FY25: EBITDA back in the black, cash rebuilt, outlook turns upbeat
Chesterfield Special Cylinders Holdings (AIM: CSC) has posted a clean turnaround in FY25. Revenue rose 12% to £16.6 million, gross margin expanded to 39%, and Adjusted EBITDA swung to a £0.8 million profit from a £0.9 million loss. The balance sheet has been reset too: cash closed at £2.1 million with nil borrowings, helped by the October 2024 sale of the PMC division. Management says earnings came in ahead of market expectations and enters FY26 with a robust defence order book and growing hydrogen pipeline.
There is still a statutory loss before tax of £0.8 million, but the direction of travel is positive, and the second half did the heavy lifting. Contract revenues in FY26 are “heavily” second-half weighted, so timing will matter again.
Key numbers investors need to see
| Metric | FY25 | FY24 | Why it matters |
|---|---|---|---|
| Revenue | £16.6m | £14.8m | Back to growth, driven by defence and lifecycle services |
| Gross profit (margin) | £6.4m (39%) | £4.9m (33%) | Margin rebuild shows pricing and mix improving |
| Adjusted EBITDA | £0.8m | £(0.9)m | Operational profitability restored |
| Adjusted operating profit | £43,000 | £(1.7)m | Near breakeven at operating level |
| Reported loss before tax | £(0.8)m | £(2.7)m | Loss narrowing |
| Basic loss per share | 1.6p | 6.1p | Improving trend |
| Adjusted basic loss per share | 0.0p | 4.7p | Near breakeven on an adjusted basis |
| Cash | £2.1m | £0.1m | Balance sheet flexibility restored |
| Borrowings | Nil | £1.0m | Debt repaid post-PMC sale |
| Order intake | £23.4m | £13.1m | Strong demand underpinning visibility |
| Order book (period end) | £16.3m | £9.5m | Good FY26 coverage |
| Defence revenue | £12.8m | £11.1m | 15% growth, overseas contracts key |
| Hydrogen revenue | £2.6m | £1.7m | Highest on record |
| Integrity Management revenue | £4.8m | £2.4m | Record year for lifecycle services |
Definitions: Adjusted EBITDA is earnings before interest, tax, depreciation, amortisation and exceptional costs. Integrity Management is CSC’s in-situ lifecycle support service that inspects, tests and recertifies safety-critical pressure systems.
What drove the improvement: defence, hydrogen and lifecycle services
Defence revenue up 15% with broadening overseas exposure
Defence delivered £12.8 million, up from £11.1 million, as overseas contracts offset the wind-down in some UK newbuild milestones. Order intake in defence more than doubled to £19.1 million, taking the defence order book to £14.6 million. Notable programmes span the Royal Australian, Royal Canadian, US and Spanish navies, plus strong UK Integrity Management work.
Importantly, management points to further overseas defence awards expected in Q1 2026. Over the medium term, AUKUS SSN-A activity is expected from FY27, with opportunities in the US submarine programme from FY28.
Hydrogen momentum despite UK policy delays
Hydrogen revenue hit a record £2.6 million, reflecting in-factory lifecycle work and initial milestones for the bp Aberdeen Hydrogen Hub. The UK’s Hydrogen Allocation Rounds (HAR) remain the key catalyst: ten HAR1 projects approved and 27 HAR2 shortlisted. A major HAR1 award slipped into Q1 2026, and first HAR2 awards are expected within FY26 for FY27 delivery.
CSC also signed a cooperation agreement with a leading Type 4 composite cylinder manufacturer to supply lightweight hydrogen road trailers, targeting growing UK demand from FY27. That broadens product capability from Type 1 steel into composite trailer solutions.
Integrity Management set a new high
Lifecycle services revenue doubled to a record £4.8 million, driven by a peak in UK naval deployments. CSC is in advanced discussions with several European navies, with European deployments expected during FY26. This is a high-value, recurring service line that smooths lumpier newbuild revenue cycles.
Order book strength and what the FY26–FY28 runway looks like
The order book closed at £16.3 million, backed by £23.4 million of FY25 intake. Management guides to “significant earnings growth” in FY26, weighted to H2. Beyond that, they see further revenue and earnings growth from FY27 as UK and overseas defence newbuilds expand and UK hydrogen projects finally scale up.
- FY26 underpinned by overseas defence contracts secured in FY24/FY25 and UK hydrogen HAR1 progress.
- FY27–FY29: SSN-A (AUKUS) milestones expected from FY27; potential US submarine supply from FY28 following qualification, which is targeted to complete in Q1 2027.
- Hydrogen: HAR1 deliveries to complete through FY27, HAR2 through to FY29, with road trailer demand rising from FY27.
Strategy to 2028: what management is aiming to deliver
CSC reconfirms its mid-term targets first set out in 2024:
- Revenue over £30 million.
- Double high-value overseas defence sales, supporting a 40% rise in overall defence revenue.
- Hydrogen to 30% of total revenue via static storage and trailers.
- Double Integrity Management service revenue; maintain lifecycle services at 30% of revenue.
- Sustainable Adjusted EBITDA margins above 15% before central costs.
FY25 progress included the PMC divestment (no further cash consideration expected), overseas defence wins, record hydrogen revenue, and the Aberdeen Hub contract. Central costs were reduced to £0.8 million from £1.7 million, helping margins.
Risks, sensitivities and how to track them
- Contract timing risk – FY26 revenues are “heavily” H2 weighted; a slip would defer earnings.
- Customer concentration – three customers were 52.4% of revenue; broadening the base is a work-in-progress.
- Hydrogen policy timing – HAR awards are moving, though commitment remains supportive; one major HAR1 award now expected Q1 2026.
- Supply chain – dependency on a key European seamless steel tube supplier remains a factor.
- Cyber risk – identified as increased in FY25, albeit mitigated by Cyber Essentials Plus accreditation and upgrades.
On the flip side, the balance sheet is much stronger: cash of £2.1 million, nil borrowings, and net cash of £1.8 million including leases. That gives room to manage phasing and working capital as the order book converts.
Why this update matters for investors
CSC has moved from stabilisation to execution. The company exited FY25 with positive Adjusted EBITDA, improved gross margins, and a reset balance sheet after the £4.4 million PMC sale proceeds. Defence exposure is broadening overseas, while the hydrogen business is finally starting to contribute with concrete UK catalysts in FY26 and a road trailer push from FY27.
Negatives are clear: statutory losses persist, H2 weighting introduces delivery risk, and customer concentration remains elevated. But with an order book of £16.3 million, defence order intake more than doubled, and lifecycle services at record levels, the operational platform looks better set than it has for several years.
My take: a credible turnaround with near-term catalysts
I view FY25 as a credible pivot. Margin gains, cost discipline and cash generation are all moving the right way. The defence pipeline feels tangible, spanning Australia, Canada, Spain and the US qualification path, while hydrogen has visible UK policy support through HAR1/HAR2 despite delays.
Key near-term watch items: the Q1 2026 HAR1 award, further defence wins in Q1 2026, and confirmation that H2-weighted FY26 deliveries land as planned. If those fall into place, CSC should move closer to its mid-term goals and shift investor focus from survival to scale and margin expansion.
Dividend remains off the table for now (not disclosed), which is sensible while the company consolidates the turnaround and invests in growth.
