PressureTechnologies - 2024 Full-Year Results
05/02/2025 07:20
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RNS Number : 9915V Pressure Technologies PLC 05 February 2025
5 February 2025
Pressure Technologies plc
("Pressure Technologies" or "the Company" or "the Group")
2024 Full-Year Results
Pressure Technologies plc (AIM: PRES), the specialist engineering group, is
pleased to announce its audited results for the 52 weeks to 28 September 2024
("FY24").
The audited Annual Report and Financial Statements will be published on the
Company's website today.
The operating divisions of the Group during this period were Chesterfield
Special Cylinders ("CSC") and Precision Machined Components ("PMC").
Following the end of FY24, the sale of the PMC division was completed, a
significant strategic milestone for the Group. The results of the PMC
division have been treated as a discontinued operation in the FY24 Statement
of Comprehensive Income with continuing operations representing the ongoing
CSC division and Group central costs.
Pro forma financial results (combined continuing and discontinued operations)
● Group revenue of £31.9 million (2023: £32.0 million)
● Gross profit down 17% to £7.5 million at 23% margin (2023: £8.9 million at
28% margin)
● Adjusted EBITDA(1) of £0.6 million (2023: Adjusted EBITDA of £2.1 million)
● Adjusted operating loss(2) of £0.9 million (2023: Adjusted profit of £0.6
million)
● Reported loss before tax of £2.3 million (2023: loss of £1.1 million)
● Reported basic loss per share of 6.3p (2023: loss per share of 1.8p); Adjusted
basic loss per share(3) of 4.5p (2023: earnings per share of 0.8p)
● Net debt(4) of £1.4 million (2023: £2.4 million); Net borrowings, excluding
asset finance lease liabilities and right of use asset lease liabilities of
£0.9 million (2023: £nil)
Financial results (statutory - continuing operations)
● Group revenue decreased 28% to £14.8 million (2023: £20.7 million)
● Gross profit down 47% to £3.7 million at 25% margin (2023: £7.0 million at
34% margin)
● Adjusted EBITDA(1) loss of £0.9 million (2023: Adjusted EBITDA profit of
£2.0 million)
● Adjusted operating loss(2) of £1.7 million (2023: Adjusted profit of £1.2
million)
● Reported loss before tax of £2.7 million (2023: loss of £0.3 million)
● Reported basic loss per share of 6.1p (2023: loss per share of 0.1p); Adjusted
basic loss per share(3) of 4.7p (2023: earnings per share of 2.4p)
● Net debt(4) of £1.4 million (2023: £1.0 million); Net borrowings, excluding
asset finance lease liabilities and right of use asset lease liabilities, of
£0.9 million (2023: £0.2 million)
1 Adjusted EBITDA is earnings / loss before interest, tax, depreciation,
amortisation and other exceptional costs
2 Adjusted operating profit / loss is operating profit/loss before
amortisation and other exceptional costs
3 Adjusted basic earnings / 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 and excludes net
debt of PMC (asset held for sale)
Group highlights
● The Group refinanced debt facilities with Lloyds Bank in November 2023 by
arranging a new term loan facility of £1.5 million with major shareholders
Rockwood Strategic plc and Peter Gyllenhammar AB
● The sale of PMC completed in October 2024 for an initial enterprise value of
£6.2 million and initial cash consideration of £4.8 million. Potential for
additional consideration up to £1.5 million based on PMC's FY25 performance.
Sale proceeds used to repay the term loan in full
● Trading performance was mixed across the two divisions during the year, with
PMC reporting strong financial performance, while CSC was impacted by
operational delays and delayed order placement
Chesterfield Special Cylinders
● Revenue of £14.8 million (2023: £20.7 million) was weaker than expected due
to delayed order placement and the deferral of defence revenues into FY25
● Defence revenue of £11.1 million (2023: £17.2 million) was the main driver
behind a reduction in gross margin to 25% (2023: 34%), as CSC passed peak
activity on high-value UK defence contract milestones
● Hydrogen revenue of £1.7 million (2023: £2.1 million) was lower than
expected, reflecting delayed order placement for new contracts now expected in
the first half of FY25
● Operational improvements underpinned throughput of 23 road trailer retesting
and recertification (2023: 11 deliveries) and a step change in efficiency and
margins, across an expanded customer base
● High-value Integrity Management revenue increased by 60% to £2.4 million
(2023: £1.4 million), including revenue from defence customers at £1.9
million (2023: £1.2 million)
● Further growth in Integrity Management revenue expected for UK and European
defence deployments in FY25. Additionally, enquiry levels from offshore
services customers present steady growth opportunities
● Operational improvements in the Sheffield facility continue to deliver
increased capacity and efficiency to support growth plans
Precision Machined Components
● Revenue increased 52% to £17.1 million (2023: £11.3 million), delivering an
Adjusted EBITDA of £1.5 million (2023: £0.1 million)
● Consistently strong financial and operational performance in much improved
market conditions underpinned the successful sale of the division to Raghu
Vamsi Machine Tools in October 2024
Strategy and outlook
● Sale of PMC focuses Group on growth and development of CSC, strengthens
balance sheet and removes exposure to cyclical oil and gas market
● Group structure aligned to support CSC growth plans, reduced central cost of
£0.9 million (FY24: £1.7 million)
● Significant revenue growth expected in FY25, with a return to Adjusted EBITDA
profitability for the full year after central costs
● Recent strategically significant order for supplier qualification and delivery
to the US naval submarine programme. This key milestone highlights CSC's
global credentials and opens new market opportunities
● Recent announcements of UK and European funding for hydrogen projects support
potential for sustained growth in hydrogen storage and transportation. Major
contract awards anticipated in Q1 and Q2 2025
● Integrity Management services are well positioned for further strong growth in
established defence and emerging hydrogen energy markets
● Ambition demonstrated through clear medium-term financial targets to FY28,
based on visible market opportunities and improved operational readiness to
support growth
● Rebranding of Pressure Technologies plc as Chesterfield Special Cylinders
Holdings plc, for approval at the AGM, proudly recognising a pre-eminent
history and an exciting outlook for the business
Chris Walters, Chief Executive of Pressure Technologies plc, commented:
"In a year of significant strategic progress, the sale of our PMC division was
a key milestone, focusing the Group on the growth and development of
Chesterfield Special Cylinders, strengthening our balance sheet and removing
the exposure to cyclical oil and gas markets.
With today's backdrop of geopolitical tensions and increasing global defence
budgets, the long-term outlook for naval newbuild and refit programmes is
strong. As a trusted supplier of safety-critical pressure systems to navies
and defence contractors worldwide, we are well positioned to realise
high-value revenue growth from these visible long-term UK and overseas
newbuild programmes, as evidenced through major contract wins in 2024 and
early 2025.
After several years of slow development in the hydrogen energy market, a
strong commitment from the UK government to ambitious domestic decarbonisation
targets has been demonstrated through recent project awards under the Net Zero
Hydrogen Fund and Hydrogen Allocation Round funding mechanisms. In the
European Union, the Alternative Fuels Infrastructure Regulation is expected to
accelerate the rollout of hydrogen refuelling networks across the region.
Now developing quickly, the hydrogen energy market presents an exciting growth
opportunity for us in the supply and lifecycle support of hydrogen storage
systems and road trailers over the next five years, and we expect contract
awards for UK and European projects in the first half of 2025, delivering
revenues in FY25 and FY26.
Our expert Integrity Management services continue to gain momentum in
established UK defence markets and are now well positioned for growth across
European naval fleets. The offshore services market presents steady growth
opportunities over the medium term, while mandatory in-situ and in-factory
retesting and recertification of hydrogen storage systems and road trailers
presents longer-term prospects as installed fleets expand.
With a simplified Group structure, stronger balance sheet and a clear ambition
for growth over the medium term, the Board remains focused on positioning the
business to maximise shareholder value."
For further information, please contact:
Pressure Technologies plc Tel: 0333 015 0710
Chris Walters, Chief Executive company.secretary@pressuretechnologies.co.uk
Singer Capital Markets (Nomad and Broker) Tel: 0207 496 3000
Rick Thompson / Asha Chotai
COMPANY DESCRIPTION
Pressure Technologies plc is based in Sheffield and operates through its wholly owned subsidiary Chesterfield Special Cylinders ("CSC").
For more information on Pressure Technologies, please visit
www.pressuretechnologies.com (http://www.pressuretechnologies.com)
CSC is a market leading designer, manufacturer and supplier of safety-critical, high-pressure containment products and services to a global customer base in the defence, hydrogen energy, oil & gas and industrial markets.
For more information on CSC, please visit
www.chesterfieldcylinders.com (http://www.chesterfieldcylinders.com)
Chair's statement
Pressure Technologies plc (the "Company") and its subsidiaries (together "the
Group") are recognised as market-leading suppliers of safety-critical,
high-pressure containment and flow control products and services to an
international customer base in defence, energy and industrial markets.
This Annual Report & Financial Statements covers the financial year ended
28 September 2024 ("FY24"). The operating divisions of the Group during this
period were Chesterfield Special Cylinders ("CSC") and Precision Machined
Components ("PMC"). Following the end of FY24, on 8 October 2024, the sale
of the PMC division was completed, a significant strategic milestone for the
Group. The results of the PMC division have been treated as a discontinued
operation in the FY24 Statement of Comprehensive Income with continuing
operations representing the ongoing CSC division.
On a pro-forma basis, from the combined continuing operations of CSC and
discontinued operations of PMC, overall Group revenue was £31.9 million
(2023: £32.0 million) and Adjusted EBITDA, post central costs, was £0.6
million (2023: Adjusted EBITDA of £2.1 million). Adjusted EBITDA is defined
as earnings / loss before interest, tax, depreciation, amortisation and
exceptional costs.
Sale of PMC
PMC was acquired by Raghu Vamsi Machine Tools Private Limited ("Raghu Vamsi"),
a manufacturer of specialised precision engineered components based in India,
for an initial enterprise value of £6.2 million and initial cash
consideration of £4.8 million. The Group is also eligible to receive
additional cash consideration of up to £1.5 million from Raghu Vamsi,
dependent on the future performance of PMC. The value of any additional cash
consideration will be calculated on the basis of the audited Adjusted EBITDA
of PMC for the year ending 30 September 2025 and would be payable during the
first calendar quarter of 2026.
The Board is pleased to have secured a strategic buyer for PMC, with the
initial consideration providing good value for the division. We look forward
to seeing the continued progress of PMC under Raghu Vamsi's ownership, where
plans for its strategic development present exciting opportunities for PMC's
customers and employees.
The proceeds of the sale strengthened the balance sheet of the Group and
facilitated the repayment of its term loan facility. The sale provides the
foundation and management focus to deliver on strategic and operational
priorities at CSC to support development and growth opportunities in defence
and hydrogen energy markets both in the UK and internationally.
Chesterfield Special Cylinders (continuing operations)
Order intake for CSC was £13.1 million (2023: £24.6 million), primarily
driven by UK and overseas defence customers. The CSC order book at the end of
the year was £9.5 million (2023: £11.3 million).
Revenue from CSC was £14.8 million (2023: £20.7 million) and Adjusted EBITDA
was £0.8 million (2023: Adjusted EBITDA of £3.9 million). The performance of
CSC was weaker than expected, driven by delayed defence order placement and
the deferral of defence revenues into FY25, lower than expected order intake
from the hydrogen energy market, and operational challenges in the year,
including unplanned downtime on process-critical equipment in the first
quarter. Lower revenue and operational activity were the main drivers of the
lower-than-expected profitability.
In addition to being the sole supplier of large high pressure storage
cylinders to the UK's submarine and surface ship programmes, CSC is the
established long-term supplier to the French submarine constructor, Naval
Group, for both their domestic and export programmes.
In March 2024 CSC secured the order for pressure vessels for the first phase
of the Royal Australian Navy's Hunter class frigate programme and in October
2024 the order for the first phase of the Royal Canadian Navy's River class
destroyer programme. CSC is pursuing other similar overseas opportunities and
most significantly we have just announced an order from General Dynamics
Electric Boat (GDEB) to supply the US Navy's submarine construction programme.
CSC's Integrity Management services business performed well in the year.
Revenue from these periodic inspection, testing and recertification services
was £2.4 million (2023: £1.4 million), driven by UK defence deployments.
Further strong progress is expected for Integrity Management services in FY25
for UK and overseas deployments.
The emerging market for hydrogen storage and transportation presents a growth
opportunity over the longer term and CSC remains well positioned. However,
order placement by established and new customers was slower than expected
during FY24 due in large part to the delay in confirmation of UK government
funding for initial major projects due to the general election.
As part of its 2024 Autumn budget, the new UK government confirmed over £2
billion in funding for eleven green hydrogen production projects of up to
125MW capacity under the first Hydrogen Allocation Round (HAR1). These
projects will be among the first commercial-scale green hydrogen projects
anywhere in the world. Together with the 875MW HAR2 programme currently open
for applications and the Net Zero Hydrogen Fund (NZHF) Strands 1 and 2
confirmed in February 2024, these domestic projects present significant
opportunities for CSC over the next five years.
CSC expects to secure a major contract for large-scale static hydrogen storage
under NZHF Strand 2 funding in the first quarter of 2025 and a further major
contract under HAR1 funding in the second quarter of 2025. We are also bidding
to supply storage systems for several European hydrogen refuelling station
projects, where we anticipate an order in the first quarter of 2025.
The market outlook for periodic inspection, testing and recertification of
hydrogen storage systems and road trailers remains strong over the medium and
longer term and CSC is well established and positioned for growth with
existing and potential new customers.
Precision Machined Components (discontinued operations)
PMC delivered a significant turnaround in performance, reporting revenue of
£17.1 million (2023: £11.3 million) and Adjusted EBITDA of £1.5 million
(2023: Adjusted EBITDA of £0.1 million). Performance in the year was
consistently strong and underpinned the successful sale of the division to
Raghu Vamsi in October 2024. The loss for the period from discontinued
operations (PMC) was £0.1 million (2023: loss of £0.7 million), giving a
Total Group loss for the period of £2.4 million (2023: £0.7 million).
Group continuing operations
In the FY24 Statement of Comprehensive Income, Group results represent the
continuing operations of CSC less Group central costs of £1.7 million (2023:
£1.9 million). Revenue from continuing operations was £14.8 million (2023:
£20.7 million) and the Adjusted EBITDA loss was £0.9 million (2023: Adjusted
EBITDA profit of £2.0 million). The loss for the period from continuing
operations was £2.3 million (2023: £nil), exceptional costs of £0.7 million
(2023: £1.2 million), finance costs of £0.3 million (2023: £0.3 million),
and a tax credit of £0.3 million (2023: £0.3 million).
Following the sale of PMC, Steve Hammell, Chief Financial Officer, stepped
down from the Board and left the Group on 31 October 2024, having implemented
significant improvements in the Group's financial controls and reporting
during his tenure. This executive management change recognises the
considerable reduction in the scale and complexity of Group operations
following the sale of PMC. Action has been taken to reduce central costs
accordingly from £1.7 million to £0.9 million in FY25.
On 1 November 2024, the Group announced that Sally Millen had been appointed
Director of Finance in a non-Board position. Sally is a Chartered Accountant
with over 15 years' experience in senior finance roles and has been Financial
Controller for Pressure Technologies since 2022, playing a key role in the
implementation of significant improvements to the Group's financial
management, controls and reporting.
Strategy
Recent developments are transformational for the Group;
· The sale of PMC removes exposure to the cyclical oil and gas
markets and resolves the Group's historic financing and balance sheet
challenges
· The recent order from GDEB for the US Navy programme
significantly augments CSC's potential international and UK defence market
· The recent announcements of UK and EU funding for hydrogen
projects underpin the potential for sustained growth in hydrogen storage and
transportation activity. Major contract awards are anticipated in Q1 and Q2
2025
· The strong growth recorded in our Integrity Management business
in FY24 demonstrates the potential for further strong growth in support of
known defence and hydrogen opportunities
Accordingly, we are today announcing new targets for FY28 as follows;
· Deliver revenue over £30 million
· Double high-value overseas defence sales to underpin a 40%
increase in overall defence sector revenue
· Grow hydrogen sales to 30% of total revenue, through new-build
static storage and trailer projects
· Double Integrity Management service sales through growth in
existing UK and new overseas markets
· Maintain 30% of revenue from high-value lifecycle support
services, including in-situ Integrity Management and factory-based retesting
and recertification
· Deliver sustainable Adjusted EBITDA Group margins above 12% (CSC
above 15% before central costs)
Proposed change of Company name
Reflecting the recent transformation of the Group, we are also announcing the
intention to change the Company name to Chesterfield Special Cylinders
Holdings plc, with the associated new stock market ticker of "CSC" This change
will be subject to shareholder approval at the Company's Annual General
Meeting to be held in March 2025.
Outlook
During FY24, CSC passed the peak of activity on high-value UK defence contract
milestones and the revenue profile will transition towards overseas defence
programmes and the hydrogen energy market over the medium term, with strong
recovery expected in UK defence contracts from FY28.
For FY25, the Board anticipates a significant increase in CSC revenue over
FY24 levels, albeit with a higher proportion of lower-margin hydrogen related
revenue weighted towards the second half of the year reflecting current and
anticipated contract wins. This should result in the Group returning to
Adjusted EBITDA profitability after central costs for the full year, an
important first step towards the achievement of FY28 targets. The Board
remains focused on addressing the issue of central costs and positioning the
business to maximise shareholder value.
Nick Salmon
Chair
5 February 2025
Strategic report
Overview - Pressure Technologies plc
We work in close collaboration with our customers who require unique solutions
when developing and manufacturing engineered products and systems for use in
harsh operating environments. We continue to build on our unrivalled 120 years
of engineering heritage, by hiring and developing highly skilled engineers and
operatives who have the creativity and ingenuity required to solve complex
design and manufacturing challenges. This differentiates us from competitors,
and we are committed to continuously investing in people and technologies to
position the company at the forefront of engineering excellence.
Chesterfield Special Cylinders (continuing operations)
Chesterfield Special Cylinders ("CSC") has over a century of industry
knowledge and expertise and is a world-leading supplier of specialised,
safety-critical high-pressure gas containment products and services. CSC is
one of only five companies globally which can compete for ultra large cylinder
contracts to meet the demanding safety and performance standards specified for
defence, hydrogen, energy and industrial markets.
High-pressure cylinders and storage packages from CSC are a critical component
in many end user applications, including several high-pressure systems on
naval submarines and surface vessels, safety systems on fighter jets, hydrogen
storage and transportation for refuelling and energy supply, air pressure
vessels in offshore motion compensation systems, breathing air systems on dive
support vessels and bulk storage and transportation of industrial gases.
Integrity Management services is a growing part of the CSC business, where
safety-critical cylinders cannot be removed for period maintenance and are
inspected and certified 'in-situ', minimising operational disruption and
increasing system availability. Factory inspection, testing and
reconditioning services extend the life of bulk gas storage systems and road
trailers to meet demanding safety requirements and mandatory
recertification. These services have been built on CSC's unrivalled industry
knowledge and OEM experience.
All product design and manufacturing work is undertaken at CSC's facility in
Sheffield, UK. Integrity Management teams deploy to projects in the UK and
overseas, working onshore and offshore.
Precision Machined Components (discontinued operations)
The Precision Machined Components ("PMC") division manufactures highly
specialised components for use in safety-critical subsea and surface flow
control applications, serving global oil and gas OEM customers through its
Al-Met, Roota Engineering and Martract operations in the UK.
The post-Covid recovery in the oil and gas market which benefitted the PMC
division during FY23 and FY24. Whilst traditional energy markets will continue
to play a key role in funding the transition to clean energy over the medium
term, a strategic decision was taken that these markets would not be
prioritised for investment.
The Board announced in October 2023 its decision to divest the PMC division
and launched the sale process in December 2023. In October 2024, following the
end of the FY24 financial year, the PMC division was sold to Raghu Vamsi
Machine Tools Private Limited, a manufacturer of specialised precision
engineered components based in India. Results for PMC have been shown as a
discontinued operation.
Our purpose, vision and strategy
The purpose, vision and strategy of the Group are focused on the future
development and growth of Chesterfield Special Cylinders.
Our purpose
To design, manufacture and support through life products and services that
deliver value for customers in three key areas:
· Safety - meeting demanding international standards for safety in
design and manufacture, enabling customers to meet their safety
responsibilities
· Performance - innovative and cost-effective designs, delivered on
time, enabling customers to meet their operational goals
· Assurance - through-life support to maximise system availability
and maintain compliance with safety and operational requirements
Our vision
To be the market leading supplier of gas storage and transportation systems
and services to customers who operate globally in demanding, safety-critical
environments where the consequences of system failure could be catastrophic.
In so doing, we will create value for our customers, our shareholders and
other stakeholders.
Building on our proud 120-year heritage to develop and grow our brand through
the motivation and commitment of our engaged and empowered workforce.
By FY28, our target is to:
· Deliver revenue over £30 million
· Double high-value overseas defence sales to underpin a 40%
increase in overall defence sector revenue
· Grow hydrogen sales to 30% of total revenue, through new-build
static storage and trailer projects
· Double Integrity Management service sales through growth in
existing UK and new overseas markets
· Maintain 30% of revenue from lifecycle support services,
including in-situ Integrity Management and factory-based retesting and
recertification
· Deliver sustainable Adjusted EBITDA Group margins above 12% (CSC
before central costs above 15%)
Our strategy
Following the sale of PMC, the Group's strategy is to focus on CSC and its
development and growth in the global defence and hydrogen energy markets.
The challenging geopolitical climate, highlighted by the Russia-Ukraine war,
widening conflict in the Middle East and tensions elsewhere in the world, is
expected to underpin medium-term defence spending commitments and drive growth
and investment in defence capabilities for the UK and its major international
allies over the longer term. The Board expects this outlook to drive demand
for CSC's core products and services over the medium and long term from UK and
overseas defence contractors, in support of submarine and surface ship new
construction programmes.
The transition to clean energy sources by leading global economies over the
next two decades is a major geopolitical and economic theme that the Board
sees as presenting potential growth opportunities for CSC. Strong support
and funding commitments from UK and European governments to clean energy
projects, including green hydrogen production is expected to drive demand
growth for CSC in hydrogen storage and transportation products and services
from FY25.
Serving regulated markets where design and operational safety standards for
products and services are demanding and governed by mandatory testing and
inspection regimes, CSC is well positioned to grow its Integrity Management
services for in-situ recertification of pressure systems and its factory
reconditioning and recertification services for transportable storage and road
trailers.
The medium-term strategy of the Group can be summarised as follows:
● FY24: Divest PMC, transition CSC
o PMC sale agreed in September 2024, completed in October 2024, shortly
after year-end
o Deliver existing UK defence contract milestones
o Develop relationships further with US, French and other global defence
prime contractors
o Increase focus on UK hydrogen opportunities, position for
government-funded Net Zero Hydrogen Fund Strand 2 and HAR1 projects
o Grow and develop Integrity Management services across UK defence market
o Increase output, efficiency and margins on factory periodic inspection and
testing services
o Reorganise and upgrade factory efficiency, workflow and safety focus to
enable throughput in hydrogen cylinders, trailers and defence volumes through
2028 and beyond to be accommodated within the existing factory site
o Align Group central functions and costs to support the future growth of
CSC
● FY25: Reposition CSC, qualify to supply overseas defence
programmes, secure UK hydrogen opportunities, grow trailer volumes in both UK
and Europe
o Use PMC sale proceeds to repay term loan and strengthen CSC balance sheet
o Qualify as critical supplier to major US defence contractor and position
for new orders
o Drive stronger margins from UK and European defence contract milestones
o Secure major contracts to supply hydrogen static storage packages to UK
NZHF Strand 2, HAR1 and HAR2 projects
o Launch competitive hydrogen road trailer products and secure new orders
from UK and European customers
o Develop European customer relationships to secure hydrogen refuelling
station contracts
o Invest in Integrity Management resources and skills to support growth in
UK and European markets
o Secure new Integrity Management contracts for European defence customers
● FY26: Secure UK and overseas defence contracts, expand hydrogen
opportunities pipeline, build capability
o Secure major UK, US and European defence contracts to support growth from
FY27
o Deliver UK Strand 2, HAR1 and HAR2 hydrogen projects, build opportunities
pipeline for FY27 and beyond
o Secure hydrogen road trailer orders
o Deliver Integrity Management contracts for European defence customers and
grow opportunities pipeline
o Accelerate growth for Integrity Management services in hydrogen energy
market
o Build operational capability, efficiency and resilience in line with
growth in defence and hydrogen markets
● FY27-FY28: Accelerate growth in hydrogen and defence markets,
drive profitability and cash
o Deliver first US defence contract milestones and secure follow on orders
o Drive margin growth from new major defence contracts with UK and European
customers
o Deliver HAR2 hydrogen projects and build opportunities pipeline
o Deliver hydrogen road trailers and build opportunities pipeline
o Expand hydrogen energy revenues in the UK and Europe, building on proven
capability and market growth
o Expand Integrity Management services to international defence customers
Markets
UK Defence & Global Defence
What is happening in the market? What does this mean for us?
Defence spending continues to be driven by the response of Western nations to As a pre-eminent supplier of high-pressure gas storage systems to NATO members
the Russia-Ukraine conflict, increasing instability in the Middle East and and NATO-friendly state navies, CSC has long-term contracts to supply bespoke
wider geopolitical tension, including the threat to critical subsea assets. products and services for conventional and nuclear submarine and surface ship
Commitments made within NATO to increase defence budgets. programmes in the UK and overseas.
In November 2022, the UK government announced that it would maintain the CSC is currently in discussions for future UK and overseas naval contracts
national defence budget of at least 2% of GDP and in 2024 it has allocated which would support manufacturing activity to 2040 and beyond, including the
2.3% of GDP. Looking ahead, the government further committed to a defence well-publicised SSN-AUKUS programme, for which CSC expects to commence early
budget of 2.5% of GDP by 2030. design and manufacturing stages from 2027.
The UK Ministry of Defence (MoD) has also confirmed a commitment to maintain Sole supplier to UK Royal Navy newbuild programmes through prime contractors
its nuclear deterrent while modernising conventional naval assets in the BAE Systems and Babcock, CSC is also a long-term supplier to French
fleet. shipbuilder Naval Group for domestic and export newbuild programmes.
The SSN-AUKUS submarine programme of nuclear-powered attack submarines to In January 2025, CSC was awarded a strategically significant contract to
replace the Astute-class is fundamental to the trilateral agreement with the supply safety-critical pressure vessels to the US defence prime contractor,
United States and Australia. The programme is already driving investment in General Dynamics Electric Boat (GDEB), the company responsible for the design,
skills training and jobs in the UK, with £4 billion committed to the design construction and lifecycle support of submarines for the US Navy.
phase.
The contract award covers supplier qualification and the delivery of pressure
Global defence-spending has seen a sharp increase during 2024 and is expected vessels to GDEB in 2026 and provides a foundation for future growth and
to continue growing, with a significant number of naval new construction development in the US naval defence market, where ongoing nuclear submarine
programmes starting and many more in the design and planning stages. new construction programmes are planned to run through to 2043.
The US, Australia, Canada and France remain committed to long-term investment Although the phasing of defence project milestones and contract revenues can
programmes. The US Columbia-class and Virginia-class programmes are active and fluctuate significantly between and within financial years, there is good
already involve the use of UK approved supply chain. medium and long-term visibility of vessel construction programmes and planned
defence expenditure from navies and their prime contractors.
CSC is the principal supplier of inspection and testing services to the UK MoD
for through-life cylinder performance and safety management on various classes
of nuclear submarine.
CSC has current opportunities to supply European navies with these inspection
and testing services, typically having been the OEM for onboard pressure
systems when the submarines or surface ships were built.
Hydrogen energy
What is happening in the market? What does this mean for us?
The global hydrogen energy market is developing quickly, underpinned by the CSC is well positioned to supply products and services to the growing hydrogen
potential to support decarbonisation in transport, power and industrial market, primarily in the UK and Europe.
applications. At the end of 2024, more than 1,500 hydrogen projects had been
announced globally, with an estimated $680 billion of investment planned The development of smaller localised hydrogen refuelling station
through to 2030, according to the J.P. Morgan 2024 Green Economy Outlook. infrastructure has slowed since 2020, driven by supply chain constraints, a
limited supply of green hydrogen and lower than expected demand from the
Domestically, Prime Minister. Sir Keir Starmer MP has said "Some nation will heavy-goods transport sector.
be the first to harness hydrogen power. Why not Britain?", and in the November
2024 Budget, Chancellor, Rachel Reeves, guaranteed £5.1 billion in funding The shift to large-scale hydrogen production projects such as those now
for green hydrogen and CCUS projects - the first time any UK Government supported by the UK's NZHF Strands 1 and 2 funding from February 2024 and more
allocated resources to these sectors in the Red Book. recent HAR funding programmes will seek to address green hydrogen supply
issues in line with national clean energy targets.
The new Government remains fully committed to its ambitious decarbonisation
targets and sees investment and job creation in the low carbon economy as a Hydrogen production projects will require different types and sizes of
core route to achieving its Growth Mission. The Labour manifesto also contains pressurised storage and transportation system. CSC is in discussion with UK
commitments to "rebuild supply chains at home" and growing manufacturing in HAR1 and HAR2 developers where its Type 1 steel cylinders are required for
net zero technologies. In this context, it is aiming to increase green static storage and road trailer applications and remains well positioned to
hydrogen production to 10GW by 2030, up from the previous administration's 6GW secure projects in early 2025 for delivery later that year and into 2026 and
target, and increase levels of UK content used by hydrogen developers and 2027.
offtakers.
The first projects under HAR are likely to progress cautiously through 2025
The strategic choice made by the UK Government to resolve the 'chicken and and 2026, as developers take care with the implementation of new technologies
egg' challenge of hydrogen is to first stimulate private investment in and the integration of system components from a wide range of suppliers.
production of the molecule. This strategy is being delivered via the Net Zero
Hydrogen Fund (NZHF) Strands 1 to 4 and Hydrogen Allocation Rounds (HAR), CSC hydrogen revenues are expected to be relatively flat through this period
which are attracting global energy companies such as Trafigura, RWE, bp and driven by the number of UK and European contracts opportunities. Once
Marubeni to develop projects in the UK due to the generous terms of the developers have proven concepts under HAR1, UK demand for storage systems and
subsidy. road trailers is expected to grow strongly from 2027 onwards.
Several of the eleven HAR1 are expected to reach FID this year, with the first Demand for hydrogen tube trailer periodic inspection, testing and
projects operational in 2026. The Government has also re-committed to publish recertification increased strongly during 2024, after steady growth in 2023.
the shortlist for HAR2 projects (which will total up to 875MW of capacity, up CSC continues to expand its customer base of gas majors and independent
from 125MW in HAR1) soon. The Government have signalled HAR rounds 3-7 will be operators in this market, which has been supported by improved operational
around 750MW each. efficiencies and margins.
In January 2025, the Government demonstrated its long-term commitment to This area is expected to grow steadily during 2025 due to increasing demand
further annual Hydrogen Allocation Rounds across this decade by publishing a for bulk hydrogen transportation, with CSC being one of very few suppliers of
consultation on plans to fund the Hydrogen Production Business Model (HPBM) this specialised safety-critical service.
subsidy via a new levy on gas shippers. This is another critical part of
building the framework for long-term development of the UK hydrogen market. A major contract for large-scale storage under NZHF Strand 2 funding is
expected in the first quarter of 2025 and a further major contract under HAR1
funding is expected in the second quarter of 2025. We are also bidding to
supply storage systems for several European hydrogen refuelling station
projects where an order is anticipated in the first quarter of 2025.
What is happening in the market? What does this mean for us?
In Europe, the Alternative Fuels Infrastructure Regulation (AFIR) is seeking Over the longer term to 2050 and beyond, large-scale hydrogen transportation
to accelerate the deployment of hydrogen refuelling networks for heavy-duty is expected to be predominantly by pipeline and some high-density bulk storage
vehicles across the region and came into effect from April 2024. Member may move to liquefied hydrogen, but a demand for pressurised buffer storage
states are required to install refuelling stations at regular intervals by and road trailer transportation is expected to remain.
2030.
While the demand for new pressurised storage and transportation systems may
Despite these positive developments, the hydrogen energy market has reduce as pipeline infrastructure expands, there will remain a strong market
experienced slower-than-expected growth since 2020, in part due to supply for CSC in the periodic inspection and testing of the installed fleets of
chain constraints with electrolysers and gas compression systems and the cylinders, generating a repeat high-value revenue stream over the longer-term.
uncertainty caused by cost inflation challenges that have impacted final
investment decisions and the unit price of delivered hydrogen for consumers.
Industrials
What is happening in the market? What does this mean for us?
The market for bulk gas storage and transportation has a diverse customer Specialised new build opportunities for high-volume industrial gas storage are
base, including industrial gas majors, higher education and scientific ad hoc and provide strong margin opportunities, while in-situ and factory
research bodies, civil nuclear and conventional power plants and specialised inspection, testing and reconditioning services have been identified as a
applications, including space programmes. moderate growth area for CSC.
Offshore services (oil & gas and offshore renewables)
What is happening in the market? What does this mean for us?
The market for offshore services includes products and services related to oil These sectors rely on specialised high-pressure gas storage systems. CSC has
and gas exploration, production, and support, as well as offshore renewable traditionally played a role in in delivering safety-critical cylinder packages
energy developments like wind farms. and providing in-situ and factory-based periodic inspection and testing
services in this highly regulated market.
The oil and gas market is characterised by deepwater and ultra-deepwater
exploration and production, requiring robust and reliable solutions for Applications include:
operations under extreme conditions.
· Motion compensation systems of offshore installations, including the
The offshore renewables sector, particularly wind energy, is expanding supply of air pressure vessels for new build projects and the provision of
rapidly. Floating wind turbines and wave energy systems, increasingly spares and periodic inspection services through life.
supporting green hydrogen production, are key growth areas.
· Diving support systems, including the supply of new safety-critical
Major OEM customers are reporting a positive outlook for UK and European breathing air storage packages and the periodic inspection, testing and
project developments for the foreseeable future. upgrading of installed systems.
The demand for Integrity Management services is forecast to increase steadily
for diving support vessels, offshore installations and floating cranes over
the next few years.
Business review
Group
FY24 was a year of significant strategic progress for the Group. As the sale
of the PMC division moved forward positively in the second half of the year
and completed in the first week of FY25, a key strategic milestone was
delivered.
Given the sale of the PMC division subsequent to year end, and this division
representing a separate major business line of the Group, it has been treated
as a discontinued operation with its results for the current and prior
financial periods being separately disclosed as a single line on the face of
the Comprehensive Income Statement from the continuing segment of the
business. Further details of the trading results of the PMC division for the
year have been shown in Note 1 to the Consolidated Financial Statements.
Trading performance was mixed across the two divisions during the year. PMC
reported strong financial and operational performance in much improved market
conditions, as order intake developed consistently throughout the year,
supporting the sale process. Performance in CSC was impacted by operational
delays and the deferral of defence contract revenues during the first half of
the year, while the second half was further impacted by later than anticipated
order placement and project delays.
For Group continuing operations, revenue was £14.8 million (2023: £20.7
million) and the Group Adjusted EBITDA loss was £0.9 million (2023: EBITDA
profit of £2.0 million), reflecting the results of CSC less Group central
costs of £1.7 million (2023: £1.9 million).
The loss for the period from continuing operations was £2.3 million (2023:
£nil), exceptional costs of £0.7 million (2023: £1.2 million), finance
costs of £0.3 million (2023: £0.3 million), and a tax credit of £0.3
million (2023: £0.3 million). The loss for the period from discontinued
operations (PMC) was £0.1 million (2023: loss of £0.7 million), giving a
Total Group loss for the period of £2.4 million (2023: £0.7 million).
The exceptional costs related principally to legal and corporate finance
advisory fees relating to the sale of PMC which completed shortly after year
end, and arrangement fees for a term loan taken out after the repayment of the
revolving credit facility with Lloyds Bank in November 2023.
Chesterfield Special Cylinders (continuing operations)
£ million 2024 2023 2022 2021 2020
Revenue 14.8 20.7 17.6 18.9 11.2
Defence 11.1 17.2 13.5 11.1 5.1
Hydrogen Energy 1.7 2.1 2.4 2.2 0.2
Oil & Gas 0.4 0.9 1.0 0.3 1.0
Industrial 1.6 0.5 0.7 5.3 4.9
Gross margin 25% 34% 26% 30% 26%
Adjusted EBITDA 0.8 3.9 1.1 2.6 0.5
Operating profit / (loss) before amortisation, impairments and exceptional 0.1 3.1 0.4 2.0 (0.1)
costs
('Adjusted profit / (loss')
Chesterfield Special Cylinders ("CSC") delivered revenue of £14.8 million
(2023: £20.7 million) and Adjusted EBITDA of £0.8 million (2023: £3.9
million). The division reported Adjusted operating profit of £0.1 million
(2023: £3.1 million). This lower-than-expected performance was driven by the
deferral of UK defence contract revenues into future years and by operational
delays, including unplanned downtime on process-critical equipment in the
first quarter, impacting delivery of finished products across the first half
of the year. Second-half performance was impacted by later than expected
defence and hydrogen order placement, which are now expected in the first half
of FY25.
Order intake was £13.1 million (2023: £24.6 million), supporting a year-end
order book of £9.5 million (2023: £11.3 million).
The significant decrease in defence revenue, down 35% on prior year, was the
main driver of the reduction in gross margin to 25% (2023: 34%), as CSC passed
the peak of activity on high-value UK defence contract milestones. Demand
from UK defence contracts is expected to grow significantly from FY28, driven
by the SSN-AUKUS Astute replacement programme. In the meantime, CSC will
continue to focus on the delivery of the existing defence order book and
remains well positioned for growth in global defence markets from FY27.
This positioning was confirmed in January 2025, when CSC was awarded a
strategically significant contract to supply safety-critical pressure vessels
to the US defence prime contractor, General Dynamics Electric Boat (GDEB), the
company responsible for the design, construction and lifecycle support of
submarines for the US Navy. The landmark contract award covers supplier
qualification and the delivery of pressure vessels to GDEB in 2026 and
provides a foundation for future growth and development in the US naval
defence market, where ongoing nuclear submarine new construction programmes
are planned to run through to 2043.
Revenue for Integrity Management field services was £2.4 million (2023: £1.4
million), including revenue from defence customers at £1.9 million (2023:
£1.2 million). Further growth is expected for UK and European defence
deployments in FY25.
Growth opportunities for Integrity Management services more generally remain
strong in key markets of defence, offshore services, power generation and
industrial ground storage. Enquiry levels from offshore services customers
continued steadily during FY24, driven by strong activity in the market to
support offshore oil and gas projects. Integrity Management services are
expected to provide strong recurring revenues at attractive margins from the
second quarter of FY25 and remain a key strategic priority for future growth.
Revenue from hydrogen projects was lower than expected in the year at £1.7
million (2023: £2.1 million), reflecting delayed order placement for new
hydrogen storage contracts now expected in the first half of FY25. Hydrogen
revenues in the year also reflect the delivery of a record 23 road trailer
reconditioning orders (2023: 11 deliveries).
The customer base for road trailers also expanded significantly during FY24,
with the addition of Air Products, Air Liquide and Airflow to the established
BOC fleet refurbishment programme and several independent operators. The
growing road trailer opportunity reflects the increasing demand for the
flexible and cost-effective transportation of hydrogen, in which CSC is well
placed to deliver solutions for established operators and new entrants.
CSC remains well positioned to supply static storage solutions to the growing
hydrogen markets in the UK and Europe. A major contract for large-scale
storage under NZHF Strand 2 funding is expected in the first quarter of 2025
and a further major contract under HAR1 funding is expected in the second
quarter of 2025. We are also bidding to supply storage systems for several EU
hydrogen refuelling station projects, where an order is anticipated in the
first quarter of 2025.
In addition, in-situ testing and factory reconditioning of hydrogen storage
and transportation systems present exciting growth opportunities for CSC in
the UK and Europe.
Precision Machined Components (discontinued operations)
£ million 2024 2023 2022 2021 2020
Revenue 17.1 11.3 7.3 6.4 14.2
Oil and Gas 16.4 10.9 6.9 5.7 13.9
Industrial 0.7 0.4 0.4 0.7 0.3
Gross margin 22% 17% 11% 11% 17%
Adjusted EBITDA 1.5 0.1 (0.3) (0.8) 0.2
Operating (loss) / profit before amortisation, impairments and exceptional 0.8 (0.6) (1.1) (1.6) (0.7)
costs ('Adjusted profit / (loss)')
Precision Machined Components ("PMC") delivered revenue of £17.1 million
(2023: £11.3 million) and Adjusted EBITDA of £1.5 million (2023: Adjusted
EBITDA of £0.1 million).
The division reported an adjusted operating profit of £0.8 million (2023:
adjusted operating loss of £0.6 million). This is an encouraging performance
during a critical recovery period for the oil and gas sector and positions the
division well for further growth in FY25.
Order intake was £12.1 million (2023: £18.4 million), a decrease of 34%,
reflecting the record intake levels in FY23 that provided order book through
into FY24. This supported a strong year-end order book of £3.9 million (2023:
£9.4 million), although lower than prior year due to exceptional intake
levels during FY23, providing strong revenue visibility into FY25.
At Roota Engineering, the demand for subsea well intervention tools, valve
assemblies and control module components continued to grow strongly during the
year as major OEM customers Expro, Halliburton, Schlumberger and Aker
continued to report strong subsea development orders backlogs and a stable
market outlook for 2025, principally from South America, West Africa, US Gulf
of Mexico, Middle East and North Sea regions. The growth of Roota revenue and
profitability was 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. This supported
a significant step-up in activity levels at Roota throughout FY24 with strong
and consistent margins reported across a more diverse product range.
Al-Met remained focused on the delivery of record orders for key customers
Schlumberger and Baker Hughes and on the steady improvement of operational
performance, efficiency and competitiveness to deliver a profitable second
half of the year.
Roota Engineering, Martract and Al-Met operations are very well positioned for
continued progress under the new ownership of Raghu Vamsi Machine Tools, where
plans for strategic development and growth present exciting opportunities for
the combined businesses, their global customers and their employees.
Central Costs
£ million 2024 2023 2022 2021 2020
Cash costs (1.7) (1.9) (1.7) (1.7) (1.4)
Depreciation (0.1) (0.1) (0.2) (0.2) (0.2)
Operating loss (1.8) (2.0) (1.9) (1.9) (1.6)
Central costs include the following items:
· the employment costs of the Board of Directors;
· the employment costs of central staff who undertake group-wide
activities;
· administration costs incurred by Directors and central staff;
· the regulatory costs of operating as a public limited company
quoted on the London Stock Exchange; and
· depreciation of assets held centrally.
Central cash costs decreased to £1.7 million in the year (2023: £1.9
million) due to reductions in employee costs and recharges to other group
companies. Throughout FY24 and following the sale of PMC in early FY25 further
actions were taken to significantly reduce FY25 Group central costs to £0.9
million (2024: £1.7 million).
Financial review
Revenue & profitability
Group revenue from continuing operations (CSC) of £14.8 million was 28% less
than last year (2023: £20.7 million) due primarily to lower levels of
defence-related activity. Gross profit was £3.7 million at 25% margin (2023:
£7.0 million at 34% margin).
Overhead costs at £5.4 million were 7% lower than last year (2023: £5.8
million) due to cost savings in response to lower defence-related activity.
The Group reported an adjusted operating loss on continuing operations of
£1.7 million (2023: adjusted operating profit of £1.2 million) in the year.
Adding back depreciation charges of £0.8 million (2023: £0.8 million), the
Group delivered an Adjusted EBITDA loss of £0.9 million in the year (2023:
Adjusted EBITDA profit of £2.0 million).
Exceptional costs
Exceptional costs of £0.7 million (2023: £1.2 million) were incurred in the
year, principally for legal and corporate finance advisory fees relating to
the sale of PMC which completed shortly after year-end, and arrangement fees
for a term loan taken out after the repayment of the revolving credit facility
with Lloyds Bank in November 2023.
Impairment review
The Group tests annually for impairment, in accordance with IAS 36, if there
are indicators that intangible or tangible fixed assets might be impaired.
The impairment methodology identifies two Cash Generating Units ("CGU's")
within the Group, being CSC and PMC. Each CGU is assessed for potential
indicators of impairment, including internal or external factors or events
that could reduce the recoverable value of the fixed assets of the Group. If
indicators of impairment are identified, a full impairment review is
undertaken to determine the recoverable amount of the CGU.
The recoverable amount of a CGU is determined using a discounted cashflow
model that is based upon a five-year forecast period. The forecast takes into
account the firm order book, sales pipeline and market opportunities of the
CGU, together with expected gross margin performance and consideration of the
cost base, planned capital expenditure and estimated working capital needs of
the CGU. A long-term growth assumption is applied beyond the five-year
forecast period. The future cashflows are then discounted to a present,
recoverable value by applying a risk-adjusted pre-tax discount rate.
In accordance with IFRS 5, the Group was required to test the PMC division for
impairment on its reclassification to an asset held for sale as at 28
September 2024.
An impairment review was undertaken for each of CSC and PMC. The review
concluded that no impairment was required at a Group level, however an
impairment of £2.3 million was required in relation to PMC at a parent entity
level.
Taxation
The tax credit for Group continuing operations in the year was £0.3 million
(2023: tax credit of £0.3 million). The current year tax credit was
principally due to the losses incurred in the Group which were not utilised
for group relief. It was further reduced by non-deductible exceptional costs
and the excess of depreciation over capital allowances.
Corporation tax refunded in the year totalled £6,000 (2023: £0.4 million).
The reduction was due to Chesterfield Special Cylinders Limited making a
significant profit in 2023, and therefore claiming deductible R&D tax
credits instead of cash in arrears.
Loss per share
Basic loss per share from continuing operations was 6.1 pence (2023: loss per
share 1.8 pence). Allowing for add-back of exceptional costs, adjusted loss
per share was 4.7 pence (2023: adjusted earnings per share of 0.8 pence).
Dividends
No dividends were paid in the year (2023: £nil) and no dividends have been
declared in respect of the year ended 28 September 2024 (2023: £nil).
Operating cash flow, capital expenditure and cash flow before financing
Operating cash flow was £2.0 million (2023: £1.2 million), arising primarily
from Adjusted EBITDA of £0.6 million (2023: Adjusted EBITDA of £2.1 million)
and working capital inflows of £1.4 million (2023: outflows of £1.2
million). Key movements within working capital in the year included the
reduction of stock across the PMC division as WIP balances at the end of FY23
were realised during FY24.
Capital expenditure in the year was £0.4 million (2023: £0.6 million)
incurred principally to replace plant and equipment for productive use.
Proceeds from the disposal of fixed assets was £0.1 million (2023: £0.2
million).
Allowing for exceptional costs of £1.5 million (2023: £1.3 million), finance
costs of £0.5 million (2023: £0.4 million) and corporation tax refunds of
£6,000 (2023: £0.4 million), cash flow before financing was an inflow of
£0.2 million (2023: outflow of £0.5 million).
Financing and liquidity
The cash balance from continuing operations at 28 September 2024 was £0.1
million (2023: £0.9 million). The reduction in cash of £0.8 million in the
year arose from the inception of the new term loan of £1.5 million, the cash
inflow before financing of £0.2 million, the repayment of borrowings of £1.4
million, and the repayment of lease liabilities of £0.7 million. A balance of
£0.4 million was also transferred to the discontinued operation held for
sale.
Net debt from continuing operations at 28 September 2024 was £1.4 million
(2023: £2.4 million). The decrease in net debt of £1.0 million is
principally due to the transfer of lease liabilities of £1.7 million to the
discontinued operation held for sale, partially offset by the £0.4 million of
cash also transferred. Prior to the transfer, during FY24 there were new lease
liabilities of £0.7 million, partially offset by the cash inflow before
financing of £0.2 million.
During the year, on 14 November 2023, the Group exited its existing debt
facilities provided by Lloyds Banking Group by arranging a new term loan
facility of £1.5 million with Rockwood Strategic plc and Peter Gyllenhammar
AB, two of its major shareholders. The new term loan was committed for a
period of 5 years and was secured against the assets of the Group. Repayments
of £0.5 million were made during the year with the balance fully repaid
subsequent to year end in October 2024, following the sale of PMC.
In conjunction with the provision of the new term loan, Rockwood and
Gyllenhammar were issued with 1,933,358 warrants in aggregate (representing 5%
of the issued share capital) to subscribe for ordinary shares in the Company
at a price of 32 pence per share, representing a 20% premium to the closing
share price on 23 October 2023 (being the day prior to the announcement of the
new facility). The warrants may be exercised at any time in the 5 years
following drawdown of the new facility and continue to be exercisable
notwithstanding that the facility was repaid in October 2024 before its final
expiry.
Going concern
These financial statements have been prepared on the going concern basis. The
Directors have prepared financial projections for the period to March 2026,
and these demonstrate that the Group can operate and meet its financial
obligations as they fall due.
As a result of the sale of the PMC division just after year end, the
projections include the proceeds of the disposal and are based on the
operations of the ongoing CSC division only.
The base and downside case projections recognise that the Group remains
dependent on the profitability of CSC which is itself largely dependent on
revenues from major defence contracts for UK and overseas customers. During
the projected period to March 2026, CSC is expected to undergo a period of
transition, with revenue from UK defence contracts falling and revenue from
the hydrogen energy market and overseas defence customers expected to
increase. Over the short term, this is expected to result in lower revenues
and earnings for CSC, which have been factored into the financial
projections.
Due to the significance of revenues from UK hydrogen projects in the base case
and the history of delays in this market, the Directors have developed the
downside scenario to account for reasonably plausible delays to the placement
of major hydrogen orders. The Directors believe that any material delays to
hydrogen contracts will give sufficient time to take mitigating actions and
adjust operating costs and capital expenditure plans to maintain cash
generation, as illustrated by the financial projections for the downside
case.
In addition to the projections for the base and downside cases, management has
modelled sensitivities to the projected performance. These additional
sensitivities account for the following risks to revenue, profit and cash
generation in the projection period:
· Delayed Integrity Management deployments resulting from changes
by the customer; and
· Later than forecast defence contract milestones, resulting from
customer delays; and
· In-house operational delays and inefficiencies, delays to the
supply of material and components by suppliers, and delays in the performance
of work by subcontractors.
In the event of these sensitivities occurring, 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.
Reflecting management's confidence in delivering large UK defence contracts
and winning new hydrogen contracts and having repaid in full its term loan
facility in October 2024, the Directors have concluded that the Group does
have sufficient financial resources to meet its obligations as they fall due
for the next twelve months and no material uncertainty relating to Going
Concern has been identified.
Key performance indicators
The Board uses Key Performance Indicators ("KPIs") when assessing the
performance of the Group. These KPIs are divided into two sections -
financial KPIs and non-financial KPIs.
Financial KPIs
The Board monitors the following financial KPIs:
Revenue Growth and Operating Margin
Revenue growth is defined as the annual year-on-year change in revenue.
Adjusted operating profit / (loss) is operating profit / (loss) before
amortisation, impairments and exceptional costs. Operating margin is defined
as adjusted operating profit divided by revenue. The trend of this KPI over
the last 5 years for continuing operations is as follows:
£ million 2024 2023 2021 2020
2022
Revenue (continuing operations) 14.8 20.7 17.6 18.9 11.2
Annual revenue growth % -28.3% 17.5% -6.8% 68.8% -19.1%
CSC adjusted operating profit / (loss) (continuing operations) 0.1 3.1 0.4 2.0 (0.1)
CSC operating margin % 0.7% 15.0% 2.3% 10.6% -0.9%
Group adjusted operating profit / (loss) (continuing operations) (1.7) 1.1 (1.5) 0.1 (1.7)
Group operating margin % -11.5% 5.3% -8.5% 0.5% -15.2%
Group Order Intake
Annual order intake represents a strong indicator of future workloads:
£ million 2024 2023 2021 2020
2022
Group order intake (continuing operations) 13.1 24.6 15.7 16.0 11.1
Non-Financial KPIs
The Board reviews a number of non-financial KPIs including the volume of
accidents, near misses and reportable safety incidents, staff utilisation and
attrition, energy consumption and environmental impact measures.
The Board places particular emphasis on health and safety and environmental
performance. Experienced safety managers with recognised HSE training cover
all operational sites, reporting through divisional management to the Chief
Executive, ensuring that the Group employs best practice, drives continuous
safety improvement and fulfils all statutory requirements.
The Board has noted:
● the Group had one reportable safety incident (RIDDOR) in FY24
(CSC); and
● the Group has zero reportable environmental incidents in the 5
years up to September 2024.
Statement by the Directors in performance of their statutory duties in
accordance with s172(1) Companies Act 2006
The Directors of Pressure Technologies plc consider, both individually and
together, that they have acted in a manner, in good faith, that would be most
likely to promote the success of the Company for the benefit of the members as
a whole in the decisions taken during the 12 months ended 28 September 2024,
having due regard to the interests of its stakeholders and the matters set out
in s172(1)(a-f) Companies Act 2006, including the:
● likely consequences of any decisions in the long term;
● interests of the Company's employees;
● need to foster the Company's business relationships with
suppliers, customers and others;
● impact of the Company's operations on the community and
environment;
● desirability of the Company maintaining a reputation for high
standards of business conduct; and
● need to act fairly as between members of the company.
In discharging our statutory duties, we acknowledge that decisions we make
will not necessarily result in a positive outcome for all of our stakeholders.
By considering our vision, values and strategic priorities, whilst operating
robust governance processes, we aim to ensure that our decisions are well
considered and consistent.
The Board fully recognises that long-term growth and profitability are
enhanced when businesses behave in a sustainable and responsible manner, with
respect for all stakeholders. The Group's stakeholders include shareholders,
customers, employees, suppliers, government, regulators, industry bodies and
the communities in which we operate.
Moreover, the Directors have actively engaged with these stakeholders using a
variety of methods in the period, applying the information obtained to drive
decisions on the execution of its strategy. The principal stakeholders engaged
during the year, and the methods used, were shareholders, customers,
employees, suppliers and government, regulators & industry bodies and
environmental responsibility & community engagement, as follows:
Shareholders
The Board aims to behave responsibly towards our shareholders and to treat
them equally and fairly. We are focussed on the delivery of value to our
shareholders. Having demonstrated resilience during the challenging conditions
of recent years, including the Covid-19 pandemic, depressed oil and gas
markets and the Russia-Ukraine conflict, we are now in a strong position to
execute our value-creation strategy.
The Company held an Annual General Meeting in March 2024 to directly engage
with all shareholders. In addition, Executive Directors meet periodically with
the Group's major shareholders and also engage with smaller shareholders.
Harwood Capital LLP, a major shareholder, appointed a representative to the
Board in May 2023. Feedback obtained from investor meetings is reviewed by the
Board and used in the formulation and execution of strategy. The Executive
Directors also host and attend events for new and existing private investors,
including accommodating investors who wish to visit its manufacturing sites.
Customers
Our customers are pioneers in what they do. We work in close collaboration
with them to develop technical solutions for their engineering needs and
produce products that can be trusted to perform in environments where failure
would be catastrophic. Customer feedback helps us measure customer
satisfaction. Customer satisfaction and loyalty are crucial factors that
determine our financial performance and we look to improve this constantly.
Building and nurturing trusted customer relationships and maintaining open
channels of communication ensures that customers:
● receive the information they require;
● are consulted on matters relevant to them;
● are heard and their needs actioned; and
● feedback is collected and reviewed in a structured manner.
The Board has regard to this information in making decisions regarding capital
investment, workforce size and distribution, production planning and
continuous improvement initiatives.
Employees
Committed, well trained, highly skilled and motivated employees are at the
heart of our business. We strive to create a working environment where our
employees can fulfil their potential by providing clear organisational purpose
and objectives, appropriately structured incentive schemes and by providing
training and career development opportunities, including a commitment to our
apprenticeship programme. We get the best from our people by nurturing our
unique culture reflected in our 4 core values:
● We put people first;
● We deliver to the highest standard;
● We work with each other; and
● We innovate and create the future.
It is the policy of the Group to communicate with employees through site-based
employee forums and by regular briefing meetings conducted by senior
management to promote a long-term perspective of the business. We also
undertake periodic employee engagement surveys using a structured
questionnaire to gather employee feedback that is used to evolve the culture
and practices of the Group.
These communication methods provide a two-way flow of information between
senior management and employees, providing valuable insight into the
perspective and interests of employees. The Board has regard to this
information in making decisions in relation to pay levels for specific
employee groups, Company-wide pay reviews, updating of terms and conditions,
investment in site facilities and amenities, investment in health & safety
and in provision of training and career development opportunities.
The Group operates a number of employee incentive schemes including
performance-related bonuses covering all staff grades.
Suppliers
We build and maintain strong, long-term relationships with our suppliers. A
robust supply chain is critical to the delivery of our products/services
on-time, on-cost and on-quality.
We have continued to focus on strengthening our supplier relationships and
performance during the year, with key initiatives including:
● Measurement of supplier quality and on-time delivery
performance;
● Proactive engagement led by dedicated supplier relationship
managers who ensure that any issues are dealt with promptly and hold regular
meetings to review supplier performance and the outlook for demand; and
● Establishment of collaboration and long-term supply agreements
with key suppliers.
The information gathered from supplier engagement is used by the Board in
making decisions in relation to supplier payment policies, capital investment
and health & safety policies.
Government, Regulators & Industry Bodies
As a technical leader in our field, we contribute to the development of
technical, safety and operational standards that relate to the products we
design and manufacture:
● We engage periodically with local and national government
representatives and have encouraged visits to our sites;
● We participate regularly in expert working groups with industry
and regulatory bodies; and
● We communicate regularly and openly regarding policies that
relate to the sectors we are involved in.
The Board has regard to this information in making decisions in relation to
product development, regulatory compliance and health & safety
investments.
Environmental Responsibility & Community Engagement
The Group complies with all relevant environmental regulations and is
committed to the continuous improvement of its environmental management
system. Specifically, the Group has established measurable environmental
objectives that are communicated to all employees and seeks to reduce waste
and energy use and prevent acts of pollution.
The Group also continues to support local charities and employees who
individually raise money or volunteer for charities.
The Board of Directors uses the information obtained from stakeholder
engagement to ensure that management operate the business in a responsible
manner, meeting the high standards of business conduct and governance expected
by our stakeholders. The objective is to protect and enhance the reputation of
the Company in its local community and the markets it chooses to serve,
In formulating and executing its strategy, the Board considers the likely
consequences of decisions in the long-term, promoting the long-term stability
and prosperity of the Group.
Principal risks
The principal risks identified by the Board, and the change in the risk
outlook in the year, are described below:
Risk and impact Status and management strategy to mitigate Change
1. Global economic conditions and market volatility
Macroeconomic factors ● The Group maintains close contacts with its customers to ensure
we have a full understanding of their likely future orders.
The global economy has experienced only modest levels of growth during the ⇎
year with the impact of inflation and elevated energy prices moderating. This
has also underpinned the improving resilience of supply chains. (no change)
Moreover, the continuation of the Russia-Ukraine conflict and instability in
the Middle East have reinforced the importance of investment in national
defence and raised concerns over longer-term energy security, driving recovery
in traditional energy markets that utilise fossil fuels.
These macro factors have driven activity in UK and global defence markets and
underpinned a stable oil price, supporting investment levels in the oil &
gas and clean energy sectors.
Market sectors ● Reduced revenues from high-value UK defence contracts from FY25 ⇎
to FY27, mitigated by growth in global defence revenues from FY27, before UK
The Group serves the four key market sectors of defence, hydrogen, industrials projects restart from FY28. (no change)
and offshore services through CSC continuing operations.
● The sales and business development focus areas are to develop
Whilst the defence and offshore services (oil & gas, plus offshore new relationships in two key sectors - global defence and hydrogen.
renewables) sectors have benefitted from the macro trends noted above, it
should be noted that defence spending on major naval build programmes is ● We continue to make progress with a number of global defence
variable over time and that the Group's work on current major UK defence opportunities to mitigate our exposure to the UK defence spending cycle.
programmes has passed a peak until the next major programme expected from
FY28. ● The hydrogen economy offers strong long-term prospects across a
broad range of projects and expanding customer base.
The emergence and growth of the hydrogen economy was slower than expected
during the year but is still expected to account for a greater share of Group ● We are also focused on increasing revenues from recurring
revenue moving forward, underpinned by strong government support in the UK and periodic inspection and testing services in defence, hydrogen and other
Europe. markets to mitigate the risk of phased new build spending.
Foreign exchange ● Natural hedges are in place for the predominant currencies the ⇎
Group is exposed to, and all foreign currency trading is completed by Group
A proportion of the Group's business is carried out in currencies other than treasury, including forward exchange contracts when appropriate. (no change)
Sterling. To the extent that there are fluctuations in exchange rates, this
may have an impact on the Group's financial position or results. ● The Group typically quotes for business on a short quote expiry
and where appropriate will include price escalation clauses to limit exposure
to fluctuations in foreign currencies.
2. Governmental policy, regulation, legislation and compliance
Government policies ● The recent change of UK government may impact domestic defence ⇑
programme spending over the medium-term, impacting demand for the Group's
Revenue generated from defence contracts is impacted by government policies products. However, the current UK government commitment is to steadily (risk increase)
which the Group may not be able to influence. increase defence spending through to 2030.
Recent government policy has been to support higher levels of spending on ● The new UK government's stance on hydrogen energy appears to be
defence, especially following the start of the Russia-Ukraine conflict. very supportive, with established HAR funding rounds progressing, although
However, the Covid-19 pandemic and the subsequent energy crisis resulted in a slower than expected.
very significant increase in government borrowing which may have a negative
impact on the government's ability to meet this commitment. ● Recent increases in business taxes introduced by the new UK
government. Significant increases in Capital Gains Tax rates may depress
The recent change of UK government may result in amendments to tax and investment. Significant increases in Employer's National Insurance rates
employment policies that could affect the business e.g. R&D tax credit will increase labour and supply chain costs, impacting prices, margins and
regime, worker representation and rights. recruitment.
Health and Safety ● The Group is accredited to international ISO standards for HSE ⇎
and has an established HSE management system and site-based teams with Group
The Group operates heavy industrial manufacturing facilities and therefore has oversight. (no change)
a fundamental duty to protect its people and other stakeholders from harm
whilst conducting its business. ● Managers and appointed safety officers have completed recognised
HSE training.
● Senior management monitors and reviews HSE performance during
weekly and monthly management meetings, taking actions to address trends or
key findings.
● HSE performance is reviewed regularly by the Board and HSE
maturity is reviewed quarterly against target levels for operational sites.
3. Market conditions and commercial relationships
Contract risk ● Commercial management skills and processes have been ⇓
strengthened considerably in CSC.
Failure to adequately manage contract risk and, as a result, commit to
(risk reduction)
obligations which the Group is unable to meet without incurring significant ● Onerous legacy contracts have either ended or been renegotiated
unplanned costs. with more favourable terms.
● Authority for the approval of major contract terms and
conditions rests with the executive management team or is delegated according
to Group policies.
● Major contract performance is reviewed in senior management
meetings against time, cost and quality goals
Customer concentration ● Divestment of PMC has further concentrated the Group's customer ⇑
base to CSC customers only.
Customer concentration for CSC is high and our relationships with key
(risk increase)
customers could be materially adversely affected by several factors, ● Key account management is a focus for CSC and we have a history
including: of strong customer relationships and customer retention.
● a customer decision to diversify or change how, or from whom, ● Recent recruitment has strengthened the focus and structure of
they source components that we currently provide; customer management processes in CSC.
● an inability to agree on mutually acceptable pricing; ● Expanding the defence customer base to include new overseas
prime contractors will reduce existing UK defence customer dependency.
● performance against contractual commitments;
● The growth of the hydrogen energy business in the CSC division
● a significant dispute with the Group. should result in lower customer concentration and diversify away from the
traditional defence and industrial customer base
If the Group was unable to enter similar relationships with other customers on
a timely basis, or at all, our business could be materially adversely
affected.
Supplier concentration in CSC division ● Five-year supply and cooperation agreements established with key ⇎
steel suppliers during 2021
The majority of seamless steel tube used in the manufacturing of ultra-large
(no change)
high-pressure cylinders has historically been sourced from two key suppliers ● Strengthened supplier management and procurement activities
in mainland Europe. through recruitment of specialist supply chain management capability will
support the evaluation of alternative seamless tube supply to reduce the risks
There are few alternative suppliers globally that can match the cost, quality of single source dependency.
and lead times of these two European steel tube mills.
● Strategic collaboration with a key European steel tube supplier
There could be a significant disruption to the CSC business in the event that to develop joint product and service opportunities in target markets,
one or both companies became unable to supply tube. including defence, industrial bulk gas storage and hydrogen energy.
4. Financial
Funding and liquidity ● The Group makes use of long-term finance lease arrangements ⇓
where appropriate.
In October 2024, subsequent to the end of FY24, the Group completed the sale
(risk reduction)
of the PMC division for an enterprise value of £6.2 million and raised net ● Repayment of Lloyds Bank loan facility in FY24 and shareholder
cash proceeds at completion of £4.4 million (£4.8 million initial cash term loan in FY25 leaves the Group with no ongoing loan obligations.
consideration, less £0.4 million agreed locked-box adjustment).
● Cashflow forecasts are reviewed on a weekly basis using
These proceeds have been utilised to repay the term loan raised from two major information from the CSC division facilitating robust planning of cash
shareholders last year and to pay transaction costs. conversion, working capital investment and liquidity.
The balance of the proceeds is intended to provide working capital flexibility ● Increased commercial focus in CSC regarding payment terms with
for CSC during the transitional periods of FY25 and FY26 and to support growth customers for long-term contracts.
in the hydrogen energy business.
There still remains a level of risk in relation to financial resources and
liquidity levels of the Group, including:
● Group earnings during FY25 and FY26 impacted by lower revenues
from high-value defence contracts, in favour of lower margin hydrogen
projects;
● new hydrogen orders are susceptible to project delays;
● increased working capital requirements to support hydrogen
market growth;
● operational performance in CSC.
5. Availability and use of key resources
Leadership ● Leadership and senior management have been substantially ⇎
re-shaped over the last three years.
As a publicly quoted SME, the Group is dependent on a small number of
(no change)
executives to provide strategic, financial, operational and governance ● Chris Webster, Chief Operating Officer joined the Group in April
leadership, to deliver business performance and growth. 2022.
Given the future strategy of the Group, there is a requirement for a balanced, ● Steve Hammell, Chief Financial Officer, left the Group in
highly experienced, and resilient leadership team that can prioritise the October 2024 following the successful completion of the sale of the PMC
deployment of Group resources to deliver strategic objectives and operational division and reflecting the significant reduction and scale of the Group.
performance in CSC.
● Former Group Financial Controller since 2022, Sally Millen was
appointed Director of Finance in a non-Board role from 1 November 2024.
● Key roles in the CSC management team have been strengthened
throughout FY23 and FY24, underpinning confidence in performance and the
delivery of growth plans.
Retention of key staff in business-critical roles ● The high added value products and services provided by CSC are ⇑
reliant on the skills and knowledge of our employees. There is a programme of
Failure to continue to evolve organisation structure and culture could prevent training in CSC to ensure the development and retention of these key skills (risk increase)
us from employing and retaining the right talent, knowledge and skills to and employees. The training programme includes apprenticeships and recognised
deliver the strategy. industry qualifications.
The Group needs to continue to recruit high quality staff, building on ● Company policies and procedures are reviewed annually and are
existing capability while recruiting skilled expertise in the right areas of incorporated in an Employee Handbook given to all new starters.
the business, at the right time.
● Employee engagement is supported by strong two-way management /
Post Covid-19, the labour market has become very tight in the UK with very low employee communication through a recognised Employee Forum and regular
levels of unemployment, substantial unfilled vacancies and rising salary and colleague briefings on business performance and outlook.
wage costs.
● The Group regularly reviews its remuneration arrangements to
The drop off in defence orderbook through FY25 and FY26 may increase the risk ensure that they remain sufficiently competitive to attract the necessary
to staff retention. talent to the business.
The recent increase in the rate of inflation has also increased pressure on
staff costs, resulting in cost reduction measures.
Major capital assets ● Key assets are subject to ongoing maintenance programmes and ⇎
strategic spares are held.
Certain of the Group's businesses rely on large or critical pieces of
(no change)
equipment, some of which are approaching their reasonable end-of-life ● Significant improvements have been made to the planned
assessment. maintenance of equipment within CSC.
Major breakdown could affect our ability to maintain delivery performance and
customer growth.
6. Technology & innovation
Product development ● Investment in product development and services is key to the ⇎
continued growth of CSC and we strive to embed a culture of research and
The strength of our business is built upon a history of delivering products development initiatives within the business, having assigned resources to (no change)
that advance safety and reliability in demanding environments. If we fail to these functions.
keep abreast of market needs or to innovate solutions, we are at risk of
losing market share to our competitors and lowering margins as demand will ● Technical Managers and engineers in CSC work with customers and
reduce. suppliers in the development of progressive gas storage and transportation
solutions.
The hydrogen energy market is a significant growth opportunity for the CSC
division. CSC products are trusted and well proven in the safety-critical ● Collaborations with major steel tube suppliers are supporting
storage and transportation of hydrogen, however competition from alternative product and service development in CSC.
technologies, including Types 3 & 4 composite cylinders for the more
efficient transport of hydrogen presents a risk. ● Collaborations with academic and research bodies are supporting
the development of new manufacturing and inspection processes.
● Partnerships with manufacturers of Types 3 & 4 composite
cylinders will enable CSC to offer composite hydrogen trailer solutions to UK
customers.
● CSC has developed the capability for the inspection, testing and
recertification of Types 3 & 4 composite cylinders.
● CSC is in the early stages of developing innovative and
competitive Type 2 steel hydrogen cylinders for static and transportable
applications and is working with UK-based advanced composite manufacturers to
assess the possibility of Type 4 cylinder manufacturing at scale.
● Despite the attraction of lighter weight composite Type 3 and
Type 4 cylinders for hydrogen transportation, safety concerns and recent
safety incidents involving these cylinder types is pushing customers and
operators to consider more thoroughly the proven track record of Type 1 and
Type 2 steel solutions, despite the typically lower payload per road unit.
Disruptive technologies ● The monitoring of evolving technologies that may disrupt the ⇎
market is ongoing, looking to both capitalise on the opportunities they may
Technological advances in production processes or materials may cause a provide as well offset any potential threats (no change)
reduction in demand for the Group's products.
● CSC is promoting the efficiency, sustainability and lower Total
Increased interest and use of composite (fibre-polymer) cylinders presents a Cost of Ownership advantages of steel over composites but accepts that both
threat to the demand for steel cylinders for high-pressure hydrogen storage, technologies have a role to play in the hydrogen energy market. CSC can
which is a growth market for CSC. integrate composite cylinders into packages required by its customers
See also Product Development section above. ● See notes on Product Development above.
Cyber-crime ● CSC carries Cyber Essentials Plus accreditation, which was ⇎
recently renewed in September 2024.
Cyber-crime is a growing risk for all businesses, recently exacerbated by
(no change)
heightened political tensions resulting from the Russia-Ukraine conflict. ● The Group uses secure cloud storage with secure data access.
The Group's principal exposures to cyber-crime relate to access to, and the ● Server and operating system upgrades were completed during FY24
potential loss of, data resources. to provide further cyber resilience.
● All employees undertake regular mandatory cyber security
training.
Chris Walters
Chief Executive
5 February 2025
Consolidated statement of comprehensive income
For the 52 week period ended 28 September 2024
Notes 52 weeks ended 52 weeks ended
28 September 30 September
2024 2023
£'000 £'000
Continuing operations
Revenue 1 14,827 20,667
Cost of sales (11,095) (13,663)
Gross profit 3,732 7,004
Administration expenses (5,404) (5,824)
Operating profit / (loss) before exceptional costs (1,672) 1,180
Separately disclosed items of administration expenses:
Exceptional costs 5 (712) (1,198)
(6,116) (7,022)
Total administration expenses
Operating loss (2,384) (18)
Finance costs 3 (277) (261)
Loss before taxation 4 (2,661) (279)
Taxation 6 316 250
Loss for the period from continuing operations (2,345) (29)
Loss for the period from discontinued operations 12 (92) (650)
Loss for the period attributable to the owners of the parent (2,437) (679)
Other comprehensive income / (expense) to be reclassified to profit or loss in (11) 12
subsequent periods:
Currency exchange differences on translation of foreign operations
Total other comprehensive income / (expense) (2,448) (667)
Total comprehensive expense for
the period attributable to the owners of the parent (2,448) (667)
Basic loss per share
From continuing operations 7 (6.1)p (0.1)p
From discontinued operations 7 (0.2)p (1.7)p
From total loss 7 (6.3)p (1.8)p
Diluted loss per share
From continuing operations 7 (6.1)p (0.1)p
From discontinued operations 7 (0.2)p (1.7)p
From total loss 7 (6.3)p (1.8)p
Consolidated statement of financial position
As at 28 September 2024
Notes 28 September 30 September
2024 2023
£'000 £'000
Non-current assets
Property, plant and equipment 6,822 10,287
Deferred tax asset 626 700
7,448 10,987
Current assets
Inventories 3,020 5,570
Trade and other receivables 4,528 9,384
Cash and cash equivalents 116 945
Current tax - 58
Assets classified as held for sale 12 9,313 -
16,977 15,957
Total assets 24,425 26,944
Current liabilities
Trade and other payables (5,722) (9,326)
Borrowings - revolving credit facility 8 (1,000) (907)
Lease liabilities 9 (245) (697)
Liabilities classified as held for sale 12 (5,412) -
(12,379) (10,930)
Non-current liabilities
Other payables - (12)
Lease liabilities 9 (313) (1,704)
Deferred tax liabilities (572) (712)
(885) (2,428)
Total liabilities (13,264) (13,358)
Net assets 11,161 13,586
Equity
Share capital 1,933 1,933
Share premium account 1,699 1,699
Translation reserve (264) (253)
Retained earnings 7,793 10,207
Total equity 11,161 13,586
Consolidated statement of changes in equity
For the 52 week period ended 28 September 2024
Share Share Translation reserve Retained earnings Total
capital premium equity
Notes account
£'000 £'000 £'000 £'000 £'000
Balance at 1 October 2022 1,553 - (265) 10,815 12,103
Shares issued 380 1,699 - - 2,079
Share based payments - - - 71 71
Transactions with owners 380 1,699 - 71 2,150
- - - (679) (679)
Loss for the period
- - 12 - 12
Other comprehensive expense:
Exchange differences on translating foreign operations
Total comprehensive expense - - 12 (679) (667)
Balance at 30 September 2023 1,933 1,699 (253) 10,207 13,586
Share based payments
- continuing operations - - - 14 14
- discontinued operations - - - 9 9
Transactions with owners - - - 23 23
- - - (2,437) (2,437)
Loss for the period
- - (11) - (11)
Other comprehensive income:
Exchange differences on translating foreign operations
Total comprehensive income / (expense) - - (11) (2,437) (2,448)
Balance at 30 September 2023 1,933 1,699 (264) 7,793 11,161
Consolidated statement of cash flows
For the 52 week period ended 28 September 2024
Notes 52 weeks ended 52 weeks ended
28 September 30 September
2024 2023
£'000 £'000
Operating activities
Operating cashflow 10 2,023 1,223
Exceptional costs (944) (1,255)
Finance costs paid (455) (406)
Income tax refunded 6 408
Net cash inflow / (outflow) from operating activities 630 (30)
Investing activities
Proceeds from sale of fixed assets 19 178
Purchase of property, plant and equipment (440) (576)
Net cash outflow from investing activities (421) (398)
Net cash inflow / (outflow) before financing 209 (428)
Financing activities
Shares issued (net of transaction costs) - 2,079
Repayment of borrowings (1,407) (1,500)
Repayment of lease liabilities (777) (989)
New borrowings 1,500 -
Net cash outflow from financing activities (684) (410)
Net decrease in cash and cash equivalents (475) (838)
Cash and cash equivalents at beginning of period 945 1,783
Cash and cash equivalents at end of period, including disposal group held for 470 945
sale
Cash and cash equivalents transferred to disposal group 12 (354) -
Cash and cash equivalents at end of period, 116 945
continuing operations
Borrowings (1,000) (907)
Lease liabilities (558) (2,401)
Net Debt 11 (1,442) (2,363)
Accounting policies
1. Basis of preparation
The consolidated financial statements have been prepared in accordance with
UK-adopted International Accounting Standards, in conformity with the
requirements of the Companies Act 2006. The financial statements are made up
to the Saturday nearest to the period end for each financial period.
Pressure Technologies plc, company number 06135104, is incorporated and
domiciled in the United Kingdom. The registered office address is Pressure
Technologies Building, Meadowhall Road, Sheffield, South Yorkshire, S9 1BT.
The Group has applied all accounting standards and interpretations issued
relevant to its operations for the period ended 28 September 2024. The
consolidated financial statements have been prepared on a going concern basis.
The summary accounts set out above do not constitute statutory accounts as
defined by Section 434 of the UK Companies Act 2006. The summarised
consolidated statement of comprehensive income, the summarised consolidated
balance sheet at 28 September 2024, the summarised consolidated statement of
comprehensive income, the summarised consolidated statement of changes in
equity and the summarised consolidated statement of cash flows for the period
then ended have been extracted from the Group's 2024 statutory financial
statements upon which the auditor's opinion is unqualified and did not contain
a statement under either sections 498(2) or 498(3) of the Companies Act 2006.
The audit report for the period ended 28 September 2024 did not contain
statements under sections 498(2) or 498(3) of the Companies Act 2006.
The statutory financial statements for the period ended 28 September 2024 were
approved by the directors on 4 February 2025 but have not yet been delivered
to the Registrar of Companies. The statutory financial statements for the
period ended 30 September 2023 have been delivered to the Registrar of
Companies.
2. Going concern
The financial statements have been prepared on a going concern basis. The
Group and Company's business activities, together with the factors likely to
affect its future development, performance and position, are set out in the
Group Strategic Report.
The Directors must consider and determine whether the Group has sufficient
financial resources to meet its obligations as they fall due for a period of
not less than 12 months from the date of approval of these accounts.
As a result of the sale of the PMC division just after year end, the
projections include the proceeds of the sale and are based on the operations
of the ongoing CSC division and Group central costs.
In making this assessment, the Directors have considered a range of factors,
including the prospects for the markets the Group serves; the position and
intentions of competitors; the customer base of the Group and any reliance on
a small number of customers; the supply chain of the Group and any reliance on
key suppliers; staff attrition and the risk of losing any key members of
staff; any actual or threatened litigation; relationships with HMRC and
regulators; historical, current and projected financial performance and cash
flows; relationships with debt and equity funders and the likely availability
of external funding; and the plans and intentions of management. The Directors
have also considered the economic backdrop and geopolitical risks to economic
activity from the Russia-Ukraine conflict and instability in the Middle East.
In undertaking their assessment, the Directors have prepared financial
projections for a period of at least 12 months from the date of approval of
these accounts. The current economic conditions have introduced additional
uncertainty into the Directors assessment, such that future potential outcomes
are more difficult to estimate. The Directors have therefore considered a
number of sensitivities to their projections to quantify potential downside
risks to future financial performance.
On 14 November 2023, the Group exited its Revolving Credit Facility with
Lloyds Bank by raising a new term loan facility ("the Facility") of £1.5
million from two of its major shareholders. The Facility was committed for a
period of five years and was not subject to any financial covenant tests. The
Facility was subject to capital repayments of £0.5 million during FY24.
These capital repayments were made on 1 July 2024 and the Facility was repaid
in full, subsequent to year end, on 10 October 2024.
Management has produced base and downside case projections for the period up
to March 2026 for the Group and CSC, assessing sensitivities by taking account
of reasonably plausible changes in trading performance and market conditions,
which have been reviewed by the Directors. In particular, the projections
reflect that:
· as a result of the sale of the PMC division just after year end,
the projections include the cash proceeds of the disposal of £4.4 million
(£4.8 million initial cash consideration, less £0.4 million agreed
leakage).
· the Group is dependent on the profitability of CSC as its only
trading operation;
· CSC is currently dependent on large UK defence contracts for its
profitability. During the projection period, CSC is expected to undergo a
period of transition, with revenue from UK defence contracts falling and
revenue from the hydrogen energy market and global defence customers
increasing. Over the short term, this is expected to result in lower revenues
and earnings for CSC, which has been factored into the financial projections.
However, there remain both internal and external risks to CSC's performance
over the projection period, which have been modelled and considered in the
sensitised base and downside cases.
The base case demonstrates that the Group is projected to generate profits and
cash in the current financial year and beyond.
Due to the significance of revenues from UK hydrogen projects in the base case
and the history of delays in this market, the Directors have developed the
downside scenario to account for reasonably plausible delays to the placement
of major hydrogen orders. The Directors believe that any material delays to
hydrogen contracts will give sufficient time to take mitigating actions and
adjust operating costs and capital expenditure plans to maintain cash
generation, as illustrated by the financial projections for the downside
case.
In addition, management has considered the sensitivity of the base and
downside cases to the following risks:
· Delayed Integrity Management deployments resulting from changes
by the customer; and
· Later than forecast defence contract milestones, resulting from
customer delays; and
· In-house operational delays and inefficiencies, delays to the
supply of material and components by suppliers, and delays in the performance
of work by subcontractors.
The Group believes that these other factors are individually less likely to be
material to the achievement of the projections than potential delays in UK
defence milestones and hydrogen orders, but in the event that they occur
together with these risks, they may have a negative impact on cash flow at
certain points in the projection period.
In the event of the delays identified above, 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. It should also be noted that work on UK and oversea
defence contracts is progressing well in FY25 in line with contractual
obligations and with no material problems or delays arising. The UK contracts
have also largely passed through the phase in which the supply of materials
and components and the use of third-party contractors, over whom the Group has
significantly less control, is at its highest.
The Directors also note that the Group has net current assets of £4.6 million
at 28 September 2024, of which £3.9 million relates to the asset held for
sale at the end of the period.
Reflecting management's confidence in delivering large UK defence contracts
and winning new hydrogen contracts, and having repaid its debt facilities in
full, the Directors have concluded that the Group does have sufficient
financial resources to meet its obligations as they fall due for the next
twelve months and no material uncertainty relating to Going Concern has been
identified.
The Group and Parent Company continue to adopt the going concern basis in
preparing these financial statements. Consequently, these financial statements
do not include any adjustments that would be required if the going concern
basis of preparation were to be inappropriate.
3. New standards adopted in 2024
No new standards were applied during the year.
4. Amendments to IFRSs that are mandatorily effective for future years
At the date of the authorisation of these financial statements, several new,
but not yet effective, standards and amendments to existing standards, and
interpretations have been published by the IASB. None of these standards or
amendments to existing standards have been adopted early by the Group.
Management anticipates that all relevant pronouncements will be adopted for
the first period beginning on or after the effective date of pronouncement.
The impact of new standards, amendments and interpretations not adopted in the
year have not been disclosed as they are not expected to have a material
impact on the Group's financial statements.
Notes to the consolidated financial statements
1. Segment analysis
The financial information by segment detailed below is frequently reviewed by
the Chief Executive who has been identified as the Chief Operating Decision
Maker (CODM).
For the 52 week period ended 28 September 2024
All other segments (continuing operations) Group (continuing operations)
Cylinders (continuing operations) Precision Machined Components (discontinued operations)
£'000 £'000 £'000 £'000
Revenue from external customers* 14,827 - 14,827 17,095
Gross profit / (loss) 3,733 (1) 3,732 3,728
Adjusted EBITDA 758 (1,678) (920) 1,491
Depreciation (660) (92) (752) (711)
Operating profit / (loss) before amortisation and exceptional costs 98 (1,770) (1,672) 780
Exceptional costs (53) (659) (712) (232)
Operating profit / (loss) 45 (2,429) (2,384) 548
Net finance costs (53) (224) (277) (178)
(Loss) / profit before tax (8) (2,653) (2,661) 370
Segmental net assets** 10,651 (1,376) 9,275 1,886
Other segment information:
Taxation credit / (charge) 178 138 316 (462)
Capital expenditure - property, plant and equipment
381 154 535 598
* Revenue from external customers is stated after deducting inter-segment
revenue of £130,000 for Precision Machined Components.
** Segmental net assets comprise the net assets of each division adjusted to reflect the elimination of the cost of investment in subsidiaries and the provision of financing loans provided by Pressure Technologies plc.
For the 52 week period ended 30 September 2023
All other segments (continuing operations) Group (continuing operations)
Cylinders (continuing operations) Precision Machined Components (discontinued operations)
£'000 £'000 £'000 £'000
Revenue from external customers* 20,667 - 20,667 11,277
Gross profit / (loss) 7,042 (38) 7,004 1,939
Adjusted EBITDA 3,854 (1,847) 2,007 82
Depreciation (710) (117) (827) (717)
Operating profit / (loss) before amortisation and exceptional costs 3,144 (1,964) 1,180 (635)
Exceptional costs (236) (962) (1,198) (57)
Operating profit / (loss) 2,908 (2,926) (18) (692)
Net finance costs (69) (192) (261) (145)
Profit / (loss) before tax 2,839 (3,118) (279) (837)
Segmental net assets** 10,477 1,138 11,615 1,971
Other segment information:
Taxation credit / (charge) 254 (6) 248 189
Capital expenditure - property, plant and equipment
243 35 278 813
* Revenue from external customers is stated after deducting inter-segment
revenue of £671,000 for Precision Machined Components.
** Segmental net assets comprise the net assets of each division adjusted to
reflect the elimination of the cost of investment in subsidiaries and the
provision of financing loans provided by Pressure Technologies plc.
The Group's revenue disaggregated by primary geographical markets is as
follows:
Revenue 2024 2023
Precision Machined Components (discontinued operations) Precision Machined Components (discontinued operations)
Cylinders (continuing operations) Total Cylinders (continuing operations) Total
£'000 £'000 £'000 £'000 £'000 £'000
United Kingdom 11,486 8,510 19,996 17,862 4,937 22,799
France 1,118 35 1,153 1,025 87 1,112
Norway 7 380 387 696 246 942
USA 16 1,379 1,395 2 1,593 1,595
Romania - 2,114 2,114 - 2,281 2,281
Italy 3 793 796 - 537 537
Germany 399 - 399 140 - 140
Singapore - 2,825 2,825 - 816 816
Australia 1,239 316 1,555 277 188 465
Rest of Europe 305 59 364 203 28 231
Rest of World 254 684 938 462 564 1,026
14,827 17,095 31,922 20,667 11,277 31,944
During the year, there were two customers that each contributed over 10% of
Group revenue from CSC continuing operations. The revenue from these two
customers was £4.7 million, or 31.8% of total revenue from CSC continuing
operations (2023: one customer contributed £13.6 million or 65.7% of CSC
revenue).
The following tables provide an analysis of the Group's revenue by market.
Revenue: continuing operations 2024 2023
£'000 £'000
Defence 11,080 17,188
Hydrogen Energy 1,738 2,067
Industrial 1,559 514
Offshore services 450 898
14,827 20,667
Revenue: discontinued operations 2024 2023
£'000 £'000
Oil and gas 16,403 10,853
Defence 130 -
Industrial 562 424
17,095 11,277
The above tables are provided for the benefit of shareholders. It is not
provided to the PT Board or the CODM on a regular monthly basis and
consequently does not form part of the divisional segmental analysis.
The Group's revenue disaggregated by pattern of revenue recognition and
category is as follows:
Revenue 2024 2023
Precision Machined Components Precision Machined Components
(discontinued operations) (discontinued operations)
Cylinders Cylinders
(continuing operations) (continuing operations)
£'000 £'000 £'000 £'000
Sale of goods transferred at a point in time 6,744 16,351 3,843 10,903
Sale of goods transferred over time 5,731 - 15,397 -
Rendering of services 2,352 744 1,427 374
14,827 17,095 20,667 11,277
The following aggregated amounts of transaction values relate to the
performance obligations from existing contracts that are unsatisfied or
partially unsatisfied as at 28 September 2024:
Revenue expected in future periods 2023
£'000
Sale of goods - Cylinders 5,968
2. Impairment review
The Group tests annually for impairment, in accordance with IAS 36, if there
are indicators that intangible or tangible fixed assets might be impaired.
The impairment methodology considers relevant Cash Generating Units ("CGU's")
within the continuing operations of the Group and the Fair Value Less Costs to
Sell ("FVLCTS") of discontinued operations or 'assets held for sale'.
Each relevant CGU or 'asset held for sale' is assessed for potential
indicators of impairment, including internal or external factors or events
that could reduce the recoverable value of the fixed assets of the Group. If
indicators of impairment are identified, a full impairment review is
undertaken to determine the recoverable amount of the CGU or the 'asset held
for sale'.
The Directors exercise their judgement in determining the recoverable amount
of a CGU, involving the use of estimates in relation to the future prospects
of the CGU, in this case the CSC continuing operations of the Group.
The recoverable amount of a CGU is determined using a discounted cashflow
model that is based upon a five-year forecast period. The forecast takes into
account the firm order book, sales pipeline and market opportunities of the
CGU, together with expected gross margin performance and consideration of the
cost base, planned capital expenditure and estimated working capital needs of
the CGU. A long-term growth assumption is applied beyond the five-year
forecast period. The future cashflows are then discounted to a present,
recoverable value by applying a risk-adjusted pre-tax discount rate. If the
recoverable value of a CGU is less than the carrying value of its balance
sheet, then an impairment charge may be required. The carrying value of the
balance sheet is determined by application of the accounting policies of the
Group.
In accordance with IFRS 5, the Group tested the PMC division for impairment on
its reclassification to an 'asset held for sale' as at 28 September 2024 using
the FVLCTS methodology. This resulted in no requirement for an impairment
charge, however an impairment of £2.3 million was required in relation to PMC
at a parent entity level.
In this reporting period, the Directors exercised their judgement on the basis
of information available at 28 September 2024.
CSC Impairment Review
In FY24, CSC's revenues were heavily weighted towards the UK defence sector.
Between FY25 and FY27, CSC is expected to transition towards global defence
and hydrogen energy markets, reducing some of its dependency on UK defence
contracts.
CSC is expected to generate lower earnings over the medium-term with the rate
of growth of revenue and the level of achievable margins from these new
markets subject to risk. This change in composition of CSC revenues and the
requirement to penetrate new markets is considered an indicator of potential
asset impairment. Therefore, an impairment review has been conducted on CSC.
As part of this impairment review, management has considered a range of
economic conditions for the sectors in which the CSC division operates that
may exist over the next five years. These economic conditions, together with
reasonable and supportable assumptions for as far as we have visibility, have
been used to estimate the future cash inflows and outflows for CSC over the
next five years in order to generate a value-in-use calculation. Management
have also prepared a reasonably plausible sensitivity analysis to its core
assumptions to generate a sensitised value-in-use for CSC.
The Directors have assumed that CSC is successful in winning new contracts in
the hydrogen energy market with steady growth over the period to FY28 by which
time hydrogen is expected to account for around 30% of CSC total revenue.
However, the Directors expect that gross margin generation on hydrogen
contracts may be somewhat lower than UK defence contracts which moderates the
growth of Adjusted EBITDA in the forecast period.
The future cashflows of CSC have been extrapolated from FY29 in perpetuity at
a growth rate of 2% and applying a risk-adjusted pre-tax discount rate of 16%.
On this basis, the recoverable value of CSC is estimated to be £15.2 million.
The carrying value of the net assets of CSC at 28 September 2024, adjusting
for cash, intercompany and deferred tax balances, was £6.9 million. On this
basis, an impairment charge is not required.
The Directors have considered sensitivities to the future cashflows of CSC, in
particular a significantly reduced level of hydrogen revenue in the period
FY26-FY28, thereby reducing the value of CSC cash flows into perpetuity. Based
on this sensitivity, the recoverable value of CSC is estimated to be £9.2
million. Therefore, an impairment charge is not required for this sensitised
case.
The Directors have concluded that CSC does not require an impairment charge
for FY24 in relation to the carrying value of its assets.
3. Finance costs
Continuing operations:
2024 2023
£'000 £'000
Interest receivable - (2)
Interest payable on bank loans and overdrafts 10 191
Interest payable on term loan 170 -
Interest payable on lease liabilities 15 38
Other interest payable 82 34
277 261
Discontinued operations (disposal group held for sale):
2024 2023
£'000 £'000
Interest payable on bank loans and overdrafts 1 2
Interest payable on lease liabilities 168 133
Other interest payable 9 10
178 145
4. Loss before taxation
Loss before taxation is stated after charging / (crediting):
Continuing operations:
2024 2023
£'000 £'000
Depreciation of property, plant and equipment - owned assets 574 613
Depreciation of property, plant and equipment - leased assets 205 213
Loss on disposal of fixed assets 22 16
Staff costs - excluding share based payments 6,904 7,230
Cost of inventories recognised as an expense 4,945 6,504
Share based payments 14 46
Equivalent charges / (credits) in discontinued operations were as follows:
Discontinued operations: disposal group held for sale:
2024 2023
£'000 £'000
Depreciation of property, plant and equipment - owned assets 410 444
Depreciation of property, plant and equipment - leased assets 301 274
(Profit) / loss on disposal of fixed assets (19) 154
Amortisation of grants receivable (20) (20)
Staff costs - excluding share based payments 4,704 3,788
Cost of inventories recognised as an expense 8,719 5,585
Share based payments 9 25
5. Exceptional costs
Continuing operations:
2024 2023
£'000 £'000
Costs in relation to the sale of PMC 627 -
Costs in relation to the sale of PMC, recharged to discontinued operation (131) -
Arrangement of term loan 111 -
Debt advisory services on behalf of Lloyds Banking Group 15 131
Debt advisory services to refinance banking - 373
facilities
Corporate finance services - 313
Write-down of historical fixed assets 33 -
Reorganisation costs 17 252
Write-down of obsolete historical - 111
inventory
Historical contract settlement - 10
Other plc costs 40 8
712 1,198
Discontinued operations (disposal group held for sale):
2024 2023
£'000 £'000
Costs in relation to the sale of PMC (recharged by parent) 131 -
Write-down of historical fixed assets 54 -
Audit costs in relation to the discontinued operation 20 -
Reorganisation costs 14 57
Reversal of inventory provision from prior year - (3)
Other 13 3
232 57
6. Taxation
2024 2023
£'000 £'000
Current tax (charge) / credit
Current tax charge - -
(Under) / over provision in respect of prior years (52) 409
(52) 409
Deferred tax (charge) / credit
Origination and reversal of temporary differences 53 144
Under provision in respect of prior years (147) (116)
(94) 28
Total taxation (charge) / credit
(146) 437
Corporation tax is calculated at 25% (2023: 22%) of the estimated assessable
loss for the period. Deferred tax is calculated at the rate applicable when
the temporary differences are expected to unwind.
The charge / (credit) for the period can be reconciled to the loss per the
consolidated statement of comprehensive income as follows:
2024 2023
£'000 £'000
Loss before taxation: continuing operations (2,661) (279)
Profit / (loss) before taxation: discontinued operations (disposal group held 370 (837)
for sale)
Total loss before taxation (2,291) (1,116)
Theoretical tax credit at UK corporation tax rate 25% (2023: 22%) 572 246
Effect of (charges) / credits:
- non-deductible expenses (19) (76)
- non-deductible exceptional items (225) (181)
- adjustments in respect of prior years (199) 293
- unrealised loss in overseas entities (4) (4)
- recognition and utilisation of losses brought forward (271) 159
Total taxation (charge) / credit (146) 437
An increase in the UK corporation tax rate to 25% was substantively enacted in May 2021 and took effect from 1 April 2023. The table above therefore uses the average rate of 22% for the previous financial period.
As the most significant timing differences are not expected to unwind until 2025 or later, the deferred tax rate was maintained at 25% in the period.
7. 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. As the Group made a loss after taxation for the
financial year there is no dilution to take place.
Adjusted loss per share shows loss per share after adjusting for the impact of
amortisation 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 52 week period ended 28 September 2024
£'000
Loss after tax from continuing operations (2,345)
Loss after tax from discontinued operations (92)
Total loss after tax (2,437)
Number of shares ('000)
Weighted average number of shares - basic 38,667
Dilutive effect of share options - SAYE 193
Dilutive effect of share options - Warrants 1,933
Weighted average number of shares - diluted 40,793
Loss per share from continuing operations - basic (6.1)p
Loss per share from discontinued operations - basic (0.2)p
Total loss per share - basic (6.3)p
Loss per share from continuing operations - diluted (6.1)p
Loss per share from discontinued operations - diluted (0.2)p
Total loss per share - diluted (6.3)p
The Group adjusted loss per share is calculated as follows:
Loss after tax from continuing operations (2,345)
Loss after tax from discontinued operations (92)
Exceptional costs: continuing operations (see Note 5) 712
Exceptional costs: discontinued operations (see Notes 5 and 12) 232
Tax effect of the above adjustments: continuing operations (178)
Tax effect of the above adjustments: discontinued operations (58)
Adjusted loss (1,729)
Adjusted loss per share: continuing operations (4.7)p
Adjusted earnings per share: discontinued operations 0.2p
Total adjusted loss per share (4.5)p
The tax effect is based on applying a 25% tax rate to the adjustment for
exceptional costs
For the 52 week period ended 30 September 2023
£'000
Loss after tax from continuing operations (29)
Loss after tax from discontinued operations (650)
Total loss after tax (679)
Number of shares ('000)
Weighted average number of shares - basic 37,400
Dilutive effect of share options 446
Weighted average number of shares - diluted 37,846
Loss per share from continuing operations - basic and diluted (0.1)p
Loss per share from discontinued operations - basic and diluted (1.7)p
Total loss per share - basic and diluted (1.8)p
The Group adjusted profit per share is calculated as follows:
Loss after tax from continuing operations (29)
Loss after tax from discontinued operations (650)
Exceptional costs: continuing operations (see Note 5) 1,198
Exceptional costs: discontinued operations (see Notes 5 and 12) 57
Tax effect of the above adjustments: continuing operations (263)
Tax effect of the above adjustments: discontinued operations (13)
Adjusted profit 300
Adjusted earnings per share: continuing operations 2.4p
Adjusted loss per share: discontinued operations (1.6)p
Total adjusted earnings per share 0.8p
The tax effect is based on applying a 22% tax rate to the adjustment for
exceptional costs.
8. Borrowings
2024 2023
£'000 £'000
Current
term loan / revolving credit facility 1,000 907
During the prior period, on 23 June 2023, the Group's revolving credit
facility (RCF) was amended and the facility expiry accelerated from March 2024
to December 2023. On 14 November 2023, the Group's RCF (30 September 2023:
drawn at £0.9 million) was fully repaid from the proceeds of a new £1.5
million term loan facility agreed with two of the major shareholders of
Pressure Technologies plc.
The interest rate on the term loan was 14.25% per quarter, and total interest
payments of £170,000 were made in the year. The contract terms required
Pressure Technologies plc to repay £0.5 million of capital in FY24, and the
remaining £1 million in four equal tranches between FY26 and FY29. The
initial repayment of £0.5 million was made during the year with the balance
fully repaid subsequent to year end in October 2024, following the sale of
PMC.
In conjunction with the provision of the new term loan, the two major
shareholders were issued with 1,933,358 warrants in aggregate (representing 5%
of the issued share capital) to subscribe for ordinary shares in the Company
at a price of 32 pence per share, representing a 20% premium to the closing
share price on 23 October 2023 (being the day prior to the announcement of the
new facility). The warrants may be exercised at any time in the 5 years
following drawdown of the new facility and continue to be exercisable
notwithstanding that the facility was repaid in October 2024 before its final
expiry.
Obligations under finance leases are secured on the plant and machinery assets
to which they relate.
The carrying amount of other borrowings is considered to be a reasonable
approximation of fair value. The carrying amounts of the Group's borrowings
are all denominated in GBP.
The maturity profile of borrowing facilities are as follows:
2024 2023
£'000 £'000
Due for settlement within one year:
term loan / revolving credit facility 1,000 907
The Group had undrawn borrowing facilities of £nil at the year-end (2023:
£nil).
9. Lease liabilities
Lease liabilities are presented in the statement of financial position as
follows:
2024 2023
£'000 £'000
Current
Asset finance lease liabilities 116 456
Right of use asset lease liabilities 129 241
245 697
Non-current
Asset finance lease liabilities 125 616
Right of use asset lease liabilities 188 1,088
313 1,704
The Group has leases for certain operational factory premises and related
facilities, several large items of plant and machinery equipment, a number of
motor vehicles and some IT equipment. The disposal group held for sale also
has leases for an office building.
During the period ended 1 October 2022, the Group completed a sale and
leaseback of its freehold property occupied by Roota Engineering Limited, part
of the Precision Machined Components division. The property lease liability at
the end of the period was £815,000 (2023: £851,000). This lease was
transferred to the disposal group as at 28 September 2024.
For right of use assets, with the exception of short-term leases and leases of
low-value underlying assets, each lease is reflected on the balance sheet as a
right-of-use asset and a lease liability.
The Group classifies its right-of-use assets in a consistent manner to its
property, plant and equipment. Each lease generally imposes a restriction
that, unless there is a contractual right for the Group to sublet the asset to
another party, the right-of-use asset can only be used by the Group. Leases
are either non-cancellable or may only be cancelled by incurring a substantive
termination fee. Some leases contain an option to extend the lease for a
further term. The Group is prohibited from selling or pledging the underlying
leased assets as security.
For leases over office buildings and factory premises the Group must keep
those properties in a good state of repair and return the properties in their
original condition at the end of the lease. Further, the Group must insure
items of property, plant and equipment and incur maintenance fees on such
items in accordance with the lease contracts.
The lease liabilities are secured by the related underlying assets. Future
minimum lease payments at 28 September 2024 were as follows:
Within one Over one to
year five years Total
£'000 £'000 £'000
28 September 2024
Lease payments 275 346 621
Finance costs (30) (33) (63)
Net present value 245 313 558
Within one Over one to
year five years Total
£'000 £'000 £'000
30 September 2023
Lease payments 827 2,141 2,968
Finance costs (130) (437) (567)
Net present value 697 1,704 2,401
Lease payments not recognised as a liability
The Group has elected not to recognise a lease liability for short term leases
(leases with an expected term of 12 months or less) or for leases of low value
assets. Payments made under such leases are expensed on a straight-line basis.
10. Reconciliation of operating profit to operating cashflow
2024 2023
£'000 £'000
Adjusted Operating (loss) / profit from continuing operations (1,672) 1,180
Adjustments for:
Depreciation of property, plant and equipment 752 827
Share option costs 14 46
Loss on disposal of property, plant and equipment - 16
Write-off of assets under construction - 108
Write-off of older assets 54 -
Movement in translation reserve (11) 12
Changes in working capital:
(Increase) / decrease in inventories (362) 814
Decrease in trade and other receivables 1,153 1,170
Increase / (decrease) in trade and other payables 1,073 (3,577)
Operating cash flow from continuing operations 1,001 596
Adjusted Operating profit / (loss) from discontinued operations 780 (635)
Adjustments for:
Depreciation of property, plant and equipment 710 717
Share option costs 9 25
Release of grants (20) (20)
(Profit) / loss on disposal of property, plant and equipment (19) 154
Write-off of older assets 54 -
Changes in working capital:
Decrease / (increase) in inventories 1,625 (1,817)
Increase in trade and other receivables (955) (1,223)
(Decrease) / increase in trade and other payables (1,162) 3,426
Operating cash flow from discontinued operations 1,022 627
Total operating cash flow 2,023 1,223
11. Net Debt Reconciliation
Cash Borrowings Leases Total
£'000 £'000 £'000 £'000
At 1 October 2022 1,783 (2,407) (2,876) (3,500)
Cash flows (838) - - (838)
Repayments - 1,500 989 2,489
New facilities - asset finance leases - - (482) (482)
Surrender - right of use asset leases - - (32) (32)
At 30 September 2023 945 (907) (2,401) (2,363)
Cash flows (475) - - (475)
Repayments - 1,407 777 2,184
New facilities - term loan - (1,500) - (1,500)
New facilities - asset finance leases - - (408) (408)
New facilities - right of use asset leases - - (251) (251)
At 28 September 2024, including disposal group 470 (1,000) (2,283) (2,813)
Transfers to disposal group (Note 12) (354) - 1,725 1,371
At 28 September 2024 116 (1,000) (558) (1,442)
On 14 November 2023, the Group exited its existing Revolving Credit Facility,
provided by Lloyds Banking Group, by arranging a new term loan facility of
£1.5 million with Rockwood Strategic plc and Peter Gyllenhammar AB, two of
its major shareholders. The new loan was drawn in full and used to repay
Lloyds in full, settle transaction costs and to provide general working
capital headroom. Repayments of £0.5 million were made during the year with
the balance fully repaid subsequent to year end in October 2024, following the
sale of PMC.
In conjunction with the provision of the new term loan, Rockwood and
Gyllenhammar were issued with 1,933,358 warrants in aggregate (representing 5%
of the issued share capital) to subscribe for ordinary shares in the Company
at a price of 32 pence per share, representing a 20% premium to the closing
share price on 23 October 2023 (being the day prior to the announcement of the
new facility). The warrants may be exercised at any time in the 5 years
following drawdown of the new facility and continue to be exercisable
notwithstanding that the facility was repaid in October 2024 before its final
expiry.
Rockwood Strategic plc is a quoted unit trust whose funds are managed by
Harwood Capital LLP, thereby placing it under the control of Richard Staveley,
a Non-Executive Director of the Company. Rockwood Strategic plc is therefore
considered to be a related party under "IAS24 - Related Party Disclosures"
(see Note 13).
12. Disposal group classified as held for sale and discontinued operations
The Board announced in October 2023 its decision to divest the Precision
Machined Components (PMC) division and launched the sale process in December
2023. The PMC division was sold to Raghu Vamsi Machine Tools Private Limited,
a manufacturer of specialised precision engineered components based in India,
in October 2024 (see Note 13).
Consequently, the assets and liabilities of PMC were classified as a disposal
group held for sale as at 28 September 2024. Revenue and expenses, gains and
losses relating to the discontinuation of this division have been eliminated
from profit or loss from the Group's continuing operations and are shown as a
single line item in the consolidated statement of comprehensive income.
Operating profit / (loss) of PMC in the period and the profit or loss from the
disposal group held for sale are summarised as follows:
52 weeks ended 52 weeks ended
28 September 30 September
2024 2023
£'000 £'000
Revenue 17,095 11,277
Cost of sales (13,367) (9,338)
Gross profit 3,728 1,939
Administration expenses (2,948) (2,574)
Operating profit / (loss) 780 (635)
Exceptional costs (232) (57)
Finance costs (178) (145)
Profit / (loss) from discontinued operations before tax 370 (837)
Tax (charge) / credit (462) 187
Loss from discontinued operations after tax (92) (650)
The tax charge of £462,000 (2023: credit of £187,000) is a consequence of
de-recognising deferred tax assets on £1,504,000 of unused losses within the
PMC division. At a deferred tax rate of 25%, the impact on the overall charge
is an increase of £376,000.
Management believes that, given the completion of the sale of PMC on 8 October
2024, the continuing Group had no future prospect of utilising these carried
forward losses in PMC as at 28 September 2024. No assumption has been made as
to whether the new owners of PMC will subsequently choose to recognise
deferred tax assets on these losses.
The carrying amounts of assets and liabilities in this disposal group are
summarised as follows:
28 September 30 September 2023
2024
£'000 £'000
Non-current assets
Property, plant and equipment 3,002 3,168
Deferred tax assets 10 390
3,012 3,558
Current assets
Inventories 1,287 2,912
Trade and other receivables 4,660 4,093
Cash and cash equivalents 354 247
6,301 7,252
Assets classified as held for sale 9,313 10,810
Current liabilities
Trade and other payables (3,517) (4,346)
Lease liabilities (308) (361)
(3,825) (4,707)
Non-current liabilities
Other payables - (12)
Lease liabilities (1,417) (1,296)
Deferred tax liabilities (170) (81)
(1,587) (1,389)
Liabilities classified as held for sale (5,412) (6,096)
Net assets classified as held for sale 3,901 4,714
The above figures are stated before net amounts of £2,015,000 (2023:
£2,746,000) owed by PMC to the continuing operations within the PT Group at
the balance sheet dates.
Property, plant and equipment includes £1,787,000 (2023: £1,937,000) of
assets held under finance and right of use leases. Of this, £423,000 (2023:
£521,000) relates to land and buildings and £1,364,000 (2023: £1,416,000)
to plant and machinery.
Cash flows generated by PMC for the reporting periods under review are as
follows:
52 weeks ended 52 weeks ended
28 September 30 September
2024 2023
£'000 £'000
Operating cash flow (Note 10) 1,022 627
Exceptional costs (Note 5) (232) (57)
Finance costs (Note 3) (178) (145)
Income tax refunds (Note 6) 6 189
Net cash inflow from operating activities 618 614
Net cash outflow from Investing activities (92) (143)
Net cash outflow from financing activities (419) (619)
Cash inflows / (outflows) from discontinued operations 107 (148)
13. Subsequent events
On 8 October 2024, the Group completed the sale of its Precision Machined
Components division in order to strengthen the Group's balance sheet and cash
position and support strategic investment into Chesterfield Special Cylinders.
On 10 October 2024, the Group repaid the outstanding balance of £1.0 million
of the term loan facility provided by Rockwood Strategic plc and Peter
Gyllenhammar AB, two of its major shareholders, who released all security
granted to them by the Group in respect of the facility.
Interest charged between year-end and repayment was £8,000, with a total
interest charge of £178,000 between inception of the loan and repayment.
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