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By Steve Moore | Thursday 31 May 2018
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from ShareProphets). I have no business relationship with any company whose stock is mentioned in this article.
A trading update from Pressure Technologies (PRES) commences “the Alternative Energy Division has scored several notable successes since the start of the current financial year, which demonstrates our continued leadership in the biogas upgrading market” and includes “the biogas market offers substantial potential” and “our Manufacturing Divisions continue to have a strong position in the global, safety critical markets they serve… an upturn in the oil and gas market and a well developed position in the defence market”. The shares have responded to the update, er, more than 22% lower, to 144p…
This is with the stated “several notable successes” and “leadership in the biogas upgrading market” followed by that “it is disappointing to report that only three new upgrader contracts have been awarded since October 2017”! This with “in North and South America, delays have arisen due to slowness in obtaining environmental permits, complexity of contract negotiations and customer funding arrangements. Delays in the UK have been primarily caused by the Renewable Heat Incentive legislation progressing slowly”.
This all sees “the division will be loss making for the year” and the exploring of “a number of strategic options that have the potential to unlock value for shareholders”. Additionally, the manufacturing divisions stated “strong position in the global, safety critical markets they serve” and “upturn in the oil and gas market” are followed by that there are also “challenges” - “largely ones of timing”, including “delays to the start of the next stage of the Dreadnought (submarine) programme”. The net near-term effect is that “the group's results for the full year are expected to be substantially below market expectations”.
I previously noted on the company in October indebted, follows profit warning with a placing - including questioning is it that loss-making, uncertainty and significant liabilities over current assets (including net debt) not the most comfortable of positions? I’ll get to review again soon, with half-year results scheduled for 12th June - but currently certainly continue to avoid.
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