TIDMPOS
RNS Number : 2366U
Plexus Holdings Plc
28 March 2019
Plexus Holdings PLC / Index: AIM / Epic: POS / Sector: Oil
equipment & services
28 March 2019
Plexus Holdings PLC ('Plexus', 'the Company' or 'the Group')
Interim Results
Plexus Holdings plc, the AIM quoted oil and gas engineering
services business and owner of the proprietary POS-GRIP(R) method
of wellhead engineering, announces its interim results for the six
months to 31 December 2018.
Financial Results
-- Following the sale of the wellhead Jack-up exploration
application business (the "Jack-up Business") to FMC Technologies
Limited ('FMCT'), a subsidiary of major oil services provider
TechnipFMC (Paris:FTI)(NYSE:FTI), on 1 February 2018, the interim
results and prior periods are reported as required on a continuing
and a discontinued operations basis.
-- Continuing operations sales revenue GBP1,312k (2017: GBP40k)
o Discontinued operations sales revenue GBPnil (2017:
GBP2,411k)
-- Continuing operations EBITDA loss (GBP1,504k) (2017: GBP1,883k loss)
o Discontinued operations EBITDA GBPnil (2017: GBP105k)
-- Continuing operations loss after tax (GBP2,337k) (2017: Loss GBP2,743k)
o Discontinued operations loss after tax GBPnil (2017: Loss
GBP1,008k)
-- Basic loss per share from continuing activities (2.22p) (2017: 2.60p loss)
o Basic loss per share from discontinued activities (nil) (2017:
0.96p loss)
-- Net cash of GBP9.5m (2017: GBP5.3m).
-- The Group in addition has GBP2.85m in financial assets (2017: nil)
-- As previously announced, following the sale of the Jack-up
Business to FMCT the Board has assessed the on-going capital
requirements of the business and declared earlier this month a
GBP1.0m special interim dividend (equivalent to approximately
0.99566 pence per Ordinary Share (excluding the 4,950,495 existing
Ordinary Shares held in treasury) due for payment on the 8 April
2019
-- In addition, the Company previously announced that it is
undertaking a court approved reduction of capital by way of a
cancellation of its share premium account in order to increase its
distributable reserves, and a General Meeting has been convened to
seek Shareholder approval of the reduction of capital. The
principal benefit of a reduction in capital is to increase the
Company's future flexibility, subject to the financial position and
prospects of the Company, to pay dividends, to facilitate any
prospective buy back of shares (including by way of tender offer)
or to provide flexibility for any other general corporate
purposes
Overview and Corporate Highlights
-- New IP led strategy focused on rolling out applications
enabled by Plexus' proprietary POS-GRIP(R) technology which is
proven to raise standards across the energy sector, including
wellhead exploration from Jack-up rigs and surface production
equipment
o Follows sale of Plexus' Jack-up Business to FMCT, a subsidiary
of top tier industry supplier TechnipFMC, in February 2018 which
demonstrated industry recognition of POS-GRIP technology
-- Significant progress made towards delivering on strategy to
establish POS-GRIP technology in new markets
-- August 2018 - Contract secured for a second rental order for
the POS-SET(TM) Connector from Oceaneering A/S, Norway for well
abandonment operations in the North Sea
-- September 2018 - Initial breakthrough agreement secured by
Russian partner Gusevsky Valves Plant LLC ('Gusar') to supply
Gazprom with two sets of Plexus' Tersus(TM) - TRT Mudline
Suspension System ('MLS') for shallow water exploration gas wells
on the Kara Sea Shelf in 2019
-- December 2018 - Acquisition of a 49% interest in Kincardine
Manufacturing Services Limited ('KMS'), a specialist precision
engineering business with a blue-chip customer base in the oil and
gas sector
o KMS distribution/dividend policy expected to generate annual
returns for Plexus
o Provides Plexus with future access to machining capability
which can support R&D development projects for alternative
applications of POS-GRIP technology
-- Post period end - February 2019 - buyback of 4,950,495
Ordinary Shares held by Gusar at 50.5p per share to accelerate the
completion of Plexus' sale of two POS-GRIP Jack-up exploration
wellhead sets and associated equipment to Gusar in anticipation of
an initial rental order in Russia and the CIS
o As per the 2016 Licensing Agreement, Plexus earns a 20%
royalty on POS-GRIP wellhead and associated equipment rented by
Gusar - potential to generate a significant revenue stream for
Plexus
-- March 2019 - following the share buyback and equipment sale
transactions, a first major breakthrough contract was secured by
Gusar with global energy giant Gazprom to supply POS-GRIP rental
wellhead gas exploration equipment. This covers the first year of a
five year gas exploration drilling programme. An additional Royalty
Agreement was entered into with Gusar at the time of the share
buyback whereby an additional 20% royalty of the invoice values of
this contract will apply
-- Step-up in interest in POS-GRIP equipment for use in surface
production projects in line with reports of major increases in new
projects being sanctioned for development in 2019
o Actively engaged in tendering processes for large-scale
projects
-- Bank facilities available to the Group with the Bank of
Scotland comprise of a reducing five year GBP1.5m term loan (with a
current minimal balance of GBP0.2m) which was put in place in
September 2014 to part fund the purchase of a building in Aberdeen
and which runs to September 2019
Chief Executive Ben van Bilderbeek said:
"Looking back 12 months, the publication of the 2018 half year
report closely followed the sale of our Jack-up exploration
wellhead business to TechnipFMC ('FMCT') and so provided us with a
timely opportunity to detail our strategy going forward: 'focus is
no longer centred on the day to day running of the Jack-up
Business. The sale and Collaboration Agreement with FMCT therefore
not only provide us with cash resources and an industry major as a
partner, but also creates capacity to develop and monetise other
products based on our ground-breaking technology which, through the
Jack-up Business, has been selected above conventional equipment
many times over out in the field.' In line with this, the half year
period under review saw our focus pivot towards expanding the
footprint of our proprietary POS-GRIP technology, and, as the jump
in our year on year H1 revenues to GBP1.3m from H1 2018's GBP40k
level demonstrates, progress is being made.
"We set ourselves three initial priorities to help achieve our
overall objective: support our local partner's efforts to win a
first order for POS-GRIP enabled equipment in the major Russian
market; secure orders for markets outside Jack-up exploration where
we already have fully developed products, such as production,
abandonment and subsea; and work on developing new POS-GRIP
applications for deployment in fast-growing sub-sectors, such as
geothermal and renewables. Progress has been made on all three
fronts, providing us with an excellent foundation with which to
build on our reputation as a supplier of critical equipment that
delivers a quantum leap in terms of setting higher performance and
safety standards, particularly in terms of gas proof seal
performance.
"In Russia and the CIS, there was an outstanding development
during the six months under review, and importantly a further one
post period end. In September 2018, our Russian partner, Gusar,
secured an initial agreement to supply supermajor Gazprom with two
sets of Plexus' Tersus - TRT Mudline Suspension System ('MLS') for
the construction of shallow water exploration gas wells on the Kara
Sea Shelf in 2019. Then post period end, earlier this month Gazprom
placed a first major breakthrough contract with Gusar for POS-GRIP
rental exploration equipment for use in the same location. The
order covers the first year of a five year Jack-up gas exploration
drilling programme and I am hopeful there will be more orders to
come. Taken together, these two contracts bode well for Gusar and
ourselves and we look forward to working with Gazprom in Russia, a
top three producing nation, and the holder of the world's largest
gas reserves.
"It is against this backdrop of supporting Gusar's efforts to
secure a first order that our February post period end buyback of
4,950,495 Ordinary Shares in Plexus beneficially held by Gusar
should be seen. The buyback accelerated the completion of the sale
and shipment to Russia of the two sets of wellhead equipment that
Gusar had ordered from Plexus in H1 2018 for circa GBP1.4m to
Russia which, in turn, enables Gusar to act swiftly to fulfil the
Gazprom rental wellhead exploration order. Looking to the future,
as our technology is proven to be superior to conventional
solutions in terms of seal performance, reliability and safety,
especially in high pressure / high temperature environments
('HP/HT') associated with gas, I am quietly confident that once
Gazprom experiences first-hand the benefits of our equipment they
will not look back to conventional designs, and that this new
opportunity will lead to further activity within the CIS in the
coming years.
"In terms of markets outside Jack-up exploration, Plexus has
POS-GRIP applications for production, subsea and abandonment
operations; all are ready for commercial roll-out. These include
"HG"(TM) Wellheads, which combine POS-GRIP Technology with gas
tight metal sealing; the Python Subsea Wellhead; the POS-SET(TM)
Connector for the decommissioning and abandonment market; and
Tersus-PCT, an innovative HP/HT Tie-Back connector product. Our
growing family of POS-GRIP products is integral to our post-FMCT
sale strategy and so it is highly encouraging that, during the half
year period, we were awarded a contract from Oceaneering for our
POS-SET Connector for a well abandonment operation. This follows an
order from Spirit Energy to supply a production wellhead in the
North Sea in the Company's last financial year, and which is being
installed currently. We are working hard to build on this, and we
are actively engaged in pursuing further order opportunities for
all our products, particularly for the large and lucrative surface
production market which, according to Rystad, is set for a surge in
investment in 2019. The consultancy estimates non-shale projects
representing over 45 billion barrels of oil equivalent ('boepd')
could be sanctioned this year, a near three-fold increase on the
17.5 billion boepd in 2018.
"As well as our target markets in the hydrocarbon space, we are
also interested in pursuing opportunities outside the energy
industry, including alternative energy sources such as geothermal.
To progress these, ongoing R&D is important as is the need for
Plexus to have access, when required, to machining capability to
design and develop new POS-GRIP enabled applications. With this in
mind, during the period we acquired a 49% interest in KMS, a
precision engineering business with a blue-chip customer base.
While KMS is an attractive investment in its own right, it also has
the potential to provide us with access to machining capability in
support of new equipment design initiatives.
"Our goal has always been to establish our patent-protected,
friction-grip method of engineering as an enabling technology for
the wider energy industry. For a junior supplier such as Plexus to
have become the dominant player in the North Sea for Jack-up
exploration drilling wellheads, despite having to compete against
top tier multinationals with substantial resources at their
disposal, is testament to the strength of our technology. For one
of these top tier players, TechnipFMC, to then acquire our Jack-up
Business and sign a Collaboration Agreement with us, represents
industry endorsement of the strength of our technology. Together
with a recovery in oil prices to an average of US$74 per barrel in
2018, compared to 2017's US$54, a structural shift among majors and
the wider economy towards cleaner natural gas, and the growing
calls for operators to use gas-proof equipment throughout the
supply chain to prevent harmful methane leaks, we believe the
outlook for Plexus is very positive. It has been a long time since
favourable cyclical and structural drivers have coincided with
significant developments at the corporate level. We now have
industry partners, a cash rich balance sheet, and we are being
invited to tender for large surface production projects. This is an
exciting period for Plexus, and I look forward to providing further
updates as we focus on capitalising on POS-GRIP's potential to be a
game-changer in terms of delivering a step-change in performance
and wellhead safety standards.
"Finally, I am pleased to acknowledge our recent declaration of
a GBP1.0m interim dividend payable in April 2019, as well as the
initiation of a court approval reduction of capital process by way
of a cancellation of our share premium account in order to generate
additional distributable reserves. The principal benefit of a
reduction in capital is to increase the Company's future
flexibility, subject to the financial position and prospects of the
Company, to pay dividends, to facilitate any prospective buyback of
shares (including by way of tender offer) or to provide flexibility
for any other general corporate purposes. These initiatives are a
sign of our growing confidence 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
Derrick Lee Cenkos Securities PLC Tel: 0131 220 9100
Frank Buhagiar St Brides Partners Ltd Tel: 020 7236 1177
Isabel de Salis St Brides Partners Ltd Tel: 020 7236 1177
Chairman's Statement
Business progress
Historically, the vast majority of Plexus' revenues have been
generated by the Jack-up exploration wellhead rental business which
we sold to TechnipFMC in February 2018. Over the years, the Jack-up
Business supplied blue chip operators such as Royal Dutch Shell,
Equinor, BP, and Total with our proprietary POS-GRIP wellhead
technology for hundreds of wells drilled all over the world, and in
the process enabled Plexus to grow the business, fund further
R&D to increase its suite of POS-GRIP products and when
appropriate distribute dividends to shareholders. The sale of the
Jack-up Business was therefore always going to necessitate a reset
in terms of the Company's revenue streams, as highlighted in last
year's Interim Statement which reported sales revenue generated
from continuing operations amounted to GBP40k. A year on from the
sale, H1 2018 revenues of GBP1,313k demonstrate the significant
progress that is being made to build up the Company's revenue
profile once again from what was effectively a standing start,
notwithstanding that the Company's IP has never been more relevant.
Crucially, we are not merely focused on regaining previous levels
of turnover, we are also working hard to ensure our revenues going
forward are more diversified and derive from significantly larger
market sectors.
At the time of last year's half yearly report, we set out how we
intend to grow our revenues both over the short and long-term. In
the short term, our focus is centred on securing sales for our
equipment in lucrative markets outside Jack-up rental wellhead
exploration where we already have products ready for commercial
roll-out, such as production, abandonment and subsea, as well as
supporting our Russian licencee partner's efforts to win orders in
the huge Russian market which, post period end in March 2019, has
resulted in a major breakthrough after Gazprom awarded Gusar a
first gas exploration drilling contract. Over the medium to
long-term, resources will continue to be directed towards
capitalising on POS-GRIP's proven superior performance over
conventional technologies to develop equipment for use in markets
both inside and outside the energy industry, specifically where the
integrity of metal-to-metal sealing under challenging operating
conditions is crucial. In our view, there is no shortage of
applications and markets where POS-GRIP technology has the
potential to raise performance and safety standards, just as it has
been proven to do in Jack-up exploration drilling.
A breakdown of the GBP1.3 million of revenues generated in H1
shows just how far we have come in a short period of time. For the
first time since Plexus was admitted to AIM in 2005, essentially
all of the Company's revenues were generated from activities
outside of Jack-up exploration: over GBP1 million as a result of an
order for one of our production wellheads from Spirit Energy we
secured in September 2017; while the remainder originated from an
order from Oceaneering for equipment for use on abandonment
operations. While recognising we have come from a low base, we have
made an encouraging start post the TechnipFMC sale, and we believe
we are well placed to build on this further and are actively
engaged in the pursuit of tenders for operations outside of Jack-up
exploration, including surface production projects.
In the meantime, further growth in the top line is already
guaranteed in H2 2018. The second half of the year will include the
proceeds of the circa GBP1.4 million sale of two of our POS-GRIP
wellhead rental systems and associated equipment to Gusar, in
addition to a further GBP0.2m of equipment supplied which is
currently included in deferred income. This follows our post period
end buyback of 4,950,495 Ordinary Shares in Plexus from Gusar,
which helped accelerate the mobilisation of this equipment
in-country. Gusar is well placed to fulfil any rental wellhead
exploration orders in Russia such as the major breakthrough
contract just awarded by Gazprom. Such progress has given us the
confidence to declare the interim dividend of GBP1.0m, which is
payable in April, as well as initiating the proposed cancellation
of our share premium account where the resulting reduction of
capital will increase the Company's flexibility to pay dividends
and facilitate any prospective buyback of shares (including by way
of tender offer) in the future.
As we found in the North Sea, securing initial orders for
ground-breaking equipment such as ours does take time but, once
achieved, additional contracts follow as operators experience for
themselves the superior performance, safety and cost savings
associated with our equipment. Prior to the oil price induced
downturn in activity in 2015, POS-GRIP had become established as
the go-to technology for HP/HT wells with nearly a 100% market
share in the North Sea, a significant achievement given Plexus was
operating very much on its own. By contrast, in Russia we are
working with a well-established local supplier and thanks to our
Licensing Agreement, we do not have to shoulder the fixed and
operating costs associated with managing a wellhead rental
inventory and business. Furthermore, the Licensing Agreement sees
Plexus receive an additional 20% royalty on the value of the order
secured by Gusar from Gazprom, which also has the potential to
accelerate the uptake of our technology in Russia without incurring
additional overhead cost.
The second half of the financial year is scheduled to include
cash flow from our first-year payment from TechnipFMC as part of
the three year earn-out. As per the agreement, Plexus stands to
receive a third of rental revenues, and ten percent of equipment
sales generated from the Jack-up Business, and FMCT provide us with
quarterly progress reports with payments made annually to Plexus.
The earn-out is proceeding as anticipated, and we look forward to
receiving a first payment before our financial year end.
Following the sale of our rental exploration wellhead business,
Plexus is today an IP-led company with a proven design and
development capability. Our core IP is our suite of
patent-protected POS-GRIP technology, which, as we have shown many
times over out in the field, delivers products that raise
performance and safety standards while at the same time generating
material cost savings. Wherever a metal-to-metal seal is required,
particularly for gas applications where leaks are now increasingly
recognised as being unacceptable, we believe a POS-GRIP enabled
product can replicate these same benefits. Having successfully
rolled-out products for production, subsea exploration and
abandonment operations, we have the know-how and expertise to
develop new applications for markets, such as geothermal and
renewable energy. Following the acquisition in December 2018 of a
49% interest in KMS, an independent oil and gas precision
engineering business, we not only have an investment that has the
potential to provide us with an additional cash income in the form
of dividends, but also one that can provide Plexus with machining
capability, a key component in new product development.
Operating Review
The half year under review is our first discrete reporting
period post the sale of the Jack-up exploration wellhead business
to TechnipFMC. Following the sale and in line with our strategy,
Plexus has reverted to an IP-led research and development business,
enabling resources and focus to be centred on both addressing the
much larger surface production and subsea exploration and
production markets, together with developing and rolling out new
and existing POS-GRIP applications outside Jack-up drilling, both
organically and with partners, including FMCT via our Collaboration
Agreement, which provides a framework to work together on potential
new applications.
Oil prices and their impact on activity within the energy sector
remain highly relevant to Plexus' operational activity levels. In
2018, the average oil price was US$74 per barrel, over 30% higher
than the US$54 recorded over the course of 2017. A combination of
demand and supply side worries, including the impact of slower
growth in China and the effects of the ongoing US-China trade
dispute on global demand for oil, have seen Brent trade at around
the US$65 per barrel level since the turn of the year. Importantly,
following a much-needed period of retrenchment during the oil price
downturn of 2014 - 2017, specifically in terms of activity and
costs, many operators have brought their respective breakeven oil
prices to sub US$60 per barrel. Sentiment is recovering, and
projects which are profitable at current oil prices are being given
the green light to proceed. In a recent article in the FT, Readul
Islam, analyst at Rystad, was quoted as saying, "Several years of
trimming the fat from project economics, coupled with a sturdier
price outlook, has helped to convince operators to sanction
long-delayed projects".
These developments are in line with our own experience, which
together with a global drive for gas-proof methane leak reducing
technologies bodes well for the future. In terms of operational
activity, Spirit Energy is currently deploying one of our
production wellheads in the UK Southern North Sea following a
contract award in September 2017, and Oceaneering has deployed our
POS-SET Connector product for a well abandonment operation. Beyond
this, the half year period has seen us secure the sale of two
wellhead sets to our Russian licensing partner Gusar which will be
used to service the first major order placed by Gazprom with Gusar
for Plexus rental equipment as well. We are also participating in
several tenders for substantial surface production projects. The
tender processes are ongoing and while there can be no guarantee
that we will be successful, they are indicative of the pickup in
activity we are seeing. Regardless of the outcome, it is highly
encouraging that Plexus is being invited to participate in such
tenders against top tier suppliers. We view this as a mark of how
far Plexus has come and how our POS-GRIP-enabled equipment outside
Jack-up exploration is being viewed as a serious alternative to the
conventional technologies available from our much larger
competitors.
Our proprietary POS-GRIP equipment is proven to be superior to
competing systems in terms of performance, reliability and safety,
whilst at the same time offering considerable time and cost
savings, particularly in terms of lower maintenance throughout
field life. At the heart of our technology's superiority is its
simplicity, and its ability to be tested to the highest standards
as a 'system' rather than as a series of individual components,
thereby replicating 'real world' field conditions. As we progress
our new strategy, I feel that it is warranted to remind our
investors and followers about POS-GRIP, a friction-grip method of
engineering, which can be applied to a diverse range of tubular
connections. It involves applying an external hydraulic force to
squeeze housing until it engages a special-design end connection
(casing or tubing hanger in wellheads), to generate a gripping
force. This initially eliminates assembly tolerances and eventually
merges the two members with such force that, for practical
purposes, the parts become one. The process is accurately
controlled by hydraulic pressure, is calibrated to deliver
monitored results and occurs within the elastic limits of material,
so that the connection is reversible.
POS-GRIP's simple design has significantly raised wellhead
standards for HP/HT applications, and by default for standard
pressure operations, to levels that equal or exceed the standard of
premium couplings. By doing so, POS-GRIP enables operators to
bypass the shortcomings that can be associated with conventional
wellhead technology. For example, the POS-GRIP system does not
require penetrations to be energised, allowing alternative annulus
pressure management procedures to be deployed in place of
conventional outlet connections. Conventional technologies are
typically comprised of many more individual components, each of
which has the potential to compromise seal integrity. These and
other benefits lie behind POS-GRIP being able to deliver a lifetime
gas-proof metal seal solution and achieve higher industry test
standards, which we believe delivers the only true long-term
wellhead metal seal available to the industry.
It is important that I draw attention to the fact that we have
been extolling the gas-proof benefits of our technology for many
years, but what is giving us considerable encouragement are the
growing calls for the energy industry to tackle the major threat to
the climate posed by methane leaks. This is a major issue and one
that I need to explain the importance of in relation to our metal
sealing technology. It is widely known that natural gas when burnt
is a far cleaner fossil fuel than coal and oil, and because of this
and advances in storage and transportation facilities, natural gas
is fast gaining market share in the hydrocarbon fuel mix, none more
so than in the US. As reported in the NY Times
(https://www.nytimes.com/2018/06/21/climate/methane-leaks.html),
"When burned for electricity, natural gas produces about half the
carbon dioxide (CO2) that coal does. The shift from coal to gas has
helped lower CO2 emissions from America's power plants by 27 per
cent since 2005". According to Shell's latest annual LNG Outlook,
"Gas emits between 45% and 55% lower greenhouse gas emissions than
coal when used to generate electricity. Coal to gas switching has
led to a 78% improvement in Beijing's winter air quality over the
last five years. Blue skies are not the only benefit of the
measures China has taken to improve air quality in Beijing. There
has been a calculated annual reduction of 176 million tonnes of CO2
in Beijing and surrounding areas."
There is however an important caveat to note, which is that
natural gas is a powerful greenhouse agent. The same article in the
New York Times continues, "methane, the main component of natural
gas, can warm the planet more than 80 times as much as the same
amount of carbon dioxide over a 20-year period if it escapes into
the atmosphere before being burned." Preventing natural gas leaking
from oil and gas operations is therefore critical. The industry's
track record leaves room for improvement, and major efforts are now
being made to address this through organisations such as the OGCI.
According to a study published in the journal Science 'Assessment
of methane emissions from the U.S. oil and gas supply chain', 2.3%
of the total annual production of gas in the US escapes from oil
and gas operations, which translates into approximately 13 million
metric tonnes of natural gas escaping every year, which is enough
to fuel 10 million homes. The Environmental Defence Fund, a group,
which works with companies to improve environmental performance,
estimates methane accounts for 25% of global warming, and Bob
Dudley, CEO of BP, has even described methane as "the Achilles Heel
of a natural low carbon fuel." By having a gas-proof sealing design
solution at the wellhead, Plexus is well positioned to play its
role in meeting such methane reduction goals.
As previously reported, to accommodate the increased interest we
are seeing in our technology and to support the number of tenders
we are participating in, we took the decision during the period to
bring forward certain additional costs from the next financial year
to build up our operational capabilities. This increase in overhead
impacted on our margins, but we believe that this is a necessary
investment for the future. The increased interest levels extended
post period end to Russia where our Licensing Agreement with Gusar
made a breakthrough with the completion of the sale of two wellhead
sets to Gusar for circa GBP1.4m, together with the confirmation of
an important contract awarded to Gusar by Gazprom earlier this
month. While the supply of the equipment to Gusar had the effect of
lowering H1's gross margin due to the need to manufacture some
additional equipment items, it importantly accelerates the
deployment of POS-GRIP Jack-up exploration wellheads in the major
Russian market.
Key functions that support our operations are Human Resources
('HR'), Quality Health and Safety ('QHSE'), Information technology
('IT') and Intellectual Property ('IP').
HR's focus during the period has included a detailed review and
subsequent overhaul of the the Competency Management System,
ensuring that the Group's employees have the necessary skills,
qualifications and experience required to operate efficiently not
only now but into the future, following the Group restructure.
QHSE also continues to be an important area not only internally,
but also externally with our trading partners. Plexus remains fully
committed to delivering the highest safety standards, and we
maintain a positive safety culture which is aligned with our
Company Safety Values. We are therefore pleased to report that our
HSE culture remains strong across the business with no major
findings identified during the most recent LRQA certification
surveillance audit against OHSAS 18001 standard and ISO 9001.
Safety risks continue to be managed through assessment,
implementation of controls, continual monitoring, engaging and
developing staff to ensure that the required competency levels are
met. Plexus continues to reinforce the important message that the
health and well-being of our employees is a crucial feature of our
QHSE and HR strategies. The restructuring of the business created
an opportunity to review and improve the OPITO accredited
competency system, allowing the technical standards to be more
closely aligned with the strategy of the business going forward. As
such a detailed review and subsequent update of the competency
systems has now been completed and was subject to the successful
LRQA audit noted above.
Robust IT systems, and the delivery of a safe and secure service
to customers and Plexus itself is paramount, especially as is
widely reported there is no reduction in external threats of
hacking and viruses. Ensuring confidentiality, integrity and
accessibility of information is essential, and Plexus continually
reviews and develops its computer network and security monitoring
systems capability. Precautions include penetration testing and
network monitoring to ensure our IT systems have not been breached,
while our anti-virus software is continually updated to newer
version malware protection, and internet filtering is used to keep
our data secure. Plexus continues to work towards ISO 27001
accreditation, designed to help ensure that both internal and
external risks are minimised. Certification further provides
customers and key stakeholders with the confidence that security
risks are taken and addressed seriously. Plexus relies on its own
in-house developed software systems, and these have the advantage
of allowing the Company to develop software solutions that can
react quickly to any IT issues that may arise.
Innovative IP is at the core of Plexus, with a focus on oil and
gas equipment design and development utilising our proprietary
POS-GRIP friction grip method of engineering. POS-GRIP was designed
to address limitations associated with conventional technology
particularly in terms of metal sealing, and this has led to the
raising of safety standards for HP/HT wellhead applications whilst
delivering significant operational and cost advantages. The ongoing
development of our extensive IP suite, in conjunction with partners
where appropriate, continues to be a priority for the Company, and
ongoing investment in research and development in a wide range of
areas and applications outside of Jack-up rental wellhead
exploration including surface production and subsea wellhead
equipment, as well as proprietary connector technology, is an
important part of this strategy. This diversification is even more
relevant following the sale of the Jack-up Business to FMCT where,
having now proven the merits of POS-GRIP in the Jack-up exploration
niche market, we have the resources and expertise to pursue the
larger market sector opportunities.
Ongoing operational activities and necessary R&D and capex
continue to be funded from cash reserves. The Group has minimal
debt which comprises of a term loan with a current balance of
GBP0.2m which runs to September 2019.
Interim Results
The six months to December 2018 results and activities reflect
the Group's movement away from the discontinued Jack-up Business
towards new areas, including the significantly larger surface
production wellhead market, and the use of the POS-SET Connector
for abandonment applications. Post period end, important progress
has been made in relation to a breakthrough order placed by Gazprom
for POS-GRIP wellhead Jack-up exploration equipment with Gusar, and
the ongoing installation of the production wellhead for Spirit
Energy in the North Sea.
Continuing operations revenue for the six-month period ended 31
December 2018 increased significantly to GBP1,312k, compared to the
previous year's figure of GBP40k, and will increase further in the
second half following the completion of circa GBP1.4m of rental
wellhead equipment to Gusar our Russian licensing partner.
During the period Plexus continued to focus on preserving Group
cash by minimising spending and investment on capex, opex and
non-essential R&D, without compromising operations. This
discipline helped generate the confidence for the board to declare
a GBP1m interim dividend earlier this month.
Continuing activities administrative expenses are broadly in
line with the prior year with expenditure for the 6 months to
December 2018 of GBP2.83m (2017: GBP2.71m). Within this total the
continuing salary component remained the largest at GBP1.14m which
is a 3.6% increase compared to the prior year first half which
totalled GBP1.07m. Personnel numbers for continuing staff are in
line with the prior year which have increased by 1 from 36 as at 31
December 2017 to 37 at 31 December 2018, although this will
increase in the second half as additional capacity is put in place
so as to be able to service a greater level of enquiries.
For continuing operations, the Group has reported a loss of
GBP2.3m which is GBP400k lower compared to the prior year loss of
GBP2.7m. The loss comes after absorbing similar rental asset and
other property, plant and equipment depreciation and amortisation
costs of circa GBP0.8m a reduction of GBP0.1m when compared to the
prior year.
Following the sale of the discontinued Jack-up Business, the
Group has been wholly focussed on its continuing business. For
discontinued operations for the six months to December 2018, sales
revenue was GBPnil, compared to GBP2.4m the prior year.
Administrative expenditure for discontinued operations was GBPnil
(2017: GBP3.4m). The Group made a loss of GBPnil compared to a loss
of GBP1m in the prior year.
The Group has not provided for a charge to UK Corporation tax at
the prevailing rate of 19%. Basic loss per share for continuing
operations was 2.22p per share which compares to a 2.60p loss per
share for the same period last year. For discontinued operations
the loss per share was nil per share which compares to a 0.96p loss
per share for the same period last year.
The balance sheet continues to remain strong, and the current
level of intangible and tangible property, plant and equipment
asset values at GBP11.1m and GBP13.3m respectively illustrate the
amount of cumulative investment that has been made in the business.
Total asset values at the end of the period stood at GBP41.1m. The
non-essential R&D spend is in line with the prior year at
GBP0.1m. Such control on investment activity will not compromise
our IP and its ongoing development, or our ability to provide
customers with a high standard of equipment and service.
The Group's cash position remains strong. The Group closed the
period with net cash of approximately GBP9.5m and in addition has
financial assets with a value of GBP2.8m at 31 December 2018.
The Group has minimal debt, which comprises of a term loan with
a current balance of GBP0.2m which runs to September 2019.
Outlook
The strategic progress that we have made during the period and
post period end I believe is highly encouraging for the future,
particularly in respect of the technical and operational advantages
of POS-GRIP technology gaining further traction. Of particular note
was the first Gazprom order with our licencee Gusar which we have
been working on securing for some time. Russia represents a key
market for Plexus as our friction grip technology and HG metal
sealing have been proven to be ideally suited to Jack-up gas
drilling applications, especially for high pressure, high
temperature. However, it is often the case that new and superior
technology needs a boost from macro developments outside of its own
control, and fortunately Plexus is seeing such a trend with the
accelerating transition from coal and oil to natural gas. It is
important therefore to properly analyse these developments, and I
make no apologies for doing so.
If the ambitious targets for electric vehicle ('EV') uptake and
the predictions of rapid growth in the energy storage market are
anything to go by, the energy transition we have referred to in
previous reports is gaining momentum as, in the words of Bob
Dudley, CEO of BP, "the world seeks to move to a pathway consistent
with meeting the climate goals outlined in the Paris Agreement."
Volvo has pledged to electrify all new models in 2019; Volkswagen
is aiming for EVs to account for 25% of sales by 2025; Denmark
intends to ban the sale of new petrol and diesel cars by 2030 and
hybrids in 2035; while France and the UK want all new vehicles sold
to produce zero emissions by 2040. Meanwhile, according to
Bloomberg New Energy Finance's report in November 2018, the global
energy storage market is expected to grow to 942GW/2,857GWh by
2040, attracting US$620 billion in investment in the process. Such
major industry developments underline the need and desire during
this energy transition for hydrocarbons to be as clean as
possible.
In an article for Energy Voice, Louise Kingham, CEO of the
Energy Institute, wrote, "The IEA reports that the proportion of
the world's energy sourced from fossil fuels is still around 80% -
the same as it was more than three decades ago - and that's 80% of
2.5 times the amount of energy!" And that is before future growth
in the world economy is factored in. According to BP's recent 2019
Energy Outlook: "In all the scenarios considered, world GDP more
than doubles by 2040 driven by increasing prosperity in
fast-growing developing economies. In the Evolving Transition
('ET') scenario this improvement in living standards causes energy
demand to increase by around a third over the Outlook, driven by
India, China and Other Asia which together account for two-thirds
of the increase." In an interview with the FT in March 2018, Chris
Midgley from S&P Global Platts adds, "S&P Global Platts
Analytics' projections are that oil production will have to
increase from about 100m b/d today to just under 125m b/d in 2040
under the 'most likely' reference case to meet rising demand from
transport. Even with aggressive penetration of EVs, it will take
until late in the next decade before an inflection in oil demand is
observed, with most demand destruction in the next 10 years coming
from fuel efficiency rather than EV displacement." It is clear
therefore that hydrocarbons will need to play a key role in meeting
the world's energy needs for many years to come.
As Mr Midgley alludes to above, the energy industry faces a
dilemma. In his introduction to this year's Energy Outlook, BP's
Bob Dudley provides a neat summary: "The outlook facing major
energy providers, like BP, is both challenging and exciting. One of
the biggest challenges of our time is a dual one: the need to meet
rising energy demand while at the same time reducing carbon
emissions." This we believe is where our gas-proof sealing
technology has an increasingly important role to play.
Big Oil has a readymade solution at its disposal: natural gas.
In terms of harmful CO2 emissions, natural gas is by far the
cleanest fossil fuel. The IEA has estimated natural gas emits 117
pounds of CO2 per million British thermal units ('Btu') of energy.
The equivalent number for coal is 228.6 pounds of CO2; diesel fuel
and heating oil 161.3 pounds of CO2; and gasoline 157.2 pounds of
CO2. Natural gas' clean credentials have seen its share of the
hydrocarbon mix grow and inform predictions for further growth in
the decades ahead. BP's Energy Outlook forecasts, "In the ET
scenario, natural gas grows at an average rate of 1.7% p.a. -
increasing nearly 50% by 2040 - the only source of energy, along
with renewables, whose share in primary energy increases over the
Outlook."
In its latest annual LNG Outlook, Shell forecasts demand for LNG
will reach c. 384 million tonnes in 2020, a 20% increase on 2018's
319 million tonnes. To meet this demand, new sources of LNG will be
needed with Shell expecting 35 million tonnes of additional LNG
supplies to come online in 2019. Maarten Wetselaar, Shell's
Integrated Gas and New Energies Director, said, "We saw Asian LNG
demand growth exceed expectations again in 2018 and we expect this
strong growth to continue. Investment in new supply projects is
picking up, but more will be needed soon." Mr Wetselaar continues,
"The continued surge in Chinese LNG imports has helped improve air
quality in some of its biggest cities over the last few years.
China's success in making the air cleaner for millions of people
shows the critical role that natural gas can play in providing more
and cleaner energy to the world".
The key challenge, however, is for the damage caused by methane
leaks to be comprehensively and effectively dealt with. In an
article for Energy Voice, Louise Kingham explained that more than
"80% of international oil and gas professionals surveyed by the IEA
last year were unaware of the extent of the possibilities to tackle
the problem." Our focus at Plexus therefore is on ensuring that the
80% of oil and gas professionals who are not aware of "the
possibilities to tackle the problem" are aware of POS-GRIP as the
'gas-proof' solution that prevents methane leaks at the wellhead
end of the supply chain, (which is one of the OGCI's areas of
focus). This is what we are doing, and we are highly encouraged by
the level of engagement we are experiencing. The heightened level
of interest in our metal-to-metal sealing surface production
technology is not just down to our equipment having been
successfully deployed on hundreds of oil and gas exploration well
applications, including ultra-high pressure and temperature
projects to 20,000 psi at 375 F, but also due to operators'
increasing focus on the need to tackle methane leaks.
The step-up in the scale of the projects we are tendering for
lay behind our decision to bring forward certain investment costs
in the half year period from the next financial year. Although this
impacts on margins in the shorter term, this will enable us to
service the higher than expected number of opportunities we are
pitching for. The increased investment will, in our view, prove to
be money well spent and we look forward to providing further
updates on our progress in due course. Following the sale of our
niche Jack-up exploration business, Plexus is undergoing its own
transition, just like the energy industry we supply. Plexus'
transition into an IP-led oil and gas services engineering company
is advancing well, and we are confident we remain on course to
establish POS-GRIP as a superior enabling gas-proof technology for
the broader energy sector, and in the process generate substantial
value for our shareholders.
J Jeffrey Thrall
Non-Executive Chairman
27 March 2019
Plexus Holdings Plc
Unaudited Interim Consolidated Statement of Comprehensive
Income
For the Six Months Ended 31 December 2018
Six months Six months Year to
to 31 December to 31 December 30 June
2018 2017 2018
GBP 000's GBP 000's GBP 000's
Revenue 1,312 40 318
Cost of sales (828) (88) (290)
--------------- --------------- ---------
Gross profit 484 (48) 28
Administrative expenses (2,833) (2,705) (5,313)
--------------- --------------- ---------
Operating loss (2,349) (2,753) (5,285)
Finance income 100 19 73
Finance costs (88) (9) (37)
Loss before taxation (2,337) (2,743) (5,249)
Income tax expense (note 6) - - 555
Loss after taxation from continuing
operations (2,337) (2,743) (4,694)
(Loss) / Profit after taxation
from discontinued operations - (1,008) 4,322
--------------- --------------- ---------
Loss for Year (2,337) (3,751) (372)
Other comprehensive income - - -
Total comprehensive income (2,337) (3,751) (372)
=============== =============== =========
(Loss)/earning per share (note
7)
Basic from continuing operations (2.22p) (2.60p) (4.45p)
Diluted from continuing operations (2.22p) (2.60p) (4.45p)
Basic from discontinued operations - (0.96p) 4.10p
Diluted from discontinued operations - (0.96p) 4.08p
Plexus Holdings Plc
Unaudited Interim Consolidated Statement of Financial Position
As at 31 December 2018
31 December 31 December 30 June
2018 2017 2018
GBP 000's GBP 000's GBP 000's
ASSETS
Goodwill 767 767 767
Intangible assets 11,129 13,257 11,469
Property, plant and equipment
(note 9) 3,673 4,203 4,004
Non-current Financial Asset 2,849 - 2,124
Deferred tax asset 984 287 984
Other Receivables 6,337 - 6,337
Investment in associate (note
10) 785 - -
Total non-current assets 26,524 18,514 25,685
------------ ----------- ---------
Asset held for sale (note 11) - 13,134 -
Inventories 1,350 1,251 1,871
Trade and other receivables 3,187 705 4,888
Cash and cash equivalents 9,765 5,828 13,296
Current income tax asset 371 420 414
Total current assets 14,673 21,338 20,469
------------ ----------- ---------
TOTAL ASSETS 41,197 39,852 46,154
============ =========== =========
EQUITY AND LIABILITIES
Called up share capital (note
13) 1,054 1,054 1,054
Share premium account 36,893 36,893 36,893
Share based payments reserve 674 767 674
Retained earnings (42) (1,176) 2,295
Total equity attributable to
equity holders
------------ ----------- ---------
of the parent 38,579 37,538 40,916
------------ ----------- ---------
Bank loans - 225 75
Other non-current liabilities 493 - 493
Total non-current liabilities 493 225 568
------------ ----------- ---------
Bank loans 225 300 300
Trade and other payables 1,900 1,789 4,370
Total current liabilities 2,125 2,089 4,670
------------ ----------- ---------
Total liabilities 2,618 2,314 5,238
------------ ----------- ---------
TOTAL EQUITY AND LIABILITIES 41,197 39,852 46,154
============ =========== =========
Plexus Holdings Plc
Unaudited Interim Statement of Changes in Equity
For the six months ended 31 December 2018
Called Share Share Based
Up Share Premium Payments Retained
Capital Account Reserve Earnings Total
GBP 000's GBP 000's GBP 000's GBP 000's GBP 000's
Balance as at 1 July 2017 1,054 36,893 767 2,575 41,289
Total comprehensive income
for the period - - - (372) (372)
Net deferred tax movement
on share options - - (1) - (1)
Reallocation following
lapse/expiry/forfeit of
share options - - (92) 92 -
Balance as at 30 June 2018 1,054 36,893 674 2,295 40,916
========= ========= =========== ========= =========
Total comprehensive income
for the period - - - (2,337) (2,337)
Balance as at 31 December
2018 1,054 36,893 674 (42) 38,579
========= ========= =========== ========= =========
Plexus Holdings Plc
Unaudited Interim Statement of Cash Flows
For the six months ended 31 December 2018
Six months Six months Year to
to 31 December to 31 December 30 June
2018 2017 2018
GBP 000's GBP 000's GBP 000's
Cash flows from operating activities
Loss before taxation from continuing
activities (2,337) (2.743) (5,249)
(Loss)/profit before taxation
from discontinued activities - (1,008) 4,232
--------------- --------------- ---------
Loss before tax (2,337) (3,751) (1,017)
Adjustments for:
Depreciation, amortisation and
impairment charges 833 1,982 3,030
Gain on sale of discontinued
operation - - (5,825)
Fair value adjustment of on financial
assets 72 - 21
Profit loss on disposal of property,
plant and equipment - - (87)
Investment income (100) (19) (73)
Interest expense 88 9 37
Changes in working capital:
Decrease/(Increase) in inventories 521 (305) (1,860)
Decrease/(Increase) in trade
and other receivables 1,701 (429) (1,377)
(Decrease)/Increase in trade
and other payables (2,470) 658 2,667
Cash generated from operations (1,692) (1,855) (4,484)
Net income taxes received 43 546 500
Net cash used in operating activities (1,649) (1,309) (3,984)
--------------- --------------- ---------
Cash flows from investing activities
Investment in associate (785) - -
Funds invested in financial instruments (797) - (2,145)
Net initial proceeds from sale
of discontinued operation - - 14,050
Associated cost on sale of discontinued
operation - - (1,585)
Purchase of intangible assets (110) (100) (231)
Interest received 100 19 73
Purchase of property, plant and
equipment (52) (197) (447)
Net proceeds from sale of asset
held for sale - - 395
Net proceeds of sale of property,
plant and equipment - 396 329
Net cash (used in)/generated
from investing activities (1,644) 118 10,439
--------------- --------------- ---------
Cash flows from financing activities
Repayment of loans (150) (150) (300)
Interest paid (88) (9) (37)
Net cash generated from financing
activities (238) (159) (337)
--------------- --------------- ---------
Net (decrease)/increase in cash
and cash equivalents (3,531) (1,350) 6,118
Cash and cash equivalents at
brought forward 13,296 7,178 7,178
Cash and cash equivalents carried
forward 9,765 5,828 13,296
=============== =============== =========
Notes to the Interim Report December 2018
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 based on the
accounting policies set out in the annual report for the year ended
30 June 2018 and which are also expected to apply for 30 June
2019.
The comparative figures for the financial year ended 30 June
2018 are not the Company's statutory accounts for that financial
year. Those accounts have been reported on by the company's
auditors, Crowe U.K 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.
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 2019. 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. Except as described below the accounting policies applied in
these interim financial statements are the same as those applied in
the Group's consolidated financial statements as at and for the
year ended 30 June 2018.
The changes in accounting policy set out below will also be
reflected in the Group's consolidated financial statements for the
year ended 30 June 2019.
IFRS 15 Revenue from contracts with Customers
The Group has adopted IFRS 15 Revenue from Contracts with
Customers from 1 July 2018 using the cumulative effect transition
method. Under the cumulative effect method, the impact of initially
applying the standard will be reflected as an adjustment to the
opening balance of retained earnings as of 1 July 2018 and the
comparative period will not be restated. The new standard requires
revenue to be recognised using a five-step model which requires the
transaction price for each contract to be apportioned to separate
performance obligations arising under the contract either when the
performance obligation in the contract has been performed (point in
time recognition) or over time as control of the performance
obligation is transferred to the customer. The five-step model is
as follows
1) Identify the contract(s) with a customer
2) Identify the performance obligations in the contract
3) Determine the transaction price
4) Allocate the transaction price to the performance obligations
in the contract
5) Recognise revenue when or as the entity satisfies its
performance obligations
The Group has completed its assessment of IFRS 15 and has not
identified any material differences between the requirements of
IFRS 15 and the previous revenue recognition policy. Accordingly,
no financial restatement has been made.
IFRS 9 Financial Instruments
The Group has adopted IFRS 9 Financial Instruments from 1 July
2018, replacing IAS 39 Financial Instrument: Recognition and
Measurement.
IFRS 9 replaces the existing credit loss model with a forward
looking expected credit loss model for assessing the impairment of
financial assets. Adopting this new model has not had a material
impact and accordingly no financial restatement has been made. The
new standard has not had a significant effect on the Group's
accounting policy.
IFRS 9 largely retains the existing requirements in IAS 39 for
the classification and measurement of financial liabilities and has
not had a significant effect on the Group's accounting policy.
3. This interim report was approved by the board of directors on
27 March 2019.
4. The directors do not recommend payment of an interim dividend
in relation to this reporting period.
5. There were no other gains or losses to be recognised in the
financial period other than those reflected in the Statement of
Comprehensive Income.
6. No corporation tax provision has been provided for the six
months ended 31 December 2018 (2017: nil). As a result there is no
effective rate of tax for the six months ended 31 December 2018
(2017: 0%) after adjustments made to reflect R&D tax credits
received relating to the current and prior years and offsets for
disallowable expenditure.
7. Basic earnings per share are based on the weighted average of
ordinary shares in issue during the half-year of 105,386,239 (2017:
105,386,239). On February 2019, Plexus Holdings PLC ("the Company")
completed the acquisition of 4,950,495 Ordinary Shares held by LLC
Gusar. The Buyback Shares have been transferred to the CREST
account of the Company and will be held in treasury and will not
rank for any future dividends and no voting rights will be
exercised in respect of such Ordinary Shares. Following the
transaction, the Company's issued share capital comprises
105,386,239 Ordinary Shares, of which 4,950,495 Ordinary Shares are
held in treasury. The Company now has a total of 100,435,744
Ordinary Shares in issue with voting rights. The calculation of EPS
has not been adjusted for this transasction.
8. 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.
9. 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 1 July 2017 3,924 706 28,832 22 32 33,516
Additions - 10 198 222 17 447
Transfers - - 229 (229) - -
Disposals (317) - (23,750) (5) (32) (24,104)
As at 30 June 2018 3,607 716 5,509 10 17 9,859
Additions - - 5 47 - 52
Transfers - - 57 (57) - -
Disposals - - (1) - - (1)
As at 31 December
2018 3,607 716 5,570 - 17 9,910
Depreciation
As at 1 July 2017 1,007 296 20,210 - 27 21,540
Charge for the
year 225 85 1,733 - 3 2,046
On disposals (74) - (17,628) - (29) (17,731)
As at 30 June 2018 1,158 381 4,315 - 1 5,855
Charge for the
year 106 43 232 - 2 383
On disposals - - (1) - - (1)
As at 31 December
2018 1,264 424 4,546 - 3 6,237
Net book value
As at 31 December
2018 2,343 292 1,024 - 14 3,673
As at 30 June 2018 2,449 335 1,194 10 16 4,004
As at 30 June 2017 2,917 410 8,622 22 5 11,976
10. Investments
On 17(th) December 2018 the Group made an investment of GBP785k,
(including associated legal costs) to acquire a 49% interest in
KMS, an independent precision engineering business focused on the
oil and gas. The Transaction is in line with management's strategy
to position Plexus as an IP-led company based around its
ground-breaking POS-GRIP friction grip method of engineering with a
design, development and now a machining capability.
11. Assets held for sale
31 December 2018 Six months to 31 December 2017 Year to
30 June
2018
GBP'000 GBP'000 GBP'000
Buildings - - -
Equipment - 6,489 -
Assets under construction - 16 -
Motor vehicles - 4 -
Inventories - 5,894 -
Trade debtors and other receivables - 732 -
Trade creditors - (1) -
Fair value adjustment - - -
Cost of sale - - -
- 13,134 -
================= =============================== =========
The assets held for sale in the prior financial period relates
to the sale of a discontinued operation. On 19 October 2017 Plexus
Holdings PLC announced the sale of its wellhead exploration
equipment and services business for Jack-up applications (the
"Jack-up Business") to FMC Technologies Limited ("FMCT"), a
subsidiary of TechnipFMC (Paris:FTI) (NYSE:FTI) one of the leading
oil & gas service and equipment companies (the "Disposal"). The
sale completed on 1 February 2018.
In addition, and as part of the Transaction, the company and
FMCT entered into a Collaboration Agreement ("CA") which
establishes a framework to work together both on the development of
existing POS-GRIP IP for applications outside of Jack-up
exploration, as well as future new technologies.
The Disposal follows the signing of a conditional Business
Purchase Agreement ("BPA") by Plexus, POSL and FMCT. Under the
terms of the BPA, the Plexus Group received an initial gross cash
consideration of GBP15,000,000, subject to certain adjustments
which led to a net receipt on 1(st) February 2018 of GBP14,050,497
with an additional sum of up to GBP27,500,000 payable dependent on
the future performance of the Jack-up Business during a three-year
earn-out period. The earn-out has the potential to increase the
total cash gross consideration to GBP42,500,000.
Under IFRS5 those assets which were identified as transferring
to FMCT on 1(st) February 2018 were included in the table above at
fair value less cost of sale.
12. Discontinued operations
Six months to 31 December 2018 Six months to 31 December 2017 Year to
30 June
2018
GBP'000 GBP'000 GBP'000
Revenue - 2,411 3,907
Expenses - (3,419) (5,500)
-------------------------------- ------------------------------- ---------
(Loss)/Profit before tax of
discontinued operations - (1,008) (1,593)
Income tax credit - - 90
-------------------------------- ------------------------------- ---------
(Loss)/Profit after tax of discontinued
operations - (1,008) (1,503)
================================ =============================== =========
13. Share Capital
Six months to 31 December 2018 Six months to 31 December 2017 Year to
30 June
2018
GBP'000 GBP'000 GBP'000
Authorised:
Equity: 110,000,000 (2017: 110,000,000)
Ordinary shares of 1p each 1,100 1,100 1,100
Allotted, called up and fully paid:
Equity: 105,386,239 (Dec 2017:
105,386,239, June 18: 105,386,239)
Ordinary shares of 1p each 1,054 1,054 1,054
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
IR LLFLDVLIDFIA
(END) Dow Jones Newswires
March 28, 2019 03:00 ET (07:00 GMT)
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