Pressure Technologies PLC on Tuesday said that the results posted for its financial years 2019, 2020, 2021 and 2022 will be adjusted, following advice from its auditor Grant Thornton UK LLP.

The Sheffield, England-based group of specialist precision engineering businesses said an accounting treatment it has applied since financial year 2019 for long-term defence contracts within its Chesterfield Special Cylinders unit is not in compliance with IFRS15, ‘which requires that all costs incurred in the period relating to the contract should be immediately expensed’.

IFRS stands for international financial reporting standards, with IFRS15 effective from 2018.

Pressure said that, since financial 2019, it recognised revenue for these specific defence contracts using an ‘output’ methodology under IFRS 15, namely ‘revenue from contracts with customers’, ‘with costs being accrued to achieve a uniform profit margin throughout the multi-year life of the contracts, resulting in cost deferrals at financial period ends. Whilst this cost treatment impacted the timing of profit recognition between financial periods, it had no impact on either the total profitability of the contracts over their entire lives, nor the quantum or timing of cash flows.

Pressure Technology said that due to the lack of compliance of its reporting practice since financial 2019, the results of financial 2019 to including 2022 will be adjusted. This means a £1.2 million increase to its financial 2022 operating loss, which it has yet to report. In financial 2021, it posted an operating loss of £745,000.

Pressure Technologies said it is unlikely that it will publish its annual report before the annual general meeting at the end of this month. A year ago in February, it released its annual results for financial 2021, which ended on October 2, 2021. The company said it will suspend its shares if it cannot publish its financial 2022 results before the end of March.

However, it noted that the accounting change will increase its operating profit in financial years 2023 and 2024. It added that it continues to foresee return to profit and cash generation in financial 2023.

Pressure Technologies shares fell 6.9% to 38.65 pence each in London on Tuesday morning.

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