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PRES Pressure Technologies Plc

40.00
-0.50 (-1.23%)
Last Updated: 08:12:44
Delayed by 15 minutes
Share Name Share Symbol Market Type Share ISIN Share Description
Pressure Technologies Plc LSE:PRES London Ordinary Share GB00B1XFKR57 ORD 5P
  Price Change % Change Share Price Bid Price Offer Price High Price Low Price Open Price Shares Traded Last Trade
  -0.50 -1.23% 40.00 39.00 41.00 40.50 40.00 40.50 14,593 08:12:44
Industry Sector Turnover Profit EPS - Basic PE Ratio Market Cap
Fluid Powr Cylindrs,actuatrs 31.94M -679k -0.0219 -18.49 12.58M

Pressure Technologies PLC 2018 Interim Results (0345R)

12/06/2018 7:00am

UK Regulatory


Pressure Technologies (LSE:PRES)
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TIDMPRES

RNS Number : 0345R

Pressure Technologies PLC

12 June 2018

12 June 2018

Pressure Technologies plc

("Pressure Technologies" or the "Group")

2018 Interim Results

Pressure Technologies (AIM: PRES), the specialist engineering group, announces its interim results for the 26 weeks to 31 March 2018.

John Hayward, CEO of Pressure Technologies, said:

"Dynamics in the defence and oil and gas markets are showing considerable momentum, so the outlook for our Manufacturing Divisions is encouraging, but time dependent. There is significant potential in Alternative Energy, and the Board is considering a number of strategic options for this Division that will hopefully increase market opportunities and lead to enhanced shareholder value."

Financial

   --    Revenue of GBP13.6 million  (2017: GBP17.7 million) 
   --    Adjusted operating loss* at GBP(1.3) million (2017: GBP(0.8) million) 
   --    Reported loss before tax of GBP(5.0) million (2017: GBP(2.6) million ) 
   --    Adjusted loss per share of (6.9)p (2017: (6.3)p) 
   --    Reported basic loss per share of (25.0)p  (2017: (15.9)p) 
   --    Adjusted operating cash outflow** GBP2.1 million (2017: inflow GBP2.2 million) 
   --    Net debt at GBP9.3 million (2017: GBP8.6 million ) 

*before M&A costs, amortisation and exceptional charges

**before exceptional cash costs

Operational

   --     The short-term Group outlook is dictated by issues of timing 

-- Manufacturing Divisions strengthened by the more favourable market conditions in the defence and oil and gas markets

   --     Delays in contract awards in Alternative Energy negatively impacting the half and full year 

-- Manufacturing businesses focused on core competency in high added value component manufacture

-- Appointment of two highly experienced business leaders to head Alternative Energy and Precision Machined Components Divisions

   --     Exploring strategic opportunities to unlock value for Shareholders for Alternative Energy 
   --     Post half year end, sale of Hydratron Limited for an initial consideration of GBP1.1 million 

For further information, please contact:

 
 Pressure Technologies plc             Today Tel: 020 7920 3150 
  John Hayward, Chief Executive         Thereafter, Tel: 0114 257 
  Officer                               3622 
  Joanna Allen, Chief Financial         www.pressuretechnologies.com 
  Officer 
  Keeley Clarke, Investor Relations 
 Cantor Fitzgerald Europe (Nominated   Tel: 020 7894 7000 
  Adviser and Broker) 
 Philip Davies / Will Goode 
 Tavistock                             Tel: 020 7920 3150 
  Simon Hudson 
 

COMPANY DESCRIPTION

Company description - www.pressuretechnologies.com

With its head office in Sheffield, Pressure Technologies was founded on its leading market position as a designer and manufacturer of high-pressure components and systems serving the global energy, defence and industrial gases markets. Today it continues to serve those markets from a broader engineering base with specialist precision engineering businesses and has a worldwide presence in Alternative Energy as a global leader in biogas upgrading.

Pressure Technologies has three divisions, Precision Machined Components, Cylinders and Alternative Energy, serving four main markets: oil and gas, defence, industrial gases and alternative energy.

Precision Machined Components - www.pt-pmc.com

   --     Al-Met, Mid Glamorgan, acquired in 2010 www.almet.co.uk 
   --     Roota Engineering, Rotherham, acquired in March 2014 www.roota.co.uk 
   --     Quadscot, Glasgow, acquired in October 2014 www.quadscot.co.uk 
   --     Martract Limited, Barton-on-Humber, acquired in December 2016 www.martract.co.uk 

Cylinders

-- Chesterfield Special Cylinders, Sheffield, IPO cornerstone in 2007 and includes, CSC Deutschland Gmbh, which is based in Dorsten, Germany and Chesterfield Special Cylinders Inc. which is based in Houston, USA www.chesterfieldcylinders.com

Alternative Energy

-- Greenlane Biogas, Vancouver, Canada and Sheffield, UK; acquired in October 2014 www.greenlanebiogas.com

Chairman and Chief Executive's statement

Group revenues for the 26 weeks to 31 March 2018 were down GBP4.1 million to GBP13.6 million (2017: GBP17.7 million) primarily due to a lower opening order book in the Alternative Energy Division (AE) (2018: GBP5.0 million, 2017: GBP14.0 million) compounded by low order intake in the period. More encouragingly, revenues in our manufacturing Divisions increased by 10% like-for-like during the first-half.

As a consequence of reduced revenues, the Group made an adjusted operating loss* of GBP1.3 million (2017: loss GBP0.8 million).

First-half trading reflects solid defence business in our Cylinders Division ("CSC"), growing confidence in the oil and gas market which positively impacted the Precision Machined Components Division ("PMC") and delays caused by the still nascent market for renewables for the Alternative Energy Division ("AE").

On 7 June 2018, Hydratron Limited, which comprises the Group's Engineered Products Division ("EP"), was sold to Pryme Group Limited for an initial cash consideration of GBP1.1 million. Additional consideration of up to GBP2.25 million may become payable depending upon Hydratron's trading performance for the twelve month period to 31 May 2019.

Balance Sheet

Net Assets increased to GBP34.5 million (2017: GBP32.7 million). The balance sheet was strengthened by the GBP4.8 million net fundraising in November 2017, GBP2.7 million of which was used to pay-down a tranche of the Group's revolving credit facility. As anticipated, with the building momentum in PMC and phasing of large projects in CSC and AE, there was a net investment in working capital in the period totalling GBP1.5 million. This, combined with the operating losses, resulted in a net adjusted cash outflow** in the period of GBP2.1 million (2017: inflow GBP2.2 million). Net Debt closed at GBP9.3 million, down from GBP11.1 million at the year-end.

The post-balance sheet disposal of Hydratron gave rise to an impairment of goodwill of GBP1.7 million. The disposal crystallised a fair market value assessment and the Board considered it appropriate to recognise the impairment in the results for the first-half of the current financial year. The proceeds of the disposal have been used to further reduce the Group's debt and the Group is currently GBP11.8 million drawn on the GBP15.0 million revolving credit facility. The Group's bankers have committed to further extend the facility repayment date to 31 January 2020.

People

During the period, we recruited two highly experienced business leaders to head our AE and PMC Divisions.

In February 2018, we conducted a Group-wide Staff Engagement survey to assess how employees feel about a range of factors associated with working within the Group. Results were very encouraging, as they revealed a high degree of engagement within the Group, with staff reporting a real sense of pride in the companies they work for, a high degree of team spirit and that their skills are being effectively utilised. This is a strong platform to build upon as we continue to grow and develop the business.

The Manufacturing Divisions

 
                     2018 H1    2017 H2    2017 H1   2017 FY 
 Revenue             GBP10.8m   GBP12.9m   GBP9.7m   GBP22.6m 
                    ---------  ---------  --------  --------- 
 Operating Profit*   GBP0.5m    GBP2.4m    GBP0.0m   GBP2.4m 
                    ---------  ---------  --------  --------- 
 

A more favourable oil and gas market and a strong defence order book have lifted sales and profits for these Divisions during the period. With increased volumes at PMC, reduced losses at the now divested EP Division and increased defence revenue at CSC.

Precision Machined Components Division

 
                     2018 H1   2017 H2   2017 H1   2017 FY 
 Revenue             GBP5.5m   GBP5.7m   GBP5.0m   GBP10.7m 
                    --------  --------  --------  --------- 
 Operating Profit*   GBP0.6m   GBP0.9m   GBP0.9m   GBP1.8m 
                    --------  --------  --------  --------- 
 

The Division offers four highly specialist engineering businesses under the PMC brand: Al-Met, Roota Engineering, Quadscot Precision Engineers and Martract, all focused on high quality, low volume and high added value components. The strategy for the Division is to expand the existing business initially through increased collaboration, cross-selling, product and key account expansion as well as the development of new markets that are in line with our core competences.

Revenues benefitted from more favourable oil and gas market conditions, although margins in the first-half were affected by a combination of product mix and ongoing investment in people and equipment as we align the Division for growth. In time margins should improve due to a combination of increased volumes of higher margin subsea components and the effects of operational gearing arising from a general rise in volumes.

The oil and gas market environment has realigned itself during the downturn, whereby customers have introduced automotive sector type disciplines with a reduced list of preferred suppliers capable of responding to demanding, shorter lead times. Key drivers for success in this environment are quality, cost and delivery, all of which play to our strengths. It is therefore pleasing to report that we have appointed a Divisional Managing Director, Martin Wood. Martin brings significant experience of the automotive component sector, as well as relevant experience in the oil and gas market.

Whilst the oil and gas market is improving, PMC continues to experience some variability in the order intake. For the last three half-years, PMC has consistently seen order intake rising. At the half-year, the closing order book was 29% higher than the comparative period and order intake for the period 33% higher.

Order intake at the start of the third-quarter has been a little muted, but requests for quotations have accelerated, particularly at Quadscot, and are at the highest level since the start of the market downturn in late 2014. The recent slowing of order intake makes us slightly more cautious about the Division's full-year outlook but with short order to delivery lead-times now the market norm, this can change within a quarter.

Cylinders Division

 
                     2018 H1   2017 H2   2017 H1     2017 FY 
 Revenue             GBP3.9m   GBP5.3m   GBP3.1m     GBP8.4m 
                    --------  --------  ----------  -------- 
 Operating Profit*   GBP0.0m   GBP1.6m   GBP(0.6)m   GBP1.0m 
                    --------  --------  ----------  -------- 
 

CSC supplies a range of high-pressure gas cylinder systems into the defence, oil and gas and industrial gases markets. The defence market is currently the key focus for CSC, with order book visibility to 2021, underpinned by the supply of cylinders for the first Dreadnought submarine (Trident replacement) during 2018 and 2019. The Division has over 80 years of experience in providing cylinders and services to the naval and military aerospace markets. This heritage in a highly demanding market, makes CSC the natural choice for cutting edge product development.

First-half results were underpinned by an increase in defence contracts. Manufacturing of standard design naval cylinders has commenced for the Dreadnought project, but we await the order to start manufacture of the programme specific cylinders. As reported in the recent trading update, timing of this will move revenue and profit between financial years, with any shortfall in 2018 recovered in 2019. Encouragingly, a number of other UK and overseas defence projects have been won, including an order for cylinders for the MoD's Type 26 Frigate programme for supply from 2019.

Whilst the oil and gas market has reduced in importance for the Division, it is pleasing to note that two orders for the supply of air pressure vessels for drillship projects have been secured; the only two new projects placed globally in the last three years. This demonstrates the Division's reputation and continuing cost competitiveness in this market.

Revenues derived from our service offerings, including Integrity Management ("IM"), were relatively flat year on year (2018: GBP1.3 million, 2017: GBP1.4 million) due to a final oxygen cylinder cleaning order in 2017 for the Astute submarine programme and delays in the award of the next MoD naval support contract in 2018. The IM team has a strong presence in the UK defence market and further short-term opportunities exist in Europe, where they were recently awarded their first overseas defence project.

Medium-term growth for this Division will come from further global defence opportunities. Beyond that, the Board believes opportunities exist in the hydrogen market, where the Division recently won a first order to supply hydrogen storage cylinders.

The Division is in a robust position with good visibility of future defence contracts, together with opportunities from the recovering oil and gas market and immediate and growing prospects in renewable fuels.

Engineered Products

 
                   2018 H1     2017 H2     2017 H1     2017 FY 
 Revenue           GBP1.7m     GBP2.2m     GBP1.7m     GBP3.9m 
                  ----------  ----------  ----------  ---------- 
 Operating Loss*   GBP(0.2)m   GBP(0.2)m   GBP(0.3)m   GBP(0.5)m 
                  ----------  ----------  ----------  ---------- 
 

The Division manufactures a range of Hydratron-branded air-operated, high-pressure hydraulic pumps, gas boosters, power packs, hydraulic control panels and test rigs, mainly for use in the oil and gas sector.

The first-half of the financial year saw a continuation of the gradual improving performance that started in 2017, with a more profitable mix of projects, but unpredictable order intake patterns.

The prolonged downturn in the oil and gas market has impacted Hydratron more so than the Group's Precision Machined Components Division. Successful steps had been taken to re-align the business with its core markets and establish the foundations for future growth. However, the Board concluded that Hydratron would be better served as part of a group that can enhance its critical mass and market position and it was sold to Pryme Group Limited on 7 June 2018.

Alternative Energy

 
                     2018 H1     2017 H2     2017 H1   2017 FY 
 Revenue             GBP2.8m     GBP7.8m     GBP8.0m   GBP15.8m 
                    ----------  ----------  --------  --------- 
 Operating Profit*   GBP(0.8)m   GBP(0.1)m   GBP0.1m   GBP0.0m 
                    ----------  ----------  --------  --------- 
 

AE is a designer and supplier of equipment used to upgrade biogas produced by the anaerobic digestion of organic waste, to high-quality methane suitable for either injection into the natural gas grid or direct use as vehicle fuel. The Division trades under the brand name of Greenlane Biogas, the long-established market leader in water-wash biogas upgrader equipment.

The Division started the year with an order book of GBP5.0 million (2017: GBP14. 0 million). During the first-half, three new upgrader contracts were awarded. Additional projects were anticipated but delayed for reasons outside the control of the Division. In North and South America, delays arose from a combination of environmental permitting, complexity of contracts and clients' funding arrangements. In the UK, the major reason for delays has been extremely slow progress of the Renewable Heat Incentive (RHI) legislation through Parliament. It is pleasing to note that this was finally approved on 22 May 2018, some four months later than the energy market had anticipated.

Profit recognition on our upgrading projects is necessarily skewed towards completion, so delays in contract awards experienced to date will negatively impact our full-year results and the Division will be loss making for the year.

As detailed in our 2017 annual report the Division undertook a major reorganisation. As a result, the Division is now centred in Vancouver, Canada, close to the US market where we see the greatest opportunity for biogas upgrading projects, while retaining presence in the important European market with staff in the UK, France, Sweden and Germany. In November 2017, as part of the restructuring, we appointed a Divisional President, Brad Douville, with experience of growing a renewable energy business and he has brought renewed focus to realising the potential of the business.

During the period, the Division scored a number of notable successes which demonstrate its continued leadership in the biogas upgrading market, such as; meeting of the world's tightest gas grid standards in California and the introduction of the world's largest single upgrader currently undergoing commissioning in Arizona. Further progress has been made in establishing commercial partnerships to expand project opportunities worldwide. Strategic relationships have been formed, one of which will give access to Pressure Swing Adsorption (PSA) technology, thereby expanding our product portfolio and broadening our market access.

The biogas market offers substantial potential, particularly in North America and Europe, backed by a range of government targets, incentives and subsidies. However, the market has been frustratingly slow to deliver, prompting a review of strategic options for the Division to unlock better value for shareholders.

Outlook

As outlined in our recent trading update, first-half financial performance has been somewhat subdued due to customers delaying placement of new orders; a market dynamic that we've seen in all Divisions. However, the underlying strength of our Divisions is robust and our capability to execute projects effectively and profitably remains sound.

With the disposal of EP, our remaining Manufacturing Divisions, Cylinders and PMC, will continue to focus on our core competence: supplying low volume, high added value, safety critical, complex components, where the cost of a component is orders of magnitude smaller than the opportunity cost of failure.

Dynamics in the defence and oil and gas markets are showing considerable momentum, so the outlook for CSC and PMC is encouraging, but time dependent. There is significant potential in AE, and the Board is considering a number of strategic options for this Division that will hopefully increase market opportunities and lead to enhanced shareholder value.

 
 Alan Wilson     John Hayward 
  Chairman        Chief Executive 
  12 June 2018 
 

*before M&A costs, amortisation and exceptional charges

**before exceptional cash costs

Condensed Consolidated Statement of Comprehensive Income

For the 26 weeks ended 31 March 2018

 
                                             Unaudited   Unaudited         Audited 
                                              26 weeks    26 weeks        52 weeks 
                                                 ended       ended           ended 
                                              31 March     1 April    30 September 
                                                  2018        2017            2017 
                                     Notes     GBP'000     GBP'000         GBP'000 
 
 Revenue                               2        13,631      17,733          38,418 
 Cost of sales                                 (9,424)    (13,509)        (27,710) 
 
 Gross profit                                    4,207       4,224          10,708 
 
 Administration expenses                       (5,466)     (4,985)         (9,611) 
 
 Operating (loss)/profit before 
  M&A costs, amortisation and 
  exceptional charges                          (1,259)       (761)           1,097 
 
 
 Separately disclosed items 
  of administrative expenses: 
  Amortisation and M&A related 
  exceptional items                    3       (2,978)     (1,285)         (1,968) 
 Other exceptional charges             4         (558)       (421)           (703) 
 
 Operating loss                                (4,795)     (2,467)         (1,574) 
 
 Finance income                                      -           -               4 
 Finance costs                                   (182)       (124)           (343) 
 
 Loss before taxation                          (4,977)     (2,591)         (1,913) 
 
 Taxation                              5           533         284             766 
 
 Loss for the period attributable 
  to owners of the parent                      (4,444)     (2,307)         (1,147) 
 
 Other comprehensive income: 
  Items that may be reclassified 
  subsequently to profit or 
  loss: 
 Currency transaction differences 
  on translation of foreign 
  operations                                        10           -             (4) 
 
 Total comprehensive income 
  for the period attributable 
  to the owners of the parent                  (4,434)     (2,307)         (1,151) 
 
 
 Loss per share from continuing 
  operations 
 Loss per share basic                  6       (25.0)p     (15.9)p          (7.9)p 
 Loss per share diluted                6       (25.0)p     (15.9)p          (7.9)p 
 

Condensed Consolidated Balance Sheet

As at 31 March 2018

 
                                          Unaudited   Unaudited         Audited 
                                           26 weeks    26 weeks        52 weeks 
                                              ended       ended           ended 
                                           31 March     1 April    30 September 
                                               2018        2017            2017 
                                  Notes     GBP'000     GBP'000         GBP'000 
 Non-current assets 
 Goodwill                                    14,370      16,062          16,062 
 Intangible assets                           12,652      13,913          13,658 
 Property, plant and equipment               12,233      13,249          12,583 
 Deferred tax asset                             343         502             343 
 
                                             39,598      43,726          42,646 
 
 Current assets 
 Inventories                                  5,972       5,245           4,986 
 Trade and other receivables                 10,042       8,818          11,339 
 Cash and cash equivalents          7         3,883       7,415           4,791 
 Current tax asset                              421           -               - 
 
                                             20,318      21,478          21,116 
 
 
 Total assets                                59,916      65,204          63,762 
 
 
 Current liabilities 
 Trade and other payables                  (10,042)    (12,854)        (11,748) 
 Deferred consideration                           -       (589)               - 
 Borrowings                         7         (220)       (210)           (219) 
 Current tax liabilities                          -       (340)            (23) 
 
                                           (10,262)    (13,993)        (11,990) 
 
 Non-current liabilities 
 Other payables                               (218)       (281)           (238) 
 Borrowings                         7      (13,009)    (15,756)        (15,642) 
 Deferred tax liabilities                   (1,944)     (2,496)         (2,089) 
 
                                           (15,171)    (18,533)        (17,969) 
 
 
 Total liabilities                         (25,433)    (32,526)        (29,959) 
 
 
 Net assets                                  34,483      32,678          33,803 
 
 
 Share capital                                  931         725             725 
 Share premium account                       26,451      21,637          21,637 
 Translation reserve                          (395)       (401)           (405) 
 Retained earnings                            7,496      10,717          11,846 
 
 Total equity                                34,483      32,678          33,803 
 
 
 

Condensed Consolidated Statement of Changes in Equity

For the 26 weeks ended 31 March 2018

 
                                                                    Profit 
                                            Share                      and 
                                 Share    premium   Translation       loss     Total 
                               capital    account       reserve    account    equity 
                               GBP'000    GBP'000       GBP'000    GBP'000   GBP'000 
 
 Balance at 30 September 
  2017 (audited)                   725     21,637         (405)     11,846    33,803 
 
 Share based payments                -          -             -         94        94 
 Shares issued                     206      4,814             -          -     5,020 
 
 Transactions with owners          206      4,814             -         94     5,114 
 
 
 Loss for the period                 -          -             -    (4,444)   (4,444) 
 Exchange differences 
  arising on retranslation 
  of foreign operations              -          -            10          -        10 
 
 Total comprehensive 
  income                             -          -            10    (4,444)   (4,434) 
 
 Balance at 31 March 
  2018 (unaudited)                 931     26,451         (395)      7,496    34,483 
 
 
 

For the 26 weeks ended 1 April 2017

 
                                                                    Profit 
                                            Share                      and 
                                 Share    premium   Translation       loss     Total 
                               capital    account       reserve    account    equity 
                               GBP'000    GBP'000       GBP'000    GBP'000   GBP'000 
 
 Balance at 1 October 
  2016 (audited)                   724     21,620         (401)     12,872    34,815 
 
 Share based payments                -          -             -        152       152 
 Shares issued                       1         17             -          -        18 
 
 Transactions with owners            1         17             -        152       170 
 
 
 Loss for the period                 -          -             -    (2,307)   (2,307) 
 Exchange differences 
  arising on retranslation 
  of foreign operations              -          -             -          -         - 
 
 Total comprehensive 
  income                             -          -             -    (2,307)   (2,307) 
 
 Balance at 1 April 2017 
  (unaudited)                      725     21,637         (401)     10,717    32,678 
 
 
 

Condensed Consolidated Statement of Changes in Equity (continued)

For the 52 weeks ended 30 September 2017

 
 
                                           Share                     Profit 
                                Share    premium   Translation     and loss     Total 
                              capital    account       reserve      account    Equity 
                              GBP'000    GBP'000       GBP'000      GBP'000   GBP'000 
 
 Balance at 1 October 
  2016 (audited)                  724     21,620         (401)       12,872    34,815 
 
 Share based payments               -          -             -          121       121 
 Shares issued                      1         17             -            -        18 
 
 Transactions with owners           1         17             -          121       139 
 
 
 Loss for the period                -          -             -      (1,147)   (1,147) 
 Other comprehensive 
  income: 
  Exchange differences 
  on translating foreign 
  operations                        -          -           (4)            -       (4) 
 
 Total comprehensive 
  income                            -          -           (4)      (1,147)   (1,151) 
 
 Balance at 30 September 
  2017 (audited)                  725     21,637         (405)       11,846    33,803 
 
 

Condensed Consolidated Cash Flow Statement

For the 26 weeks ended 31 March 2018

 
                                             Unaudited   Unaudited         Audited 
                                              26 weeks    26 weeks        52 weeks 
                                                 ended       ended           ended 
                                              31 March     1 April    30 September 
                                                  2018        2017            2017 
                                               GBP'000     GBP'000         GBP'000 
 Cash flows from operating activities 
 Loss after tax                                (4,444)     (2,307)         (1,147) 
 Adjustments for: 
 Depreciation of property, plant 
  and equipment                                    697         683           1,438 
 Finance costs - net                               182         124             339 
 Amortisation of intangible assets               1,286       1,202           2,407 
 Loss on disposal of property, plant 
  and equipment                                      2           -              21 
 Share option costs                                 94         152             121 
 Income tax credit                               (533)       (284)           (766) 
 Exceptional goodwill impairment                 1,692           -               - 
 Exceptional deferred consideration 
  released and revaluation                           -           -           (597) 
 Exceptional impairment of assets                    -           -              11 
 
 Changes in working capital: 
 (Increase)/decrease in inventories              (986)        (16)             243 
 Decrease in trade and other receivables         1,297       2,617             413 
 Decrease in trade and other payables          (1,802)       (427)         (2,164) 
 
 Cash flows from operating activities          (2,515)       1,744             319 
 
 Finance costs paid                              (100)       (124)           (324) 
 Income tax (paid)/ refunded                      (56)         185             216 
                                                                           _______ 
 Net cash from operating activities            (2,671)       1,805             211 
 
 Cash flows from investing activities 
 Purchase of property, plant and 
  equipment                                      (441)        (88)           (961) 
 Proceeds from sale of fixed assets                 26           -              21 
 Cash outflow on purchase of subsidiaries 
  net of cash acquired                                     (3,597)         (3,597) 
 
 Net cash used in investing activities           (415)     (3,685)         (4,537) 
 
 Financing activities 
 New borrowings                                      -       3,350           3,350 
 Repayment of borrowings                       (2,842)       (145)           (324) 
 Shares issued                                   5,020          17              18 
                                                ______      ______          ______ 
 Net cash used for financing activities          2,178       3,222           3,044 
 
 Net (decrease)/increase in cash 
  and cash equivalents                           (908)       1,342         (1,282) 
 
 Cash and cash equivalents at beginning 
  of period                                      4,791       6,073           6,073 
 
 Cash and cash equivalents at end 
  of period                                      3,883       7,415           4,791 
 
 

Notes to the Condensed Consolidated Interim Financial Statements

1. Basis of preparation

The Group's interim results for the 26 weeks ended 31 March 2018 are prepared in accordance with the Group's accounting policies which are based on the recognition and measurement principles of International Financial Reporting Standards ("IFRS") as adopted by the EU and effective, or expected to be adopted and effective, at 29 September 2018. As permitted, this interim report has been prepared in accordance with the AIM rules and not in accordance with IAS34 "Interim financial reporting" and therefore the interim information is not in full compliance with IFRS. The principal accounting policies of the Group have remained unchanged from those set out in the Group's 2017 annual report and financial statements.

The Group's 2017 financial statements for the 52 weeks ended 30 September 2017 were prepared under IFRS. The auditor's report on these financial statements was unmodified and did not contain statements under Sections 498(2) or (3) of the Companies Act 2006 and they have been filed with the Registrar of Companies.

The consolidated financial statements are prepared under the historical cost convention as modified to include the revaluation of financial instruments.

The financial information for the 26 weeks ended 31 March 2018 and 1 April 2017 has not been audited or reviewed and does not constitute full financial statements within the meaning of Section 434 of the Companies Act 2006. The unaudited interim financial statements were approved by the Board of Directors on 12 June 2018.

2. Segmental analysis

Revenue by destination

 
                   Unaudited   Unaudited         Audited 
                    26 weeks    26 weeks        52 weeks 
                       ended       ended           ended 
                    31 March     1 April    30 September 
                        2018        2017            2017 
                     GBP'000     GBP'000         GBP'000 
 
 United Kingdom        5,447       6,785          15,451 
 Other EU              3,953       2,674           7,050 
 Rest of World         4,231       8,274          15,917 
 
                      13,631      17,733          38,418 
 
 

Revenue by sector

 
                       Unaudited   Unaudited         Audited 
                        26 weeks    26 weeks        52 weeks 
                           ended       ended           ended 
                        31 March     1 April    30 September 
                            2018        2017            2017 
                         GBP'000     GBP'000         GBP'000 
 
 Oil and gas               7,097       6,774          13,775 
 Defence                   2,520       1,909           6,471 
 Industrial gases          1,201       1,017           2,347 
 Alternative energy        2,813       8,033          15,825 
 
                          13,631      17,733          38,418 
 
 

2. Segmental analysis (continued)

Revenue by activity

 
                                             Unaudited   Unaudited         Audited 
                                              26 weeks    26 weeks        52 weeks 
                                                 ended       ended           ended 
                                              31 March     1 April    30 September 
                                                  2018        2017            2017 
                                               GBP'000     GBP'000         GBP'000 
 
 Cylinders                                       3,855       3,108           8,403 
 Precision Machined Components                   5,512       5,014          10,703 
 Engineered Products                             1,698       1,731           3,861 
 Intra divisional                                (229)       (136)           (349) 
                                               _______     _______         _______ 
 Manufacturing subtotal                         10,836       9,717          22,618 
 
 Alternative Energy                              2,795       8,016          15,800 
 
                                                13,631      17,733          38,418 
 
 
 
                                             Unaudited   Unaudited         Audited 
                                              26 weeks    26 weeks        52 weeks 
                                                 ended       ended           ended 
 Profit/(loss) from continuing operations     31 March     1 April    30 September 
  before taxation by activity                     2018        2017            2017 
                                               GBP'000     GBP'000         GBP'000 
 
 Cylinders                                          14       (627)           1,062 
 Precision Machined Components                     625         866           1,840 
 Engineered Products                             (150)       (284)           (471) 
                                               _______     _______         _______ 
 Manufacturing subtotal                            489        (45)           2,431 
 
 Alternative Energy                              (807)          91               3 
 Unallocated central costs                       (941)       (807)         (1,337) 
                                               _______     _______         _______ 
 
 Operating (loss)/profit pre amortisation 
  and M&A related exceptional items            (1,259)       (761)           1,097 
 
 Amortisation and M&A related exceptional 
  items                                        (2,978)     (1,285)         (1,968) 
 Other exceptional charges                       (558)       (421)           (703) 
                                                                           _______ 
 Operating loss                                (4,795)     (2,467)         (1,574) 
 
 Finance costs                                   (182)       (124)           (339) 
                                               _______     _______         _______ 
 
 Loss before tax                               (4,977)     (2,591)         (1,913) 
                                                ______     _______         _______ 
 

The Operating (loss)/profit before taxation by activity is stated before the allocation of Group management charges.

2. Segmental analysis (continued)

Earnings before interest, taxation, depreciation, and amortisation (EBITDA)

 
                                         Unaudited   Unaudited         Audited 
                                          26 weeks    26 weeks        52 weeks 
                                             ended       ended           ended 
                                          31 March     1 April    30 September 
                                              2018        2017            2017 
                                           GBP'000     GBP'000         GBP'000 
 
 Adjusted EBITDA                             (562)        (78)           2,535 
 
 M&A costs and related exceptional 
  items                                    (1,692)        (83)             439 
 Other exceptional charges                   (558)       (421)           (703) 
 
 
 EBITDA                                    (2,812)       (582)           2,271 
 
 
 Depreciation                                (697)       (683)         (1,438) 
 Amortisation re: acquired businesses      (1,286)     (1,202)         (2,407) 
 Interest                                    (182)       (124)           (339) 
 
 
 Loss before tax                           (4,977)     (2,591)         (1,913) 
 
 

Amortisation on acquired businesses as set out above consists of the amortisation charged on intangible assets acquired as a result of business combinations in previous periods.

3. Amortisation and M&A related exceptional items

M&A related exceptional items and amortisation of intangible assets are shown separately in the Condensed Consolidated Statement of Comprehensive Income. A breakdown of those costs can be seen below.

 
                                       Unaudited   Unaudited         Audited 
                                        26 weeks    26 weeks        52 weeks 
                                           ended       ended           ended 
                                        31 March     1 April    30 September 
                                            2018        2017            2017 
                                         GBP'000     GBP'000         GBP'000 
 
 Amortisation of intangible assets 
  arising on a business combination      (1,286)     (1,202)         (2,407) 
 Goodwill impairment                     (1,692)           -               - 
 M&A costs                                     -        (83)           (158) 
 Deferred consideration write back             -           -             597 
 
                                         (2,978)     (1,285)         (1,968) 
 
 

The Goodwill impairment relates to a full write down of the goodwill which arose on the acquisition of Hydratron Limited. The disposal of Hydratron Limited (note 10) provided an indicator of impairment, with the divestment crystallising a fair market value assessment and the Directors considered it appropriate to recognise the impairment in the 6 month period ended 31 March 2018.

The deferred consideration write back for the period ended 30 September 2017 related to the deferred consideration arising

from the acquisition of Martract Limited. The payment of this consideration was contingent on the future results of Martract. Given the magnitude of the amount released and the fact that it was non-trading, the Directors considered it appropriate to disclose it as an exceptional item.

4. Other exceptional charges

Items that are material either because of their size or their nature, or that are non-recurring are considered as exceptional items and are disclosed separately on the face of the Condensed Consolidated Statement of Comprehensive Income.

An analysis of the amounts presented as exceptional items in these financial statements is given below:

 
                                           Unaudited   Unaudited         Audited 
                                            26 weeks    26 weeks        52 weeks 
                                               ended       ended           ended 
                                            31 March     1 April    30 September 
                                                2018        2017            2017 
                                             GBP'000     GBP'000         GBP'000 
 Reorganisation and redundancy                 (290)       (401)           (710) 
 Costs in relation to HSE investigation          (6)        (20)            (21) 
 Share placing costs                           (262)           -               - 
 Write back of KGTM loan previously 
  provided for                                     -           -              28 
 
                                               (558)       (421)           (703) 
 
 

The reorganisation costs relate to costs of restructuring across the Group. They are recognised in accordance with IAS 19.

Costs in relation to the HSE investigation are costs borne by the Group as a direct result of the accident at Chesterfield Special Cylinders which are not recoverable through insurance.

The write back of KGTM loan previously provided for, related to a receipt from KGTM for a loan amount that was previously provided for (reversal of the provision).

The share placing costs are transaction costs relating to the share issue on 6 November 2017.

Given the non-trading nature of these costs, the Directors consider it appropriate to disclose these as exceptional items.

5. Taxation

 
                                            Unaudited   Unaudited         Audited 
                                             26 weeks    26 weeks        52 weeks 
                                                ended       ended           ended 
                                             31 March     1 April    30 September 
                                                 2018        2017            2017 
                                              GBP'000     GBP'000         GBP'000 
 
 Current tax credit                               386         125             356 
 Deferred taxation credit                         147         159             410 
 
 Taxation credit to the income statement          533         284             766 
 
 

The tax charge differs from the theoretical amount that would arise using the weighted average tax rate applicable to the profits of the consolidated entities.

6. Earnings/(loss) per ordinary share

The calculation of basic earnings per share is based on the earnings attributable to ordinary shareholders divided by the weighted average number of shares in issue during the period.

The calculation of diluted earnings per share is based on basic earnings per share, adjusted to allow for the issue of shares on the assumed conversion of all dilutive options.

Adjusted earnings per share shows earnings per share, adjusting for the impact of M&A costs, the amortisation charged on intangible assets acquired as a result of business combinations, any exceptional items, and for the estimated tax impact, if any, of those costs. Adjusted earnings per share is based on the profits as adjusted divided by the weighted average number of shares in issue.

 
                                              Unaudited    Unaudited          Audited 
                                               26 weeks     26 weeks         52 weeks 
                                                  ended        ended            ended 
                                               31 March      1 April     30 September 
                                                   2018         2017             2017 
                                                GBP'000      GBP'000          GBP'000 
 
 Loss after tax for basic and diluted 
  earnings per share                            (4,444)      (2,307)          (1,147) 
 
 (Loss)/profit after tax for adjusted 
  earnings per share: 
 
 Loss after tax as above                        (4,444)      (2,307)          (1,147) 
 Amortisation and M&A related exceptional 
  items                                           2,978        1,285            1,968 
 Other exceptional charges                          558          421              703 
 Tax movement thereon                             (325)        (317)            (606) 
 
 (Loss)/profit after tax for adjusted 
  earnings per share                            (1,233)        (918)              918 
 
 
                                                 Number       Number 
                                                     of           of        Number of 
                                                 Shares       Shares           shares 
 
 Weighted average number of shares 
  in issue                                   17,779,695   14,474,848       14,485,099 
 
 Dilutive effect of options                           -        3,766               75 
 
 Diluted weighted average number of 
  shares                                     17,779,695   14,478,614       14,485,174 
 
 
 Loss per share - basic                         (25.0)p      (15.9)p           (7.9)p 
 
 
 Loss per share - diluted                       (25.0)p      (15.9)p           (7.9)p 
 
 
 Adjusted (loss)/earnings per share 
  - basic                                        (6.9)p       (6.3)p             6.3p 
 
 

In the current period the Group has recorded a loss after tax and therefore the options are antidilutive.

7. Reconciliation of net borrowings

 
                              Unaudited   Unaudited         Audited 
                               26 weeks    26 weeks        52 weeks 
                                  ended       ended           ended 
                               31 March     1 April    30 September 
                                   2018        2017            2017 
                                GBP'000     GBP'000         GBP'000 
 
 Cash and cash equivalents        3,883       7,415           4,791 
 Bank borrowings               (12,300)    (15,000)        (15,000) 
 Finance leases                   (929)       (966)           (861) 
 
 Net borrowings                 (9,346)     (8,551)        (11,070) 
 
 
 

At the balance sheet date, the above bank borrowings were due for repayment on 31 March 2019, being exactly 12 months from the balance sheet date. On 11 June the bank committed to extend the repayment date to 31 January 2020. Accordingly the directors have concluded that it is appropriate to present the loan as due for repayment after one year.

8. Contingent liabilities

Following the fatal accident at Chesterfield Special Cylinders ("CSC") in June 2015, other than the submission by CSC of written responses to questions from the Health and Safety Executive ("HSE"), there have been no further developments since the preliminary statement on 12 December 2017 and the HSE investigation into this accident remains ongoing. On 1 February 2016 the Sentencing Council's new "Health and Safety Offences, Corporate Manslaughter and Food Safety and Hygiene Offences Definitive Guideline" (2016) came into force.

The guidelines set a range of fines dependent on the levels of harm and culpability. These levels are assessed by the Judge when sentencing and not at the time of charges being brought. We continue to cooperate fully with the HSE. Until the HSE investigation is complete CSC's management and legal adviser are not in a position to assess what charges may be brought. As a result of this and the nature of the sentencing guidelines it is not possible to determine with any degree of certainty what, if any, financial penalties may be levied on CSC or any other group company as a result of this investigation. At such time as the quantum and likelihood of any penalty is able to be reliably determined further disclosure or provision will be made in accordance with IAS 37 "Provisions, Contingent Liabilities and Contingent Assets".

9. Dividends

No final or interim dividend was paid for 52 week periods ended 1 October 2016 or 30 September 2017. No interim dividend for the 52 week period ending 29 September 2018 is proposed.

A copy of the Interim Report will be sent to shareholders shortly and will be available on the Company's website: www.pressuretechnologies.com.

10. Post Balance Sheet event

On 7 June 2018, and as separately communicated to Shareholders on that date, the Group completed the disposal of

the entire issued share capital of its subsidiary, Hydratron Limited, to Pryme Group Limited, majority owned by Simmons Private Equity LP. This business is reported by the Group as the Engineered Products segment.

The initial consideration is GBP1.1m (less costs and retentions), along with potential deferred contingent consideration up to a maximum of GBP2.3m, dependent on revenue in the twelve months post completion. As detailed in Note 3 to these financial statements a goodwill impairment of GBP1.7m was recognised as an exceptional charge in the 6 month period ended 31 March 2018.

This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact rns@lseg.com or visit www.rns.com.

END

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