TIDMPOS
RNS Number : 4492T
Plexus Holdings Plc
30 March 2016
Plexus Holdings PLC / Index: AIM / Epic: POS / Sector: Oil
equipment & services
30 March 2016
Plexus Holdings plc ('Plexus' or 'the Group')
Interim Results for the six months ended 31 December 2015
Plexus Holdings plc, the AIM quoted oil and gas engineering
services business and owner of the proprietary POS-GRIP(R)
friction-grip method of wellhead engineering, announces its interim
results for the six months to 31 December 2015.
Financial Results
-- Sales revenue GBP6.76m (2014: GBP13.51m)
-- EBITDA (GBP1.23m) (2014: GBP4.16m)
-- Loss after tax (GBP3.5m) (2014: GBP1.97m)
-- Basic earnings per share (3.93p) (2014: 2.32p)
-- Net cash of GBP4.4m
-- While the Company remains committed to distributing dividends
to its shareholders, the Directors believe that in the current low
oil price environment and resulting reduction in exploration
drilling activity it is prudent to suspend the payment of
dividends. The Company will look to reinstate the dividend at the
earliest opportunity.
Overview
-- Sharp contraction in exploration activity following
retrenchment in oil prices, which reached a thirteen year low of c.
US$27 per barrel in January 2016, has impacted the Company's core
business of renting its proprietary POS-GRIP(R) friction-grip
exploration wellhead equipment to major international oil and gas
customers around the world resulting in a c.50% reduction in
Plexus' sales revenue
-- Impact particularly felt in the UK North Sea where it has
been reported that investment is expected to fall by almost 90%
with fewer exploration wells anticipated than at any time since
data started being collected in the late 1970's
-- Recent signs of oil price recovery together with political
and environmental pressures to accelerate move away from coal to
gas, is encouraging for Plexus' core area of activity
-- Strategy to build on proven technology reputation, which has
resulted in Plexus establishing a dominant position in the North
Sea, and expand geographic reach is bearing fruit:
o First major licence agreement signed with Yantai Jereh
Oilfield Services Group Co., Ltd ('Jereh') in China to facilitate
the rental, sale, and manufacture of Plexus' wellhead equipment to
supply the major Chinese, wider Asian, Brazilian, Indian and Middle
Eastern oil and gas markets
o Awarded local Petronas licence to manufacture and supply
Plexus' POS-GRIP wellhead equipment in Malaysia through Plexus
Products (Asia) Sdn Bhd ('PPA'), the Malaysian company set up with
a local partner as part of an Asian business hub with reach to the
Australian, Brunei, Indonesian, Malaysian, Thai, and Singaporean
markets
o Post period end: exclusive licence agreement signed with two
independent Russian oil and gas equipment manufacturers, LLC Gusar
(OOO Gusar) Ltd ('Gusar'), and CJSC Konar (ZAO Konar) ('Konar') for
the rental, manufacture and servicing of Plexus' jack-up drilling
wellhead exploration equipment into the Russian Federation and the
other CIS states oil and gas markets
-- Significant progress made in new product innovation in line
with strategy to expand the family of equipment based on Plexus'
POS-GRIP technology:
o Ground breaking Python(R) Subsea Wellhead launched in
September 2015 as a new best in class and safest standard for the
multi-billion dollar subsea and volume surface production market -
supported by BG, Royal Dutch Shell, Wintershall, Maersk, Total,
Tullow Oil, eni, Senergy, and Oil States Industries Inc. - initial
prototype order now being sought
o Collaboration with Aquaterra to develop HP/HT dual marine
risers to provide a safer, technically superior and cost efficient
solution for use on jack-up rigs
o Tersus-PCT HP/HT Tie-Back connector product and its unique
operational and cost saving advantages now beginning to be marketed
to the industry
-- Research and Development ('R&D') spend in the period,
excluding costs of building test fixtures, totalled GBP1.3m
compared to GBP1.4m in the same period last year reflecting Plexus'
ongoing innovative and proprietary technology driven nature
focus
-- Capital investment in additional POS-GRIP rental wellhead
assets for exploration was GBP1.33m, as compared to H1 2015's
GBP1.35m - the strong inventory build over recent years is expected
to reduce the need for significant capital investment in rental
wellhead fleet over the course of the next upturn, which has
positive implications for cash flow generation and speed of
response to market demand
-- Post period end activity included two purchase orders both of
which were outside of the North Sea:
o US$0.6m initial well contract with new customer Masirah Oil
Limited ('Masirah'), which is majority owned by leading technology
driven oil and gas company REX International Holdings Limited
(REXIH: Singapore) for oil exploration offshore Oman - represents a
new country in a new region
o GBP0.9m purchase order with Talisman Malaysia Limited
('Talisman'), which is a part of REPSOL Group (MC: REP), the
integrated global energy group, for an exploration well offshore
Malaysia
Corporate
-- Growing global awareness of both Plexus and the safety and
operational benefits of POS-GRIP technology not only in relation to
organic exploration drilling activities, but also in relation to
production and subsea applications, as evidenced by the securing of
Licensing Agreements covering China and Russia
-- Subscription by Jereh China in new shares of the Company,
representing 5% of the new issued share capital of Plexus for c.
GBP8m net of expenses
-- Board changes:
o Appointment of Ms Kunming Liu to the Board as a Non-Executive
Director as part of licence and share subscription agreement with
Jereh - Ms Liu replaces Christopher Fraser
-- Bank facilities with the Bank of Scotland currently comprise
a three year term GBP5m revolving credit facility renewable
September 2016 and a GBP1m overdraft payable on demand - in
addition the Company has a reducing five year GBP1.5m term loan
(with a current balance of GBP1.125m) which was put in place in
September 2014 to part fund the purchase of the additional facility
in Aberdeen.
Plexus' Chief Executive Ben van Bilderbeek said,
"Like all companies operating in the oil and gas sector, the
rapid and sharp decline seen in the oil price over the last
eighteen months, and particularly since late 2015, has
significantly impacted our first half performance and current
outlook as previously reported to the market. Despite this we
remain positive for the future as, unlike many other oil and gas
services and engineering companies, Plexus is proprietary IP driven
thanks to our patent protected POS-GRIP technology providing the
heart of our best in class wellhead equipment. This sets us apart
from all of our competitors who use conventional wellhead
technology that cannot deliver our unique standard of safety and
time savings benefits. Having successfully deployed our wellhead
equipment in over 400 wells around the world, we believe that the
superior performance, reliability and safety of our equipment is
now proven. As a result, we are confident that when exploration
activity reignites we will be well placed to pick up where we left
off before the downturn took hold. The basis of such confidence is
perhaps best illustrated by the GBP3.3m Total E&P Norge AS
Solaris exploration well contract win in June 2015 for a
technically challenging Ultra High Pressure High Temperature well
offshore Norway.
"I was pleased to see that the Chancellor in this month's budget
announced a number of tax cuts designed to increase the
attractiveness of the North Sea for operators. Although I would
have liked to have seen more incentives specifically targeted at
encouraging exploration of the sort that work so effectively in
Norway, it was still encouraging to see the abolishment of the 17%
petroleum revenue tax paid by older oil and gas fields, as well as
a halving of the supplementary charge imposed on oil producers from
20% to 10%. Oil and Gas UK welcomed these measures and said that
the new measures would "modernise" the tax regime and make the
North Sea more competitive and improve investor confidence, and
confirmed that the new tax rate is now back to 2003 levels.
"We are confident that Plexus will enter the next upswing in a
much stronger position than has been the case in previous growth
cycles. We have a full suite of rental equipment, reducing the need
to invest heavily in additional inventory in the medium term; we
have an expanded product base following the launch of our Python
Subsea Wellhead, Tersus-PCT HPHT Tie-back Connector, and POS-SET
Connector(TM) which are targeting important markets outside of our
traditional organic jack-up exploration business; we have a growing
reputation around the globe for providing best in class wellhead
equipment; we have secured licence agreements with major local
partners to enter the huge Chinese and Russian volume production
markets and we have established a hub in Singapore and Malaysia to
service Petronas in the important wider Asian markets.
(MORE TO FOLLOW) Dow Jones Newswires
March 30, 2016 02:00 ET (06:00 GMT)
"Encouragingly, our initiatives to expand our international
reach are already starting to bear fruit, notably post period end
when our Malaysian JV secured a first order for a well in Malaysia
and we were also awarded our first orders in Oman, a new territory
for Plexus. These latest initiatives, along with the potentially
transformational licencing agreements we have signed in China and
Russia during the last six months, ought to be seen in the context
of the natural progression in Plexus' development, as we use our
dominant position in the North Sea as a platform from which to
increase our global footprint. Licensing agreements are often used
in the technology sector to break into new markets as they allow
companies to firstly expand without having to invest capital in
manufacturing, distribution and sales infrastructure and secondly
to secure local partners with established relationships in their
respective markets. We believe that the licensing model fits well
with our global strategy and we will continue to pursue similar
opportunities in other areas of the world, such as the Gulf of
Mexico.
"Whilst I believe that the medium to long term prospects of the
Company have never been better, we first have to navigate the
unprecedented retrenchment seen in the oil price and the effect
this has had on our traditional North Sea market and elsewhere.
Such developments are for a greater part geo-political in nature
and therefore difficult to anticipate and influence, but what is
clear from a number of reports is that demand for hydrocarbons will
continue to increase for many years to come and we do not believe
that OPEC and other major producers will be content with such low
oil prices for an extended period.
"Faced with the current climate of lower orders and lower
revenues, we like many other companies are of course not simply
waiting for a pick-up in exploration activity to return to positive
cash flow. We have embarked on a series of major headcount and cost
reduction measures designed to ensure we come through this cycle
much leaner but still in a strong position to capitalise on the
opportunities that I believe will present themselves as deferred
and new drilling projects come back on stream. These include
targeting major opportunities with national oil companies ('NOCs')
with whom up until now we have had only limited interaction. NOCs
have different business models and profiles to international oil
companies ('IOCs'), which have to date provided the bulk of our
business, and it is noteworthy that of the US$400 billion or so
projects that have so far fallen victim to the oil price since late
2014, the majority are those operated by IOCs. In tandem with
exploring new avenues of growth, the comprehensive review of our
cost base has been implemented post period end, and it is important
to note that this has been structured so as not to be totally at
the expense of our long-held commitment to essential R&D, which
we recognise as being key to the long term success of the Company.
Similarly we are also mindful to safeguard our core competencies to
ensure that when growth returns, we are in a strong position to
respond quickly to operators' needs.
"It is certainly our view that it is a matter of 'when'
exploration activity picks up again rather than 'if'. Along with
the wider industry, we believe the current downturn is very much a
cyclical one: put simply supply is outstripping demand driven by a
combination of geo-political factors and technical innovation. A
variety of reasons have been put forward for the current state of
play including the US shale revolution and Saudi Arabia's switch in
priorities from protecting prices to protecting market share.
Predicting how long these market dynamics will persist is not for
me to do. However, with demand for energy forecast to rise strongly
over the next few decades as emerging nations continue to move up
the development curve, fossil fuels will be required to satisfy the
lion's share of this growth. Importantly this does not have to be
incompatible with tackling climate change. For example, by
increasing the proportion of cleaner natural gas in the fossil fuel
mix at the expense of dirtier coal, forecast demand growth can be
satisfied without a significant acceleration in global warming, as
CO2 emissions from natural gas are around half of those of coal and
25% less than diesel and gasoline. Such considerations are feeding
directly into the economy, for example JPMorgan Chase recently
announced that it is to stop direct financing of all new coal mines
and new coal power plants in rich countries in the wake of the
global climate accord agreed in Paris last December. The US bank
has included coal projects alongside child labour on a list of
"prohibited transactions" in the latest version of its
environmental and social policy published on its website.
"On the supply side, the oil and gas industry is not standing
still but is working hard to realign itself to today's markets.
Across the supply chain, cost savings are being sought by operators
which in aggregate will lower the industry's break even oil price.
As Royal Dutch Shell's CEO, Ben van Beurden, was recently quoted as
saying "The lower the oil prices go, the lower also. . . the cost
of establishing supply chains and in the end the cost of producing
the oil...So the break-even price will come down actually with
lower oil prices." Such cost saving sentiments are positive for
Plexus and in particular our latest POS-GRIP product, the Python
Subsea wellhead, which we launched in Q3 2015 as a new best in
class and safest standard. We developed Python as part of a Joint
Industry Project requested and supported by major international oil
companies including BG, eni, Maersk, Shell and Total. Thanks to
Python's greater reliability and performance, fewer installation
trips are required which, in terms of savings for operators, have
been independently quantified at between US$1-2m of time costs per
trip for the operator depending on water depth. This means that
even at today's lower rig rates savings running into millions of
dollars per well can be achieved which is a multiple of the capital
cost of the equipment itself. We are therefore highly confident
that Python can make a significant contribution to lowering the
break-even price of oil and gas whilst significantly increasing
safety and sealing capabilities. With this in mind, we are pursuing
discussions with operators for a trial of Python out in the
field.
"I am encouraged by tentative signs that OPEC and non-OPEC
producers are engaging in constructive dialogue, culminating in the
recent announcement by Saudi Arabia and Russia to freeze production
at January 2016 levels. Together with the favourable medium to long
term demand profile for energy, the ingredients are in place for
supply and demand to return to a much healthier equilibrium level.
Needless to say we are looking forward to the next upswing and in
the meantime would like to thank our customers, shareholders and
staff for their ongoing support.
"Finally I would like to welcome Jereh, China as a new partner,
licensee and shareholder, and also Ms Kunming Liu, our new
non-executive director to the Board, and look forward to pursuing
new significant commercial business opportunities across the globe
with both Jereh, and also Gusar and Konar our new Russian licensees
in the future."
For further information please visit www.posgrip.com or
contact:
Ben van Bilderbeek Plexus Holdings PLC Tel: 020 7795
6890
Graham Stevens Plexus Holdings PLC Tel: 020 7795
6890
Nick Tulloch Cenkos Securities Tel: 0131 220
PLC 9772
Derrick Lee Cenkos Securities Tel: 0131 220
PLC 9100
Frank Buhagiar St Brides Partners Tel: 020 7236
Ltd 1177
Isabel de Salis St Brides Partners Tel: 020 7236
Ltd 1177
Chairman's Statement
Business Progress
December 2015 marked Plexus' tenth anniversary as a publicly
traded company. Ten years ago we came to the London Stock
Exchange's AIM Market with POS-GRIP, our revolutionary patent
protected friction-grip method of engineering technology for oil
and gas field wellheads and connectors. At the time we said our
technology, which involves deforming one tubular member against
another within the elastic range of the steel to effect gripping
and sealing, would set a new standard for wellhead equipment in
terms of performance, reliability and safety. Initially we served
the North Sea with standard pressure rental wellhead equipment. Ten
years on, and after being successfully used in over 400 wells by a
wide range of blue chip international and national oil company
operators, Plexus has established itself as a new standard of
wellhead, particularly for the most challenging HP/HT wells in the
North Sea and beyond where safety and metal to metal sealing
integrity is so important. Our strategy now is to accelerate our
focus on markets outside of the North Sea, and not just for
exploration wellhead applications. Importantly we have now reached
the stage where we can uniquely claim to be able to match the
testing and performance standards that apply to premium couplings -
a true industry first and something that we say cannot be matched
by conventional technology.
(MORE TO FOLLOW) Dow Jones Newswires
March 30, 2016 02:00 ET (06:00 GMT)
A great deal of hard work and significant R&D and capex
investment has gone into getting to where we are today and our job
has been made easier thanks to the best in class properties of our
simple proprietary POS-GRIP technology, which offers operators not
only superior operational performance and safety, but also
significant time and cost savings. In our view it is this
compelling combination that has seen our wellheads gain an almost
100% share of the HP/HT North Sea market. Conversely, being the
North Sea's dominant supplier in 'jack-up exploration drilling'
means that our order book was never going to be immune to the
effects of the collapse in the oil price, specifically the sharp
contraction in exploration activity seen across major hydrocarbon
jurisdictions around the world, and in particular the North Sea
where the UK's unfavourable oil and gas tax regime makes it one of
the most expensive areas to operate in. As detailed in a trading
update issued in January 2016, this has had a direct impact on our
core wellhead rental business and is reflected in our first half
numbers reported today, which are in line with market
expectations.
While our business has been impacted by the falling oil price,
the outcome would have been more acutely felt but for the efforts
we have made in recent years to diversify our geographic exposure
into other regions which have different cost and pricing regimes to
the North Sea. In tandem with this, we have been working to expand
our family of POS-GRIP products including the POS-SET Connector
which has the ability to play an important role in the expanding
decommissioning market. The unique benefits of POS-GRIP allow us to
offer a number of key features that have never before been
available to operators, particularly for HP/HT wells, including
improved technical performance, improved integrity of metal seals,
significant installation time savings, reduced operating costs, no
use of wear bushings or lock rings and enhanced safety. Thanks to
our pioneering technology, Plexus is very much a proprietary IP led
company, which sets us apart from the sector. While cycles will
come and go, our IP will not: we therefore entered this cyclical
downturn as the only company of its kind, similarly we will come
out of it as the only unique POS-GRIP wellhead equipment
company.
From the outset, it was always our intention to first prove the
superior qualities of our POS-GRIP technology in the North Sea, one
of the harshest and most expensive operating environments in the
world, and then use this as a springboard from which to expand into
other targeted geographies. We are doing precisely this, as
evidenced by our entry into major petroleum provinces such as Asia
and Russia. In Asia, we announced the formation of a new Malaysian
Joint Venture ('JV') company, Plexus Products (Asia) Sdn Bhd
('PPA'), with a local oil and gas partner. This JV forms a key part
of our strategy to create a fully operational Asian business hub.
Since then we have secured, through our Malaysian JV, a local
PETRONAS licence to manufacture and supply POS-GRIP wellhead
equipment in Malaysia and post period end, we announced our first
order worth an estimated GBP0.9 million with Talisman Energy. We
are confident this will prove to be the first of many orders
secured via our JV in these markets.
Furthermore, we significantly expanded our Asian footprint
during the six months under review after we entered into a licence
agreement with Yantai Jereh Oilfield Services Group Co., Ltd
('Jereh'), a world-class supplier of oil and gas field equipment
and services, to manufacture and supply Plexus' wellhead equipment
into the major Chinese, wider Asian, Brazilian, Indian and Middle
Eastern oil and gas markets. Under the agreement, Jereh is able to
utilise Plexus' trademarks, patents, technology, know-how,
engineering, standards and other intellectual property and
technical services. In return, Plexus is entitled to a range of
royalty percentages from Jereh in respect of the rental and sale of
different POS-GRIP wellhead equipment applications made available
under the Licence Agreement. Inevitably Jereh has also been
impacted by the wider China and global oil and gas slowdown but we
are confident that we can work together to successfully pursue
commercial opportunities in the region and build on the initial
Shell China well that we were contracted in 2014 to supply.
For a company of our size, licensing agreements can fast track
our entry into major global markets by allowing us to partner with
established local manufacturers and oil service providers who have
existing commercial relationships with key national and
international oil companies. In addition, they allow us to expand
our geographic reach without having to commit Plexus' capital into
expensive manufacturing facilities and sales and distribution
infrastructure. We are working on developing similar business
opportunities in Russia and the Gulf of Mexico and with this in
mind, we entered into a second licensing agreement post period end,
this time to enter the important Russian Federation market. We have
agreed to partner with two independent Russian oil and gas
equipment manufacturers Gusar and Konar, who will rent, manufacture
and service our jack-up drilling wellhead exploration equipment
into the Russian Federation and the other CIS states.
We have long held the view that Russia is a highly attractive
market for Plexus and the numbers speak for themselves. In 2014 the
EIA ranked Russia the third largest producer of petroleum and other
liquids and estimated it holds almost a quarter of the world's
proven natural gas reserves and 5% of global crude reserves.
Importantly, with gas forming the lion's share of the Russian
energy sector and our equipment being ideally suited to the high
pressures and high temperatures associated with gas wells, this is
a key target market for us, and we will be actively pursuing
additional opportunities with our new partners in the region.
It is not just in Russia where gas represents a huge opportunity
for Plexus. It has been widely documented that within the fossil
fuel family, gas ranks as the cleanest in terms of global warming
and carbon dioxide ('CO2') emissions. Different fuels emit
different amounts of CO2 in relation to the energy they produce
when burned. According to the EIA, on a CO2 emitted per unit of
energy output or heat content basis coal at 228.6 pounds of CO2
emitted per million British thermal units (Btu) of energy is the
dirtiest; diesel fuel and heating oil emit 161.3 pounds of CO2; and
gasoline 157.2 pounds. By contrast natural gas emits 117 pounds of
CO2. As a result there is a growing view among industrialised
nations and respected climate change observers that a 'dash for
gas' can play a major role in preventing a breach of a 2 degree
increase in global temperatures, a level which scientists believe
could lead to irreversible climate change. This was a key theme in
the BP Energy Outlook 2016 edition: BP's chief economist, Spencer
Dale, said "We expect the mix of fuels to change quite
significantly over the next 20 years, gas to grow quickly, also
strong growth in renewables like solar and wind." As major
economies around the world look to move towards gas and away from
coal, gas exploration will need to pick up. This is very
encouraging for Plexus as we not only have the best metal to metal
sealing system technology available for gas but also the only
through the BOP HP/HT and XHP/HT jack-up drilling and land wellhead
designs.
In tandem with our geographic expansion we have been working
hard to grow the family of products based on our POS-GRIP
technology. After over four years of research and development,
during which we were supported by our Joint Industry Partners, BG,
eni, Royal Dutch Shell, Maersk, Total, Wintershall, Tullow Oil,
Senergy, and Oil States Industries Inc, September 2015 saw the
launch of the Python Subsea Wellhead at Europe's biggest oil show,
OE2015in Aberdeen. At the industry's request, we have developed
this exciting new product to address key technical issues and
requirements which were highlighted by regulators following the
Gulf of Mexico incident in April 2010, and in the process set a new
safer and best in class standard for subsea wellheads. As part of
this project we can now uniquely claim that our Python subsea
wellhead has successfully completed the new Shell test standard
proposed to the industry. We were confident that POS-GRIP would be
able to deliver all of this and we have not been disappointed, and
now we have to work hard to gain traction in the marketplace as we
successfully achieved with our jack-up exploration wellhead
systems. Furthermore we believe the considerable efficiency and
time savings will resonate with operators, particularly in today's
oil price environment. For Plexus, subsea exploration and
production activities are a much bigger and faster growing
multi-billion Dollar market, compared to our traditional jack up
exploration and production market of which we have a circa 10%
global share, so it is clear that the scale of future expansion
opportunities is significant.
As well as the Python Subsea Wellhead, we have also been working
on other new POS-GRIP based products. These include the Tersus-PCT
HP/HT Tie-Back connector, which for the first time allows HP/HT
exploration and pre-drilled production wells to be converted to
either subsea or platform producing wells; the new POS-SET
Connector which is designed to enable operators to re-establish a
connection onto rough conductor casing for the abandonment market,
which is increasing in the North Sea and beyond; a low cost
wellhead system for the volume production market - WellTree(TM);
and HP/HT dual barrier marine risers in collaboration with
Aquaterra. All of these product innovations are in line with
Plexus' strategy to extend its POS-GRIP product reach into new and
commercially attractive markets. We are also looking in due course
to expand our product range further to include valves, trees and
controls which would open up new markets for us.
Operating Review
(MORE TO FOLLOW) Dow Jones Newswires
March 30, 2016 02:00 ET (06:00 GMT)
Plexus, like the rest of the oil and gas services industry, has
seen a sharp deterioration in operator activity and associated
sales opportunities since late 2015 and into 2016. In response to
this we have therefore taken further and more significant cost
reduction and cash conservation measures. As a result a significant
headcount reduction programme was initiated post period end which
led to c. 50 redundancies, effective from early March 2016. We
believe that the appropriate balance has now been struck between a
reduced cost base, personnel numbers and expected sales activity
levels over the next twelve to eighteen months. Importantly however
we have a rental wellhead inventory that is capable of being
deployed at short notice as the oil price recovers and the industry
rebalances. The inventory is estimated to be able to support sales
of up to GBP40m.
In the meantime we are continuing to focus on sales
opportunities outside of our traditional North Sea territory.
During the period we were supporting or starting wellhead
operations for a number of new and existing international oil and
gas operators including Cardon IV in Venezuela, Masirah Oil in
Oman, and Brunei Shell Petroleum. Norway continued to be our most
important region, and together with the UKCS our clients included
Centrica Energy, Lundin Petroleum, Premier Oil, BG Group, Maersk
Oil and Gas, Statoil and Total.
At the corporate strategic level, focus has been on pursuing
sales opportunities outside of Europe as well as securing partners
who can help us accelerate the market penetration of our
technology. This is at a time when we have expanded our POS-GRIP
range of products which now includes our new Python subsea wellhead
design, our Tersus-PCT HP/HT Tie-back connector and our POS-SET
connector, which can offer the growing abandonment and
decommissioning markets unique capabilities as a result of its
ability to re-establish a connection onto rough conductor casing
previously cut above the seabed. These efforts as reported have
successfully resulted in our first major licence agreement signed
with Yantai Jereh Oilfield Services Group Co., Ltd ('Jereh') in
China in July 2015, the award of a local Petronas licence to
manufacture and supply Plexus' POS-GRIP wellhead equipment in
Malaysia through Plexus Products (Asia) Sdn Bhd ('PPA') and post
period end an exclusive licence agreement with two independent
Russian oil and gas equipment manufacturers for the rental,
manufacture and servicing of Plexus' jack-up drilling wellhead
exploration equipment into oil and gas markets of the Russian
Federation and the other CIS states. This last agreement oil and
gas markets has two condition precedents attached which are yet to
be fulfilled.
Key functions and operational areas are HR, Health and Safety
('HSE'), IT and IP. In terms of HR much of the period has been
focused on preparing and managing staff redundancy programmes.
Responding to the declining activity within the Oil & Gas
market as a result of on lower oil prices, an initial cost saving
exercise was conducted during September 2015. This resulted in 19
redundancies across the business along with other fundamental
changes such the cessation shift working and overtime, as well
other operational changes all designed to minimise expenditure.
Since that period, continued falls in the oil led to Plexus
embarking on a further, more significant, cost saving exercise
which post period end resulted in approximately a further c. 50
redundancies coupled with salary cuts for remaining staff across
the business. Staffing figures at the end of December 2015 were 122
employees plus 4 international employees, and currently are circa
84. Throughout the period we have ensured that we continue to
develop comprehensive training modules for our Field Service
Technicians as well as further developing our reach across the
business of our Competency Assurance programme.
Whatever trading conditions exist, Plexus' HSE function remains
fully committed to delivering the highest practicable safety
standards. We continue to maintain and improve a positive safety
culture which is aligned with our Company Star Safety Programme
safety values and this is evident throughout the organisation. This
is achieved by continual development and implementation of a
programme of initiatives, engaging with all levels of staff and
sharing our safety messages and performance, via our Star Safety
branding. LRQA, our certifying body carried out a recertification
audit of our ISO 9001 and BS OHSAS 18001 Management Systems in
December 2015, and this has resulted in our certification being
extended to 2018. This is a tangible demonstration that we are
operating to the recognised industry and national standards and we
continue to collaborate with our clients and industry bodies to
share HSE best practice and information. We continue to manage our
safety risks through assessment, implementation of controls,
continual monitoring, and developing staff to meet the competency
levels required. We always reinforce the compelling message that
the health and well-being of our employees is the crucial feature
of our HSE and HR strategy, and our workforce plays a key part in
the delivery of our services. We encourage our personnel to get
involved, have confidence to intervene and to challenge any unsafe
act or condition, suggest improvements, and to ensure transparent
reporting that meets our desired safety culture.
It is increasingly recognised that robust and secure IT systems
are crucial to any business and Plexus certainly recognises the
importance of such issues. With cyber risks an ever evolving and
ongoing risk for all companies', work has progressed towards ISO
27001:2013 accreditation which will help minimise both internal and
external risks. The certification process is rigorous and is
expected to be completed in Quarter 4 2016. Our in-house software
development has continued to enhance the systems available,
allowing Plexus to react quickly to the ever changing demands of
the business in a tough marketplace by providing managers access to
accurate and timely business data for planning and analysis.
Investment has also been increased in external market research data
and analysis which now allows Plexus to look further ahead in
relation to future rig activity and planned deployment. This is
proving beneficial in enabling our sales and business development
team to identify sales opportunities around the world.
IP and related patents and know-how, in relation to our
proprietary POS-GRIP technology, are an important part of our
business, and illustrate the unique nature of our superior
technology in terms of safety, time savings and increased
operational efficiencies. Plexus continues to invest in new product
development and associated continuation and new patents around the
world, and as we increase our focus outside of the North Sea this
includes our new licencing areas China and Russia. As a
demonstration of the strength of our IP, we recently made a visit
to Brazil to discuss our new Python subsea wellhead design with a
major international operator. It was very encouraging to have
confirmed that the unique advantages of not needing lock rings and
wear bushings could many millions of Dollars per subsea well
(depending on depth) by reducing the number of trips required
during the drilling programme versus conventional wellhead designs.
We have no doubt that such advantages will enable Plexus to expand
its business activities in the future, whether organically or
through licence partners into both the multi-million dollar
exploration and production subsea well markets, as well as land and
platform production well markets.
Post period end a further demonstration of the unique nature and
capability of our technology was provided by the successful
completion of our Python wellhead production hanger POS-GRIP system
qualification to the entirety of the latest revision of a new
proposed Shell standard which we believe no other wellhead company
is capable of achieving. This is a major achievement by our R&D
and engineering teams and we hope that the unique capabilities of
our equipment will gain the recognition it deserves. This milestone
successfully included the completion of both minimum and maximum
grip testing verifying that Python will work over the full possible
tolerance range. At each tolerance extreme, testing included three
cycles of 6.25 million pounds lockdown capacity; lockdown
load/pressure load envelope testing at 350 degree F; endurance
testing (twenty cycles) of 6.25million pounds lockdown capacity and
further load and pressure tests from both above and below the HG
seals at both 350 degrees F and ambient temperature. Importantly,
there were no leaks past our HG metal seal.
In addition to this progress our API 6A/17D certification
renewal was also successfully awarded.
The ongoing operational activities and necessary R&D and
investment in tangible and intangible assets are currently funded
by free cash and our bank facilities with the Bank of Scotland,
comprising a three year GBP5m revolving credit facility due for
renewal as of September 2016 and a GBP1m overdraft payable on
demand. In addition a GBP1.5m five year term loan was put in place
in September 2014 to part fund the purchase of the additional
Aberdeen facility, which runs to September 2019 with a current
balance of GBP1.125m
Interim Results
(MORE TO FOLLOW) Dow Jones Newswires
March 30, 2016 02:00 ET (06:00 GMT)
As highlighted earlier, the drop off in exploration activity,
particularly in the North Sea, has impacted the Company's half
yearly financial performance and outlook for the rest of this year,
although activity could pick up at short notice due to our fast
response time capability. As a result, revenue for the six month
period ended 31 December 2015 was GBP6.76m, a 49.9% reduction
compared to the previous year's figure of GBP13.51m. The rental
wellhead equipment and associated services business activities for
exploration drilling contracts accounted for over 94% of sales
revenues. The largest sales component remains the supply of our
HP/HT wellhead equipment which totalled GBP5.8m compared to
GBP11.8m last year, and accounted for approximately 84% of total
revenues compared to 87% last year. Revenue generated by the rental
of 10,000 psi standard pressure wells were GBP0.59m (2014:
GBP1.25m) reflecting the significant downturn in North Sea activity
levels. Geographically the North Sea during this period was the
most significant source of sales revenues as compared to the Rest
of the World. Within the North Sea, UKCS sales during the period
were GBP0.88m, a reduction of 85% against the same period last
year, and in the ECS, sales totalled GBP4.59m, a less impacted 29%
reduction compared to last year. Norway was once again the most
important sector and year on year sales activity fell to a lesser
degree of 14% reflecting in part the more benign tax regime, which
is designed to encourage exploration, and the widely recognised
high level of safety and operating standards that are applied in
that region. First half gross margins stood at 46.8% compared to
67.9% in the comparative period last year.
In response to the fall off seen in exploration activity in our
core markets, we are taking appropriate action and making
significant reductions to capex, opex, non-essential R&D and
personnel expenditure, in order to realign the cost base to the
prevailing oil price environment and the associated reduction in
sales revenues. For the first half period to the end of December
2015 administration and overhead expenses were reduced to GBP6.59m
compared to GBP7.05m last year. Within this total the salary
component was largest but has been reduced from GBP4.89m last year
to GBP4.07m during the first half period. In the second half to end
of June 2016 we have already actioned a circa 50 personnel
headcount reduction programme which is estimated to reduce payroll
costs excluding R&D credits from an annualised estimate for
2015/16 of GBP8.15m to GBP4.27m for 2016/17. Personnel numbers have
reduced from circa 130 as at 31 December 2015 to circa 80
currently. These cost saving initiatives have not been undertaken
lightly, and great care has been taken to ensure that our core
competencies and our ability to progress the existing range of
future opportunities, which are broader and more international than
ever before, are impacted as little as possible. This is key as the
Company recognises the importance of continuing to invest in
essential R&D and POS-GRIP product extensions at a time when
the industry continues to actively pursue innovative cost saving
disciplines and safety driven initiatives. In the future we would
anticipate being able to progress new opportunities such as a low
cost production wellhead and a Plexus tree with our partners who we
would expect to contribute towards the cost of development. In the
meantime, management is focused on the Company being cash
generative for the duration of the current cyclical downturn, and
to this end a number of additional initiatives are being considered
and/or implemented.
The circa 50% decrease in sales revenues resulted in a loss of
GBP3.5m compared to a profit before tax of GBP2.20m in the
equivalent period last year. The loss came after absorbing higher
rental asset and other property, plant and equipment depreciation
and amortisation costs totalling GBP2.19m up from GBP1.85m for the
same period last year, an increase of 15.5%. The higher level of
depreciation and amortisation reflects the impact of increased
capital expenditure over recent years including the Python subsea
project and the impact of such expenditure will reduce
significantly going forward. On-going investment in Plexus' rental
wellhead equipment inventory equipment totalled GBP1.33m as
compared to GBP1.35m for the prior year. Total capital expenditure
decreased to GBP3.01m compared to GBP6.55m during the same period
last year, a decrease of 54%. However it is important to note that
GBP2.79m of the comparative period's expenditure was the total cost
including improvements of acquiring circa 36,000 sq. ft. additional
work shop and facility space in Dyce, Aberdeen. If this is excluded
from the analysis, capex decreased by 19.9%, which still
demonstrates the early stages of our expenditure reduction
initiatives. Loss before tax is stated after charges for share
based payments under IFRS2; the charge for the half year to
December 2015 is GBP0.01m, which compares to GBP0.01m for the
corresponding period last year. The Group has therefore not
provided for a charge to UK Corporation tax at the prevailing rate
of 20%. Loss after tax is GBP3.5m compared to the equivalent period
last year (2014: GBP1.97m). Basic earnings per share is a negative
3.93p per share (2014: 2.32p).
The balance sheet continues to remain strong and reflects past
and in period investment in operations, R&D and IP related
strategic initiatives in line with our past and future growth
initiatives. Although recent strategic decisions will now result in
a significantly reduced level of such expenditure we are positioned
to be able to support our existing and new customers, as well as
our licencing and trading partners subject to necessary headcount
additions. Property, plant and equipment including items in the
course of construction stood at GBP17.07m as at the end of December
2015, compared to GBP16.93m at the end of December 2014. R&D
activity was GBP1.31m against GBP1.4m in the same period last year.
IP continues to be an important component of our balance sheet, and
the on-going development and protection of newly created IP and
twenty year patents supports and protects our business development
strategy both for our organic business as well as our targeted
participation in the subsea arena. Here, at the request of the
industry, we have developed our new Python subsea wellhead design
which is now ready for us to seek an operator to run a prototype in
the field. Fixed asset value as at 31 December 2015 stood at
GBP31.89m comprising of GBP17.07m of tangible assets and GBP14.82m
of intangible assets. With regards to cash flow the Group's cash
position was positively impacted at the beginning of the period
with the subscription by Jereh for new ordinary shares representing
5% of the issued share capital of Plexus for circa GBP8m net of
expenses. The Group closed the period with net cash of GBP4.41m
after paying a final dividend of GBP1.56m, including a special
dividend component during the period and incurring capital
expenditure and R&D totalling GBP4.33m. Current bank facilities
total GBP7.125m (comprising a three year revolving GBP5m credit
facility renewable September 2016, an additional GBP1m overdraft
facility payable on demand, and a five year term property loan with
a current balance of GBP1.125m).
Outlook
We strongly believe that current moves in the oil market are
essentially geo political in nature where the major producers, and
in particular Saudi Arabia, USA, and Russia are vying for market
share rather than long term structural factors, and that once
supply and demand reach equilibrium, oil prices will recover.
Plexus is not alone in holding this view. It is widely accepted
that global demand for energy from hydrocarbon resources will
continue to increase over the next 25 years as the world continues
to industrialise and the population increases. According to the BP
Energy Outlook 2016 "energy demand will continue to grow. Put
simply, as the world economy expands, more energy will be needed to
fuel the higher levels of activity and living standards. The growth
in energy will be curbed by faster gains in energy efficiency. And
there is of course considerable uncertainty as to exactly how
quickly global GDP will grow. Even so, it seems clear that
significantly more energy will be required over the next twenty
years to enable the world economy to grow and prosper. Fossil fuels
remain the dominant source of energy powering the world economy,
supplying 60% of the energy increase out to 2035." On the supply
side, according to BP, OPEC's share of global crude production in
2014 was 41% and a number of members are either running huge
deficits as prices remain low or are having to deplete sovereign
wealth funds and it is clear that such a "race to the bottom" is
unsustainable.
We are of course not in the business of calling the peaks and
troughs of markets, but there is a growing view that the industry
will overshoot on the downside and that the severe cut back in
planned or new exploration activity that has taken place as a
result of this being the one activity that can be "turned off" the
quickest, is likely to lead to a supply constraint over the next 12
to 24 months and a corresponding increase in the oil price. It is
noteworthy that according to Wood Mackenzie an estimated US$200bn
worth of oil and gas projects around the world shelved in 2015.
These represent significant volumes of hydrocarbons which had been
expected to feed into the market over the next few years. Even if
the appetite to embark on large scale and expensive projects
returns, it will take years for this potential new supply to come
on stream. Today's supply glut could therefore very quickly become
a supply squeeze even if demand for oil continues to grow at a more
sedate pace than has been seen over the last few years. It should
also be noted that natural reservoir production declines over time,
and this has been estimated as equating historically to 4-5 percent
globally, which means that even without growth in demand the oil
and gas
(MORE TO FOLLOW) Dow Jones Newswires
March 30, 2016 02:00 ET (06:00 GMT)
industry must produce an additional circa 4m barrels per day
every year just to keep up with current demand. Furthermore Colin
Welsh, head of international energy investment banking at Simmons
& Company in Aberdeen was recently quoted as saying "You can't
defy gravity. If you don't spend any money on investment, then
oilfields deplete even faster than usual" and went onto say that
they could even decline by as much as 7% because of investment
cuts. We therefore remain confident about the medium/longer term
growth prospects for standard, HP/HT and subsea drilling
opportunities and it was encouraging to hear Aramco, Shell and BP
all saying at Davos that they see prices returning to US$50 plus by
the end of 2016.
The positive long term outlook across the industry extends to
the North Sea, where Plexus has a dominant position in the supply
of wellhead equipment. According to a new major piece of research
on the oilfield gas service sector by international law firm,
Pinsent Masons, 96% of 200 senior executives across the oilfield
services industry believe the UKCS oil and gas sector will recover
to 'peak' levels of profitability, with almost half (48%) expecting
the UKCS to rebound within five years, while over one-quarter (28%)
predict recovery within three years, subject to a general
improvement in the oil price. As Peter Strachan, Robert Gordon
University's professor of energy policy, said "With up to 22
billion barrels of oil still to be extracted in the North Sea, it
is of no surprise that this new Pinsent Masons research study
outlines that the UKCS will return to peak profitability, as oil
prices recover, in the years to come." Pinsent Masons' partner in
the oil and gas team, David McEwing, added "There is encouragement
to be taken from the optimism surrounding the UKCS. There has been
discussion in some circles about whether the UKCS could ever
recover to previous levels of profitability, but an overwhelming
majority of those we spoke to see a recovery."
Furthermore Scottish Government Business Minister Fergus Ewing
agrees "With 22 billion barrels of oil & gas remaining, the
sector can still have a strong future...While it is clear that the
oil and gas industry faces severe challenges from a low global oil
price, there are still opportunities that Scotland can capture from
new discoveries and through our world-class supply chain". In terms
of tax take over the long term it is clearly in the Government's
interest to safeguard the future of the UK offshore oil and gas
industry which employs circa 375,000 people in the UK: in 2011 the
North Sea generated GBP10.9bn in revenue for the Treasury. However
at current oil price levels the majority of fields are loss making
and as a result, the Government is expected to receive as little as
GBP100m for the 2015 fiscal year. Such dynamics clearly led to the
Chancellor announcing in this month's budget that the 17% petroleum
revenue tax paid by older oil and gas fields is to be abolished,
and that the supplementary charge imposed on oil producers has been
halved from 20% to 10%. Although we would have liked to see more
direct incentives for encouraging exploration activity these
measures are a move in the right direction, and we hope that if
necessary further action will be taken in relation to ensuring that
the remaining oil and gas in the UKCS will be explored and
produced.
The stakes are high not just for the UK's embattled oil and gas
sector but also for the global economy in general. Lower oil prices
do not just provide a soundbite for politicians who can trumpet how
consumers are able to fill up their cars for less than GBP1 a
litre. As Sir Alan Duncan (Con: Rutland and Melton) neatly summed
up during Prime Minister's Questions on 13 January 2016, oil is
integral to the stability of the global economy: "Thirty dollar oil
is great for petrol prices, but it is potentially catastrophic in
other respects. If it goes on like this, we risk seeing regimes
under pressure, dramatic corporate failures and financial default,
enormous financial transfers out of our markets to pay for other
countries' deficits, a possible collapse in share prices and
dividends for pensions, and a liquidity problem in our banking
sector." Clearly the negative impact of low oil prices extends way
beyond operators' profit margins, and it is surprising to me how
long it seems to have taken for this to be widely understood. For
example it makes no sense from an environmental perspective when
the world's politician's flocked to Paris last December to support
the climate change initiative COP21 and the 2 degree temperature
increase limit target, whilst at the same time 'back home' then
talking about cheaper petrol being good for consumers. As Deloitte
recently reported in their "2016 Outlook on Oil and Gas" note
consumers respond "in the usual let's go-buy-a-car, or better yet,
a massive-SUV kind of way".
It was timely to note and encouraging for the future to see in
January 2016 Norway's Ministry of Petroleum and Energy award 56 oil
and gas exploration licences in mature areas on the Norwegian
Continental Shelf ('NCS') to a total of 36 companies, ranging from
the international majors to small domestic exploration companies.
Offshore Norway is of course a key market for Plexus. The Minister
of Petroleum and Energy Tord Lien said in a statement: "This year's
APA round is among the largest ever awarded on the NCS. It will
contribute to activity both in the oil companies and in the supply
industry as exploration progresses, wells are drilled and
discoveries are made." Out of 56 licences, 27 were in the North
Sea, 24 in the Norwegian Sea and five in the Barents Sea. In our
view this latest licensing round demonstrates how it is possible to
maintain interest and activity in the North Sea through the
establishment of an accommodative fiscal regime which encourages
rather than penalises exploration activity.
With cash conservation uppermost on the minds of operators,
Plexus is ready to play its part. Operators around the world are
having to deal with the twin forces of increased regulation on the
one hand and the need to control and reduce drilling costs in the
face of volatile oil markets on the other. The industry is looking
for major cost savings with 30% cuts from oil service companies
being reported as a minimum. Plexus believes it can offer such
savings and a great deal more. Our wellhead equipment can deliver
on both the safety and cost saving parameters and having been
successfully used by a roster of blue chip operators in over 400
wells in some of the most challenging operating environments around
the world, our technology is proven. We believe that this is why we
are seeing more interest in Plexus and our technology from various
parties around the world. The wider industry is aware of the
benefits of the POS-GRIP method of engineering, indeed we have the
only wellhead technology that has passed the new higher Shell
standard. This industry-wide recognition has opened the door to us
embarking on the next phase of our growth strategy: to licence out
the manufacture and supply of our patent protected equipment in
order to enter new markets such as China and Russia without taking
on board undue risk and without significant capital investment on
the part of Plexus. Together with the expansion of our POS-GRIP
family of products, most notably via the launch of Python, I
believe that the long term outlook for our Company has never been
better.
It is relevant that I comment on the fast developing
circumstances around surplus supply and ongoing negotiations
between OPEC and non OPEC members with a view to reaching an accord
on a level of supply that can bring stability to the oil price and
allow it to settle back at a level that all stakeholders can live
with. The oil price has already increased by circa 50% since
January 2016 and evidence is growing that a decline in US shale
production is starting to be felt. Michael Hulme, a fund manager at
Carmignac Gestion, the French investment group recently said he
believed that oil markets had bottomed out and that "On a 12 to 18
month view, oil prices should normalise back to the marginal cost
of supply of at least US$60". An important driver of this recent
oil price increase is the February agreement led by Saudi Arabia,
Russia, Venezuela and other leading producers to cap output levels
at January levels. More importantly Qatar's energy minister
Mohammed Bin Saleh al-Sada said this month that about 15 producers
in and outside OPEC, accounting for 73% of global output were
backing a plan for some of the world's biggest oil producing
countries to meet in Doha in April next month to discuss a freeze
in output. As Mr Sada said, stabilisation was in "the interest of
all".
I am confident that when drilling activity recovers, Plexus'
sales and profitability will return strongly with it. Unlike our
previous periods of strong growth, we have existing wellhead
inventory in place which will ensure our ability to respond quickly
to the needs of operators, and free up a larger portion of revenues
generated. Utilisation of our wellheads is clearly key and once
activity picks up we are confident we can deliver significant
EBITDA and profit. Indeed we estimate that subject to logistical
efficiency factors our current inventory consisting of 62 wellhead
sets is capable of supporting sales revenues of up to GBP40m per
annum. With strong partners in key markets, a growing suite of
pioneering products and a first rate management team, all the
ingredients are in place for Plexus to not only weather the current
cyclical downturn but to achieve our goal of becoming a leading
global supplier of oil and gas equipment. Finally I would to thank
all our staff, both past and present for all their hard work,
commitment and dedication during what is a challenging period
currently being experienced by our industry.
Jeff Thrall
Chairman
(MORE TO FOLLOW) Dow Jones Newswires
March 30, 2016 02:00 ET (06:00 GMT)
29 March 2016
Plexus Holdings Plc
Unaudited Interim Consolidated Statement
of Comprehensive Income
For the six months ended 31 December
2015
Six months Six months
to 31 to 31 Year to
December December 30 June
2015 2014 2015
GBP 000's GBP 000's GBP 000's
Revenue 6,764 13,506 28,526
Cost of sales (3,602) (4,334) (8,581)
---------- ---------- ---------
Gross profit 3,162 9,172 19,945
Administrative expenses (6,593) (7,052) (14,925)
---------- ---------- ---------
Operating (loss) / profit (3,431) 2,120 5,020
Finance income 34 2 512
Finance costs (96) (83) (182)
Share of profit of associate - 165 236
Gain on disposal of associate - - 352
(Loss) / profit before
taxation (3,493) 2,204 5,938
Income tax expense (note
5) (9) (238) (509)
(Loss) / profit after
taxation (3,502) 1,966 5,429
Other comprehensive income - - -
Total comprehensive income (3,502) 1,966 5,429
========== ========== =========
(Loss) / Earning per
share
Basic (note 6) (3.93p) 2.32p 6.40p
Diluted (note 6) (3.93p) 2.23p 6.16p
Plexus Holdings Plc
Unaudited Interim Consolidated Statement of Financial
Position
As at 31 December 2015
31 December 31 December 30 June
2015 2014 2015
GBP 000's GBP 000's GBP 000's
ASSETS
Goodwill 767 760 767
Intangible assets 14,056 11,466 13,167
Investment in associate - 1,106 -
Property, plant and equipment
(note 8) 17,074 16,931 17,154
Deferred tax assets - - -
Total non-current assets 31,897 30,263 31,088
----------- ----------- ---------
Inventories 6,327 6,065 6,551
Trade and other receivables 1,222 6,571 7,301
Cash and cash equivalents 10,534 2,352 3,328
Total current assets 18,083 14,988 17,180
----------- ----------- ---------
TOTAL ASSETS 49,980 45,251 48,268
=========== =========== =========
EQUITY AND LIABILITIES
Called up share capital
(note 10) 894 849 849
Share premium account
(note 10) 28,045 20,138 20,141
Share based payments
reserve 1,457 1,641 1,862
Retained earnings 10,562 12,557 15,628
Total equity attributable
to equity holders
----------- ----------- ---------
of the parent 40,958 35,185 38,480
----------- ----------- ---------
Bank loans 5,825 6,125 5,975
Deferred tax liabilities 628 96 212
Total non-current liabilities 6,453 6,221 6,187
----------- ----------- ---------
Bank loans 300 300 300
Trade and other payables 2,187 3,202 3,296
Current income tax liabilities 82 343 5
Total current liabilities 2,569 3,845 3,601
----------- ----------- ---------
Total liabilities 9,022 10,066 9,788
----------- ----------- ---------
TOTAL EQUITY AND LIABILITIES 49,980 45,251 48,268
=========== =========== =========
Plexus Holdings Plc
Unaudited Interim Statement of Changes
in Equity
For the six months ended 31 December 2015
Share
Called Share Based
Up Share Premium Payments Retained
Capital Account Reserve Earnings Total
GBP GBP GBP GBP
000's 000's GBP 000's 000's 000's
Balance as at 30
June 2014 849 20,138 2,476 11,117 34,580
Total comprehensive
income for the period - - - 5,429 5,429
Issue of ordinary
shares
(net of issue costs) - 3 - - 3
Share based payments
reserve charge - - 21 - 21
Transfer of share
based payments reserve
charge on exercise
of options - - (1) 1 -
Transfer of share
based payments reserve
charge on lapse of
options - - (38) 38 -
Tax credit recognised
directly in equity 2 2
Net deferred tax
movement on share
options - - (596) - (596)
Dividends - - - (959) (959)
Balance as at 30
June 2015 849 20,141 1,862 15,628 38,480
========= ======== ========= ========= =======
Total comprehensive
income for the period - - - (3,502) (3,502)
Issue of ordinary
shares
(net of issue costs) 45 7,904 - - 7,949
Share based payments
reserve charge - - 11 - 11
Net deferred tax
movement on share
options - - (416) - (416)
Dividends - - - (1,564) (1,564)
Balance as at 31
December 2015 894 28,045 1,457 10,562 40,958
========= ======== ========= ========= =======
Plexus Holdings Plc
Unaudited Interim Statement of Cash Flows
For the six months ended 31 December 2015
Six months Six months
to 31 to 31 Year to
December December 30 June
2015 2014 2015
GBP 000's GBP 000's GBP 000's
Cash flows from operating
activities
(Loss) / profit before
taxation (3,493) 2,204 5,938
Adjustments for:
Depreciation, amortisation
and impairment charges 2,193 1,848 3,881
Loss on disposal of property,
plant and equipment 2 20 20
Charge for share based
payments 11 12 21
Investment income (34) (2) (512)
Interest expense 96 60 182
Share of result in associate - (165) (236)
Gain on disposal of associate - - (352)
Dividend received from
associate - - 37
Changes in working capital:
Decrease / (increase)
in inventories 224 (809) (1,295)
Decrease / (increase)
in trade and other receivables 6,079 (108) (838)
(Decrease) in trade and
other payables (1,109) (2,280) (1,678)
Cash generated from operations 3,969 780 5,168
Net income taxes received/
(paid) 68 (78) (318)
Net cash generated from
operating activities 4,037 702 4,850
---------- ---------- ---------
Cash flows from investing
activities
Proceeds from disposal
of associate - - 1,492
Acquisition of subsidiary - - (7)
Purchase of intangible
assets (1,367) (1,413) (3,541)
Purchase of property,
plant and equipment (1,640) (5,136) (7,016)
Proceeds of sale of property,
plant and equipment 3 5 56
Net cash used in investing
activities (3,004) (6,544) (9,016)
---------- ---------- ---------
Cash flows from financing
activities
Drawdown of loans - 2,500 2,500
Repayment of loans (150) (75) (225)
Net proceeds from issue
of new ordinary shares 7,949 - -
(MORE TO FOLLOW) Dow Jones Newswires
March 30, 2016 02:00 ET (06:00 GMT)
Proceeds from share options
exercised - - 3
Interest paid (96) (60) (182)
Interest received 34 2 4
Equity dividends paid (1,564) (526) (959)
Net cash generated from
financing activities 6,173 1,841 1,141
---------- ---------- ---------
Net increase / (decrease)
in cash and cash equivalents 7,206 (4,001) (3,025)
Cash and cash equivalents
at brought forward 3,328 6,353 6,353
Cash and cash equivalents
at carried forward 10,534 2,352 3,328
========== ========== =========
Notes to the Interim Report December 2015
1. This interim financial information does not constitute
statutory accounts as defined in section 435 of the Companies Act
2006 and is unaudited.
This unaudited interim report has been prepared on the basis of
the accounting policies set out in the annual report for the year
ended 30 June 2015 and which are also expected to apply for 30 June
2016.
The interim financial information is compliant with IAS 34 -
Interim Financial Reporting.
The accounting policies are based on current International
Financial Reporting Standards ("IFRS"), International Financial
Reporting Interpretation Committee ("IFRIC") interpretations and
current International Accounting Standards Board ("IASB") exposure
drafts that are expected to be issued as final standards and
adopted by the EU such that they are effective for the year ending
30 June 2016. These standards are subject to on-going review and
endorsement by the EU and further IFRIC interpretations and may
therefore be subject to change.
2. This interim report was approved by the board of directors on
29 March 2016.
3. During the interim period the Group paid a final dividend on
ordinary shares of GBP1,564k. The directors do not recommend
payment of an interim dividend.
4. There were no other gains or losses to be recognised in the
financial period other than those reflected in the Statement of
Comprehensive Income.
5. No corporation tax provision has been provided for the six
months ended 31 December 2015 (2014: 20%). As a result there is no
effective rate of tax for the six months ended 31 December 2015
(2014: 11%) after adjustments made to reflect R&D tax credits
received relating to the current and prior years and offsets for
disallowable expenditure.
6. Basic earnings per share are based on the weighted average of
ordinary shares in issue during the half-year of 89,226,270(2014:
84,892,673).
7. The Group derives revenue from the sale of its POS-GRIP
friction-grip technology and associated products, the rental of
wellheads utilising the POS-GRIP friction-grip technology and
service income principally derived in assisting with the
commissioning and on-going service requirements of its equipment.
These income streams are all derived from the utilisation of the
technology which the Group believes is its only segment. Business
activity is not subject to seasonal fluctuations.
8. Property, plant and equipment
Assets
Tenant under
Improve-ments Constru-ction Motor
Buildings GBP'000 Equipment GBP'000 Vehicles Total
GBP'000 GBP'000 GBP'000 GBP'000
Cost
As at 30 June
2014 974 430 25,393 260 44 27,101
Additions 3,405 2 1,544 2,054 11 7,016
Transfers - - 2,140 (2,140) - -
Disposals - - (533) - (7) (540)
As at 30 June
2015 4,379 432 28,544 174 48 33,577
Additions 7 156 363 1,114 - 1,640
Transfers - - 1,075 (1,075) - -
Disposals - - (14) - - (14)
As at 31 December
2015 4,386 588 29,968 213 48 35,203
Depreciation
As at 1 July
2014 405 126 13,257 - 29 13,817
Charge for
the year 153 56 2,854 - 7 3,070
On disposals - - (461) - (3) (464)
As at 30 June
2015 558 182 15,650 - 33 16,423
Charge for
the year 125 30 1,558 - 3 1,716
On disposals - - (10) - - (10)
As at 31 December
2015 683 212 17,198 - 36 18,129
Net book value
As at 31 December
2015 3,703 376 12,770 213 12 17,074
As at 30 June
2015 3,821 250 12,894 174 15 17,154
As at 30 June
2014 569 304 12,136 260 15 13,284
9. The comparative figures for the financial year ended 30 June
2015 are not the Company's statutory accounts for that financial
year. Those accounts have been reported on by the company's
auditors, Crowe Clark Whitehill LLP, and delivered to the registrar
of companies. The report of the auditors was (i) unqualified, (ii)
did not include a reference to any matters to which the auditors
drew attention by way of emphasis without qualifying their report
and (iii) did not contain a statement under section 498(2) or (3)
of the Companies Act 2006.
10. Share Capital
Six months to 31 December 2015 Six months to 31 December 2014 Year to
30 June
2015
GBP'000 GBP'000 GBP'000
Authorised:
Equity: 110,000,000 (2014: 110,000,000)
Ordinary shares of 1p each 1,100 1,100 1,100
Allotted, called up and fully paid:
Equity: 89,390,576 (Dec 2014:
84,892,673, June 15: 84,902,196)
Ordinary shares of 1p each 894 849 849
Share issue during the period: Number of Share Share Total
shares capital premium GBP'000
GBP'000 GBP'000
At 30 June 2015 84,902,196 849 20,141 20,990
On 7 July 2015 4,468,537 45 7,894 7,939
On 9 December 2015 19,843 - 10 10
At 31 December 2015 89,390,576 894 28,045 28,939
During the period the Group issued new shares as a result of the
following transactions:
Number of Price per Aggregate Total
shares share nominal aggregate
value value
GBP GBP
7 July 2015
-Share issue 4,468,537 180p 44,685 8,043,366
9 December 2015
- Share options 9,747 60p 97 5,848
- Share options 10,096 41p 100 4,139
This information is provided by RNS
The company news service from the London Stock Exchange
END
IR LLFSEVLIAFIR
(END) Dow Jones Newswires
March 30, 2016 02:00 ET (06:00 GMT)