Pressure Technologies plc Annual Report 2007

FY2007 Annual Report · Pressure Technologies plc

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Pressure Technologies

Annual Report & Accounts 2007

The Board of Directors of Pressure Technologies plc

(Left to right) Nigel Luckett, Non-executive Director; John Hayward, Chief
Executive; Richard Shacklady, Non-executive Chairman.

The Operational Board of Directors of
Chesterfield Special Cylinders Limited

(Standing – left to right) John Brown, John Hayward (Managing Director),
Philip Redfern. (Seated – left to right) Philip Catton, Alan Harding.

Pressure Technologies plc

Contents of the Annual Report

Company information

Directors

Secretary

Registered office

Registered number

Website

Nominated advisor

Auditors

Solicitors

Bankers

Registrars

R.L.Shacklady – non-executive Chairman
J.T.S.Hayward – Chief Executive
N.F.Luckett – non-executive

T.J.Lister

Meadowhall Road
Sheffield
S9 1BT

06135104

www.pressuretechnologies.com

Brewin Dolphin Securities
34 Lisbon Street
Leeds
LS1 4LX

Grant Thornton UK LLP
Chartered Accountants
Centre City Tower
7 Hill Street
Birmingham
B5 4UU

Hlw Commercial Lawyers LLP
Commercial House
Commercial Street
Sheffield
S1 2AT

Bank of Scotland
7 Leopold Street
Sheffield
S1 2FF

Capita Registrars
Northern House
Woodsome Park
Fenay Bridge
Huddersfield
HD8 0LA

Pressure Technologies plc

Chairman’s statement

Following our successful listing on AIM in June 2007, it gives me great pleasure to present our first Annual Report as a
public company.

Financial Highlights: The year ended 30th September 2007, resulted in a further period of sustained high growth in our
business. Continued strong demand from global energy markets and increased penetration of overseas defence and
aerospace sectors enabled the Group to continue its strong upward momentum. Turnover nearly doubled to £15.1m
compared with £8.2m achieved in 2006.

Operating profit before exceptional items at £1.9m was nearly double the 2006 level of £1.1m. Pre-tax profits before
operating exceptional items increased to £1.9m compared with £0.8m in 2006. As well as volume growth, the benefits of the
business relocating to the Meadowhall, Sheffield facility in 2005 continue to positively impact manufacturing performance.

The net proceeds from flotation were £5.4m, of which £1.2m has been invested into working capital to support organic
growth and our strong balance sheet provides significant flexibility to capitalise on further opportunities.

As indicated at the time of flotation, no dividend will be paid for year ended 30th September 2007. We can confirm our
intention to declare a dividend for the six months interim period to 31st March 2008.

Strategy: We continue to implement a business growth programme based on penetration of key growth sectors, notably
global energy and high pressure gases markets, establishing a presence in new niche sectors, and an increased focus on
acquisition of businesses which offer synergistic benefits in related niche sectors. During 2007, we consolidated our supply
position in the global offshore oil and gas market. Significant progress was made in the UK gas trailer refurbishment
market and we plan to develop this sector further during 2008. We also have a number of initiatives underway in the
Compressed Natural Gas and Biogas sectors which offer significant potential for our products in Continental Europe.

During the year £0.4 million of exceptional costs were incurred as a result of extensive due diligence on an unsuccessful
overseas acquisition. Other acquisition targets, which will enhance our business, are being actively pursued.

The Board and Corporate Governance: As previously reported, Nigel Luckett joined the Group in April 2007 and we
increasingly benefit from his wisdom and experience. It is our intention to further strengthen the Board this year with the
appointment of a further Non-Executive Director.

The Board has established Audit and Remuneration Committees chaired by Nigel Luckett and a Nomination Committee
chaired by myself.

We have also developed what has become an increasingly active corporate website for disseminating information to our
investors.

People: Pressure Technologies’ supportive culture helps to motivate all our employees to succeed and it is our employees
who have helped to deliver a set of excellent results for the year and I am grateful for their contribution. As a result of their
efforts it was notable that the business lost less than 48 hours output during the period when the factory was flooded in the
storms of mid 2007.

It is appropriate to acknowledge the continued commitment and support of the Operational Directors of our subsidiary,
Chesterfield Special Cylinders, ably led by our Chief Executive John Hayward since the MBO in 2004.

I would also like to thank our shareholders and investors who recognising our potential have supported us through the year.

Prospects: The Group finished 2007 in excellent financial condition, with buoyant conditions in each of our key market
sectors and a forward order book of over £18 million, a record for any year end. These factors when combined with our
strategic initiatives, make the Board confident of delivering further progress in the year ahead.

Richard L. Shacklady
Chairman
22 February 2008

Pressure Technologies plc

Chief Executive’s statement

I am delighted to submit my first annual statement as Chief Executive of Pressure Technologies plc. This has been both a
rewarding and award winning year for the Group. Rewarding due to the way the Group has grown and developed, and our
successful flotation on AIM in June. Award winning as Pressure Technologies won a Yorkshire Post Business Excellence
award and our manufacturing subsidiary, Chesterfield Special Cylinders, was recipient of the Confederation of British
Metalforming Company of the Year award. Financially we have exceeded analyst expectations and our order book remains
strong with visibility through to 2009 in the oil and gas sector and a good level of potential projects across all market
sectors.

To achieve these results we have made significant changes in the Group. The major changes are outlined below:

●

Sales & marketing

The year saw a further strengthening of the sales team with the appointment of an experienced export sales manager.
This has allowed the development of several opportunities in Europe and the Far East. A new agent has been
appointed in Australia and negotiations are well advanced with potential agents in the Pacific Rim. We are again
forecasting growth in export sales in 2008.

In 2008 we will be aggressively pursuing growth in the UK with the appointment of an additional salesman focussed
solely on this market. There are still significant opportunities to grow the customer base in our home market across
the full range of commercial products and services.

Defence remains a difficult market in the UK where capital budgets are under pressure and market conditions remain
tough. Export defence markets have provided better opportunities with projects won in 2007 with two more NATO
navies for delivery from 2008 onwards.

●

Operations

Another near doubling in turnover has brought with it many challenges. Fortunately the move to Sheffield has put us
in an area with a large pool of skilled metal workers and recruitment of labour has not been a major issue. We
continue to invest in employee development and all manufacturing operatives either have as a minimum qualification
or are studying for NVQ level 2. We have also recruited two new apprentices and it is a target of the business to recruit
one or two new apprentices each year.

Management of operations has been significantly enhanced by the introduction of additional logistics and production
engineering staff in 2007. Plans are well advanced to further increase production scheduling and administration staff
in 2008. These appointments are backed up by continuing investment in our IT systems.

Capital investment has been focussed on improving manufacturing efficiency and increasing output. Major cost
savings have been achieved through the elimination of subcontractors for ultralarge cylinder fit up and leak test and
the purchase of a CNC machining centre to manufacture fittings and adaptors in-house. Capital investment in 2008
is forecast to be nearly four times depreciation charge as we look to continuously improve our output and efficiency.

●

Technical & development

Last year was a busy time for our technical departments. An increasing workload arising from the increase in sales
was more than matched by increases in development work. Major projects have been commenced on the
metallurgical properties of cylinders for naval applications, in-situ inspection, two-dimensional computer modelling
of cold forming, alternative methods of hot forging of aircraft cylinders and the evaluation of new materials for high
pressure cylinder manufacture.

The Design function has come under particular pressure and since the year end we have employed an additional
Designer and later in the year we will be looking to recruit a trainee into this area. It is essential that we maintain our
edge in bespoke cylinder design and also have the resources to cope with the demands on the design function arising
from increased sales volumes and new product development.

Pressure Technologies plc

Chief executive’s statement
continued

In addition to our internal technical resources we are seeking to forge closer working relationships with universities
and R&D organisations in the region. Sheffield has a cluster of such organisations at the Advanced Manufacturing
Park and EC support through Objective 1 and Objective 2 funding is still available.

●

Health, Safety & Environment

To meet the ever increasing burden of legislation, a specialist Health, Safety and Environmental manager has been
appointed. As a result of this, our environmental management systems are now to a standard where we obtained
accreditation to ISO14001 at Chesterfield Special Cylinders on 31 January 2008. This is very important to the business
as it is likely that ISO14001 will become a qualifier for winning business with multi-national customers in the same
way that ISO9000 is today.

Our flotation on AIM was a new beginning for the Group rather than an end in itself and I am very pleased that our first year
report shows substantial progress in the year against our stated aims. We look forward to reporting further success in our
2008 interim results.

John Hayward
Chief Executive
22 February 2008

Pressure Technologies plc

Directors’ report

The Directors present their report and the audited financial statements for the year ended 30 September 2007.

Principal activities

Pressure Technologies plc (“PT”) is the holding company for Chesterfield Special Cylinders Limited (“CSC”) whose principal
activities are the design, manufacture and reconditioning of seamless steel high pressure gas cylinders.

PT was incorporated on 2 March 2007 and in May 2007 effected a group reorganisation by which it became the parent
company of CSC and Chesterfield Pressure Systems Group Limited. On 6 June 2007 the shares of PT were listed on the AIM
market of the London Stock Exchange. As more fully explained within the Accounting Policies note to the financial
statements, this has resulted in the consolidated financial statements presenting information as if the group existed in its
current form for the two years ended 30 September 2007.

Results and dividends

The Consolidated Profit & Loss Account is set out on page 13. The profit on ordinary activities before taxation of the Group
for the year ended 30 September 2007 amounted to £1,409,000 (2006: £839,000).

In line with the dividend policy stated in the Admission Document issued for the flotation in June 2007 the directors do not
intend to declare a dividend for the period, with all profits being reinvested in the development of the Group. The Directors
intend to declare a dividend in relation to the interim period for the six months ending 31 March 2008.

Business review

Financial overview

Sales revenues increased to £15,124,000 (2006: £8,170,000) as a result of demand from the oil & gas sector, an increase of
85%.

Gross profit increased by 46% to £3,887,000 (2006: £2,666,000) giving a gross margin of 25.7%. This reduction in gross
margin was due to changes in mix with a higher proportion of product manufactured from bought in semi-finished forgings.

Selling and administration costs, excluding exceptional costs, increased by 23% to £1,980,000 to support business growth.
Operating profit margins excluding exceptional costs decreased marginally from 12.9% to 12.6% as a result of the mix
change and overhead cost increases.

Exceptional operating costs were £530,000 of which £125,000 was due to the costs of the flotation on AIM and £405,000 was
due diligence costs of an aborted potential acquisition.

Profit before tax increased by 68% to £1,409,000 (2006: £839,000). Basic earnings per share were up 44% at 11.1p (2006:
7.7p).

The cash outflow from operations was £609,000 (2006: inflow £1,146,000) as the increase in trading required a large
increase in working capital and also due to the exceptional operating costs incurred in the year.

Capital expenditure cash payments amounted to £428,000 (2006: £381,000) with expenditure targeted on improvements to
the efficiency of the ultralarge finishing line and the replacement of subcontract manufacture of fittings & adaptors by in-
house manufacture. The full year effect of this expenditure on profits will not be realised until 2008.

Net cash raised from the AIM flotation was £5,417,000 and cash increased by £3,932,000 to £4,930,000 (2006: £998,000).

Operational overview

The operational overview is contained in the Chief Executive’s statement on pages 4 and 5.

Pressure Technologies plc

Directors’ report
continued

Environment

Pressure Technologies recognises that its activities have an impact on the environment. Managing this impact is an integral
part of responsible corporate governance and good management practice. The Group has developed environmental policies
and the main points are listed below:

● Overall responsibility for the implementation of these policies is the responsibility of the Pressure Technologies Board

and the senior management at each Group company.

● The Group will comply with both the letter and the spirit of relevant environmental regulations. Additionally the group

will actively participate in industry and governmental environmental consultative processes.

● The Group will apply the requirements of ISO14001:2004 and implement an effective environmental management system.

● The Group is committed to the continuous improvement of its environmental management system. Specifically the

Group seeks to reduce waste and energy use and prevent pollution.

● As part of continuous improvement, it is the policy of the Group to establish measurable environmental objectives and
communicate these to all employees. These documented objectives will be periodically reviewed as part of the internal
audit and management review process. The necessary personnel and financial resources will be provided to meet these
objectives.

● Employees are given such information, training and equipment as is necessary to enable them to undertake their work

with the minimum impact on the environment.

The Group had no notifiable environment incidents in 2007.

Outlook for 2008

Orders and order prospects do not appear to have been affected by recent events arising from the collapse of the subprime
lending market in the USA. Since the year end, sales volumes have been ahead of last year and whilst it is too early to
predict the outcome for the year we remain confident of the growth potential for the business.

Principal risks & uncertainties

Specific principal risks identified by management are described below together with management actions to minimise
these risks:

Risk

Management action

The Group derives over 75% of its sales from two key
customers in one market sector.

Significant management resource is allocated to service
the requirements of these customers.
Ongoing development of new products, customers & markets.

The Group derives a high proportion of its raw material
from a small number of key suppliers some of whom are
competitors.

To reduce the inherent risk of supply from competitors,
requirements are split across the available supplier
base.

The Group operates from a single manufacturing site. In
the event of a prolonged interruption to operations at this
site, the Group may not have the ability to transfer its
manufacturing activities to other facilities.

The Group is small and relies on a small number of key
Directors and senior managers.

Health, safety and environmental risks which could result
in site closure are managed on a day to day basis by a
specialist manager reporting directly to the CSC Operations
Director.
The site is above the main flood plain. The threat of
localised flooding has been reduced by raising the height of
the banks of the stream adjacent to the factory.

As the business grows, increases in staff numbers make
succession planning easier and recruitment is already carried
out to ensure that skills and expertise can be duplicated.

Key man insurance is in place for the PT Chief Executive,
the CSC Operations Director and the CSC Sales and
Marketing Director. The Board regularly reviews the
adequacy of the policies currently in place.

Pressure Technologies plc

Directors’ report
continued

Other risks may also adversely affect the Group and actual results may differ materially from anticipated results because
of a variety of risk factors, including but not limited to: changes in interest and exchange rates; changes in global, political,
economic, business, competitive and market forces; changes to legislation and tax rates; future business acquisitions or
disposals; relations with customers and customer credit risk; relations with suppliers and supplier credit risks; events
affecting international security, including global health issues and terrorism, and; changes in legislation.

Summary and calculation of key performance indicators

Shareholders

KPI – Earnings per share

2007
2006

11.1p
7.7p

Earnings per share is calculated as profit for the year divided by the weighted average number of shares in issue.

Financial performance

KPI – Sales

2007
2006
Target

£15.1 million
£ 8.2 million
£40 million by 2011

KPI - Return on sales

2007
2006
Target

12.6%
12.9%
15.0%

Sales growth was predominantly in the offshore oil & gas sector which accounted for 86% of sales in 2007 (61% in 2006).

Return on sales is calculated as operating profit before exceptional operating costs divided by sales expressed as a
percentage. Return on sales was down marginally due to a combination of sales mix changes and additional overheads to
support the sales growth through to 2008.

Health & safety

KPI – Reportable Accidents
2007
2006
Target

2
5
Zero

Substantial shareholdings

Environment

KPI - Reportable Incidents
Zero
Zero
Zero

2007
2006
Target

As at 30 January 2008, the following had notified the Company that they held or were beneficially interested in 3% or more
of the Company’s issued ordinary share capital:

Number
of shares

1,100,040
870,000
800,000
773,333
773,333
342,224

Percentage of
issued share
capital owned

9.7%
7.7%
7.1%
6.8%
6.8%
3.0%

J.T.S. Hayward
P.L. Redfern
J.W. Brown
P.D. Catton
A. Harding
South Yorkshire Investment Capital Fund LP

Pressure Technologies plc

Directors’ report
continued

Directors and their interests

The present Directors of the Company are set out on page 2.

J.T.S.Hayward was appointed a Director on 2 March 2007. R.L.Shacklady and N.F.Luckett were appointed Directors on 4 May
2007. J.D.Clark was appointed a Director on 2 March 2007 and resigned on 31 December 2007. Their interests in the share
capital of the Company are set out below.

Ordinary shares

R.L.Shacklady (including 10,000 shares held by his wife)
J.T.S.Hayward
J.D.Clark (including 3,333 shares held by his wife)
N.F.Luckett

Share options

30 September
2007
No.

43,333
1,100,040
50,000
33,333

On 2 November 2007 approval was received from HM Revenue & Customs for the Pressure Technologies SAYE Sharesave
Scheme. On 30 November 2007 the directors granted options on 59,197 ordinary shares in accordance with the Rules of the
scheme to 27 of the Group’s 46 employees who were eligible to apply for option shares under the scheme. The Directors’
interests in share options granted on 30 November 2007 are as follows:

R.L.Shacklady
J.T.S.Hayward
N.F.Luckett

Financial instruments

Options on
Ordinary shares
of 5p
No.

5,454
2,181
5,454

The Group’s operations expose it to a variety of financial risks including the effects of changes in interest rates on debt,
foreign currency exchange rates, credit risk and liquidity risk. The Group’s principal financial instruments comprise cash
and bank deposits, bank loans and overdrafts together with trade debtors and trade creditors that arise directly from its
operations. The Group has not entered into derivative transactions, with the exception of foreign exchange contracts in the
normal course of trade, nor does it trade in financial instruments as a matter of policy.

The main risks arising from the Group’s financial instruments can be analysed as follows:

Price risk

Where possible the Group enters into contracts incorporating price escalation clauses to mitigate any significant exposure
to materials and utilities price risk.

Credit risk

The Group’s credit risk is primarily attributable to its trade debtors. Credit risk is managed by monitoring the aggregate
amount and duration of exposure to any one customer depending upon their credit rating. The amounts presented in the

Pressure Technologies plc

Directors’ report
continued

balance sheet are net of allowances for doubtful debts, estimated by the Group’s management based on prior experience
and their assessment of the current economic environment. The credit risk on liquid funds is minimised because the
counterparties are banks with high credit-ratings assigned by international credit-rating agencies.

Interest rate risk

Surplus cash is placed on short term deposit at fixed rates of interest.

Liquidity risk

Short term financing needs are met by working capital facilities.

Exchange rate risk

The Group purchases its raw materials in both US Dollars and Euros and receives payment for some of its products in
Euros, however most payments are received in Sterling. After netting off foreign currency receipts and payments there is a
net exposure to the risk of currency movements both in US Dollars and Euros. Where necessary the net exposure is hedged
using forward contracts subject to limits in the Group’s banking facility.

Research and development

During the year £21,000 of development costs were expensed to the profit & loss account (2006: £9,000).

Donations

Donations made by the Group during the year for charitable purposes in the United Kingdom amounted to £3,495 (2006:
£nil).

Supplier payment policy

The Group’s policy is to comply wherever practical with the terms of payment agreed with its suppliers. At the year end
creditor days were 43 (2006: 51) for the Group.

Directors' indemnities

The Company maintains director and officer insurance cover for the benefit of its directors which remained in force at the
date of this report.

Statement of directors' responsibilities for the financial statements

The Directors are responsible for preparing the Annual Report and the financial statements in accordance with applicable
law and regulations.

Company law requires the Directors to prepare financial statements for each financial year. Under that law the Directors
have elected to prepare the financial statements in accordance with United Kingdom Generally Accepted Accounting
Practice (United Kingdom Accounting Standards and applicable law). The financial statements are required by law to give
a true and fair view of the state of affairs of the Company and the Group and of the profit or loss of the Group for that
period. In preparing these financial statements, the directors are required to:

select suitable accounting policies and then apply them consistently;

make judgements and estimates that are reasonable and prudent;

state whether applicable United Kingdom accounting standards have been followed, subject to any material
departures disclosed and explained in the financial statements; and

prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Group will
continue in business.

●

Pressure Technologies plc

Directors’ report
continued

The Directors are responsible for keeping proper accounting records which disclose with reasonable accuracy at any time
the financial position of the Group and enable them to ensure that the financial statements comply with the Companies Act
1985. They are also responsible for safeguarding the assets of the Group and hence for taking reasonable steps for the
prevention and detection of fraud and other irregularities.

The Directors are responsible for the maintenance and integrity of the corporate and financial information on the Group's
website. Legislation in the United Kingdom governing the preparation and dissemination of the financial statements and
other information included in annual reports may differ from legislation in other jurisdictions.

Disclosure of information to auditors

At the date of making this report each of the Company’s directors, as set out on page 2, confirm the following:

●

so far as each director is aware, there is no relevant information needed by the Company's auditors in connection with
preparing their report of which the Company's auditors are unaware, and

each director has taken all the steps that he ought to have taken as a director in order to make himself aware of any
relevant information needed by the Company’s auditors in connection with preparing their report and to establish that
the Company's auditors are aware of that information.

Transition to International Financial Reporting Standards

The six months ending 31 March 2008 will be the first results for the Group that will be reported under International
Financial Reporting Standards (‘IFRS’). The IFRS conversion project is progressing well and the Directors do not expect the
impact of the adoption to be significant to the reported results of the Group.

Auditors

RSM Robson Rhodes LLP ("Robson Rhodes") were appointed as auditors during the year. Robson Rhodes merged its audit
practice with that of Grant Thornton UK LLP (“Grant Thornton”) with effect from 2 July 2007, with the successor firm being
Grant Thornton. Robson Rhodes resigned as auditors on 2 July 2007, creating a casual vacancy which the directors have
filled by appointing Grant Thornton. A resolution to reappoint Grant Thornton as auditors of the Group will be proposed at
the forthcoming Annual General Meeting.

Cautionary statement on forward-looking statements and related information

This document contains a number of forward-looking statements relating to the Group. The Group considers any
statements that are not historical facts as "forward-looking statements". They relate to events and trends that are subject
to risks and uncertainties that could cause the actual results and financial position of the Group to differ materially from
the information presented. Readers are cautioned not to place undue reliance on these forward-looking statements which
speak only as at the date of this document.

By order of the Board

T.J.Lister
Secretary
22 February 2008

Independent Auditors' Report
to the shareholders of Pressure Technologies plc

We have audited the Group and parent company financial statements (the “financial statements”) of Pressure Technologies
plc for the year ended 30 September 2007 which comprise the consolidated profit and loss account, consolidated balance
sheet, company balance sheet, consolidated cash flow statement, consolidated statement of total recognised gains and
losses and notes to the financial statements. These financial statements have been prepared under the accounting policies
set out therein.

This report is made solely to the Company’s shareholders, as a body, in accordance with section 235 of the Companies Act 1985.
Our audit work has been undertaken so that we might state to the company’s shareholders those matters we are required to
state to them in an auditors' report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume
responsibility to anyone other than the company and the company’s shareholders as a body, for our audit work, for this report,
or for the opinions we have formed.

Respective responsibilities of directors and auditors

The directors’ responsibilities for preparing the Annual Report and the financial statements in accordance with United
Kingdom law and Accounting Standards (United Kingdom Generally Accepted Accounting Practice) are set out in the
Statement of Directors’ Responsibilities.

Our responsibility is to audit the financial statements in accordance with relevant legal and regulatory requirements and
International Standards on Auditing (UK and Ireland).

We report to you our opinion as to whether the financial statements give a true and fair view and have been properly
prepared in accordance with the Companies Act 1985. We also report to you whether in our opinion the information given
in the directors' report is consistent with the financial statements. The information given in the Directors' report includes
the specific information presented in the Chairman's and Chief Executive’s statements that are cross referred from the
Principal Activities and Business Review section of the Directors’ report.

In addition we report to you if, in our opinion, the Group and the Company has not kept proper accounting records, if we
have not received all the information and explanations we require for our audit, or if information specified by law regarding
directors’ remuneration and other transactions is not disclosed.

We read other information contained in the Annual Report and consider whether it is consistent with the audited financial
statements. This other information comprises only the Chairman’s Statement, Chief Executive’s Statement and Directors’
Report. We consider the implications for our report if we become aware of any apparent misstatements or material
inconsistencies with the financial statements. Our responsibilities do not extend to any other information.

Basis of audit opinion

We conducted our audit in accordance with International Standards on Auditing (UK and Ireland) issued by the Auditing
Practices Board. An audit includes examination, on a test basis, of evidence relevant to the amounts and disclosures in the
financial statements. It also includes an assessment of the significant estimates and judgements made by the directors in
the preparation of the financial statements, and of whether the accounting policies are appropriate to the Group's and
Company's circumstances, consistently applied and adequately disclosed.

We planned and performed our audit so as to obtain all the information and explanations which we considered necessary
in order to provide us with sufficient evidence to give reasonable assurance that the financial statements are free from
material misstatement, whether caused by fraud or other irregularity or error. In forming our opinion we also evaluated the
overall adequacy of the presentation of information in the financial statements.

Opinion

In our opinion:

●

the financial statements give a true and fair view, in accordance with United Kingdom Generally Accepted Accounting
Practice of the state of the Group's and the parent company's affairs as at 30 September 2007 and of the Group's profit
for the year then ended;

the financial statements have been properly prepared in accordance with the Companies Act 1985; and

the information given in the directors' report is consistent with the financial statements.

Grant Thornton UK LLP
Chartered Accountants and Registered Auditors
Birmingham, England
22 February 2008

Pressure Technologies plc

Consolidated profit and loss account
For the year ended 30 September 2007

Turnover

Cost of sales

Gross profit

Selling and administration expenses before exceptional costs
Exceptional administration costs

Total selling and administration expenses

Operating profit before exceptional costs
Exceptional administration costs

Operating profit

Interest receivable
Interest payable

Profit on ordinary activities before taxation
Taxation on profit on ordinary activities

Profit for the financial year

Earnings per share

All the above results are from continuing operations.

The notes on pages 17 to 31 form part of these financial statements.

2007

£’000

15,124

(11,237)

3,887

(1,980)
(530)

(2,510)

1,907
(530)

1,377

116
(84)

1,409
(452)

957

11.1p

2006
(as restated)
£’000

8,170

(5,504)

2,666

(1,610)
–

(1,610)

1,056
–

1,056

15
(232)

839
(274)

565

7.7p

Notes

3
3

4
8

Consolidated statement of total recognised gains and
losses
For the year ended 30 September 2007

Profit for the financial year

Total recognised gains and losses relating to the year

Prior year adjustment

Total gains and losses recognised since the last annual report

Note

2006
(as restated)
£’000

565

2007

£’000

957

(664)

293

Pressure Technologies plc

Consolidated balance sheet
As at 30 September 2007

Fixed assets
Intangible assets
Tangible assets

Current assets
Stocks
Debtors
Cash at bank and in hand

Creditors: amounts falling due within one year

Net current assets

Total assets less current liabilities

Creditors: amounts falling due after more than one year

Provisions for liabilities

Net assets

Capital and reserves
Called up share capital
Share premium account
Profit and loss account
Other reserve

Equity shareholders' funds

Notes

11
12

14
15

20
21
21
21

2007

£’000

–
1,774

1,774

4,550
3,155
4,930

12,635

(5,790)

6,845

8,619

(513)

(241)

7,865

567
5,341
1,957
–

7,865

2006
(as restated)
£’000

–
1,557

1,557

1,281
3,366
998

5,645

(4,898)

747

2,304

(1,191)

(216)

897

220
-
731
(54)

897

The notes and accounting policies on pages 17 to 31 form part of these financial statements.

The financial statements were approved by the Board on 22 February 2008 and signed on its behalf by:

J. T. S. Hayward
Director

Pressure Technologies plc

Company balance sheet
As at 30 September 2007

Fixed assets
Investments

Current assets
Debtors
Cash at bank and in hand

Creditors: amounts falling due within one year

Net current assets

Net assets

Capital and reserves
Called up share capital
Share premium account
Profit and loss account

Equity shareholders' funds

The notes on pages 17 to 31 form part of these financial statements.

Approved by the Board on 22 February 2008 and signed on its behalf by:

J. T. S. Hayward
Director

Notes

20
21
21

2007
£’000

1,001

1,804
3,931

5,735

(330)

5,405

6,406

567
5,341
498

6,406

Pressure Technologies plc

Consolidated cash flow statement
For the year ended 30 September 2007

Net cash (outflow)/inflow from operating activities

Returns on investment and servicing of finance
Interest received
Interest paid

Net cash inflow/(outflow) from returns on investments and
servicing of finance

Taxation paid

Investing activities
Purchase of tangible fixed assets
Proceeds from sale of tangible fixed assets

Net cash outflow for capital expenditure and financial investment

Net cash (outflow)/inflow before financing

Financing
Issue of ordinary share capital (net of expenses charged against
the share premium account)
Loan repayments

Net cash inflow/(outflow) from financing

Net increase in cash

The notes on pages 17 to 31 form part of these financial statements.

2007

£’000

(609)

116
(84)

(176)

(428)
9

(419)

(1,172)

5,541
(437)

5,104

3,932

2006
(as restated)
£’000

1,146

15
(87)

(72)

–

(381)
–

(381)

693

–
(97)

(97)

596

Note

23a

23c

Pressure Technologies plc

Notes to the financial statements

Accounting policies

These financial statements have been prepared under the historical cost convention and in accordance with applicable UK
accounting standards and the Companies Act 1985. The Group will adopt International Financial Reporting Standards as
adopted in the EU for the first time in the financial statements for the year ending 30 September 2008 and the interim
financial statements for the period ending 31 March 2008.

Basis of preparation
The financial statements for the year consist of the accounts for Pressure Technologies plc and its subsidiary undertakings.

Pressure Technologies Limited (“PT”) was incorporated on 2 March 2007. On 21 May 2007 PT entered into a share for share
exchange with the shareholders of Chesterfield Pressure Systems Group Limited (“CPSG”) pursuant to which PT acquired
the entire issued share capital of CPSG. As the shareholders of PT after this transaction remained the same as those
previously in CPSG, no change of control took place. The transaction was a reorganisation of an existing entity and
accordingly the transaction has been accounted for as a group reconstruction with both the net assets of PT and CPSG
being recorded at book value. The consolidated balance sheet presents consolidated information as if the group existed in
its current form at 30 September 2006 and 30 September 2007 and the consolidated profit and loss account and
consolidated cash flow statement reflect two years trading for the Group. The individual Company balance sheet for PT is
shown as at 30 September 2007 but since the Company had not been incorporated at 30 September 2006 there are no
comparative figures.
All other acquisitions and disposals have been accounted for under the acquisition method of accounting whereby profits
or losses are included as from or up to their respective dates of acquisition or disposal.
Under section 230(4) of the Companies Act 1985 the Company is exempt from the requirement to present its own profit and
loss account. The profit for the financial year dealt within the financial statements of the holding company was £498,000
after incurring exceptional operating costs totalling £530,000 (2006: £nil) relating to the flotation and aborted acquisition.

Goodwill
Negative goodwill is capitalised where the consideration paid for net non-monetary assets is less than the fair value of
assets and liabilities acquired. The negative goodwill is amortised through the profit and loss account over the period in
which the net non-monetary assets are recovered.

Turnover
Turnover arises from the sales of goods and services provided in the normal course of business, net of trade discounts, VAT
and other sales-related taxes. Revenue from the sale of goods is recognised when the significant risks and benefits of
ownership have been transferred to the buyer, which maybe on despatch, completion of the product or the product being
ready for delivery, based on specific contract terms. Revenue from services provided by the Group is recognised when the
Group has performed its obligations and, in exchange, obtained the right to consideration.

Fixed assets and depreciation
Fixed assets are stated at cost less accumulated depreciation and any reduction for recognised impairment in value with a
corresponding charge to the profit and loss account.
Cost reflects purchase price or construction cost of the asset together with any incidental costs of bringing the asset into use.
Depreciation is applied on a straight-line basis so as to reduce the assets to their residual values over their estimated
useful lives. The rates of depreciation used are:
Plant and machinery
Where any evidence of impairment is recognised, assets are written down to recoverable amount.

4 – 15 years

Investments
Investments in subsidiary undertakings are stated at cost subject to provision where the underlying business does not
support the carrying value of the investment. Where the ownership of investments have been transferred between Group
undertakings, this has been accounted for at book value under the provisions of merger relief.

Operating leases
Rentals under operating leases where substantially all of the benefits and risks of ownership remain with the lessor are
charged to the profit and loss account on a straight-line basis over the lease term.

Pressure Technologies plc

Notes to the financial statements
continued

Stocks
Stocks have been valued at the lower of cost and net realisable value. Cost includes materials, direct labour and an
attributable proportion of manufacturing overheads based on normal levels of activity. Net realisable value is based on the
estimated sales price after allowing for all further costs of completion and disposal. Provision is made for obsolete, slow-
moving or defective items where appropriate.

Financial liabilities and equity
Financial liabilities and equity instruments are classified according to the substance of the contractual arrangements
entered into. An equity instrument is any contract that evidences a residual interest in the assets of the Group after
deducting all of its liabilities.

Bank borrowings
Interest bearing bank loans and overdrafts are recorded at the proceeds received, net of direct issue costs. Finance charges,
including premiums payable on settlement or redemption and direct issue costs, are accounted for on an accruals basis in
the profit and loss account.

Compound instruments
The component parts of compound instruments issued by the Group, such as the “A” Ordinary Shares in issue in the prior
period, are classified separately as financial liabilities and equity in accordance with the substance of the contractual
arrangement. At the date of issue, the fair value of the liability component is estimated using the prevailing market interest
rate for a similar non-convertible instrument and the present value of forecast future payments associated with the liability.
This amount is recorded as a liability on an amortised cost basis using the effective interest method until extinguished upon
conversion or at the instrument’s maturity date. The equity component is determined by deducting the amount of the
liability component from the fair value of the compound instrument as a whole. This is recognised and included in equity,
net of income tax effects, and is not subsequently re-measured. Finance charges associated with such instruments are
spread over the life of the debt.

Deferred taxation
Deferred tax is provided on timing differences that have arisen but not reversed by the balance sheet date, where the timing
differences result in an obligation to pay more tax, or a right to pay less tax, in the future. Timing differences arise because
of differences between the treatment of certain items for accounting and taxation purposes.

Deferred tax assets are recognised to the extent that it is regarded as more likely than not that they will be recovered.

Deferred tax is measured at the tax rates that are expected to apply in the periods when the timing differences are expected
to reverse, based on tax rates and law enacted or substantively enacted at the balance sheet date. Deferred tax assets and
liabilities are not discounted.

Translation of foreign currencies
Transactions in foreign currencies are translated into sterling at the rate of exchange at the date of the transaction.
Monetary assets and liabilities denominated in foreign currencies at the balance sheet date are reported at the rates of
exchange prevailing at that date. All differences are taken to the profit and loss account.

Grants
Grants relating to tangible fixed assets are treated as deferred income and released to the profit and loss account over the
expected useful lives of the assets concerned. Other grants are credited to the profit and loss account in the same period
as the related expenditure is incurred.

Pensions
The Group operates a defined contribution scheme with costs being charged to the profit and loss account in the period to
which they relate.

Pressure Technologies plc

Notes to the financial statements
continued

Segmental analysis

Turnover by destination

United Kingdom
Other EU
Rest of World

2007
£’000

1,794
350
12,980

15,124

2006
£’000

2,585
428
5,157

8,170

All turnover originates in the United Kingdom.

The Directors have not disclosed any other segmental information relating to turnover, profits/(losses) and net assets since
they are of the opinion that to fully comply with the requirements of SSAP 25 ‘Segmental Reporting’ would be seriously
prejudicial to the interests of the Group.

Interest receivable and interest payable

Interest receivable on bank deposits

Payable on bank loans and overdrafts
Notional interest on “A” Ordinary Shares

Total interest payable

4. Profit on ordinary activities before taxation

Profit on ordinary activities before taxation is stated after charging/(crediting):

Depreciation of tangible fixed assets:

Owned assets

Profit on disposal of fixed assets
Amortisation of negative goodwill
Amortisation of grant receivable
Loss on foreign exchange transactions
Operating lease rentals:
Land and buildings
Machinery and equipment
Exceptional operating items

2007
£’000

116

(84)
–

(84)

2007
£’000

203
(1)
-
(12)
12

344
8
530

2006
£’000

(87)
(145)

(232)

2006
£’000

120
-
(17)
(14)
27

259
7
–

The charge for exceptional operating items comprises costs relating to the Group’s flotation on AIM of £125,000 (2006: £nil)
and costs relating to an unsuccessful overseas acquisition of £405,000 (2006: £nil).

Pressure Technologies plc

Notes to the financial statements
continued

Auditors’ remuneration

Fees payable to the Company's auditor for the audit of the financial statements

Fees payable to the Company's auditor and its associates for other services:
– Audit of the Company's subsidiaries pursuant to legislation

Total audit fees

– Tax services
– Services as Reporting Accountants in relation to flotation

Total non–audit fees

6. Directors’ emoluments

Particulars of Directors’ emoluments are as follows:

2007
£’000

2006
£’000

25
75

100

10
–

Non–Executive:
R.L.Shacklady
N.F.Luckett

Executive:
J.T.S.Hayward
J.D.Clark

Total emoluments

Salary
and
fees Benefits
£’000

£’000

Bonus
£’000

Total
2007
£’000

Total
2006
£’000

Pension
Total
2007
£’000

Pension
Total
2006
£’000

55
7

74
46

182

–
–

1
1

–
–

31
18

55
7

106
65

233

12
–

92
–

104

–
–

5
3

–
–

2
–

All the payments shown for Mr. R.L.Shacklady were paid to RLS Associates, a partnership which he controls, on his behalf.

The number of Directors who are accruing benefits under money purchase schemes is two (2006: one).

Pressure Technologies plc

Notes to the financial statements
continued

Employees

Particulars of employees, including Executive Directors:

Wages and salaries
Social security costs
Other pension costs

2007
£’000

1,471
156
43

1,670

2006
£’000

1,178
104
13

1,295

The average monthly number of employees (including Executive Directors) during the year was as follows:

Production
Selling and distribution
Administration

2007
Number

2006
Number

39
4
4

33
3
3

The only employee costs of the Company are those of the Directors. These are included in note 6.

Pressure Technologies plc

Notes to the financial statements
continued

Taxation

United Kingdom corporation tax
Current tax on income for the year
Adjustments in respect of prior years

Total current taxation

Deferred taxation
Origination and reversal of timing differences – current year
Adjustment in respect of prior years

Total Deferred taxation

Tax on profit on ordinary activities

Current tax reconciliation:

Profit on ordinary activities before taxation

Theoretical tax at UK corporation tax rate 30% (2006: 30%)
Effects of:
– non–deductible expenses
– capital allowances in advance of depreciation
– utilisation of tax losses brought forward
– income not assessable to tax
– movement in unrecognised losses
– adjustments in respect of prior years
– effect of rate change
– small companies relief

Current taxation charge

Earnings per ordinary share

2007

£’000

445
(18)

427

25
–

452

2007
£’000

1,409

423

70
(25)
–
–
–
(18)
(17)
(6)

427

2006
(as restated)
£’000

93
–

161
20

181

274

2006
£’000

839

252

42
(58)
(103)
(5)
(24)
–
–
(11)

Basic earnings per share has been calculated in accordance with FRS22 which requires that earnings should be based on
the net profit or loss attributable to ordinary shareholders and the weighted average number of ordinary shares in issue
during the year.

The calculation of basic earnings per share of 11.1p (2006: 7.7p) is based on the profit for the year of £957,000 (2006: £565,000)
and on the weighted average number of shares in issue during the year of 8,615,812 (2006: 7,333,620).

Adjusted earnings per share are stated after adding back operating exceptional items totalling £530,000 less related taxation
of £129,000 giving an adjusted earnings per share of 15.8p (2006: 9.7p after adjusting for the notional interest payable arising
from the classification of “A” Ordinary Shares as debt in that year £145,000).

There were no options or similar instruments in place at 30 September 2006 or 2007 that would have had a dilutive effect
upon the weighted average number of shares in issue during the year.

Pressure Technologies plc

Notes to the financial statements
continued

10. Prior year adjustment

Within the documentation prepared for the Group’s admission to AIM in June 2007, certain adjustments were made to the
Group’s results which have been fully reflected within these financial statements by way of a prior year adjustment. In
addition, a finance charge and other reserve has been recognised in respect of the “A” Ordinary Shares to restate these
shares at their fair value. These shares were converted to Ordinary Shares during the year and consequently the prior year
adjustment has been reversed through reserves during the year ended 30 September 2007. As a result of these
adjustments, opening net assets at 1 October 2005 have been reduced by £448,000, comprising a reduction in opening profit
and loss reserve of £247,000, share capital of £147,000 and other reserve of £54,000.

The impact on the opening profit and loss account comprises:

The write off of costs previously capitalised and the resulting adjustment to depreciation – £240,000

Charge for a rent free period under a property lease – £82,000

The recognition of deferred consideration on a previous acquisition which had previously been expensed – £(44,000)

The impact of the above on the amortisation of negative goodwill – £(100,000) and taxation – £(55,000)

The reclassification of “A” Ordinary Shares from equity to debt and measurement of that debt at its fair value in
accordance with FRS25 “Financial Instruments: Disclosure and Presentation”, resulting in a cumulative interest
charge of £124,000. This adjustment also reduced share capital by £147,000 and created an other reserve of £54,000.

The above adjustments have reduced reported profit for the year ended 30 September 2006 by £216,000, giving a total
recognised loss of £664,000.

11. Intangible fixed assets

Negative Goodwill

Group

Cost
At 1 October and 30 September

Amortisation
At 1 October
Credit for the year

At 30 September

Net book value
At 30 September

2007

£000

2006
(as restated)
£000

(168)

168
–

168

–

151
17

168

–

Pressure Technologies plc

Notes to the financial statements
continued

12. Tangible fixed assets

Group

Cost
At 1 October 2006
Additions
Disposals

At 30 September 2007

Depreciation
At 1 October 2006
Charge for the year
Disposals

At 30 September 2007

Net book value
At 30 September 2007

Net book value
At 30 September 2006

13.

Investments

Company

Cost and net book value
Additions

At 30 September 2007

The principal subsidiaries are:

Name

Chesterfield Pressure Systems Group Limited (“CPSG”)
Chesterfield Special Cylinders Limited (“CSC”)

Plant and
machinery
(as restated)
2007
£’000

3,390
428
(12)

3,806

1,833
203
(4)

2,032

1,774

1,557

Investment in
subsidiary companies
£’000

1,001

Country of
incorporation

England
England

Principal activity

Management company
Manufacturing

The Company acquired 100% of the issued share capital of CPSG on 21 May 2007 via a share for share exchange and 100%
ownership of CSC was transferred by CPSG to PT on 24 May 2007. Both transactions were undertaken at book value.

Pressure Technologies plc

Notes to the financial statements
continued

14. Stocks

Raw materials and consumables
Work in progress

The replacement cost of stock is not materially different from the book value.

15. Debtors

Amounts: falling due within one year
Trade debtors
Other debtors
Prepayments and accrued income
Amounts owed by group undertakings

16. Creditors: amounts falling due within one year

Current portion of long term loans

Short–term borrowings

Trade creditors
Corporation taxation
Other tax and social security
Other creditors
Deferred consideration
Accruals and deferred income

2007
Group
£’000

2,599
1,951

4,550

2006
Group
£’000

2,583
64
719
–

3,366

2006
Group
£’000

376
905

1,281

2007
Company
£’000

–
26
31
1,747

1,804

2006
Group
(as restated)
£’000

2007
Company

£’000

216

1,616
111
166
406
100
2,283

4,898

–

20
–
7
–
–
303

330

2007
Group
£’000

2,023
113
1,019
–

3,155

2007
Group

£’000

1,339
362
45
–
125
3,839

5,790

Pressure Technologies plc

Notes to the financial statements
continued

17. Creditors: amounts falling due after more than one year

Long term loans
Deferred consideration
‘A’ ordinary £1 shares
Other creditors

2007
Group

£’000

240
125
–
148

513

2006
Group
(as restated)
£’000

541
150
470
30

1,191

Deferred consideration is payable over ten years ending in June 2014. The amount payable is not contingent.

Until the Company’s flotation in June 2007, the ‘A’ Ordinary Shares carried rights to receive fixed dividends and were
therefore valued at the present value of the future dividend payments and classified as debt as at 30 September 2006 with
a notional interest expense being charged to the profit and loss account. During 2007 the holders of the ‘A’ Ordinary Shares
relinquished their rights to the fixed dividends and accordingly these shares are now treated as equity.

The maturity profile of long term loans is as follows:

Due within one year
Due within one to two years
Due within two to five years

Security is provided on the bank loan by a charge over the Group’s assets.

2007
Group

£’000

80
80
160

320

2006
Group
(as restated)
£’000

216
216
325

757

Pressure Technologies plc

Notes to the financial statements
continued

18. Financial instruments

The Group’s policies in respect of foreign currency and interest rate risk management are set out in the financial
instruments section of the Directors’ Report on pages 6 and 11.

The Group held the following categories of financial instruments (excluding short term debtors and creditors) at
30 September 2007.

Assets/(liabilities):
Cash and deposits
Short term borrowings
Borrowings falling due after more than one year
“A” Ordinary Shares
Deferred consideration

2007
£’000

4,930
(80)
(240)
–
(250)

2006
£’000

998
(216)
(541)
(470)
(250)

The fair value of the financial instruments set out above is not materially different to the book value.

An analysis of financial instruments by currency is as follows:

Financial liabilities:
Sterling

Financial assets:
Sterling
Euro
US Dollar
Norwegian Krone

Variable interest rate

2007
£’000

320

106
940
274
64

1,384

2006
£’000

1,227

219
289
61
409

978

Fixed interest rate
2007
£’000

2006
£’000

–

3,500
–
–
–

3,500

–

–
–
–
–

–

No interest

2007
£’000

250

46
–
–
–

2006
£’000

250

20
–
–
–

Financial liabilities comprise bank loans of £320,000 (2006: £400,000), deferred consideration of £250,000 (2006: £250,000)
and in 2006 “A” Ordinary shares of £470,000 and loans from shareholders £357,000.

The interest rate on the bank loans of £320,000 is set at 2.75% above Bank of Scotland Base Rate. The loan is repayable at
the rate of £20,000 per quarter.

The sterling balance of £3,500,000 at 30 September 2007 represents a single fixed term deposit for one month ending on
12 October 2007 at a rate of interest of 6.45%.

The Group maintains foreign currency denominated bank accounts that earn interest based on the Bank of Scotland base
rate applicable to that currency.

The Group had un–drawn borrowing facilities available at 30 September 2007 of £1,250,000 (2006: £1,500,000).

Pressure Technologies plc

Notes to the financial statements
continued

19. Provisions for liabilities

Deferred taxation comprises the following:

Group

Accelerated capital allowances

The movement in the period was as follows:

At 1 October
Prior year adjustment – see note 10

At 1 October – as restated

Transferred from profit and loss account

At 30 September

Group

Losses

20. Called up share capital

Authorised

Authorised ordinary shares of £1 each
Authorised ordinary shares of 5p each

Allotted, issued and fully paid
Ordinary shares of £1 each
Ordinary shares of 5p each

2007
Number

2006
Number

–
15,000,000

11,333,620

300,000
–

220,000
–

Provided
2007

£’000

241

2007

£’000

216
–

216

241

Unprovided
2007

£’000

101

2007
£’000

–
750

–
567

Provided
2006
(as restated)
£’000

216

2006
(as restated)
£’000

90
(55)

181

216

Unprovided
2006
(as restated)
£’000

112

2006
£’000

300
–

220
–

The Company was incorporated on 2 March 2007 with issued share capital comprising 2 ordinary shares of £1 each. On
18 May 2007 the Company subdivided the 2 ordinary shares of £1 each into 40 ordinary shares of 5p each. On 21 May 2007
the Company issued 7,333,580 ordinary shares of 5p in a share for share exchange with the shareholders of Chesterfield
Pressure Systems Group Limited. On 6 June 2007 the Company issued a further 4,000,000 ordinary shares of 5p at 150p per
share when the Company floated on the AIM market of the London Stock Exchange.

Pressure Technologies plc

Notes to the financial statements
continued

21. Reserves

Group

At 1 October
Prior year adjustment (note 10)

As restated

Profit for the financial year
Arising on share issue
Costs relating to share issue
Release of financial liability

At 30 September

Company

Profit for the financial year
Arising on share issue
Costs relating to share issue

At 30 September

Share
premium
account
2007
£’000

Profit
and loss
account
2007
£’000

Other
reserve

2007
£’000

Profit
and loss
account
2006
£’000

Other
reserve

2006
£’000

(54)
–

(54)

–
–
–
54

–

413
(247)

166

565
–
–
–

731

–
(54)

(54)

–
–
–
–

(54)

–
–

–

–
5,800
(459)
–

5,341

–
5,800
(459)

5,341

731
–

731

957
–
–
269

1,957

498
–
–

498

The other reserve represents the excess of the fair value of a financial liability (the “A” Ordinary Share Capital) over its
transaction value. This reserve has subsequently been released to the profit and loss account upon conversion of these
shares to ordinary shares.

22. Reconciliation of movements in equity shareholders’ funds

Profit for the financial year
Shares issued in share for share exchange
Reclassification of ‘A’ ordinary shares
Proceeds of share issue (net of costs)
Release of financial liability

Net change to shareholders’ funds for year

Equity shareholders’ funds at 1 October (as restated)

Equity shareholders’ funds at 30 September

Group

2007
£’000

957
–
147
5,541
323

6,968

897

7,865

Group
(as restated)
2006
£’000

565
–
–
–
–

565

332

897

Company

2007
£’000

498
367
–
5,541
–

6,406

–

6,406

Equity shareholders’ funds at 1 October 2006 have been restated from £1,561,000 to £897,000 to reflect the prior year
adjustment as set out in note 10 (1 October 2005 restated from £780,000 to £332,000).

Pressure Technologies plc

Notes to the financial statements
continued

23. Notes to the consolidated cashflow statement

Reconciliation of operating profit to net cash (outflow)/inflow from operating activities:

Operating profit
Depreciation of fixed assets
Amortisation of negative goodwill
Profit on sale of tangible fixed assets
Increase in stock
Decrease/(increase) in debtors
Increase in creditors

Net cash (outflow)/inflow from operating activities

Reconciliation of net cash flow to movement in net debt

Increase in cash
Cashflow from decrease in debt

Decrease in net debt from cash flow
Reclassification of “A” ordinary shares as equity
Net debt at 1 October

Net funds/(debt) at 30 September

2007

£’000

1,377
203
–
(1)
(3,269)
211
870

(609)

2007

£’000

3,932
437

4,369
470
(229)

4,610

2006
(as restated)
£’000

1,056
120
(17)
–
(347)
(2,291)
2,625

1,146

2006
(as restated)
£’000

596
97

693
–
(922)

(229)

Reconciliation of net cash outflow to movement in net funds/(debt)
1 October
2006
(as restated)
£’000

Cash at bank and in hand
Bank loans
“A” Ordinary Shares

Net funds/(debt)

998
(757)
(470)

(229)

Non cash
movement

Cashflow

30 September
2007

£’000

–
–
470

470

£’000

3,932
437
–

4,369

£’000

4,930
(320)
–

4,610

Pressure Technologies plc

Notes to the financial statements
continued

24. Related Party Transactions

(a)

(b)

South Yorkshire Investment Fund LP (“SYIF”) was a holder of the ‘A’ Ordinary Shares in Chesterfield Pressure
Systems Group Limited and is now a shareholder of Pressure Technologies plc. At 30 September 2006, the Group
had a loan of £205,000 outstanding from SYIF which was included in creditors. This balance was fully repaid during
the period. During the year interest totalling £12,000 was paid on the loan (2006: £20,000).

Yorkshire & Humber Regional Venture Fund No.1 LP (“YHRVF”) was a holder of the ‘A’ Ordinary Shares in
Chesterfield Pressure Systems Group Limited and is now a shareholder of Pressure Technologies plc. At
30 September 2006, the Group had a loan of £152,000 outstanding from YHRVF which was included in creditors.
This balance was fully repaid during the period. During the year interest totalling £15,000 was paid on the loan
(2006: £24,000).w

25. Financial commitments

(a)

Capital commitments

Commitments for capital expenditure entered into by 30 September 2007 were as follows:

Contracted for, but not provided in the accounts

(b)

Leasing commitments

2007
£’000

2006
£’000

–

The annual commitments under operating leases are analysed according to the period in which each lease expires as
follows:

Land and buildings, leases expiring:

After more than five years

Other assets, leases expiring:

Within one year

(c)

Other financial commitments

2007
£’000

403

2006
£’000

371

At 30 September 2007, the Group had entered into a binding commitment with its primary supplier to make advance
payments after the year end against outstanding purchase orders totalling £483,000 (2006: £1,605,000).

Pressure Technologies plc

Pressure Technolgies plc
Meadowhall Road, Sheffield S9 1BT, UK

Telephone +44 (0) 114 242 7500
Fax +44 (0) 114 242 7501