Rail tech supplier Petards saw a drop in revenue and profits last year but has hailed its current order book.
Results show the firm saw revenue drop from £13.57m to £10.8m in 2022, as operating profit more than halved from £570,000 to £225,000 amid headwinds in its main rail market. But the Tyneside-based maker of train and defence safety and surveillance systems told investors it is eyeing up potential acquisition targets and was likely to update on progress this year.
The growth ambition comes as Petards highlighted a £7m order book - up from £4m the year previous - and progress in generating recurring revenue from licencing, maintenance, spares and engineering support - all of which now account for almost half of the group's revenue. Challenges surrounding the transition to the planned public-owned Great British Railways body were said to have made securing new clients and orders more difficult for the firm's flagship eyeTrain surveillance systems and its software.
Despite the difficulties Petards said it was in a good position for when new contracts with Great British Railways are in place. And across the firm's defence division, there had been development of the eyeCraft360 situational awareness system using technology taken from the rail products.
While the war in Ukraine was said to have increased overall Ministry of Defence spending, Petards said there had been little benefit to the engineering services it provides. Meanwhile the impact of the war, Brexit and Covid on supply of components had eased but the firm said it had worked hard to make sure it did not delay orders.
Raschid Abdullah, Petards chairman, said: "The group performed well in 2022 generating profits and cash from operations in challenging conditions, particularly in the rail market. The current financial year has started satisfactorily with the group continuing to trade cash generatively.
"The focus of the group's business in 2022 was on shorter delivery, lower value but higher margin contracts, due to market conditions in the UK rail market which affected order book levels. A significant proportion of the group's revenues were derived from such contracts and from our high and growing base of service related revenues, much of which is contracted on a month-to-month basis. These service revenues are expected to continue their increasing trend as the installed base grows.
"At December 31, 2022 the order book stood at just over £4m (December 31, 2021: £7m), most of which is scheduled for delivery in 2023. We are now seeing encouraging signs for new projects, particularly in the new build and retrofit rail rolling stock market, for some of which we are currently in active negotiations. Management is continuing to drive the group's development forward, and the board's objectives for 2023 are for improved results, strong cash generation and to further strengthen the group's portfolio of businesses."
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