TIDMPRES
RNS Number : 7017A
Pressure Technologies PLC
27 September 2022
Pressure Technologies plc
("Pressure Technologies" or the "Group")
Full-Year Trading Update
Pressure Technologies (AIM: PRES), the specialist engineering
group, provides a trading update for the 52 weeks ending 1 October
2022.
The results for the first half of the year, which were announced
on 28 June 2022, indicated an adjusted operating loss(1) of GBP2.1
million for the first half, but with a much stronger performance
expected for the second half of the year, on the basis of a strong
order book in the Chesterfield Special Cylinders division and an
expected recovery in order intake in the Precision Machined
Components division. However, whilst the second half of the year is
expected to show an adjusted operating profit(1) , the recovery has
been significantly below that anticipated at the half year and the
Group is now expecting to report an adjusted operating loss for the
full year.
Chesterfield Special Cylinders (CSC)
In CSC, progress on major defence contracts in the fourth
quarter was impacted by a combination of unexpected customer
delays, supply chain disruption and the unplanned outage of key
equipment, delaying significant revenue into the first half of
FY23. Similarly, several Integrity Management deployments planned
for the second half have been delayed by customers into FY23 and
beyond. Input costs from raw materials and energy-intensive
processes increased significantly throughout the year, further
impacting margins where the costs could not be recovered through
price escalations and permitted contract variations within the
period.
However, the outlook for CSC in FY23 remains positive, supported
by an order book of GBP5.9 million, major defence contract
placements expected in the first quarter, and a strong pipeline of
defence contracts, Integrity Management deployments and hydrogen
storage and transportation projects.
Hydrogen revenue for FY22 is expected to be GBP2.7 million
(2021: GBP2.2 million) and the current opportunities pipeline
underpins confidence in further significant hydrogen revenue growth
in FY23, weighted towards the second half of the year.
Precision Machined Components (PMC)
In PMC, there was an unexpected slowdown in order placement from
oil and gas customers over the summer period, which recovered later
in the fourth quarter. Together with supply chain delays and cost
increases, the temporary slowdown resulted in lower revenue and a
significantly greater adjusted operating loss(1) than anticipated
for the full year.
Order intake since the summer holiday period has been strong and
the PMC order book at the beginning of FY23 is expected to be
around GBP3.3 million (2021: GBP1.8 million). OEM customers
forecast continued recovery in demand for specialised components
for oil and gas exploration and production projects into 2023 and
beyond. This is reflected in the expected fourth quarter FY22 order
intake of around GBP3.0 million, the highest quarterly intake since
April 2020. The Board now expects PMC to return to profitability in
the second quarter of FY23.
Banking Facilities
The Group's revolving credit facility with Lloyds Bank currently
runs to 30 June 2023 and at the end of FY22 is expected to be fully
drawn at GBP2.4 million (2 October 2021: GBP4.8 million drawn). The
net debt position, which includes asset finance and right of use
lease liabilities, at the end of FY22 is expected to be around
GBP3.9 million (2 October 2021: GBP4.9 million).
As a result of the expected adjusted operating loss for the full
year, the Group now anticipates that it will not be able to meet
the requirements of the two existing financial covenants contained
within the current facility. These covenants relate to leverage and
interest cover and a first test is currently required at the end of
October based on full-year performance to 30 September 2022. The
Group is currently in constructive dialogue with Lloyds Bank
regarding these covenants and ongoing facility requirements.
Ernst & Young LLP continues to support the Group with the
review of funding options to replace the Lloyds Bank facility with
new arrangements that provide increased liquidity, greater
flexibility and the required working capital to support the Group's
strategic investment in CSC, in particular for growth opportunities
in hydrogen energy.
Outlook
Notwithstanding the disappointing trading performance for FY22,
the Board is confident in underlying market opportunities and
expects a return to profitability and positive cash generation in
FY23. The positive outlook for the Group in the medium and longer
term is underpinned by a strong defence orderbook and pipeline, the
completion of projects deferred from FY22, improving order
placement in PMC over recent weeks and exciting opportunities in
hydrogen storage and transportation.
1 Adjusted operating profit/(loss) is operating profit/(loss)
before amortisation, impairments and other exceptional costs
For further information, please contact:
Pressure Technologies plc Tel: 0330 015 0710
Chris Walters, Chief Executive PressureTechnologies@houston.co.uk
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
The information contained within this announcement is deemed by
the Company 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, as amended and supplemented from time to time.
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.
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END
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