Strategy and Markets
Medium and long-term strategy
The Board's strategy is to widen the range of the Company's activities and enhance profit margins.
The Company is exploring potential new areas of operation − managing the associated risks by confining any diversification to activities in which the Company's core skills and expertise are wholly applicable. The Directors have identified strict criteria which any acquisitions or capital investment would be required to meet.
The Directors believe that there are opportunities to deliver ancillary services to the Company's existing customers, including in-situ testing and recertification, particularly in respect of cylinders on deep-sea drilling rigs.
The Directors have identified various opportunities to enhance margins by bringing in-house certain activities that are currently outsourced or bought in.
Markets
Energy (oil and gas)
Our core activity is the supply of air pressure vessel assemblies for semi-submersible rigs and drill ships in deep-sea oil and gas markets.
The depletion of existing oil and gas resources, allied to increases in energy demand, has made sourcing more remotely located supplies of oil and gas, such as in deep-sea locations, more economically viable.
Strong growth in the energy markets has driven the significant rise in Group revenues in recent years. The Company has continued to enjoy strong demand from this sector, despite the current financial climate.
Oil rigs are subject to regular test cycles (reclassification). We are currently exploring opportunities to provide on-site in-situ testing for air pressure vessels on semi-submersible rigs and drill ships.
Defence - Naval Applications
Pressure Technologies has a long history of designing and supplying the Royal Navy's high pressure gas and energy storage requirements on submarines and surface vessels.
Having established an outstanding reputation for skill, experience and innovation in this market, the Group is increasingly supplying other navies around the World. Among significant contracts, recently won, are cylinders for Asian and European navies, including sets for the UK "Astute" and French "Barracuda" and "Scorpene" submarine programmes.
Applications include backup breathing air supply, nuclear reactor valve operation, ballast evacuation and weapons systems discharge for submarines and backup systems such as emergency generator starters and weapons activation for surface vessels.
Medium term prospects for the UK defence market look promising and the Group intends to lodge innovative bids, highlighting its supply chain expertise. The Group also continues to target all naval build programmes worldwide, as its design and development capability in this sector is unrivalled and offers a re-testing service for the full range of naval application cylinders.
Defence − Aviation Applications
Pressure Technologies supplies cylinders to a number of major defence contractors, as well as directly to the Royal Air Force. These are incorporated into breathing apparatus for pilots, pneumatic applications for emergency system operations and fuel tank explosion prevention systems. The Group also provides design, development and re-testing services in this key market.
Transportation
The transportation of gas is a regulated sector with a key emphasis on safety. Gas transporters have to follow strict regulations which include rules governing maintenance of gas containers and related fittings. Pressure Technologies supplies a range of cylinders for the transportation of gas and is authorised to carry out retesting and recertification work on the existing stock. The Group also holds contracts to refurbish gas trailers, ensuring that the trailer conforms to the relevant European regulations.
Ground storage
Pressure Technologies manufactures ultra-large cylinders to provide a range of static storage solutions for a diverse range of end applications, including the buffer storage of compressed natural gas, wind tunnels, space programmes and even back-up systems for the lifts at the new Oslo opera house. Our ability to design for the specific requirements of the customer is a key differentiator in this market.
Biogas
The UK market for biomethane has, to date, remained untapped, largely due to a limited availability of methane-fuelled vehicles and subsidies for combined heat and power plants, which have made the injection of methane into the gas grid uneconomic. These two factors are now being addressed. Mercedes and Volkswagen are now producing right−hand drive methane−fuelled vehicles for the UK market and the Energy Bill has been changed to pave the way for financial incentives designed to encourage direct injection of biomethane into the gas grid.
Chesterfield BioGas will develop the UK market for biogas cleaning equipment, which provides clean biomethane suitable for use as an alternative vehicle fuel or for direct injection into the natural gas grid, across a wide range of commercial sectors. These will include waste management and water treatment companies, as well as large commercial farmers and waste food processors. Due to the complexity of UK planning law and lead times on equipment, it is anticipated that orders secured by Chesterfield BioGas in 2009 will not contribute to Group revenues until the year ending 30 September 2010.
Share Price
-3.50 (-1.97)
09:06 07/09/2010
Annual Report
