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Pressure Technologies – “considerable momentum” & “significant potential”, so why are the shares further lower?

By Steve Moore | Tuesday 12 June 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.


Pressure Technologies (PRES) has announced results for its half year ended 31st March 2018 including “dynamics in the defence and oil and gas markets are showing considerable momentum” and “there is significant potential in Alternative Energy”. So why are the shares currently further lower, below 130p?

Well, the results show, on revenue 23% lower than in the corresponding prior year period – at £13.6 million, a £0.6 million increased adjusted loss of £1.4 million. After particularly also a £1.5 million net working capital outflow, even after £5 million of new equity, net debt only improved by £1.7 million to £9.3 million.

The company emphasises “net assets increased to £34.5 million (2017: £32.7 million)” and there was a net current asset position of £10.1 million. However, the latter included more than £10 million of receivables and £6 million of inventories, with the former also including more than £27 million of intangibles.

The statement commences that the revenue decline was “primarily due to a lower opening order book in the Alternative Energy Division… compounded by low order intake in the period”, before going on to add “customers delaying placement of new orders; a market dynamic that we've seen in all divisions”. Indeed, it is reiterated that Manufacturing business trading encouragement is “time dependent” and that re. Alternative Energy, “the board is considering a number of strategic options for this division that will hopefully increase market opportunities and lead to enhanced shareholder value”.

Hmmm. The company placed in October – having had net debt of £11.1 million at 30th September 2017; I questioning then is it that loss-making, uncertainty and significant liabilities over current assets (including net debt) not the most comfortable of positions? Since the half-year end, £1.1 million has been raised via a disposal of a moderately loss-making business (Hydratron) but, particularly with the noted balance sheet, I’d want to see evidence of strong, sustainable recovery in trading from here before reconsidering my stance to avoid.


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