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Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
---|---|---|---|---|---|
Petards Group Plc | LSE:PEG | London | Ordinary Share | GB00B4YL8F73 | ORD 1P |
Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|---|---|
0.00 | 0.00% | 7.50 | 7.00 | 8.00 | 7.50 | 7.50 | 7.50 | 25 | 01:00:00 |
Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
---|---|---|---|---|---|
Security Systems Service | 9.42M | -1.05M | -0.0173 | -4.34 | 4.55M |
TIDMPEG
RNS Number : 0688S
Petards Group PLC
15 March 2016
15 March 2016
PETARDS GROUP PLC
FINAL RESULTS FOR THE YEAR ENDED 31 DECEMBER 2015
Petards Group plc ('Petards'), the AIM quoted developer of advanced security and surveillance systems, reports its audited results for the year ended 31 December 2015.
Key points:
-- Financial
o Results for 2015
-- Revenues GBP13.1 million (2014: GBP13.5 million)
-- Gross margin up to 35.2% from 30.4% in 2014
-- EBITDA increased 24% to GBP1,260,000 (2014: GBP1,015,000)
-- Operating profit increased 22% to GBP935,000 (2014: GBP769,000 profit)
-- Profit after tax GBP765,000 (2014: GBP620,000 profit)
o Finance
-- Generated GBP1.2 million of operating cash inflows (2014: GBP0.8 million)
-- Cash at 31 December 2015 GBP2.5 million (31 Dec 2014: GBP1.4 million) and no bank debt
-- Convertible loan notes of GBP1.5 million maturing in September 2018 providing long term finance (31 Dec 2014: GBP1.5 million)
-- Basic EPS increased 22% to 2.19p earnings per share (2014: 1.80p)
-- Diluted EPS increased 18% to 1.62p earnings per share (2014: 1.37p per share)
-- Operational
o Closing order book GBP16 million (2014: GBP20 million)
o Order book for eyeTrain maintained with significant orders received from Siemens Mobility, Bombardier Transportation and Hitachi Rail Europe
o ProVida revenues up 35% on 2014
o Defence order intake disappointing but signs of improvement in Q1 2016
o Recurring revenue orders for eyeTrain spares and support were 90% ahead of 2014
o Export revenues increased by 25% and totalled 26% of Group revenues
-- Outlook
o Current order book contains GBP11 million scheduled for delivery in 2016
Raschid Abdullah, Chairman of Petards, commented:
"Our strong opening order book together with recently received orders provides GBP11 million of revenues that are presently scheduled for delivery in 2016. With new projects still under discussion, the board is confident that the Group is well positioned to achieve another good year's performance in 2016."
Contacts
Petards Group plc www.petards.com Raschid Abdullah, Chairman Mb: 07768 905004 WH Ireland Limited, Nomad www.wh-ireland.co.uk and Joint Broker Mike Coe, Ed Allsopp Tel: 0117 945 3470 Hybridan LLP, Joint Broker www.hybridan.com Claire Louise Noyce Tel: 020 3764 2341
Chairman's statement
I am pleased to report to our shareholders and stakeholders that the Company made considerable progress during the course of 2015 building on the foundations for growth that were laid down by the board in the previous year. You will also note that the board has decided to alter the layout of the annual report with the Chairman's Statement now focussing on the key drivers and business strategy with a separate in-depth operational business review section.
We achieved a healthy increase in pre-tax profits which totalled GBP762,000 for 2015 against the previous year's pre-tax profit of GBP620,000, being a 23% increase year on year. Basic earnings per share improved to 2.19p against 1.80p recorded for 2014 with fully diluted earnings per share registering an increase to 1.62p compared to 1.37p for 2014 representing increases of 21.7% and 18.2% respectively.
Although overall revenues at GBP13.1 million were broadly similar to the previous year's of GBP13.5 million, gross margins increased significantly to 35.2% against 30.4% for 2014. This was largely a reflection of the changed product mix during the course of the year with revenues being weighted towards our transport and emergency services products and reduced levels of revenue being recorded from lower margin defence products.
We entered 2016 with an overall order book of GBP16 million of which approaching GBP10 million is scheduled to be delivered during 2016. Whilst this is ahead of the same period last year, active negotiations continue to secure new projects in all of our product areas. I was delighted that earlier this month we were successful in winning a new MOD contract with a value in excess of GBP800,000 to be delivered during 2016 further strengthening our order book position.
The improved performance in profitability for 2015 generated excellent cash flow in the business during the course of the year with Group cash balances growing from GBP1.4 million at the close of 2014 to GBP2.5 million at the end of 2015, a GBP1.1 million increase. Although the Group negotiated and put in place a small bank overdraft facility, this was not required or utilised during the course of the year.
We continued our 'Fit for Growth' programme that was initiated at Petards Joyce-Loebl, the Group's principal trading subsidiary, over two years ago which included designing new products, recruitment and growing our software engineering skills to support our customers on future projects. I would like to express on behalf of the board, its sincere appreciation and thanks to all of our employees with a warm welcome to those who joined us during the course of the year, for their excellent contribution and valued support to the business during the year and going forward into 2016.
In my statement last year I referred to the considerable deficit that existed on distributable reserves within our balance sheet. The board took steps to resolve this issue and High Court approval was granted last December for a capital reduction. I am pleased to inform shareholders that we now have positive distributable reserves with a structured balance sheet to support the Group going forward. This places the board in a better position for the commencement of dividend payments at some future date. No dividend is being proposed in respect of 2015 as it is presently considered appropriate to retain our strong cash position to support investment in our growth plans and acquisition strategy.
As a result of the past two years positive trading, improved balance sheet and financial robustness following our initial turnaround, we are now well positioned to pursue an earnings enhancing acquisition strategy. We intend to expand the Group into a larger and more prosperous business. The board has under review a number of potential businesses to acquire and we will of course be keeping shareholders fully advised of our progress.
Our strong opening order book together with recently received orders provides GBP11 million of revenues that are presently scheduled for delivery in 2016. With new projects still under discussion, the board is confident that the Group is well positioned to achieve another good year's performance in 2016.
Raschid Abdullah
Chairman
Business review
The Group continues to have 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, the main markets for which are:
-- Rail Transport - software driven video and other sensing systems for on-train applications (eyeTrain brand)
-- Defence - electronic countermeasure protection systems, mobile radios and related engineering services
-- Emergency Services - in-car speed enforcement and ANPR systems (ProVida brand)
During 2015 good progress was made from both an operational and financial perspective and the Group made significant improvements in the majority of its key performance measures.
Operating review
The Group closed the year with a strong order book that provides good visibility of earnings with 60% of the GBP16 million order book scheduled for delivery in 2016. While the overall order book is lower than that at the close of 2014, its composition remains very encouraging with the 2015 closing order book for eyeTrain products being maintained at the same level as that at 31 December 2014.
During the course of the year the Group secured a number of significant orders for eyeTrain systems from train builders that included Siemens Mobility Germany, Bombardier Transportation and Hitachi Rail Europe. In addition, the trend of increasing recurring revenues from spares and support reported at the half year continued. Orders for spares and support were 90% ahead of those received in 2014, supporting management's view that this will increasingly become a significant contributor to revenues as the eyeTrain installed base increases and the trains to which eyeTrain systems are fitted enter operational service.
Looking to the future we are working on a number of exciting opportunities for eyeTrain with both UK and overseas based train builders and we anticipate that some of these will come to fruition during the course of 2016.
The slower than anticipated order intake for our defence related products and services reported at the half year continued into the second half of 2015 which coupled with the delivery of substantial milestones for projects in the 2015 opening order book, led to the reduction in the Group's overall closing order book.
The GBP4.5 million software modification project for the MOD secured in 2014 progressed to schedule and was over 80% complete by the end of 2015. The project was a significant contributor to 2015 Group revenues and should be completed during the course of 2016. While there remains a small amount of equipment to supply on the RAF's Secure Management Radio Equipment (SMRE) contract, that project has entered its support phase for which Petards holds a 10 year contract.
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Defence products remain an important element of Petards' business and the Group continues to provide equipment and support services to the MOD in the niche areas of its expertise which it has operated in for many years. The nature of larger projects for Petards' defence products, particularly those relating to electronic countermeasures, means that the order book for these products tends to follow a more variable trend than that for eyeTrain and ProVida. Nevertheless, the Group remains well placed to win defence business and has made some alterations to the way it addresses this market. It is therefore encouraging that 2016 has started well, an example of which was the recently announced GBP0.8 million order from the MOD for communication systems and related support.
Demand for our ProVida products strengthened in the second half of 2015 and revenues were up over 35% on the prior year. Historically ProVida has had a strong overseas customer following as well as within the UK, although the proportion of overseas revenues for these products had been reducing in recent years. It was pleasing that the growth in 2015 was driven by exports, although it is too early to say whether this will be maintained as 2015 revenues benefitted from a large spares order from an existing export customer.
Petards has operated within the speed enforcement and ANPR markets for over 15 years and while it is presently the smallest element of its business, management continues to consider this to be an interesting market with scope for the Group to grow its presence both in the UK and internationally.
Financial review
Operating performance
While revenues for the year ended 31 December 2015 were similar to those in 2014, the profitability and operating cash flows were significantly higher. Revenues for the year were GBP13.1 million (2014: GBP13.5 million) and the improvement in gross margins seen at the half-year stage over those achieved in 2014 was sustained. Export revenues grew by over 25% and accounted for over a quarter of Group revenues.
Margins increased to 35.2% (2014: 30.4%) driving earnings before interest, tax, depreciation and amortisation (EBITDA) to GBP1,260,000, an increase over 2014 of over 24% (2014: GBP1,015,000). Operating profits increased by over 21% to GBP935,000 (2014: GBP769,000).
The increase in margins arose from the revenue mix comprising a larger proportion of higher margin eyeTrain and ProVida revenues and due to the prior year containing GBP4.5 million of lower margin equipment deliveries on the SMRE project.
Administrative expenses grew by 10% to GBP3.7 million (2014: GBP3.3 million) primarily due to increases in the amortisation of development costs capitalised in 2014 and payroll costs following the strengthening of the team at Petards Joyce-Loebl.
Net financial expenses totalled GBP173,000 (2014: GBP149,000), the increase being due to net foreign exchange losses of GBP25,000 and after a GBP3,000 tax credit (2014: GBPnil), profit after tax totalled GBP765,000 (2014: GBP620,000).
Research and development
While product development costs incurred during the year were much lower than in 2014, this was in line with our expectations following two years of heavy investment. The Group remains committed to developing its products and services to maintain and grow its market position and service its customers. Capitalised development expenditure for the year was GBP66,000 (2014: GBP661,000), while development expenditure expensed in the year increased to GBP217,000 (2014: GBP80,000).
Cash and cash flow
The Group's financial position continued to strengthen and at 31 December 2015 it held cash balances of GBP2.5 million, no bank debt and had convertible loan notes maturing in September 2018 of GBP1.5 million (2014: GBP1.4 million cash, no bank debt and loan notes of GBP1.5 million).
Cash flows from operating activities were up 54% to GBP1,174,000 (2014: GBP761,000) reflecting both the strong operating performance in the year and a reduction in working capital.
Balance sheet
On 16 December 2015, following the approval of the High Court, the Company completed the reduction of share capital (Capital Reduction) approved by shareholders on 11 November 2015. The Capital Reduction eliminated the deficit in the Company's retained earnings that previously existed and consequently puts it in a position to pay dividends to shareholders as and when the Board deems it appropriate.
Taxation
Due to the availability of brought forward tax losses and research and development tax credits, the Group did not incur a corporation tax charge in respect of 2015 (2014: GBPnil). In 2014 the Group surrendered tax losses to receive cash payments of GBP208,000 in respect of research and development tax credits. In 2015 it repaid GBP169,000 of those research and development tax credits and instead utilised the related tax losses against taxable profits making a net tax saving of over GBP140,000.
Osman Abdullah
Group Chief Executive
Consolidated Income Statement
for year ended 31 December 2015
Note 2015 2014 GBP000 GBP000 Revenue 2 13,072 13,462 Cost of sales (8,473) (9,370) Gross profit 4,599 4,092 Administrative expenses (3,664) (3,323) Operating profit 935 769 ------------------------------------ ---- ------- ------- Analysed as: Earnings before interest, tax, depreciation and amortisation ('EBITDA') 1,260 1,015 Depreciation and amortisation (325) (246) 935 769 Financial income 3 3 3 Financial expenses 3 (176) (152) Profit before tax 762 620 Income tax 4 3 - Profit for the year attributable to equity shareholders of the parent 765 620 Earnings per share (pence) Basic 8 2.19 1.80 Diluted 8 1.62 1.37
Consolidated Statement of Comprehensive Income
for year ended 31 December 2015
2015 2014 GBP000 GBP000 Profit for the year 765 620 Other comprehensive income Items that may be reclassified to profit: Currency translation on foreign - - currency net investments Total comprehensive income for the year 765 620
Statement of Changes in Equity
for year ended 31 December 2015
Share Share Merger Special Retained Currency Total capital premium reserve Equity reserve earnings translation equity reserve differences GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 At 1 January 2014 6,645 25,153 1,075 206 - (31,132) (211) 1,736 Profit for the year - - - - - 620 - 620 Total comprehensive income - - - - - 620 - 620 Conversion of convertible loan notes 4 23 - (2) - 2 - 27 Exercise of share options 2 16 - - - - - 18 At 31 December 2014 6,651 25,192 1,075 204 - (30,510) (211) 2,401 At 1 January 2015 6,651 25,192 1,075 204 - (30,510) (211) 2,401 Profit for the year - - - - - 765 - 765 Total comprehensive income - - - - - 765 - 765 Equity-settled share based payments - - - - - 6 - 6 Conversion of convertible loan notes 1 14 - (1) - - - 14 Capital reduction (note 6) (6,303) (25,192) (1,075) - 8 32,562 - - At 31 December 2015 349 14 - 203 8 2,823 (211) 3,186
Consolidated Balance Sheet
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at 31 December 2015
Note 2015 2014 GBP000 GBP000 ASSETS Non-current assets Property, plant and equipment 247 187 Goodwill 401 401 Development costs 902 1,103 Deferred tax assets 429 516 1,979 2,207 Current assets Inventories 2,168 1,439 Trade and other receivables 1,861 2,982 Cash and cash equivalents - escrow deposits - 54 Cash and cash equivalents 2,478 1,434 6,507 5,909 Total assets 8,486 8,116 EQUITY AND LIABILITIES Equity attributable to equity holders of the parent Share capital 7 349 6,651 Share premium 14 25,192 Equity reserve 203 204 Merger reserve - 1,075 Special reserve 8 - Currency translation reserve (211) (211) Retained earnings 2,823 (30,510) Total equity 3,186 2,401 Non-current liabilities Interest-bearing loans and borrowings 5 1,543 1,524 Deferred tax liabilities - 100 1,543 1,624 Current liabilities Other trade and other payables 3,757 4,091 3,757 4,091 Total liabilities 5,300 5,715 Total equity and liabilities 8,486 8,116
Consolidated Statement of Cash Flows
for year ended 31 December 2015
Note 2015 2014 GBP000 GBP000 Cash flows from operating activities Profit for the year 765 620 Adjustments for: Depreciation 58 48 Amortisation of intangible assets 267 198 Financial income 3 (3) (3) Financial expense 3 176 152 Equity settled share-based payment expenses 6 - Income tax credit (3) - Operating cash flows before movement in working capital 1,266 1,015 Change in trade and other receivables 1,138 (2,035) Change in inventories (729) 340 Change in trade and other payables (195) 1,340 Cash generated from operations 1,480 660 Interest received 3 3 Interest paid (146) (110) Tax (paid)/received (163) 208 Net cash from operating activities 1,174 761 Cash flows from investing activities Acquisition of property, plant and equipment (118) (70) Capitalised development expenditure (66) (661) Cash deposits held in escrow 54 (54) Net cash outflow from investing activities (130) (785) Cash flows from financing activities Proceeds from exercise of share options - 18 Net cash inflow from financing activities - 18 Net increase/(decrease) in cash and cash equivalents in the year 1,044 (6) Cash and cash equivalents at 1 January 1,434 1,440 Cash and cash equivalents at 31 December 2,478 1,434 1 Basis of preparation and status of financial information
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 2015 or 31 December 2014 but is derived from those accounts. Statutory accounts for 2014 have been delivered to the registrar of companies, and those for 2015 will be delivered in due course. The auditor has reported on those accounts; his reports were (i) 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.
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 to allocate resources.
The Board of Directors 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 and 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 ruggedised electronic applications.
As the Board receives revenue, EBITDA and operating profit on the same basis as set out in the Consolidated Income Statement no further reconciliation is considered to be necessary.
Revenue by geographical destination can be analysed as follows:
2015 2014 GBP000 GBP000 United Kingdom 9,684 10,773 Continental Europe 2,552 1,724 Rest of World 836 965 ____ ____ 13,072 13,462 ____ ____
Included in the above amounts are revenues of GBP8,192,000 (2014: GBP9,793,000) in respect of construction contracts. The balance comprises revenue from sales of goods and services.
3 Financial income and expense 2015 2014 GBP000 GBP000 Recognised in profit or loss Interest on bank deposits 3 3 Financial income 3 3 GBP000 GBP000 Interest expense on financial liabilities at amortised cost 151 150 Net foreign exchange loss 25 2 Financial expenses 176 152 4 Taxation
Recognised in the income statement
2015 2014 GBP000 GBP000 GBP000 GBP000 Current tax expense/(credit) Adjustments in respect of prior years 10 (109) Total current tax 10 (109) Deferred tax (credit)/expense Origination and reversal of temporary differences (1) (15) Recognition of previously unrecognised tax losses (43) (72) Utilisation of recognised tax losses 170 169 Tax rate change 40 - Adjustment in respect of prior years (179) 27 Total deferred tax (13) 109 Total tax (credit)/charge in income statement (3) -
Reconciliation of effective tax rate
2015 2014 GBP000 GBP000 Profit before tax 762 620 Tax using the UK corporation tax rate of 20.25% (2014: 21.5%) 154 133 Non-deductible expenses 46 36 Non-taxable income (25) - Utilisation of tax losses 15 (87) Effect of tax losses generated in year not provided for in deferred tax (21) - Change in unrecognised temporary differences (43) 7 Adjustments in respect of prior years (169) (82) Effect of rate change 40 (7) Total tax credit (3) - 5 Interest-bearing loans and borrowings
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