doing so, using conference facilities to communicate with
their teams and customers. Following the Covid-19 lockdown,
management conducted a full review of all operations and the effect
it has had on customers' operations. This has led to some staff
being furloughed under the Job Retention Scheme which is being kept
under constant review.
The main risks to the Group from Covid-19 identified so far 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 2020 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.
In the current circumstances of Covid-19 the provision of
forward guidance remains extremely challenging. With the Department
for Transport, the MOD and train operating companies focussing
their efforts on dealing with Covid-19, the timing of contract
awards previously anticipated for 2020 revenues are unlikely to
become clearer until the pandemic within the UK has abated. As
referred to in Note 1 Going Concern, the Board continues to keep
this under close review.
13 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.
Current net funds
Current net funds comprise cash and cash equivalents less
current liabilities in respect of interest bearing loans and
borrowings, excluding liabilities recognised on the adoption of
IFRS 16 'Leases'. This allows management to monitor the short term
indebtedness of the Group.
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
FR FRMLTMTIBBIM
(END) Dow Jones Newswires
June 18, 2020 02:00 ET (06:00 GMT)
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