TIDMPEG
RNS Number : 1285J
Petards Group PLC
07 September 2016
7 September 2016
Petards Group plc
("Petards", "the Group" or "the Company")
Interim results for the six months ended 30 June 2016
Petards Group plc (AIM: PEG), the AIM quoted developer of
advanced security and surveillance systems, is pleased to report
its interim results for the six months to 30 June 2016.
Key Highlights:
-- Operational
o Another set of strong trading results for the Group
o Profits grow for fifth successive six-month period
o Acquisition of QRO Solutions ("QRO") successfully completed in
April 2016
o Investment made in expanding the Group's software development
capabilities
o Order book at 30 June 2016: GBP12 million (31 Dec 2015: GBP16
million)
o Order book increased post 30 June 2016 by receipt of over GBP4
million of orders including GBP3 million received from Bombardier
Transportation and Hitachi Rail Europe
-- Financial
o Total revenues increased 22% to GBP7.4 million (2015: GBP6.1
million)
o EBITDA from continuing operations increased 27% to GBP776,000
(2015: GBP609,000)
o Pre-tax profit from continuing operations up 48% to GBP526,000
(2015: GBP356,000)
o Cash balances GBP2.0m (31 Dec 2015: GBP2.5 million) and no
bank debt after acquisition of QRO
o Basic EPS increased 32% to 1.36p (2015: 1.03p)
o Diluted EPS increased 25% to 0.95p (2015: 0.76p)
Commenting on the current outlook, Raschid Abdullah, Chairman,
said:
"With the strong results for the half year and the current
orders scheduled for delivery in the second half year, the board is
confident that the Group is well placed to deliver full year
results in line with market expectations."
Contacts:
Petards Group plc www.petards.com
Raschid Abdullah, Chairman Mb: 07768 905004
Tel: 01483 230445
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
The first six months of the current financial year have been
very busy with the Group trading well, the acquisition of QRO
Solutions ("QRO") having been successfully completed, investment
made in the Group's software capabilities and a number of exciting
order prospects being under negotiation.
With the Group's pre-tax profits up by one third to GBP475,000
over the corresponding period in 2015, this is the fifth successive
six-month period in which the Group has recorded an increase in its
profitability. Revenues from continuing operations increased by 17%
on the back of increased deliveries of the Group's eyeTrain
surveillance products and by over 22% including QRO.
Business overview
Following the QRO acquisition the Group's 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 Transport - software driven video and other sensing
systems for on-train applications sold under the eyeTrain brand to
global train builders, integrators and rail operators;
-- Emergency Services - in-car speed enforcement and end-to-end
Automatic Number Plate Recognition ("ANPR") systems sold under the
ProVida and QRO brands to UK and overseas law enforcement agencies;
and
-- Defence - electronic countermeasure protection systems,
mobile radio systems and related engineering services sold
predominantly to the UK Ministry of Defence ("MOD").
The Group performed well during the six months ended 30 June
2016, delivering organic growth in addition to the acquisition of
QRO, and that performance is a summarised below.
Operating review
The growth in revenues during the period primarily resulted from
a strong trading performance in respect of the Group's eyeTrain
products with increased deliveries for the Siemens Mobility
Thameslink project accounting for the majority of that increase.
The project, which is now almost 50% complete, is for the supply of
on-board monitoring systems that will provide 115 Siemens Desiro
City Electrical Multiple Unit (EMU) trains with Driver Only
Operation (DOO) capability as well as the ability to monitor the
overhead pantograph, saloon interiors and the track to both the
front and rear of the trains. The first of these trains have now
entered service and once all have been commissioned the 115 trains,
comprising 1,140 vehicles, will represent another substantial
increase in Petards eyeTrain installed base.
Other eyeTrain projects contributing to revenues in the period
included those for Siemens, Bombardier Transportation and Hitachi
Rail Europe. Demand for eyeTrain spares, support and maintenance
parts remained strong with revenues continuing at similar levels to
those achieved in the corresponding period in 2015. Management's
view is that as new trains fitted with Petards equipment enter
service, these areas will grow and contribute significantly to
recurring revenues and profitability.
Revenues from Defence and Emergency Services products in the
period were lower than in the same period in last year. In Defence,
the first half of 2015 benefitted from revenues from the GBP4.5
million contract to modify electronic countermeasures equipment
fitted to certain of the MOD's aircraft fleet. With that programme
substantially complete, its contribution to revenues in 2016 was
much less significant. However, much of that decrease was offset by
the GBP800,000 contract from the MOD for the supply and delivery of
radio equipment and support services, which was delivered in full
in the first half of 2016.
Emergency Services product revenues in the first half of 2015
included a substantial spares order from an overseas government.
Once the effect of that order is removed, revenues (excluding QRO)
for the first half of 2016 were up approximately 10%.
Operational improvements continue to be made and I am pleased to
report that the investment made in strengthening the engineering
capability within Petards Joyce-Loebl during 2015 has started to
show the expected benefits. Since then, in order to accelerate the
Group's development of new product offerings and to enable it to be
more proactive in the market place, additional investment in its
software development operations has been implemented. This included
new software tools, improvements in software development processes
and expanded test facilities, the benefits of which are now being
felt in the delivery of current projects.
While the Group's trading performance has been strong, order
intake during the period was slower than had been anticipated for
both eyeTrain and ProVida products. This contrasted with a better
than anticipated order intake for Defence products following
receipt of the GBP800,000 MOD radio order referred to above.
The board believes the slower order intake was due to the timing
of specific customer projects rather than any BREXIT effect. Since
the start of the third quarter, orders totalling over GBP4 million
have been received. These orders have included two previously
announced orders from Bombardier Transportation totalling in excess
GBP2.5 million for the supply of eyeTrain systems on two UK
projects for fitment to ELECTROSTAR and the new AVENTRA EMU trains
for delivery in 2017 and 2018. A further order of approximately
GBP0.6 million has been received from Hitachi Rail Europe for
eyeTrain automatic passenger counting (APC) systems for delivery
over the next three years.
The Group's order book at 30 June 2016 was GBP12 million of
which just under half is scheduled for delivery in the second half
of 2016. The above orders grew the order book at 31 August 2016 to
approximately GBP13.5 million, the majority of those new orders
being in support of 2017 revenues.
Acquisition
In April, the board was pleased to welcome QRO into the Group
following its acquisition for an initial consideration of
GBP1,115,000 payable in cash from the Group's existing cash
resources. At the time of acquisition QRO's balance sheet included
net cash balances of GBP876,000. As the board considers at this
stage that it unlikely that the contingent consideration of
GBP140,000 will be payable, the resulting net cash consideration
for the acquisition is expected to be GBP239,000.
QRO provides 'end-to-end' ANPR, security and speed enforcement
solutions to UK police forces and to integrators serving the police
and security markets. Its systems integration expertise enables it
to offer fixed site, mobile, re-deployable and hand-held ANPR
systems which can be integrated into its own back office management
suite of software; Check-IT ANPR, Check-IT CSGS, Check-IT Handheld
and Multimedia Vault. It comes to the Group with a strong service
based operation, well established in its field, profitable, cash
generative with recurring revenues and complements Petards existing
Emergency Services ProVida brand.
QRO made a small contribution (before acquisition costs) to the
Group's profits in the 2 1/2 months following its acquisition but
grew its order book over that same period with an order intake of
approaching GBP400,000. Its contribution to profits would have been
higher had it not been for revenues being deferred due to the late
delivery of equipment by a key supplier, however, this issue has
been resolved, the related shipments completed and I am pleased to
say that QRO continues to trade profitably.
Financial review
Operating performance
Revenues from continuing operations for the six months ended 30
June 2016 increased by 17% to GBP7.1million (June 2015: GBP6.1
million) with a gross margin in line with that recorded for the
2015 full year. QRO contributed revenues of GBP0.3 million at a 40%
gross margin taking Group revenues for the period to GBP7.4
million.
Administrative expenses from continuing operations grew to
GBP1.9 million (June 2015: GBP1.8m) with much of this increase
being payroll, training and recruitment costs relating to the
investment in the software development capabilities of the Group.
Administrative expenses relating to QRO totalled GBP119,000 which
with acquisition costs of GBP57,000, took Group administrative
expenses to GBP2.1 million.
Earnings before interest, tax, depreciation & amortisation
(EBITDA) from continuing operations improved by 27% to GBP776,000
(June 2015: GBP609,000) and operating profits by 39% to GBP604,000
(June 2015: GBP436,000). A small contribution was made by QRO and
after deducting acquisition costs the Group achieved an EBITDA of
GBP786,000 and an operating profit of GBP553,000 for the half
year.
Net financial expenses totalled GBP78,000, and with no tax
charge, profits before and after tax on the Group's activities
totalled GBP475,000, an increase of 33% (June 2015: GBP356,000)
with diluted earnings per share increasing 25% to 0.95p (June 2015:
0.76p).
Research & Development
The Group continues to invest in its product offering and
capitalised GBP265,000 during the period relating to development of
its eyeTrain systems (June 2015: GBP27,000).
Cash and cash flow
The Group's financial position remains healthy with cash on its
balance sheet and no bank debt. At 30 June 2016, cash balances
totalled GBP2.0 million (December 2015: GBP2.5 million) and it has
undrawn working capital facilities of GBP0.5 million.
The net operating cash inflow for the period was GBP122,000
(June 2015: inflow of GBP558,000) with working capital movements
reducing the cash generated. The largest of these movements was a
result of lower revenue volumes but much higher exports in the
second quarter of 2016 compared with the last quarter of 2015,
causing a significant reduction in output VAT payable. Total cash
outflows after investing activities amounted to GBP488,000 which
includes the GBP239,000 net cash flow arising from the acquisition
of QRO.
Outlook
Since the half year the Group has continued to trade well with
new orders totalling over GBP4 million secured and with further
business under negotiation for 2017 and beyond.
With the strong results for the first half year and the current
orders scheduled for delivery in the second half year, the board is
confident that the Group is well placed to deliver full year
results in line with market expectations.
Raschid Abdullah
7 September 2016
Condensed Consolidated Income Statement
for the six months ended 30 June 2016
Continuing Acquisition Unaudited Unaudited Audited
Operations 6 months 6 months year
30 June 30 June ended ended ended
2016 2016 30 June 30 31 December
Note 2016 June 2015
2015
GBP000 GBP000 GBP000 GBP000 GBP000
Revenue 7,096 315 7,411 6,067 13,072
Cost of sales (4,615) (190) (4,805) (3,860) (8,473)
Gross profit 2,481 125 2,606 2,207 4,599
Administrative expenses 2 (1,877) (176) (2,053) (1,771) (3,664)
Operating profit/(loss) 604 (51) 553 436 935
----------------------------- ----- ----------- ----------- --------- --------- ------------
Analysed as:
Earnings before
interest, tax, depreciation
and amortisation
('EBITDA') 776 10 786 609 1,260
Depreciation and
amortisation (159) (4) (163) (172) (325)
Exceptional item:
Acquisition costs - (57) (57) - -
Share based payments (13) - (13) (1) -
604 (51) 553 436 935
Financial income 2 - 2 1 3
Financial expenses 3 (80) - (80) (81) (176)
Profit before tax 526 (51) 475 356 762
Income tax 4 - - - - 3
Profit for the period
attributable to
equity shareholders
of the company 526 (51) 475 356 765
Basic earnings per
share (pence) 6 1.36 1.03 2.19
Diluted earnings
per share (pence) 6 0.95 0.76 1.62
Condensed Consolidated Statement of Comprehensive Income
for the six months ended 30 June 2016
Unaudited Unaudited Audited
6 months 6 months year
ended ended ended
30 June 30 June 31 December
2016 2015 2015
GBP000 GBP000 GBP000
Profit for period 475 356 765
Total comprehensive income
for the period 475 356 765
Condensed Consolidated Statement of Changes in Equity
for the six months ended 30 June 2016
Currency
Share Share Merger Equity Special Retained translation Total
capital premium reserve reserve reserve earnings differences equity
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
Balance at 1
January 2015
(audited) 6,651 25,192 1,075 204 - (30,510) (211) 2,401
Profit for the
period - - - - - 356 - 356
Total comprehensive
income for the
period - - - - - 356 - 356
Conversion of
convertible
loan
Notes 1 11 - (1) - 1 - 12
Equity-settled
share based
payments - - - - - 1 - 1
Balance at 30
June 2015 (unaudited) 6,652 25,203 1,075 203 - (30,152) (211) 2,770
Balance at 1
January 2015
(audited) 6,651 25,192 1,075 204 - (30,510) (211) 2,401
Profit for the
year - - - - - 765 - 765
Total comprehensive
income for the
year - - - - - 765 - 765
Conversion of
convertible
loan
notes 1 14 - (1) - - - 14
Equity-settled
share based
payments - - - - - 6 - 6
Capital Reduction (6,303) (25,192) (1,075) - 8 32,562 - -
Balance at 31
December 2015
(audited) 349 14 - 203 8 2,823 (211) 3,186
Balance at 1
January 2016
(audited) 349 14 - 203 8 2,823 (211) 3,186
Profit for the
period - - - - - 475 - 475
Total comprehensive
income for the
period - - - - - 475 - 475
Conversion of
convertible
loan
notes 2 11 - (1) - - - 12
Equity-settled
share based
payments - - - - - 13 - 13
Settlement of
non-consenting
creditors - - - - (8) 8 - -
Balance at 30
June 2016 (unaudited) 351 25 - 202 - 3,319 (211) 3,686
Condensed Consolidated Balance Sheet
at 30 June 2016
Unaudited Unaudited Audited
30 June 30 June 31 December
2016 2015 2015
ASSETS GBP000 GBP000 GBP000
Non-current assets
Property, plant and
equipment 360 212 247
Goodwill 5 703 401 401
Development costs 1,172 983 902
Deferred tax assets 429 514 429
2,664 2,110 1,979
Current assets
Inventories 2,075 1,864 2,168
Trade and other receivables 2,332 2,382 1,861
Cash and cash equivalents 1,990 1,968 2,478
6,397 6,214 6,507
Total assets 9,061 8,324 8,486
EQUITY AND LIABILITIES
Equity attributable
to equity holders of
the parent
Share capital 351 6,652 349
Share premium 25 25,203 14
Equity reserve 202 203 203
Merger reserve - 1,075 -
Special reserve - - 8
Currency translation
reserve (211) (211) (211)
Retained earnings /
(deficit) 3,319 (30,152) 2,823
Total equity 3,686 2,770 3,186
Non-current liabilities
Interest-bearing loans
and borrowings 1,550 1,528 1,543
Deferred tax liabilities 9 100 -
1,559 1,628 1,543
Current liabilities
Trade and other payables 3,816 3,926 3,757
3,816 3,926 3,757
Total liabilities 5,375 5,554 5,300
Total equity and liabilities 9,061 8,324 8,486
Condensed Consolidated Statement of Cash Flows
for the six months ended 30 June 2016
Unaudited Unaudited Audited
6 months 6 months year
ended ended ended
30 June 30 June 31 December
2016 2015 2015
GBP000 GBP000 GBP000
Cash flows from operating activities
Profit for the period 475 356 765
Adjustments for:
Depreciation 43 26 58
Amortisation of intangible assets 119 147 267
Equity settled share-based payment
expenses 13 1 6
Financial income (2) (1) (3)
Financial expense 81 81 176
Income tax credit - - (3)
Operating cash flows before
movement in working capital 729 610 1,266
Change in trade and other receivables (129) 600 1,138
Change in inventories 118 (425) (729)
Change in trade and other payables (536) (160) (195)
Cash generated from operations 182 625 1,480
Interest received 2 1 3
Interest paid (62) (68) (146)
Income tax paid - - (163)
Net cash generated from operating
activities 122 558 1,174
Cash flows from investing activities
Acquisition of subsidiary, net
of cash acquired 5 (239) - -
Acquisition of property, plant
and equipment (106) (51) (118)
Capitalised development expenditure (265) (27) (66)
Cash deposits held in escrow - 54 54
Net cash used in investing activities (610) (24) (130)
Net (decrease)/increase in cash
and cash equivalents (488) 534 1,044
Cash and cash equivalents at
start of period 2,478 1,434 1,434
Cash and cash equivalents at
end of period 1,990 1,968 2,478
Cash and cash equivalents comprise:
Cash and cash equivalents per
balance sheet 1,990 1,968 2,478
Notes
1 Basis of preparation
The interim financial information set out in this statement for
the six months ended 30 June 2016 and the comparative figures for
the six months ended 30 June 2015 are unaudited. This financial
information does not constitute statutory accounts as defined in
Section 435 of the Companies Act 2006.
The comparative figures for the financial year ended 31 December
2015 are not the Company's statutory accounts for that financial
year. Those accounts have been reported on by the Company's
auditors and delivered to the Registrar of Companies. The report of
the auditors was (i) unqualified, (ii) did not include a reference
to any matters to which the auditor drew attention by way of
emphasis without qualifying their report, and (iii) did not contain
a statement under section 498 (2) or (3) of the Companies Act
2006.
This interim statement, which is neither audited nor reviewed,
has been prepared in accordance with the measurement and
recognition criteria of International Financial Reporting Standards
(IFRS) as adopted by the EU. It does not include all the
information required for the full annual financial statements, and
should be read in conjunction with the financial statements of the
Group as at and for the year ended 31 December 2015. As permitted,
this interim statement has been prepared in accordance with AIM
Rules for Companies and is not required to comply with IAS 34
'Interim Financial Reporting' to maintain compliance with IFRS.
The accounting policies applied in preparing these interim
financial statements are the same as those applied in the
preparation of the annual financial statements for the year ended
31 December 2015, as described in those financial statements other
than standards, amendments and interpretations which became
effective after 1 January 2016 and were adopted by the Group. These
have had no significant impact on the Group's profit for the period
or equity. The Board approved these interim financial statements on
6 September 2016.
Copies of this interim statement will be available on the
Company's website (www.petards.com) and from the Company's
registered office at Parallel House, 32 London Road, Guildford, GU1
2AB.
2 Administrative expenses
Legal, professional and stamp duty costs incurred in connection
with the acquisition of QRO Solutions Limited totalled GBP57,000
and have been charged to the Condensed Consolidated Income
Statement within administrative expenses (see also note 5).
3 Financial expenses
Unaudited Unaudited Audited
6 months 6 months year ended
ended ended 31 December
30 June 30 June 2015
2016 2015 GBP000
GBP000 GBP000
Interest expense on financial
liabilities at amortised
cost:
* Convertible loan notes at 7% p.a. (cash) 57 56 115
17 16 34
5 1 2
* Convertible loan notes amortisation (non-cash)
* Other (cash)
Net foreign exchange loss 1 8 25
Financial expenses 80 81 176
4 Taxation
No provision for taxation has been made in the Condensed
Consolidated Income Statement for the six months to 30 June 2016
based on the estimated tax provision required for the year ending
31 December 2016. No provision was required in the six months to 30
June 2015.
5 Acquisition of QRO Solutions Limited
On 13 April 2016, the Group acquired the entire issued share
capital of QRO Solutions Limited ("QRO") for a cash consideration
of GBP1,115,000, funded by internal cash resources. A further
deferred consideration payment of GBP140,000 is subject to QRO
achieving revenues of at least GBP1,750,000 and profits before tax
of at least GBP240,000 for their financial year ending 30 November
2016. The Group currently assesses the probability of this payment
being made at zero.
The provisional fair value of identifiable assets and
liabilities acquired, purchase consideration and goodwill are as
follows:
Provisional
Book fair Provisional
value value fair
GBP000 adjustments values
GBP000 GBP000
Net assets acquired:
Intangible assets - 124 124
Property, plant & equipment 50 - 50
Inventory 26 - 26
Trade and other receivables 333 - 333
Cash and cash equivalents 876 - 876
Trade and other payables (596) - (596)
_ _
689 124 813
Goodwill 302
_
Total consideration, satisfied
by Cash 1,115
_
Cash flow:
Total consideration 1,115
Cash included in undertaking
acquired (876)
_
Net cash consideration in cash
flow statement 239
_
6 Earnings per share
Basic earnings per share
Basic earnings per share is calculated by dividing the profit
for the period attributable to the shareholders by the weighted
average number of shares in issue.
Unaudited Unaudited Audited
6 months 6 months year
ended ended ended
30 June 30 31 December
2016 June 2015
2015
Earnings
Profit for the period (GBP000) 475 356 765
Number of shares
Weighted average number of ordinary
shares ('000) 34,998 34,629 34,858
Diluted earnings per share
Diluted earnings per share assumes conversion of all potentially
dilutive ordinary shares, which arise from both convertible loan
notes and share options, and is calculated by dividing the adjusted
profit for the period attributable to the shareholders by the
assumed weighted average number of shares in issue. The adjusted
profit for the period comprises the profit for the period
attributable to the shareholders after adding back the interest on
convertible loan notes for the period.
Unaudited Unaudited Audited
6 months 6 months year
ended ended ended
30 June 30 31 December
2016 June 2015
2015
Adjusted earnings
Profit for the period (GBP000) 551 425 914
Number of shares
Weighted average number of ordinary
shares ('000) 57.966 55,879 56,268
This information is provided by RNS
The company news service from the London Stock Exchange
END
IR SSLFMMFMSEDU
(END) Dow Jones Newswires
September 07, 2016 02:00 ET (06:00 GMT)
Petards (LSE:PEG)
Historical Stock Chart
From Mar 2024 to Apr 2024
Petards (LSE:PEG)
Historical Stock Chart
From Apr 2023 to Apr 2024