Petards Group delivers 24% revenue growth and a bigger order book for 2025
Petards Group plc (AIM: PEG) has posted a solid trading update for the year ended 31 December 2025. Revenue grew 24% to circa £14.9 million, adjusted EBITDA rose to circa £1.0 million, and the year closed with a strengthened order book of £9.2 million. It’s an encouraging set of numbers for a business that’s been rebuilding momentum across its Rail and Defence operations.
Importantly, adjusted EBITDA is expected to be in line with current market expectations, and operating cash generation improved markedly. The tone from the board is cautiously upbeat: 2026 starts with better revenue cover, although tendering cycles remain elongated and execution will be key.
Revenue and EBITDA: tangible progress in 2025
Group revenues increased by 24% year-on-year to circa £14.9 million (2024: £12.0 million), with adjusted EBITDA advancing to circa £1.0 million (2024: £0.4 million). These are unaudited figures, but they point to improving gross margins and profitability, as highlighted by the Chairman.
The step-up wasn’t driven by a single division. Petards Rail and Petards Defence both saw higher revenue and profitability versus the prior year, and Affini delivered a profitable maiden full-year contribution. That breadth matters – it suggests the growth is more resilient than a one-off contract bump.
Order book climbs to £9.2 million, boosted by blue-chip defence contracts
Order intake in Rail and especially Defence hit levels not seen for several years. In the final two months of the year, Petards secured contract awards totalling £3.5 million from the MOD, RBSL and BAE Systems. Those wins helped lift the year-end order book to £9.2 million (2024: £7.1 million), with around 85% scheduled for delivery in 2026.
That delivery profile gives meaningful visibility into the current year. It does, however, put the onus on timely execution and supply-chain efficiency. The Chairman notes trading remains challenging with extended tendering processes, but the stronger opening order book provides good revenue cover for 2026.
Divisional colour: Rail and Defence up, QRO hit by order delays
The narrative by division is mixed, but mostly positive:
- Petards Rail – Higher revenue and profitability versus 2024, supported by better order intake.
- Petards Defence – The standout, with strong order intake and wins from prime defence contractors and the MOD.
- Affini – Delivered its first full-year profitable contribution, which is a helpful addition to Group earnings quality.
- QRO – Secured important framework contracts but faced delays in order placement in H2, resulting in lower revenue than 2024.
Looking ahead, management expects QRO’s revenue momentum to recover as framework contracts convert, interest builds in the newly launched Harrier Mini, and overseas opportunities are progressed. That’s a credible setup, but the conversion timing is the watch-out.
Cash flow and net debt: moving in the right direction
Operating cash generation improved to £1.4 million (2024: £0.2 million). After investing and financing flows, total net debt reduced to £1.3 million at 31 December 2025 (31 December 2024: £1.5 million). On a business of this size, cash discipline matters. The swing in operating cash is a clear positive, and the modest reduction in net debt helps de-risk the balance sheet.
There’s no disclosure of cash at bank, gross debt, or interest costs in this update. Likewise, profit before tax and statutory profit figures are not disclosed. Those will be worth checking when the full results land.
My take: momentum is improving, but execution and timing still matter
There’s plenty to like here. Revenue growth of 24%, adjusted EBITDA stepping up to around £1.0 million, and operating cash of £1.4 million signal that 2025 was a year of rebuilding and better discipline. The order book at £9.2 million – with heavy 2026 delivery – underpins near-term visibility, especially with defence wins from household names.
The caution flags are familiar for project-led engineering businesses: extended tendering cycles, order timing (as seen at QRO), and the need to convert frameworks into purchase orders at pace. Net debt is modest but still present, so continued cash generation is important.
Net-net, the direction of travel is positive. If Petards converts its late-2025 wins, accelerates QRO’s frameworks and Harrier Mini interest, and keeps margins improving, 2026 could show further gains. But this is a “show me” year for execution.
Why this update matters for investors
- Growth across core divisions – Rail and Defence are both contributing, reducing single-division risk.
- Defence momentum – £3.5 million of late-year awards from MOD, RBSL and BAE Systems adds credibility and pipeline depth.
- Cash turning – £1.4 million operating cash indicates better working capital control and earnings quality.
- Order book visibility – £9.2 million order book with around 85% scheduled for 2026 gives coverage into the new year.
- QRO recovery to watch – Frameworks and Harrier Mini interest are promising, but conversion timing will drive revenue.
Key numbers at a glance (unaudited)
| Metric | 2025 | 2024 | Context |
|---|---|---|---|
| Revenue | Circa £14.9 million | £12.0 million | Up 24% year-on-year |
| Adjusted EBITDA | Circa £1.0 million | £0.4 million | In line with market expectations |
| Operating cash flow | £1.4 million | £0.2 million | Stronger cash generation |
| Total net debt (year-end) | £1.3 million | £1.5 million | Improved versus prior year |
| Order book (year-end) | £9.2 million | £7.1 million | ~85% scheduled for 2026 |
| Late-2025 awards | £3.5 million | Not disclosed | From MOD, RBSL and BAE Systems |
Jargon buster
- Adjusted EBITDA – earnings before depreciation, amortisation, exceptional items, acquisition costs and share-based payments.
- Total net debt – cash and cash equivalents less interest-bearing loans and borrowings.
- Order book – the value of contracted work yet to be delivered.
- Framework contract – an agreement setting terms for future orders; revenue only arrives when specific orders are placed.
What to watch next
- Full-year results – statutory profit figures, gross margin detail, cash and debt breakdown.
- QRO conversion – timing of purchase orders under frameworks and uptake of the Harrier Mini.
- Delivery cadence – execution of the £9.2 million order book, most of which is scheduled for 2026.
- Further defence wins – follow-on orders from MOD, RBSL and BAE Systems would reinforce momentum.
Bottom line
Petards ends 2025 stronger: bigger top line, improved profitability, better cash generation and a fatter order book. The set-up for 2026 is constructive, albeit with the usual execution and timing risks. If management keeps converting and delivering, investors could see another year of progress.
