AGM Statement

RNS Number : 2636P

Pressure Technologies PLC

17 February 2016

 

17 February 2016

Pressure Technologies plc

("Pressure Technologies" or the "Group")

AGM STATEMENT

The Board of Pressure Technologies plc (AIM: PRES) issues the following trading update ahead of the Group's Annual General Meeting, which is being held at 11.00 hours today at Chesterfield Special Cylinders, Meadowhall Road, Sheffield.

The Group businesses dependent on the oil and gas industry are showing resilience in what are extremely difficult markets and we will continue to take whatever measures are needed to maintain that. Our view, along with others in the sector, is that there will be no significant pick up in the oil and gas market during 2016. Whilst we are monitoring our cost base closely and taking action where necessary to ensure the resilience of our businesses, we continue to invest in the future of the Group and implement the strategic objectives to broaden our customer, technology and industrial base.

Alternative Energy, which is tracking as planned, brings balance and diversification to the Group. Our manufacturing businesses, Precision Machined Components, Engineered Products and Cylinders are well run businesses, which have withstood many oil and gas market cycles. In the short-term the Group is dependent on the timing of receipt of large orders in Cylinders and Alternative Energy to meet market expectations and the third quarter of the financial year will be critical to this, with profits heavily skewed to the second-half. Cash requirements for the Group remain well-controlled and we have comfortably complied with banking covenants.

The Board remains confident in the medium to long-term prospects for the Group despite the difficult market conditions created by the low oil price.

Divisional Review

Precision Machined Components

The division, which is almost 100% focused on the oil and gas market continues to trade in line with expectations. Management believes that market share is being maintained in a very tight market through a combination of cost down initiatives and ability to offer high quality product on short delivery lead-times. Sales of wear parts and consumable tooling remain resilient due to continuing high volumes of oil production. Sales into the capital equipment market remain at subdued levels but even there, new customer and product developments should start to feed into sales revenues from the fourth quarter of the 2016 financial year.

Engineered Products

This division has seen the most marked impact from the downturn in the oil and gas market. Two main product areas, high-pressure pumps and test benches have experienced a further decline in demand since the annual report. Sales of the core high-pressure pump products have been impacted by a reduction in maintenance spend and higher asset utilisation by our customers. Test benches for high-pressure components have been heavily affected by a reduction in discretionary spend with customers delaying investment in new and replacement test facilities.

The appointment of a new Managing Director in December of 2015 has resulted in a significant reorganisation of the division. Reductions in headcount over and above those discussed in the annual report should yield further savings from the second half of this financial year. At the same time, the project to expand the core product line continues together with development of sales channels and, over the next two years, we expect a significant increase in business outside the oil and gas market.

Cylinders

With order to delivery lead-times of several months, the Cylinders Division has better forward visibility than Precision Machined Components and Engineered Products and is benefitting from an increase in defence contracts and the expansion of its customer base. The sales office in the USA and the Integrity Management business continue to make steady progress.

At this stage of the year, sales and orders are in line with expectations. There is a good pipeline of potential orders, very little of which is for the oil and gas market. Timing of new orders and delivery dates will have a significant influence on results.

Alternative Energy

Like the Cylinders Division, the Alternative Energy Division has long order to delivery lead-times for its biogas upgrader projects. Unlike the rest of the Group, the main driver for customers placing orders is incentive driven rather than oil and gas price. Two recent contract wins, one in the UK, a repeat order, and one in North America, together with a significant pipeline of potential orders across Europe, North America and China are very encouraging. Timing of contract awards has a major bearing on results, as revenue recognition milestones can easily cross between financial years.

Product and technology development is continuing as planned with the launch of our membrane technology at the recent Biogaz Europe show in France adding to our existing upgrading technology, water wash and pressure swing adsorption ("PSA"). The ability to offer all three options makes us unique in the biogas upgrading market, with outsourced manufacturing and no factory to fill, we are able to offer our customers the best technical and cost solution for each project.

For further information, please contact:

Pressure Technologies plc John Hayward, Chief Executive Jo Allen, Group Finance Director Keeley Clarke, Investor Relations	Tel: [phone] www.pressuretechnologies.com
Tavistock Simon Hudson	Tel: [phone]
Cantor Fitzgerald Europe (Nominated Adviser and Broker) Philip Davies / Will Goode	Tel: [phone]

COMPANY DESCRIPTION

Company description - www.pressuretechnologies.com

With its head office in Sheffield, Pressure Technologies was founded on its leading market position as a designer and manufacturer of high pressure systems serving the global energy, defence and industrial gases markets. Today it continues to serve those markets from a broader engineering base with specialist precision engineering businesses and has a worldwide presence in Alternative Energy as the global leader in biogas upgrading. On this foundation, the company is building a highly profitable group of companies 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, Glasgow, 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.com

Alternative Energy

·      Chesterfield BioGas, Sheffield, founded in 2008. Renamed Greenlane Biogas UK on 5 June 2015.

·      Greenlane, Vancouver, Canada and Auckland, New Zealand, acquired in October 2014 www.greenlanebiogas.com

 

END

 

 

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