TIDMPRES
RNS Number : 9583D
Pressure Technologies PLC
27 June 2023
The information contained within this announcement is deemed by
the Group to constitute inside information as stipulated under the
UK version of the EU Market Abuse Regulation (2014/596) which is
part of UK law by virtue of the European Union (Withdrawal) Act
2018, ("MAR"), and is disclosed in accordance with the Group's
obligations under Article 17 of MAR. Upon the publication of this
announcement via a Regulatory Information Service, this inside
information will be considered to be in the public domain.
27 June 2023
Pressure Technologies plc
("Pressure Technologies", the "Company" or the "Group")
2023 Interim Results
Pressure Technologies (AIM: PRES), the specialist engineering
group, is pleased to announce its unaudited interim results for the
26 weeks to 1 April 2023.
Financial Highlights
-- Group revenue increased 45% to GBP13.8 million (2022:
GBP9.5 million)
-- Gross profit up 76% to GBP3.7 million at 27% margin
(2022: GBP2.1 million at 22% margin)
-- Adjusted EBITDA(1) profit of GBP0.3 million (2022:
EBITDA loss of GBP1.2 million)
-- Adjusted operating loss(2) of GBP0.5 million (2022:
loss of GBP2.1 million)
-- Reported loss before tax of GBP1.4 million (2022: loss
of GBP2.3 million)
-- Reported basic loss per share of 3.9p (2022: loss per
share of 6.0p) and Adjusted basic loss per share(3)
of 2.3p (2022: loss per share of 5.7p)
-- Net debt(4) of GBP3.7 million (2022: GBP5.4 million;
1 October 2022: GBP3.5 million); Net bank borrowings,
excluding asset finance lease liabilities and right
of use asset lease liabilities, of GBP0.9 million (2022:
GBP2.7 million; 1 October 2022: GBP0.6 million)
1 Adjusted EBITDA is earnings before interest, tax,
depreciation, amortisation and other exceptional costs
2 Adjusted operating loss is operating loss before amortisation
and other exceptional costs
3 Adjusted basic loss per share is reported earnings per share
before amortisation and other exceptional costs
4 Net debt comprises cash and cash equivalents, bank borrowings,
asset finance lease liabilities and right of use asset lease
liabilities
Group Highlights
-- Improving trading conditions during the first half of FY23
driven by major defence contract placement and continued
recovery in the oil and gas market against the backdrop of
more resilient economic conditions.
-- Group revenue in the first half of FY23 of GBP13.8 million
(2022: GBP9.5 million), representing like-for-like growth
of 45% and underpinning a return to Adjusted EBITDA profitability
of GBP0.3m (2022: loss of GBP1.2 million).
-- Order intake of GBP34.3 million for the eight months ended
May 2023 (eight months ended May 2022: GBP17.4 million) was
97% higher than the corresponding period last year and supports
a current order book of GBP28.1 million at May 2023 (May
2022: GBP16.6 million), the highest level for more than five
years.
-- Fundraising of GBP2.1 million (net of expenses) in December
2022 used to support the Group's short-term working capital
requirements and provide a bridge to profitable, cash-generative
trading following placement of a major defence contract in
February 2023.
-- Bank borrowings were reduced by GBP0.5 million in the period
to GBP1.9 million (1 October 2022: GBP2.4 million).
-- The refinancing of the debt facilities of the Group has not
progressed as quickly as originally expected. The Board continues
to explore refinancing options for the Group and is engaged
in constructive discussions with potential lenders. Based
on these discussions, the Board has a reasonable expectation
that the refinancing can be completed in the remainder of
calendar year 2023.
-- Following a marketing process, the Board has decided not
to divest Precision Machined Components at this time due
to improving conditions in the oil and gas market and will
revisit strategic options for the division later in the year.
Chesterfield Special Cylinders ("CSC")
-- CSC revenue in the first half of FY23 of GBP8.8 million (2022:
GBP6.3 million), driven by defence work in the second quarter
and progress in hydrogen markets, underpinning improved EBITDA
profitability.
-- Defence revenue of GBP7.0 million (2022: GBP5.0 million),
reflecting strong order book and new contract placements
for submarine and surface ship projects for UK and overseas
navies.
-- Largest ever contract award of GBP18.2 million announced
in February 2023 to supply safety-critical pressure vessels
for major UK naval new construction programme over three
years to 2025.
-- Hydrogen revenue increased to GBP1.3 million (2022: GBP0.5
million), driven equally by sales of new refuelling station
storage and periodic inspection, testing and recertification
services for hydrogen road trailers.
-- Enquiry levels for Integrity Management services increased
sharply during the first half of FY23, driven by growing
activity in the offshore and hydrogen energy markets.
-- CSC order intake of GBP22.3 million in the eight months ended
May 2023 (eight months ended May 2022: GBP12.4 million) supports
a current order book of GBP19.2m million at the end of May
2023 (May 2022: GBP14.2 million), the highest order book
level seen in the last five years, providing strong revenue
cover for the remainder of FY23 and good visibility into
FY24.
-- Operational improvements in the Sheffield facility are delivering
increased capacity and efficiency for hydrogen cylinder and
road trailer new build, inspection and testing services.
Precision Machined Components ("PMC")
-- PMC revenue in the first half of FY23 of GBP4.9 million (2022:
GBP3.2 million), reflecting recovery in the oil and gas market
and underpinning a return to EBITDA profitability.
-- PMC order intake strengthened significantly in the first
half of FY23 and reached GBP12.0 million in the 8 months
ended May 2023 (8 months ended May 2022: GBP5.0 million),
supporting a current order book of GBP8.9 million at the
end of May 2023 (May 2022: GBP2.4 million), the highest order
book level seen in the last five years, providing strong
revenue cover for the remainder of FY23.
Outlook
-- Improved second-half performance expected for CSC, driven
by high-value defence contract milestones, Integrity Management
deployments and hydrogen energy projects.
-- Despite delays in the broader hydrogen supply chain, opportunities
continue to be developed for the supply of new hydrogen storage
and transportation systems for refuelling and decarbonisation
applications.
-- Demand for in-situ and factory-based inspection, testing
and recertification services for hydrogen storage and road
trailers presents an exciting growth opportunity across an
expanding customer base.
-- Recovery of financial performance in PMC expected to strengthen
in second half driven by increasing order intake as OEM customers
report a stronger oil and gas market outlook, supporting
improving profitability.
-- The order book of the Group is robust, underpinning a stronger
performance in the second half of FY23. However, this will
require further strong improvements in operational and supply
chain performance and confirmation of the expected increase
in Integrity Management activity, all of which represent
material uncertainties.
-- Accordingly, the Board therefore believes that full-year
FY23 Adjusted EBITDA is more likely to be in the range GBP2.2
million to GBP2.5 million, which would represent significant
progress as compared to FY22 (Adjusted EBITDA Loss of GBP0.9
million).
Chris Walters, Chief Executive of Pressure Technologies plc,
commented:
"Significantly improved performance in the first half of FY23
reflects the strong defence order book in Chesterfield Special
Cylinders and the continued recovery of oil and gas market trading
conditions in Precision Machined Components.
In Chesterfield Special Cylinders, the order book reached the
highest level on record following an GBP18.2 million contract award
to supply air pressure vessels for a major UK naval new
construction programme. This order was the largest ever for the
division, providing good visibility of high-value work through the
remainder of FY23 and into FY24.
Despite delays in the hydrogen energy supply chain over the past
year, we remain well positioned in this emerging market to supply
static and mobile hydrogen storage solutions, and to provide the
through-life inspection, testing and recertification services for
these safety-critical systems over the medium and longer term.
In Precision Machined Components, the recovery of order intake
levels during the first half of the year is expected to continue
throughout the second half, as OEM customers report an increasingly
positive oil and gas market outlook. In light of these improving
conditions, the Board has decided not to divest PMC at this time
and will revisit strategic options for the business later in the
year.
Both of our divisions have strong and growing order books, our
executive team, including Chief Financial Officer and Chief
Operating Officer, is complete and we see the opportunity for
revenue growth and margin improvement across the Group."
Additional Information
The person responsible for arranging release of this
announcement on behalf of the Company is Steve Hammell, Chief
Financial Officer.
For further information, please contact:
Pressure Technologies plc Tel: 0333 015 0710
Chris Walters, Chief Executive
Steve Hammell, Chief Financial
Officer
Singer Capital Markets (Nomad Tel: 0207 496 3000
and Broker)
Rick Thompson / Asha Chotai
Houston (Financial PR and Investor Tel: 0204 529 0549
Relations) pressuretechnologies@houston.co.uk
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 (CSC) - www.chesterfieldcylinders.com
-- Precision Machined Components (PMC) - www.pt-pmc.com
o Includes the Al-Met, Roota Engineering and Martract sites.
Business Review
Pressure Technologies has made significant progress in the first
half of FY23 as reflected in these interim results. Revenue has
increased significantly in the period alongside an increase in new
orders, driven by a major new UK defence contract and recovery in
the oil and gas market.
Chesterfield Special Cylinders
Chesterfield Special Cylinders ("CSC") has built momentum in the
period following receipt of its largest ever contract award of
GBP18.2 million to supply safety-critical pressure vessels for a
major UK naval new construction programme, with a three-year
manufacturing programme to 2025. Operational performance on this
contract was strong in the second quarter driving revenue
recognition.
CSC remains well positioned in the emerging market for hydrogen
storage and transportation. Order placement from established and
new customers was slower than expected during the first half of
FY23, influenced by constraints and delays in the broader supply
chain for components required in the generation and compression of
hydrogen for refuelling and decarbonisation projects. Despite these
delays, CSC delivered hydrogen revenues of GBP1.3 million (2022:
GBP0.5 million) from several refuelling station projects and from
periodic inspection, testing and recertification services carried
out on existing hydrogen storage systems and road trailers.
CSC order intake in the eight months ended May 2023 was GBP22.3
million (eight months ended May 2022: GBP12.4 million) supporting a
current order book of GBP19.2 million at the end of May 2023 (May
2022: GBP14.2 million), the highest order book level seen in the
last five years. The order book provides strong revenue cover for
the remainder of FY23 and good visibility into FY24.
CSC has made strong progress on its operational excellence
improvements in the period. Organisational changes have been made
to strengthen the operations team, with new appointments and
governance to improve multi-functional working through a focussed
project management approach. A continuous improvement roadmap has
been developed and deployment is on-track through a dedicated
team.
Furthermore, equipment maintenance processes have been
strengthened with the appointment of new technicians and the
roll-out of software to track equipment reliability and enable the
development of focussed improvements. Further system developments
are in the implementation stage which will drive productivity and
margins. Solid progress has been made in CSC to improve reliability
and repeatability to customers, which in-turn delivers improved
forecast accuracy so that forward efforts and plans can focus on
cost control and margin enhancement.
Precision Machined Components
Since 2020, our Precision Machined Components ("PMC") division
has felt the significant impact of the Covid-19 pandemic. However,
we are now seeing the early stages of recovery in oil and gas
markets and are encouraged by the steady growth in order intake for
the division, which has traded in-line with expectations throughout
the first half of FY23 and returned to EBITDA profitability.
The demand for subsea well intervention tools, valve assemblies
and control module components has continued to grow during the
first half of the year with a sharp improvement noted in April and
May 2023. Roota Engineering OEM customers, including Aker, Expro,
Halliburton and Schlumberger, continue to report a stronger oil and
gas market outlook for the second half of 2023 and are investing
heavily in their global manufacturing capacity to support growth in
oil and gas production, principally from Middle East, South
America, North Sea, US Gulf of Mexico and Australasia regions.
There is also growing demand for well de-commissioning projects in
the North Sea.
Business Review (continued)
Roota Engineering order intake in the eight months ended May
2023 was GBP4.2 million (eight months ended May 2022: GBP2.9
million) supporting a current order book of GBP2.7 million at May
2023 (May 2022: GBP1.3 million).
Demand for production drilling and flow control components,
supported by a strong and sustained recovery in subsea tree new
build capex, is also expected to grow across 2023 and beyond for
major subsea and
surface production projects. Al-Met OEM customers, including
Schlumberger and Baker Hughes, report increasing investment to
support oil and gas production in Middle East, South America, North
Sea, US Gulf of Mexico, Canada and South-East Asia regions.
The recovery of order intake at Al-Met was particularly strong
in the first half of the year. Order intake in the eight months
ended May 2023 was GBP7.8 million (eight months ended May 2022:
GBP2.1 million) supporting a current order book of GBP6.2 million
at May 2023 (May 2022: GBP1.1 million), which includes over GBP3.0
million already secured for delivery in the first half of FY24.
Overall PMC order intake in the eight months ended May 2023 was
GBP12.0 million (eight months ended May 2022: GBP5.0 million)
supporting a current order book of GBP8.9 million at the end of May
2023 (May 2022: GBP2.4 million), the highest order book level seen
in the last five years. The order book provides strong revenue
cover for the remainder of FY23.
In November 2022, the Board announced that an improved trading
environment and outlook created the potential opportunity to divest
PMC in order to raise funds to progress strategic priorities in
CSC. As part of this process, a number of offers to acquire PMC
were received but none were at a level that the Board felt
appropriately reflected the value of the business, particularly in
light of the improved outlook for the oil and gas market and the
recent strong order intake of PMC. As a result, the Board has
decided not to divest PMC at this time and will revisit strategic
options for the business later in the year.
Equity Raising
On 6 December 2022, the Group completed a GBP2.1 million equity
fundraise with support from institutional and retail shareholders.
The funds raised provided important flexibility and liquidity
during the first half of FY23 and a bridge to profitable,
cash-generative trading driven by the commencement of major defence
contracts in CSC and recovering order intake in PMC.
Outlook
The Group is well positioned in the defence and emerging
hydrogen energy sectors and expects to benefit from recovery in the
oil and gas market. Based on the strong current order book, the
Group is well placed to drive revenue growth in the second half of
FY23 and beyond although this will be critically dependent on the
rate at which improved production and supply chain performance can
be delivered. Given the supply chain challenges experienced in the
period, the Board recognises that this remains a risk to the
delivery of the expected stronger performance in the second half of
FY23 as delivery milestones, and hence revenue, could be deferred
into FY24.
The Board therefore believes that full-year FY23 Adjusted EBITDA
is more likely to be in the range GBP2.2 million to GBP2.5 million,
which would represent significant progress as compared to FY22
(Adjusted EBITDA Loss of GBP0.9 million).
Chris Walters
Chief Executive
27 June 2023
Financial Review
Revenue & Profitability
Improving market conditions in the oil and gas market and strong
new defence orders have underpinned a significant improvement in
performance in the first half of FY23. Revenue of GBP13.8 million
was 45% higher than the corresponding period last year (2022:
GBP9.5 million) and has helped drive gross profit to GBP3.7 million
at 27% margin (2022: GBP2.1m at 22% margin).
The gross margin improvement has been driven by the higher level
of activity and throughput in both CSC and PMC, improving asset
utilisation, and a benefit of GBP0.4 million in the period in
relation to the adoption of the amended IFRS 15 treatment for
certain long-term contracts disclosed in the FY22 Annual
Report.
Overhead costs increased slightly in the period to GBP4.2
million (2022: GBP4.1 million) with a strict focus on cost control
largely offsetting inflationary pressures.
The Group reported an operating loss of GBP0.5 million (2022:
loss of GBP2.0 million) in the period. Allowing for depreciation
charges of GBP0.8 million (2022: GBP0.8 million), the Group
returned to an Adjusted EBITDA profit of GBP0.3 million in the
period (2022: loss of GBP1.2 million), demonstrating a strong
turnaround in underlying financial performance.
Exceptional costs of GBP0.7 million were incurred in the period
(2022: GBP0.1 million) in relation to reorganisation costs, the
extension of its banking facilities with Lloyds Bank in October
2022 and the strategic review of PMC.
Cashflow
The Group reported a net cash outflow of GBP0.8 million in the
period (2022: outflow of GBP1.9 million). This was driven by
reported EBITDA of GBP0.3 million, exceptional costs of GBP0.7
million, working capital outflows (GBP1.1 million), capital
expenditure (GBP0.6 million), interest costs (GBP0.2 million) and
debt repayments (GBP0.6 million), partially offset by the net
proceeds of the equity raising (GBP2.1 million) in December
2022.
The equity raising involved the issue of 7,600,000 new ordinary
shares at an issue price of 30 pence per share and has provided
essential financial flexibility in the period. These funds also
supported the purchase of a new milling machine at PMC for GBP0.5
million in the period.
The cash balance at the end of the period was GBP1.0 million (1
October 2022: GBP1.8 million). Net debt, which comprises cash, bank
borrowings, finance lease liabilities and right of use asset lease
liabilities, at the end of the period was GBP3.7 million (1 October
2022: GBP3.5 million). Net bank borrowings, which comprises cash
and bank borrowings only, at the end of the period was GBP0.9
million (1 October 2022: GBP0.6 million).
Prior Year Adjustment
During the preparation of the Annual Report & Accounts for
the year ended 1 October 2022, the Group reviewed its accounting
policy and past accounting treatment in respect of a small number
of long-term defence contracts within CSC and it was identified
that this accounting treatment was not in compliance with IFRS
15.
As a result, the comparative period financial statements have
been restated. As at 2 October 2021 and 2 April 2022, the impact of
the restatement was to reduce total equity by GBP1,054,000. The
restatement had no impact on profit recognition in the 26 weeks
ended 1 April 2023 or the 26 weeks ended 2 April 2022.
These accounting adjustments only impact the timing of profit
recognition under these specific contracts.
They do not impact the total profitability of the contracts, the
net debt position of the Group at any date,
Financial Review (continued)
the future cash generation profile of the Group, nor the
underlying trading or operations of the business.
Refinancing of Debt Facilities and Amendment of Lloyds Bank
Facilities
The Board has been engaged in discussions with a number of
prospective lenders to provide asset-backed lending facilities and
alternative financing to enable the full repayment of the existing
facilities of Lloyds Bank and provide working capital headroom to
support the strategic development of the Group. These discussions
have progressed more slowly than expected and have not concluded at
this time. The Board continues to explore options for refinancing
and is engaged in constructive discussions with potential lenders
which will require more time to conclude.
The current debt facilities provided by Lloyds Bank have been
amended this month such that the final maturity date of the
facilities has been brought forward from 31 March 2024 to 31
December 2023, with Lloyds having agreed to waive the financial
covenant tests due on 30 June 2023 under the facilities. The Lloyds
facility is expected to support the financing requirements of the
Group over the period to 31 December 2023 although the liquidity
and covenant headroom during this period remains limited.
After December 2023 the Group is likely to require additional
working capital facilities, depending on operational and financial
performance, to ensure it meets its financial obligations as they
fall due. Given the on-going constructive discussions with
potential lenders, the Board has a reasonable expectation that
adequate financing can be secured during the remainder of the
calendar year 2023.
Auditor
Grant Thornton resigned as auditors to the Group on 23 May 2023
following the signing of the FY22 Annual Report and Accounts. They
confirmed that there were no matters connected with their ceasing
to hold office which they considered should be brought to the
attention of the shareholders or creditors of the Group. The Board
has commenced the process to appoint new auditors and will update
in due course.
Steve Hammell
Chief Financial Officer
27 June 2023
Condensed Consolidated Statement of Comprehensive Income
For the 26 weeks ended 1 April 2023
Unaudited Unaudited Audited
26 weeks 26 weeks 52 weeks
ended ended ended
1 April 2 April 1 October
2023 2022 2022
Notes GBP'000 GBP'000 GBP'000
Revenue 4 13,765 9,492 24,939
Cost of sales (10,051) (7,437) (19,680)
Gross profit 3,714 2,055 5,259
Administration expenses (4,230) (4,110) (7,883)
Operating loss before amortisation,
impairments and other exceptional
costs (516) (2,055) (2,624)
Separately disclosed items of administrative
expenses:
Amortisation - (64) (101)
Other exceptional costs 6 (704) (41) (968)
Operating loss (1,220) (2,160) (3,693)
Finance costs (180) (140) (292)
Loss before taxation (1,400) (2,300) (3,985)
Taxation 7 - 437 (52)
Loss for the period attributable
to owners of the parent (1,400) (1,863) (4,037)
Other comprehensive income/(expense)
to be reclassified to profit or
loss in subsequent periods
Currency exchange differences on
translation of foreign operations 6 42 (5)
Total comprehensive expense for
the period attributable to the owners
of the parent (1,394) (1,821) (4,042)
Loss per share - basic and diluted
From loss for the period 8 (3.9)p (6.0)p (13.0)p
Condensed Consolidated Statement of Financial Position
As at 1 April 2023
Restated*
Unaudited Unaudited Audited
26 weeks 26 weeks 52 weeks
ended ended ended
1 April 2 April 1 October
2023 2022 2022
Notes GBP'000 GBP'000 GBP'000
Non-current assets
Intangible assets - 152 -
Property, plant and equipment and
right of use assets 10,961 12,477 11,197
Deferred tax asset 663 1,138 663
11,624 13,767 11,860
Current assets
Inventories 4,765 4,578 4,566
Trade and other receivables 8,137 12,487 9,331
Cash and cash equivalents 9 1,039 1,326 1,783
Current tax asset 58 435 58
13,999 18,826 15,738
Total assets 25,623 32,593 27,598
Current liabilities
Trade and other payables (7,342) (10,452) (9,477)
Borrowings - revolving credit facility 9 (1,907) - (2,407)
Lease liabilities 9 (526) (1,028) (839)
(9,775) (11,480) (12,723)
Non-current liabilities
Other payables (22) (62) (32)
Borrowings - revolving credit facility 9 - (4,000) -
Lease liabilities 9 (2,293) (1,732) (2,037)
Deferred tax liabilities (703) (1,066) (703)
(3,018) (6,860) (2,772)
Total liabilities (12,793) (18,340) (15,495)
Net assets 12,830 14,253 12,103
Equity
Share capital 10 1,933 1,553 1,553
Share premium account 10 1,699 - -
Translation reserve (259) (218) (265)
Retained earnings 9,457 12,918 10,815
Total equity 12,830 14,253 12,103
*A restatement of the Condensed Consolidated Statement of
Financial Position as at 2 April 2022 has been undertaken to
correct an error which related to the incorrect treatment of
certain contract accounting transactions (see Note 13).
Condensed Consolidated Statement of Changes in Equity
For the 26 weeks ended 1 April 2023
Share
Share premium Translation Retained Total
capital account reserve earnings equity
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Balance at 1 October 2022 (audited) 1,553 - (265) 10,815 12,103
Shares issued 380 1,699 - - 2,079
Share based payments - - - 42 42
Transactions with owners 380 1,699 - 42 2,121
Loss for the period - - - (1,400) (1,400)
Exchange differences arising on
retranslation of foreign operations - - 6 - 6
Total comprehensive income/(expense) - - 6 (1,400) (1,394)
Balance at 1 April 2023 (unaudited) 1,933 1,699 (259) 9,457 12,830
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
Prior period adjustment - - - (1,054) (1,054)
Restated* balance at 2 October
2021 (audited) 1,553 - (260) 14,730 16,023
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) (1,821)
Restated* balance at 2 April 2022
(unaudited) 1,553 - (218) 12,918 14,253
Condensed Consolidated Statement of Changes in Equity
(continued)
For the 52 weeks ended 1 October 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
Prior period adjustment - - - (1,054) (1,054)
Restated* balance at 2 October 2021
(audited) 1,553 - (260) 14,730 16,023
Share based payments - - - 122 122
Transactions with owners - - - 122 122
Loss for the period - - - (4,037) (4,037)
Exchange differences arising on translating
foreign operations - - (5) - (5)
Total comprehensive expense - - (5) (4,037) (4,042)
Balance at 1 October 2022 (audited) 1,553 - (265) 10,815 12,103
*A restatement of the Condensed Consolidated Statement of
Changes in Equity as at 2 October 2021 and 2 April 2022 has been
undertaken to correct an error which related to the incorrect
treatment of certain contract accounting transactions (see Note
13).
Condensed Consolidated Cash Flow Statement
For the 26 weeks ended 1 April 2023
Unaudited Unaudited Audited
26 weeks 26 weeks 52 weeks
ended ended ended
1 April 2 April 1 October
2023 2022 2022
GBP'000 GBP'000 GBP'000
Cash flows from operating activities
Loss after tax (1,400) (1,863) (4,037)
Adjustments for:
Depreciation of property, plant and
equipment 778 849 1,678
Finance costs - net 180 140 292
Amortisation of intangible assets - 64 101
Exchange differences 6 42 -
Profit on disposal of property, plant
and equipment - - (327)
Share option costs 42 51 122
Income tax (credit)/charge - (437) 52
Release of grants - - (66)
Changes in working capital:
Increase in inventories (199) (870) (859)
(Increase)/decrease in trade and other
receivables 1,194 (3,425) (269)
Increase/(decrease) in trade and other
payables (2,145) 4,799 4,132
Cash flows from operating activities (1,544) (650) 819
Finance costs paid net of interest income
received (180) (140) (292)
Corporation tax refunded - 414 138
Net cash (outflow)/inflow from operating
activities (1,724) (376) 665
Cash flows from investing activities
Purchase of property, plant and equipment (542) (364) (536)
Proceeds from disposal of fixed assets
and assets held for sale - 217 2,063
Net cash (outflow)/inflow from investing
activities (542) (147) 1,527
Financing activities
Repayment of lease liabilities (411) (595) (1,260)
New finance leases 354 - -
Repayment of borrowings (500) (773) (2,366)
Shares issued 2,079 - -
Net cash inflow/(outflow) from financing
activities 1,522 (1,368) (3,626)
Net decrease in cash and cash equivalents (744) (1,891) (1,434)
Cash and cash equivalents at beginning
of period 1,783 3,217 3,217
Cash and cash equivalents at end of
period 1,039 1,326 1,783
Notes to the Condensed Consolidated Interim Financial
Statements
1. General information
Pressure Technologies plc is incorporated in England and Wales
and is quoted on AIM, a market operated by the London Stock
Exchange.
These unaudited interim condensed consolidated financial
statements for the 26 weeks ended 1 April 2023 and were approved by
the Board of Directors on 26 June 2023.
These financial statements may contain certain statements about
the future outlook of Pressure Technologies plc. Although the
Directors believe their expectations are based on reasonable
assumptions, any statements about future outlook may be influenced
by factors that could cause actual outcomes and results to be
materially different.
2. Basis of preparation
The Group's unaudited interim results for the 26 weeks ended 1
April 2023 ("Interim Results") 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. As permitted, the Interim Results 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 interim condensed consolidated financial statements are
prepared under the historical cost convention as modified to
include the revaluation of certain financial instruments. 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 1 October
2022. The principal accounting policies of the Group have remained
unchanged from those set out in the Group's 2022 annual report and
financial statements. The Principal Risks and Uncertainties of the
Group are also set out in the Group's 2022 annual report and
financial statements and are unchanged in the period.
The financial information for the 26 weeks ended 1 April 2023
and 2 April 2022 has not been audited and does not constitute full
financial statements within the meaning of Section 434 of the
Companies Act 2006.
The Group's 2022 financial statements for the 52 weeks ended 1
October 2022 were prepared under UK-adopted International
Accounting Standards. The auditor's report on these financial
statements was unqualified 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.
3. Going concern
The Directors have considered whether the Group will be able to
meet its obligations as they fall due for the period of at least 12
months from the date of these Interim Results. These interim
condensed financial statements have been prepared on a going
concern basis.
The Group's current revolving credit facility (RCF) with Lloyds
Bank was amended in June 2023. The facility reduces from GBP1.9
million to GBP0.9 million on 30 September 2023 and now expires on
31 December 2023. The covenant test on 30 June 2023 has been waived
and the final testing date is 30 September 2023. The Board is
currently engaged in constructive discussions with potential
lenders in order to refinance the Lloyds Bank facilities and has a
reasonable expectation that new financing arrangements can be
secured before the expiry of the Lloyds Bank facility on 31
December 2023.
Management have produced forecasts for the period up to
September 2024 for all business units, taking account of reasonably
plausible changes in trading performance and market conditions,
which have been reviewed by the Directors. In particular, the
forecasts reflect both (i) the award of a major, multi-year
contract for the Chesterfield Special Cylinders division to supply
air pressure vessels for a major UK naval new construction program,
which was announced on 6 February 2023, and also (ii) the recent
significantly improved trading in the Precision Machined Components
division as oil and gas markets recover, following unprecedented
order intake levels which have resulted in an order book of GBP8.9
million at the end of May 2023, the highest order book level seen
in the last five years for the division. The base case forecast
demonstrates that the Group is projected to:
-- generate profits and cash in the current financial year and beyond;
-- has headroom in financial covenants over the period up to the
expiry of the Lloyds RCF on 31 December 2023; and
-- generates sufficient cash to repay the tranche of the RCF on
30 September 2023 and the final repayment of the facility on 31
December 2023 and has sufficient cash reserves beyond 31 December
2023 to manage without the RCF or an alternative financing
facility. While the level of cash reserves is low for the first
quarter of calendar year 2024, the level is forecast to improve
substantially for the remainder of the forecast period.
The Group has also developed downside scenarios, which include
consideration of the recent track record of not always achieving
budgets. The downside scenario demonstrates the Group's dependence
on the performance of large contracts (including the large
3. Going concern (continued)
naval contract) noted above due to their materiality to the
Group's overall results. Management have modelled the downside
scenario based on reasonably possible delays in the large naval
contract. By their nature, the achievement of performance
milestones under these types of contract can be subject to
uncertainties and delays have occurred on similar contracts in the
past. These uncertainties include in-house operational delays and
inefficiencies, delays in the supply of material and components by
suppliers and delays in the performance of work by subcontractors.
The Group often has limited control of the latter two factors. The
achievement of performance milestones enables the Group to
recognise revenue and profits under the contract and typically
initiates invoicing to, and subsequent cash collection from, the
customer.
As a result, these delays, whilst typically not impacting the
financial performance of the contract over its entire duration, can
lead to material delays in the timing of profit recognition and
cash receipts between periods. Given the size of the recent naval
contract, any delays and unforeseen events could have a material
impact on the Group's cash reserves and covenant compliance.
In the event of delays in the contract, the Group would look to
mitigate the impact, partially or fully, by pulling forward
contracted work from other customers and through normal working
capital management and other cash preservation initiatives. Work on
this contract has already commenced and, to date, whilst the
contract is progressing in line with our contractual commitments,
some minor delays have arisen, principally due to supply issues
with components from third parties and the work of
subcontractors.
Given the expiry of the RCF on 31 December 2023 and the step
down in its quantum in September 2023, the Group is currently
exploring several actions to strengthen the Group's financial
position. In particular, the Group is currently working with an
advisor to support the Group's review of funding options, including
asset-backed and alternative financing lenders, in order to replace
the Lloyds Bank RCF with new arrangements that will provide the
Group with increased facility headroom and flexibility. These
discussions are taking longer than was originally anticipated but
management expect these discussions to be completed by the time of
the expiry of the Lloyds Bank RCF on 31 December 2023. In addition
to pursuing these refinancing opportunities, the Group is also
currently exploring the refinancing of the Group's freehold
property at Meadowhall Road, Sheffield.
Other factors which could negatively impact the forecasts
include:
-- Failure to win additional contracts in the Chesterfield
Special Cylinders division for hydrogen energy projects due to
market factors outside the control of the Group;
-- Weaker revenue from Integrity Management deployments due to customer delays; and
-- The recent improvement in the Precision Machined Components
divisional revenue and order book not continuing going forward due
to weaker than expected oil and gas market conditions.
The Group believes that these factors are individually less
likely to be material to the achievement of the forecasts than
potential delays in the large naval contract, but in the event that
they occur, together with large naval contract delays, they may
have a negative impact on covenant compliance and cash flow at
certain test dates in the forecast period.
The possibility of material delays to the performance of
contracts (naval contract in particular) and a replacement
financing facility not yet being in place gives rise to material
uncertainties, as defined in accounting standards, relating to
events and circumstances which may cast significant doubt about the
Group's ability to continue as a going concern and to realise its
assets and discharge its liabilities in the normal course of
business.
Reflecting management's confidence in delivering large contracts
and successfully replacing their financing facility, the Group
continue to adopt the going concern basis in preparing these
interim condensed financial statements. Management have concluded
that the Group will be able to continue in operation and meet their
liabilities as they fall due over the period to September 2024.
Consequently, these financial statements do not include any
adjustments that would be required if the going concern basis of
preparation were to be inappropriate.
4. Segmental analysis of Revenue and Operating Loss
Revenue by destination Unaudited Unaudited Audited
26 weeks 26 weeks 52 weeks
ended ended ended
1 April 2 April 1 October
2023 2022 2022
GBP'000 GBP'000 GBP'000
United Kingdom 9,441 6,482 16,126
Europe 2,779 1,462 6,715
Rest of the World 1,545 1,548 2,098
13,765 9,492 24,939
Revenue by sector
Unaudited Unaudited Audited
26 weeks 26 weeks 52 weeks
ended ended ended
1 April 2 April 1 October
2023 2022 2022
GBP'000 GBP'000 GBP'000
Oil and Gas 4,938 3,105 7,953
Defence 7,211 5,047 13,483
Industrial 322 785 1,099
Hydrogen Energy 1,294 555 2,404
13,765 9,492 24,939
Revenue by activity
Unaudited Unaudited Audited
26 weeks 26 weeks 52 weeks
ended ended ended
1 April 2 April 1 October
2023 2022 2022
GBP'000 GBP'000 GBP'000
Cylinders 8,835 6,247 17,583
Precision Machined Components 4,930 3,245 7,356
13,765 9,492 24,939
4. Segmental analysis of Revenue and Operating Loss
(continued)
Revenue recognition
The Group's pattern of revenue recognition is as follows:
Unaudited Unaudited Audited
26 weeks 26 weeks 52 weeks
ended ended ended
1 April 2 April 1 October
2023 2022 2022
GBP'000 GBP'000 GBP'000
Sale of goods transferred at a point
in time 6,559 5,513 10,357
Sale of goods transferred over time 6,350 2,696 12,584
Rendering of services 856 1,283 1,998
13,765 9,492 24,939
Operating loss by activity
Unaudited Unaudited Audited
26 weeks 26 weeks 52 weeks
ended ended ended
1 April 2 April 1 October
2023 2022 2022
GBP'000 GBP'000 GBP'000
Cylinders 768 (250) 409
Precision Machined Components (181) (825) (1,100)
Manufacturing subtotal 587 (1,075) (691)
Unallocated central costs (1,103) (980) (1,933)
Operating loss before amortisation,
impairment and other exceptional costs (516) (2,055) (2,624)
Amortisation and impairment - (64) (101)
Other exceptional costs (note 6) (704) (41) (968)
Operating loss (1,220) (2,160) (3,693)
Finance costs (180) (140) (292)
Loss before taxation (1,400) (2,300) (3,985)
The Operating (loss)/profit by activity is stated before the
allocation of Group management charges, which are included within
'Unallocated central costs'.
5. Earnings before Interest, Taxation, Depreciation and
Amortisation (EBITDA)
Earnings before interest, taxation, depreciation, and
amortisation (EBITDA) is as follows:
Unaudited Unaudited Audited
26 weeks 26 weeks 52 weeks
ended ended ended
1 April 2 April 1 October
2023 2022 2022
GBP'000 GBP'000 GBP'000
Adjusted EBITDA (pre-exceptionals) 262 (1,206) (946)
Other exceptional costs (note 6) (704) (41) (968)
EBITDA (442) (1,247) (1,914)
Depreciation (778) (849) (1,678)
Amortisation and impairments - (64) (101)
Finance costs (180) (140) (292)
Loss before taxation (1,400) (2,300) (3,985)
6. Other exceptional costs
Items that are incurred outside the normal course of business
and/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 is as
follows:
Unaudited Unaudited Audited
26 weeks 26 weeks 52 weeks
ended ended ended
1 April 2 April 1 October
2023 2022 2022
GBP'000 GBP'000 GBP'000
Reorganisation and redundancy (201) (65) -
Refinancing of Group banking facilities (176) (344)
Professional fees in relation to banking
facilities (98) - -
Professional fees in relation to strategic
review of PMC (229) - -
Reversal of impairment/(impairment)
of inventory and work in progress - 89 (121)
Property costs - - (280)
Reversal of inventory provision - - 91
Final settlement for ERP system costs - - (193)
Historical contract settlement - - (88)
Other plc costs - (65) (33)
(704) (41) (968)
7. Taxation
Unaudited Unaudited Audited
26 weeks 26 weeks 52 weeks
ended ended ended
1 April 2 April 1 October
2023 2022 2022
GBP'000 GBP'000 GBP'000
Current tax credit - 435 58
Deferred taxation credit/(charge) - 2 (110)
Taxation credit/(charge) to the income
statement - 437 (52)
8. Loss per ordinary share
The calculation of basic loss per share is based on the loss
attributable to ordinary shareholders divided by the weighted
average number of shares in issue during the period.
The calculation of diluted loss per share is based on basic loss
per share, adjusted to allow for the issue of shares on the assumed
conversion of all dilutive share options.
Adjusted loss per share shows loss per share after adjusting for
the impact of amortisation charges, impairment charges and any
other exceptional items, and for the estimated tax impact, if any,
of those costs. Adjusted loss per share is based on the loss as
adjusted divided by the weighted average number of shares in
issue.
For the 26 week period ended 1 April 2023
GBP'000
Loss after tax (1,400)
Number of Shares
('000).
Weighted average number of shares - basic 36,134
Dilutive effect of share options 528
Weighted average number of shares - diluted 36,662
Loss per share - basic and diluted (3.9)p
The effect of anti-dilutive potential shares is not disclosed in
accordance with IAS 33.
The Group adjusted loss per share is calculated as follows:
Loss after tax (1,400)
Other exceptional items (note 5) 704
Theoretical tax effect of above adjustments (134)
Adjusted loss (830)
Adjusted basic loss per share (2.3)p
8. Loss per ordinary share (continued)
For the 26 week period ended 2 April 2022
GBP'000
Loss after tax (1,863)
Number of Shares
('000)
Weighted average number of shares - basic 31,067
Dilutive effect of share options 702
Weighted average number of shares - diluted 31,769
Loss per share - basic and diluted (6.0)p
The effect of anti-dilutive potential shares is not disclosed in
accordance with IAS 33.
The Group adjusted loss per share is calculated as follows:
Loss after tax (1,863)
Amortisation and impairments 64
Other exceptional items (note 5) 41
Theoretical tax effect of above adjustments (19)
Adjusted loss (1,777)
Adjusted basic loss per share (5.7)p
For the 52 week period ended 1 October 2022
GBP'000
Loss after tax (4,037)
Number of Shares
('000)
Weighted average number of shares - basic 31,067
Dilutive effect of share options 661
Weighted average number of shares - diluted 31,728
Loss per share - basic and diluted (13.0)p
The effect of anti-dilutive potential shares is not
disclosed in accordance with IAS 33.
8. Loss per ordinary share (continued)
The Group adjusted loss per share is calculated as follows:
For the 52 week period ended 1 October 2022
GBP'000
Loss after tax (4,037)
Amortisation 101
Other exceptional items (note 5) 968
Theoretical tax effect of above adjustments (203)
Adjusted loss (3,171)
Adjusted basic loss per share (10.2)p
9. Reconciliation of net debt
Unaudited Unaudited Audited
1 April 2 April 1 October
2023 2022 2022
GBP'000 GBP'000 GBP'000
Cash and cash equivalents 1,039 1,326 1,783
Bank borrowings (1,907) (4,000) (2,407)
Net bank borrowings excluding lease
liabilities (868) (2,674) (624)
Asset finance lease liabilities (1,386) (1,886) (1,364)
Right of use asset lease liabilities (1,433) (874) (1,512)
Net debt (3,687) (5,434) (3,500)
As at 1 April 2023, the Group's bank borrowings was a revolving
credit facility provided by Lloyds Bank with a drawn balance of
GBP1.9 million (1 October 2022: GBP2.4 million drawn) and an expiry
date of 31 March 2024. The revolving credit facility was amended in
June 2023 and now has an expiry date of 31 December 2023.
10. Called up share capital and share premium
Unaudited Audited Unaudited Audited
1 April 1 October 1 April 1 October
2023 2022 2023 2022
Share Share
Shares Shares Capital Capital
No. No. GBP'000 GBP'000
Allotted, issued and fully paid
Ordinary shares of 5p each 38,667,163 31,067,163 1,933 1,553
Share
Premium
GBP'000
Share Premium account
At 2 April 2022 and 1 October 2022 -
Shares issued 1,699
At 1 April 2023 1,699
On 6 December 2022, the Group issued 7,600,000 new ordinary
shares with a nominal value of 5p each, raising GBP2.1 million net
of expenses. Of this total, GBP1.7 million was allocated to the
share premium account.
11. Dividends
No final or interim dividend was paid for the 52-week period
ended 1 October 2022. No interim dividend is declared for the
26-week period ended 1 April 2023.
12. Related party transactions
There were no related party transactions in the 26 week periods
to 1 April 2023 and 2 April 2022.
13. Prior year adjustment - Restatement in respect of IFRS 15
"Revenue from Contracts with Customers"
During the preparation of the Annual Report & Accounts for
the year ended 1 October 2022, the Group reviewed its accounting
policy and past accounting treatment in respect of a small number
of long-term defence contracts within CSC.
Since FY19, the Group has consistently applied an accounting
treatment whereby revenue for these specific defence contracts was
recognised using an 'Output' methodology under IFRS 15, 'Revenue
from Contracts with Customers' ("IFRS 15"), with costs being
accrued to achieve a uniform profit margin throughout the
multi-year life of the contracts, resulting in cost deferrals at
financial period ends. Whilst this cost treatment impacted the
timing of profit recognition between financial periods, it had no
impact on either the total profitability of the contracts over
their entire lives, nor the quantum or timing of cash flows.
During the preparation of the Annual Report & Accounts for
the year ended 1 October 2022, it was noted that this accounting
treatment is not in compliance with IFRS 15, which requires that
all costs incurred in the period relating to the contract should be
immediately expensed. This means that cost deferral to achieve a
uniform contract profit margin, as historically adopted by the
Group, is not permitted.
13. Prior year adjustment - Restatement in respect of IFRS 15
"Revenue from Contracts with Customers" (continued)
As a result, the comparative period financial statements have
been restated. As at 2 October 2021 and 2 April 2022, the impact of
the restatement was to reduce total equity by GBP1,054,000. The
restatement had no impact on profit recognition in the 26 weeks
ended 1 April 2023 or the 26 weeks ended 2 April 2022.
These accounting adjustments only impact the timing of profit
recognition under these specific contracts. They do not impact the
net debt position of the Group at any date, the future cash
generation profile of the Group, nor the underlying trading or
operations of the business.
A copy of the Interim Report will be sent to shareholders
shortly and will be available on the Company's website:
www.pressuretechnologies.com .
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END
IR FFMRTMTMTBBJ
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June 27, 2023 02:00 ET (06:00 GMT)
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