REG - PressureTechnologies - Post-Close Update

Pressure TechnologiesAnnouncement

03/10/2023 07:00

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RNS Number : 4434O  Pressure Technologies PLC  03 October 2023

The information contained within this announcement is deemed by the Group to
constitute inside information as stipulated under the UK version of the EU
Market Abuse Regulation (2014/596) which is part of UK law by virtue of the
European Union (Withdrawal) Act 2018, ("MAR"), and is disclosed in accordance
with the Group's obligations under Article 17 of MAR. Upon the publication of
this announcement via a Regulatory Information Service, this inside
information will be considered to be in the public domain.

3 October 2023

 

Pressure Technologies plc

("Pressure Technologies" or "the Group")

 

Post-Close Update

 

Pressure Technologies plc (AIM: PRES), the specialist engineering group,
announces a business update and its expected unaudited post-close results for
the financial year ended 30 September 2023 ("FY23").

 

FY23 Post-Close Results

 

The Group's unaudited results(1) for FY23 are expected as follows:

 

£'million
FY23               FY22

 

Revenue
32                    25

Adjusted EBITDA(2) Profit / (Loss)                       2.0
           (0.9)

 

Order
Intake
43                    25

Closing Order Book
      21                    10

 

Net
Debt(3)
(2.4)                (3.5)

Net Bank Borrowings(4)
   0.0                (0.6)

 

1 These post-close results have not yet been audited and are therefore the
results that the Group expects to report for FY23. The post-close results have
been prepared on the going concern basis using the existing accounting
policies of the Group.

2 Adjusted EBITDA Profit / (Loss) is earnings before interest, tax,
depreciation, amortisation and other exceptional costs.

3 Net Debt comprises cash and cash equivalents, bank borrowings, asset finance
lease liabilities and right of use asset lease liabilities.

4 Net Bank Borrowings comprises cash and cash equivalents and bank borrowings
only.

 

The Group is expected to report revenue of approximately £32 million (FY22:
£25 million) in FY23, representing like-for-like growth of 28%, underpinning
a return to profitability with an expected Adjusted EBITDA of approximately
£2.0 million (FY22: loss of £0.9 million). This performance was driven by
Group order intake of approximately £43 million (FY22: £25 million) in the
year, a 72% increase on prior year, supporting an order book of approximately
£21 million (FY22: £10 million) at year-end, providing much improved
visibility of forward revenue. The expected Adjusted EBITDA is slightly below
the guidance issued in June 2023 due to the slippage of revenue from a small
number of projects into the first quarter of FY24.

 

Chesterfield Special Cylinders (CSC) is expected to report revenue of
approximately £21 million (FY22: £18 million) with a strong performance in
the second half of the year driven by activity on a major UK defence contract
secured in February 2023, underpinned by recent operational improvements. CSC
Adjusted EBITDA in the year is expected to be approximately £3.6 million
(FY22: £1.1 million), a significant improvement on prior year. CSC order
intake in the year was approximately £25 million (FY22: £16 million),
supporting an order book of approximately £11 million (FY22: £7 million) at
year-end.

 

Precision Machined Components (PMC) is expected to report revenue of
approximately £11 million (FY22: £7 million), an increase of 57%, with
improved performance in the second half of the year driven by the recovery in
order intake from major oil and gas OEM customers since March 2023. This has
underpinned a return to profitability with expected Adjusted EBITDA of
approximately £0.3 million (FY22: loss of £0.3 million). PMC order intake in
the year was approximately £18 million (FY22: £9 million), a 100% increase
on prior year, supporting an order book of approximately £10 million (FY22:
£3 million) at year-end and providing the best visibility of forward revenue
seen in the last five years.

 

Central costs (before exceptional items) in the year are expected to be
approximately £1.9 million (FY22: £1.7 million), slightly higher than prior
year due to general inflationary pressures.

 

The FY23 post-close results above have not yet been audited. The Group has
appointed Cooper Parry as its new auditors and expects that the FY23 audited
Annual Report & Accounts will be released in January 2024.

 

FY24 Outlook

 

The financial year ending 30 September 2024 ("FY24") is expected to be a year
of transition for CSC. During the first half of FY24, CSC will continue to
focus on delivering consistent operational performance and expects to pass the
peak of activity on high-value UK defence contract milestones in the second
quarter. The division then expects to re-balance its revenue profile across UK
defence programmes, global defence programmes and the hydrogen energy market
in the second half of the year, with each of these markets presenting
significant opportunities over the medium-term. During this transitional
period, CSC revenue is expected to decline marginally on FY23 levels with a
consequent reduction in divisional profitability in FY24.

 

The Board expects PMC to continue to operate at its current improved rate of
activity and to generate further year-on-year growth in revenue and improved
profitability in FY24, based upon a robust outlook for order intake from the
oil and gas sector, improved pricing and manufacturing efficiencies.

 

As a result of these divisional trends, the Board expects FY24 Group revenue
and profitability to increase slightly over FY23 levels.

 

Debt Facilities & Refinancing

 

The Group made a scheduled repayment of £1.0 million to Lloyds Banking Group
on 29 September 2023 from existing cash resources. This reduced the remaining
debt balance payable to Lloyds to £0.9 million which the Group expects to
repay in full on 31 December 2023, at which point the facility will expire.

 

Following the repayment of £1.0 million on 29 September 2023, the cash
balance at the end of the year was approximately £0.9 million (FY22: £1.8
million). Net debt, which comprises cash, bank borrowings, asset finance lease
liabilities and right of use asset lease liabilities, was approximately £2.4
million (FY22: £3.5 million) at the end of the year. Net bank borrowings,
which comprises cash and bank borrowings only, was approximately £nil (FY22:
£0.6 million) at the end of the year.

 

The Group has continued to explore options for raising additional finance to
provide increased working capital headroom and to fund the transition of CSC
into the hydrogen energy market. The Board is in constructive discussions to
raise new finance and will update further in due course.

 

Strategic Options for PMC Division

 

In June 2023, the Board paused the sale of PMC and undertook to revisit
strategic options for this division later in the year.

 

The Board has noted the continued improvement in oil and gas market
conditions, including the recent strengthening of the price of oil, which has
driven the much improved trading performance of PMC in the second half of
FY23. The current trading environment, improved prospects and positive
developments being made by the PMC division enhance the Board's optionality in
respect of delivering future shareholder value from this division.

 

Chris Walters, Chief Executive of Pressure Technologies plc, commented:

 

"Strong order intake in both divisions and recent operational improvements
have driven a more consistent performance in the second half of FY23 which has
enabled a return to much improved levels of profitability. We continue to see
opportunities for further margin improvement in both divisions.

 

Global defence programmes present strong opportunities for Chesterfield
Special Cylinders and we remain well positioned to transition into the
developing hydrogen energy market to supply static and mobile storage
solutions, and to provide the through-life inspection, testing and
recertification services for these safety-critical systems over the longer
term."

 

Additional Information

 

The person responsible for arranging release of this announcement on behalf of
the Company is Steve Hammell, Chief Financial Officer.

 

 

 

For further information, please contact:

   Pressure Technologies plc                                                                              Tel: 0333 015 0710

   Chris Walters, Chief Executive

   Steve Hammell, Chief Financial Officer
   Singer Capital Markets (Nomad and Broker)                                                              Tel: 0207 496 3000

   Rick Thompson / Asha Chotai
   Houston (Financial PR and Investor Relations)                                                          Tel: 0204 529 0549

   Kay Larsen / Ben                                                                                       pressuretechnologies@houston.co.uk
 Robinson

 

 

 

 

 

COMPANY DESCRIPTION

 

www.pressuretechnologies.com (http://www.pressuretechnologies.com/)

 

With its head office in Sheffield, the Pressure Technologies Group was founded
on its leading market position as a designer and manufacturer of
high-integrity, safety-critical components and systems serving global supply
chains in oil and gas, defence, industrial and hydrogen energy markets.

The Group has two divisions:

 

·    Chesterfield Special Cylinders (CSC) - www.chesterfieldcylinders.com
(http://www.chesterfieldcylinders.com/)

·    Precision Machined Components (PMC) - www.pt-pmc.com
(http://www.pt-pmc.com/)

o  Includes the Al-Met, Roota Engineering and Martract sites.

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