Team Valley tech firm Petards slashed the workforce of one of its divisions by 40% after the firm took a hit from delays to contracts.
The Gateshead software developer makes security and surveillance systems for the rail, traffic and defence sectors, with its eyeTrain systems being an area of particular focus.
The company works with most of the major train manufacturers and operators and in 2019 eyetrain products comprised two-thirds of group revenues.
But in a trading update for the full year ended December 31 2020, the company outlined how it had now carried out a planned reorganisation of eyeTrain activities, resulting in job cuts.
It is not known how many staff were affected within the eyeTrain workforce, but accounts for 2019 show that overall it employed around 130 during that financial year.
In the statement a company director said that, as reported in September last year, trading was proving extremely challenging and had continued to be tough for the remainder of the year.
Petards said: “This was particularly pertinent in respect of our eyeTrain operations for which customer scheduling was subject to change and deferral at very short notice, exacerbating the impact on revenue and delays in placement of new customer orders. On a brighter note, one of those delayed orders, for £1.3m was placed in October and will be delivered in the first quarter of 2021.
“The planned reorganisation of eyeTrain activities I referred to in 2019, was a major priority in 2020, re-aligning the cost base following the substantial completion of the large software engineering developments that have been a feature of recent years. To put this into perspective, this enabled the group to reduce its eyeTrain workforce by 40% during the course of the year while incurring substantial exceptional costs which will be recognised in the results for 2020.
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“These actions will preserve future cash and improve operational efficiency thereby providing a better focus for future business.”
The company said it has recently created a virtual Petards Technology Centre to capitalise upon the wider group’s technical and development expertise.
The group said its defence activities had had a moderately profitable year, but had also been affected by custmers changing delivery schedules, resulting in £500,000 of revenue being delayed into this year and impacting profitability for 2020.
The group expects to report, subject to audit, revenue of around £13m for the year, down on 2019’s £15.7m but that it expected to see an improvement in its adjusted EBITDA levels. After amortisation, depreciation, reorganisation and financing charges, the group said it expects to report a loss before tax similar to 2019.
The year-end order book stood at over £12m, £10m of which is currently scheduled for delivery in 2021.
The update concluded: “Against a background of the difficulties encountered by ourselves and our customers due to the impact and disruption caused by Covid-19, the board consider the results for the year represent a credible performance.
“However, we believe that the benefits arising from the restructured eyeTrain business and the establishment of the Petards Technology Centre, places the group in much stronger position for 2021 and beyond. While it is presently too early in the year to re-instate market guidance, the board is cautiously hopeful of improved results in 2021.”