TIDMPEG
RNS Number : 3775K
Petards Group PLC
05 May 2022
5 May 2022
Petards Group plc
("Petards", "the Group" or "the Company")
Final results for the year ended 31 December 2021
Petards Group plc (AIM: PEG), the AIM quoted developer of
advanced security and surveillance systems, is pleased to report
its audited final results for the year ended 31 December 2021.
Key Highlights:
-- Financial
o Total revenues GBP13,574,000 (2020: GBP13,001,000)
o Gross profit margin increased to 44.9% (2020: 36.4%)
o Adjusted EBITDA* GBP1,534,000 profit (2020: GBP320,000
profit)
o Operating profit GBP570,000 (2020: GBP1,145,000 loss)
o Profit after tax GBP865,000 (2020: GBP583,000 loss)
o Continued strong cash generation from operating activities
GBP745,000 (2020: GBP2,398,000)
o Total net funds (cash less debt) GBP1,510,000 (31 Dec 2020:
GBP1,179,000)
o Basic EPS 1.51p earnings and diluted EPS 1.47p earnings (2020:
basic and diluted 1.01p loss)
o Secured undrawn GBP2.5 million 3-year CBILS overdraft facility
to May 2024
-- Operational
o Order book at 31 December 2021: circa GBP7 million (30 June 2021: circa GBP9 million)
o GBP8 million revenue coverage for FY 2022 from deliveries and
orders on hand at 31 March 2022
o Margins improved significantly following restructuring
undertaken in prior year
o Another record trading performance from QRO which is
continuing into 2022
o On-train trials of AI technology solution arising from work of
Petards' Virtual Technology Centre
* Adjusted EBITDA comprises operating profit adjusted to remove
the impact of depreciation, amortisation, exceptional items,
acquisition costs and share based payments. A reconciliation of
Adjusted EBITDA to operating profit is included on the face of the
consolidated income statement.
Commenting on the current outlook, Raschid Abdullah, Chairman,
said:
" The Group closed the year with an order book of around GBP7
million and trading for the first three months of 2022 has started
well, with the Group trading slightly ahead of management's
expectations. At present this is thought to be timing related
rather than an indication of a better than expected performance for
the year. With scheduled deliveries of GBP8 million already secured
for the current year by the end of the first quarter, the Board has
confidence that the Group is positioned to make further progress in
2022."
This announcement contains inside information for the purposes
of Article 7 of the UK version of Regulation (EU) No 596/2014 which
is part of UK law by virtue of the European Union (Withdrawal) Act
2018, as amended ("MAR"). Upon the publication of this announcement
via a Regulatory Information Service, this inside information is
now considered to be in the public domain.
.
Contacts:
Petards Group plc www.petards.com
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 the results for the year again
showed a significant improvement against those reported in the
prior year. Against a background of economic uncertainty arising
from the legacy of Covid-19 and its various successor strains, and
inflationary fears becoming a reality, the Group traded in line
with market expectations with revenues increasing to GBP13,574,000
(2020: GBP13,001,000) and adjusted EBITDA* increasing almost
five-fold to a profit of GBP1,534,000 (2020: GBP320,000).
This improvement was seen across all other profit measures with
profit before tax increasing to GBP502,000 from a loss of
GBP1,238,000, and profit after tax to GBP865,000 from a GBP583,000
loss.
Net cash generated from operating activities in the year
totalled GBP745,000 (2020: GBP2,398,000) leading to closing cash
balances at 31 December 2021 of GBP2,277,000 (31 December 2020:
GBP2,204,000) and net funds of GBP1,510,000 (31 December 2020:
GBP1,179,000).
As anticipated in my statement of last September, revenues and
profitability were weighted towards the first half of the year.
However, given the challenges outlined above facing the Group's
businesses, the Board considers the result to be creditable with
both the first and second half of the year being profitable, and
justified its decision in 2020 to realign its cost base, a process
which continued into 2021.
While the last couple of years have been difficult for smaller
businesses such as Petards, I am pleased to report that the Group's
balance sheet is in good shape. Net assets at 31 December 2021
increased to GBP7,722,000 (2020: GBP6,928,000) including cash
balances of GBP2,277,000 (2020: GBP2,204,000) and with minimal
debt.
Personnel
The success arising out of the reorganisation of the Group's
eyeTrain operations in 2020 and other cost realignments undertaken
in 2021, has been very much to the credit of our management and
their respective teams. They have all demonstrated commitment and
resilience during this period of significant change.
We very much appreciate the key role all personnel have played
and continue to play in developing the Group, especially through
the difficult times of the last couple of years, and I and the
Board on behalf of shareholders extend our thanks to each and every
one of them.
I am also pleased to welcome to the Group, Ben Gillam as Company
Secretary and Group Financial Controller who joined us earlier this
year. Ben is an experienced chartered accountant and joins us from
TT Electronics plc where he spent the last 15 years in a variety of
head office and operational finance roles.
Environmental Social Governance ("ESG")
The Board has continued to work towards relevant proportionate
long term ESG goals within the Group's operations. The on-going
development of our operations and product offerings will continue
to embrace ESG considerations in partnership with our customers,
suppliers, and the communities in which we operate.
Petards Virtual Technology Centre ("PVTC")
I am pleased to report that our PVTC has been successful in
providing a focussed technical forum to drive forward the Group's
product development plans. As a result of work carried out through
the PVTC, we are presently trialling with a major train operator,
an artificial intelligence ("AI") and machine learning solution
which utilises Petards' existing technology. If successful, this
on-train solution would provide rail operators with the potential
for real time data analytics to identify on-track hazards and
safety improvements to their rail networks.
Acquisitions
The Board has reviewed a number of potential acquisitions, both
in the rail and surveillance infrastructure markets. Agreeing fair
value with the vendors of these businesses has proved challenging,
particularly those who depend heavily on the government purse for
their revenue at a time when many forecast projects are being
deferred.
Despite this background, ,the Company will continue to review
relevant opportunities.
Outlook
The Group enters 2022 with its reduced cost base, improved
productivity and a strong, cash positive balance sheet.
The strong financial performance delivered for 2021 was achieved
against the backdrop of the continuing effects of the pandemic on
government spending in certain sectors, and the state of flux
experienced by the UK rail industry in recent times, including the
formation of Great British Railways. Both these factors are likely
to influence the outcome for the current financial year.
While there has been increasing bid activity in recent months,
primarily for smaller projects, the timing of order placements is
still difficult to predict. For the immediate future, the eyeTrain
order book is likely to comprise smaller projects with shorter
delivery cycles. This contrasts with the larger multi-year
deliveries for new rolling stock projects that have comprised a
significant element of the Group's order book in recent years. Such
smaller retrofit and refurbishment orders are often delivered in
the same year they are received.
The Group closed the year with an order book of around GBP7
million and trading for the first three months of 2022 has started
well, with the Group trading slightly ahead of management's
expectations. At present this is thought to be timing related
rather than an indication of a better than expected performance for
the year. With scheduled deliveries of GBP8 million already secured
for the current year by the end of the first quarter, the Board has
confidence that the Group is positioned to make further progress in
2022.
Raschid Abdullah
Chairman
*See Alternative Performance Measures Glossary at the end of
this RNS.
Strategic Report
Business review
Petards' operations continue to be focused upon the development,
supply and maintenance of technologies used in advanced security,
surveillance and ruggedised electronic applications, the main
markets for which are:
-- Rail - software driven video and other sensing systems for
on-train applications sold under the eyeTrain brand to global train
builders, integrators and rail operators, and web-based real-time
safety critical integrated software applications supporting the UK
rail network infrastructure sold under the RTS brand;
-- Traffic - Automatic Number Plate Recognition ("ANPR") systems
for lane and speed enforcement and other applications, and UK Home
Office approved mobile speed enforcement systems, sold under the
QRO and ProVida brands to UK and overseas law enforcement agencies
and commercial customers; and
-- Defence - electronic countermeasure protection systems,
mobile radio systems and related engineering services sold
predominantly to the UK Ministry of Defence ("MOD").
Operating review
The significant increase in adjusted EBITDA profit in 2021
reflected the full year benefit of the restructuring of the Group's
eyeTrain operations in 2020, and the continued growth of the
Group's Traffic solutions. Higher levels of maintenance and support
activities from rail and defence customers also contributed to the
stronger performance.
Notable achievements within the Group's eyeTrain operation
included the delivery of systems for fitment by Porterbrook
Maintenance to the UK's first tri-mode trains, capable of running
on overhead and third rail electric lines as well as under their
own diesel power. This GBP1 million project was delivered in full,
on schedule and only a few months from when the contract was
awarded.
Management also continued to have to manage a much higher level
of re-scheduling of deliveries by customers than was the case
pre-pandemic. However, with the volume of train services
increasing, revenues from the provision of engineering support,
spares and repairs for our existing installed base recovered to
almost pre-pandemic levels.
In May 2021, the long awaited government policy paper on the UK
railways, "Great British Railways: Williams-Shapps Plan for Rail"
("the Plan") was published, based on a 'root and branch' review of
the structure of the UK rail industry. The Plan is wide ranging
covering the sector's recovery post pandemic, passenger experience,
safe and secure railways for all, growth not contraction of the
network while seeking to retain the best elements of the private
sector. In addition to the impact the Plan has had on short term
investment decisions by central government, the demise of the
independent Train Operating Companies ("TOCs") has further affected
UK rail investment and decision making, at least in the shorter
term.
Recognising that the Plan was imminent and the impact this was
starting to have on the Group's rail customers when it came to
decisions concerning new investment, the Board took the view in
2020 to plan based on there being little new business available
from major new build or refurbishment rolling stock projects in the
near term and planned accordingly. This approach proved justified
with the completion of the acquisition of Bombardier Transportation
by Alstom during the early part of 2021 compounding the degree of
change experienced in the sector.
Nevertheless, while no significant projects were secured in the
period, we are starting to see a higher level of eyeTrain
opportunities both for the UK and overseas markets. These are
predominantly for smaller retrofit and upgrade projects rather than
larger new train build projects with lead times from first enquiry
to first delivery for the former being much shorter than new build
projects which have dominated the Group's order book in the last
ten years.
While, when available, suitable larger contracts will be
tendered for, management's focus will be on securing contracts
where it is able to protect its margins through quality of product,
systems and delivery performance over shorter contract delivery
time periods.
Elsewhere in rail, RTS Solutions ("RTS") had another solid year
in terms of its revenue, profitability and cash flow and licence
and maintenance contract renewals totalling GBP0.8 million were
received for its rail infrastructure focussed software
offering.
At the outset of the year, the Board approved a strategy
proposal involving investment in new software offerings and
services for RTS's customers and in marketing and business
development resources, including the development and launch of the
new RTS website www.rts-solutions.net in December. The Board views
RTS as having the potential to further develop in the trackside
management and rail health & safety segment, and with this in
mind has embarked on a review of this sub-sector for opportunities
as well as acquisitions that might reduce the timeframe of route to
market.
QRO Solutions ("QRO") had another record year in terms of
revenue, cash flow and profitability. Of particular note was the
on-time delivery of an export order worth in excess of GBP500,000
to a new customer for ProVida speed enforcement systems, and
increasing sales of the NASBox, whose rights were acquired in 2020,
with 400 units being delivered in 2021.
We are expecting the coming year for QRO to continue strongly,
with the addition of six new UK police forces to QRO's customer
list and the launch of several new products. These include the
Q-Box, a cost effective in-vehicle ANPR solution for which there
has been a high level of customer interest and revenues in the
first quarter of 2022.
Petards' Defence made an increased contribution to the Group's
profitability in the year. It is primarily a provider of specialist
engineering services and value added reseller, for which it is well
known to the MOD and UK prime defence contractors. Following the
Board's decision in 2020 to focus on securing smaller orders, order
intake increased in 2021 and it is hoped that the securing of a
5-year framework contract in June from the MOD for the support of
threat simulator systems will give rise to additional order flow in
the coming years. Management is seeking to develop its Defence
offering, playing to its strength and experience of providing
customers with high value-add support and engineering services.
During the year Petards was not totally immune to the impact of
Brexit and Covid-19 on its supply chain. Global component shortages
have meant that management have had to work hard to mitigate any
implications these had on delivery timescales. Where practicable
certain components have been purchased ahead of time, and inventory
levels increased, and the situation continues to be closely
monitored.
So far, we have not seen any supply chain or inflationary
pressures specific to the Ukrainian conflict. The Group does not
have any customers or direct supply chain dependencies in Ukraine
and while the situation is concerning, the Board is not expecting
any specific supply chain inflation.
The growing risk of cyber threats is an area of focus for the
Group's customers. This may well present sales opportunities in due
course, but with regard to the resilience of the Group's own
systems, during and since the year end it has been proactive in
enhancing the measures taken to reduce exposure to such
threats.
Financial review
Operating performance
Group revenues increased by 4% to GBP13,574,000 (2020:
GBP13,001,000). The main driver for the increased revenues in 2021
was the Group's Traffic products, with QRO continuing its strong
growth record since its acquisition five years ago. Revenues from
Rail and Defence products were at similar levels to those achieved
in the prior year.
The increase in overall gross profit margin seen at the half
year stage continued into the second half of 2021. All product
areas saw their gross profit margins at either similar or increased
levels as compared with those in 2020 with the cost base reductions
made in 2020 feeding through to higher gross profit margin. This,
coupled with higher levels of service and licence income, and
significantly lower non-recurring eyeTrain project costs, resulted
in gross profit margins improving year-on-year to 44.9% (2020:
36.4%).
While administrative costs, fell by GBP349,000 to GBP5,530,000
(2020: GBP5,879,000), the like-for-like reduction was small as the
prior year included exceptional restructuring costs of GBP425,000
and Job Retention Scheme grants received of GBP141,000. QRO saw
some growth in its overheads related to its growing revenues, but
this was offset by reductions in other operations.
There was a very significant increase in earnings before
interest, tax, depreciation, amortisation, exceptional items,
acquisition costs and share based payment charges ("adjusted
EBITDA"), which rose from a profit of GBP320,000 in 2020 to a
profit of GBP1,534,000 in 2021.
Net financial expenses reduced to GBP68,000 (2020: GBP93,000)
mainly due to a lower foreign exchange charge, and lower interest
on the Group's CBILs term loan as that loan reduced through
repayments. While that loan is interest free for the first year to
May 2022, the interest charge has been shown gross and the interest
saving of GBP8,000 shown as other income.
The tax credit of GBP363,000 (2020: GBP655,000 credit) largely
reflected R&D tax credits of GBP532,000 claimed and recognised
in 2021, relating to 2020, with the related cash refunds of
GBP461,000 being received in the year. Claims for 2021 R&D
activities will be made and recognised in 2022. The balance of the
2021 tax credit included a deferred tax charge of GBP126,000
arising from the surrender of previously recognised losses for
R&D tax credits and the utilisation of previously recognised
tax losses, net of a GBP94,000 credit from the recognition of net
deferred tax assets at the corporation tax rate of 25% effective
from 1 April 2023.
The overall result for the Group for the year was a profit after
tax of GBP865,000 (2020: GBP583,000 loss) and represented diluted
earnings per share of 1.47p (2020: 1.01p loss).
Research and development
The Group continued to invest in its internally developed
software and hardware solutions. That investment totalled
GBP553,000 in 2021 amounting to 4% of revenues (2020:
GBP1,284,000), of which only GBP17,000 was capitalised (2020:
GBP371,000). The capitalised development costs related to the
Group's eyeTrain advanced on-train sensing software and systems. In
addition to eyeTrain, the other R&D costs incurred related to
the enhancement of the software and hardware solutions of QRO and
RTS.
Cash, cash flow and net debt
The Group again recorded a strong cash generative performance
with net cash inflows from operating activities totaling GBP745,000
(2020: GBP2,398,000). This was despite working capital increasing
by a net GBP1,242,000 in the year much of which related to the
unwinding in the second half year of a very favorable working
capital position on a large project that arose in 2020. The
operating cash inflows included GBP461,000 in respect of R&D
tax credits arising from product development undertaken in 2020.
The prior year's R&D tax receipts of GBP1,660,000 were much
higher as they included R&D tax credits relating to more than
one year.
Capital equipment purchases for QRO accounted for the majority
of the GBP127,000 net cash outflows from investing activities
(2020: GBP543,000). In addition to repayments of the 5-year term
loan and the principal paid on lease liabilities, the net financing
outflows of GBP545,000 (2020: GBP478,000) included GBP103,000 in
respect of the Company's purchase of 1,000,000 of its own ordinary
shares which are presently held as treasury shares.
At 31 December 2021 the Group's cash and cash equivalents were
GBP2,277,000 (2020: GBP2,204,000) and net funds at 31 December 2021
were GBP1,510,000 (2020: GBP1,179,000 net debt) after deducting
IFRS 16 lease liabilities of GBP392,000 (2020: GBP398,000).
In May 2021 the Group entered into a 3-year 2.5 million CBILs
overdraft facility to provide the Group with the capacity to
finance additional working capital should that be required,
although to date this has not been drawn.
Osman Abdullah
Group Chief Executive
Consolidated income statement
for year ended 31 December 2021
Note 2021 2020
GBP000 GBP000
Revenue 2 13,574 13,001
Cost of sales (7,482) (8,267)
Gross profit 6,092 4,734
Administrative expenses (5,530) (5,879)
Other income 8 -
Adjusted EBITDA* 1,534 320
Amortisation of intangibles (603) (637)
Depreciation of property, plant and
equipment (193) (244)
Amortisation of right of use assets (136) (133)
Share based payment charges (32) (26)
Exceptional restructuring costs - (425)
---------------------------------------- ---- ------- -------
Operating profit/(loss) 570 (1,145)
Finance income 3 - -
Finance expenses 3 (68) (93)
Profit/(loss) before tax 502 (1,238)
Income tax 4 363 655
Profit/(loss) for the year attributable
to equity shareholders
of the parent 865 (583)
Other comprehensive income - -
Total comprehensive income/(expense)
for the year 865 (583)
Earnings/(loss) per ordinary share
(pence)
Basic 5 1.51 (1.01)
Diluted 5 1.47 (1.01)
* Earnings before financial income and expenses, tax,
depreciation, amortisation, exceptional items, acquisition costs
and share based payment charges. See Alternative Performance
Measures Glossary at the end of this document.
Statements of changes in equity
for year ended 31 December 2021
Share Share Treasury Equity Retained Total
capital premium shares reserve earnings equity
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
At 1 January 2020 575 1,617 - 14 5,272 7,478
Loss for the year - - - - (583) (583)
Total comprehensive expense
for the year - - - - (583) (583)
Contributions by and distributions
to owners
Equity-settled share based
payments - - - - 26 26
Exercise of share options - 7 - - - 7
Total contributions by and
distributions to owners - 7 - - 26 33
At 31 December 2020 575 1,624 - 14 4,715 6,928
At 1 January 2021 575 1,624 - 14 4,715 6,928
Profit for the year - - - - 865 865
Total comprehensive income
for the year - - - - 865 865
Contributions by and distributions
to owners
Equity-settled share based
payments - - - - 32 32
Purchase of treasury shares - - (103) - - (103)
Total contributions by and
distributions to owners - - (103) - 32 (71)
At 31 December 2021 575 1,624 (103) 14 5,612 7,722
Consolidated balance sheet
at 31 December 2021
Note
2021 2020
GBP000 GBP000
ASSETS
Non-current assets
Property, plant and equipment 686 761
Right of use assets 366 387
Intangible assets 4,031 4,617
Investments in subsidiary
undertakings 5 5
Deferred tax assets 6 396 522
5,484 6,292
Current assets
Inventories 1,659 2,372
Trade and other receivables 1,989 2,645
Cash and cash equivalents 2,277 2,204
5,925 7,221
Total assets 11,409 13,513
EQUITY AND LIABILITIES
Equity attributable to equity holders of
the parent
Share capital 8 575 575
Share premium 1,624 1,624
Treasury shares (103) -
Equity reserve 14 14
Retained earnings 5,612 4,715
Total equity 7,722 6,928
Non-current liabilities
Interest-bearing loans
and borrowings 7 284 649
Current liabilities
Interest-bearing loans
and borrowings 7 483 376
Trade and other payables 2,920 5,560
3,403 5,936
Total liabilities 3,687 6,585
Total equity and liabilities 11,409 13,513
Consolidated statement of cash flows
for year ended 31 December 2021
Note
2021 2020
GBP000 GBP000
Cash flows from operating activities
Profit/(loss) for the year 865 (583)
Adjustments for:
Depreciation of property, plant
and equipment 193 244
Amortisation of right of use
assets 136 133
Amortisation of intangible assets 603 637
Loss on disposal of property,
plant and equipment - 1
Profit on disposal of right of
use assets (8) (5)
Financial expenses 3 68 93
Equity settled share-based payment
expenses 32 26
Income tax credit 4 (363) (655)
Operating cash flows before movement
in
working capital 1,526 (109)
Change in inventories 713 58
Change in trade and other receivables 641 226
Change in trade and other payables (2,596) 563
Cash generated from operations 284 738
Tax received 461 1,660
Net cash from operating activities 745 2,398
Cash flows from investing activities
Acquisition of property, plant
and equipment (118) (33)
Sale of right of use assets 8 16
Acquisition of intangible assets - (150)
Capitalised development expenditure (17) (371)
Acquisition of investments - (5)
Net cash outflow from investing
activities (127) (543)
Cash flows from financing activities
Bank loan repaid 7 (250) (250)
Interest paid on loans and borrowings 7 (18) (33)
Principal paid on lease liabilities 7 (122) (138)
Interest paid on lease liabilities 7 (27) (20)
Other interest and foreign exchange 3 (25) (44)
Proceeds from exercise of share
options - 7
Purchase of treasury shares (103) -
Net cash outflow from financing
activities (545) (478)
Net increase in cash and cash
equivalents 73 1,377
Total movement in cash and cash equivalents
in the year 73 1,377
Cash and cash equivalents at
1 January 2,204 827
Cash and cash equivalents at
31 December 2,277 2,204
Notes
1 Basis of preparation
The financial information set out in this statement has been
prepared in accordance with the recognition and measurement
principles of International Financial Reporting Standards
("IFRSs"), IFRIC interpretations and the Companies Act 2006
applicable to companies reporting under IFRS. It does not include
all the information required for full annual accounts.
The financial information does not constitute the Company's
statutory accounts for the years ended 31 December 2021 or 31
December 2020 but is derived from those accounts. Statutory
accounts for 2020 have been delivered to the Registrar of Companies
and those for 2021 will be delivered in due course. The Auditor has
reported on those accounts; his reports (i) were unqualified, (ii)
did not include a reference to any matters to which the Auditor
drew attention by way of emphasis without qualifying his report and
(iii) did not contain a statement under section 498 (2) or (3) of
the Companies Act 2006.
Going concern
Petards is a critical supplier to many of its customers
supporting the UK's police and armed forces as well as the safe
running of the railways. The main risks to the Group's cash flows
identified are firstly, that customers may delay or re-schedule
deliveries for orders already in the Group's order book and
secondly that, in the short term, contract awards that the Group
was expecting to secure for revenue in 2022 may be delayed. By
their nature these risks are difficult for the Group to directly
influence or control, but by keeping in close contact with our
customers we are seeking to ensure that we are well-informed about
their plans and prepared to secure contracts awards as and when the
opportunities arise. The Group is fortunate that its customer base
comprises blue chip companies, the UK Government and its agencies
and its exposure to credit risk is low.
The Group currently meets its day to day working capital
requirements through its own cash resources and a 3-year overdraft
facility of 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 GBP0.38
million at the year-end.
The Group has prepared working capital forecasts based on the
2022 budget updated for material known changes since it was
prepared and the 2022 management accounts to 31 March 2022. The
time period reviewed is to 31 May 2023. At 31 March 2022 the Group
had cash balances of 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 2023. Accordingly, they have adopted the going
concern basis in preparing these financial statements.
2 Segmental information
The analysis by geographic segment below is presented in
accordance with IFRS 8 on the basis of those segments whose
operating results are regularly reviewed by the Board of Directors
(the Chief Operating Decision Maker as defined by IFRS 8) to make
strategic decisions, to monitor performance and allocate
resources.
The Board regularly reviews the Group's performance and balance
sheet position for its entire operations as a whole. The Board
receives financial information, assesses performance and makes
resource allocation decisions for its UK based business as a whole,
therefore the directors consider the Group to have only one segment
in terms of products and services, being the development, supply
and maintenance of technologies used in advanced security,
surveillance and ruggedized electronic applications.
As the Board of Directors receives revenue, Adjusted EBITDA and
operating profit on the same basis as set out in the consolidated
income statement no further reconciliation or disclosure is
considered necessary.
Revenue by geographical destination can be analysed as
follows:
2021 2020
GBP000 GBP000
United Kingdom 12,162 12,080
Continental Europe 834 837
Rest of World 578 84
13,574 13,001
The timing of revenue recognition can be analysed as
follows:
2021 2020
GBP000 GBP000
Products and services transferred at a point
in time 11,370 11,118
Products and services transferred over time 2,204 1,883
13,574 13,001
3 Finance expenses
2021 2020
GBP000 GBP000
Interest expense on financial liabilities
at amortised cost 16 29
Interest expense on lease liabilities 27 20
Other interest payable 20 23
Other exchange loss 5 21
Financial expenses 68 93
4 Taxation
Recognised in the income statement
2021 2021 2020 2020
GBP000 GBP000 GBP000 GBP000
Current tax (credit)/expense
Current tax charge 43 87
Adjustments in respect of
prior years (532) (748)
Total current tax (489) (661)
Deferred tax (credit)/expense
Origination and reversal
of temporary differences (90) (358)
Utilisation of recognised
tax losses 76 13
Adjustment in respect of
prior years 234 412
Effect of change in rate
of corporation tax (94) (61)
Total deferred tax 126 6
Total tax credit in income
statement (363) (655)
The GBP532,000 credit to current tax in respect of prior years
related to enhanced tax deductions for R&D tax claims and
losses surrendered for R&D tax credits in respect of prior
years. These claims are recognised when receipt is determined to be
probable. The GBP234,000 deferred tax expense in respect of prior
years, predominantly relates to previously recognised losses
surrendered for the above R&D tax credits.
The main rate of UK corporation tax, which was 19% for the year,
will change to 25% with effect from 1 April 2023. That change was
substantively enacted on 24 May 2021 and therefore the effect of
this rate reduction has been applied to the deferred tax balances
as at 31 December 2021.
Reconciliation of effective tax rate
2021 2020
GBP000 GBP000
Profit/(loss) before tax 502 (1,238)
Tax using the UK corporation tax rate of 19%
(2019: 19%) 95 (236)
Non-deductible expenses 9 18
Non-taxable income (10) -
Recognition of previously unrecognised tax
losses (65) (41)
Adjustments in respect of prior years (298) (336)
Effect of change in rate of corporation tax (94) (61)
Other reconciling items - 1
Total tax credit (363) (655)
5 Earnings per share
Basic earnings per share
Basic earnings per share is calculated by dividing the
profit/(loss) for the year attributable to the shareholders by the
weighted average number of shares in issue, which exclude treasury
shares.
2021 2020
Earnings
Profit/(loss) for the year (GBP000) 865 (583)
Number of shares
Weighted average number of ordinary shares ('000) 57,441 57,526
Basic earnings/(loss) per share (pence) 1.51 (1.01)
Diluted earnings per share
Diluted earnings per share assumes conversion of all potentially
dilutive ordinary shares, which arise from share options that would
decrease earnings per share or increase loss per share from
continuing operations and is calculated by dividing the adjusted
profit for the year attributable to the shareholders by the assumed
weighted average number of shares in issue. In 2020, the share
options in issue had an anti-dilutive effect due to the loss in
that year.
2021 2020
Adjusted earnings
Profit/(loss) for the year (GBP000) 865 (583)
Number of shares
Weighted average number of ordinary shares ('000) 58,744 57,526
Diluted earnings/(loss) per share (pence) 1.47 (1.01)
6 Deferred tax assets and liabilities
Recognised deferred tax assets and liabilities are attributable
to the following:
Assets Liabilities Net
2021 2020 2021 2020 2021 2020
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
Property, plant
and equipment - - (81) (48) (81) (48)
Provisions 6 5 - - 6 5
Tax value of loss
carry-forwards 926 937 - - 926 937
Intangible fixed
assets - - (455) (372) (455) (372)
Tax assets/(liabilities) 932 942 (536) (420) 396 522
Offset of tax (536) (420) 536 420 - -
Net tax assets 396 522 - - 396 522
Unrecognised deferred tax assets are attributable to the
following:
Assets Assets
2021 2020
GBP000 GBP000
Property, plant and equipment 365 278
Provisions 5 2
Tax value of loss carry-forwards 1,856 1,475
Tax assets 2,226 1,755
There is no expiry date on the above unrecognised deferred tax
assets.
Movement in deferred tax during the year
1 January Recognised 31 December
2021 in income 2021
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
Movement in deferred tax during the prior year
1 January Recognised 31 December
2020 in income 2020
GBP000 GBP000 GBP000
Property, plant
and equipment (80) 32 (48)
Provisions 5 - 5
Tax value of loss
carry-forwards 919 18 937
Intangible fixed
assets (328) (44) (372)
Initial application
of IFRS 15 12 (12) -
528 (6) 522
7 Interest-bearing loans and borrowings
This note provides information about the contractual terms of
the Group's interest-bearing loans and borrowings, which are
measured at amortised cost.
2021 2020
GBP000 GBP000
Non-current liabilities
Bank loan 125 375
Lease liabilities 159 274
284 649
Current liabilities
Bank loan 250 252
Current portion of lease liabilities 233 124
483 376
The interest rate on the bank loan is set at The Bank of England
bank rate plus 3.25% and the loan is secured by a fixed and
floating charge over the assets of the Group. In May 2021 the bank
loan was re-financed as a CBILS term loan over the existing term
and no interest is payable for the first year. The Group has
available a GBP2.5 million 3-year CBILS overdraft facility which
expires in May 2024, and which was undrawn at 31 December 2021.
Changes in liabilities from financing activities
Non-current 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 non-current
to in year (250) 250 -
Balance at 31 December
2021 125 250 392
Non-current Current
loans and loans and Lease
borrowings borrowings liabilities
GBP000 GBP000 GBP000
Balance at 1 January 2020 - 881 471
Cash items:
Repayment of bank loan
and interest - (283) -
Payment of lease liabilities - - (158)
Non-cash items:
New lease liabilities - - 65
Interest expense - 29 20
Re-classified from current
to non-current in year 375 (375) -
Balance at 31 December
2020 375 252 398
8 Share capital
At 31 At 31
December December
2021 2020
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 AIMBTMTMMTAT
(END) Dow Jones Newswires
May 05, 2022 02:01 ET (06:01 GMT)
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