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
IR FBMFTMBABBRP
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June 12, 2018 02:00 ET (06:00 GMT)
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