Last checked at 10 Nov 2015 07:00
10 November 2015
FULL YEAR TRADING UPDATE
The Board of Pressure Technologies plc ('Pressure Technologies' or the 'Group') is pleased to announce a post year end update on the financial year ended 3 October 2015 ('FY2015'), ahead of the publication of the audited preliminary results on 15 December 2015.
As a result of strong performances across certain of the Group's Divisions adjusted EBIT (subject to audit) will be slightly ahead of market expectations. This is particularly pleasing given the conditions in our main oil and gas market and reflects the positive actions initiated in the first half of the year to integrate acquisitions and significantly reduce our operational cost base. We believe we have preserved our core skills, which will place the Group in a strong position when the market returns.
Divisional Review
Precision Machined Components
The division has performed better than forecast, producing the highest return on sales and cash conversion in the Group, and with all companies delivering a profit, despite the reduction in orders from April and continued pressure on pricing. The Group is starting to benefit from the in-sourcing of machined products from Quadscot, which is expected to benefit our overall return on sales.
Cylinders
The result at Cylinders is expected to be slightly ahead of forecast, as a strong performance in the second half was boosted by efficiencies put in place during the first half of the year. We have continued to broaden the product and service capability of this division through the marketing of our integrity management service and the introduction of a US based sales team.
Engineered Products
As a result of reduced order intake, pricing pressures, and the deferral of an order due for delivery in FY2015 to FY2016, the division has not met earlier expectations. We are in the process of appointing a new managing director with the aim of increasing sales, developing existing market share and penetrating markets outside oil and gas, through a combination of customer expansion and product development in the UK and US.
Alternative Energy
The Alternative Energy Division has had a strong second half, with orders in North America as well as a repeat order in the UK, and the division is expected to be an important contributor to the Group in the future. There is significant potential for Biogas upgrading as a solution to waste management and renewable energy supply and we are looking at ways to extend our technology to cover a wider range of solutions for this market. The order book and enquiry levels remain strong.
Financial Performance
The steps taken during FY2015 will deliver annualised operational efficiencies in FY2016 of around £1.5 million across the Group. The Board continues to explore opportunities for further operational synergies and efficiencies across the Group.
We anticipate that the performance of Roota and Greenlane will trigger the payments of deferred consideration in line with market expectations. We expect, however, to release the £1.8 million provision for deferred consideration in respect of Quadscot in FY2015.
The Group was strongly cash generative in the second half, driven particularly by Precision Machined Components, and we ended the year with a slightly lower net debt position than at the half year.
Outlook
The Board remains committed to plans for the medium to long-term development of the Group and implementation of strategic objectives to broaden our customer, technology and industrial base.
Along with many others in the sector, we do not foresee any signs of pick-up in our main oil and gas market during 2016, however we do not currently anticipate market conditions deteriorating further. As a result, we remain confident in our expectations for our Precision Machined Components, Cylinders and Engineered Products Divisions. The Alternative Energy Division is project based and consequently is subject to the timing of new contract awards, but we are pleased with the growing momentum in this business.
A full update will be given in the Group's preliminary results statement for the year ended 3 October 2015, which will be published on 15 December 2015.
For further information, please contact:
Pressure Technologies plc John Hayward, Chief Executive Jo Allen, Group Finance Director Keeley Clarke, Investor Relations |
Tel: 0114 257 3622 www.pressuretechnologies.com |
Tavistock Simon Hudson |
Tel: 020 7920 3150 |
Cantor Fitzgerald Europe (Nominated Adviser and Broker) Philip Davies / Will Goode |
Tel: 020 7894 8337 |
COMPANY DESCRIPTION
Company description - www.pressuretechnologies.com
With its head office in Sheffield and its origins going back to 1897, Pressure Technologies is a growing, profitable, dividend paying, AIM listed, leading designer and manufacturer of speciality engineering solutions for high-pressure systems serving large global markets. The company is building a highly profitable group of companies, specialising in technology for the containment and control of liquids and gases in pressure systems through a combination of organic initiatives and acquisitions.
Pressure Technologies has four divisions, Precision Machined Components, Cylinders, Engineered Products and Alternative Energy, serving four markets: oil and gas, defence, industrial gases and alternative energy.
Precision Machined Components
· Al-Met, Mid Glamorgan, acquired in 2010 www.almet.co.uk
· Roota Engineering, Rotherham, acquired in March 2014 www.roota.co.uk
· Quadscot, acquired in October 2014 www.quadscot.co.uk
Cylinders
· Chesterfield Special Cylinders, Sheffield, IPO cornerstone in 2007 www.chesterfieldcylinders.com
· Kelley GTM Manufacturing, Amarillo - 40% stake acquired by the Group in December 2013 www.kelleygtm.com
Engineered Products
· Hydratron, Manchester and Houston, acquired in 2010 www.hydratron.co.uk
Alternative Energy
· Chesterfield BioGas, Sheffield, renamed Greenlane Biogas UK on 5 June 2015, founded in 2008
· Greenlane, acquired in October 2014 www.greenlanebiogas.com