Pressure Tech Regulatory News (PRES)

30 Jan 2008 07:01

Pressure Technologies PLC30 January 2008 Pressure Technologies plc Preliminary Results Year Ended 30 September 2007 Highlights 2007 2006 (as restated) £'000 £'000 % change Turnover 15,124 8,170 85% Operating profit before exceptional costs 1,907 1,056 80% PBT 1,409 839 68% PAT 957 565 69% Basic earnings per share 11.1p 7.7p 44% Adjusted earnings per share 15.8p 9.7p 63%(excludes exceptional costs and FRS25 financecharge) • Sales revenues increased by 85% as a result of increaseddemand from the oil & gas sector • Record year end order book of £18 million (2006: £11 million) • No signs of slowdown with strong sales prospects and customerforecasts • Record operating profits, 46% ahead of analyst expectationsfor 2007 set at the time of the IPO • Growth is all organic. Company description Pressure Technologies plc ("PT") acts as a holding company for ChesterfieldSpecial Cylinders Limited ("CSC") and Chesterfield Pressure Systems GroupLimited ("CPSG") the former holding company for CSC. CSC designs, manufacturesand offers testing and refurbishment services for a range of speciality highpressure, seamless steel gas cylinders for global energy, defence and industrialgases markets. The business is conducted under the "Chesterfield" brand which isa long established name in the cylinders and specialised pressure vessel market. Based at Meadowhall, Sheffield Pressure Technologies listed on AIM in June 2007.The Company's vision is to grow the business through a mixture of organicgrowth, diversification and acquisition of complementary business to achieve a£40 million turnover business within five years. Chairman's statement Following our successful listing on AIM in June 2007, it gives me great pleasureto present our first preliminary results as a public company. Financial Highlights: The year ended 30th September 2007, resulted in a furtherperiod of sustained high growth in our business. Continued strong demand from global energy markets and increased penetration of overseas defence and aerospacesectors enabled the Group to continue its strong upward momentum. Turnovernearly doubled to £15.1 million compared with £8.2 million achieved in 2006. Operating profit before exceptional items at £1.9 million was nearly double the2006 level of £1.1 million. Pre-tax profits before operating exceptional itemsincreased to £1.9 million compared with £0.8 million in 2006. As well as volumegrowth, the benefits of the business relocating to the Meadowhall, Sheffieldfacility in 2005 continue to positively impact manufacturing performance. The net proceeds from flotation were £5.4 million, of which £1.2 million hasbeen invested into working capital to support organic growth and our strongbalance sheet provides significant flexibility to capitalise on furtheropportunities. As indicated at the time of flotation, no dividend will be paid for year ended30th September 2007. We can confirm our intention to declare a dividend for thesix months interim period to 31st March 2008. Strategy: We continue to implement a business growth programme based onpenetration of key growth sectors, notably global energy and high pressure gasesmarkets, establishing a presence in new niche sectors, and an increased focus onacquisition of businesses which offer synergistic benefits in related nichesectors. During 2007, we consolidated our supply position in the global offshoreoil and gas market. Significant progress was made in the UK gas trailerrefurbishment market and we plan to develop this sector further during 2008. Wealso have a number of initiatives underway in the Compressed Natural Gas andBiogas sectors which offer significant potential for our products in ContinentalEurope. During the year £0.4 million of exceptional costs were incurred as a result ofextensive due diligence on an unsuccessful overseas acquisition. Otheracquisition targets, which will enhance our business, are being activelypursued. The Board and Corporate Governance: As previously reported, Nigel Luckett joinedthe Group in April 2007 and we increasingly benefit from his wisdom andexperience. It is our intention to further strengthen the Board this year withthe appointment of a further Non-Executive Director. The Board has established Audit and Remuneration Committees chaired by NigelLuckett and a Nomination Committee chaired by myself. We have also developed what has become an increasingly active corporate websitefor disseminating information to our investors. People: Pressure Technologies' supportive culture helps to motivate all ouremployees to succeed and it is our employees who have helped to deliver a set ofexcellent results for the year and I am grateful for their contribution. As aresult of their efforts it was notable that the business lost less than 48 hoursoutput during the period when the factory was flooded in the storms of mid 2007. It is appropriate to acknowledge the continued commitment and support of theOperational Directors of our subsidiary, Chesterfield Special Cylinders, ablyled by our Chief Executive John Hayward since the MBO in 2004. I would also like to thank our shareholders and investors who recognising ourpotential have supported us through the year. Prospects: The Group finished 2007 in excellent financial condition, withbuoyant conditions in each of our key market sectors and a forward order book ofover £18 million, a record for any year end. These factors, when combined withour strategic initiatives, make the Board confident of delivering furtherprogress in the year ahead. Richard L. Shacklady Chairman 30 January 2008 Consolidated profit and loss account For the year ended 30 September 2007 Note 2007 2006 (as restated) £'000 £'000 Turnover 15,124 8,170 Cost of sales (11,237) (5,504) ------------------------ Gross profit 3,887 2,666 Selling and administration expenses (1,980) (1,610) ----------------------- Operating profit before exceptional costs 1,907 1,056 Exceptional administration costs (530) - -------------------- Operating profit after exceptional costs 1,377 1,056 Interest receivable 116 15Interest payable (84) (232) -------------------- Profit on ordinary activities before taxation 2 1,409 839Taxation on profit on ordinary activities (452) (274) --------------------- Profit for the financial year 957 565 -------------------- Earnings per share - basic 4 11.1p 7.7p Earnings per share - adjusted 4 15.8p 9.7p === ===== • All the above results are from continuing operations. • Gross profit increased by 46% to £3,887,000 (2006: £2,666,000)giving a gross margin percentage of 25.7% (2006: 32.6%). This reduction in grossmargin percentage was due to changes in mix with a higher proportion of productmanufactured from bought in semi-finished forgings. • Selling & Administration costs increased by 23% to £1,980,000to support business growth. Operating profit margins before exceptional costsdecreased marginally from 12.9% to 12.6% as a result of the mix change andoverhead cost increases. Consolidated cash flow statement For the year ended 30 September 2007 Note 2007 2006 (as restated) £'000 £'000 Net cash (outflow)/inflow from operating 6a (609) 1,146 -------------------activities Returns on investment and servicing of financeInterest received 116 15Interest paid (84) (87) ------------------- Net cash inflow/(outflow) from returns oninvestments 32 (72) ------------------and servicing of finance Taxation paid (176) - -------------------- Investing activitiesPurchase of tangible fixed assets (428) (381)Proceeds from sale of tangible fixed assets 9 - -----------------Net cash outflow for capital expenditure andfinancial (419) (381) --------------------investment Net cash (outflow)/inflow before financing (1,172) 693 FinancingIssue of ordinary share capital (net of expenses) 5,541 -Loan repayments 6c (437) (97) -------------------- Net cash inflow/(outflow) from financing 5,104 (97) ===================== Net increase in cash 6c 3,932 596 ====================== • Cash flow generated from operations was an outflow of £609,000(2006: inflow £1,146,000) as the increase in trading required a large increasein working capital and also due to the exceptional operating costs incurred inthe year. • Capital expenditure cash payments amounted to £428,000 (2006:£381,000) with expenditure targeted on improvements to the efficiency of theultra-large finishing line and the replacement of subcontract manufacture offittings & adaptors by in-house manufacture. The full year effect on profits ofthis expenditure will not be realised until 2008. Consolidated balance sheet As at 30 September 2007 Note 2007 2006 (as restated) £'000 £'000 Fixed assetsTangible assets 1,774 1,557 --------------------- 1,774 1,557 --------------------- Current assetsStocks 4,550 1,281Debtors 3,155 3,366Cash at bank and in hand 4,930 998 --------------------- 12,635 5,645 Creditors: amounts falling due within one year (5,790) (4,898) --------------------- Net current assets 6,845 747 --------------------- Total assets less current liabilities 8,619 2,304 Creditors: amounts falling due after more than one (513) (1,191)yearProvisions for liabilities (241) (216) ------------------- Net assets 7,865 897 ==================== Capital and reservesCalled up share capital 567 220Share premium account 5,341 -Profit and loss account 1,957 731Other reserves - (54) --------------------- Equity shareholders' funds 5 7,865 897 ==================== Notes 1 Basis of preparation The financial information set out above does not constitute the Company'sstatutory accounts for the years ended 30 September 2007 or 2006. The financialstatements for the year ended 30 September 2007 will be the first set offinancial statements for the company. The financial information set out in thisannouncement is derived from those accounts which will be delivered to theRegistrar of Companies following the Company's annual general meeting. This financial information has been prepared under the historical costconvention and in accordance with applicable UK accounting standards and theCompanies Act 1985. The group will adopt International Financial ReportingStandards as adopted in the EU for the first time in the financial statementsfor the year ending 30 September 2008 and the interim financial statements forthe period ending 31 March 2008. Pressure Technologies Limited ("PT") was incorporated on 2 March 2007. On 21 May2007 PT entered into a share for share exchange with the shareholders ofChesterfield Pressure Systems Group Limited ("CPSG") pursuant to which PTacquired the entire issued share capital of CPSG. As the shareholders of PTafter this transaction remained the same as those previously in CPSG, no changeof control took place. The transaction was a reorganisation of an existingentity and accordingly the transaction has been accounted for as a groupreconstruction with both the net assets of PT and CPSG being recorded at bookvalue. The consolidated balance sheet presents consolidated information as ifthe group existed in its current form at 30 September 2006 and 30 September 2007and the consolidated profit and loss account and consolidated cash flowstatement reflect two years trading for the group. 2 Profit on ordinary activities before taxation Profit on ordinary activities before taxation is stated after charging/(crediting): 2007 2006 £'000 £'000Depreciation of tangible fixed assets:Owned assets 203 120Profit on disposal of fixed assets (1) -Amortisation of negative goodwill - (17)Amortisation of grant received (12) (14)Loss on foreign exchange transactions 12 27Operating lease rentals:Land and buildings 344 259Machinery and equipment 8 7Exceptional operating items 530 - ================ ================== The charge for exceptional operating items comprises costs relating to theGroup's flotation on AIM of £125,000 (2006: £nil) and costs relating to aprospective overseas acquisition of £405,000 (2006: £nil). 3 Prior year adjustment Within the documentation prepared for the Group's admission to AIM in June 2007,certain adjustments were made to the Group's results which have been fullyreflected within these financial statements by way of a prior year adjustment.In addition, a finance charge and other reserve has been recognised in respectof the 'A' Ordinary Shares to restate these shares at their fair value. Theseshares were converted to Ordinary Shares during the year and consequently theprior year adjustment has been reversed through reserves during the year ended30 September 2007. As a result of these adjustments, opening net assets at 1 October 2005 have been reduced by £448,000, comprising a reduction in openingprofit and loss reserves of £247,000, share capital of £147,000 and otherreserves of £54,000 to take account of the following:- 1. The write off of costs previously capitalised and the resulting adjustment to depreciation - £240,000 2. Charge to account for a rent free period under a property lease - £82,000 3. The recognition of deferred consideration on a previous acquisition which had previously been expensed - £44,000 4. The impact of the above on the amortisation of negative goodwill - £100,000 and taxation - £55,000 5. The reclassification of "A" Ordinary Shares from equity to debt and measurement of that debt at its fair value in accordance with FRS25 "Financial Instruments: Disclosure and Presentation" - £325,000 The above adjustments have reduced reported profit for the year ended 30September 2006 by £216,000. 4 Earnings per share Basic earnings per share has been calculated in accordance with FRS22 whichrequires that earnings should be based on the net profit or loss attributable toordinary shareholders and the weighted average number of ordinary shares inissue during the year. The calculation of basic earnings per share is based onthe profit for the year of £957,000 (2006: £565,000) and on the weighted averagenumber of shares in issue during the year of 8,615,812 (2006: 7,333,620). At theyear end there were 11,333,620 shares in issue. Adjusted earnings per share are stated after adding back operating exceptionalitems totalling £530,000 less related taxation of £129,000, giving an adjustedEPS of 15.8p (2006: 9.7p after adjusting for the notional interest payablearising from the classification of "A" Ordinary Shares as debt in that year£145,000). Diluted earnings per share has not been prepared as there were no options orsimilar instruments in place at 30 September 2006 or 2007 that would have had adilutive effect upon the weighted average number of shares in issue during theyear. 5 Reconciliation of movements in equity shareholders' funds 2007 2006 (as restated) £'000 £'000Profit for the financial year 957 565Shares issued in share-for-share exchange - -Reclassification of 'A' ordinary shares 147 -Proceeds of share issue (net of costs) 5,541 -Release of financial liability 323 - ----------------------- Net change to shareholders' funds for year 6,968 565 Equity shareholders' funds at 1 October (as 897 332 -----------------------restated) Equity shareholders' funds at 30 September 7,865 897 ======================== Equity shareholders' funds at 1 October 2006 have been restated from £1,561,000to £897,000 to reflect the prior year adjustment as set out in note 3 (1 October2005 restated from £780,000 to £332,000). 6 Notes to the consolidated cashflow statement a. Reconciliation of operating profit to net cash (outflow)/inflow fromoperating activities: 2007 2006 £'000 £'000Operating profit 1,377 1,056Depreciation of fixed assets 203 120Amortisation of negative goodwill - (17)Profit on sale of tangible fixed assets (1) -Increase in stock (3,269) (347)Decrease/(increase) in debtors 211 (2,291)Increase in creditors 870 2,625 ---------------- Net cash (outflow)/inflow from operating activities (609) 1,146 ================ b. Reconciliation of net cash flow to movement in net funds/(debt) 2007 2006 £'000 (as restated) £'000Increase in cash 3,932 596Cashflow from decrease in debt 437 97 --------------------- Decrease in net debt from cash flow 4,369 693Reclassification of "A" ordinary shares as equity 470 -Net debt at 1 October (229) (922) ----------------------- Net funds/(debt) at 30 September 4,610 (229) ========================= c. Reconciliation of net cash outflow to movement in net funds/(debt) 1 October Non cash movement Cashflow 30 September 2006 2007 (as restated) £'000 £'000 £'000 £'000Cash at bank and inhand 998 - 3,932 4,930Bank loans (757) - 437 (320)"A" Ordinary shares (470) 470 - - ------------------------------------------------- Net funds/(debt) (229) 470 4,369 4,610 ================================================= AGM The Annual General Meeting will be held at Tankersley Manor Hotel, Barnsley, on9th April 2008 at 10.00am. Copies of the Report and Accounts and formal noticeof the AGM will be posted to shareholders at least 21 clear days before thisdate, and will be available on our website : www.pressuretechnologies.co.uk . Contacts: Pressure Technologies plc John Hayward Chief Executive 0114 242 7506 07711 891186 Brewin Dolphin Investment Banking Neil Baldwin Director 0113 241 0130 This information is provided by RNS The company news service from the London Stock Exchange