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Petards (PEG:AIM) is a well-established AIM-listed software developer of advanced security and surveillance systems, providing technology based solutions to the Rail, Traffic & Defence sectors.
SECTOR SYNOPSIS - POSITIONING FOR GROWTH
Petards Rail designs hardware and software systems which are located on-board trains under the ‘eyeTrain’ brand. These are primarily used in support of train drivers during their journeys, enabling visual camera surveillance whilst simultaneously recording data for them and for the train operators at their operational centres.
These products have been developed over many years in close consultation with train builders, owners and operators with the product offerings continuing to grow through the adoption and utilisation of new technologies.
The surveillance and data collection systems provide on-board saloon cameras and a range of externally fitted cameras and sensors. Current products also include forward facing track debris detection and a technically advanced Automatic Selective Door Opening (ASDO) system linked to Global Satellite Positioning (GPS) technology. These products are all rail approved and meet the standards of compliance required for new train build and the UK retrofit market.
Petards RTS a software based business that licenses its operational Health & Safety software packages to Network Rail and its Tier 1 contractors as an essential part of their working on the UK on-track rail infrastructure. The software packages are a support tool for the contractors compliance with Health & Safety requirements in advance of their commencing work on the track.
Petards QRO, is a specialist camera and software integrator of traffic, number plate recognition and highway products. QRO integrates the ‘best of breed’ third party camera products together with its own suite of hardware products which are designed and developed by its own in-house hardware team and powered by its proprietary software. The business has continued to grow and improve its market presence through the establishment of framework agreements with a number of the UK law enforcement agencies and local authorities.
The Petards defence business is a long established supplier of defence related electronic countermeasure protection systems, mobile radio systems and related engineering services to the UK Ministry of Defence (MOD) as well as defence companies within countries forming the North Atlantic Treaty Organisation (NATO).
TECHNICAL - DYNAMIC APPROACH
Petards prides itself on the quality of its products and the commitment of the dedicated people who work within the organisation. With a large proportion of highly skilled and experienced people working within the business possessing an engineering doctorate or an engineering qualification, the leadership teams are able to proactively enhance the quality of product offerings, thereby providing the solutions and support that meet the needs of their customers.
By providing strong technical liason and support on projects to customers has enabled the businesses to enhance products with a competitive edge. These key customer relationships form an important partnership with new technologies being embedded into their new products together with additional applications.
Petards has established a new ‘Petards Technology Centre’ with a highly qualified in-house team to accelerate new product development within their respective markets. They are presently focussed on data capture, data transmission and analytics to improve their market position and fuel organic growth and value in the coming years.
The strengthening of software expertise within the group was a core strategic objective which together with the establishment of the new Technology Centre will support all group companies.
BOARD LEADERSHIP
The board is chaired by Raschid Abdullah with three other supporting directors. The board primarily deals with the strategic direction and investment decisions for the group, ensuring the group’s financing requirements, relationships with the company’s NOMAD, AIM listing compliance and relationships with investors as well as reviewing potential business opportunities.
Petards Group operates as a holding company with each operating business having its key performance drivers which include pre-approved budgets, cash flow forecasts, profitability targets, capital allocation and returns on capital employed, driven by a dedicated managing director or general manager who reports directly to the group CEO.
They are given responsibility with accountability, operating their businesses autonomously coupled with monthly reporting to the centre with a focus on the key performance drivers which are analysed and monitored by a small team at the centre.
PREVIOUS ACQUISITIONS
Since 2016, Petards has made two small acquisitions for cash both which have proven successful in terms of business growth with the winning of new business being a key driving force.
RECENT TRADING RELEASE
On 23 September 2021, Petards released to the market their trading update statement in respect of the six months ended 30 June 2021 with a copy on Petards website. That stock market release reported on a return to profitability at all levels and strong cash generative performance.
The actions taken in 2020 to reduce the cost base fed through to an improved gross profit margin of 39.6%, up from 34.4% in the comparative period, with post tax profits totalling £430,000. Cash generated from operating activities was £1,669,000 and at 30 Jun 2020 Petards reported closing cash balances of £3.5 million and a net cash position of £2.7 million. It also reported a period end £9 million order book and that trading for 2021 remained broadly in line with market expectations.
DISCLAIMER: This article was written by Petards and published by Shares under a commercial agreement. It is not a recommendation to buy or sell the shares. The article originally appeared in Shares’ Spotlight report on 25 November 2021.
