27 June 2023
Pressure Technologies plc
(“Pressure Technologies”, the “Company” or the “Group”)
2023 Interim Results
Pressure Technologies (AIM: PRES), the specialist engineering group, is pleased to announce its unaudited interim results for the 26 weeks to 1 April 2023.
Financial Highlights
| ● | Group revenue increased 45% to £13.8 million (2022: £9.5 million) |
| ● | Gross profit up 76% to £3.7 million at 27% margin (2022: £2.1 million at 22% margin) |
| ● | Adjusted EBITDA1 profit of £0.3 million (2022: EBITDA loss of £1.2 million) |
| ● | Adjusted operating loss2 of £0.5 million (2022: loss of £2.1 million) |
| ● | Reported loss before tax of £1.4 million (2022: loss of £2.3 million) |
| ● | Reported basic loss per share of 3.9p (2022: loss per share of 6.0p) and Adjusted basic loss per share3 of 2.3p (2022: loss per share of 5.7p) |
| ● | Net debt4 of £3.7 million (2022: £5.4 million; 1 October 2022: £3.5 million); Net bank borrowings, excluding asset finance lease liabilities and right of use asset lease liabilities, of £0.9 million (2022: £2.7 million; 1 October 2022: £0.6 million) |
1 Adjusted EBITDA is earnings before interest, tax, depreciation, amortisation and other exceptional costs
2 Adjusted operating loss is operating loss before amortisation and other exceptional costs
3 Adjusted basic loss per share is reported earnings per share before amortisation and other exceptional costs
4 Net debt comprises cash and cash equivalents, bank borrowings, asset finance lease liabilities and right of use asset lease liabilities
Group Highlights
| ● | Improving trading conditions during the first half of FY23 driven by major defence contract placement and continued recovery in the oil and gas market against the backdrop of more resilient economic conditions. |
| ● | Group revenue in the first half of FY23 of £13.8 million (2022: £9.5 million), representing like-for-like growth of 45% and underpinning a return to Adjusted EBITDA profitability of £0.3m (2022: loss of £1.2 million). |
| ● | Order intake of £34.3 million for the eight months ended May 2023 (eight months ended May 2022: £17.4 million) was 97% higher than the corresponding period last year and supports a current order book of £28.1 million at May 2023 (May 2022: £16.6 million), the highest level for more than five years. |
| ● | Fundraising of £2.1 million (net of expenses) in December 2022 used to support the Group’s short-term working capital requirements and provide a bridge to profitable, cash-generative trading following placement of a major defence contract in February 2023. |
| ● | Bank borrowings were reduced by £0.5 million in the period to £1.9 million (1 October 2022: £2.4 million). |
| ● | The refinancing of the debt facilities of the Group has not progressed as quickly as originally expected. The Board continues to explore refinancing options for the Group and is engaged in constructive discussions with potential lenders. Based on these discussions, the Board has a reasonable expectation that the refinancing can be completed in the remainder of calendar year 2023. |
| ● | Following a marketing process, the Board has decided not to divest Precision Machined Components at this time due to improving conditions in the oil and gas market and will revisit strategic options for the division later in the year. |
Chesterfield Special Cylinders (“CSC”)
| ● | CSC revenue in the first half of FY23 of £8.8 million (2022: £6.3 million), driven by defence work in the second quarter and progress in hydrogen markets, underpinning improved EBITDA profitability. |
| ● | Defence revenue of £7.0 million (2022: £5.0 million), reflecting strong order book and new contract placements for submarine and surface ship projects for UK and overseas navies. |
| ● | Largest ever contract award of £18.2 million announced in February 2023 to supply safety-critical pressure vessels for major UK naval new construction programme over three years to 2025. |
| ● | Hydrogen revenue increased to £1.3 million (2022: £0.5 million), driven equally by sales of new refuelling station storage and periodic inspection, testing and recertification services for hydrogen road trailers. |
| ● | Enquiry levels for Integrity Management services increased sharply during the first half of FY23, driven by growing activity in the offshore and hydrogen energy markets. |
| ● | CSC order intake of £22.3 million in the eight months ended May 2023 (eight months ended May 2022: £12.4 million) supports a current order book of £19.2m million at the end of May 2023 (May 2022: £14.2 million), the highest order book level seen in the last five years, providing strong revenue cover for the remainder of FY23 and good visibility into FY24. |
| ● | Operational improvements in the Sheffield facility are delivering increased capacity and efficiency for hydrogen cylinder and road trailer new build, inspection and testing services. |
Precision Machined Components (“PMC”)
| ● | PMC revenue in the first half of FY23 of £4.9 million (2022: £3.2 million), reflecting recovery in the oil and gas market and underpinning a return to EBITDA profitability. |
| ● | PMC order intake strengthened significantly in the first half of FY23 and reached £12.0 million in the 8 months ended May 2023 (8 months ended May 2022: £5.0 million), supporting a current order book of £8.9 million at the end of May 2023 (May 2022: £2.4 million), the highest order book level seen in the last five years, providing strong revenue cover for the remainder of FY23. |
Outlook
| ● | Improved second-half performance expected for CSC, driven by high-value defence contract milestones, Integrity Management deployments and hydrogen energy projects. |
| ● | Despite delays in the broader hydrogen supply chain, opportunities continue to be developed for the supply of new hydrogen storage and transportation systems for refuelling and decarbonisation applications. |
| ● | Demand for in-situ and factory-based inspection, testing and recertification services for hydrogen storage and road trailers presents an exciting growth opportunity across an expanding customer base. |
| ● | Recovery of financial performance in PMC expected to strengthen in second half driven by increasing order intake as OEM customers report a stronger oil and gas market outlook, supporting improving profitability. |
| ● | The order book of the Group is robust, underpinning a stronger performance in the second half of FY23. However, this will require further strong improvements in operational and supply chain performance and confirmation of the expected increase in Integrity Management activity, all of which represent material uncertainties. |
| ● | Accordingly, the Board therefore believes that full-year FY23 Adjusted EBITDA is more likely to be in the range £2.2 million to £2.5 million, which would represent significant progress as compared to FY22 (Adjusted EBITDA Loss of £0.9 million). |
Chris Walters, Chief Executive of Pressure Technologies plc, commented:
“Significantly improved performance in the first half of FY23 reflects the strong defence order book in Chesterfield Special Cylinders and the continued recovery of oil and gas market trading conditions in Precision Machined Components.
In Chesterfield Special Cylinders, the order book reached the highest level on record following an £18.2 million contract award to supply air pressure vessels for a major UK naval new construction programme. This order was the largest ever for the division, providing good visibility of high-value work through the remainder of FY23 and into FY24.
Despite delays in the hydrogen energy supply chain over the past year, we remain well positioned in this emerging market to supply static and mobile hydrogen storage solutions, and to provide the through-life inspection, testing and recertification services for these safety-critical systems over the medium and longer term.
In Precision Machined Components, the recovery of order intake levels during the first half of the year is expected to continue throughout the second half, as OEM customers report an increasingly positive oil and gas market outlook. In light of these improving conditions, the Board has decided not to divest PMC at this time and will revisit strategic options for the business later in the year.
Both of our divisions have strong and growing order books, our executive team, including Chief Financial Officer and Chief Operating Officer, is complete and we see the opportunity for revenue growth and margin improvement across the Group.”
Additional Information
The person responsible for arranging release of this announcement on behalf of the Company is Steve Hammell, Chief Financial Officer.
For further information, please contact:
| Pressure Technologies plc Chris Walters, Chief Executive Steve Hammell, Chief Financial Officer | Tel: 0333 015 0710 |
| Singer Capital Markets (Nomad and Broker) Rick Thompson / Asha Chotai | Tel: 0207 496 3000 |
| Houston (Financial PR and Investor Relations) Kay Larsen /Ben Robinson | Tel: 0204 529 0549pressuretechnologies@houston.co.uk |