TIDMPRES
RNS Number : 3710Q
Pressure Technologies PLC
28 June 2022
28 June 2022
Pressure Technologies plc
("Pressure Technologies" or the "Group")
2022 Interim Results
Pressure Technologies (AIM: PRES), the specialist engineering
group, announces its interim results for the 26 weeks to 2 April
2022.
Financial Highlights
-- Group revenue of GBP9.5 million (2021: GBP14.5 million)
-- Gross profit of GBP2.1 million (2021: GBP4.7 million)
-- Adjusted operating loss(1) of GBP2.1 million (2021:
profit GBP1.1 million)
-- Reported loss before tax of GBP2.3 million (2021: profit
GBP0.2 million)
-- Reported basic loss per share of 6.0p (2021: earnings
per share 0.8p)
-- Adjusted basic loss per share(2) of 5.7p (2021: earnings
per share 2.9p)
-- Adjusted operating cash outflow(3) of GBP0.6 million
(2021: outflow GBP1.4 million)
-- Net borrowings(4) of GBP5.4 million (2 October 2021:
GBP4.9 million)
1 Adjusted operating loss is operating loss before amortisation,
impairments and other exceptional costs
2 Adjusted basic loss per share is reported earnings per share
before amortisation, impairments and other exceptional costs
3 Adjusted operating cash outflow is operating cashflow before
cash flow for exceptional costs
4 Net borrowings comprises cash and cash equivalents, bank
borrowings, asset finance lease liabilities and right of use asset
lease liabilities
5 EBITDA is operating (loss)/profit before depreciation,
amortisation, impairments and other exceptional costs
Operational Highlights
Chesterfield Special Cylinders (CSC)
-- As expected, the timing of major defence contract placement
and phasing of contract milestones resulted in significantly
lower first-half revenue of GBP6.3 million (2021: GBP11.3
million) and adjusted EBITDA(5) of GBP0.1 million (2021:
GBP3.3 million)
-- Order book reached over GBP14.5 million at the end of March
2022, the highest level for more than five years, driven
by strong growth in UK and overseas defence markets
-- Integrity Management and factory cylinder reconditioning
services increased steadily during the period, delivering
revenue of GBP1.3 million (2021: GBP0.7 million)
-- Hydrogen project revenue over the twelve-month period to
2 April 2022 was significantly higher at GBP2.4 million (twelve-month
period to 3 April 2021: GBP0.5 million)
-- Enquiries increasing for large-scale green hydrogen ground
storage facilities and for hydrogen road trailers in the
UK and Europe , with orders expected to grow significantly
into 2023 and beyond
Precision Machined Components (PMC)
-- Revenue of GBP3.2 million (2021: GBP3.2 million) and a negative
adjusted EBITDA of GBP0.4 million (2021: negative adjusted
EBITDA GBP0.6 million), reflected challenging trading conditions
in the oil and gas market
-- Order book grew steadily during the first half of the year
and by the end of the period had reached its highest level
since August 2020, helping to further strengthen profitability
at Roota Engineering
-- Order intake has continued to grow through the start of the
second half and in the three months to the end of May 2022
was GBP2.2 million (three months to February 2022: GBP1.7
million)
Outlook
-- Strong second-half performance expected for CSC, with revenue
of more than GBP11.0 million already in the orderbook for
delivery by the end of September 2022, driven by high-value
defence contract milestones, Integrity Management deployments
and hydrogen energy projects
-- Recovery of order intake levels in PMC expected to continue
throughout the second half of the year as OEM customers report
a stronger oil and gas market outlook and the division is
expected to return to profitability by the end of the first
quarter of FY23
-- Notwithstanding the current economic climate and cost-inflationary
pressures across the Group's operations and supply chains,
the Board remains confident in meeting full-year market expectations
Chris Walters, Chief Executive of Pressure Technologies
commented:
"Results for the first half of the year reflect the expected
timing of major defence contract placement and milestones in
Chesterfield Special Cylinders and the continued impact of
difficult oil and gas market trading conditions in Precision
Machined Components.
In Chesterfield Special Cylinders, the order book reached its
highest level for more than five years at the end of the first half
and a strong second-half performance is expected, driven by
high-value defence contracts, Integrity Management deployments and
hydrogen energy projects.
The pipeline of hydrogen opportunities continues to develop,
with order intake from this exciting market expected to grow
significantly into 2023 and beyond, reflecting the accelerating
adoption of hydrogen technologies and higher targets for green
hydrogen production announced by UK and European governments. As a
result, enquiries are increasing for large-scale hydrogen ground
storage facilities and for hydrogen road trailers in the UK and
Europe, for which we are well placed to deliver solutions to
established operators and new entrants.
In Precision Machined Components, the recovery of order intake
levels is expected to continue throughout the second half of the
year, as OEM customers report an increasingly strong oil and gas
market outlook. The division is expected to return to profitability
by the end of the first quarter of FY23, as performance recovers in
Al-Met and builds on the already profitable and strengthening
performance of Roota Engineering.
Our strategy remains focused on the delivery of value from the
growth and development of both divisions. I am pleased with the
progress made against our strategic priorities and encouraged by
the outlook in core markets. Notwithstanding the current economic
climate and cost-inflationary pressures across our operations, the
Board remains confident in meeting full-year market expectations
and is excited about future opportunities for the Group."
For further information, please contact:
Pressure Technologies plc Tel: 0330 015 0710 PressureTechnologies@houston.co.uk
Chris Walters, Chief Executive
James Locking, Chief Financial
Officer
Singer Capital Markets (Nomad Tel: 0207 496 3000
and Broker)
Mark Taylor / Asha Chotai
Houston (Financial PR and Investor Tel: 0204 529 0549
Relations)
Kay Larsen / Ben Robinson
COMPANY DESCRIPTION
www.pressuretechnologies.com
With its head office in Sheffield, the Pressure Technologies
Group was founded on its leading market position as a designer and
manufacturer of high-integrity, safety-critical components and
systems serving global supply chains in oil and gas, defence,
industrial and hydrogen energy markets.
The Group has two divisions, Chesterfield Special Cylinders and
Precision Machined Components.
Chesterfield Special Cylinders (CSC) -
www.chesterfieldcylinders.com
-- Chesterfield Special Cylinders, Sheffield, includes CSC Deutschland GmbH.
Precision Machined Components (PMC) - www.pt-pmc.com
-- Precision Machined Components includes the Al-Met, Roota Engineering and Martract sites.
BUSINESS REVIEW
OVERVIEW
Good progress has continued against strategic priorities in
defence, oil and gas and hydrogen energy markets despite difficult
trading conditions in the first half of the year that reflected the
challenging global economic climate, supply chain disruptions and
cost inflationary pressures on the Group's operations, customers
and suppliers.
Overall Group revenue for the period was GBP9.5 million (2021:
GBP14.5 million), reflecting the expected phasing of defence
contract activity and milestones that are heavily weighted to the
second half of the year for Chesterfield Special Cylinders (CSC)
and the impact of difficult oil and gas market trading conditions
for Precision Machined Components (PMC). Gross profit was GBP2.1
million (2021: GBP4.7 million), resulting in an overall adjusted
operating loss of GBP2.1 million (2021: profit GBP1.1 million).
CHESTERFIELD SPECIAL CYLINDERS
As expected, the timing of major defence contract placement and
the phasing of contract milestones resulted in a significantly
lower first-half revenue of GBP6.3 million (2021: GBP11.3 million).
Gross margin of 29% (2021: 41%) and adjusted EBITDA(1) of GBP0.1
million (2021: GBP3.3 million) reflected the lower level of defence
contract revenues delivered in the period and the impact on
operational performance of supply chain disruption and higher
costs. In addition, the Group invested in the workforce to build
required capacity and capability necessary to deliver the strong
order book and pipeline for the second half of the year and into
FY23.
Input costs, notably for raw material, labour, utilities and
subcontracted processes, especially heat treatment, are being
closely monitored to ensure they are sufficiently reflected in
prices to customers and in permitted contract variations.
At the end of the first half of the year, the CSC order book had
reached over GBP14.5 million, its highest level for more than five
years, with further contracts secured in the first two months of
the second half.
The strong defence order book and pipeline provides good
visibility of UK and overseas navy new construction and refit
programmes. Several major contracts with existing customers,
including BAE Systems, Babcock, Naval Group and ThyssenKrupp, were
secured in the first half of the year and early in the second half,
and will contribute to significant revenue and margin recovery in
the second half of the year and into FY23.
Demand for Integrity Management and factory cylinder
reconditioning services increased steadily during the period,
delivering revenue of GBP1.3 million (2021: GBP0.7 million). The
lifting of Covid-19 travel restrictions has further strengthened
order intake for field deployments scheduled for the second half of
the year. This creates a solid growth opportunity in the key
markets of defence, offshore oil & gas, industrial ground
storage and nuclear.
The number of opportunities with new and established customers
for static and mobile hydrogen storage systems has continued to
grow and the visibility of future demand is improving through the
development of long-term supply agreements. This growth also
reflects announcements made during the period by established
customers Haskel and McPhy about their planned manufacturing
capacity increases over the next two years for European
markets.
1 EBITDA is operating (loss)/profit before depreciation,
amortisation, impairments and other exceptional costs
Revenue from hydrogen projects in the first half of the year was
GBP0.6 million (2021: GBP0.4 million), reflecting a brief pause in
order placement by customers due to supply chain issues that
affected lead times for manufactured components and the uncertainty
due to cost inflation. However, over the twelve-month period to 2
April 2022 revenue from hydrogen projects was significantly higher
at GBP2.4 million (twelve-month period to 3 April 2021: GBP0.5
million).
The strengthening hydrogen order book includes contracts with
new and established customers, including Haskel, McPhy and Shell
for European projects, with manufacturing and delivery schedules
weighted to the second half of 2022 and the first half of 2023.
Enquires have also been increasing for large-scale green
hydrogen ground storage facilities and for hydrogen road trailers
in the UK and Europe. This reflects the increasing interest and
demand for the flexible and cost-effective transportation of
hydrogen, often from new entrants to the sector, in which CSC is
well placed to deliver solutions for established operators and new
entrants.
CSC has further raised the profile of its hydrogen capabilities,
products and services during events and exhibitions held in France,
Spain, Germany and the UK. Based on our own market forecasting and
developments seen in customer requirements, we are evaluating
opportunities and developing solutions for higher storage
pressures, transportable storage systems and the use of alternative
storage technologies for hydrogen, representing additional exciting
growth opportunities for CSC.
In order to meet the expected increase in demand from the
growing hydrogen energy market, investment in the Sheffield
facility is focused on delivering the capacity, operational
efficiencies and improved contract margins. In addition, the
strategic steel tube stock purchased in 2021, using the proceeds
from the December 2020 fund raise, and long-term cooperation
agreements established with specialist steel tube suppliers,
Tenaris and Vallourec, have helped to mitigate raw material cost
inflation and support competitive lead times in all markets.
PRECISION MACHINED COMPONENTS
In Precision Machined Components (PMC), revenue of GBP3.2
million (2021: GBP3.2 million) and a negative adjusted EBITDA(1) of
GBP0.4 million (2021: negative adjusted EBITDA GBP0.6 million)
reflected the challenging trading conditions in the oil and gas
market that continued throughout the first half of the year, while
Covid-19 disruption and supply chain constraints resulted in
further delays.
As expected, and reflecting an increased oil price, t he PMC
order book built during the first half of the year and by the end
of the period had reached its highest level since August 2020,
helping to further strengthen profitability at Roota Engineering.
Focus remains on the recovery of profitability at Al-Met, where the
order book at the end of the first half of the year reached its
highest level since January 2021.
The demand for subsea well intervention tools, valve assemblies
and control module components continued to grow steadily during the
first half of the year. Demand is expected to grow further in the
second half as major Roota Engineering OEM customers including
Aker, Expro, Halliburton and Schlumberger, plus several new
specialist customers, continue to report a stronger oil and gas
market outlook for the second half of 2022 and are investing
heavily in their global manufacturing capacity to support growth in
oil and gas production, principally from South America, West
Africa, US Gulf of Mexico, Middle East and North Sea regions. The
recovery of revenue and profitability at Roota Engineering has been
supported by successful recruitment, skills development and
specialist engineering software, increasing the capacity to meet
the growing demand and extended product range for a broader
customer base.
1 EBITDA is operating (loss)/profit before depreciation,
amortisation, impairments and other exceptional costs
At Al-Met, a slower than expected recovery in demand for
production drilling and flow control components and a higher cost
base driven by the protection of core capabilities and retention of
the skilled workforce have resulted in a loss for the period.
However, Al-Met OEM customers, Cameron and Baker Hughes are
forecasting a strong recovery in demand for subsea trees and flow
control components throughout the remainder of 2022, into 2023 and
beyond. Order intake levels for high volume components are already
increasing, with Baker Hughes placing their first significant
orders for precision choke components covered by the five-year
strategic supply agreement signed with Al-Met in June 2020, as
major subsea and surface production engineering contracts restart.
Al-Met has remained focused on the improvement of operational
performance, efficiency and competitiveness in readiness for the
recovering order book and is well positioned amongst very few
European competitors to do so.
The improving customer sentiment and outlook, supported by
increasing enquiry levels are encouraging. Order intake has
continued to grow through the start of the second half and in the
three-month period to the end of May 2022 was GBP2.2 million
(three-month period to February 2022: GBP1.7 million). Intake
levels are expected to increase further from both established and
new customers.
Order intake levels, the acquisition of new customers and the
extension of scope for established customers has been supported by
demonstrable improvements in operational performance to meet more
stringent customer metrics for quality and on-time delivery.
Long-term supply agreements and investment in customer relationship
management are providing clearer visibility of demand and enabling
agile pricing decisions to address fluctuating costs.
Further progress has been made in diversifying into non-oil and
gas markets, with 9% (2021: 4%) of revenue in the first half coming
from industrial and defence orders, and this is expected to
increase further in the second half.
BANK FACILITY, BORROWINGS AND LIQUIDITY
At the end of the period, the Group had net debt of GBP5.4
million (2 October 2021: GBP4.9 million), including net bank
borrowings (drawn revolving credit facility less cash) of GBP2.7
million and lease liabilities of GBP2.7 million.
The Group's revolving credit facility with Lloyds Bank, which
now runs to the end of September 2023, was fully drawn at the end
of the period at GBP4.0 million (2 October 2021: GBP4.8 million
drawn).
SENIOR MANAGEMENT APPOINTMENT
On 19 April 2022, Chris Webster joined the Group as Chief
Operating Officer, taking on responsibility for manufacturing
operations at the Chesterfield Special Cylinders, Roota
Engineering, Al-Met and Martract sites.
Based in South Yorkshire, Chris is a Materials Science &
Technology graduate from the University of Birmingham and a
Chartered Engineer with an MBA in Lean Manufacturing from Warwick
Business School.
Chris brings a wealth of knowledge and operational experience
from almost 30 years working in the steel industry and in the rail
sector, including responsibility for a range of single and
multi-site manufacturing operations.
Strong progress has already been made in identifying and
addressing opportunities for efficiency improvement to support
growth.
OUTLOOK
The Group's strategy remains focused on the delivery of value
from the growth and development of both divisions. Whilst trading
in the first half of the year remained difficult, the Board is
pleased with the progress made and encouraged by the improving
outlook for demand in core markets.
A strong second-half performance is expected for CSC, with
revenue of more than GBP11.0 million already in the orderbook for
delivery by the end of September 2022, driven by high-value defence
contract milestones, Integrity Management deployments and hydrogen
energy projects. The pipeline of hydrogen energy opportunities
continues to develop, with order intake from this exciting market
expected to grow significantly into 2023 and beyond, reflecting the
accelerating adoption of hydrogen technologies and higher targets
for green hydrogen production announced by UK and European
governments.
The UK's Energy Security Strategy and European Commission's
REPowerEU plan were recently updated and released, representing a
strong commitment to accelerate the delivery of larger targets for
renewables and green hydrogen production, underpinning increased
energy security and reducing reliance on Russian fossil fuels. In
the case of the UK, the production capacity target for green
hydrogen has doubled. This is expected to benefit CSC due to its
strong position in its domestic market.
The recovery of order intake levels in PMC is expected to
continue throughout the second half of the year as OEM customers
report a stronger oil and gas market outlook. The division is
expected to return to profitability by the end of the first quarter
of FY23, as performance recovers in Al-Met and builds on the
already profitable and strengthening performance of Roota
Engineering.
Notwithstanding the current economic climate and
cost-inflationary pressures across the Group's operations and
supply chains, the Board is excited about the future opportunities
for the Group and remains confident in meeting full-year market
expectations.
Chris Walters
Chief Executive
Condensed Consolidated Statement of Comprehensive Income
For the 26 weeks ended 2 April 2022
Unaudited Unaudited Audited
26 weeks 26 weeks 52 weeks
ended ended ended
2 April 3 April 2 October
2022 2021 2021
Notes GBP'000 GBP'000 GBP'000
Revenue 3 9,492 14,494 25,284
Cost of sales (7,437) (9,823) (18,569)
Gross profit 2,055 4,671 6,715
Administration expenses (4,110) (3,603) (7,460)
Operating (loss)/profit before
amortisation, impairments and other
exceptional costs (2,055) 1,068 (745)
Separately disclosed items of administrative
expenses:
Amortisation 4 (64) (113) (224)
Impairments 4 - - (1,773)
Other exceptional costs 5 (41) (558) (1,044)
Operating (loss)/profit (2,160) 397 (3,786)
Finance costs (140) (157) (412)
(Loss)/profit before taxation (2,300) 240 (4,198)
Taxation 6 437 (46) 772
(Loss)/profit for the period attributable
to owners of the parent (1,863) 194 (3,426)
Other comprehensive income to be
reclassified to profit or loss in
subsequent periods
Currency exchange differences on
translation of foreign operations 42 88 33
Total comprehensive (expense)/income
for the period attributable to the
owners of the parent (1,821) 282 (3,393)
(Loss)/earnings per share - basic
and diluted
From (loss)/profit for the period 7 (6.0)p 0.8p (12.0)p
Condensed Consolidated Statement of Financial Position
As at 2 April 2022
Unaudited Unaudited Audited
26 weeks 26 weeks 52 weeks
ended ended ended
2 April 3 April 2 October
2022 2021 2021
Notes GBP'000 GBP'000 GBP'000
Non-current assets
Intangible assets 8 152 212 101
Property, plant and equipment and
right of use assets 8 12,477 14,579 13,100
Deferred tax asset 1,138 464 1,138
13,767 15,255 14,339
Current assets
Inventories 5,632 6,907 4,762
Trade and other receivables 12,487 13,859 9,061
Asset held for sale - 392 195
Cash and cash equivalents 9 1,326 8,638 3,217
Current tax asset 435 - 414
19,880 29,796 17,649
Total assets 33,647 45,051 31,988
Current liabilities
Trade and other payables (10,452) (14,788) (5,474)
Borrowings - revolving credit facility 9 - - (4,773)
Lease liabilities 9 (1,028) (1,154) (1,110)
Current tax liabilities - (48) -
(11,480) (15,990) (11,357)
Non-current liabilities
Other payables (62) (388) (241)
Borrowings - revolving credit facility 9 (4,000) (4,773) -
Lease liabilities 9 (1,732) (2,477) (2,245)
Deferred tax liabilities (1,066) (750) (1,068)
(6,860) (8,388) (3,554)
Total liabilities (18,340) (24,378) (14,911)
Net assets 15,307 20,673 17,077
Equity
Share capital 10 1,553 1,553 1,553
Share premium account 10 - 32,573 -
Translation reserve (218) (205) (260)
Retained earnings 13,972 (13,248) 15,784
Total equity 15,307 20,673 17,077
Condensed Consolidated Statement of Changes in Equity
For the 26 weeks ended 2 April 2022
Share
Share premium Translation Retained Total
capital account reserve earnings equity
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Balance at 2 October 2021 (audited) 1,553 - (260) 15,784 17,077
Share based payments - - - 51 51
Transactions with owners - - - 51 51
Loss for the period - - - (1,863) (1,863)
Exchange differences arising on
retranslation of foreign operations - - 42 - 42
Total comprehensive income/(expense) - - 42 (1,863) (2,011)
Balance at 2 April 2022 (unaudited) 1,553 - (218) 13,972 15,307
For the 26 weeks ended 3 April 2021
Share
Share premium Translation Retained Total
capital account reserve earnings equity
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Balance at 3 October 2020 (audited) 930 26,172 (293) (13,495) 13,314
Share based payments - - - 53 53
Shares Issued 623 6,401 - - 7,024
Transactions with owners 623 6,401 - 53 7,077
Profit for the period - - - 194 194
Exchange differences arising on
retranslation of foreign operations - - 88 - 88
Total comprehensive income - - 88 194 282
Balance at 3 April 2021 (unaudited) 1,553 32,573 (205) (13,248) 20,673
Condensed Consolidated Statement of Changes in Equity
(continued)
For the 26 weeks ended 2 April 2022
Share
Share premium Translation Retained Total
capital account reserve earnings equity
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Balance at 3 October 2020 (audited) 930 26,172 (293) (13,495) 13,314
Shares issued 623 6,401 - - 7,024
Share based payments - - - 132 132
Capital reduction transfer - (32,573) - 32,573 -
Transactions with owners 623 (26,172) - 32,705 7,156
Loss for the period - - - (3,426) (3,426)
Exchange differences arising on
translating foreign operations - - 33 - 33
Total comprehensive income/(expense) - - 33 (3,426) (3,393)
Balance at 2 October 2021 (audited) 1,553 - (260) 15,784 17,077
Condensed Consolidated Cash Flow Statement
For the 26 weeks ended 2 April 2022
Unaudited Unaudited Audited
26 weeks 26 weeks 52 weeks
ended ended ended
2 April 3 April 2 October
2022 2021 2021
GBP'000 GBP'000 GBP'000
Cash flows from operating activities
(Loss)/profit after tax (1,863) 194 (3,426)
Adjustments for:
Depreciation of property, plant and
equipment 849 819 1,655
Finance costs - net 140 157 412
Amortisation of intangible assets 64 113 224
Exchange differences 42 88 -
Loss on disposal of property, plant
and equipment - - 78
Impairment - - 1,484
Share option costs 51 53 132
Income tax (credit)/charge (437) 46 (772)
Changes in working capital:
(Increase)/decrease in inventories (870) (1,420) 490
Increase in trade and other receivables (3,425) (2,316) (1,995)
Increase/(decrease) in trade and other
payables 4,799 268 (4,448)
Cash outflow from operating activities (650) (1,998) (6,166)
Finance costs paid net of interest income
received (140) (157) (412)
Income tax refunded 414 - -
Net cash outflow from operating activities (376) (2,155) (6,578)
Cash flows from investing activities
Purchase of property, plant and equipment (364) (637) (1,325)
Proceeds from disposal of fixed assets
and assets held for sale 217 213 477
Proceeds from repayment of Promissory
Note - 3,074 3,074
Net cash (outflow)/inflow from investing
activities (147) 2,650 2,226
Financing activities
Repayment of lease liabilities (595) (538) (1,805)
Proceeds from asset financing - 241 934
Repayment of borrowings (773) (2,000) (2,000)
Shares issued - 7,024 7,024
Net cash (outflow)/inflow from financing
activities (1,368) 4,727 4,153
Net (decrease)/increase in cash and
cash equivalents (1,891) 5,222 (199)
Cash and cash equivalents at beginning
of period 3,217 3,416 3,416
Cash and cash equivalents at end of
period 1,326 8,638 3,217
Notes to the Condensed Consolidated Interim Financial
Statements
1. Basis of preparation and going concern
The Group's interim results for the 26 weeks ended 2 April 2022
are prepared in accordance with the Group's accounting policies
which are based on the recognition and measurement principles of
the UK-adopted international accounting standards in conformity
with the requirements of the Companies Act 2006 and effective from
3 October 2021. As permitted, this interim report has been prepared
in accordance with the AIM rules and not in accordance with IAS 34
"Interim financial reporting" and therefore the interim information
is not in full compliance with international accounting standards.
The principal accounting policies of the Group have remained
unchanged from those set out in the Group's 2021 annual report and
financial statements. The Principal Risks and Uncertainties of the
Group are also set out in the Group's 2021 annual report and
financial statements and are unchanged in the period other than in
respect of increased inflationary pressures for raw materials
(notably steel) and energy. Recent months have seen significant
increases in raw material and energy costs arising from both
post-pandemic supply chain issues and, more recently, the conflict
in Ukraine. The Group monitors these input costs very closely and
endeavours to pass the increased costs on to customers wherever
possible.
The Group's 2021 financial statements for the 52 weeks ended 2
October 2021 were prepared under UK-adopted international
accounting standards. The auditor's report on these financial
statements was unmodified and did not contain statements under
Sections 498(2) or (3) of the Companies Act 2006 and they have been
filed with the Registrar of Companies.
Management have produced forecasts to September 2023 for all
business units, taking account of reasonably plausible changes in
trading performance and market conditions, which have been reviewed
by the Directors. These reasonably plausible changes include the
customer's timing of key defence contract milestones, operational
delays and the timing of hydrogen energy order placement. The
forecasts demonstrate that the Group expects to generate profits
and cash in the current financial year and has sufficient cash
reserves and headroom in financial covenants to enable the Group to
meet its obligations as they fall due for the period of at least 15
months from the date when these financial statements have been
signed. The Directors believe that, in the event of assumptions in
the forecast not being realised, such that a future potential
covenant breach is anticipated, there are several mitigating
actions that could be taken, including further cost reductions and
cash management steps that could help prevent a potential covenant
breach from occurring. After undertaking these assessments and
considering the uncertainties set out above, the Directors have a
reasonable expectation that the Group has adequate resources to
continue to operate for the foreseeable future and for these
reasons they continue to adopt the going concern basis in preparing
these financial statements. The Group's current banking facility
expires in September 2023. The Directors are currently considering
various scenarios and have a reasonable expectation that
alternative financing arrangements will be secured in order to
replace this facility before the end of the going concern
period.
The condensed consolidated financial statements are prepared
under the historical cost convention as modified to include the
revaluation of certain financial instruments.
The financial information for the 26 weeks ended 2 April 2022
and 3 April 2021 has not been audited and does not constitute full
financial statements within the meaning of Section 434 of the
Companies Act 2006. The unaudited interim financial statements were
approved for issue by the Board of Directors on 27 June 2022.
2. Significant accounting policies
The accounting policies adopted in the preparation of the
interim condensed consolidated financial statements are consistent
with those followed in the preparation of the Group's annual
consolidated financial statements for the year ended 2 October
2021, except for the adoption of amendments to existing standards
as of 2 October 2021, as noted below.
New Standards adopted as at 3 October 2021
The following amendments to existing standards and
interpretations were effective in the period to 2 April 2022, but
were either not applicable or did not have a material impact on the
Group:
-- Reference to the Conceptual Framework (Amendments to IFRS 3)
-- COVID-19-Related Rent Concessions beyond 30 June 2021 (Amendment to IFRS 16)
-- Property, Plant and Equipment: Proceeds before Intended Use (Amendments to IAS 16)
-- Onerous Contracts - Cost of Fulfilling a Contract (Amendments to IAS 37)
o Reference to the Conceptual Framework (Amendments to IFRS
3)
o COVID-19-Related Rent Concessions beyond 30 June 2021
(Amendment to IFRS 16)
o Property, Plant and Equipment: Proceeds before Intended Use
(Amendments to IAS 16)
o Onerous Contracts - Cost of Fulfilling a Contract (Amendments
to IAS 37)
3. Segmental analysis and Earnings before Interest, Taxation,
Depreciation and Amortisation (EBITDA)
Revenue by destination Unaudited Unaudited Audited
26 weeks 26 weeks 52 weeks
ended ended ended
2 April 3 April 2 October
2022 2021 2021
GBP'000 GBP'000 GBP'000
United Kingdom 6,482 11,024 18,220
Europe 1,462 1,582 4,563
Rest of the World 1,548 1,888 2,501
9,492 14,494 25,284
Revenue by sector
Unaudited Unaudited Audited
26 weeks 26 weeks 52 weeks
ended ended ended
2 April 3 April 2 October
2022 2021 2021
GBP'000 GBP'000 GBP'000
Oil and gas 3,105 3,163 6,076
Defence 5,047 6,319 11,070
Industrial 785 4,604 5,949
Hydrogen energy 555 408 2,189
9,492 14,494 25,284
Revenue by activity
Unaudited Unaudited Audited
26 weeks 26 weeks 52 weeks
ended ended ended
2 April 3 April 2 October
2022 2021 2021
GBP'000 GBP'000 GBP'000
Cylinders 6,247 11,288 18,877
Precision Machined Components 3,245 3,206 6,407
9,492 14,494 25,284
3 . Segmental analysis and Earnings before Interest, Taxation,
Depreciation and Amortisation (EBITDA) (continued)
The Group's revenue disaggregated by pattern of revenue
recognition and category is as follows:
Unaudited Unaudited Audited
26 weeks 26 weeks 52 weeks
ended ended ended
2 April 3 April 2 October
2022 2021 2021
GBP'000 GBP'000 GBP'000
Sale of goods transferred at a point
in time 5,513 3,770 7,086
Sale of goods transferred over time 2,696 9,657 15,594
Rendering of services 1,283 1,067 2,604
9,492 14,494 25,284
The following aggregated amounts of transaction values relate to
the performance obligations from existing contracts that are
unsatisfied or partially unsatisfied as at 2 April 2022:
At 2 April At 3 April
2022 2021
GBP'000 GBP'000
Contracted revenue deliverable within next 12 months
- Cylinders 3,638 3,169
(Loss)/profit before taxation by activity
Unaudited Unaudited Audited
26 weeks 26 weeks 52 weeks
ended ended ended
2 April 3 April 2 October
2022 2021 2021
GBP'000 GBP'000 GBP'000
Cylinders (250) 2,979 2,834
Precision Machined Components (825) (987) (1,647)
Manufacturing subtotal (1,075) 1,992 1,187
Unallocated central costs (980) (924) (1,932)
Operating (loss)/profit before amortisation,
impairment and other exceptional costs (2,055) 1,068 (745)
Amortisation and impairment (note 4) (64) (113) (1,997)
Other exceptional costs (note 5) (41) (558) (1,044)
Operating (loss)/profit (2,160) 397 (3,786)
Finance costs (140) (157) (412)
(Loss)/profit before tax (2,300) 240 (4,198)
The Operating (loss)/profit by activity is stated before the
allocation of Group management charges, which are included within
'Unallocated central costs'.
3. Segmental analysis and (Loss)/Earnings before Interest,
Taxation, Depreciation and Amortisation (EBITDA) (continued)
(Loss)/Earnings before interest, taxation, depreciation, and
amortisation (EBITDA)
Unaudited Unaudited Audited
26 weeks 26 weeks 52 weeks
ended ended ended
2 April 3 April 2 October
2022 2021 2021
GBP'000 GBP'000 GBP'000
Adjusted EBITDA (1,206) 1,887 910
Other exceptional costs (note 5) (41) (558) (1,044)
EBITDA (1,247) 1,329 (134)
Depreciation (849) (819) (1,655)
Amortisation and impairments (note 4) (64) (113) (1,997)
Finance costs (140) (157) (412)
(Loss)/profit before tax (2,300) 240 (4,198)
4. Amortisation and impairments
Amortisation of intangible assets and other asset impairments
are both shown separately in the Condensed Consolidated Statement
of Comprehensive Income. A breakdown of those non-cash costs can be
seen below.
Unaudited Unaudited Audited
26 weeks 26 weeks 52 weeks
ended ended ended
2 April 3 April 2 October
2022 2021 2021
GBP'000 GBP'000 GBP'000
Amortisation of intangible assets (64) (113) (224)
Property impairment - - (655)
ERP system impairment - - (1,118)
(64) (113) (1,997)
In the year ended 2 October 2021, within tangible fixed assets,
land and buildings included the Meadowhall Road site which, as part
of the Group's discussions with its bankers, was valued by an
independent chartered surveyor, Lambert Smith Hampton, which
resulted in an impairment of GBP655,000. The Directors are
satisfied that the carrying value is comparable with market
value.
Also included in tangible fixed assets within Assets under
Construction was GBP829,000 along with associated costs of
GBP289,000 that was held in prepayments, relating to the internal
and third-party costs incurred in association with the development
of a new ERP system in the CSC division. Improvements to the
incumbent ERP system meant after an initial assessment, the
Directors determined that there was an indicator of impairment of
the Asset under Construction and the associated prepayment relating
to the development of CSC's ERP system. The Directors recorded an
impairment charge of GBP1,118,000 to fully write off this
asset.
5. Other exceptional costs
Items that are material either because of their size or their
nature, or that are non-recurring are considered as exceptional
costs and are disclosed separately on the face of the Condensed
Consolidated Statement of Comprehensive Income.
An analysis of the amounts presented as exceptional costs in
these financial statements is given below:
Unaudited Unaudited Audited
26 weeks 26 weeks 52 weeks
ended ended ended
2 April 3 April 2 October
2022 2021 2021
GBP'000 GBP'000 GBP'000
Reorganisation and redundancy (65) (364) (398)
Reversal of impairment/(impairment
of) inventory and work in progress 89 - (240)
Closure of Precision Machined Components
facility (Quadscot) - - (166)
Release of doubtful debt provision - 189 -
Other plc costs (65) (383) (240)
(41) (558) (1,044)
The reorganisation costs relate to various costs of
restructuring across the Group.
Given that these costs do not relate to underlying trading, the
Directors consider it appropriate to disclose these as exceptional
costs.
6. Taxation
Unaudited Unaudited Audited
26 weeks 26 weeks 52 weeks
ended ended ended
2 April 3 April 2 October
2022 2021 2021
GBP'000 GBP'000 GBP'000
Current tax credit/(charge) 435 (49) 414
Deferred taxation credit 2 3 358
Taxation credit/(charge) to the income
statement 437 (46) 772
7. (Loss)/earnings per ordinary share
The calculation of basic earnings per share is based on the
earnings attributable to ordinary shareholders divided by the
weighted average number of shares in issue during the period.
The calculation of diluted earnings per share is based on basic
earnings per share, adjusted to allow for the issue of shares on
the assumed conversion of all dilutive options.
Adjusted earnings per share shows earnings per share, adjusting
for the impact of the amortisation charged on intangible assets
acquired as a result of business combinations, impairments of
goodwill and intangible assets, and any other exceptional items,
and for the estimated tax impact, if any, of those costs. Adjusted
earnings per share is based on the profits as adjusted divided by
the weighted average number of shares in issue.
For the 26 week period ended 2 April 2022
Total
GBP'000
Loss after tax (1,863)
No.
Weighted average number of shares - basic 31,067,163
Dilutive effect of share options 32,674
Weighted average number of shares - diluted 31,099,837
Loss per share - basic and diluted (6.0)p
The Group adjusted earnings per share is calculated as
follows:
Loss after tax (1,863)
Amortisation and impairments (note 4) 64
Other exceptional items (note 5) 41
Theoretical tax effect of above adjustments (19)
Adjusted loss (1,777)
Adjusted loss per share - basic and diluted (5.7)p
7. (Loss)/earnings per ordinary share (continued)
For the 26 week period ended 3 April 2021
Total
GBP'000
Profit after tax 194
No.
Weighted average number of shares - basic 25,859,076
Dilutive effect of share options -
Weighted average number of shares - diluted 25,859,076
Earnings per share - basic and diluted 0.8p
The Group adjusted earnings/(loss) per share is calculated as
follows:
Profit after tax 194
Amortisation and impairments (note 4) 113
Other exceptional items (note 5) 558
Theoretical tax effect of above adjustments (125)
Adjusted earnings 740
Adjusted earnings per share - basic and diluted 2.9p
For the 52 week period ended 2 October 2021
Total
GBP'000
Loss after tax (3,426)
No.
Weighted average number of shares - basic 28,463,119
Dilutive effect of share options -
Weighted average number of shares - diluted 28,463,119
Basic loss per share (12.0)p
Diluted loss per share (12.0)p
7. (Loss)/earnings per ordinary share (continued)
The Group adjusted loss per share is calculated as follows:
For the 52 week period ended 2 October 2021
Total
GBP'000
Loss after tax (3,426)
Amortisation and impairments (note 4) 1,997
Other exceptional items (note 5) 1,044
Theoretical tax effect of above adjustments (241)
Adjusted loss (626)
Adjusted loss per share - basic and
diluted (2.2)p
8. Asset Impairment Review
The Group tests annually for impairment, or more frequently if
there are indicators that intangible and tangible fixed assets
might be impaired. The pandemic is a global issue affecting every
single business sector and every country to some degree. It has
already had a significant impact on the global economy, and whilst
its impacts are reducing in the principal countries in which the
Group operates, some level of uncertainty remains going forward
particularly in respect of supply chain issues and inflationary
pressures. Consequently, the impact of the pandemic and the high
level of global economic uncertainty is considered to remain an
indicator that the carrying value of our intangible and tangible
assets in one of the Group's cash generating units (CGU) - the
Precision Machined Components (PMC) division - may be impaired.
In light of the above, the Group has considered a range of
economic conditions for the sectors in which the Group operates
that may exist over the next three years. These economic
conditions, together with reasonable and supportable assumptions,
have been used to estimate the future cash inflows and outflows for
the PMC CGU over the next three years.
These forecasts have been approved by management and the Board
of Directors and are based on a bottom-up assessment of costs and
uses the current and estimated future sales pipeline. The forecasts
used for years two to three assume revenue growth, along with a 2%
long-term rate of growth incorporated into the perpetuity
calculation at the end of year three. A value in use calculation
has been calculated by applying a discount rate of 11.7% (Sep 2021:
11.0%) to the cash flows in these forecasts.
Management's key assumptions are based on their past experience
and future expectations of the market over the longer term. The key
assumptions for the value in use calculations are those regarding
the discount rates, growth rates, changes in customer sector mix,
and expected changes to selling prices and direct costs. A baseline
reforecast was produced reflecting management's best estimate of
the likely impact of the pandemic on the Group's businesses.
Carrying amount of assets allocated to the PMC CGU
Unaudited
2 April
2022
GBP'000
Carrying value of tangible fixed assets 4,405
Carrying value of other intangibles 134
4,539
In the 52 weeks ended 2 October 2021, the Group recorded no
impairment charge with respect to the PMC division.
8. Asset Impairment Review (continued)
The value in use calculation for the PMC CGU based on the
baseline reforecast resulted in headroom of GBP2.9 million over the
total carrying value of GBP4.5 million, such that no additional
impairment, or write back of previous impairments, is required for
the PMC division in these interim results. The recoverable amount
is most sensitive to the assumptions regarding expected future cash
inflows and the discount rate. Given the limited headroom, a
relatively small change in the assumptions used in the baseline
forecasts for the division's profitability and/or the discount rate
applied to the cash flows could cause the carrying value to exceed
the recoverable amount, thus indicating that an impairment may be
required. This will be next reviewed at the annual impairment test
in September 2022.
9. Reconciliation of net (borrowings)/cash
Unaudited Unaudited Audited
2 April 3 April 2 October
2022 2021 2021
GBP'000 GBP'000 GBP'000
Cash and cash equivalents 1,326 8,638 3,217
Bank borrowings (4,000) (4,773) (4,773)
Net (borrowings)/cash excluding lease
liabilities (2,674) 3,865 (1,556)
Asset finance lease liabilities (1,886) (2,787) (2,331)
Right of use asset lease liabilities (874) (844) (1,024)
Net (borrowings)/cash (5,434) 234 (4,911)
The Group's revolving credit facility with Lloyds Bank, which
now runs to the end of September 2023, was fully drawn at the end
of the period at GBP4.0 million (2 October 2021: GBP4.8 million
drawn). Leverage (net debt to adjusted EBITDA) and interest cover
covenants, tested quarterly, will commence on the first testing
date of 30 September 2022 through to the end of the facility.
10. Called up share capital and share premium
Share Capital Share Capital
No. GBP'000
Share Capital - allotted, issued
and fully paid ordinary 5p shares
At 2 April 2022, 2 October 2021 and
3 April 2021 31,067,163 1,553
Share Premium
GBP'000
Share Premium reserve
At 3 April 2021 32,573
Capital Reduction (32,573)
At 2 April 2022 and 3 October 2021 -
11. Dividends
No final or interim dividend was paid for the 52-week period
ended 2 October 2021. No interim dividend for the 26-week period
ended 2 April 2022 is proposed.
12. Related party transactions
During the period ended 2 April 2022, Pressure Technologies
incurred costs of GBPnil (2021: GBP12,500) with RAG Associates
Limited with whom one former Non-Executive Director, Sir Roy
Gardner, is a connected person. GBPnil was outstanding to be paid
as at 2 April 2022 (2021: GBP7,500). The transactions were made on
an arm's length basis.
A copy of the Interim Report will be sent to shareholders
shortly and will be available on the Company's website:
www.pressuretechnologies.com .
Independent review report to Pressure Technologies plc
Introduction
We have been engaged by the company to review the financial
information in the half-yearly financial report for the six months
ended 2 April 2022 which comprises Condensed Consolidated Statement
of Comprehensive Income, the Condensed Consolidated Statement of
Financial Position, the Condensed Consolidated Statement of Changes
in Equity, the Condensed Consolidated Cash Flow Statement and the
related explanatory notes. We have read the other information
contained in the half yearly financial report and considered
whether it contains any apparent misstatements or material
inconsistencies with the information in the condensed set of
financial statements.
Directors' responsibilities
The half-yearly financial report is the responsibility of, and
has been approved by, the directors. The AIM rules of the London
Stock Exchange require that the accounting policies and
presentation applied to the financial information in the
half-yearly financial report are consistent with those which will
be adopted in the annual accounts having regard to the accounting
standards applicable for such accounts.
As disclosed in the Accounting policies, the annual financial
statements of the group are prepared in accordance with UK-adopted
international accounting standards. The financial information in
the half-yearly financial report has been prepared in accordance
with the basis of preparation in Note 1.
Our responsibility
Our responsibility is to express to the company a conclusion on
the financial information in the half-yearly financial report based
on our review.
Scope of review
We conducted our review in accordance with International
Standard on Review Engagements (UK and Ireland) 2410, 'Review of
Interim Financial Information Performed by the Independent Auditor
of the Entity' issued by the Auditing Practices Board for use in
the United Kingdom. A review of interim financial information
consists of making enquiries, primarily of persons responsible for
financial and accounting matters, and applying analytical and other
review procedures. A review is substantially less in scope than an
audit conducted in accordance with International Standards on
Auditing (UK) and consequently does not enable us to obtain
assurance that we would become aware of all significant matters
that might be identified in an audit. Accordingly, we do not
express an audit opinion.
The impact of macro-uncertainties on our review
Our review of the summary accounts in the half-yearly financial
report requires us to obtain an understanding of all relevant
uncertainties, including those arising as a consequence of the
effects of macro-economic uncertainties such as Covid-19 and
Brexit. Such reviews assess and challenge the reasonableness of
estimates made by the directors and the related disclosures and the
appropriateness of the going concern basis of preparation of the
financial statements. All of these depend on assessments of the
future economic environment and the company's future prospects and
performance.
Covid-19 and Brexit are amongst the most significant economic
events for the UK, and at the date of this report its effects are
subject to unprecedented levels of uncertainty, with the full range
of possible outcomes and their impacts unknown. We applied a
standardised firm-wide approach in response to these uncertainties
when assessing the company's future prospects and performance.
However, no review of interim financial information should be
expected to predict the unknowable factors or all possible future
implications for a company associated with a course of action such
as Covid-19 and Brexit.
Conclusion
Based on our review, nothing has come to our attention that
causes us to believe that the financial information in the
half-yearly financial report for the six months ended 2 April 2022
is not prepared, in all material respects, in accordance with the
basis of preparation and going concern as described in Note 1.
Use of our report
This report is made solely to the company in accordance with
guidance contained in ISRE (UK and Ireland) 2410, 'Review of
Interim Financial Information performed by the Independent Auditor
of the Entity'. Our review work has been undertaken so that we
might state to the company those matters we are required to state
to it in a review report and for no other purpose. To the fullest
extent permitted by law, we do not accept or assume responsibility
to anyone other than the company for our review work, for this
report, or for the conclusion we have formed.
Grant Thornton UK LLP
Statutory Auditor, Chartered Accountants
Sheffield
27 June 2022
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END
IR FRMPTMTTTBAT
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