3 October 2023
Pressure Technologies plc
(“Pressure Technologies” or “the Group”)
Post-Close Update
Pressure Technologies plc (AIM: PRES), the specialist engineering group, announces a business update and its expected unaudited post-close results for the financial year ended 30 September 2023 (“FY23”).
FY23 Post-Close Results
The Group’s unaudited results1 for FY23 are expected as follows:
£’million FY23 FY22
Revenue 32 25
Adjusted EBITDA2 Profit / (Loss) 2.0 (0.9)
Order Intake 43 25
Closing Order Book 21 10
Net Debt3 (2.4) (3.5)
Net Bank Borrowings4 0.0 (0.6)
1 These post-close results have not yet been audited and are therefore the results that the Group expects to report for FY23. The post-close results have been prepared on the going concern basis using the existing accounting policies of the Group.
2 Adjusted EBITDA Profit / (Loss) is earnings before interest, tax, depreciation, amortisation and other exceptional costs.
3 Net Debt comprises cash and cash equivalents, bank borrowings, asset finance lease liabilities and right of use asset lease liabilities.
4 Net Bank Borrowings comprises cash and cash equivalents and bank borrowings only.
The Group is expected to report revenue of approximately £32 million (FY22: £25 million) in FY23, representing like-for-like growth of 28%, underpinning a return to profitability with an expected Adjusted EBITDA of approximately £2.0 million (FY22: loss of £0.9 million). This performance was driven by Group order intake of approximately £43 million (FY22: £25 million) in the year, a 72% increase on prior year, supporting an order book of approximately £21 million (FY22: £10 million) at year-end, providing much improved visibility of forward revenue. The expected Adjusted EBITDA is slightly below the guidance issued in June 2023 due to the slippage of revenue from a small number of projects into the first quarter of FY24.
Chesterfield Special Cylinders (CSC) is expected to report revenue of approximately £21 million (FY22: £18 million) with a strong performance in the second half of the year driven by activity on a major UK defence contract secured in February 2023, underpinned by recent operational improvements. CSC Adjusted EBITDA in the year is expected to be approximately £3.6 million (FY22: £1.1 million), a significant improvement on prior year. CSC order intake in the year was approximately £25 million (FY22: £16 million), supporting an order book of approximately £11 million (FY22: £7 million) at year-end.
Precision Machined Components (PMC) is expected to report revenue of approximately £11 million (FY22: £7 million), an increase of 57%, with improved performance in the second half of the year driven by the recovery in order intake from major oil and gas OEM customers since March 2023. This has underpinned a return to profitability with expected Adjusted EBITDA of approximately £0.3 million (FY22: loss of £0.3 million). PMC order intake in the year was approximately £18 million (FY22: £9 million), a 100% increase on prior year, supporting an order book of approximately £10 million (FY22: £3 million) at year-end and providing the best visibility of forward revenue seen in the last five years.
Central costs (before exceptional items) in the year are expected to be approximately £1.9 million (FY22: £1.7 million), slightly higher than prior year due to general inflationary pressures.
The FY23 post-close results above have not yet been audited. The Group has appointed Cooper Parry as its new auditors and expects that the FY23 audited Annual Report & Accounts will be released in January 2024.
FY24 Outlook
The financial year ending 30 September 2024 (“FY24”) is expected to be a year of transition for CSC. During the first half of FY24, CSC will continue to focus on delivering consistent operational performance and expects to pass the peak of activity on high-value UK defence contract milestones in the second quarter. The division then expects to re-balance its revenue profile across UK defence programmes, global defence programmes and the hydrogen energy market in the second half of the year, with each of these markets presenting significant opportunities over the medium-term. During this transitional period, CSC revenue is expected to decline marginally on FY23 levels with a consequent reduction in divisional profitability in FY24.
The Board expects PMC to continue to operate at its current improved rate of activity and to generate further year-on-year growth in revenue and improved profitability in FY24, based upon a robust outlook for order intake from the oil and gas sector, improved pricing and manufacturing efficiencies.
As a result of these divisional trends, the Board expects FY24 Group revenue and profitability to increase slightly over FY23 levels.
Debt Facilities & Refinancing
The Group made a scheduled repayment of £1.0 million to Lloyds Banking Group on 29 September 2023 from existing cash resources. This reduced the remaining debt balance payable to Lloyds to £0.9 million which the Group expects to repay in full on 31 December 2023, at which point the facility will expire.
Following the repayment of £1.0 million on 29 September 2023, the cash balance at the end of the year was approximately £0.9 million (FY22: £1.8 million). Net debt, which comprises cash, bank borrowings, asset finance lease liabilities and right of use asset lease liabilities, was approximately £2.4 million (FY22: £3.5 million) at the end of the year. Net bank borrowings, which comprises cash and bank borrowings only, was approximately £nil (FY22: £0.6 million) at the end of the year.
The Group has continued to explore options for raising additional finance to provide increased working capital headroom and to fund the transition of CSC into the hydrogen energy market. The Board is in constructive discussions to raise new finance and will update further in due course.
Strategic Options for PMC Division
In June 2023, the Board paused the sale of PMC and undertook to revisit strategic options for this division later in the year.
The Board has noted the continued improvement in oil and gas market conditions, including the recent strengthening of the price of oil, which has driven the much improved trading performance of PMC in the second half of FY23. The current trading environment, improved prospects and positive developments being made by the PMC division enhance the Board’s optionality in respect of delivering future shareholder value from this division.
Chris Walters, Chief Executive of Pressure Technologies plc, commented:
“Strong order intake in both divisions and recent operational improvements have driven a more consistent performance in the second half of FY23 which has enabled a return to much improved levels of profitability. We continue to see opportunities for further margin improvement in both divisions.
Global defence programmes present strong opportunities for Chesterfield Special Cylinders and we remain well positioned to transition into the developing hydrogen energy market to supply static and mobile storage solutions, and to provide the through-life inspection, testing and recertification services for these safety-critical systems over the longer term.”
Additional Information
The person responsible for arranging release of this announcement on behalf of the Company is Steve Hammell, Chief Financial Officer.
For further information, please contact:
| Pressure Technologies plc 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 |