TIDMPRES
RNS Number : 7364Y
Pressure Technologies PLC
18 January 2022
18 January 2022
Pressure Technologies plc
("Pressure Technologies" or "the Group")
2021 Preliminary Results
Pressure Technologies (AIM: PRES), the specialist engineering
group, announces its preliminary results for the 52 weeks to 2
October 2021.
Financial Results
-- Revenue of GBP25.3 million (2020: GBP25.4 million)
-- Gross profit of GBP6.7 million (2020: GBP5.3 million)
-- Adjusted operating loss* of GBP0.7 million (2020: GBP2.4
million operating loss)
-- Loss before taxation of GBP4.2 million (2020: GBP20.0 million
loss before taxation)
-- Basic loss per share at (12.0)p (2020: loss per share (101.5)p)
-- Net operating cash outflow** of GBP 6.6 million (2020:
GBP1.7 million inflow)
-- Net debt*** reduced to GBP4.9 million (2020: GBP7.4 million)
* Operating loss excluding amortisation, impairments and other
exceptional costs.
** Before cash outflow for exceptional costs
*** Net debt includes gross borrowings, asset finance leases,
right of use asset leases, less cash and cash equivalents
Group Highlights
Results
-- Group results in line with market expectations, despite
the prolonged challenge of oil and gas markets, supply
chain constraints and the disruptive backdrop of Covid-19
-- Strong performance in Chesterfield Special Cylinders (CSC)
from defence, industrial, nuclear and hydrogen contracts
offset weak results in Precision Machined Components (PMC)
-- In CSC, defence contract revenues more than doubled to
GBP11.1 million (2020: GBP5.1 million), driven by UK and
overseas naval submarine and surface ship programmes
-- In PMC, non-oil and gas revenue for the year was GBP0.7
million (2020: GBP0.3 million), being 12% of the divisional
total for the year and highlighting progress made in diversifying
end markets
-- Further PMC restructuring completed in February, delivering
a 40% reduction in the cost base compared with 2020 and
helping to minimise losses and conserve cash
-- Order intake at our Roota and Martract sites recovered
steadily from March to exceed pre-pandemic levels of output
and profitability for well tool and valve components
-- Slower than expected demand for flow control components
severely impacted order intake at our Al-Met site, which
remained loss-making throughout the year
Strategic Progress
-- Revolving credit facility with Lloyds Bank plc amended
in October 2021 and facility term extended to June 2023
-- In CSC, process and system improvements and investment
in operational capability have progressed under a strengthened
management team and will continue throughout 2022
-- In PMC, strategic progress continued with the diversification
of customers and end markets and the extension of product
ranges covered by long-term supply agreements
-- New production management systems in PMC and previous investment
in advanced equipment are delivering efficiencies, costs
savings and increased competitiveness
Hydrogen Energy Market Progress & Investment
-- Continued momentum and increased visibility of opportunities
in the hydrogen energy market, with customers planning
increased production capacity throughout 2022
-- Revenue growth to GBP2.2 million (2020: GBP0.2 million)
from hydrogen refuelling station contracts for Haskel Hydrogen
Group, McPhy, Framatome, Arcola Energy and Plug Power
-- First two orders placed by Shell Hydrogen under the five-year
framework agreement signed in June 2020 for European refuelling
station storage
-- Efficient and highly competitive cylinder design developed
to allow modular expansion and configured for cost-effective
in-situ inspection and recertification through life
-- Investment continues in the CSC production facility to
meet expected growth in hydrogen project demand from 2023,
with support from the successful December 2020 fundraise
-- Collaboration strengthened with specialist steel tube suppliers,
Tenaris and Vallourec to support competitive product development
and underpin future order book delivery
-- Purchase of strategic steel tube stock for hydrogen cylinder
designs helped us respond quickly to growing customer demand
in a period of cost volatility and supply chain disruption
Outlook
-- Strong defence order book and pipeline for CSC going into
FY22, with high-value naval projects and Integrity Management
deployments weighted to the second half of the year
-- Strategy and positioning in the hydrogen energy market
are showing progress and delivering results, as pipeline
of opportunities for static and mobile storage systems
continues to grow
-- The visibility of future hydrogen energy demand is improving,
with refuelling station projects expected to ramp up sharply
from 2023 onwards
-- For PMC, we are encouraged by steadily improving order
intake levels. All OEM customers are reporting a stronger
outlook for the oil and gas market during 2022
-- Whilst we remain cautious regarding the pace of recovery
in PMC, we expect improved performance in FY22, including
restoring profitability in our Al-Met business
-- Our strategy remains focused on delivering value from the
growth and development of both divisions and the Board
remains confident in the prospects and opportunities for
the Group
Chris Walters, Chief Executive of Pressure Technologies
commented:
"Over the past year, we have continued to make good progress and
delivered results in line with market expectations, despite the
prolonged challenge of oil and gas market conditions and the
disruptive backdrop of Covid-19. Colleagues across the business
have shown great resilience through this period and I would like to
thank them for all that they have done and continue to do.
The management and operational changes we have implemented over
the past two years have helped us to cope with these challenges and
have further developed the organisational culture in line with our
values, which remains key to the delivery of our strategy and
sustainable growth.
Improved performance in Chesterfield Special Cylinders has been
underpinned by high-value defence contracts and the orderbook
remains strong going into 2022 for major UK and overseas naval
submarine and surface ship programmes.
Revenue from hydrogen energy contracts grew significantly last
year and momentum continues to build in this exciting and
fast-developing market, with increased visibility of opportunities
and customers planning increased production capacity throughout
2022. Investment continues in the Chesterfield Special Cylinders
production facility to meet expected growth in hydrogen project
demand from 2023.
Strong collaboration with our specialist steel tube suppliers,
Tenaris and Vallourec continues to support competitive product
development and underpins the delivery of the future order book.
The purchase of strategic steel tube stock for popular hydrogen
cylinder designs in early 2021 proved to be important in mitigating
raw material cost escalation, supply chain disruption and
increasing lead times experienced throughout the second half of
last year.
Our OEM customers are reporting a stronger outlook for the oil
and gas market in 2022 and whilst we remain cautious regarding the
pace of recovery, the steadily improving order intake is
encouraging news for our Precision Machined Components
division.
As we begin 2022, the Group is well positioned to take advantage
of a strong defence order book, exciting growth opportunities in
hydrogen energy and the prospect of steadily improving oil and gas
market conditions. Our strategy remains focused on delivering value
from the growth and development of both divisions and the Board
remains confident in the prospects and opportunities for the
Group."
S
For further information, please contact:
Pressure Technologies plc Tel: 0330 015 0710
Chris Walters, Chief Executive PressureTechnologies@houston.co.uk
James Locking, Chief Financial
Officer
Singer Capital Markets (Nomad Tel: 0207 496 3000
and Broker)
Mark Taylor / Asha Chotai
Houston (Financial PR and Investor Tel: 0204 529 0549
Relations)
Kay Larsen / Ben Robinson
Chairman's statement
Overview
The team at Pressure Technologies demonstrated great resilience
and resourcefulness as the Covid-19 pandemic continued to impact
our business throughout the financial year. Whilst a number of
anticipated contracts were delayed as a result of the significant
economic and operational headwinds that have slowed global activity
for an extended period of time, we focused on enhancing our
capabilities and increasing efficiencies to ensure that the
business is well placed to secure the opportunities we see in
FY22.
During the year we continued to prioritise the safety and
wellbeing of our people and I would like to express my gratitude to
the entire Pressure Technologies team for their hard work and
commitment throughout this immensely challenging period.
We started the financial year with a substantial funding round
in December 2020 from supportive investors that will enable us to
focus on the exciting growth opportunities for Chesterfield Special
Cylinders (CSC) in the hydrogen energy market and Integrity
Management services business. The importance of the hydrogen sector
was highlighted during the COP26 meeting in Glasgow in November
2021, where discussions centred on the importance of limiting
global warming through energy transition. In the years ahead, the
hydrogen sector will play a key role in achieving that goal and I
am delighted that Pressure Technologies and CSC will be supporting
these efforts. We have also continued to see strong performance in
defence markets with a healthy pipeline of opportunities heading
into 2022, which will be CSC's 125(th) anniversary year.
Having strengthened our engineering, sales and production
capabilities in recent years, we saw new customer acquisitions and
further penetration in our target markets, despite the challenging
economic and operating environment. In addition, the business
returned to a stable financial footing at the end of the year,
having agreed an amendment to its banking credit facility.
Whilst oil and gas markets remained very subdued for much of
2021, towards the end of the financial year we started to
experience early signs of recovery, with renewed investment in
subsea systems and production levels which is encouraging for
Precision Machined Components (PMC) as we move into FY22.
Despite the disruptions, we maintained focus on improving
operational efficiencies and bringing talent into the business to
ensure that the Group is well-placed to fully leverage its leading
position in core markets over the medium and long term.
Board
In May 2021, James Locking was appointed Chief Financial Officer
and joined the Board. Having been with Pressure Technologies for
two years already as Group Financial Controller and then Interim
Chief Financial Officer, James has a strong understanding of the
business and the required skills that will be essential as Pressure
Technologies continues to grow.
In November 2021, I announced that I would be stepping down as
Chairman prior to the next Annual General Meeting in March 2022. It
has been a privilege and honour to serve as Chairman of the
Pressure Technologies Board over the past two years. I am pleased
to have been able to support our Chief Executive, Chris Walters,
and his team to steer the business through these challenging times.
I leave the company with a significantly strengthened balance sheet
and sufficient funding to meaningfully address the growing hydrogen
energy opportunity and recovering oil and gas market. My successor
will join a Board with the strong mix of knowledge and experience
required to support and guide Pressure Technologies through this
next exciting phase of its development.
Sir Roy Gardner
Chairman
Business review
Over the past year, we have continued to make good progress
against our strategic priorities and delivered results in line with
market expectations, despite the prolonged challenge of oil and gas
market conditions and the disruptive backdrop of Covid-19.
The management and operational changes we have implemented over
the past two years have helped us to cope with these challenges and
have further developed the organisational culture in line with our
values, which remains key to the delivery of our strategy and
sustainable growth. Colleagues across the business have worked hard
and shown great resilience throughout the year and I would like to
thank them for all that they have done and continue to do.
I would also like to thank our Chairman, Sir Roy Gardner, who
will stand down from the Board before the next AGM in March 2022,
for his support and guidance over the past two eventful years.
OUR PERFORMANCE
Overall Group revenue for the year of GBP25.3 million (2020:
GBP25.4 million) and an adjusted operating loss(1) of GBP0.7
million (2020: GBP2.4 million loss) reflect a strong performance in
Chesterfield Special Cylinders (CSC) from major defence, nuclear
and hydrogen energy contracts, which offset the impact of difficult
trading conditions for Precision Machined Components (PMC) in the
oil and gas market, supply chain disruptions and the continuing
backdrop of Covid-19 related challenges.
GBP million 2021 2020 2019 2018
Group Revenue 25.3 25.4 28.3 21.1
------ ------- ------ ------
Oil & Gas 6.1 14.9 16.3 12.4
------ ------- ------ ------
Defence 11.1 5.1 9.1 6.4
------ ------- ------ ------
Industrial 5.9 5.2 2.2 2.3
------ ------- ------ ------
Hydrogen Energy 2.2 0.2 0.7 -
------ ------- ------ ------
Group Operating (Loss) /
Profit before amortisation,
impairment and other exceptional
costs (0.7) (2.4) 2.2 1.0
------ ------- ------ ------
Group Loss before taxation (4.2) (20.0) (0.5) (1.7)
------ ------- ------ ------
(1) Operating loss excluding amortisation, impairments and other
exceptional costs.
CHESTERFIELD SPECIAL CYLINDERS
GBP million 2021 2020 2019 2018
Revenue 18.9 11.2 13.9 9.9
----- ------ ----- -----
Oil and Gas 0.3 1.0 2.2 1.4
----- ------ ----- -----
Defence 11.1 5.1 9.1 6.4
----- ------ ----- -----
Industrial 5.3 4.9 1.9 2.1
----- ------ ----- -----
Hydrogen Energy 2.2 0.2 0.7 -
----- ------ ----- -----
Gross Margin % 32% 26% 36% 35%
----- ------ ----- -----
Operating Profit/(loss) before
amortisation, impairment
and other exceptional costs 2.8 (0.1) 2.1 1.1
----- ------ ----- -----
Profit/(loss) before taxation 1.7 (1.0) 2.1 1.0
----- ------ ----- -----
Return on Revenue 15% 0% 15% 11%
----- ------ ----- -----
Chesterfield Special Cylinders delivered a 69% increase in
revenue for the year to GBP18.9 million (2020: GBP11.2
million).
The phasing of major defence contracts resulted in significantly
higher revenue and gross margin in the first half of the year,
which also included the positive impact of a major defence contract
delayed from FY20 into Q1 FY21. Gross margin increased to 32%
(2020: 26%), resulting in an adjusted operating profit of GBP2.8
million (2020: GBP0.1 million adjusted operating loss) and a return
on revenue of 15% (2020: 0%).
Revenue for defence contracts more than doubled to GBP11.1
million (2020: GBP5.1 million), representing 59% of the divisional
total for the year, driven by UK and overseas naval submarine and
surface ship programmes for customers including BAE Systems, Naval
Group, Babcock and ThyssenKrupp. A contract to supply highly
specialised cylinders for early warning radar systems was delivered
to Thales for the UK Ministry of Defence during the year.
The defence order book and contract pipeline remain strong,
providing good visibility of naval new construction and refit
programmes going into FY22. Several major contracts were secured in
the first quarter of FY22 for the supply of pressure systems to UK
and overseas submarine and surface ship programmes.
Industrial market revenue increased to GBP5.3 million (2020:
GBP4.9 million), representing 28% of the divisional total for the
year, and included the second contract for EDF Energy to supply
several UK nuclear power stations with nitrogen storage packages
and the delivery of a contract for new customer, Parker Hannifin to
supply cylinders for a wastewater treatment project in Abu
Dhabi.
Momentum continued to build in the fast-developing hydrogen
energy market, with revenue of GBP2.2 million (2020: GBP0.2
million), representing 12% of the divisional total for the year,
from contracts with established and new customers, including Haskel
Hydrogen Group, McPhy, Framatome, Arcola Energy and US fuel cell
technology major, Plug Power. During the second half the year,
Shell placed the first two orders for hydrogen storage under the
five-year framework agreement with CSC announced in June 2020, both
for European refuelling station projects.
All contracts placed to date for hydrogen storage utilise CSC's
efficient and highly competitive hydrogen cylinder design that has
been developed with our customers to allow modular expansion to
meet future demand and configured to enable cost-effective in-situ
inspection and recertification with maximum availability through
life, using CSC's Integrity Management services.
Collaboration with our specialist steel tube suppliers, Tenaris
and Vallourec has been strengthened further during the year to size
the global hydrogen energy market, support competitive product
development, improve manufacturing efficiencies and to underpin the
delivery of our future order book. The purchase of strategic steel
tube stock for popular hydrogen cylinder designs in early 2021
proved to be important in mitigating raw material cost escalation,
supply chain disruption and increasing lead times experienced
throughout the second half of the year.
Demand for oil and gas related projects deteriorated sharply
during 2020 and remained low throughout 2021 due to depressed oil
prices and reduced capital spend in the sector. Total oil and gas
market revenue decreased by 70% to GBP0.3 million (2020: GBP1.0
million), representing just 2% of the divisional total for the
year. Early signs of recovering demand for air pressure vessels
came in the second half of the year with a GBP1.1 million order
placed by established customer, MHWirth for delivery in FY22.
Several smaller orders for similar applications were also placed by
new and established customers in the second half of the year.
Covid-19 travel restrictions continued to significantly disrupt
Integrity Management services and deployments during the year.
Several UK and overseas projects were completed for offshore
services and defence customers in the first half of the year, but
the extended UK lockdown, travel restrictions and postponed
customer projects had a negative impact on Integrity Management
revenue for the year, which fell to GBP1.5 million (2020: GBP2.3
million). A recovery of deployment activity had been expected
during the second half, but these projects have been rescheduled
into FY22 and FY23.
Investment in people and production facilities progressed at the
CSC Sheffield site during the year, in line with plans set out
during the December 2020 fundraise. The investment will continue
throughout 2022 and will increase overall operational capacity to
meet the expected growth in demand for static and mobile hydrogen
storage projects from 2023. We have also strengthened our
operational teams, making key appointments across research and
development, engineering, sales, production and supply chain
functions.
PRECISION MACHINED COMPONENTS
GBP million 2021 2020 2019 2018
Revenue 6.4 14.2 14.4 11.2
------ ------ ------ ------
Oil and Gas 5.7 13.9 14.0 11.0
------ ------ ------ ------
Industrial 0.7 0.3 0.4 0.2
------ ------ ------ ------
Gross Margin % 11% 17% 29% 33%
------ ------ ------ ------
Operating (Loss) / profit
before amortisation, impairment
and other exceptional costs (1.6) (0.7) 1.9 1.5
------ ------ ------ ------
Loss before taxation (2.3) (4.3) (0.3) (0.3)
------ ------ ------ ------
Return on Revenue (26)% (5)% 13% 13%
------ ------ ------ ------
Precision Machined Components (PMC) delivered revenue of GBP6.4
million (2020: GBP14.2 million) and an adjusted operating loss of
GBP1.6 million (2020: GBP0.7 million loss), reflecting the very
challenging trading conditions in the oil and gas market throughout
FY21, while Covid-19 disruption and supply chain constraints
resulted in several delays to output.
Our customers downgraded their trading outlook in early 2021
and, as a result, a further phase of restructuring was completed in
February, which delivered a 40% reduction in the cost base compared
with 2020 and helped to minimise losses and conserve cash through
the year.
As expected, the demand for subsea well intervention tools,
valve assemblies and control module components began to recover
steadily from March 2021, exceeding pre-pandemic order intake
levels and resulting in a profitable second half of the year for
our Roota and Martract sites. This recovery has been supported by
successful recruitment and new skills development, increasing
Roota's capacity to meet the growing demand.
However, this improvement was largely offset by the slower than
expected recovery in demand for subsea trees and the associated
production drilling and flow control components, which severely
impacted order intake at our Al-Met site, which remained
loss-making in the second half of the year. Whilst our Al-Met OEM
customers have indicated that they expect a strong recovery in
demand for subsea trees from the beginning of 2022, we have yet to
see this increased optimism result in higher order intake.
Further strategic progress has been made on reducing customer
concentrations and extending the range of products covered by the
long-term supply agreements established over the past two years,
demonstrating customer confidence in our products and service
levels as they seek to consolidate their approved supplier lists.
In June 2021, we reported that we had signed a global supply
agreement with Schlumberger Technology Corporation, covering a wide
range of precision machined parts for their oilfield service
applications.
A stronger sales team and mature sales processes have
underpinned increased sales effectiveness and better customer
relationship management. We have also made initial progress in
diversifying our end markets, with the first orders secured for
offshore wind turbine components, water treatment applications and
specialised components on UK defence projects in collaboration with
CSC, which are expected to continue into FY22. Non-oil and gas
revenues totalled GBP0.7 million (2020: GBP0.3 million), being 12%
of divisional revenue for the year, with initial progress made in
defence and industrial markets.
OUTLOOK
Our strategy remains the delivery of value from the continued
growth and development of both divisions and whilst we have had to
endure another year of difficult trading in the PMC division as a
result of the Covid-19 pandemic and depressed oil and gas market
conditions, the Board is pleased with the overall progress being
made by the Group.
CSC has a strong defence order book going into FY22, with
high-value projects weighted to the second half of the year. As
travel restrictions are gradually lifted, periodic inspection
regimes will require product revalidations and we expect to see a
steady recovery in Integrity Management services across defence,
offshore, nuclear power and hydrogen energy sectors, where risk
management and asset availability are paramount.
As governments increasingly acknowledge the role of hydrogen in
net zero carbon targets for transportation and industrial
decarbonisation, hydrogen energy storage remains a strategically
important market for the Group. Hydrogen related revenue was strong
in FY21 and the pipeline of opportunities for static and mobile
hydrogen storage systems with established and new customers
continues to grow. The visibility of future demand is improving,
with refuelling station projects expected to ramp up sharply driven
by city bus networks from 2023 and accelerating heavy duty truck
demand from 2024.
Ongoing investment following the December 2020 fundraising is
helping to deliver operational improvements that will underpin the
capacity growth, efficiencies and reduced lead times at our
Sheffield facility over the next two years in readiness for the
increasing hydrogen demand. Stronger collaboration with our
specialist steel tube suppliers, Tenaris and Vallourec will
continue to support competitive product development and underpin
the delivery of our future order book.
For PMC, our focus remains on the recovery of profitability and
cash generation. We are encouraged by recent increases in order
intake for the Roota and Martract businesses and by efficiency and
margin gains achieved from operational improvements at all sites.
Our major OEM customers, including Schlumberger, Halliburton, Expro
and Baker Hughes are reporting a stronger outlook for the oil and
gas market during 2022, which we expect to drive improved
performance, including restoring profitability in our Al-Met
business. Whilst we remain cautious regarding the pace of recovery,
particularly in light of the Covid-19 Omicron variant, the division
is well placed to deliver an improved performance in FY22.
The Board remains confident in the prospects and opportunities
for the business in the medium term.
Chris Walters
Chief Executive
Financial review
Highlights
Group Revenue at Group Adjusted Group loss
GBP25.3m operating loss (*) before taxation
(2020: GBP25.4m) at GBP0.7m at GBP4.2m
(2020: loss of GBP2.4m) (2020: loss of
GBP20.0m)
Return on Revenue (**) Net operating cash Closing
outflow (***)
at -2.9% GBP6.6m Net Debt (****)
(2020: -9.4%) (2020: GBP1.7m cash GBP4.9m
inflow)
(2020: GBP7.4m)
========================== ==================
* Operating loss excluding amortisation, impairments and other
exceptional costs.
** Adjusted operating loss divided by revenue
*** Before cash outflow for exceptional costs
**** Net debt includes gross borrowings, asset finance leases,
right of use asset leases, less cash and cash equivalents
Our financial priority this year, following the fundraise in
December 2020, was to invest in our Chesterfield Special Cylinders
(CSC) facility, strategic stock to reduce lead times in the
hydrogen energy market and the Integrity Management business,
whilst maintaining sufficient liquidity for the increased working
capital requirements during the year.
CSC had a significantly improved year due to the BAE Dreadnought
Boatset 2 revenue for material and build as well as increased
hydrogen energy revenue. However, continued tough trading
conditions within the oil and gas market as well as Covid-19
disruption severely impacted the Precision Machined Components
(PMC) division. Overall, this resulted in a very minor reduction in
Group revenue for the year to GBP25.3 million (2020: GBP25.4
million) and an adjusted operating loss for the year of GBP0.7
million (2020: adjusted loss of GBP2.4 million). The Group made a
loss before taxation of GBP4.2 million (2020: loss of GBP20.0
million).
CSC revenue increased by 69% to GBP18.9 million (2020: GBP11.2
million) with an adjusted operating profit of GBP2.8 million (2020:
GBP0.1 million adjusted loss) and profit before taxation of GBP1.7
million (2020: loss of GBP1.0 million). PMC revenue decreased by
55% to GBP6.4 million (2020: GBP14.2 million) with an adjusted
operating loss of GBP1.6 million (2020: adjusted loss of GBP0.7
million) and a loss before taxation of GBP2.3 million (2020: loss
of GBP4.3 million).
As at 2 October 2021, net debt reduced to GBP4.9 million (2020:
GBP7.4 million). The Group's GBP6.0 million revolving credit
facility (RCF) was drawn at GBP4.8 million (2020: GBP6.8 million).
Cash and cash equivalents decreased slightly to GBP3.2 million
(2020: GBP3.4 million) resulting in reduced net borrowings (before
lease liabilities) of GBP1.6 million (2020: GBP3.4 million). Lease
liabilities as at 2 October 2021 decreased to GBP3.4 million (2020:
GBP4.1 million).
The reduction in net debt was driven principally by the receipt
in February 2021 of a GBP3.4 million final repayment of the
Greenlane Renewables Inc. Promissory Note and the fundraising in
December 2020, through the issue of 12,471,998 new ordinary shares,
which raised cash proceeds, net of expenses, of approximately
GBP7.0 million. These cash inflows were partially offset by a net
working capital outflow of GBP6.2 million.
The Group's Revolving Credit Facility (RCF) was amended
subsequent to year end in October 2021. The RCF was reduced from
GBP6.0 million to GBP4.0 million and the facility term was extended
from November 2022 to June 2023. New covenants covering minimum
liquidity and maximum capital expenditure were agreed for the
period to the end of June 2022. Leverage (net debt to adjusted
EBITDA) and interest cover covenants, tested quarterly, will
commence on the first testing date of 30 September 2022 through to
the end of the facility.
Trading results
CSC
Revenue increased by 69% on the prior year primarily due to the
phasing of major defence contracts and a step change in our
hydrogen energy revenue to GBP2.2 million (2020: GBP0.2
million).
As a result, gross profit increased to GBP6.1 million (2020:
GBP2.9 million), with a 6.3ppt improvement in gross margin.
Adjusted operating profit before amortisation, impairment and
other exceptional costs was GBP2.8 million (2020: GBP0.1 million
adjusted operating loss) with a 15.0ppt increase in return on
revenue to 15.0% (2020: nil).
Contracts that were categorised as 'recognised over time' and
still in progress at the end of the year had a future revenue value
of GBP5.0 million relating to as yet unfulfilled performance
obligations which are due for delivery in 2022.
PMC
PMC revenue decreased by 55% primarily due to the lack of
recovery in oil and gas markets, the key end-market for this
division, and the continued impact of the Covid-19 pandemic. The
division also saw lower than expected gross margins as volume
decreases could not be fully mitigated, despite the further
restructuring in February giving a 40% reduction in the divisional
cost base.
Gross profit decreased by 71.7% with a 6.4ppt reduction in gross
margin to 10.9% compared to 2020, primarily due to the sharply
reduced order intake in the first half of the year as our oil and
gas OEM customers deferred project spend causing further
uncertainty and disruption in the market. There were some signs of
recovery in our Roota operation in the second half of the year with
a return to profitability in the last four months of the financial
year. However, Al-Met experienced very difficult trading throughout
the year and is expected to return to profitability in the second
quarter of FY22.
The division reported an adjusted operating loss before
amortisation, impairments and other exceptional costs of GBP1.6
million which represents a return on revenue of -25.7%, a 21.1ppt
reduction from 2020.
Central costs
Unallocated central costs (before other exceptional costs) were
GBP1.9 million (2020: GBP1.7 million).
In respect of the Group's various share option plans there was a
net cost in the year of GBP0.1 million (2020: GBP0.1 million).
Asset impairment and amortisation
The Group tests annually for impairment, or more frequently if
there are indicators that intangible and tangible fixed assets
might be impaired. The continued impact of the Covid-19 pandemic
and the difficult trading conditions and outlook for the oil and
gas market, PMC's key end-market, is considered to be an indicator
that the carrying value of our intangible and tangible assets in
one of the Group's cash generating units (CGU) - the PMC division -
may be impaired. The Group has considered a range of economic
conditions for the sectors over the next three years.
These economic conditions, together with reasonable and
supportable assumptions, have been used to estimate the future cash
inflows and outflows for the PMC CGU over the next three years.
The assumptions underlying these forecasts are detailed in these
financial statements. The review concluded that no impairment was
required in these financial statements. Amortisation costs were
GBP0.2 million (2020: GBP2.0 million) and have been treated as a
non-cash exceptional item.
The Group holds a number of freehold land and buildings,
including CSC's main facility at Meadowhall Road, Sheffield. As
part of discussions with the Group's bankers during the year, the
Directors obtained a valuation from an independent chartered
surveyor, Lambert Smith Hampton, of this building which indicated
that an impairment of this asset of GBP655,000 was required which
has been treated as a non-cash exceptional item.
Also included in Assets under Construction is GBP829,000 along
with associated costs of GBP289,000 held in prepayments, relating
to the internal and third-party costs incurred in the current and
prior years associated with the development of a new ERP system in
the CSC division. Improvements to the incumbent ERP system in CSC
have recently become available which the Group is currently
assessing for suitability and cost. Whilst this review is not yet
complete, an initial assessment indicates that upgrading the
incumbent system to the recently announced software version, rather
than completing the development of the new system, may be a more
appropriate and cost-effective route to improving the ERP system in
CSC. As a result, the Directors have determined that there is an
indicator of impairment of the Asset under Construction and the
associated prepayment relating to the development of CSC's ERP
system. Following an impairment review, the Directors have recorded
an impairment charge of GBP1,118,000 to fully write off this asset.
This impairment has been reflected as a non-cash exceptional
item.
Other exceptional items
Reorganisation and redundancy costs in the year were GBP0.4
million (2020: GBP0.4 million), which predominantly related to the
PMC site reorganisation costs that took place in February 2021.
Other exceptional items included an inventory write off in CSC
relating to obsolete stock items totalling GBP0.2 million (2020:
GBP0.5 million), costs related to the closure in the prior year of
PMC's Quadscot facility of GBP0.2 million (2020: GBP0.7 million),
and other head office costs including bank refinancing costs
totalling GBP0.2 million (2020: GBP0.4 million).
Taxation
The tax credit for the year was GBP0.8 million (2020: GBP1.1
million).
The current year tax credit has benefitted from a GBP0.4 million
overprovision in respect of the prior year (2020: overprovision
GBP0.1 million).
R&D tax benefits in respect of 2021 are expected to be
GBP1.4 million (2020: GBP1.1 million).
Corporation tax refunded in the year totalled GBPnil (2020:
GBP0.2 million). Taxes relating to overseas territories are
minimal.
Foreign Exchange
The Group now has no material exposure to movements in foreign
exchange rates related to both transactional trading and
translation of overseas assets and liabilities, following the
receipt in February 2021 of the remaining Promissory Note from
Greenlane Renewables Inc. which were part denominated in Canadian
dollars.
In the year under review, the principal exposure which arose
from trading activities was to movements in the value of the Euro,
the Canadian Dollar and the US Dollar relative to Sterling. As the
Group companies both buy and sell in overseas currencies,
particularly the Euro and the US Dollar, there is a degree of
natural hedging already in place. Where appropriate, and where the
timing of future cash flows are able to be reliably estimated,
forward contracts can be taken out to cover exposure.
As at 2 October 2021 there were no forward contracts in place
(2020: none).
Financing, cash flow and leverage
Operating cash outflow before movements in working capital was
GBP0.4 million (2020: GBP3.3 million outflow). After a net working
capital outflow of GBP6.2 million (2020: GBP5.0 million inflow),
cash used by operations was GBP6.6 million (2020: GBP1.7 million
generated from operations). Key movements within working capital
include GBP0.8 million related to the purchase of strategic stock,
GBP2.6 million related to the increase in CSC's net contract
balances and an outflow of GBP1.0 million PAYE and VAT to HMRC,
which had been deferred from the prior year utilising Covid-19
relief.
Cash outflows in the year in respect of other exceptional costs
(see Note 5) were GBP0.6 million (2020: GBP1.5 million). This
excludes the inventory write down and asset impairments which were
non cash-flow related.
During the year the Group received the final repayment of GBP3.1
million of the Promissory Note and its associated interest from
Greenlane Renewables Inc. which formed part of the consideration on
the sale of the Alternative Energy division in 2019.
Net debt was GBP4.9 million (2020: GBP7.4 million), the decrease
driven primarily by the receipts of GBP3.4 million from the
Greenlane Renewables Inc. Promissory Note and the fundraising on 18
December 2020 which raised cash proceeds, net of expenses, of
approximately GBP7.0 million. This enabled the repayment of GBP2.0
million of the Group's drawings under the revolving credit facility
("RCF") reducing drawn debt to GBP4.8 million at the year end
(2020: GBP6.8 million).
The Group's RCF was amended subsequent to year end in October
2021. The RCF was reduced from GBP6.0 million to GBP4.0 million and
the facility term was extended from November 2022 to June 2023. New
covenants covering minimum liquidity and maximum capital
expenditure were agreed for the period to the end of June 2022.
Leverage (net debt to adjusted EBITDA) and interest cover
covenants, tested quarterly, will commence on the first testing
date of 30 September 2022 through to the end of the facility.
Loss per share and dividends
Basic loss per share was 12.0 pence (2020: 101.5 pence).
Adjusted loss per share was 2.2 pence (2020: 6.4 pence).
No dividends were paid in the year (2020: nil) and no dividends
have been declared in respect of the year ended 2 October 2021
(2020: nil). Distributable reserves in the parent company, which at
the year end are GBP8.6 million (2020: GBP20.4 million negative
reserve), increased as a result of the fundraising which increased
the share premium reserve and the subsequent capital reduction and
transfer of the share premium reserve into distributable reserves
following Court approval granted in June 2021 .
Statement of financial position
Intangible assets (at net book value) decreased by GBP0.2
million to GBP0.1 million (2020: GBP0.3 million). Amortisation in
the year was GBP0.2 million (2020: GBP2.0 million).
The property at Quadscot is owned by the Group and was marketed
for sale after the site was closed in June 2020. As at 2 October
2021 the Group had sold 2 of its 3 conjoined units, generating
proceeds of GBP0.4 million. The statement of financial position is
showing the market value of the remaining property of GBP0.2
million (2020: GBP0.6 million) as an "Asset held for sale" under
current assets. The remaining property was sold on 10 December 2021
for GBP0.2 million.
Net current assets (being current assets less current
liabilities) decreased to GBP6.3 million (2020: GBP8.5 million)
following RCF borrowings being reclassified to current from
non-current liabilities. Non-current liabilities of GBP3.6 million
(2020: GBP10.9 million) have decreased by GBP7.3 million, primarily
as a result of the reclassification of RCF borrowings to current
liabilities, as well as a reduction in RCF borrowings by GBP2.0
million.
Net assets increased by 29% to GBP17.1 million (2020: GBP13.3
million) but net asset value per share decreased to 55 pence (2020:
72 pence) following the fundraising through the issue on 18
December 2020 of 12,471,998 new ordinary shares, taking our total
ordinary shares in issue to 31,067,163.
James Locking
Chief Financial Officer
Consolidated statement of comprehensive income
For the 52 week period ended 2 October 2021
Notes 52 weeks 53 weeks
ended ended
2 October 3 October
2021 2020
GBP'000 GBP'000
------ ----------- -----------
Revenue 1 25,284 25,403
------ ----------- -----------
Cost of sales (18,569) (20,054)
------ ----------- -----------
Gross profit 6,715 5,349
------ ----------- -----------
Administration expenses (7,460) (7,728)
------ ----------- -----------
Operating loss before amortisation,
impairment and other exceptional
costs (745) (2,379)
------ ----------- -----------
Separately disclosed items of administrative
expenses:
------ ----------- -----------
Amortisation 4 (224) (1,958)
------ ----------- -----------
Impairment 4 (1,773) (13,878)
------ ----------- -----------
Other exceptional costs 5 (1,044) (2,751)
------ ----------- -----------
Operating loss (3,786) (20,966)
------ ----------- -----------
Finance (costs)/income 2 (412) 977
------ ----------- -----------
Loss before taxation 3 (4,198) (19,989)
------ ----------- -----------
Taxation 6 772 1,113
------ ----------- -----------
Loss for the period attributable
to the owners of the parent (3,426) (18,876)
------ ----------- -----------
Other comprehensive income to be
reclassified to profit or loss in
subsequent periods:
Currency exchange differences on
translation of foreign operations 33 (13)
------ ----------- -----------
Total other comprehensive income/(expense) 33 (13)
------ ----------- -----------
Total comprehensive expense for
the period attributable to the owners
of the parent (3,393) (18,889)
------ ----------- -----------
Basic loss per share
------ ----------- -----------
From loss for the period 7 (12.0)p (101.5)p
------ ----------- -----------
Diluted loss per share
------ ----------- -----------
From loss for the period 7 (12.0)p (101.5)p
------ ----------- -----------
Consolidated statement of financial position
As at 2 October 2021
Restated Restated
Notes 2 October 3 October 28 September
2021 2020 2019
GBP'000 GBP'000 GBP'000
-------- ------------ ----------- --------------
Non-current assets
-------- ------------ ----------- --------------
Goodwill - - 9,510
-------- ------------ ----------- --------------
Intangible assets 101 325 6,598
-------- ------------ ----------- --------------
Property, plant and equipment 13,100 14,910 14,142
-------- ------------ ----------- --------------
Deferred tax asset 1,138 464 278
-------- ------------ ----------- --------------
Other financial assets - - 7,350
-------- ------------ ----------- --------------
14,339 15,699 37,778
-------- ------------ ----------- --------------
Current assets
-------- ------------ ----------- --------------
Inventories 4,762 5,252 4,669
-------- ------------ ----------- --------------
Trade and other receivables 9,061 7,067 9,590
-------- ------------ ----------- --------------
Cash and cash equivalents 3,217 3,416 2,208
-------- ------------ ----------- --------------
Asset held for sale 195 580 -
-------- ------------ ----------- --------------
Other financial assets - 3,074 -
-------- ------------ ----------- --------------
Current tax 414 - 95
-------- ------------ ----------- --------------
17,649 19,389 16,562
-------- ------------ ----------- --------------
Total assets 31,988 35,088 54,340
-------- ------------ ----------- --------------
Current liabilities
-------- ------------ ----------- --------------
Trade and other payables (5,474) (9,659) (6,963)
-------- ------------ ----------- --------------
Borrowings - revolving credit facility 8 (4,773) - (10,800)
-------- ------------ ----------- --------------
Lease Liabilities 9 (1,110) (1,209) (656)
-------- ------------ ----------- --------------
(11,357) (10,868) (18,419)
-------- ------------ ----------- --------------
Non-current liabilities
-------- ------------ ----------- --------------
Other payables (241) (538) (158)
-------- ------------ ----------- --------------
Borrowings - revolving credit facility 8 - (6,773) -
-------- ------------ ----------- --------------
Lease Liabilities 9 (2,245) (2,843) (2,116)
-------- ------------ ----------- --------------
Deferred tax liabilities (1,068) (752) (1,561)
-------- ------------ ----------- --------------
(3,554) (10,906) (3,835)
-------- ------------ ----------- --------------
Total liabilities (14,911) (21,774) (22,254)
-------- ------------ ----------- --------------
Net assets 17,077 13,314 32,086
-------- ------------ ----------- --------------
Equity
-------- ------------ ----------- --------------
Share capital 1,553 930 930
-------- ------------ ----------- --------------
Share premium account - 26,172 26,172
-------- ------------ ----------- --------------
Translation reserve (260) (293) (280)
-------- ------------ ----------- --------------
Retained earnings 15,784 (13,495) 5,264
-------- ------------ ----------- --------------
Total equity 17,077 13,314 32,086
-------- ------------ ----------- --------------
A restatement of the Consolidated statement of financial
position as at 3 October 2020 and 28 September 2019 has been
undertaken to correct an error, which had resulted in the incorrect
presentation of contract assets and contract liabilities relating
to ongoing contracts (see Note 12).
Consolidated statement of changes in equity
For the 52 week period ended 2 October 2021
Share
Share premium Translation Retained Total
capital account reserve earnings equity
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
--------- --------- ------------ ---------- ---------
Balance at 28 September
2019 930 26,172 (280) 5,264 32,086
--------- --------- ------------ ---------- ---------
Share based payments - - - 117 117
--------- --------- ------------ ---------- ---------
Transactions with
owners - - - 117 117
--------- --------- ------------ ---------- ---------
Loss for the period - - - (18,876) (18,876)
--------- --------- ------------ ---------- ---------
Other comprehensive
expense:
Exchange differences
on translating foreign
operations - - (13) - (13)
--------- --------- ------------ ---------- ---------
Total comprehensive
expense - - (13) (18,876) (18,889)
--------- --------- ------------ ---------- ---------
Balance at 3 October
2020 930 26,172 (293) (13,495) 13,314
--------- --------- ------------ ---------- ---------
Shares issued 623 6,401 - - 7,024
--------- --------- ------------ ---------- ---------
Share based payments - - - 132 132
--------- --------- ------------ ---------- ---------
Capital reduction
transfer - (32,573) - 32,573 -
--------- --------- ------------ ---------- ---------
Transactions with
owners 623 (26,172) - 32,705 7,156
--------- --------- ------------ ---------- ---------
Loss for the period - - - (3,426) (3,426)
--------- --------- ------------ ---------- ---------
Other comprehensive
income:
Exchange differences
on translating foreign
operations - - 33 - 33
--------- --------- ------------ ---------- ---------
Total comprehensive
income/(expense) - - 33 (3,426) (3,393)
--------- --------- ------------ ---------- ---------
Balance at 2 October
2021 1,553 - (260) 15,784 17,077
--------- --------- ------------ ---------- ---------
Consolidated statement of cash flows
For the 52 week period ended 2 October 2021
Notes 52 weeks 53 weeks
ended ended
2 October 3 October
2021 2020
GBP'000 GBP'000
------ ----------- -----------
Operating activities
------ ----------- -----------
Cash flows from operating activities 10 (6,166) 1,707
------ ----------- -----------
Finance costs paid (412) (188)
------ ----------- -----------
Income tax refunded - 213
------ ----------- -----------
Net cash (outflow)/inflow from operating
activities (6,578) 1,732
------ ----------- -----------
Investing activities
------ ----------- -----------
Proceeds from sale of financial assets
held at FVTPL - 3,145
------ ----------- -----------
Proceeds from sale of associate - 297
------ ----------- -----------
Proceeds from sale of fixed assets 477 268
------ ----------- -----------
Proceeds from repayment of Promissory
Note 3,074 2,000
------ ----------- -----------
Purchase of property, plant and equipment (1,325) (2,103)
------ ----------- -----------
Net cash generated from investing activities 2,226 3,607
------ ----------- -----------
Financing activities
------ ----------- -----------
Repayment of borrowings (2,000) (4,250)
------ ----------- -----------
Proceeds from new borrowings - 223
------ ----------- -----------
Repayment of lease liabilities (1,805) (1,301)
------ ----------- -----------
Shares issued net of transaction costs 7,024 -
------ ----------- -----------
Proceeds from asset financing 934 1,197
------ ----------- -----------
Net cash generated from/(used in) financing
activities 4,153 (4,131)
------ ----------- -----------
Net (decrease)/increase in cash and
cash equivalents (199) 1,208
------ ----------- -----------
Cash and cash equivalents at beginning
of period 3,416 2,208
------ ----------- -----------
Cash and cash equivalents at end of
period 3,217 3,416
------ ----------- -----------
Notes
Basis of preparation
The summary accounts are based on the consolidated financial
statements that have been prepared in accordance with international
accounting standards, in conformity with the requirements of the
Companies Act 2006. The summary accounts and consolidated financial
statements are made up to the Saturday nearest to the period end
for each financial period.
Pressure Technologies plc, company number 06135104, is
incorporated and domiciled in the United Kingdom. The registered
office address is Pressure Technologies Building, Meadowhall Road,
Sheffield, South Yorkshire, S9 1BT.
The Group has applied all accounting standards and
interpretations issued relevant to its operations for the period
ended 2 October 2021. The consolidated financial statements have
been prepared on a going concern basis.
The summary accounts set out above do not constitute statutory
accounts as defined by Section 434 of the UK Companies Act 2006.
The summarised consolidated statement of comprehensive income, the
summarised consolidated balance sheet at 2 October 2021, the
summarised consolidated statement of comprehensive income, the
summarised consolidated statement of changes in equity and the
summarised consolidated statement of cash flows for the period then
ended have been extracted from the Group's 2021 statutory financial
statements upon which the auditor's opinion is unqualified and did
not contain a statement under either sections 498(2) or 498(3) of
the Companies Act 2006. The audit report for the period ended 3
October 2020 did not contain statements under sections 498(2) or
498(3) of the Companies Act 2006. The statutory financial
statements for the period ended 3 October 2020 have been delivered
to the Registrar of Companies. The 2 October 2021 accounts were
approved by the directors on 17 January 2022 but have not yet been
delivered to the Registrar of Companies.
Going concern
The financial statements have been prepared on a going concern
basis. The Company's business activities, together with the factors
likely to affect its future development, performance and position,
are set out in the Group Strategic Report. The Financial Reporting
Council issued its "Annual Review of Corporate Reporting 2020/21"
in October 2021. The Directors have considered this when preparing
these financial statements.
The Group's Revolving Credit Facility (RCF) was amended
subsequent to the year end in October 2021. The RCF was reduced
from GBP6.0 million to GBP4.0 million and the facility term was
extended from November 2022 to June 2023. New covenants covering
minimum liquidity and maximum capital expenditure were agreed for
the period to the end of June 2022. Leverage (net debt to adjusted
EBITDA) and interest cover covenants, tested quarterly, will
commence on the first testing date of 30 September 2022 through to
the end of the facility.
Management have produced forecasts for the period up to March
2023 for all business units, taking account of reasonably plausible
changes in trading performance and market conditions, which have
been reviewed by the Directors. These reasonably plausible changes
include the continued impact of the Covid-19 pandemic and the
impact of the currently depressed oil and gas market. The forecasts
demonstrate that the Group is forecast to generate profits and cash
in the current financial year and beyond and that the Group has
sufficient cash reserves and headroom in the financial covenants to
enable the Group to meet its obligations as they fall due for a
period of at least 14 months from the date when these financial
statements have been signed. The Directors believe that, in the
event that the assumptions in the forecast are not being realised
such that a future potential covenant breach is anticipated, there
are a number of mitigating actions that could be taken, including
further cost reductions and cash management actions, that could
help prevent a potential covenant breach from occurring. After
undertaking these assessments and considering the uncertainties set
out above, the Directors have a reasonable expectation that the
Group has adequate resources to continue to operate for the
foreseeable future and for these reasons they continue to adopt the
going concern basis in preparing the financial statements.
New Standards adopted in 2021
No new standards were applied during the year.
Adoption of new and revised standards
Amendments to IFRSs that are mandatorily effective for the
current year
At the date of the authorisation of these financial statements,
several new, but not yet effective, standards and amendments to
existing standards, and interpretations have been published by the
IASB. None of these standards or amendments to existing standards
have been adopted early by the Group. Management anticipates that
all relevant pronouncements will be adopted for the first period
beginning on or after the effective date of pronouncement. The
impact of new standards, amendments and interpretations not adopted
in the current year have not been disclosed as they are not
expected to have a material impact on the Group's financial
statements.
Notes to the consolidated financial statements
1. Segment analysis
The financial information by segment detailed below is
frequently reviewed by the Chief Executive who has been identified
as the Chief Operating Decision Maker (CODM).
For the 52 week period ended 2 October 2021
Precision
Machined Central
Cylinders Components costs Total
GBP'000 GBP'000 GBP'000 GBP'000
----------- ------------ -------- --------
Revenue from external customers 18,877 6,407 - 25,284
----------- ------------ -------- --------
Gross profit/(loss) 6,102 696 (83) 6,715
----------- ------------ -------- --------
Operating profit/(loss)
before amortisation, impairment
and other exceptional costs 2,834 (1,647) (1,932) (745)
----------- ------------ -------- --------
Amortisation and impairment (916) (56) (1,025) (1,997)
----------- ------------ -------- --------
Other exceptional costs (250) (501) (293) (1,044)
----------- ------------ -------- --------
Operating profit/(loss) 1,668 (2,204) (3,250) (3,786)
----------- ------------ -------- --------
Net finance costs (82) (85) (245) (412)
----------- ------------ -------- --------
Profit/(loss) before tax 1,586 (2,289) (3,495) (4,198)
----------- ------------ -------- --------
Segmental net assets/(liabilities)
* 8,569 9,352 (844) 17,077
----------- ------------ -------- --------
Other segment information:
----------- ------------ -------- --------
Capital expenditure - property,
plant and equipment 795 487 217 1,499
----------- ------------ -------- --------
Depreciation 632 818 205 1,655
----------- ------------ -------- --------
Amortisation 87 56 81 224
----------- ------------ -------- --------
* Segmental net assets/(liabilities) comprise the net assets of
each division adjusted to reflect the elimination of the cost of
investment in subsidiaries and the provision of financing loans
provided by Pressure Technologies plc.
Notes to the consolidated financial statements (continued)
1. Segment analysis (continued)
For the 53 week period ended 3 October 2020
Precision
Machined Central
Cylinders Components costs Total
GBP'000 GBP'000 GBP'000 GBP'000
----------- ------------ --------- ---------
Revenue 11,218 14,185 - 25,403
----------- ------------ --------- ---------
Gross profit/(loss) 2,912 2,461 (24) 5,349
----------- ------------ --------- ---------
Operating loss before amortisation,
impairment and other exceptional
costs (58) (656) (1,665) (2,379)
----------- ------------ --------- ---------
Amortisation and impairment (88) (1,788) (13,960) (15,836)
----------- ------------ --------- ---------
Other exceptional costs (827) (1,752) (172) (2,751)
----------- ------------ --------- ---------
Operating loss (973) (4,196) (15,797) (20,966)
----------- ------------ --------- ---------
Net finance (costs)/income (31) (89) 1,097 977
----------- ------------ --------- ---------
Loss before tax (1,004) (4,285) (14,700) (19,989)
----------- ------------ --------- ---------
Segmental net assets/(liabilities)
* 7,160 12,079 (5,925) 13,314
----------- ------------ --------- ---------
Other segment information:
----------- ------------ --------- ---------
Capital expenditure -
property, plant and equipment 1,287 793 23 2,103
----------- ------------ --------- ---------
Depreciation 641 880 205 1,726
----------- ------------ --------- ---------
Amortisation 88 1,788 82 1,958
----------- ------------ --------- ---------
* Segmental net assets/(liabilities) comprise the net assets of
each division adjusted to reflect the elimination of the cost of
investment in subsidiaries and the provision of financing loans
provided by Pressure Technologies plc.
Notes to the consolidated financial statements (continued)
1. Segment analysis (continued)
The Group's revenue disaggregated by primary geographical
markets is as follows:
Revenue 2021 2020
Cylinders Precision Total Cylinders Precision Total
Machined Machined
Components Components
----------- ------------ -------- ----------- ------------ --------
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
----------- ------------ -------- ----------- ------------ --------
United Kingdom 15,270 2,950 18,220 8,509 7,544 16,053
----------- ------------ -------- ----------- ------------ --------
France 1,164 - 1,164 303 228 531
----------- ------------ -------- ----------- ------------ --------
Germany 616 - 616 805 - 805
----------- ------------ -------- ----------- ------------ --------
Italy - 776 776 - 1,673 1,673
----------- ------------ -------- ----------- ------------ --------
Romania - 916 916 - 1,709 1,709
----------- ------------ -------- ----------- ------------ --------
Switzerland 748 - 748 - - -
----------- ------------ -------- ----------- ------------ --------
Rest of Europe 172 171 343 787 68 855
----------- ------------ -------- ----------- ------------ --------
South Korea 294 - 294 - - -
----------- ------------ -------- ----------- ------------ --------
Norway 23 306 329 596 - 596
----------- ------------ -------- ----------- ------------ --------
USA - 798 798 - 591 591
----------- ------------ -------- ----------- ------------ --------
Rest of the
World 590 490 1,080 218 2,372 2,590
----------- ------------ -------- ----------- ------------ --------
18,877 6,407 25,284 11,218 14,185 25,403
----------- ------------ -------- ----------- ------------ --------
The Group's largest customer, which is reported within the
Cylinders segment, contributed 26% to the Group's revenue (2020:
13%, reported in the Cylinders segment).
The following table provides an analysis of the Group's revenue
by market.
Revenue 2021 2020
GBP'000 GBP'000
-------- --------
Oil and gas 6,076 14,901
-------- --------
Defence 11,070 5,142
-------- --------
Industrial 5,949 5,219
-------- --------
Hydrogen energy 2,189 141
-------- --------
25,284 25,403
-------- --------
The above table is provided for the benefit of shareholders. It
is not provided to the PT board or the CODM on a regular monthly
basis and consequently does not form part of the divisional
segmental analysis.
The Group's revenue disaggregated by pattern of revenue
recognition and category is as follows:
Revenue 2021 2020
Cylinders Precision Cylinders Precision
Machined Machined
Components Components
----------- ------------ ----------- ------------
GBP'000 GBP'000 GBP'000 GBP'000
----------- ------------ ----------- ------------
Sale of goods transferred
at a point in time 1,080 6,006 2,201 13,736
----------- ------------ ----------- ------------
Sale of goods transferred
over time 15,594 - 5,222 -
----------- ------------ ----------- ------------
Rendering of services 2,203 401 3,795 449
----------- ------------ ----------- ------------
18,877 6,407 11,218 14,185
----------- ------------ ----------- ------------
Notes to the consolidated financial statements (continued)
1. Segment analysis (continued)
The following aggregated amounts of transaction values relate to
the performance obligations from existing contracts that are
unsatisfied or partially unsatisfied as at 2 October 2021:
Revenue expected in future periods 2022
GBP'000
--------
Sale of goods - Cylinders 4,982
--------
The following table provides an analysis of the carrying amount
of non-current assets and additions to property, plant and
equipment, all of which is held within the United Kingdom.
2021 2020
GBP'000 GBP'000
---- -------- --------
Non-current assets 14,247 15,699
-------- --------
Additions to property,
plant and equipment 1,499 3,434
-------- --------
2. Finance (costs)/income
2021 2020
GBP'000 GBP'000
-------- --------
Interest receivable 40 419
-------- --------
Interest payable on bank loans and overdrafts (332) (455)
-------- --------
Interest payable on lease liabilities (120) (153)
-------- --------
Profit on sale of associate - 297
-------- --------
Profit on sale of shareholding in GRN Inc. - 1,895
-------- --------
Modification of Promissory Note receivable - (1,026)
-------- --------
(412) 977
-------- --------
In June and July 2020, the Group sold its 21% shareholding in
Greenlane Renewables, Inc. for cash proceeds, net of related
expenses, of GBP3,145,000 generating a profit on sale of
GBP1,895,000. At the same time, the Group recorded a related
modification of GBP1,026,000 in the carrying value of the
Promissory Note which formed part of the consideration on sale of
the Alternative Energy division in 2019. In February 2021, the
Group received the final proceeds of GBP3,074,000 in relation to
the Promissory Note.
3. Loss before taxation
Loss before taxation is stated after charging/(crediting):
2021 2020
GBP'000 GBP'000
-------- --------
Depreciation of property, plant and equipment
- owned assets 956 1,376
-------- --------
Depreciation of property, plant and equipment
- leased assets 699 350
-------- --------
Loss/(profit) on disposal of fixed assets 78 (61)
-------- --------
Amortisation of intangible assets 224 1,958
-------- --------
Amortisation of grants receivable (40) (40)
-------- --------
Staff costs - excluding share based payments 8,899 10,995
-------- --------
Cost of inventories recognised as an expense 12,821 12,448
-------- --------
Operating lease rentals:
-------- --------
- Machinery and equipment - 19
-------- --------
Foreign currency loss - 69
-------- --------
Share based payments 132 117
-------- --------
Notes to the consolidated financial statements (continued)
4. Amortisation and Impairment
2021 2020
GBP'000 GBP'000
-------- --------
Amortisation of intangible assets 224 1,958
-------- --------
Goodwill and intangible assets impairment - 13,878
-------- --------
Property impairment 655 -
-------- --------
ERP system impairment 1,118 -
-------- --------
1,997 15,836
-------- --------
Within tangible fixed assets, land and buildings include the
Meadowhall Road site which, as part of the Group's discussions with
its bankers, was valued by an independent chartered surveyor,
Lambert Smith Hampton, during the period resulting in an impairment
of GBP655,000. The Directors are satisfied that the carrying value
is comparable with market value.
Included in tangible fixed assets within Assets under
Construction is GBP829,000 along with associated costs of
GBP289,000 held in prepayments, relating to the internal and
third-party costs incurred in the current and prior years
associated with the development of a new ERP system in the CSC
division. As also noted in the prior year, the Covid-19 pandemic
has resulted in delays in finalising this project such that it has
effectively been at standstill for nearly two years. Improvements
to the incumbent ERP system in CSC have recently become available
which the Group is currently assessing for suitability and cost.
Whilst this review is not yet complete, an initial assessment
indicates that upgrading the incumbent system to the recently
announced software version, rather than completing the development
of the new system, may be a more appropriate and cost-effective
route to improving the ERP system in CSC. As a result, the
Directors have determined that there is an indicator of impairment
of the Asset under Construction and the associated prepayment
relating to the development of CSC's ERP system. Following an
impairment review, the Directors have recorded an impairment charge
of GBP1,118,000 to fully write off this asset. This impairment has
been reflected as a non-cash exceptional item.
5. Other exceptional costs
2021 2020
GBP'000 GBP'000
-------- --------
Reorganisation and redundancy 398 424
-------- --------
Impairment of inventory and work in progress 240 504
-------- --------
Costs in relation to HSE fine - 700
-------- --------
Closure of Precision Machined Components facility
(Quadscot) 166 690
-------- --------
Other costs (including bank refinancing and
legal costs) 240 433
-------- --------
1,044 2,751
-------- --------
The reorganisation and redundancy costs relate to costs of
restructuring across the Group. No further reorganisation costs are
expected in FY22 unless market conditions deteriorate further as a
result of the Covid-19 pandemic. In addition, no further costs are
expected in FY22 relating to the closure of the Quadscot facility
or impairment of inventory.
Notes to the consolidated financial statements (continued)
6. Taxation
2021 2020
GBP'000 GBP'000
---------------- ----------------
Current tax credit
---------------- ----------------
Over provision in respect of prior years (414) (118)
---------------- ----------------
(414) (118)
---------------- ----------------
Deferred tax credit
---------------- ----------------
Origination and reversal of temporary differences (421) (43)
---------------- ----------------
Impairment of intangible assets - (1,013)
---------------- ----------------
Under provision in respect of prior years 63 61
---------------- ----------------
(358) (995)
---------------- ----------------
Total taxation credit (772) (1,113)
---------------- ----------------
Corporation tax is calculated at 19% (2020: 19%) of the
estimated assessable profit for the period. Deferred tax is
calculated at the rate applicable when the temporary differences
are expected to unwind.
The charge for the period can be reconciled to the loss per the
consolidated statement of comprehensive income as follows:
2021 2020
GBP'000 GBP'000
Loss before taxation (4,198) (19,989)
---------- ----------
Theoretical tax credit at UK
corporation tax rate 19% (2020:
19%) (798) (3,798)
---------- ----------
Effect of charges/(credits):
----- ---------- ----------
* non-deductible expenses (3) 74
---------- ----------
* non-deductible exceptional items 393 2,970
---------- ----------
- research and development
allowance - (204)
---------- ----------
* adjustments in respect of prior years (385) (57)
---------- ----------
16 -
* change in taxation rates
----- ---------- ----------
* differences in deferred tax rates (17) 31
---------- ----------
* losses not previously recognised now utilised 22 (129)
---------- ----------
Total taxation credit (772) (1,113)
---------- ----------
An increase in the UK corporation tax rate to 25% was
substantively enacted in May 2021 and is due to take effect from 1
April 2023. As the most significant timing differences are not
expected to unwind until 2023 or later, the deferred tax rate was
changed from 19% to 25% in the period.
Notes to the consolidated financial statements (continued)
7. Loss per ordinary share
The calculation of the basic earnings per share is based on the
earnings attributable to ordinary shareholders divided by the
weighted average number of shares in issue during the period. The
adjusted earnings per share is also calculated based on the basic
weighted average number of shares.
The calculation of diluted earnings per share is based on the
basic earnings per share, adjusted to allow for the issue of shares
on the assumed conversion of all dilutive share options. As the
Group made a loss after taxation for the financial year there is no
dilution to take place.
On 18 December 2020 the Group undertook a fundraising through
the issue of 12,471,998 new ordinary shares.
For the 52 week period ended 2 October 2021
Total
GBP'000
Loss after tax (3,426)
-----------
No.
-----------
Weighted average number of shares -
basic 28,463,119
-----------
Basic loss per share (12.0)p
-----------
Diluted loss per share (12.0)p
-----------
The Group adjusted loss per share is calculated as follows:
Total
GBP'000
Loss after tax (3,426)
---------
Amortisation and Impairment (see Note
4) 1,997
---------
Other exceptional costs (see Note 5) 1,044
---------
Theoretical tax effect of the above
adjustments (241)
---------
Adjusted loss (626)
---------
Adjusted loss per share (2.2)p
---------
In the Directors' view, adjusted loss per share reflects the
ongoing performance of the business, how the business is managed on
a day to day basis, and allows for a consistent and meaningful
comparison between periods.
The theoretical tax effect is based on applying a 19% tax rate
to the adjustments for amortisation and other exceptional costs
incurred.
Notes to the consolidated financial statements (continued)
7. Loss per ordinary share (continued)
For the 53 week period ended 3 October 2020
Total
GBP'000
Loss after tax (18,876)
-----------
No.
-----------
Weighted average number of shares -
basic 18,595,165
-----------
Basic loss per share (101.5)p
-----------
Diluted loss per share (101.5)p
-----------
The Group adjusted loss per share is calculated as follows:
Loss after tax (18,876)
Amortisation and Impairment (see Note
4) 15,836
---------
Other exceptional costs (see Note 5) 2,751
---------
Theoretical tax effect of the above
adjustments (895)
---------
Adjusted loss (1,184)
---------
Adjusted loss per share (6.4)p
---------
8. Borrowings
2021 2020
GBP'000 GBP'000
Current
--------- ---------
Revolving credit facility 4,773 -
--------- ---------
Non-current
--------- ---------
Revolving credit facility - 6,773
--------- ---------
Total borrowings 4,773 6,773
--------- ---------
During the period, the bank loans drawn under the Revolving
Credit Facility (RCF) had an average annual interest rate of 2%
above SONIA.
In December 2020 the Group extended its facility through to 30
November 2022 with a GBP9 million facility through to 1 July 2021
and then GBP7 million for the remainder of the term. In March 2021,
the RCF was reduced to GBP6 million from September 2021, following
the sales of the Quadscot properties during the year.
The Group's RCF was drawn at GBP4.8 million at the year end
date. These bank borrowings are secured on the property, plant and
equipment of the Group by way of a debenture. Obligations under
finance leases are secured on the plant and machinery assets to
which they relate.
Notes to the consolidated financial statements (continued)
8. Borrowings (continued)
The Group's RCF was amended subsequent to the period end on 22
October 2021. The RCF was reduced from GBP6.0 million to GBP4.0
million and the facility term was extended from November 2022 to
June 2023. New covenants covering minimum liquidity and maximum
capital expenditure were agreed for the period to the end of June
2022. Leverage (net debt to adjusted EBITDA) and interest cover
covenants, tested quarterly, will commence on the first testing
date of 30 September 2022 through to the end of the facility.
The carrying amount of other bank borrowings is considered to be
a reasonable approximation of fair value. The carrying amounts of
the Group's borrowings are all denominated in GBP.
The maturity profile of borrowing facilities are as follows:
2021 2020
GBP'000 GBP'000
--------- --------
Due for settlement within one year:
--------- --------
Revolving credit facility 4,773 -
--------- --------
Due for settlement after one year:
--------- --------
Revolving credit facility - 6,773
--------- --------
The Group has the following undrawn borrowing facilities at the
year end:
2021 2020
GBP'000 GBP'000
--------- --------
Expiring within one year 1,227 -
--------- --------
Expiring beyond one year - 5,227
--------- --------
Subsequent to year end, as noted above, the RCF was reduced from
GBP6.0 million to GBP4.0 million and the facility term was extended
from November 2022 to June 2023.
9. Lease Liabilities
Lease liabilities are presented in the statement of financial
position as follows:
2021 2020
GBP'000 GBP'000
-------- --------
Current
-------- --------
Asset finance lease liabilities 810 955
-------- --------
Right of use asset lease liabilities 300 254
-------- --------
1,110 1,209
-------- --------
Non-current
-------- --------
Asset finance lease liabilities 1,521 2,003
-------- --------
Right of use asset lease liabilities 724 840
-------- --------
2,245 2,843
-------- --------
Notes to the consolidated financial statements (continued)
9. Lease Liabilities (continued)
The Group has leases for certain operational factory premises
and related facilities, several large items of plant and machinery
equipment, an office building, a number of motor vehicles and some
IT equipment.
For right of use assets, with the exception of short-term leases
and leases of low-value underlying assets, each lease is reflected
on the balance sheet as a right-of-use asset and a lease
liability.
The Group classifies its right-of-use assets in a consistent
manner to its property, plant and equipment. Each lease generally
imposes a restriction that, unless there is a contractual right for
the Group to sublet the asset to another party, the right-of-use
asset can only be used by the Group. Leases are either
non-cancellable or may only be cancelled by incurring a substantive
termination fee. Some leases contain an option to extend the lease
for a further term. The Group is prohibited from selling or
pledging the underlying leased assets as security.
For leases over office buildings and factory premises the Group
must keep those properties in a good state of repair and return the
properties in their original condition at the end of the lease.
Further, the Group must insure items of property, plant and
equipment and incur maintenance fees on such items in accordance
with the lease contracts.
The lease liabilities are secured by the related underlying
assets. Future minimum lease payments at 2 October 2021 were as
follows:
Within one Over one to Total
year five years
GBP'000 GBP'000 GBP'000
----------- ------------ --------
2 October 2021
----------- ------------ --------
Lease payments 1,225 2,419 3,644
----------- ------------ --------
Finance costs (115) (174) (289)
----------- ------------ --------
Net present value 1,110 2,245 3,355
----------- ------------ --------
Within one Over one to Total
year five years
GBP'000 GBP'000 GBP'000
----------- ------------ --------
3 October 2020
----------- ------------ --------
Lease payments 1,335 3,012 4,347
----------- ------------ --------
Finance costs (126) (169) (295)
----------- ------------ --------
Net present value 1,209 2,843 4,052
----------- ------------ --------
Lease payments not recognised as a liability
The Group has elected not to recognise a lease liability for
short term leases (leases with an expected term of 12 months or
less) or for leases of low value assets. Payments made under such
leases are expensed on a straight-line basis. In addition, certain
variable lease payments are not permitted to be recognised as lease
liabilities and are expensed as incurred and are disclosed in
operating lease commitments in these financial statements.
Notes to the consolidated financial statements (continued)
10. Consolidated cash flow statement
2021 Restated
2020
GBP'000 GBP'000
-------- ---------
Loss after tax (3,426) (18,876)
-------- ---------
Adjustments for:
-------- ---------
Finance costs - net 412 189
-------- ---------
Depreciation of property, plant and equipment 1,655 1,726
-------- ---------
Amortisation of intangible assets 224 1,958
-------- ---------
Share option costs 132 117
-------- ---------
Income tax credit (772) (1,113)
-------- ---------
Loss/(profit) on disposal of property, plant
and equipment 78 (61)
-------- ---------
Profit on sale of PT US Inc. associate - (297)
-------- ---------
Profit on disposal of shareholding in Greenlane
Renewables Inc. - (1,895)
Modification of Promissory Note receivable - 1,026
-------- ---------
Impairment 1,484 13,878
-------- ---------
Changes in working capital:
-------- ---------
Decrease/(increase) in inventories 490 (137)
-------- ---------
(Increase)/decrease in trade and other receivables (1,995) 2,474
-------- ---------
(Decrease)/increase in trade and other payables (4,448) 2,718
-------- ---------
Cash (outflows)/inflows from operating activities (6,166) 1,707
-------- ---------
A restatement of the various components of Changes in working
capital in the prior period has been undertaken to correct an error
in the Consolidated statement of financial position as at 3 October
2020 and 28 October 2019, which resulted in the incorrect
presentation of contract assets and contract liabilities relating
to ongoing contracts (see Note 12). The cash inflow from operating
activities in the prior period of GBP1,707,000 has not been
impacted by this restatement.
11. Net Debt Reconciliation
Borrowings Cash & Total
Leases Bank
GBP'000 GBP'000 GBP'000 GBP'000
------------ --------- -------- ---------
Cost
------------ --------- -------- ---------
At 28 September 2019 (10,800) (2,772) 2,208 (11,364)
------------ --------- -------- ---------
Cash flows - - 1,208 1,208
------------ --------- -------- ---------
Repayments 4,250 1,301 - 5,551
------------ --------- -------- ---------
New facilities - asset
finance leases (223) (1,197) - (1,420)
------------ --------- -------- ---------
New facilities - right
of use leases - (1,384) - (1,384)
------------ --------- -------- ---------
At 3 October 2020 (6,773) (4,052) 3,416 (7,409)
------------ --------- -------- ---------
Cash flows - - (199) (199)
------------ --------- -------- ---------
Repayments 2,000 1,805 - 3,805
------------ --------- -------- ---------
New facilities - asset
finance leases - (934) - (934)
------------ --------- -------- ---------
New facilities - right
of use leases - (174) - (174)
------------ --------- -------- ---------
At 2 October 2021 (4,773) (3,355) 3,217 (4,911)
------------ --------- -------- ---------
Notes to the consolidated financial statements (continued)
12. Prior Period Adjustment
A restatement of Consolidated statement of financial position as
at 3 October 2020 and 28 September 2019 has been undertaken to
correct an error, which resulted in the incorrect presentation of
contract assets and contract liabilities relating to ongoing
contracts.
As at 3 October 2020, the impact of the restatement was as
follows:-
2020 2020 2020
Presented Adjustment Restated
-------------------- --------------- ---------
GBP'000 GBP'000 GBP'000
-------------------- --------------- ---------
Inventories - Work in progress 2,716 (235) 2,481
-------------------- --------------- ---------
Trade and other receivables - Prepayments
and accrued income 1,613 (362) 1,251
-------------------- --------------- ---------
Trade and other receivables - Contract
assets 5,296 (4,114) 1,182
-------------------- --------------- ---------
Trade and other payables - Deferred
income (6,497) 4,562 (1,935)
-------------------- --------------- -----------
Trade and other payables - Contract
liabilities (505) 149 (356)
-------------------- --------------- ---------
Total 2,623 - 2,623
-------------------- --------------- ---------
As at 28 September 2019, the impact of the restatement was as
follows:-
2019 2019 2019
Presented Adjustment Restated
-------------------- --------------- ---------
GBP'000 GBP'000 GBP'000
-------------------- --------------- ---------
Inventories - Work in progress 3,010 (446) 2,564
-------------------- --------------- ---------
Trade and other receivables - Prepayments
and accrued income 1,002 (48) 954
-------------------- --------------- ---------
Trade and other receivables - Contract
assets 1,056 97 1,153
-------------------- --------------- ---------
Trade and other payables - Deferred
income (2,353) 1,453 (900)
-------------------- --------------- -----------
Trade and other payables - Contract
liabilities - (1,056) (1,056)
-------------------- --------------- ---------
Total 2,715 - 2,715
-------------------- --------------- ---------
13. Subsequent events
The Group's Revolving Credit Facility (RCF) was amended
subsequent to the year end in October 2021. The RCF was reduced
from GBP6.0 million to GBP4.0 million and the facility term was
extended from November 2022 to June 2023. New covenants covering
minimum liquidity and maximum capital expenditure were agreed for
the period to the end of June 2022. Leverage (net debt to adjusted
EBITDA) and interest cover covenants, tested quarterly, will
commence on the first testing date of 30 September 2022 through to
the end of the facility.
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END
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January 18, 2022 02:00 ET (07:00 GMT)
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