Annual Report (Annual Report 2024)

Annual report and financial statements

31 December 2024

Registered number 2990100

Petards

Group plc

Introduction

Following its acquisition during 2024 of Affini, Petards' operations are now focused upon the development, supply and maintenance of technologies used in advanced security, communications, surveillance and ruggedised electronic applications, the principal 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 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;

• Defence - engineering services relating to electronic control systems, threat simulation systems, radio systems, and other defence related equipment sold predominantly to the UK Ministry of Defence ("MOD") both directly and via its prime defence contractors; and

• Communications - critical communications and wireless technologies systems integrator serving the transport, blue light, energy, central government and construction sectors, offering an end-to-end service from initial strategy and design, through to equipment supply, providing ongoing maintenance and managed services.

1 Financial and operational highlights

2 Chairman's statement

4 Strategic report

11 Chairman's corporate governance statement

18 Directors' remuneration report

20 Directors' report

23 Statement of directors' responsibilities in respect of the annual report and the financial statements

24 Independent auditor's report to the members of Petards Group plc

31 Consolidated income statement

32 Statements of changes in equity

33 Statement of financial position

34 Statements of cash flows

35 Notes

70 Alternative performance measures glossary

71 Directors, officers and advisors

72 Notice of Annual General Meeting

Financial and operational highlights

Revenue

13.0

13.6

10.9

12.0

9.4

2020 2021 2022 2023 2024

Adjusted EBITDA*

1.5

1.2

0.3

0.3

0.4

2020 2021 2022 2023 2024

Net funds/(debt)

1.6

1.9

1.9

1.2

(1.5)

2020 2021 2022 2023 2024

2024 2023

£000 £000

1 Net debt at 31 December 2024 is stated after payment of the cash consideration and acquisition costs for Affini Technology Group Ltd.

* See Alternative Performance Measures Glossary on page 70.

Chairman's statement

I am pleased to report that 2024 was a year of progress for the Group, the highlights of which were the acquisition of Affini Technology ("Affini") in June 2024, which has bedded in well, and strong revenues for our QRO ANPR solutions.

The second half of the year saw an improved overall performance for the Group, benefiting from six month's contribution from Affini, and some improvement in trading at the Group's existing operations.

Revenues for the full year ended 31 December 2024 were £12.02 million (2023: £9.42 million), giving an adjusted EBITDA of £0.41 million (2023: £0.34 million).

Our QRO ANPR solutions for the Traffic sector continue to be the leading contributor to Group profitability with their profit contribution up ten per cent on the prior year. Throughout the year we continued to develop new products to enhance our market position, and in Q4 we laid the foundations for future growth in other geographic markets by appointing an experienced ANPR international business development manager. Since then we have exhibited at ANPR exhibitions in Dubai, Seville and Mexico City and will be exhibiting at Highways KSA in Riyadh in October. We look forward to seeing the results of these initiatives beginning to come through later in 2025.

Petards eyeTrain rail solutions continued to operate in a difficult market with a particular slowness in the placement of orders by customers. The strength of our considerable installed base of passenger rail vehicles continued to provide a strong ongoing flow of service, spares and repairs business as well as opportunities for system upgrades.

Although overall revenues were lower than the prior year, we made good progress in closing out past contracts and releasing cash retentions of £0.45 million of which £0.26 million was received in the year. We also continued to advance both our core eyeTrain technology extending its functionality, and our eyeBOS back office software, designed to assist train operators manage their fleets more efficiently by harmonising all data sets into a user friendly portal.

The transition of the Railways from private to public ownership under GB Rail has been a source of uncertainty for UK rail industry suppliers for some considerable time. During 2025 a further three train operating companies ("TOCs") are to be nationalised increasing the number in public ownership to seven. We hope that the removal of the uncertainty arising when TOCs are nearing the end of their franchises will provide them with greater certainty when making investment decisions concerning rolling stock upgrades.

Revenues from Petards' defence services were also down on 2023, while making a positive contribution. During the second half of the year we saw increased engagement with the Ministry of Defence ("MOD") and its prime contractors on new projects for certain systems, for which Petards is an existing supplier. Post year end we have received initial orders relating to one of these projects, giving us some encouragement that orders for the more substantial aspects will be placed later this year.

The business has also started getting traction on its efforts to win work in related sectors that utilise its facilities and capabilities in electronic engineering for repair and test. We anticipate that some benefits of this will be forthcoming in the second half of 2025.

Our specialist RTS software focused on rail asset management, logistics, planning, and business process application continued to be a steady performer and we believe there is the potential for those applications to have broader penetration within the sub-sector. During 2024 its contribution increased on slightly lower revenues as we saw the benefits of a lower cost base coming through, following the reorganisation undertaken in the latter part of 2023.

The Board continues to implement ESG ideals and objectives in a manner which is appropriate to the Group's size and scale. As Petards develops, the Board will continue to assess and adapt its approach and, where appropriate, make changes in a proportionate and commercial manner.

Every business depends upon the quality of its management and their respective teams, and the Board believes that across the Group, its current management and personnel demonstrate the required skills, experience, enthusiasm and commitment at all levels to drive the Group forward.

Petards' pool of skill and experience was enhanced with the acquisition of Affini, and we are very pleased to welcome Ian Carr, Affini's CEO, and his team to the Petards Group and look forward to working together to develop Affini to its full potential.

On behalf of the Board, I would like to express our thanks to all Petards' management and employees for their contributions and loyalty, and for their support during what proved to be a challenging year.

Following the year end, after serving as a director for ten years, Paul Negus stepped down from the Board and we thank him for his contribution to the business during his tenure and wish him every success in his future endeavours.

In the year we made excellent progress towards delivering on the Group's acquisition strategy and were pleased to have acquired Affini on 13 June 2024. We will continue to pursue other complementary cash generative businesses which would be earnings enhancing and increase the scale of the Group.

Since April 2016 the Group has made three acquisitions, QRO, RTS and Affini, as well as the rights to NASBox ANPR which has made a good contribution to the growth of our Traffic revenues. All these acquisitions continue to make positive contributions to the Group's results.

Each has been funded from the Group's own cash and debt resources, except for Affini, where the vendors elected to receive 6.8 per cent. of Petards' enlarged issued equity valued at £326,000 out of the total consideration of £2.85 million, with the balance being paid in cash from a combination of the Group's cash resources and bank debt.

2025 has started positively with trading in the first five months of the year in line with budget and we expect trading for the first half of the year to be well ahead of that reported in the first half of 2024.

The Group's current pipeline of new business remains strong, although in Rail and Defence markets we are still experiencing later than expected placement of orders by customers. Those delays are not presently expected to impact the overall trading performance for 2025 as a whole.

With an opening order book of £7.1 million (31 December 2023: £2.4 million), together with the orders received in the first five months of 2025, revenue cover for 2025 has increased to around 75 per cent.

In view of the Group's significantly improved opening order book and a full year's contribution from Affini, the Board is confident in the enlarged Group's prospects and anticipates an improved trading performance for 2025.

Chairman

20 June 2025