TIDMPRES
RNS Number : 2636P
Pressure Technologies PLC
17 February 2016
17 February 2016
Pressure Technologies plc
("Pressure Technologies" or the "Group")
AGM STATEMENT
The Board of Pressure Technologies plc (AIM: PRES) issues the
following trading update ahead of the Group's Annual General
Meeting, which is being held at 11.00 hours today at Chesterfield
Special Cylinders, Meadowhall Road, Sheffield.
The Group businesses dependent on the oil and gas industry are
showing resilience in what are extremely difficult markets and we
will continue to take whatever measures are needed to maintain
that. Our view, along with others in the sector, is that there will
be no significant pick up in the oil and gas market during 2016.
Whilst we are monitoring our cost base closely and taking action
where necessary to ensure the resilience of our businesses, we
continue to invest in the future of the Group and implement the
strategic objectives to broaden our customer, technology and
industrial base.
Alternative Energy, which is tracking as planned, brings balance
and diversification to the Group. Our manufacturing businesses,
Precision Machined Components, Engineered Products and Cylinders
are well run businesses, which have withstood many oil and gas
market cycles. In the short-term the Group is dependent on the
timing of receipt of large orders in Cylinders and Alternative
Energy to meet market expectations and the third quarter of the
financial year will be critical to this, with profits heavily
skewed to the second-half. Cash requirements for the Group remain
well-controlled and we have comfortably complied with banking
covenants.
The Board remains confident in the medium to long-term prospects
for the Group despite the difficult market conditions created by
the low oil price.
Divisional Review
Precision Machined Components
The division, which is almost 100% focused on the oil and gas
market continues to trade in line with expectations. Management
believes that market share is being maintained in a very tight
market through a combination of cost down initiatives and ability
to offer high quality product on short delivery lead-times. Sales
of wear parts and consumable tooling remain resilient due to
continuing high volumes of oil production. Sales into the capital
equipment market remain at subdued levels but even there, new
customer and product developments should start to feed into sales
revenues from the fourth quarter of the 2016 financial year.
Engineered Products
This division has seen the most marked impact from the downturn
in the oil and gas market. Two main product areas, high-pressure
pumps and test benches have experienced a further decline in demand
since the annual report. Sales of the core high-pressure pump
products have been impacted by a reduction in maintenance spend and
higher asset utilisation by our customers. Test benches for
high-pressure components have been heavily affected by a reduction
in discretionary spend with customers delaying investment in new
and replacement test facilities.
The appointment of a new Managing Director in December of 2015
has resulted in a significant reorganisation of the division.
Reductions in headcount over and above those discussed in the
annual report should yield further savings from the second half of
this financial year. At the same time, the project to expand the
core product line continues together with development of sales
channels and, over the next two years, we expect a significant
increase in business outside the oil and gas market.
Cylinders
With order to delivery lead-times of several months, the
Cylinders Division has better forward visibility than Precision
Machined Components and Engineered Products and is benefitting from
an increase in defence contracts and the expansion of its customer
base. The sales office in the USA and the Integrity Management
business continue to make steady progress.
At this stage of the year, sales and orders are in line with
expectations. There is a good pipeline of potential orders, very
little of which is for the oil and gas market. Timing of new orders
and delivery dates will have a significant influence on
results.
Alternative Energy
Like the Cylinders Division, the Alternative Energy Division has
long order to delivery lead-times for its biogas upgrader projects.
Unlike the rest of the Group, the main driver for customers placing
orders is incentive driven rather than oil and gas price. Two
recent contract wins, one in the UK, a repeat order, and one in
North America, together with a significant pipeline of potential
orders across Europe, North America and China are very encouraging.
Timing of contract awards has a major bearing on results, as
revenue recognition milestones can easily cross between financial
years.
Product and technology development is continuing as planned with
the launch of our membrane technology at the recent Biogaz Europe
show in France adding to our existing upgrading technology, water
wash and pressure swing adsorption ("PSA"). The ability to offer
all three options makes us unique in the biogas upgrading market,
with outsourced manufacturing and no factory to fill, we are able
to offer our customers the best technical and cost solution for
each project.
For further information, please contact:
Pressure Technologies plc Tel: 0114 257 3622
John Hayward, Chief Executive www.pressuretechnologies.com
Jo Allen, Group Finance Director
Keeley Clarke, Investor Relations
Tavistock Tel: 020 7920 3150
Simon Hudson
Cantor Fitzgerald Europe (Nominated Tel: 020 7894 8337
Adviser and Broker)
Philip Davies / Will Goode
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 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 the global leader in biogas upgrading. On
this foundation, the company is building a highly profitable group
of companies through a combination of organic initiatives and
acquisitions.
Pressure Technologies has four divisions, Precision Machined
Components, Cylinders, Engineered Products and Alternative Energy,
serving four markets: oil and gas, defence, industrial gases and
alternative energy.
Precision Machined Components
-- 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
Cylinders
-- Chesterfield Special Cylinders, Sheffield, IPO cornerstone in
2007 www.chesterfieldcylinders.com
-- Kelley GTM Manufacturing, Amarillo - 40% stake acquired by
the Group in December 2013 www.kelleygtm.com
Engineered Products
-- Hydratron, Manchester and Houston, acquired in 2010 www.hydratron.com
Alternative Energy
-- Chesterfield BioGas, Sheffield, founded in 2008. Renamed
Greenlane Biogas UK on 5 June 2015.
-- Greenlane, Vancouver, Canada and Auckland, New Zealand,
acquired in October 2014 www.greenlanebiogas.com
This information is provided by RNS
The company news service from the London Stock Exchange
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February 17, 2016 02:00 ET (07:00 GMT)