pressure
technologies plc
annual report and accounts 2008 contents
overview
products
people
markets
biogas
highlights 09
chairman’s statement 10
review
chief executive’s statement 12
management  governance
directors and advisors 16
directors’ report 18
financial statements  notes
report of the independent auditor to the
members of pressure technologies plc 22
consolidated income statement 23
consolidated statement of total
recognised income and expense 23
consolidated balance sheet 24
consolidated cash flow statement 25
notes to the consolidated
financial statements 26
company balance sheet 47
notes to the company financial statements 48
pressure
technologies plc
products
a leading designer and
manufacturer of engineering
solutions for high pressure
markets
pt

special
we are more than a manufacturer
we work in partnership with our
customers to design and develop
the best technical solutions
for their cylinder and pressure
systems requirements ist

bleed
 people
we have a highly experienced
and skilled team we draw upon
these skills from design and
manufacturing to project
and supply chain management
with one common purpose
to make our customers’
lives easier
experts
bleed
 
bleed
 markets
0pportu
we look forward to the future
with confidence underpinned by
a record order book in growing
niche markets in the global
energy and defence sectors
bleed
 nities
 we are building upon a proven
track record in the renewable
energy market with our partners
greenlane
®
biogas in scandinavia
bringing the technology to
convert raw biogas to fuel grade
biomethane into the uk market
biogas
sustain
bleed
 able

bleed
 an exceptional year
outstanding profits
strong balance sheet
record order book
and cash in the bank
to fund future growth
highlights
value
bleed
 pressure technologies plc annual report and accounts 2008 09
delivering
success
56

revenue 2008 £237m
91


gross profit 2008 £75m
16 2
operating profit 2008 £49m
epsbasic 2008 £316p

19 0
a great heritage
100 years of experience in the design
manufacture and maintenance of
pressure products
meeting customers needs
an unrivalled reputation for product
excellence and customer service
innovation
continuing research and development
in cylinder and system applications
design and technical experience
continuing to stretch the envelope
of cylinder and system designs and
influencing international standards
through active collaboration on iso
working groups
engineering sales
the sales team are first and foremost
engineers looking for the optimum
solution to our customers’ requirements
building for the future
recruiting training and developing
the best designers technicians
engineers and apprentices
adding value
a deep understanding of core
markets enabling the delivery of
bespoke engineering solutions
broadening the base
continuing to develop new markets
for our products around the world
with expansion in australasia and
the pacific rim
pushing the boundaries
identifying new products and cross
selling opportunities including the
introduction of biogas into the uk
and gas trailer refurbishment
green energy
supplying the technology to turn
raw biogas into high quality biomethane
a green energy efficient fuel
technology available today
bringing to the uk a proven technology
with a decade long track record
around the world
untapped market
a significant pipeline of project
opportunities already identified
sales growth
we have seen significant growth
across all market sectors which
continues to be underpinned by a
solid forward order load
profit growth
profitability has grown through
the contribution of increased volumes
production efficiencies better
operational gearing and the weakening
of sterling
financial stability
strong balance sheet with
net funds of £59 million
shareholder value
earnings per share almost tripled
reflecting the increased level
of profitability in the business
maiden dividend of 6p per share
paid and proposed
    10 pressure technologies plc annual report and accounts 2008
chairman’s statement
we have entered the new
financial year with a record
order book of £23 million giving
clear visibility throughout
2009 and into 2010
2008
a great year
october 2007
for the first time in 14 years an avro vulcan
symbol of britain’s cold war history has taken
to the skies with a little help from
chesterfield special cylinders chesterfield
supplied around 20 hp aircraft cylinders of
between 044 and 10 litres capacity pressure technologies plc annual report and accounts 2008 11
november 2007
pressure technologies plc won the yorkshire
post excellence in business award for 2007
the award for business achievement was
sponsored by pricewaterhousecoopers and
presented by the right hon william hague mp 
december 2007
new furnaces installed at the
ultralarge forge reducing gas usage
by 50 and improving both product
quality and throughput
it gives me pleasure to announce an outstanding
set of results for the group which surpassed all
original expectations for the year 
we are also on course to exceed one of the major
aims in our flotation strategy “to be a £40 million
turnover business within five years” as the
group achieved record exports to its oil and gas
exploration and production customers as well as
winning selected overseas defence contracts
results
turnover increased to £237 million compared
with £151 million in 2007  a creditable rise of
over 50 this increase in sales combined with
ongoing operating efficiency gains served to more
than double operating profits to £49 million
before exceptional items 2007 £19 million
profit before taxation was £50 million
2007 £14 million and earnings per share rose
to 316p 2007 109p
despite long lead times from major suppliers
i am pleased to confirm that our actions to
control working capital resulted in year end net
funds of £59 million 2007 £46 million
the board has agreed a progressive dividend
policy and is recommending a maiden final
dividend of 40 pence per share giving a total
dividend for the year of 60 pence if approved at
the annual general meeting this dividend will
be paid on 12 march 2009 to shareholders
on the share register at the close of business on
13 february 2009 the exdividend date will be
11 february 2009
strategy
our business growth strategy to penetrate key
growth sectors notably global energy and high
pressure gases markets establishing a
presence in new niche markets and acquire
businesses which offer synergistic benefits in
related niche sectors is progressing
long term export contracts and orders have
been secured from overseas defence and
aerospace programmes in europe and asia
as well as supplying assemblies to drilling rig
constructors we are also continuing to win
orders for offshore diving support vessels
in the industrial gas trailer refurbishment sector
contracts have been secured stretching into 2009
from a major industrial gas supplier 
in the compressed natural gas “cng” and
biogas sectors we have signed an agreement
with greenlane
®
biogas limited a new zealand
based company with a market leading position
on biogas upgrading technology the uk lags
behind the rest of northern europe in exploiting
an energy source that is growing at over 25 per
annum in those countries recent changes in uk
legislation will facilitate the growth of this energy
source in the uk gas market
we continue to invest in rd programmes
including composite material cylinders and
internal selected surface coatings which are
attracting interest from both industrial and
defence customers initial prototype products
are being manufactured and evaluated for
potential applications
key equipment has been procured and skilled
staff recruited that will enable us to target the
inservice field testing of ultralarge cylinders
this sector is expected to develop as cylinders
in service start to require recertification
people
we welcomed philip cammerman to the board
as a nonexecutive director in april 2008 and
also james lister who was appointed group
finance director on 1 june 2008 the group
is already benefiting from their combined
expertise
i am particularly pleased to report that the
achievements of our chief executive john
hayward were recognised nationally when he
scooped the ernst  young business products
entrepreneur of the year award 2008
we strengthened our second tier management
and professional staff during the year under
review recognising that there is a skills
shortage in the uk we have ramped up our
engineering training and apprentice programmes
the group is also well positioned geographically
to benefit from local universities and research
institutes which have maintained sound technical
faculties  including sheffield university hallam
university and namtec our future as a
valuedriven engineered products business
depends on our investment in engineering and
metallurgical skills and resources
it is appropriate to acknowledge the skill hard
work and support of our operational directors
and all our employees in contributing to another
successful year for our business
finally i would like to thank our shareholders for
their support of the company throughout the year 
prospects
pressure technologies has entered the new
financial year with a record order book of
£23 million 2007 £180 million giving clear
visibility throughout 2009 and into 2010 there
remains a shortage of semi submersible and
deepwater drilling rigs to support the world’s
demand for hydrocarbons and we are enthused
by the medium term prospects of the cng and
biogas sector in which chesterfield biogas is
already developing a significant tender pipeline
the company continues to evaluate synergisitic
acquisitions particularly in the light of our cash
resources and the opportunities now being
presented in the market
the board is confident that pressure technologies
will deliver further growth in the short term and
as we roll out our diversification strategy on a
controlled and profit driven basis the medium to
long term future of the group remains strong
richard shacklady
chairman
8 december 2008 12 pressure technologies plc annual report and accounts 2008
chief executive’s statement
2008
a great year
january 2008
it was very pleasing to see csc gain
accreditation to iso140012004 in january 2008
our product is virtually 100 recyclable
but it is also good to know that we also have
a robust environmental management system
in our manufacturing facility pressure technologies plc annual report and accounts 2008 13
our strong order book and
pipeline of prospects should
ensure that we deliver another
good result in 2009
march 2008
first cylinders supplied to the canadian navy
for victoria class submarines
june 2008
further orders received from the indian
national aeronautics laboratory as part
of our involvement in the indian space
programme
it was a year of exceptional organic growth
which was recognised in our share price
performance relative to the aim market
we exited the year with a record order book
and a strong pipeline of quoted projects in all
markets this seems somewhat at odds with the
world financial climate but may be explained in
part by the markets in which we operate
in our main market the oil and gas sector there
remains a shortage of semisubmersible drilling
rigs and drill ships to develop deep water
hydrocarbon reserves this has created strong
demand for our products which started in 2005
when oil prices were averaging around 50 per
barrel if oil price is a driver of investment then
we do not yet appear to be outside the price
range for investment to be profitable nor has
there been a reduction in the number of projects
for support services projects a further indicator
of the sector’s strength is the availability of
materials in particular seamless pipe which is
used for drill pipe as well as cylinders this is
still rationed and a number of steel mills have
no available capacity in 2009
there was an increase in activity in the export
defence market we won naval build orders in
two new geographical areas france and canada
the uk defence market remains subdued
however we continued to supply significant
quantities of cylinders into military aircraft
programmes and are bidding for further
contracts on aircraft carriers and the astute
submarine programme sales to the naval
market will be significantly higher in 2009 than
at any time since 2002
all our other markets in terms of orders and
levels of quotations remain at or above historical
levels i was particularly pleased with the growth
achieved in our trailer refurbishment business
which should continue into 2009 we have our
largest forward order load for new trailers since
the management buyout in 2004
threats from market downturn do not appear
significant in the short term and i concur with
our chairman on the medium and long term
prospects for the group
looking at 2008 we had a terrific year with a
significant number of “highs” and a few missed
opportunities the key points being
what we did well
winning orders growing sales and ending the
year with a record £23 million order book sales
at our operating company chesterfield special
cylinders increased by 56 to £237 million
2007 £151 million with growth being achieved
in all our major markets
the increase in sales was predominantly in
ultralarge cylinders and operations management
was highly effective improving line efficiency
as a consequence gross profit increased by
91 after allowing for year on year net exchange
gains of £05 million
manufacturing support was improved through
the addition of a production planner and
implementation of finite capacity scheduling
software
building relationships with a range of business
partners and organisations which will benefit
the growth of the business in the future
getting to a position where we could launch
chesterfield biogas see below
where we could have done better
we did not have sufficient resources to grow
the small cylinder business due to the focus
on improving throughput on the ultralarge
production line and sales resources were
diverted onto the biogas project see below
this will be addressed in 2009 by the introduction
of a separately managed business unit for small
cylinders which will have its own dedicated
operations management and sales staff 14 pressure technologies plc annual report and accounts 2008
chief executive’s statement
continued
2008
a great year
july 2008
chesterfield biogas formed in preparation
for the launch of the new division in
november 2008
stock levels were too high as a result of holding
stock to cover poor delivery by suppliers and the
insistence by some customers that we source
certain fittings from their nominated suppliers
we are working very closely with suppliers to
improve the reliability of deliveries and our
customers have now given us permission to
resource fittings from cost effective uk based
suppliers
operational review
sales and marketing
this was a very busy year for philip redfern and
his team at csc the plan to pursue growth in
the uk aggressively with the appointment of an
additional salesman focused solely on this
market was put on hold as the new salesman
was moved to our new biogas project significant
opportunities to grow the customer base in our
home market across the full range of
commercial products and services remain and a
modified version of this plan incorporating the
new business unit structure will be relaunched
as soon as we have recruited another salesman
our international sales development manager
was very active in india the far east and china
during the year and we are actively quoting for
projects in niche sectors where higher pressures
product integrity and design capability are
essential
as reported above the export defence market
was very rewarding it was particularly satisfying
to win the contract for high pressure cylinders on
the barracuda submarine after thirty years
endeavouring to gain entry to the french defence
sector  we will continue to target all naval build
programmes worldwide as our design and
development capability in this sector is
unrivalled medium term prospects for the uk
look promising and we intend to lodge innovative
bids that highlight our supply chain expertise
operations
the challenges of the £86 million increase in
revenues should not be underestimated
operations management at csc led by john
brown and philip catton met the challenges
very successfully manufacturing employees
increased from 33 at the beginning of the year to
52 by year end training was not neglected and
we successfully ran induction courses and an
nvq level 2 course given the success of our
apprenticeship scheme we decided to employ
three new apprentices in september 2008
an experienced production planner was
employed and investment in finite capacity
scheduling software was made to ensure on
time delivery and manage production flow more
effectively by the year end overdue orders were
reduced to very low levels
capital investment was once again focused on
improving manufacturing efficiency and
increasing output this included changing the
layout of a number of areas within ultralarge
manufacturing to improve product flow and the
installation of new endheating furnaces for the
ultralarge forge which halved gas usage and
improved product quality capital investment in
2009 will again be in excess of twice the
depreciation level
business units will be introduced in 2009 to
deliver improvements in both the ultralarge and
the small cylinder areas in ultralarge there will
be a concerted effort to eliminate waste and
further improve process flow and we are
currently working with the manufacturing
advisory service on a project to achieve this
in small cylinders the focus will be on growing
the business
technical and development
maintaining our technical and design capability
continued to pay dividends as many of our
customers no longer have high pressure cylinder
design expertise in their organisations the
additional designer we employed gives us greater
scope for both product and tooling development
we are now in the process of recruiting a
graduate trainee into the design function
the csc technical director alan harding is
actively engaged in the development of new
iso standards for ultralarge seamless steel
cylinders and ultralarge composite cylinders
to assist with this and other areas of development
we have engaged dr rohitan roy irani former
global technical authority cylinders for
the boc group as a consultant roy has a
lifetime’s experience in the design and applications
of both high and low pressure cylinders including
cryogenic applications
research and development continued on a range
of products and services and we now have closer
links with the sheffield advanced manufacturing
research centre and the two sheffield universities
csc is also involved in the special metals
forums nuclear supply chain initiative the key
areas for development in 2008 are
the development of inservice field testing of
cylinders where we have recently procured key
equipment and recruited staff with the relevant
nondestructive testing expertise
the development of ultralarge composite
cylinders
the development of materials and coatings for
naval applications pressure technologies plc annual report and accounts 2008 15
corporate social responsibility
the management of health and safety issues
remains a management priority across the
business health and safety is an agenda item at
both the pressure technologies and csc boards
it was disappointing to see reportable accidents
increase to three this year 2007 2 target 0
none of these injuries were lifethreatening
additional capital expenditure to improve
materials handling is planned for 2009  the
major project will improve loading and unloading
of the ultralarge forge
it was very pleasing to see csc gain accreditation
to iso140012004 in january 2008 our product is
virtually 100 recyclable but it is also good to
know that we also have a robust environmental
management system in our manufacturing
facility once again we had no environmental
incidents in the year 
csc gives donations of £250 per month to
charity these donations are administered by an
employee committee the aim of these donations
is twofold to help small mainly local charities
and to raise employee awareness of and
participation in charitable giving
chesterfield biogas
during the year we were actively engaged in
preparing the group’s entry to a new market
on 10 november 2008 we announced the
establishment of a new operating division
chesterfield biogas following the signing of a
cooperation agreement with greenlane
®
biogas
limited the world leader in biogas upgrading
from raw biogas to vehicle quality fuel
under the agreement which gives pressure
technologies exclusive rights to market greenlane
®
equipment in the uk and eire chesterfield
biogas will provide turnkey solutions for the
cleaning storage and dispensing of biomethane
produced from waste water treatment and
anaerobic digestion of organic waste we have a
long relationship with flotech the owners of
greenlane
®
biogas as we have worked together
on a number of biogas projects in sweden over
the last decade this is a lowrisk tried and
tested biomethane fuel solution for the uk
market our joint skills and experience in this
field mean that we are able to deliver an effective
and successful system when others can only
offer prototypes
the uk market for biomethane has to date
remained untapped largely due to a limited
availability of methanefuelled 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 righthand 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
a strong pipeline of projects is developing but
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
acquisitions
we have a target list of companies that match
our criteria of niche high added value companies
in pressure containment and control markets
and we are actively in discussions with a number
of companies we now have more time to spend
working on delivering acquisitions and intend to
employ additional resources to assist with this
process buying private companies is time
consuming and about relationships time spent
getting this right is essential to the success of
the programme and we will not buy in haste
in summary 2008 was another successful year
for the group delivering solid growth and
shareholder value our strong order book and
pipeline of prospects should ensure that we
deliver another good result in 2009
john hayward
chief executive
8 december 2008
august 2008
record order intake of over £6 million
in one month
september 2008
order placed by dcn for the supply of
cylinders for the french navy’s barracuda
class submarines 16 pressure technologies plc annual report and accounts 2008
directors and advisors
pressure technologies plc
board of directors
left to right
nigel luckett richard shacklady
philip cammerman
john hayward james lister
chesterfield special cylinders ltd
operational board directors
left to right
john hayward managing director james lister
john brown alan harding philip catton
philip redfern pressure technologies plc annual report and accounts 2008 17
p s cammerman
nonexecutive director 66
philip has over 20 years industrial experience in
engineering and hitech industries and has
worked in both the uk and usa he has spent
the last 23 years in the venture capital industry
playing a major part in the development of the
yfm group into the most active investor in uk
sme’s he retired from all yfm group
businesses in april 2008 following their disposal
to gle capital philip is chairman of the
remuneration committee
n f luckett
nonexecutive director 66
a qualified chartered accountant nigel is a
former partner of thomson mclintock  co and
latterly kpmg and has over 40 years of extensive
corporate finance insolvency and auditing
experience since his retirement from kpmg in
1995 he has had a number of nonexecutive
director and chairman positions in the broad
engineering sector  nigel is chairman of the
audit committee
r l shacklady
nonexecutive chairman 60
richard is a partner with rls associates
where he works as a management consultant
he joined the pressure technologies business
at the time of the mbo in 2004 he has extensive
experience of working in several roles in the
engineering sector latterly as managing director
of doncasters uk holdings plc richard is
also the nonexecutive chairman of langley
alloys limited
j t s hayward
chief executive 47
john has worked for the company for 11 years
initially as finance director of chesterfield
cylinders limited before assuming additional
directorial responsibility for the then special
products division in 2000 he led the mbo
in 2004 and then assumed the role of
chief executive john is a qualified accountant
and has previously worked for boots courtaulds
united engineering steels and tn latterly at
tn he worked as an internal consultant and
was brought to chesterfield cylinders as a
result of his experience of automotive sector
management techniques he holds a degree
in physics from oxford university
t j lister
finance director 53
james joined the company in 2008 his previous
engineering industry experience includes seven
years with the 600 group plc in roles both as
group financial controller and as finance
director of 600 lathes prior experience included
15 years with bridon in a variety of roles including
group development manager where he acted as
the in house mergers and acquisitions manager 
james is a qualified chartered accountant
our management team
a wide range of talents and
experience focused on
delivering shareholder value
directors
rlshacklady – nonexecutive chairman
jtshayward – chief executive
p scammerman  nonexecutive director
appointed on 140408
t jlister  finance director appointed on 010608
nfluckett – nonexecutive director
secretary
tjlister
registered office
meadowhall road
sheffield
s9 1bt
company information
registered number
06135104
website
wwwpressuretechnologiescom
nominated advisor
brewin dolphin limited
34 lisbon street
leeds ls1 4lx
auditors
grant thornton uk llp
enterprise house
115 edmund street
birmingham
west midlands b3 2hj
solicitors
hlw commercial lawyers llp
commercial house
commercial street
sheffield s1 2at
bankers
bank of scotland
7 leopold street
sheffield s1 2ff
registrars
capita registrars
northern house
woodsome park
fenay bridge
huddersfield hd8 0la 18 pressure technologies plc annual report and accounts 2008
directors’ report
the directors present their report and the audited financial statements for the period from 1 october 2007 to 27 september 2008
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
results and dividends
the consolidated income statement is set out on page 23 the profit on ordinary activities before taxation of the group for the period ended
27 september 2008 amounted to £5046 million 2007 £1384 million
an interim dividend of 20p per share was paid during the period 2007 £nil the directors recommend a final dividend of 4p per share 2007 £nil
business review
financial overview
revenues increased to £23660 million 2007 £15124 million principally as a result of demand from the oil and gas sector an increase of 56
gross profit increased by 91 to £7510 million 2007 £3935 million giving a gross margin of 32 2007 26 the increase in gross margin was
due to improved operating efficiencies increased activity levels through the factory and favourable exchange rate movements
administration expenses excluding exceptional costs increased by 26 to £2578 million to support business growth
profit before tax increased by 265 to £5046 million 2007 £1384 million basic earnings per share were up 187 at 316p 2007 109p
the cash inflow from operations was £2881 million 2007 outflow £0609 million reflecting the significant increase in operating profits which
were converted to cash less the extra inventory requirements of the business
the nature of the capital expenditure projects undertaken during the year are described in the chief executive’s statement
operational overview
the operational overview is contained in the chief executive’s statement on pages 12 to 15
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 main 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
• chesterfield special cylinders gained iso140012004 approval in january 2008
• 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 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 environmental incidents in 2008 pressure technologies plc annual report and accounts 2008 19
principal risks and uncertainties
specific principal risks identified by management are described below together with management actions to minimise these risks
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
2008 316p
2007 109p
the improvement in earnings per share is a result of growth in the business and continued drive to improve efficiency and elimination of waste
earnings per share is calculated as profit for the period divided by the weighted average number of shares in issue
financial performance
kpi – revenue kpi – return on revenue
2008 £237 million 2008 208
2007 £151 million 2007 124
target £40 million by 2011 target 200
revenue growth was predominantly in the offshore oil and gas sector which accounted for 85 of sales in 2008 86 in 2007
the return on revenue benefited from improved operational gearing through the factory and the weakening of sterling against the euro
return on revenue is calculated as operating profit before exceptional operating costs divided by revenue expressed as a percentage
health  safety environment
kpi – reportable accidents kpi – reportable incidents
2008 3 2008 zero
2007 2 2007 zero
target zero target zero
risk
the group derives over 75 of its sales from two key customers in one
market sector
the group derives a high proportion of its raw material from a small
number of key suppliers some of whom are competitors
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
the group purchases some of its raw materials in both us dollars
and euros and receives payment for some of its products in euros
management action
significant management resource is allocated to service the requirements
of these customers ongoing development of new products
customers and markets
to reduce the inherent risk of supply from competitors requirements
are split across the available supplier base
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
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
the net exposure is reduced by the use of forward exchange contracts
subject to limits in the group’s banking facility 20 pressure technologies plc annual report and accounts 2008
directors’ report continued
substantial shareholdings
as at 1 december 2008 the following held or were beneficially interested in 3 or more of the company’s issued ordinary share capital
percentage of
number issued share
of shares capital owned
funds managed by octopus investments limited 1039933 92
jts hayward 1000040 88
goldman sachs international 899910 79
pl redfern 745000 66
jw brown 700000 62
pd catton 673333 59
a harding 673333 59
funds managed by axa framlington 597284 50
unicorn aim vct2 366767 32
south yorkshire investment capital fund lp 342224 30
the liontrust intellectual capital trust 341553 30
directors and their interests
the present directors of the company are set out on page 16 and 17
jd clark resigned on 31 december 2007 ps cammerman was appointed as a nonexecutive director on 14 april 2008 tj lister was
appointed as a director on 1 june 2008 the interests of the directors in the share capital of the company are set out below
27 september 30 september
2008 2007
ordinary shares no no
rl shacklady including 22500 shares held by his wife 57500 43333
jts hayward 1000040 1100040
nf luckett 50000 33333
tj lister 3750 —
ps cammerman 2000 —
share options
on 2 november 2007 approval was received from hm revenue and customs for the pressure technologies saye sharesave scheme on 30 november 2007
the directors granted options on 59197 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
options on
ordinary shares
of 5p
no
2008
jtshayward 2181
on 20 august 2008 following a review of best practice in corporate governance rl shacklady and nf luckett cancelled their saye sharesave
scheme membership there were no other changes in the number of options in issue during the year or since the year end
financial instruments
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 entered into derivative transactions being foreign exchange contracts and sale and
purchase contracts denominated in a foreign currency in the normal course of trade it does not trade in financial instruments as a matter of policy
information about the use of the financial instruments by the company and its subsidiaries is given in note 19 to the financial statements
donations
donations made by the group during the period for charitable purposes in the united kingdom amounted to £3275 2007 £3495 pressure technologies plc annual report and accounts 2008 21
supplier payment policy
the group’s policy is to comply wherever practical with the terms of payment agreed with its suppliers the average creditor days were 40 2007 43
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
employee involvement
it is the policy of the group to communicate with employees by employee representation on works and staff committees and by regular briefing
meetings conducted by senior management career development is encouraged through suitable training and annual appraisals the group takes
the approach of maximising performance through the heightening of awareness of corporate objectives and policies
disabled persons
the group gives full and fair consideration to applications for employment from disabled persons where they have the necessary abilities and
skills for that position and wherever possible will retrain employees who become disabled so that they can continue their employment in another
position the group engage promote and train staff on the basis of their capabilities qualifications and experience without discrimination giving
all employees an equal opportunity to progress
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 which give a true and fair view of the state of affairs of
the parent company and the group as at the end of the financial year and of the profit or loss of the group for the financial year the aim rules for
companies require that the directors prepare the group financial statements in accordance with international financial reporting standards as
adopted by the european union ifrss the directors have elected to prepare the parent company financial statements in accordance with
united kingdom generally accepted accounting practice uk gaap in preparing these financial statements the directors are required to
• select suitable accounting policies and then apply them consistently
• make judgments and estimates that are reasonable and prudent
• for the group financial statements state whether applicable ifrss have been followed subject to any material departures disclosed and
explained in the financial statements
• for the parent company financial statements state whether applicable uk accounting standards have been followed subject to any material
departures disclosed and explained in the financial statements
• prepare the financial statements on the going concern basis unless it is inappropriate to presume that the company will continue in business
the directors are responsible for keeping proper accounting records that disclose with reasonable accuracy at any time the financial position of
the company 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 company 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 included on the company’s website legislation
in the united kingdom governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions
disclosure of information to auditors
in so far as each of the directors is aware
• there is no relevant audit information of which the company’s auditors are unaware and
• the directors have taken all steps that they ought to have taken to make themselves aware of any relevant audit information and to establish
that the auditors are aware of that information
auditors
grant thornton uk llp are willing to continue in office and a resolution to reappoint them will be proposed at the annual general meeting
cautionary statement on forwardlooking statements and related information
this document contains a number of forwardlooking statements relating to the group the group considers any statements that are not
historical facts as “forwardlooking 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 forwardlooking statements which speak only as at the date of this document
by order of the board
tj lister
secretary
8 december 2008 22 pressure technologies plc annual report and accounts 2008
report of the independent auditor
to the members of pressure technologies plc
we have audited the group and parent company financial statements the financial statements of pressure technologies plc for the period
ended 27 september 2008 which comprise the consolidated income statement the consolidated and parent company balance sheets the
consolidated cash flow statement the consolidated statement of recognised income and expense and notes 1 to 26 to the group consolidated
financial statements and notes 1 to 9 to the parent company financial statements these financial statements have been prepared under the
accounting policies set out therein
this report is made solely to the company’s members 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 members 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 members 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 group financial statements in accordance with united kingdom law
and international financial reporting standards ifrss as adopted by the european union and for preparing the parent company 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 whether the financial statements have been
properly prepared in accordance with the companies act 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 that specific information presented in
the chairmans and chief executives 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 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 directors report the chairmans statement and the chief executives statement 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 judgments made by the directors in the preparation of the financial statements and of whether
the accounting policies are appropriate to the groups and companys 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 group financial statements give a true and fair view in accordance with ifrss as adopted by the european union of the state of the
groups affairs as at 27 september 2008 and of its profit for the period then ended
• the group financial statements have been properly prepared in accordance with the companies act 1985
• the parent company financial statements give a true and fair view in accordance with united kingdom generally accepted accounting
practice of the state of the parent companys affairs as at 27 september 2008
• the parent company 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
registered auditor
chartered accountants
birmingham
8 december 2008 pressure technologies plc annual report and accounts 2008 23
consolidated income statement
for the period ended 27 september 2008
2008 2007
notes £’000 £’000
revenue 3 23660 15124
cost of sales 16150 11189
gross profit 7510 3935
administration expenses 2578 2053
exceptional administration costs — 530
total administration expenses 2578 2583
operating profit before exceptional costs 4932 1882
exceptional administration costs 6 — 530
operating profit 4932 1352
finance income 4 155 116
finance costs 5 41 84
profit before taxation 6 5046 1384
taxation 10 1465 446
profit for the financial period 23 3581 938
earnings per share – basic 11 316p 109p
– diluted 11 315p 109p
all the above results are from continuing operations
the notes on pages 26 to 46 form part of these financial statements
consolidated statement of total recognised income and expense
for the period ended 27 september 2008
2008 2007
note £’000 £’000
profit for the financial period 3581 938
tax taken directly to equity 23 1 —
total recognised gains and losses relating to the period 3582 938 24 pressure technologies plc annual report and accounts 2008
consolidated balance sheet
as at 27 september 2008
2008 2007
notes £’000 £’000
noncurrent assets
property plant and equipment 12 2043 1774
deferred tax asset 20 76 49
2119 1823
current assets
inventories 14 6527 4550
trade and other receivables 15 3125 3155
derivative financial instruments 16 110 78
cash and cash equivalents 6091 4930
15853 12713
total assets 17972 14536
current liabilities
trade and other payables 17 4731 5348
borrowings 18 80 80
current tax liabilities 846 362
5657 5790
noncurrent liabilities
other payables 17 695 448
borrowings 18 160 240
deferred tax liabilities 20 293 263
1148 951
total liabilities 6805 6741
net assets 11167 7795
equity
share capital 21 567 567
share premium account 23 5341 5341
retained earnings 23 5259 1887
total equity 23 11167 7795
the notes and accounting policies on pages 26 to 46 form part of these financial statements
the financial statements were approved by the board on 8 december 2008 and signed on its behalf by
jts hayward
director pressure technologies plc annual report and accounts 2008 25
consolidated cash flow statement
for the period ended 27 september 2008
2008 2007
note £’000 £’000
operating activities
cash flows from operating activities 24 2881 609
finance costs paid 41 84
income tax paid 977 176
net cash inflowoutflow from operating activities 1863 869
investing activities
interest received 155 116
purchase of property plant and equipment 551 428
proceeds from sale of property plant and equipment 101 9
net cash used in investing activities 295 303
financing activities
proceeds from issue of ordinary shares — 5541
repayment of borrowings 80 437
dividends paid 227 —
payment of deferred consideration 100 —
net cash outflowinflow from financing activities 407 5104
net increase in cash and cash equivalents 1161 3932
cash and cash equivalents at beginning of period 4930 998
cash and cash equivalents at end of period 6091 4930
the notes on pages 26 to 46 form part of these financial statements notes to the consolidated financial statements
1 accounting policies
basis of preparation
the consolidated financial statements have been prepared in accordance with international financial reporting standards ifrs adopted by the
european union and ifric interpretations issued by the international accounting standards board and with those parts of the companies act 1985
applicable to companies reporting under ifrs for the first time the company has elected to prepare its parent company financial statements in
accordance with uk generally accepted accounting principles uk gaap these are presented on pages 47 to 49
the policies have changed from the previous year when the financial statements were prepared under applicable united kingdom generally
accepted accounting principles uk gaap the comparative data for the year to 30 september 2007 has been restated and reconciliations are
included in note 26 to explain the changes
the financial statements have been prepared under the historical cost convention except for derivative financial instruments carried at fair value
the following standards and interpretations which have not been applied during the period but are likely to impact on the financial statements
of the group were in issue but not yet effective
ias 1 presentation of financial statements revised 2007 effective 1 january 2009
ias 23 borrowing costs revised 2007 effective 1 january 2009
ias 27 consolidated and separate financial statements revised 2008 effective 1 july 2009
amendment to ifrs 2 sharebased payment – vesting conditions and cancellations effective 1 january 2009
ifrs 3 business combinations revised 2008 effective 1 july 2009
ifrs 8 operating segments effective 1 january 2009
improvements to ifrss effective 1 january 2009 other than certain elements effective 1 july 2009
the directors anticipate that the adoption of these standards and interpretations in future periods will have no material impact on the financial
statements of the group except for ias 1 revised ifrs 3 revised and ifrs 8 the amendment to ias 1 affects the presentation of owner
changes in equity and introduces a statement of comprehensive income preparers will have the option of presenting items of income and
expense and components of other comprehensive income either in a single statement of comprehensive income with subtotals or in two separate
statements a separate income statement followed by a statement of other comprehensive income this amendment does not affect the financial
position or results of the group but will give rise to additional disclosures management is currently assessing the detailed impact of this
amendment on the group’s financial statements
ifrs 3 business combinations revised 2008 will apply to any future business combinations that the group may undertake once it is in force
the group has no plans to adopt the revised standard in advance of its mandatory implementation date and it is not possible to quantify the effect
of the standard on future business combinations until those combinations take place
ifrs 8 introduces new rules on the disclosure of operating results by business segment the new standard requires a management approach
under which segment information is presented on the same basis as that used for internal reporting procedures the group will apply ifrs 8
from 1 october 2009 the impact of the standard is not expected to be significant as the group only has one segment that currently contributes
more then ten percent of total revenue profit or loss or assets
first time adoption of ifrs
application of ifrs 1
the consolidated financial statements for the period ended 27 september 2008 are the first annual financial statements that comply fully with
ifrs 1 and all other applicable international financial reporting standards these financial statements have been prepared as described above
the groups transition date is 1 october 2006 and the group prepared its opening ifrs balance sheet at that date in preparing these consolidated
financial statements in accordance with ifrs 1 the group has applied the mandatory exemptions and certain of the optional exemptions from full
retrospective application of ifrs the group did not take advantage of any optional exemptions available
26 pressure technologies plc annual report and accounts 2008 1 accounting policies continued
basis of consolidation
the group financial statements consolidate those of the company and all of its subsidiary undertakings drawn up to 27 september 2008
subsidiaries are entities over which the group has the power to control the financial and operating policies so as to obtain benefits from its
activities the group obtains and exercises control through voting rights
all intragroup transactions have been eliminated on consolidation unrealised gains on transactions between the group and its subsidiaries are
eliminated unrealised losses are also eliminated unless the transaction provides evidence of an impairment of the asset transferred
acquisitions of subsidiaries are dealt with by the purchase method the purchase method involves the recognition at fair value of all identifiable
assets and liabilities including contingent liabilities of the subsidiary at the acquisition date regardless of whether or not they were recorded in
the financial statements of the subsidiary prior to acquisition on initial recognition the assets and liabilities of the subsidiary are included in the
consolidated balance sheet at their fair values which are also used as the bases for subsequent measurement in accordance with the group
accounting policies goodwill is stated after separating out identifiable intangible assets goodwill represents the excess of acquisition cost over
the fair value of the groups share of the identifiable net assets of the acquired subsidiary at the date of acquisition
segment reporting
a business segment is a group of assets and operations engaged in providing products or services that are subject to risks and rewards that are
different from those of other business segments a geographical segment is engaged in providing products or services within a particular
economic environment that are subject to risks and returns that are different from those operating in other economic environments
based on risks and returns the directors consider that the primary reporting format is by business segment the secondary reporting format is
by geographical analysis by origin and destination
revenue
revenue is measured by reference to the fair value of consideration received or receivable and arises from the sales of goods and services
provided in the normal course of business net of trade discounts vat and other salesrelated taxes revenue from the sale of goods is
recognised when the significant risks and benefits of ownership have been transferred to the buyer which may be on despatch completion of the
product or the product being ready for delivery based on specific contract terms when the amount of revenue can be measured reliably and
when it is probable that the economic benefits associated with the transaction will flow to the group
revenue from services provided by the group which does not represent a significant portion of the total revenue is recognised when the outcome
of the transaction can be estimated reliably and the group has performed its obligations and in exchange obtained the right to consideration
exceptional administration costs
exceptional administration costs are material items which individually or if a similar type in aggregate need to be disclosed by virtue of their size
or incidence because of their relevance to understanding the entity’s financial performance
costs of this nature were incurred in the prior period and are detailed in note 6 to the consolidated financial statements
research and development
expenditure on research or the research phase of an internal project is recognised as an expense in the period in which it is incurred
development costs are capitalised when all the following conditions are satisfied
• completion of the intangible asset is technically feasible so that it will be available for use or sale
• the group intends to complete the intangible asset and use or sell it
• the group has the ability to use or sell the intangible asset
• the intangible asset will generate probable future economic benefits among other things this requires that there is a market for the output
from the intangible asset or for the intangible asset itself or if it is to be used internally the asset will be used in generating such benefits
• there are adequate technical financial and other resources to complete the development and to use or sell the intangible asset and
• the expenditure attributable to the intangible asset during its development can be measured reliably
development costs not meeting the criteria for capitalisation are expensed as incurred
pressure technologies plc has not incurred any costs in the year that have met the above criteria for development costs with all relevant costs
being expensed as research costs as they are incurred
pressure technologies plc annual report and accounts 2008 27 notes to the consolidated financial statements continued
1 accounting policies continued
sharebased employee remuneration
all sharebased payment arrangements granted after 7 november 2002 which had not vested by the date of transition to ifrs are recognised in
the consolidated financial statements the group operates equitysettled sharebased remuneration plans for remuneration of its employees
the groups plan does not feature any options for a cash settlement
all goods and services received in exchange for the grant of any sharebased payment are measured at their fair values where employees are
rewarded using sharebased payments the fair values of employees services are determined indirectly by reference to the fair value of the
instrument granted to the employee this fair value is appraised at the grant date and excludes the impact of nonmarket vesting conditions for
example profitability and sales growth targets
all sharebased remuneration is ultimately recognised as an expense in profit or loss with a corresponding credit to the profit and loss reserve
if vesting periods or other vesting conditions apply the expense is allocated over the vesting period based on the best available estimate of the
number of share options expected to vest nonmarket vesting conditions are included in assumptions about the number of options that are
expected to become exercisable estimates are subsequently revised if there is any indication that the number of share options expected to vest
differs from previous estimates any cumulative adjustment prior to vesting is recognised in the current period no adjustment is made to any
expense recognised in prior periods if share options ultimately exercised are different to that estimated on vesting upon exercise of share
options the proceeds received net of any directly attributable transaction costs up to the nominal value of the shares issued are allocated to share
capital with any excess being recorded as additional paidin capital
the cancellation of equitysettled share based payments is accounted for as an acceleration of vesting
dividends
dividends are recognised when the shareholders right to receive payment is established
property plant and equipment
plant and equipment is stated at cost net of depreciation and any provision for impairment no depreciation is charged whilst assets are still in
the course of construction depreciation is applied on a straightline basis so as to reduce the assets to their residual values over their estimated
useful lives residual values are reviewed annually the rates of depreciation used are
plant and machinery 4 – 15 years
the gain or loss arising on the disposal of an asset is determined as the difference between the disposal proceeds and the carrying amount of the
asset and is recognised in the income statement
for the purposes of assessing impairment assets are grouped at the lowest levels for which there are separately identifiable cash flows
cashgenerating units as a result some assets are tested individually for impairment and some are tested at cashgenerating unit level
an impairment loss is recognised for the amount by which the asset’s or cashgenerating unit’s carrying amount exceeds its recoverable amount
the recoverable amount is the higher of fair value reflecting market conditions less costs to sell and value in use based on an internal
discounted cash flow evaluation
the group operates from a single manufacturing site in sheffield under a 15 year lease expiring in june 2020 the directors consider that the
remaining life of the building to be considerably longer than the remaining life of the lease and consequently the lease has been treated as an
operating lease
operating leases
leases are classified as finance leases whenever the terms of the lease transfer substantially all the risks and rewards of ownership to the
lessee all other leases are classified as operating leases
payments under operating leases are charged to the income statement on a straightline basis over the term of the lease lease incentives are
spread over the term of the lease
inventories
inventories are stated at the lower of cost and net realisable value on a first in first out basis 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 slowmoving or defective items where appropriate
28 pressure technologies plc annual report and accounts 2008 1 accounting policies continued
income taxes
the tax expense represents the sum of the tax currently payable and deferred tax current tax is the tax currently payable based on taxable profit for the year 
deferred income taxes are calculated using the liability method on temporary differences deferred tax is generally provided on the difference
between the carrying amounts of assets and liabilities and their tax bases however deferred tax is not provided on the initial recognition of
goodwill nor on the initial recognition of an asset or liability unless the related transaction is a business combination or affects tax or accounting
profit deferred tax on temporary differences associated with shares in subsidiaries is not provided if reversal of these temporary differences can
be controlled by the group and it is probable that reversal will not occur in the foreseeable future in addition tax losses available to be carried
forward as well as other income tax credits to the group are assessed for recognition as deferred tax assets
deferred tax liabilities are provided in full with no discounting deferred tax assets are recognised to the extent that it is probable that the
underlying deductible temporary differences will be able to be offset against future taxable income current and deferred tax assets and liabilities
are calculated at tax rates that are expected to apply to their respective periods of realisation provided they are enacted or substantively enacted
at the balance sheet date
changes in deferred tax assets and liabilities are recognised as a component of tax expense in the income statement except where they relate to
items that are charged or credited directly to equity in which case the related deferred tax is also charged or credited directly to equity
accounting for financial assets
the group has financial assets in the following categories
• loans and receivables
• financial assets at fair value through profit or loss
financial assets are assigned to the different categories on initial recognition depending on the characteristics of the instrument and its purpose
a financial instruments category is relevant for the way it is measured and whether any resulting income and expenses are recognised in profit or
loss or directly in equity
all financial assets are recognised when the group becomes a party to the contractual provisions of the instrument financial assets other than
those categorised as at fair value through profit or loss are recognised at fair value plus transaction costs financial assets categorised as at fair
value through profit or loss are recognised initially at fair value with transaction costs expensed through the income statement
loans and receivables are nonderivative financial assets with fixed or determinable payments that are not quoted in an active market after initial
recognition these are measured at amortised cost using the effective interest method less provision for impairment any change in their value is
recognised in profit or loss pressure technologies plcs trade and most other receivables fall into this category of financial instrument
discounting however is omitted where the effect of discounting is immaterial
significant receivables are considered for impairment on a casebycase basis when they are past due at the balance sheet date or when objective
evidence is received that a specific counterparty will default all other receivables are reviewed for impairment in groups which are determined by
reference to the industry and region of a counterparty and other available features of shared credit risk characteristics if any the percentage of
the write down is then based on recent historical counterparty default rates for each identified group
accounting for financial liabilities
financial liabilities represent a contractual obligation for the group to deliver cash or other financial assets financial liabilities are initially
recognised at fair value net of issue costs when the group becomes a party to the contractual agreements of the instrument all interestrelated
charges and if applicable changes in an instruments fair value that are reported in profit or loss are included in the income statement line items
“finance costs” or “finance income”
the groups financial liabilities include borrowings trade and other payables including finance lease liabilities which are measured at
amortised cost using the effective interest rate method
pressure technologies plc annual report and accounts 2008 29 1 accounting policies continued
derivative financial instruments
the group has derivative financial instruments and embedded derivative financial instruments that are carried at fair value through profit or loss
the group does not hedge account for these items
any gain or loss arising from derivative financial instruments is based on changes in fair value which is determined by direct reference to active market
transactions or using a valuation technique where no active market exists the group has foreign currency forward contracts that fall into this category
derivatives embedded within contracts for the sale or purchase of a nonfinancial item that are denominated in a foreign currency are separated
when their economic characteristics and risks are not closely related to those of the host contract embedded derivatives are valued at their fair
value with changes in fair value being recognised in the income statement
the group have sales and purchase orders that contain embedded derivatives
cash and cash equivalents
cash and cash equivalents comprise cash on hand and demand deposits together with other shortterm highly liquid investments that are
readily convertible into known amounts of cash and which are subject to an insignificant risk of changes in value and bank overdrafts where they
form an integral part of the groups cash management
equity instruments
an equity instrument is any contract that evidences a residual interest in the assets of the group after deducting all of its liabilities equity
instruments issued by the group are recorded at the proceeds received net of direct issue costs the only equity instrument applicable to the
group is its issued share capital
compound instruments
the component parts of compound instruments issued by the group 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 nonconvertible instrument this amount is recorded as a liability on an amortised cost basis using the effective
interest rate method until extinguished upon conversion or at the instruments maturity date the equity component is determined by deducting
the amount of the liability component from the fair value of the component instrument as a whole this is recognised and included in equity net of
income tax effects and is not subsequently remeasured
the group previously had preferential ordinary shares in issue which fell into this category these shares were converted to ordinary shares
during the previous financial year
interest
interest is recognised using the effective interest method which calculates the amortised cost of a financial asset or liability and allocates the
interest income over the relevant period the effective interest rate is the rate that exactly discounts estimated future cash receipts through the
expected life of the financial asset to the net carrying amount of the financial asset
foreign currency translation
foreign currency transactions are translated into the functional currency being the currency of the primary economic environment in which the
group operates of the respective group entity using the exchange rates prevailing at the dates of the transactions spot exchange rate foreign
exchange gains and losses resulting from the settlement of such transactions and from the remeasurement of monetary balance sheet items at
yearend exchange rates are recognised in the income statement nonmonetary items carried at fair value that are denominated in foreign
currencies are translated at rates prevailing at the date when the fair value was determined nonmonetary items that are measured in terms of
historical cost in a foreign currency are not retranslated
for the purpose of the consolidated financial statements the results and financial position of each group company are expressed in pounds
sterling which is the functional currency of the company and the presentation currency of the consolidated financial statements
grants
grants relating to property plant and equipment are treated as deferred income and released to the income statement over the expected useful
lives of the assets concerned other grants are credited to the income statement in the same period as the related expenditure is incurred
pensions
the group operates a defined contribution scheme with costs being charged to the income statement in the period to which they relate
notes to the consolidated financial statements continued
30 pressure technologies plc annual report and accounts 2008 2 critical accounting judgements and key sources of estimation uncertainty
in the application of the groups accounting policies which are described in note 1 the directors are required to make judgements estimates and
assumptions about the carrying amounts of assets and liabilities that are not readily apparent from other sources the estimates and associated
assumptions are based on historical experience and other factors that are considered to be relevant actual results may differ from these estimates
the estimates and assumptions that have a material risk to the carrying value of assets and liabilities within the next financial year are discussed below
fair value of derivatives and other financial instruments
as described in note 19 the directors use their judgement in selecting an appropriate valuation technique for financial instruments not quoted in
an active market valuation techniques commonly used by market practitioners are applied for derivative and embedded derivative financial
instruments assumptions are made based on quoted market rates adjusted for specific features of the instrument details of the assumptions
used and the results of sensitivity analyses regarding these assumptions are provided in note 19
revenue recognition
the group recognises revenue when the goods in question have finished production and passed any applicable factory and customer acceptance
tests where goods remain on the group’s premises at the year end at the request of the customer management consider the detailed criteria for
the recognition of revenue from the sale of goods as set out in ias 18 in particular consideration is given as to whether the significant risks and
rewards of ownership are considered to have transferred to the buyer
capitalisation of research and development
where the conditions of ias 38 intangible assets are met the group capitalises the relevant development expenditure as an asset in order to
capitalise research and development expenditure the group must create an asset that is expected to generate future economic benefits in which
the revenue can be reliably measured the group incurred research and development expenditure during the year which the director’s do not
consider to have met this criteria and consequently the expenditure has been expensed during the period
inventory provisions
the directors have reviewed the level of specific and general provisions carried against inventory in the light of outstanding current and
anticipated customer orders where no customer orders are received against finished goods full provision is made
3 segmental analysis
based on risks and returns the directors consider that the primary reporting format is by business segment the directors consider that only one
business segment exists being the groups supply of highpressure gas cylinders into the energy market no other segment represents more
than 10 of revenue consequently separate disclosure of each business segment is not required as disclosures for the primary segment are
already given in the financial statements
geographical segment
the following table provides an analysis of the groups revenue by geographical market the carrying amount of segment assets and additions to
property plant and equipment and intangible assets have not been analysed separately by location as they are all located in the united kingdom
2008 2007
revenue £’000 £’000
united kingdom 2770 1794
europe 2134 350
rest of the world 18756 12980
23660 15124
4 finance income
2008 2007
£’000 £’000
interest receivable on bank deposits 155 116
5 finance costs
2008 2007
£’000 £’000
interest payable on bank loans and overdrafts 41 84
pressure technologies plc annual report and accounts 2008 31 notes to the consolidated financial statements continued
6 profit before taxation
profit on ordinary activities before taxation is stated after chargingcrediting
2008 2007
£’000 £’000
depreciation of property plant and equipment 200 203
profit on disposal of property plant and equipment 19 1
amortisation of grant receivable 27 12
staff costs see note 9 2589 1670
cost of inventories recognised as an expense 14053 9737
operating lease rentals
land and buildings 434 417
machinery and equipment 17 8
exceptional operating items — 530
the charge for exceptional operating items in the prior period comprised costs relating to the group’s flotation on aim of £125000 and costs
relating to a prospective overseas acquisition of £405000 there were no such costs incurred in the current period
7 auditors’ remuneration
2008 2007
£’000 £’000
fees payable to the companys auditor for the audit of the financial statements 10 5
fees payable to the companys auditor and its associates for other services
– audit of the companys subsidiaries pursuant to legislation 15 12
fees payable to the groups auditors for nonaudit services
– tax services 17 25
– services as reporting accountants in relation to flotation — 75
– review of interim financial statements 8 —
– other services 8 —
8 directors’ emoluments
particulars of directors’ emoluments are as follows
salary pension pension
and total total total total
fees benefits bonus 2008 2007 2008 2007
£’000 £’000 £’000 £’000 £’000 £’000 £’000
nonexecutive
rl shacklady 24 —— 24 55 — —
nf luckett 15 —— 15 7 — —
ps cammerman 8— — 8 — — —
executive
jts hayward 92 1 50 143 106 8 5
jd clark 17 1— 18 65 1 3
tj lister 26 — 13 39 — 2 —
total emoluments 182 2 63 247 233 11 8
all the payments shown for rl shacklady were paid to rls associates a partnership which he controls on his behalf
tjlister joined the company in january 2008 as finance director designate being appointed a director on 1 june 2008 the emoluments included
above cover the period from his appointment as a director to the 27 september 2008
in addition to the amounts shown above jd clark received a payment as compensation for loss of office of £50000
the number of directors who are accruing benefits under money purchase schemes is 2 2007 2
the group believes that the directors of pressure technologies plc are the only key management personnel under the definition of ias 24
“related party disclosures”
32 pressure technologies plc annual report and accounts 2008 9 employee costs
particulars of employees including executive directors
2008 2007
£’000 £’000
wages and salaries 2281 1471
social security costs 228 156
other pension costs 80 43
2589 1670
the average monthly number of employees including executive directors during the period was as follows
2008 2007
no no
production 58 39
selling and distribution 4 4
administration 5 4
67 47
10 taxation
2008 2007
£’000 £’000
current tax
current tax expense 1461 445
relating to prior periods — 18
1461 427
deferred tax
origination and reversal of temporary differences 4 19
adjustment in respect of prior years 8 —
total taxation charge 1465 446
corporation tax is calculated at 28 2007 30 of the estimated assessable profit for the period
the charge for the period can be reconciled to the profit per the income statement as follows
2008 2007
£’000 £’000
profit before taxation 5046 1384
theoretical tax at uk corporation tax rate 28 2007 30 1413 415
effects of
– nondeductible expenses 4 72
– adjustments in respect of prior years – current tax — 18
– adjustments in respect of prior years – deferred tax 8 —
– effect of rate change – see below 50 17
– small companies and marginal relief 10 6
total taxation charge 1465 446
the corporation tax rate has fallen as a result of the reduction in the uk corporation tax rate from 30 to 28 from 6 april 2008
pressure technologies plc annual report and accounts 2008 33 notes to the consolidated financial statements continued
11 earnings per ordinary share
basic and diluted earnings per share have been calculated in accordance with ias 33 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 period
the calculation of the basic earnings per share is based on the earnings attributable to ordinary shareholders divided by the weighted average
number of shares in issue during the period
the calculation of diluted earnings per share is based on the basic earnings per share adjusted to allow for the issue of shares on the assumed
conversion of all dilutive options
2008 2007
£’000 £’000
profit after tax 3581 938
no no
weighted average number of shares – basic 11333620 8615812
dilutive effect of options issued 30 november 2007 47958 —
weighted average number of shares – diluted 11381578 8615812
basic earnings per share 316p 109p
diluted earnings per share 315p 109p
12 property plant and equipment
plant and
machinery
£’000
cost
at 1 october 2006 3390
additions 428
disposals 12
at 30 september 2007 3806
additions 551
disposals 388
at 27 september 2008 3969
depreciation
at 1 october 2006 1833
charge for the year 203
disposals 4
at 30 september 2007 2032
charge for the period 200
disposals 306
at 27 september 2008 1926
net book value
at 27 september 2008 2043
at 30 september 2007 1774
34 pressure technologies plc annual report and accounts 2008 13 subsidiaries
a list of the significant investments in subsidiaries including the name country of incorporation and proportion of ownership interest is given in
note 4 to the companys separate financial statements
14 inventories
2008 2007
£’000 £’000
raw materials and consumables 3749 2599
work in progress 2778 1951
6527 4550
the replacement cost of stock is not materially different from the book value
15 trade and other receivables
2008 2007
£’000 £’000
amounts falling due within one year
trade receivables 1830 2023
other debtors 245 113
prepayments and accrued income 1050 1019
3125 3155
the average credit period taken on the sale of goods and services was 70 days 2007 56 days in respect of the group the group has two major
customers the largest of which represent 43 2007 35 and the other 24 2007 32 of trade receivables at the year end apart from these
balances the group has no other significant concentration of receivables
ageing of past due but not impaired receivables
2008 2007
£’000 £’000
days past due
0 – 30 days 19 143
31 – 60 days 23 14
61 – 90 days 28 8
91120 days 39 —
121  days 84 2
total 193 167
of the above overdue debts £161000 has since been received the group has reviewed the need for provisions against bad and doubtful debts and
concluded that no provision is required no impairment losses were recognised during the year in respect of trade receivables
16 derivative financial instruments
2008 2007
£’000 £’000
derivatives carried at fair value not recognised for hedge accounting
– forward foreign currency contracts 21 —
– contracts for sales and purchases of nonfinancial items denominated in foreign currencies 89 78
110 78
pressure technologies plc annual report and accounts 2008 35 36 pressure technologies plc annual report and accounts 2008
notes to the consolidated financial statements continued
17 trade and other payables
2008 2007
£’000 £’000
amounts due within 12 months
trade payables 1354 1339
other tax and social security 58 45
accruals and deferred income 3269 3839
4681 5223
deferred consideration 50 125
total due within 12 months 4731 5348
amounts due after 12 months
other payables 247 175
deferred income 348 148
595 323
deferred consideration 100 125
total due after 12 months 695 448
the payables and accruals principally comprise amounts outstanding for trade purchases and ongoing costs the directors consider that the
carrying amount of trade payables approximates to their fair value
deferred consideration relating to a prior acquisition is payable over ten years ending in june 2014 the amount payable is not contingent
18 borrowings
2008 2007
£’000 £’000
secured borrowings
bank loans 240 320
total borrowings 240 320
amounts due for settlement within 12 months 80 80
amounts due for settlement after 12 months 160 240
the maturity profile of longterm loans is as follows
2008 2007
£’000 £’000
due within one year 80 80
due within one to two years 80 80
due within two to five years 80 160
240 320
security is provided on the bank loan by a charge over the group’s assets pressure technologies plc annual report and accounts 2008 37
19 financial instruments
capital risk management
pressure technologies plcs capital management objectives are to ensure the groups ability to continue as a going concern and to provide an
adequate return to shareholders
the group manages its capital through the optimisation of the debt and equity balance and by pricing products and services commensurately with
the level of risk the capital structure of the group consists of debt which includes the borrowings disclosed in note 18 cash and cash equivalents
and equity attributable to equity holders of the parent comprising issued capital reserves and retained earnings as disclosed in note 23
2008 2007
£’000 £’000
debt 240 320
cash and cash equivalents 6091 4930
net debt 5851 4610
equity 11167 7795
debt is defined as long and shortterm borrowings as detailed in note 18 equity includes all capital and reserves of the group attributable to
equity holders of the parent
the group is not subject to externally imposed capital requirements other than the minimum capital requirements and duties regarding a serious
reduction of capital as imposed by the companies act 1985 on all public limited companies
the group held the following categories of financial instruments
2008 2007
£’000 £’000
financial assets
fair value through profit and loss fvtpl
– derivative instrument – forward currency contract not recognised for hedge accounting 21 —
– embedded derivative instrument – contracts for sales and purchase of nonfinancial items
denominated in foreign currencies 89 78
loans and receivables
– trade receivables 1830 2023
– cash and cash equivalents 6091 4930
8031 7031
financial liabilities
trade and other payables – held at amortised cost
– trade payables 1354 1339
– accruals and deferred income 3269 3839
borrowings – at amortised cost 240 320
deferred consideration – held at amortised cost 150 250
5013 5748
the fair value of the financial instruments set out above is not materially different from their book value
financial risk management objectives
management monitor and manage the financial risks relating to the operations of the group through regular reports to the board these risks
include currency risk interest rate risk credit risk and liquidity risk
the group seeks to minimise the effects of these risks by using derivative financial instruments to reduce these risk exposures the use of financial
derivatives is governed by the groups policies on foreign exchange risk interest rate risk credit risk the use of financial derivatives and nonderivative
financial instruments and the investment of excess liquidity the group does not enter into or trade financial instruments including derivative
financial instruments for speculative purposes whilst the group enters into forward currency contracts during the year to mitigate foreign
currency risk it does not apply hedge accounting 38 pressure technologies plc annual report and accounts 2008
notes to the consolidated financial statements continued
19 financial instruments continued
market risk
the groups activities expose it primarily to the financial risks of changes in foreign currency exchange rates particularly in us dollars and euros and
interest rates the group enters into derivative financial instruments to manage its exposure to foreign currency risk and interest rate risk including
the use of fixed interest rates on its long term borrowings the level of long term borrowings in place at the year end is not significant to the group
foreign currency risk management
the group purchases its principal raw materials in both us dollars and euros and receives payment for some of its products in euros as well as
in pounds 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
the carrying amounts of the groups foreign currency denominated monetary financial assets and monetary financial liabilities at the reporting
date are as follows
financial financial financial financial
liabilities assets liabilities liabilities
2008 2007 2008 2007
£000 £000 £000 £000
euro 1706 2356 1574 825
norwegian krone — 42 — —
us dollar 331 339 — —
2037 2737 1574 825
foreign currency sensitivity analysis
the group is mainly exposed to the us dollar and euro currency movements
the following table details the groups sensitivity to a 10 increase and decrease in pound sterling against the relevant foreign currencies
euro currency euro currency norwegian krone norwegian krone us dollar us dollar
impact impact currency impact currency impact currency impact currency impact
2008 2007 2008 2007 2008 2007
£000 £000 £000 £000 £000 £000
profit or loss 26 143 — 7 28 31
the use of a 10 movement in exchange rates is considered appropriate given recent movements in exchange rates
the above analysis represents the group’s exposure to foreign currency risk based financial assets and liabilities outstanding at the year end
a substantial amount of the group’s sales and purchases are made in foreign currencies the exposure to foreign exchange rates varies
throughout the year depending on the volume and timing of transactions in foreign currencies
forward foreign exchange contracts
it is the policy of the group to enter into forward foreign exchange contracts to cover specific foreign currency payments and receipts the group
also periodically enters into forward foreign exchange contracts to manage the risk associated with anticipated sales and purchase transactions
out to between 612 months the group does not hedge account for the forward currency exchange contracts
as of 27 september 2008 the aggregate amount of profitloss under forward foreign exchange contracts was £21000
at 27 september 2008 the group had an outstanding forward exchange contract to purchase 560000 which substantially covered the outstanding
value of us dollar denominated purchase orders
interest rate risk management
the group finances its operations where necessary through bank loans and overdrafts surplus cash is placed on shortterm deposit at fixed
rates of interest
if interest rates had been 05 higherlower and all other variables were held constant the impact on the results in the income statement and
equity would be an increasedecrease of £17000
the group had undrawn borrowing facilities available at 27 september 2008 of £1500000 2007 £1250000
price risk management
where possible the group enters into contracts incorporating price escalation clauses to mitigate any significant exposure to materials and
utilities price risk pressure technologies plc annual report and accounts 2008 39
19 financial instruments continued
credit risk management
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 the group’s management estimate the level of allowances required for doubtful debts based on prior experience
and their assessment of the current economic environment the credit risk on liquid funds is minimized by using counterparty banks with high
creditratings assigned by international creditrating agencies
liquidity risk management
the group manages liquidity risk by maintaining adequate reserves and banking facilities by continuously monitoring forecast and actual cash
flows and by matching the maturity profiles of financial assets and liabilities
at 27 september 2008 the groups liabilities have contractual maturities summarised below
current
within current non current less future total net
6 months 612 months 1 to 5 years interest payable
2008 £’000 £’000 £’000 £’000 £’000
bank overdraft and loans 48 47 173 28 240
trade and other payables 4094 529 —— 4623
gross settled derivatives 283 —— — 283
4425 576 173 28 5146
current
within current non current less future total net
6 months 612 months 1 to 5 years interest payable
2007 £’000 £’000 £000 £’000 £’000
bank overdraft and loans 53 51 268 52 320
trade and other payables 4801 342 35 — 5178
4854 393 303 52 5498
the interest rate on the bank loans of £240000 2007 £320000 is set at 275 above bank of scotland base rate the loan is repayable at the rate
of £20000 per quarter
included in cash and cash equivalents is a sterling balance of £2000000 2007 £3500000 which represents a single fixed term deposit for one
month ending on 24 october 2008 at a rate of interest of 524 2007 645
the group maintains foreign currency denominated bank accounts that earn interest based on the bank of scotland base rate applicable to that currency
at 27 september 2008 there was an outstanding foreign exchange liability of £283000 which expires within 6 months of the year end 2007 £nil
the following amounts have been recognised in the income statement in respect of derivative financial instruments
2008 2007
£’000 £’000
fair value through profit and loss fvtpl
– derivative instrument – forward currency contract not recognised for hedge accounting 21 —
– embedded derivative instrument – contracts for sales and purchase of nonfinancial items
denominated in foreign currencies 11 48
amounts credited to cost of sales within the income statement 32 48
fair values
the fair values of financial assets and liabilities are determined as follows
– outstanding foreign currency exchange contracts are measured using quoted forward exchange rates at the balance sheet date the group does
not hedge account
– the value of outstanding sales and purchase orders denominated in foreign currencies are revalued at the balance sheet date using exchange
rates then applicable to the expected settlement of the outstanding orders
the carrying value and fair value of the financial assets and financial liabilities are considered to be the same 40 pressure technologies plc annual report and accounts 2008
notes to the consolidated financial statements continued
20 deferred tax
the following are the major deferred tax liabilities and assets recognised by the group and movements thereon during the current and prior reporting period
accelerated revaluation short term operating
tax of financial timing share lease
depreciation instruments differences option costs incentives total
£’000 £’000 £’000 £’000 £’000 £’000
at 1 october 2006 216 12 —— 33 195
creditcharge to income 25 10 —— 16 19
at 30 september 2007 241 22 —— 49 214
creditcharge to income 21 9 33 20 4
taken directly to equity —— — 1— 1
at 27 september 2008 262 31 34 69 217
the net deferred tax balance has been analysed as follows in the consolidated balance sheet
2008 2007
£’000 £’000
non current asset
deferred tax asset 76 49
non current liabilities
deferred tax liabilities 293 263
217 214
at the balance sheet date the group has unused tax losses as disclosed below
unprovided unprovided
2008 2007
£’000 £’000
trading losses 43 43
21 called up share capital
2008 2007 2008 2007
no no £’000 £’000
authorised
authorised ordinary shares of 5p each 15000000 15000000 750 750
allotted issued and fully paid
ordinary shares of 5p each 11333620 11333620 567 567 pressure technologies plc annual report and accounts 2008 41
22 share based payments
pressure technologies plc introduced a share option scheme for all employees of the group during the period no options were in issue in the
prior year options are exercisable at 176p the vesting period is 3 years if the options remain unexercised after a period of 3 years and 6 months
from the date of the grant the options expire options are forfeited if the employee leaves the group before the options vest
details of the share options outstanding during the period are as follows
options
no
granted during the period 59197
cancelled during the period 10908
outstanding and exercisable at the end of the period 48289
the options outstanding at 27 september 2008 had a weighted average exercise price of 176p and a weighted average remaining contractual life
of 22 years the terms of these options are as follows
options
outstanding market value
at 27 september vesting at date of exercise exercise
date of grant 2008 period grant p price p period
301107 48289 3 years 220 176 6 months
there are no performance conditions that apply to the options other than continued employment
on 30 november 2007 the companys nonexecutive chairman rl shacklady and its nonexecutive director nf luckett were each granted
options over 5454 ordinary shares under the scheme these options comprised the directors entire holdings of share options these options
were cancelled on 20 august 2008 following a review of best practice in corporate governance in which the directors concluded that it would be
inappropriate for the nonexecutive directors to participate in the scheme
the options granted have been valued using the blackscholes model the inputs into the blackscholes model are as follows
scheme date of grant 301107
weighted average share price 220p
weighted average exercise price 176p
expected volatility 376
expected life 3 years
risk free rate 52
expected dividend yield 0
expected volatility was determined by calculating the historical volatility of the groups share price over the period since the group was
admitted to aim the expected option value used in the model has been adjusted based on managements best estimate for the effects of
nontransferability exercise restrictions and behavioural considerations the expected dividend yield was based on the group’s dividend payout
pattern at the date of issue of the options
the total charge to the income statement in the period in respect of sharebased payments was £18000
a deferred tax charge of £3000 was recognised in the income statement during the period in respect of share based payments a further £1000
was taken directly to reserves 42 pressure technologies plc annual report and accounts 2008
notes to the consolidated financial statements continued
23 statement of changes in equity
share share
capital premium other retained
account account reserves earnings total
£’000 £’000 £’000 £’000 £’000
balance at 1 october 2006 220 — 54 680 846
profit for the year —— — 938 938
release of financial liability —— 54 269 323
new share issue 347 5341 —— 5688
at 30 september 2007 567 5341 — 1887 7795
profit for the period —— — 3581 3581
dividends paid —— — 227 227
share based payments —— — 17 17
tax taken directly to equity — — —11
at 27 september 2008 567 5341 — 5259 11167
the share premium account represents the excess of proceeds from the share issue over the nominal value of the shares net of issue costs
the other reserve represents the excess of the fair value of the financial liability over its transaction value and was released to the profit and loss
account upon settlement of the financial liability
24 cash flows from operating activities
2008 2007
£’000 £’000
continuing operations
profit after tax 3581 938
adjustments for
finance income – net 114 32
depreciation of property plant and equipment 200 203
profit on sale of property plant and equipment 19 1
share option costs 17 —
income tax expense 1465 446
gain on derivative financial instruments 32 48
changes in working capital
increase in inventories 1977 3269
decrease in trade and other receivables 30 211
decreaseincrease in trade and other payables 270 943
cash flows from operating activities 2881 609 pressure technologies plc annual report and accounts 2008 43
25 financial commitments
a capital commitments
commitments for capital expenditure entered into were as follows
2008 2007
£’000 £’000
contracted for but not provided in the accounts 64 66
b operating lease commitments
the group has entered into commercial leases on certain properties motor vehicles and items of plant and equipment at the balance sheet date
the group had outstanding commitments for minimum lease payments under noncancellable operating leases which fall due as follows
2008 2007
£’000 £’000
land and buildings leases expiring
within one year 403 403
in the second to fifth years inclusive 1751 1708
after more than five years 3246 3692
5400 5803
other assets leases expiring
within one year 7 8
in the second to fifth years inclusive 7 —
14 8
the operating lease commitment on land and buildings represents the lease on the group’s factory and offices at meadowhall sheffield the group
entered into a lease for a period of 15 years commencing on 1 july 2005 the current rent payable under the lease is £370975 per annum the
lease includes rent reviews in every fifth year of the term in respect of years 610 inclusive the rent increases to £409586 and then £452216 in
the following review period
there is an additional lease entered into on the same date for the same period for an end bay at the premises the rent for the first five years of
the lease will be £32000 per annum rising to £36206 following the first review and £40964 following the final review
c other financial commitments
at 27 september 2008 the group had entered into a binding commitment with its primary supplier to make advance payments after the period
end against outstanding purchase orders totalling £nil 2007 £483000 44 pressure technologies plc annual report and accounts 2008
notes to the consolidated financial statements continued
26 reconciliation of equity and profit under uk gaap to ifrs
pressure technologies plc reported under uk gaap in its previously published financial statements for the year ended 30 september 2007 the
analysis below shows a reconciliation of equity and profit as reported under uk gaap as at 30 september 2007 to the revised equity and profit
under ifrs as reported in these financial statements in addition there is a reconciliation of equity under uk gaap to ifrs at the transition date
for the group being 1 october 2006
reconciliation of consolidated equity at 1 october 2006 date of transition to ifrs
uk gaap ias 17 ias 39 ias 12 ifrs
£’000 £’000 £’000 £’000 £’000
property plant and equipment 1557 —— — 1557
deferred tax asset —— — 33 33
noncurrent assets 1557 —— 33 1590
inventories 1281 —— — 1281
trade and other receivables 3366 —— — 3366
derivative asset —— 30 30
cash and cash equivalents 998 —— — 998
current assets 5645 — 30 — 5675
total assets 7202 — 30 33 7265
trade and other payables 4571 —— — 4571
current portion of longterm borrowings 216 —— — 216
current tax payable 111 —— — 111
current liabilities 4898 —— — 4898
other payables 180 102 —— 282
longterm borrowings 1011 —— — 1011
deferred tax liabilities 216 —— 12 228
noncurrent liabilities 1407 102 — 12 1521
total liabilities 6305 102 — 12 6419
net assets 897 102 30 21 846
share capital 220 —— — 220
other reserve 54 —— — 54
profit and loss account 731 102 30 21 680
total equity 897 102 30 21 846 pressure technologies plc annual report and accounts 2008 45
26 reconciliation of equity and profit under uk gaap to ifrs continued
reconciliation of equity at 30 september 2007
uk gaap ias 17 ias 39 ias 12 ifrs
£’000 £’000 £’000 £’000 £’000
property plant and equipment 1774 —— — 1774
deferred tax asset —— — 49 49
noncurrent assets 1774 —— 49 1823
inventories 4550 —— — 4550
trade and other receivables 3155 —— — 3155
derivative asset —— 78 — 78
cash and cash equivalents 4930 —— — 4930
current assets 12635 — 78 — 12713
total assets 14409 — 78 49 14536
trade and other payables 5348 —— — 5348
current portion of longterm borrowings 80 —— — 80
current tax payable 362 —— — 362
current liabilities 5790 —— — 5790
other payables 273 175 —— 448
longterm borrowings 240 —— — 240
deferred tax liabilities 241 —— 22 263
noncurrent liabilities 754 175 — 22 951
total liabilities 6544 175 — 22 6741
net assets 7865 175 78 27 7795
share capital 567 —— — 567
share premium account 5341 —— — 5341
profit and loss account 1957 175 78 27 1887
total equity 7865 175 78 27 7795 46 pressure technologies plc annual report and accounts 2008
notes to the consolidated financial statements continued
26 reconciliation of equity and profit under uk gaap to ifrs continued
reconciliation of profit for the year ended 30 september 2007
uk gaap ias 17 ias 39 ias 12 ifrs
£’000 £’000 £’000 £’000 £’000
revenue 15124 —— — 15124
cost of sales 11237 — 48 — 11189
gross profit 3887 — 48 — 3935
selling and administration expenses 1980 73 —— 2053
exceptional administration costs 530 —— — 530
operating profit 1377 73 48 — 1352
finance income 116 —— — 116
finance cost 84 —— — 84
profit before taxation 1409 73 48 — 1384
taxation 452 —— 6 446
profit for the period 957 73 48 6 938
explanation of transition to ifrs
an explanation of how the transition from uk gaap to ifrs has affected the group’s financial position financial performance and cash flows is
set out below
ias 17 – accounting for operating leases
the group benefited from an operating lease incentive at the outset of its 15 year lease on the meadowhall factory in 2005
under uk gaap the benefit of the operating lease incentive is spread to the date that the rent is first revised to market rent
under ias 17 “leases” payments made under operating leases should be recognised as an expense on a straight line basis over the lease term
even if lease payments are not made on such a basis as a result the total amount payable under the operating lease has been spread over the
entire lease term on a straight line basis with the difference between the amount recognised in the income statement and the amount paid being
included within other payables on the balance sheet
ias 39 – contracts in foreign currencies
ias 39 “financial instruments recognition and measurement” requires that embedded derivatives are separated from the host contract and
accounted for as a derivative when they are not closely related to the economic characteristics of the host contract a value is placed on all sales
and purchase orders at the time of order placement based on the forward rate applicable for the expected date of delivery where orders remain
outstanding at subsequent reporting dates the difference between that rate and the forward rate for the expected delivery date calculated at the
reporting date is accounted for separately as a derivative asset or liability
movements in the carrying value of the derivative asset or liability are recognised through the income statement
ias 39 also requires forward foreign exchange contracts to be recognised on the balance sheet at their fair value with movements in the fair value
being recognised through the income statement
ias 12 – income taxes
ias 12 “income taxes” requires that deferred tax is calculated based on the difference between the carrying amounts of assets and liabilities and
their tax bases as a result deferred tax has been calculated on each of the adjustments explained above deferred tax assets and liabilities are
recognised separately pressure technologies plc annual report and accounts 2008 47
company balance sheet
as at 27 september 2008
2008 2007
notes £’000 £’000
fixed assets
investments 4 1010 1001
current assets
debtors 5 1918 1804
cash at bank and in hand 5042 3931
6960 5735
creditors amounts falling due within one year 6 661 330
net current assets 6299 5405
net assets 7309 6406
capital and reserves
called up share capital 7 567 567
share premium account 8 5341 5341
equity – non distributable 8 9 —
profit and loss account 8 1392 498
equity shareholders funds 9 7309 6406
the notes on pages 48 to 49 form part of these financial statements
approved by the board on 8 december 2008 and signed on its behalf by
jts hayward
director 48 pressure technologies plc annual report and accounts 2008
notes to the company financial statements
1 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 under section 2304 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 £1113000 2007 £498000
investments
investments in subsidiary undertakings are stated at cost subject to provision for impairment 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 nominal value under the provisions of merger relief
pensions
the company makes contributions to a defined contribution scheme with costs being charged to the profit and loss account in the period to which
they relate
share based payments
the share option programme allows pressure technologies plc to grant options to group employees to acquire shares in pressure technologies
plc the fair value is measured at the date of granting the options and spread over the period during which the employees become unconditionally
entitled to the options the fair value of the options granted is measured using an option valuation model taking into account the terms and
conditions upon which the options were granted the amount recognised as fair value is adjusted to reflect the actual number of share options
that vest except where forfeiture is due only to share prices not achieving the threshold for vesting deferred taxation is recognised over the
vesting period
where the individuals are employed by the parent company the fair value of options granted is recognised as an employee expense with a
corresponding increase in equity where the individuals are employed by a subsidiary undertaking the fair value of options to purchase shares in
the company that have been issued to employees of subsidiary companies is recognised as an additional cost of investment by the parent
company an equal amount is credited to other equity reserves this treatment is in accordance with uitf 44 and frs 20 share based payments
2 employee costs
the only employee costs of the company are those of the directors these are detailed in note 9 to the consolidated financial statements
3 operating profit
the auditors’ remuneration for the audit and other services is disclosed in note 7 to the consolidated financial statements
4 investments
investment
in subsidiary
companies
£’000
cost
at 1 october 2007 1001
share options granted to subsidiary employees 9
at 27 september 2008 1010
the principal subsidiaries which are both 100 owned are
name country of incorporation principal activity
chesterfield pressure systems group limited “cpsg” england management company
chesterfield special cylinders limited “csc” england manufacturing
5 debtors
2008 2007
£’000 £’000
amounts falling due within one year
other debtors 6 26
prepayments and accrued income 24 31
amounts owed by group undertakings 1888 1747
1918 1804 pressure technologies plc annual report and accounts 2008 49
6 creditors amounts falling due within one year
2008 2007
£’000 £’000
trade creditors 15 20
other tax and social security 8 7
other creditors 2 —
accruals and deferred income 162 303
corporation tax 39 —
amounts owed by group undertakings 435 —
661 330
7 share capital
details of the companys authorised and issued share capital and of movements in the year are given in note 21 to the consolidated financial
statements
8 reserves
share profit share profit
equity – non premium and loss premium and loss
distributable account account account account
2008 2008 2008 2007 2007
£’000 £’000 £’000 £’000 £’000
at beginning of period — 5341 498 ——
profit for the financial period —— 1113 — 498
arising on share issue —— — 5800 —
share option costs —— 8 — —
share options granted to subsidiary employees 9— — — —
costs relating to share issue —— — 459 —
dividends —— 227 ——
at end of period 9 5341 1392 5341 498
9 reconciliation of movements in equity shareholders’ funds
2008 2007
£’000 £’000
equity shareholders’ funds at beginning of period 6406 —
profit for the financial period 1113 498
shares issued in shareforshare exchange — 367
dividends paid 227 —
share option costs 8 —
proceeds of share issue net of costs — 5541
share options granted to subsidiary employees 9 —
equity shareholders’ funds at end of period 7309 6406
design  production
wwwckdcorpcouk
tel 020 7566 0190
photography
charlie fawell
print
wwwspinoffsetcouk
printed on revive 5050this paper comes from sustainable
forests and is fully recyclable and biodegradeable
made from 50 recovered waste and 50 virgin fibre
the manufacturers of the paper and the printer are accredited
with iso 14001 environmental management system pressure technologies plc
meadowhall road
sheffield
s9 1bt
uk
telephone 44 0 114 242 7500
fax 44 0 114 242 7501
wwwpressuretechnologiescom


Summary:
 12 pressure technologies plc annual report and accounts 2008
chief executive’s statement
2008
a great year
january 2008
it was very pleasing to see csc gain
accreditation to iso140012004 in january 2008
our product is virtually 100 recyclable
but it is also good to know that we also have
a robust environmental management system
in our manufacturing facility pressure technologies plc annual report and accounts 2008 13
our strong order book and
pipeline of prospects should
ensure that we deliver another
good result in 2009
march 2008
first cylinders supplied to the canadian navy
for victoria class submarines
june 2008
further orders received from the indian
national aeronautics laboratory as part
of our involvement in the indian space
programme
it was a year of exceptional organic growth
which was recognised in our share price
performance relative to the aim market
we exited the year with a record order book
and a strong pipeline of quoted projects in all
markets this seems somewhat at odds with the
world financial climate but may be explained in
part by the markets in which we operate
in our main market the oil and gas sector there
remains a shortage of semisubmersible drilling
rigs and drill ships to develop deep water
hydrocarbon reserves this has created strong
demand for our products which started in 2005
when oil prices were averaging around 50 per
barrel if oil price is a driver of investment then
we do not yet appear to be outside the price
range for investment to be profitable nor has
there been a reduction in the number of projects
for support services projects a further indicator
of the sector’s strength is the availability of
materials in particular seamless pipe which is
used for drill pipe as well as cylinders this is
still rationed and a number of steel mills have
no available capacity in 2009
there was an increase in activity in the export
defence market we won naval build orders in
two new geographical areas france and canada
the uk defence market remains subdued
however we continued to supply significant
quantities of cylinders into military aircraft
programmes and are bidding for further
contracts on aircraft carriers and the astute
submarine programme sales to the naval
market will be significantly higher in 2009 than
at any time since 2002
all our other markets in terms of orders and
levels of quotations remain at or above historical
levels i was particularly pleased with the growth
achieved in our trailer refurbishment business
which should continue into 2009 we have our
largest forward order load for new trailers since
the management buyout in 2004
threats from market downturn do not appear
significant in the short term and i concur with
our chairman on the medium and long term
prospects for the group
looking at 2008 we had a terrific year with a
significant number of “highs” and a few missed
opportunities the key points being
what we did well
winning orders growing sales and ending the
year with a record £23 million order book sales
at our operating company chesterfield special
cylinders increased by 56 to £237 million
2007 £151 million with growth being achieved
in all our major markets
the increase in sales was predominantly in
ultralarge cylinders and operations management
was highly effective improving line efficiency
as a consequence gross profit increased by
91 after allowing for year on year net exchange
gains of £05 million
manufacturing support was improved through
the addition of a production planner and
implementation of finite capacity scheduling
software
building relationships with a range of business
partners and organisations which will benefit
the growth of the business in the future
getting to a position where we could launch
chesterfield biogas see below
where we could have done better
we did not have sufficient resources to grow
the small cylinder business due to the focus
on improving throughput on the ultralarge
production line and sales resources were
diverted onto the biogas project see below
this will be addressed in 2009 by the introduction
of a separately managed business unit for small
cylinders which will have its own dedicated
operations management and sales staff 14 pressure technologies plc annual report and accounts 2008
chief executive’s statement
continued
2008
a great year
july 2008
chesterfield biogas formed in preparation
for the launch of the new division in
november 2008
stock levels were too high as a result of holding
stock to cover poor delivery by suppliers and the
insistence by some customers that we source
certain fittings from their nominated suppliers
we are working very closely with suppliers to
improve the reliability of deliveries and our
customers have now given us permission to
resource fittings from cost effective uk based
suppliers
operational review
sales and marketing
this was a very busy year for philip redfern and
his team at csc the plan to pursue growth in
the uk aggressively with the appointment of an
additional salesman focused solely on this
market was put on hold as the new salesman
was moved to our new biogas project significant
opportunities to grow the customer base in our
home market across the full range of
commercial products and services remain and a
modified version of this plan incorporating the
new business unit structure will be relaunched
as soon as we have recruited another salesman
our international sales development manager
was very active in india the far east and china
during the year and we are actively quoting for
projects in niche sectors where higher pressures
product integrity and design capability are
essential
as reported above the export defence market
was very rewarding it was particularly satisfying
to win the contract for high pressure cylinders on
the barracuda submarine after thirty years
endeavouring to gain entry to the french defence
sector  we will continue to target all naval build
programmes worldwide as our design and
development capability in this sector is
unrivalled medium term prospects for the uk
look promising and we intend to lodge innovative
bids that highlight our supply chain expertise
operations
the challenges of the £86 million increase in
revenues should not be underestimated
operations management at csc led by john
brown and philip catton met the challenges
very successfully manufacturing employees
increased from 33 at the beginning of the year to
52 by year end training was not neglected and
we successfully ran induction courses and an
nvq level 2 course given the success of our
apprenticeship scheme we decided to employ
three new apprentices in september 2008
an experienced production planner was
employed and investment in finite capacity
scheduling software was made to ensure on
time delivery and manage production flow more
effectively by the year end overdue orders were
reduced to very low levels
capital investment was once again focused on
improving manufacturing efficiency and
increasing output this included changing the
layout of a number of areas within ultralarge
manufacturing to improve product flow and the
installation of new endheating furnaces for the
ultralarge forge which halved gas usage and
improved product quality capital investment in
2009 will again be in excess of twice the
depreciation level
business units will be introduced in 2009 to
deliver improvements in both the ultralarge and
the small cylinder areas in ultralarge there will
be a concerted effort to eliminate waste and
further improve process flow and we are
currently working with the manufacturing
advisory service on a project to achieve this
in small cylinders the focus will be on growing
the business
technical and development
maintaining our technical and design capability
continued to pay dividends as many of our
customers no longer have high pressure cylinder
design expertise in their organisations the
additional designer we employed gives us greater
scope for both product and tooling development
we are now in the process of recruiting a
graduate trainee into the design function
the csc technical director alan harding is
actively engaged in the development of new
iso standards for ultralarge seamless steel
cylinders and ultralarge composite cylinders
to assist with this and other areas of development
we have engaged dr rohitan roy irani former
global technical authority cylinders for
the boc group as a consultant roy has a
lifetime’s experience in the design and applications
of both high and low pressure cylinders including
cryogenic applications
research and development continued on a range
of products and services and we now have closer
links with the sheffield advanced manufacturing
research centre and the two sheffield universities
csc is also involved in the special metals
forums nuclear supply chain initiative the key
areas for development in 2008 are
the development of inservice field testing of
cylinders where we have recently procured key
equipment and recruited staff with the relevant
nondestructive testing expertise
the development of ultralarge composite
cylinders
the development of materials and coatings for
naval applications pressure technologies plc annual report and accounts 2008 15
corporate social responsibility
the management of health and safety issues
remains a management priority across the
business health and safety is an agenda item at
both the pressure technologies and csc boards
it was disappointing to see reportable accidents
increase to three this year 2007 2 target 0
none of these injuries were lifethreatening
additional capital expenditure to improve
materials handling is planned for 2009  the
major project will improve loading and unloading
of the ultralarge forge
it was very pleasing to see csc gain accreditation
to iso140012004 in january 2008 our product is
virtually 100 recyclable but it is also good to
know that we also have a robust environmental
management system in our manufacturing
facility once again we had no environmental
incidents in the year 
csc gives donations of £250 per month to
charity these donations are administered by an
employee committee the aim of these donations
is twofold to help small mainly local charities
and to raise employee awareness of and
participation in charitable giving
chesterfield biogas
during the year we were actively engaged in
preparing the group’s entry to a new market
on 10 november 2008 we announced the
establishment of a new operating division
chesterfield biogas following the signing of a
cooperation agreement with greenlane
®
biogas
limited the world leader in biogas upgrading
from raw biogas to vehicle quality fuel
under the agreement which gives pressure
technologies exclusive rights to market greenlane
®
equipment in the uk and eire chesterfield
biogas will provide turnkey solutions for the
cleaning storage and dispensing of biomethane
produced from waste water treatment and
anaerobic digestion of organic waste we have a
long relationship with flotech the owners of
greenlane
®
biogas as we have worked together
on a number of biogas projects in sweden over
the last decade this is a lowrisk tried and
tested biomethane fuel solution for the uk
market our joint skills and experience in this
field mean that we are able to deliver an effective
and successful system when others can only
offer prototypes
the uk market for biomethane has to date
remained untapped largely due to a limited
availability of methanefuelled 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 righthand 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
a strong pipeline of projects is developing but
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
acquisitions
we have a target list of companies that match
our criteria of niche high added value companies
in pressure containment and control markets
and we are actively in discussions with a number
of companies we now have more time to spend
working on delivering acquisitions and intend to
employ additional resources to assist with this
process buying private companies is time
consuming and about relationships time spent
getting this right is essential to the success of
the programme and we will not buy in haste
in summary 2008 was another successful year
for the group delivering solid growth and
shareholder value our strong order book and
pipeline of prospects should ensure that we
deliver another good result in 2009
john hayward
chief executive
8 december 2008
august 2008
record order intake of over £6 million
in one month
september 2008
order placed by dcn for the supply of
cylinders for the french navy’s barracuda
class submarines