Pressure Tech Regulatory News (PRES)

13 February 2014

Pressure Technologies plc

("Pressure Technologies" or the "Group")

AGM Statement

The Board of Pressure Technologies plc issues the following trading update ahead of the Group's AGM, which is being held at 12.00 hours today at the Copthorne Hotel in Cardiff.

The Board is pleased to report a positive start to the year, which has been underpinned by strong order books and pipelines of prospective orders across the Group. At the end of January 2014, the total orders on hand were 39% higher than at the start of the current financial year and 100% higher than at the end of January 2013.

The Group's principal market, oil and gas, has continued to show resilience, and further progress has been made in the naval defence market and at Chesterfield BioGas. Our cylinder product range has also been expanded through our investment in Kelley GTM, manufacturers of welded-steel composite cylinders, which was announced on 13 December 2013. In line with the Group's strategy, the Board continues to seek and evaluate further acquisition opportunities.

Cylinders

Chesterfield Special Cylinders has continued to experience improving demand for its principal product range, air pressure vessels for deepwater semi-submersible oil rigs and drillships, although margins have been impacted by the now long standing pressure on prices from South Korean competition. Further contracts have been won in the naval defence market for submarine build programmes in Germany and Asia for delivery between 2014 and 2018. Sales of our high added value in-situ retest service continue to grow in both the oil and gas and defence markets.

The investment in Kelley GTM, via a loan that has partly converted into a 40% stake, gives the Group a low risk entry into the composite cylinders market and will, over the medium term, lead to the development of both welded and seamless steel lined composite cylinders for the compressed natural gas and hydrogen alternative fuels markets.

Engineered Products

Demand for products from Al-Met and Hydratron has continued to increase. In November 2013, both Al-Met and Hydratron took over £1,000,000 of new orders, a record for a single month.

The first stage of the planned capital investment at Al-Met has been completed, with the addition of an EDM wire cutting machine to expand our capability for the manufacture of components for large gate valves. The second stage, the purchase of a 5-axis mill turning machining centre, will be completed in the second half of the current financial year, giving an enhanced capability for the manufacture of stems for subsea trees. The combined cost of these investments is in the region of £750,000 and has been funded through finance leases.

Hydratron has completed the initial phase of the reorganisation of its manufacturing in the UK, creating more space for the assembly of control panels and test benches to meet the increase in manufacturing activity required to service its growing order book.

Both companies have also increased headcount since year end. Al-Met has recruited a number of skilled operators and additional apprentices, and Hydratron has recruited a specialist Research and Development manager and a number of graduate trainees in sales and engineering.

Alternative Energy

The momentum in Chesterfield BioGas' core market, the sale of biogas upgrading equipment for biogas-to-grid ("BtG"), is growing. Following on from the announcement of a £4.2 million order in January 2014, the division has this week secured a further order amounting to £1.8 million for a BtG project in Scotland. This takes the order book to £10.6 million with project delivery split between the 2014 and 2015 financial years. As with the other divisions, the pipeline of prospective projects remains buoyant.

Summary and outlook

Sales prospects across the Group are very strong and Pressure Technologies is performing in line with the Board's expectations at this stage of the year. The Board is confident that the outcome for the current financial year will be at least in line with market forecasts.

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Company description

Pressure Technologies is an AIM listed, leading designer and manufacturer of speciality engineering solutions for high pressure systems serving large global markets. The Group is organised into three divisions: Cylinders, Engineered Products and Alternative Energy.

Cylinders

The division comprises Chesterfield Special Cylinders and the recently acquired 40% stake in Kelley GTM, LLC.

Chesterfield Special Cylinders is a global market leader in the design and manufacture of speciality high pressure, seamless steel gas cylinders for the offshore oil and gas, defence, industrial gases and alternative energy markets and retesting and refurbishment services.

The company has unparalleled industry knowledge, gathered over the last 100 years' trading. As a trusted supplier with unrivalled expertise, Chesterfield Special Cylinders plays an integral role in the project design and engineering process, working closely with its customers on design solutions for high pressure systems.

The core activity of Chesterfield Special Cylinders is the design and manufacture of Air Pressure Vessel systems for oil rig motion compensation systems and deepwater offshore platforms. This is closely followed in importance by activity in the naval market. Chesterfield Special Cylinders provides cylinders for a wide range of applications in submarines and surface ships to a significant proportion of the world's navies.

The company's product and process knowledge has led, in recent years, to an expansion from manufacturing into value added services, making full use of expertise in the business. Chesterfield Special Cylinders has developed a number of service offerings for the inspection and revalidation of cylinders including a novel "in-situ" testing service, which is driven by a new BSI standard for the inspection of hard to reach/impossible to move gas tubes. Chesterfield Special Cylinders is the only company capable of delivering this strict new testing regime worldwide.

More information is available on the company's website www.chesterfieldcylinders.co.uk.

Kelley GTM is a leading manufacturer of high pressure vessels for high pressure gas transport solutions based in Amarillo, Texas. Founded in 2008, Kelley GTM is part of the Kelley Family of Companies in Texas, a group that has led the speciality gas transportation industry in the United States and globally for over 60 years. The company's expertise lies in the production of light-weight composite cylinders and the strategy is to develop and expand Kelley GTM's product range for use in the United States and subsequently further afield.

Pressure Technologies has an option to acquire a further 40 per cent. stake in Kelley GTM in 2015.

More information is available on the company's website www.gogtm.com.

Engineered Products

This division comprises Al-Met Limited ("Al-Met") and the Hydratron group of companies ("Hydratron").

Al-Met is a niche manufacturer of specialised, precision engineered valve wear parts used in the oil and gas industries, acquired by Pressure Technologies plc in 2010. Its products are used in high-pressure choke and flow control valves, designed to regulate flow volumes in extremely demanding applications in the subsea and surface oil and gas industries. The business, established in 1985, has developed a market leading capability in precision machining carbides, high grade stainless steels and super alloys. More information is available on the company's website www.almet.co.uk.

Hydratron designs, manufactures and sells a range of air operated high pressure hydraulic pumps, gas boosters, power packs, hydraulic control panels and test rigs. The business, which was also acquired in 2010, operates out of two locations situated in the UK and USA. Hydratron also has an extensive network of distributors in key locations around the world. Formed in 1981, Hydratron has established itself as a leading supplier of quality high pressure equipment to the oil and gas industries. The full range of Hydratron products may be viewed at www.hydratron.co.uk.

Alternative Energy: 

Chesterfield BioGas Limited was founded in November 2008, following the signing of a co-operation agreement with Greenlane® Biogas Limited, the world leader in biogas upgrading, which gives Pressure Technologies exclusive rights, in perpetuity, to market and manufacture Greenlane® equipment in the UK and Eire.

Chesterfield BioGas provides turnkey solutions for the cleaning, storage and dispensing of biomethane for injection into the gas grid or use as a vehicle fuel. In 2010, Chesterfield BioGas installed the UK's first biogas upgrader supplying biomethane to the national grid at a Thames Water site in Didcot. A second upgrader was delivered in October 2012.

For more information visit the company's website www.chesterfieldbiogas.co.uk.