Trading continues in line with management expectations and the Group is in a strong financial position, following the successful £7.5 million fundraising completed in December 2020.
Chesterfield Special Cylinders (CSC)
With a strong and increasingly diverse order book, CSC continues to make good progress on major contracts for defence, industrial and nuclear energy customers.
Momentum has gathered further in the fast-developing hydrogen energy market, with refuelling station contract wins of over £1.0 million secured since December 2020 from new and established customers. The pipeline of hydrogen opportunities continues to grow and the visibility of increasing future demand is improving through the development of deeper customer relationships, underpinning our outlook for strong and sustainable growth in this exciting sector. Investment in our production capacity and engineering capability to support hydrogen growth, utilising fundraising proceeds, will commence in the second half of this year.
Whilst Covid-19 travel restrictions have disrupted Integrity Management deployments, several UK and overseas projects were completed in the first half of the year. A steady recovery in deployments is expected as travel restrictions are lifted. Recruitment and investment in specialist equipment to support continued growth is progressing in line with investment plans.
Precision Machined Components (PMC)
As expected, the impact of the pandemic on the oil and gas market continued through the first half of the year, with record low order intake levels. Restructuring, site consolidation and cost saving measures completed over the past year have reduced the divisional cost base by around 40%, while operational improvement projects have been accelerated to support efficiency gains and margin improvement to underpin service levels for our OEM customers.
Further progress has been made with the diversification of customers and product scope and with the development of long-term supply agreements with key customers. We also continue to appraise opportunities to diversify our specialist engineering capability into other sectors.
Our priority remains to protect core capability, while conserving cash and recovering profitability, as we await a recovery in market conditions. The outlook for the oil and gas market remains uncertain, but we have been encouraged by strengthening oil prices and the steadily improving enquiry levels seen since early February and we expect order intake in March to reach its highest level since July 2020.
The Group's strategy remains focused on the continued development and growth of both divisions. The Board is encouraged by the progress being made and expects performance for the full year to be in line with management expectations.
Notice of Results
On 15 June 2021, the Group will announce its interim results for the 26 weeks to 3 April 2021.