TIDMPOS
RNS Number : 2257S
Plexus Holdings Plc
05 November 2019
Plexus Holdings PLC / Index: AIM / Epic: POS / Sector: Oil
equipment & services
5 November 2019
This announcement contains inside information
Plexus Holdings plc ('Plexus' or 'the Group')
Preliminary Results for the year to 30 June 2019
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 preliminary results for the
year ending 30 June 2019.
Financial and Corporate Overview
Following the completion on 1 February 2018 of the sale of
Plexus' wellhead exploration equipment services business for
Jack-up applications ('the Jack-up Business') to FMC Technologies
Limited ('TFMC'), a subsidiary of one of the leading oil and gas
service and equipment companies TechnipFMC (Paris:FTI) (NYSE:FTI),
the year-end results and comparative prior year period have been
reported as required on a continuing and a discontinued operations
basis.
-- Continuing operations sales revenue GBP3,611k (2018: GBP318k)
o Discontinued operations sales revenue GBPnil (2018:
GBP3,907k)
-- Adjusted EBITDA on continuing activities (GBP2.51m) loss (2018: GBP3.74m loss)
-- Continuing operations operating loss GBP4,010k (2018: GBP5,285k)
o Discontinued operations operating loss GBP108k (2018:
GBP1,593k)
-- Continuing operations operating loss after tax GBP3,227k (2018: GBP4,694k)
o Discontinued operations loss after tax GBP88k (2018: GBP4,322k
profit)
-- Basic loss per share from continuing activities 3.12p (2018: 4.45p loss)
o Basic loss per share from discontinued activities 0.09p (2018:
4.10p earning)
-- Net cash of GBP5.08m (2018: net cash GBP12.9m)
-- The Group has GBP2.84m in high-yield bonds (2018: GBP2.12m)
-- February 2019 - Buyback of 4,950,495 Ordinary Shares held by
Russian licensee 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 ahead of initial
rental order in Russia with Gazprom
-- April 2019 - Payment of aggregate GBP1.0m special interim dividend
-- May 2019 - Court approval of reduction of capital by way of a
cancellation of the Plexus Share Premium Account in order to
increase distributable reserves. This increases the flexibility to
pay dividends, to facilitate any prospective buy back of shares or
for any other general corporate purposes
-- Whilst the Company remains committed to distributing
dividends to its shareholders, the Directors believe that it is
prudent to consider the payment of dividends subject to the ongoing
capital and operational requirements of the business
Operational Overview
-- Full year revenues principally generated through sale of
POS-GRIP(R) equipment for production, abandonment and Russian
Jack-up exploration operations - a major departure from previous
years when revenues were dependent on the rental of Jack-up
exploration wellheads:
o August 2018 - Contract for a second rental order for the
POS-SET(TM) Connector from Oceaneering A/S, Norway for well
abandonment operations in the North Sea
-- Progress made towards establishing a diversified portfolio of
revenue streams based on products empowered by Plexus' proprietary
POS-GRIP(R) Technology - follows 2018 sale of Plexus' wellhead
exploration equipment services business for jack-up applications to
FMC Technologies Limited ('TFMC'), a subsidiary of top tier
industry supplier TechnipFMC (Paris:FTI) (NYSE:FTI)
-- Potential material royalty stream from licensing agreement
covering Russia and CIS market with Gusevsky Valves Plant LLC
('Gusar') follows:
o September 2018 - Order secured by Russian partner to supply
Gazprom with two sets of Plexus' Tersus(TM) - TRT Mudline
Suspension System ('MLS') for shallow water exploration gas
wells
o March 2019 - Breakthrough order secured by Gusar with global
energy giant Gazprom to supply POS-GRIP rental wellhead gas
exploration equipment during the first year of a five-year gas
exploration drilling programme
-- GBP735,000 investment in Kincardine Manufacturing Services
Limited ('KMS'), a specialist precision engineering business with a
blue-chip customer base in the oil and gas sector - acquisition of
49% interest in KMS has the potential to provide Plexus with:
o Annual cash income stream from KMS distribution/dividend
policy
o Future access to machining capability which can support
R&D development projects for alternative applications of
POS-GRIP Technology
-- Formation of joint venture ('JV'), Plexus Pressure Control
Ltd ('PPC') with UK based BEL Valves Ltd enables Plexus to offer
operators full-service package including valves and Xmas-trees for
large scale production projects
o Actively tendering for a number of large-scale projects across
the world
o Step-up in interest in POS-GRIP equipment for use in surface
production projects
Chief Executive Ben van Bilderbeek said:
"For the 12 months ended 30 June 2019, the major focus has been
on our 'Reset and Rebuild' strategy: resetting our model away from
running the niche Jack-up exploration wellhead rental business to
one focused on developing and rolling out new products for the much
larger production wellhead equipment, outlet valve and Xmas tree
market sectors; and rebuilding over time our past record of
reporting robust financial results and distributing dividends to
shareholders. The 2018 sale of the Jack-up exploration wellhead
business to TFMC has been the trigger for the reset and rebuild
initiative. Our business model is now one that is IP driven rather
than operations-led, centred on designing, developing and marketing
new POS-GRIP-enabled products, both independently and with partners
such as TFMC through the Collaboration Agreement we signed in 2018.
This strategy is based upon our innovative proprietary POS-GRIP
Technology and "HG"(R) Seals which importantly raise performance,
reliability and safety standards, just as they did for Jack-up
exploration.
"In terms of rebuilding our revenue profile into one that is
more balanced and diversified, a breakdown of our full year
revenues demonstrates some of the progress that we have made in a
short period of time. Income during the year was generated from
orders for a production wellhead for Spirit Energy, our POS-SET
Connector for abandonment operations for Oceaneering A/S and circa
GBP1.4m from the sale of two POS-GRIP wellhead systems to our
Russian partner Gusar for a Gazprom contract. Our full year
financial performance reflects the efforts being made with a
substantial year on year increase in continuing sales revenues to
GBP3,611k compared to GBP318k in 2018; a narrowing in the EBITDA
loss to GBP2.51m (from GBP3.74m loss in 2018); and the special
dividend of 0.99566 pence per Ordinary Share (paid in April 2019),
the first since 2015. While the numbers are small relative to those
we regularly reported prior to the oil price downturn, the full
year sets a foundation for future growth
"Our objective is to fully capitalise on the potential of our
technology and to develop a portfolio of POS-GRIP-based products
and partners. We already have a suite of developed equipment for
the production, subsea and abandonment markets as well as a number
of first-rate partners, but there remains considerable run room in
terms of the number of products and partners we can have - wherever
metal to metal annulus sealing is required, POS-GRIP can deliver a
true leak proof technology. This is key to delivering highly
reliable production equipment that virtually eliminates maintenance
costs and can significantly reduce the total cost of ownership of
the equipment to operators over field life.
"Among our existing partnerships is our licensing agreement in
Russia. Here we have high hopes based on our partner Gusar's
breakthrough POS-GRIP wellhead order with Russian major Gazprom for
a Jack-up exploration drilling campaign in the Arctic. As we found
in the North Sea, once operators experience for themselves the
multiple performance benefits of our equipment many become
long-standing customers of Plexus and we are confident that this
can be the case with Gazprom. Majors such as BP and Royal Dutch
Shell were all part of a blue-chip customer base with whom we
established long-term relationships supplying Jack-up exploration
wellheads. Gusar's first order with Gazprom therefore has the
potential to be the first of many, which would in turn transform
the Russian and CIS licensing agreement into a valuable long-term
royalty stream for Plexus.
"Another partnership with major income-generating potential for
the Company is PPC, a JV with BEL Valves Limited. A key strategic
move, the JV enables us for the first time to offer a "package
solution" so as to be able to compete with top tier suppliers when
bidding for production contracts. Plexus can now offer operators a
turnkey solution comprised of highly qualified surface Xmas trees
and valves, alongside our POS-GRIP production wellhead systems.
Contracts for the large production projects generally have long
lead times but despite this and the recent conception of the JV, we
have already begun to be invited to tender. Securing just one large
production contract would be transformational for Plexus, not only
in terms of the revenues that can be generated, but also in terms
of demonstrating to the industry that we can supply major projects
with state-of-the-art equipment as part of a full-service
package.
"We believe we have the right IP, the right business model and
the right partners to over time establish POS-GRIP as the go-to
wellhead and related products technology for the broader energy
sector, and in the process rebuild Plexus into a highly profitable,
operating and IP-licensing company. Moreover, we believe now is the
right time for our technology, although we do not underestimate
reports such as that from KPMG in September which said that
oilfield service providers recorded their lowest level of
transactions in five years. The meteoric rise of cleaner natural
gas in the hydrocarbon energy mix has brought with it an increased
urgency to tackle natural gas leaks. A principal component of
natural gas is methane which in un-combusted form is very damaging
to the environment and a negative in respect of the green
credentials of natural gas. By delivering a cost-effective,
leak-proof solution at the wellhead, we believe POS-GRIP systems
helps prevent methane emissions throughout the life of a well,
where long term integrity is critical.
"A major opportunity is therefore opening up to Plexus, which we
recognise has the potential to accelerate the roll-out of our
leak-proof, and maintenance free equipment, increase the number of
income / royalty streams within our portfolio whilst helping raise
safety standards across the energy industry. I look forward to
providing further updates on our progress as we focus on
capitalising on the unique strengths of our technology for the
benefit of all stakeholders."
For further information please visit www.plexusplc.com or
contact:
Ben van Bilderbeek Plexus Holdings PLC Tel: 020 7795 6890
Graham Stevens Plexus Holdings PLC Tel: 020 7795 6890
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Derrick Lee Cenkos Securities PLC Tel: 0131 220 9100
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Pete Lynch Cenkos Securities PLC Tel: 0131 220 9772
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Frank Buhagiar St Brides Partners Ltd Tel: 020 7236 1177
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Isabel de Salis St Brides Partners Ltd Tel: 020 7236 1177
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Summary of Results for the year ended 30 June 2019
2019 2018
GBP'000 GBP'000
Revenue (continuing operations) 3,611 318
--------- ---------
Adjusted EBITDA (continuing operations) (2,512) (3,737)
--------- ---------
Operating Loss (continuing operations) (4,010) (5,285)
Loss after taxation (continuing operations) (3,227) (4,694)
--------- ---------
(Loss) / profit after taxation (discontinued operation) (88) 4,322
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Loss after taxation (combined) (3,315) (372)
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Basic loss per share (pence) (continuing operations) (3.12p) (4.45)
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Basic (loss) / earning per share (pence) (discontinued operation) (0.09)p 4.10p
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Chairman's Statement
Business progress
Following the sale of the Jack-up Business, the Company's
revenues in the 12 months to 30 June 2019 amounted to GBP3,611k
(2018: GBP318k), which was largely generated from orders for a
production wellhead (Spirit Energy), a POS-SET Connector
(Oceaneering A/S) and the sale of two POS-GRIP wellhead systems to
Plexus' Russian partner Gusar for an initial Gazprom contract. The
Company is optimistic that these orders are positive early steps
into new and larger markets, and notes that there is typically a
much longer lead time to securing new business in the production
sector in particular. The Directors are pleased with the progress
that has been made during the current year on the development of a
project pipeline for future work, and organic growth is anticipated
as the move into the production market begins to gain traction;
however, these are not likely to begin to yield meaningful revenues
until the last quarter of the year to 30 June 2020 ("FY20").
Accordingly, it is expected at this stage that revenues in FY20
will be H2-weighted and materially lower than the prior year.
However, the Company is currently in early stage discussions
regarding a number of exciting projects which, due to the longer
project lead times, could deliver significant growth in revenues in
FY21.
Last year, I drew shareholders' attention to the Summary of
Results table above the Chairman's Statement. The numbers
highlighted the significant corporate event that took place during
2018, specifically the sale of the Jack-up exploration wellhead
rental business to TFMC. Up until that point, this business had
accounted for the vast majority of Plexus' revenues and so its sale
resulted in, and necessitated, a reset and rebuild strategy centred
around leveraging the recognition and awareness of our proprietary
friction grip method of engineering that the transaction created.
12 months on, and the Summary of Results table is once again
informative. Despite being only one year into Plexus' goal of
becoming an IP-led business based around monetising POS-GRIP, our
game-changing technology that has raised wellhead performance and
safety standards, the table shows the progress being made in
rebuilding our revenues from what was effectively a standing start
to GBP3.6m.
This year, I would like to draw shareholders' attention to our
new direction of travel. The year ended 30 June 2019 was the first
in Plexus' history as a plc where the rental of POS-GRIP wellheads
for Jack-up exploration did not account for the majority of our
income. Instead, revenues were generated from the sale of a
production wellhead to Spirit Energy for deployment in the North
Sea, a contract for our POS-SET Connector for use on abandonment
operations also in the North Sea, and from the sale of two Jack-up
rig exploration gas wellheads to Gusar, our licensee in Russia.
While we will continue to receive income from the rental of Jack-up
exploration wellheads via our three year earn-out with TFMC and
revenues from our retained rights for the CIS, going forward we are
working on increasing the portion of our revenues generated from
activities outside of the Jack-up Business.
Our goal is to add additional revenue streams to our portfolio
and at the same time scale up those that are already in place. In
that respect recent reports that the Russian government is
considering opening up exploration of the Artic Sea to foreign
operators is positive for our company as the potential of the
region outstrips the original size of the North Sea. Each new
revenue stream will be defined by geography, products or partners
but they will all share one common denominator: our proprietary
POS-GRIP Technology. Used on over 350 wells worldwide by a
blue-chip customer base that includes supermajors such as BP,
Gazprom, Royal Dutch Shell and Total, POS-GRIP is the best
technology for high pressure, high temperature drilling operations,
where its metal-to-metal seals deliver true leak proof performance.
Prior to the oil price downturn, POS-GRIP had become the dominant
Jack-up exploration wellhead equipment in the North Sea - one of
our wellheads was selected by Total for what is believed to be the
highest pressure and temperature well ever drilled in the North
Sea. This was for good reason. As far as we know only POS-GRIP
enabled equipment has, without qualification, passed a level of
test standards demanded by one of the supermajors. For a company of
Plexus' size to have raised the bar in terms of industry standards
and established relationships with leading operators is a standout
achievement, one that is testament to the strength and simplicity
of our technology and the considerable time savings it offers
operators. We are focused on offering the same superior
functionality and material cost savings to customers in other
sectors, both inside and in due course potentially outside of the
energy industry, and in the process build a portfolio of Plexus
products.
A number of important developments over the course of the year
bode well for the coming years. The sale of two exploration
POS-GRIP wellheads to our Russian partner and the subsequent
contract Gusar was awarded by Gazprom are the necessary first steps
towards transforming the licensing agreement into a significant and
regular royalty stream for Plexus; the Plexus Pressure Control Ltd
('PPC') joint venture ('JV') signed with BEL Valves Ltd, a UK based
manufacturer and supplier of valves and actuators, enables us to
combine our wellheads with extensively field-proven, highly
qualified surface production Xmas trees and wellhead annulus outlet
valves and so deliver the full service package operators of large
scale production projects typically prefer, and the acquisition of
a 49% stake in Kincardine Manufacturing Services Limited ('KMS'), a
specialist precision engineering business servicing the oil and gas
sector, provides us with access to machining capability in support
of R&D projects focused on developing applications of POS-GRIP
Technology for new markets.
Our aim is to have a pipeline of POS-GRIP-enabled applications
at various stages of the development curve. We have already
developed equipment for the Jack-up exploration, production, subsea
and abandonment markets. We are currently working to not only
exploit these products in the new market sectors we are now
targeting, both independently and with partners, but are now also
looking to develop new products and applications for areas of the
energy market where POS-GRIP's proven capability to deliver what we
believe is the only true metal-to-metal leak proof seal which can
significantly raise performance and safety standards. We are
pursuing potential licensees for the supply and marketing of our
POS-GRIP-enabled equipment in such markets and geographies and are
confident that in due course further IP-led transactions will be
secured.
Overview
The technology around which the business is built is POS-GRIP,
our friction grip method of engineering and associated product
suite that is proven to deliver true and verifiable metal-to-metal
leak proof "HG" seals, enhanced safety and operational features,
and material time and cost savings due to lower or zero maintenance
and remedial spend throughout field life. This is a key
differential between Plexus and all other conventional oil service
company equipment suppliers, and I am hopeful that the
opportunities open to us are becoming more accessible as the
industry continues to embrace the necessity for advanced technical
solutions. This was very recently demonstrated during the recent UN
climate summit in New York where the oil and gas industry met to
discuss a plan for reducing emissions from fossil fuels, and in
particular natural gas. A senior moderator involved with the
Environmental Defence Fund concluded net-zero emissions without new
technology was an impossibility and that - "We need every
technology" to meet this goal.
The simplicity of POS-GRIP's design and by implication the ease
with which it can be deployed and operated lies behind the
technology's strength and explains why operators of hundreds of
wells worldwide were willing to switch away from conventional
wellhead technologies in favour of POS-GRIP, especially for high
pressure high temperature ('HPHT') operations. Competing equipment
typically comprises a much larger number of individual components,
each of which has the potential to compromise seal integrity and
are vulnerable to fretting/movement caused by temperature and
pressure variations. By contrast, POS-GRIP involves applying an
external hydraulic force to squeeze the housing until it engages a
special-design end connection (casing or tubing hanger in
wellheads) to generate a gripping force. This eliminates assembly
tolerances and eventually merges the two members with such force
that the parts effectively become one, delivering where required a
lifetime leak proof metal seal solution. The process is accurately
controlled by hydraulic pressure and occurs within the elastic
limits of material, so that the connection is reversible, which is
particularly beneficial for example for side-tracking
operations.
Over the years, the benefits of our technology have attracted
orders from blue-chip customers, such as Total and Equinor, and
development and licensing partners, such as TFMC and Gusar. The
year under review saw new names added to the list of POS-GRIP
customers and partners. In August 2018 we secured an order for our
POS-GRIP enabled POS-SET Connector(TM) from Oceaneering A/S, Norway
for well abandonment operations in the North Sea. In March 2019,
global energy giant Gazprom became the latest supermajor to award a
contract for a POS-GRIP wellhead through Gusar.
The Gazprom purchase order, which was secured via our Russian
licensing partner Gusar, covers the first year of a five-year
Jack-up gas exploration drilling programme and so has the potential
to lead to further orders in the future. We believe that Russia can
become an important market for Plexus equipment, and being the
number one gas producer in the world, Russia represents a huge
market opportunity. As a result, the above breakthrough order with
leading Russian operator Gazprom is highly encouraging.
In terms of new partners, in June 2019 we announced the
formation of PPC, a JV with UK-based BEL Valves Limited. The JV
enables Plexus to compete on a level playing field with top tier
suppliers when bidding for contracts for large scale production
projects, which are typically awarded to providers offering turnkey
solutions. The JV, in which Plexus owns a majority shareholding,
will supply us with highly qualified surface Xmas trees and valves,
which we can then package up with our own POS-GRIP production
wellhead systems. We are now therefore much better placed to
successfully bid for lucrative surface production projects where
wellheads are often purchased as part of a package of
equipment.
PPC will not only service Plexus' existing surface production
wellhead business, but it is anticipated the JV will also support
the development of elements of our POS-GRIP Technology and other
IP, specifically in relation to valve and Xmas tree technology for
both land and offshore surface platform production wells. Such
improvements in our design and development capability for future
POS-GRIP applications was one reason behind our decision to invest
GBP735,000 into Kincardine Manufacturing Services Limited ('KMS'),
a specialist precision oil and gas engineering business. As well as
generating a future dividend stream for Plexus, our 49% interest in
KMS gives us access to machining capability in support of R&D
projects.
Staff
On behalf of the Board I would once again like to thank all our
employees both past and present for their dedication and hard work
during a year that continued to remain challenging for not only
Plexus but also the wider oil and gas industry, especially as
pressure continues to grow on hydrocarbons and their associated
impact on climate change. Following our prior year's restructuring
and related job losses, these macro trends combined with our new
strategy to create both new additional pressures and opportunities
for our experienced and dedicated staff. I am confident that they
will rise to these challenges as we look forward to an increased
level of future activity, particularly in relation to our
production wellhead applications, and now trees and valves. I am
confident that these developments will be positive for our staff,
and also for future employment opportunities within Plexus.
Outlook
"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 was BP CEO Bob
Dudley's introduction to the 2019 edition of BP's Energy Outlook.
This statement is an excellent summary of the current energy
conundrum. 'Rising energy demand' is largely being driven by
growing prosperity in Asia and other developing regions. 'Reducing
carbon emissions' is largely being driven by the need to meet the
climate goals set in the Paris Agreement.
Satisfying such growing demand for energy while reducing harmful
emissions may appear to be diametrically opposed, but only if the
energy industry is viewed through a twentieth-century lens. Today,
advanced technologies that enable fast-growing energy sub-sectors,
such as renewables and the transportation of cleaner natural gas in
liquified form, offer up solutions that allow the industry to meet
the challenge of providing the world with the ever-increasing
amounts of energy it requires while at the same time combatting
climate change. Bob Dudley continues, "New technologies are
revolutionizing the way in which that energy is produced,
transported and consumed."
We count our own POS-GRIP wellhead and "HG" metal-to-metal
sealing system as one such enabling technology. POS-GRIP equipment
delivers the only true long-term wellhead metal seal which can be
tested and qualified as a system to mirror true field life
conditions, rather than simplistic component-based testing. By
providing a leak proof solution at the wellhead end of the gas
supply infrastructure chain both during production and beyond, we
believe that POS-GRIP clearly has an important role to play in
preventing wellhead gas leaks, which can result in costly well
shutdowns, maintenance, and potential hydrocarbon emissions.
According to the US Energy Information Agency, gas-fired power
plants produce approximately 50% less carbon dioxide than coal
plants, and it is therefore very important that such benefits are
not eradicated as a result of methane and other hydrocarbons leaks
along the supply chain, from the wellhead all the way through to
the consumer. As Bob Dudley, BP's CEO at this month's 40(th) annual
Oil & Money conference in London told the audience one of his
concerns "is that gas is being increasingly marginalised. Even
vilified, and demonised". He further stated that to "exclude gas -
when so much is at stake - is to take huge and unnecessary risk",
and that "methane leaks and flaring can and must be tackled".
To illustrate the growing importance of gas, in July, Rystad
Energy predicted 2019 will see LNG greenfield investment hit US$103
billion which, if achieved, would be a new record for the industry.
With so much investment being committed to natural gas, it is clear
that it is in the industry's interests to ensure the environmental
benefits delivered by gas are safeguarded, and encouragingly many
initiatives are being put in place. For example, Shell has joined
BP, Eni, ExxonMobil, Repsol, Statoil, Total and Wintershall to
reduce methane emissions under the Guiding Principles, a
collaboration between organisations, including the International
Energy Agency and the United Nations.
Increased focus on and demand for gas by the energy industry,
together with the growing scrutiny of leaks across operations and
infrastructure, play to the strengths of our POS-GRIP Technology
and provide a positive long-term backdrop for the uptake of our
POS-GRIP-enabled equipment. Furthermore, while superior performance
tends to go hand in hand with higher costs, POS-GRIP breaks the
mould because of simplicity and by removing the need for remedial
maintenance and associated shut in costs, offering operational cost
savings that conventional technologies struggle to match. This fits
perfectly with what we understand our customers really care about
most, which is the lowest possible life-cycle cost, together with
maximum reliability, zero maintenance and improved safety
performance.
The combination of POS-GRIP's operational, environmental and
financial benefits ought to resonate strongly with companies
operating across the energy sector. Our challenge is to ensure all
operators are aware of POS-GRIP Technology, its multiple benefits
and its various applications. As the growing level of interest in
POS-GRIP equipment by customers and partners demonstrates, progress
is being made, although momentum will take time in a conservative
industry. We are confident the year ahead will see us build on the
start we have made in resetting and rebuilding Plexus into a
profitable IP-led technology business, which can generate
substantial value for our shareholders.
J Jeffrey Thrall
Non-Executive Chairman
4 November 2019
Strategic Report
Principal Activity
The Group markets oil and gas industry equipment that utilises
its patented friction grip method of engineering, including
wellheads and connectors known as POS-GRIP. This involves deforming
one tubular member against another within the elastic range to
effect gripping and sealing. This superior method of engineering
for wellheads offers several important advantages to operators,
particularly for HP/HT applications, and can include improved
technical performance, improved integrity of metal-to-metal seals,
significant installation time savings, reduced operating and
maintenance costs and enhanced safety.
Following the 2018 sale of the Company's Jack-up exploration
wellhead rental operations to a division of leading oil and gas
service and equipment provider TFMC, the year under review saw the
Group move towards an IP-led business model focused on designing,
developing and rolling-out a wider range of products based on the
POS-GRIP method of engineering. The Company retains the right to
pursue Jack-up exploration related business in Russia and the CIS,
the third largest hydrocarbon producing market in the world, and
where it has existing licence agreements with LLC Gusar and CJSC
Konar. In addition, Plexus continues to benefit from Jack-up
exploration drilling activity via its three year earn-out
arrangement with TFMC, which was part of the terms of the 2018 sale
agreement.
The Company is now focused on pursuing other markets including
surface production, abandonment and subsea. In line with this
strategy, in August 2018, the Company announced a purchase order
for its POS-SET Connector from Oceaneering A/S, Norway for well
abandonment operations in the North Sea. In June 2019, the Company
established Plexus Pressure Control Limited ('PPC'), with UK-based
BEL Valves Limited, which is important when bidding for large scale
production projects. Plexus owns a majority interest in the JV,
which enables it to supply operators with surface Xmas trees and
valves, alongside its own POS-GRIP production wellhead systems. As
a result, Plexus is able to compete with top tier suppliers for
high-value surface production projects which are generally awarded
to service providers offering turnkey solutions.
The Directors believe that the Company's proprietary technology
has additional wide-ranging applications both within and outside
the oil and gas industry. Work streams are underway to develop
additional POS-GRIP-enabled applications for new markets, both
independently and with partners, including TFMC with whom Plexus
signed a Collaboration Agreement to develop new POS-GRIP
products.
Financial Results
Revenue
Continuing revenue for the year was GBP3,611k, a significant
increase from GBP318k in the previous year. The increase in
continuing sales revenue is a result of the Group moving towards
alternative revenue streams following the sale of the Jack-up
Business, in particular the production wellhead market.
Plexus continued to invest for the future and in its technology
with total R&D spend GBP0.31m compared to GBP0.23m last
year.
Margin
Gross margin on continuing operations increased to 48.4%
(compared to 8.8% in the previous year). The increase in margin is
largely driven by the increase in continuing sales revenue. Cost of
sales include depreciation charges relating to rental assets which
is a fixed cost in nature, therefore this year the depreciation
charge is a significantly smaller portion of sales revenue.
Additionally, the equipment sales during the year carried
relatively high margins.
Overhead expenses
Continuing activities administrative expenses have increased
when compared to the prior year with expenditure of GBP5.76m (2018:
GBP5.31m). Within this total the continuing salary component
remained the largest at GBP2.68m which is broadly in line with last
year's total cost of GBP2.53m. The increase in overhead expenditure
is a result of costs realigning to the new business strategy
structure.
Adjusted EBITDA
The Directors use Adjusted EBITDA on continuing operations as a
non-GAAP measure to assess the Group's business. Directors consider
Adjusted EBITDA on continuing operations, which approximates the
operational cash generated by or used in the business, to be the
most appropriate measure of the underlying performance of the
Group's business in the period, given the continuing business will
be the focus of the Group going forward.
Adjusted EBITDA on continuing operations for the year was a loss
of GBP2.51m, compared to a loss of GBP3.74m in the previous year.
Adjusted EBITDA on continuing operations is calculated as
follows:
2019 2018
GBP'000 GBP'000
Operating loss (4,010) (5,285)
--------- --------
Add back:
--------- --------
-Depreciation 718 737
--------- --------
-Amortisation 904 898
--------- --------
-Fair value adjustment to asset held for
sale - -
--------- --------
Share in profit of associate (122) -
--------- --------
-Gain on disposal - (87)
--------- --------
Adjusted EBITDA on continuing operations (2,510) (3,737)
--------- --------
Loss before tax
Loss before tax on continuing operations of GBP3.71m compared to
a loss last year of GBP5.25m. The loss on discontinued operations
was GBP0.1m compared to a loss of GBP1.59m, (which was before
adding the gain on sale of the discontinued operation of
GBP5.83m).
Tax
The Group shows a total income tax credit of GBP0.50m for the
year compared to a tax credit of GBP0.65m for the prior year. The
income tax credit has been split between continuing activities
(GBP0.48m, 2018: GBP0.55m) and discontinued activities (GBP0.02m,
2018: GBP0.09m). The income tax credit for the year is driven by
the loss incurred during the financial period.
Investments
In December 2018 Plexus acquired a 49% shareholding in
Kincardine Manufacturing Services Limited ('KMS'), for a
consideration of GBP735k plus associated legal fees of GBP50k. At
the year-end a share in profit of associate of GBP122k has been
recognised increasing the value of the investment to GBP907k.
Moving forward it is expected that this investment will provide a
dividend income stream to Plexus.
EPS
The Group reports basic earnings loss per share on continuing
activities of 3.12p compared to a loss per share of 4.45p in the
prior year. The basic loss per share on discontinued activities of
0.09p, compared to an earnings per share of 4.10p in the prior
year.
Cash and Statement of Financial Position
The net book value of property, plant and equipment including
items in the course of construction and the property held for sale
at the year-end was GBP3.80m compared to GBP4.00m last year.
Capital expenditure on tangible assets increased to GBP0.53m
compared to GBP0.45m last year. The net book value of intangible
assets, including goodwill, IP rights, R&D and software,
decreased by 4.9% to GBP11.64m compared to GBP12.24m last year.
Capital expenditure on intangibles totalled GBP0.31m compared to
GBP0.23m last year. Receivables decreased to GBP9.46m compared to
GBP11.23m last year. Net cash closed at GBP5.07m (cash and cash
equivalents of GBP5.15m less bank loans of GBP0.08m) compared to
net cash of GBP12.92m last year (cash and cash equivalents of
GBP13.30m less bank loans of GBP0.38m) reflecting net cash outflow
for the year of GBP7.85m (net decrease in cash of GBP8.14m per
Statement of Cash Flows plus net decrease in bank borrowings of
GBP0.30m). The reduction in bank borrowing represents GBP0.30m of
repayments on the property term loan reducing the balance from
GBP0.38m to GBP0.08m. It should also be noted that the Group has
invested a further GBP2.84m in high yield bonds that can be traded
for cash, these are included in non-current financial investments
in the statement of financial position. Banking facilities comprise
of a reducing five year GBP1.5m term loan (with a current
balance
of GBP0.08m) which was put in place in September 2014 to part
fund the purchase of the additional building in Aberdeen. Post
period end the bank loan has been settled in full. The expected
future cash inflow from the TFMC transaction and the cash balances
held are anticipated to be adequate to meet current on-going
working capital, capital expenditure, R&D and related project
commitments.
Intellectual Property ('IP')
The Group carries in its statement of financial position
goodwill and intangible assets of GBP11.64m, a decrease of 4.9%
from GBP12.24m last year. This movement represents investment of
GBP0.30m less the annual amortisation charge of GBP0.90m.
Plexus own an extensive range of IP which includes many
registered patents and trademarks across a number of jurisdictions,
and actively works to develop and protect new POS-GRIP methods and
applications where deemed commercially advantageous to do so. In
addition to registered IP, Plexus has developed over many years a
vast body of specialist know-how in relation of the POS-GRIP
friction grip method of engineering.
The Directors have considered whether there have been any
indications of impairment of its IP and have concluded, following a
detailed asset impairment review, that there is no impairment. The
Directors therefore consider the current carrying values to be
appropriate. Indications of impairment are considered annually.
Research and Development
R&D expenditure including patents has increased from
GBP0.23m in 2018 to GBP0.31m in 2019. This increase demonstrates an
investment in protecting, developing, and broadening the range of
proprietary POS-GRIP friction-grip method of engineering
applications and related IP. Following the sale of the Jack-up
Business in the prior year it is likely that there will be an
increase in R&D investment to increase the Group's product
offering as it enters new target markets over the coming years.
Capital reorganisations
On 1 February 2019 Plexus Holdings PLC completed the acquisition
of 4,950,495 Ordinary Shares beneficially held by LLC Gusar
Following the above 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. This
transaction has created a negative "Shares Held in Treasury
Reserve" of GBP2.5m.
Secondly, in April 2019 following a court approval process
Plexus Holdings Plc cancelled the Share Premium Account in order to
increase distributable reserves the principle benefit of which 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 a tender offer) or to provide flexibility for any other general
corporate purposes. This transaction reduced the share premium
account from GBP36,893k to nil.
Dividends
In April 2019 the Company paid a special dividend of 0.99566
pence per Ordinary Share, with an aggregate value of GBP1m. Whilst
the Company remains committed to distributing dividends to its
shareholders, the Directors believe that it is prudent to consider
the payment of dividends subject to the ongoing capital and
operational requirements of the business.
Operations
During the year important milestones have been achieved in line
with the Company's strategy to build a portfolio of revenue streams
based on its POS-GRIP technology. In Jack-up exploration, activity
was centred on supporting the efforts of Gusar and Konar, Plexus'
licensing partners in Russia and CIS markets, to secure a first
wellhead order in the Russian and CIS markets. The Russian
licensing agreement, which falls outside of the sale of the Jack-up
Business to TFMC, achieved such a milestone in March 2019 following
the award of a purchase order for a POS-GRIP wellhead from Gazprom
covering the first year of a five-year Jack-up gas exploration
drilling programme. This followed the GBP1.4m sale to Gusar in
February 2019 of two POS-GRIP 18-3/4" rental wellhead sets and
associated mudline equipment to provide the basis for Gusar's own
POS-GRIP rental exploration wellhead inventory.
Outside Jack-up exploration, the Company continues to market its
POS-GRIP-enabled production and subsea wellheads, and its POS-SET
Connector for abandonment operations. Following the sale of the
Jack-up Business, the much larger production market is a key area
of focus for the Company and with this in mind during the year,
Plexus established a joint venture, Plexus Pressure Control Limited
('PPC'), with UK-based BEL Valves Limited, to bid for contracts for
large scale production projects. These contracts are generally
awarded to service providers offering turnkey solutions. The JV, in
which Plexus owns a majority interest, enables Plexus to supply
operators with a full-service package comprised of surface Xmas
trees and valves, as well as the Company's own POS-GRIP production
wellhead systems. PPC helps Plexus to compete on a level playing
field with top tier suppliers when bidding for high-value surface
production projects. The Company is currently tendering for a
number of such contracts.
In August 2018, Plexus secured a contract for a rental order for
the POS-SET(TM) Connector from Oceaneering A/S, Norway for well
abandonment operations in the North Sea. This is the second order
the Company has secured for its POS-SET Connector for abandonment
operations, a market the Directors believe has the potential to
grow significantly as decades old fields and equipment are
decommissioned and made safe, particularly in the North Sea.
Plexus continued to invest in R&D, with expenditure
excluding test fixtures of GBP0.31m compared to GBP0.23m in the
prior year, an increase of 34.7%. R&D remains an important
operational activity and underpins and further develops the value
of our IP and ability to extend the range of applications of
POS-GRIP technology. Innovation in the oil and gas industry
continues to be an essential part of developing both cost saving
initiatives and ever safer drilling methods, and Plexus is
confident that it can continue to play an important role in
delivering such solutions whilst raising wellhead standards to a
level that conventional technology cannot reach, such as passing
test standards equivalent to those used for premium couplings.
Following the transfer of employees, as part of the sale of the
Jack-up Business to TFMC, staffing levels have been stable and the
resource gaps identified through the Management of Change process
have been fulfilled.
As a result of the reduction in personnel, a new Emergency
Response team has been established and additions made to the
on-call team. Awareness and training sessions have been carried out
with these employees to furnish them with the necessary information
and skills demanded of these groups.
The OPITO accredited competency system has been completely
updated to better reflect the equipment and to enhance the robust
assessment of employees in safety critical roles. A thorough review
of all standards across the system has taken place which resulted
in a complete restructure and rework for the Workshop and FST
scopes. The system has since undergone a monitoring audit in July
2019 and has successfully maintained its OPITO approval.
An evaluation of the in-house training modules has been
conducted and work has commenced on redeveloping these to ensure
they continue to provide the necessary underpinning knowledge and
skills required of those fulfilling technical roles.
As part of the continuing commitment to the health and wellbeing
of employees, the Healthy Working Lives programme aims to encourage
habits of wellbeing and inspires individuals to take responsibility
for their own health. A schedule of diverse information campaigns
and activities resulted in the retention of our Gold Award.
The implementation of an absence management procedure ensures
that the appropriate procedures and processes are in place to
support employees during periods of ill-health and furthermore to
allow the business to manage and monitor absence and facilitate
employee return to work.
Comprehensive reviews of both the General Data Protection
Regulations (GDPR) and the Criminal Finances Act 2017 were carried
out and the resulting actions and processes necessary for
compliance have been realised. This also includes ensuring the
communication and awareness of the measures throughout the
business.
Staffing figures at the end of June 2019 were 37 employees
including 2 international employees, which compares to a total of
54 in the prior year.
Health and Safety continues to be a pivotal part of the business
and remains at the centre of everything we do. Plexus remains fully
committed to continually improving safety standards and the safety
culture across the business, and this is reflected in the business
being lost time injury (LTI) free for the fourth consecutive
year.
Plexus continues to retain OHSAS 18001:2007 accreditation with
the next surveillance audit scheduled for Nov 2019. Plexus is
currently enhancing its BMS with a look to transition across to ISO
45001:2018 which replaces OHSAS 18001:2007 in 2020 ahead of the
March 2021 deadline.
Quality continues to be an integral focus for Plexus, ensuring
the Group consistently provides products and services that meet
customers' requirements. Plexus retained its ISO 9001:2015
accreditation following a re-certification audit completed by
Lloyd's Register in November 2018, with only minor Non-conformities
and Opportunities for Improvements raised.
As part of continual improvement, Plexus has completed the first
(Stage 1) of two audits with API as part of the company strategy to
achieve API Q1 Certification for its Business Management System,
with the second audit (Stage 2) in October 2019. Plexus continues
to hold Licences for both API 6A and 17D
The IT Department provides technology leadership for Plexus,
including governance, information security, software development
and expertise in deploying modern information technologies to
improve company efficiency. During these challenging times for the
oil and gas industry Plexus has continued to develop its in-house
systems to ensure the Company is able to react swiftly to changing
market requirements.
With major cyber-attacks increasingly on the rise, the ongoing
risk to Plexus as with other companies increases correspondingly
year on year. Defending against cyber-attacks and keeping up to
date with evolving policies and regulations is a complex and
time-consuming task. To guarantee that the confidentiality,
integrity and accessibility of information is maintained, Plexus
continually evolves its security defences to minimise all cyber
risks.
To ensure that the Plexus IT infrastructure, systems and data
are as secure as possible Plexus is currently working to the ISO
27002 standard and will in the future work towards achieving ISO
27001 accreditation. This will give added confidence to both
customers and key stakeholders that Plexus takes security risks
seriously and has put sufficient measures in place to deal with
such risks.
Strategy and Future Developments
Technology
Plexus' proprietary POS-GRIP technology involves applying
compressive force to the outside of a wellhead or pipe, to flex it
inwards. As the bore of the vessel moves inwards, it makes contact
with an inner pipe (or hanger) on the inside. Sufficient contact
force is generated to hold the inner member in place through
friction between the two components and creates a superior
metal-to-metal seal. The Company's strategy is primarily focused on
delivering the highest standard of wellhead design for the upstream
oil and gas markets around the world, and one which is already
proven to be uniquely advantageous in terms of safety features,
operational efficiency, and cost savings for Jack-up drilling
especially HP/HT applications. The Company is now focused on
replicating this success in other wellhead markets including
production and subsea, as well as other initiatives such as a
POS-GRIP Crown Plugs and POS-GRIP Lateral Trees.
POS-GRIP wellhead designs deliver many advantages over
conventional "slip and seal" and "mandrel hanger" wellhead
technologies for surface exploration and land and platform
production applications. These include larger metal-to-metal seal
contact areas, virtual elimination of movement between parts, fewer
components, simplified design and assembly, enhanced corrosion
resistance, simpler manufacture, long term integrity, annulus
management, and reduced installation and maintenance costs.
Plexus' POS-GRIP enabled product suite also includes the Python
subsea wellhead as well as the POS-SET Connector for use in the
growing decommissioning market. We believe the Python subsea
wellhead is important as it can eliminate the need for wear
bushings, pack-offs, lock-rings, and lockdown sleeves, whilst
delivering instant rigid lock-down in all directions, and is fully
reversible for ease of workover, side-tracking or abandonment.
These design simplifications and features not only reduce the risk
of installation problems and safety issues, they also significantly
reduce installation time and the number of trips that are needed
such that it has been independently estimated that over ten days of
savings per well can be achieved in deep-water under certain
conditions which, depending on water depth, Plexus estimates could
result in a saving of over $10m for the operator. The POS-SET
Connector, which is designed to re-connect to bare conductor pipe
for well re-entry or permanent abandonment operations, creates a
solid connection with reliable sealing directly against the pipe,
and retains bend and load capabilities at 80% of pipe strength. The
directors believe that such features mean that Plexus' wellhead
equipment sets and delivers a new and superior standard. Apart from
the operational time savings and related safety benefits, at an
engineering level the Company has demonstrated that its technology
can raise and even exceed the integrity of wellhead testing and
sealing to that of premium couplings, which supports its claim that
wellheads no longer need to be the weak link in the well
architecture chain.
POS-GRIP friction-grip technology has wide ranging applications
both within and outside the oil and gas industry. As POS-GRIP is a
method of engineering and not a product in its own right, where
there is an opportunity for the technology to improve the
performance of conventional products the Company will look to
integrate POS-GRIP so that the benefits together with "HG" sealing
can be realised organically or in conjunction with partners.
Business Model and Markets
The Company is proprietary technology driven and its extensive
patent protected IP and many years' worth of specialist know-how
has been successfully deployed in hundreds of wells around the
world. Its superior performance, safety and operational advantages
led to the Company becoming established initially as a leading
equipment and services provider to the niche Jack-up exploration
wellhead market. The Directors believe that this success can be
replicated and extended to the wider and much larger energy sectors
including production, subsea, geothermal and fracking applications
based on its POS-GRIP technology.
Historically Plexus has focused on supplying adjustable
exploration wellhead equipment and associated running tools on a
rental basis for the niche Jack-up exploration drilling market in
the UK Continental Shelf ('UKCS'), achieving a near 100% market
share for HP/HT exploration wells. Over the years, Plexus'
equipment has been deployed in the ECS (Norway, Netherlands and
Denmark) as well as China, Russia, Egypt, Cameroon, Trinidad,
Venezuela, and Morocco. The exploration wellhead contracts were
supplied from a rental fleet of owned inventory of which the
majority were for 15,000psi HP/HT; and the remainder for 10,000psi
wellheads.
Following the sale of the Jack-up business to TFMC, the
Directors believe Plexus is well placed to pursue its strategy of
breaking into the significantly larger and more mainstream volume
production wellhead and subsea markets both organically and in
conjunction with partners, including licensees. In line with this
strategy, the Company previously established Plexus Pressure
Control Limited ('PPC'), a joint venture with UK-based BEL, to bid
for contracts for large scale production projects that are
typically awarded to service providers offering full package,
turnkey solutions. Plexus owns a majority interest in PPC which
enables Plexus to supply operators with surface Xmas trees and
valves, in addition to the Company's own POS-GRIP production
wellhead systems. In August 2018, the Company announced a purchase
order for its POS-SET Connector from Oceaneering A/S, Norway for
well abandonment operations in the North Sea. The order is the
second Plexus has secured for the POS-SET Connector.
Strategy
Plexus' long-term goal is to establish POS-GRIP technology as a
new industry standard for wellhead and metal sealing designs,
whilst continuing to develop new products, which can also offer
multiple benefits and advantages to the industry in terms of
improved safety, functionality, and cost and time savings. An
example of such extensions for POS-GRIP technology is the Company's
connector technology, which is ideal for high integrity, low
fatigue applications. The Directors believe wellhead connectors,
riser connectors, subsea jumper connectors, pipeline connectors,
tether tensioners and even vessel mooring connectors can all
benefit from the simplicity of POS-GRIP.
Following the sale of the Jack-up Business to TFMC, Plexus is
today an IP-led research and development business focused on
extending its business activities into the volume land, platform
and subsea sectors. This strategy will be pursued both organically
and through licensees and partners.
Key Performance Indicators
The Directors monitor the performance of the Group by reference
to certain financial and non-financial key performance indicators.
The financial indicators include revenue, EBITDA, profit and loss,
earnings per share, cash balances, and working capital resources
and requirements. The analysis of these is included in the
financial results section of this report, and highlights the Group
moving towards a supplier of production wellhead equipment.
Non-financial indicators include Health and Safety statistics,
equipment utilisation rates, geographical diversity of revenues and
customers, the level of ongoing customer interest and support,
geo-political considerations such as emissions concerns and
awareness, effectiveness of various research and development
initiatives; for example, in relation to new patent activity and
inventions, and appropriate employee headcount numbers and turnover
rates. The non-financial key performance indicators are included
within the strategic report.
Principal Risks and Risk Management
There are a number of potential risks and uncertainties that
could have an impact on the Group's performance which include the
following.
(a) Political, legal and environmental risks
Plexus participates in a global market where the exploration and
production of oil and gas reserves, and even the access to those
reserves can be adversely impacted by changes in political,
operational, and environmental circumstances. The current global
political and environmental landscape, particularly in relation to
climate change concerns and the relentless move away from
hydrocarbons to, for example renewables, continues to demonstrate
how any combination of such factors can generate risks and
uncertainties that can undermine stable trading conditions. Further
examples include Iran making efforts to return to the world
hydrocarbon supply stage, ongoing destabilisation in Syria, America
continuing to aggressively pursue its fracking activities, extreme
financial and economic deterioration in Venezuela, the speed and
scale of reform recently announced in Saudi Arabia together with
recent events in Turkey and wide ranging sanctions on Russia. A
specific example of political risk are the aforementioned
sanctions, and in extreme circumstances even regime change or a
military coup. As a potential supplier to the global oil and gas
industry it is clear that Plexus can be adversely impacted by such
events, which can disrupt the markets and compromise the ability to
execute work for customers and/or collect payment for services
performed. Such risks also extend to legal and regulatory issues
and it is important to understand that these can change at short
notice. To help address and balance such risks, the Group where
possible seeks to broaden its geographic footprint and customer
base, as well as actively looking to forge commercial relationships
with large industry players.
The Company is closely monitoring the potential impact and risks
of the UK's pending exit ('Brexit') from the European Union ('EU')
under various scenarios, including leaving the EU without a deal.
This includes assessing the potential impact of the introduction of
trade tariffs and the potential supply chain disruption that could
result from increased customs checks at borders and related
matters. Plexus has an IP-led business model which provides it with
operational flexibility and the ability to respond to and mitigate
some of the potential impacts of the different scenarios regarding
the UK's exit from the EU. In the meantime, Plexus has amongst
other activities applied for and is expecting shortly an Economic
Operator Registration and Identification ('EORI') number to enable
the Company to continue to import and export with the EU.
(b) Oil and Gas Sector Trends
It is readily understood that the world continues to move away
from coal as part of the COP21 and other climate change objectives
in relation to the ongoing need to urgently reduce CO2 and CH4
(methane) emissions. However, the commercial and environmental
dynamics between traditional hydrocarbons in terms of coal, oil and
gas is not the only trend to consider. New technologies,
particularly in relation to renewables such as wind and solar,
alternative energies and developments such as the increasing use of
electric vehicles and corresponding improvements in battery storage
life, and wave energy, could all in the future prove very
disruptive to the traditional oil and gas industry and therefore
demand for exploration and production equipment and services. It is
however also recognised that the world will need hydrocarbons as an
energy source, and in particular gas for many years to come, and
indeed currently global demand for hydrocarbons continues to grow
annually.
(c) Technology
The Group is now focusing on the commercialisation, marketing
and application of its POS-GRIP friction-grip technology beyond
Jack-up rental exploration wellhead equipment, both with regard to
expanding into the surface land and platform production market
sector, as well as the target subsea market where the Plexus
POS-GRIP Python subsea wellhead offers numerous operational, time
savings and performance benefits. Current and future contract
opportunities may be adversely affected by technology related
factors outside the Group's control, especially where new product
developments are concerned. These may include unforeseen equipment
design issues, test delays during a contract and final testing, and
delayed acceptances of deliveries, as well as the slow uptake by
operators which could lead to possible abortive expenditure and
write downs, reputational risk and potential customer claims or
onerous contractual terms. Such risks may materially impact on the
performance of the Group. To help mitigate this risk, the Group
continues to invest in developing and proving the technology and
has a policy of on-going training of our own personnel and where
appropriate our partners and customers.
(d) Competitive risk
The Group operates in highly competitive markets and often
competes directly with large multi-national corporations who have
greater resources and are more established, and who are more
resilient to extended adverse trading conditions. This risk has
become more concentrated over the past few years as the large oil
service companies have merged. These major oil service and
equipment company consolidations that have taken place over the
last few years have therefore magnified such issues as competitors
reduce in number but increase in size, influence, and reach.
Unforeseen product innovation or technical advances by competitors
could adversely affect the Group and lead to a slower take up of
the Group's proprietary technology. To mitigate this risk Plexus
maintains an extensive suite of patents and trademarks, and
actively continues to develop and improve its IP to ensure that it
continues to be able to offer unique superior wellhead design
solutions.
(e) Operational
Plexus, like many other oil service companies, has had to make
significant reductions in its workforce numbers over the past few
years as a result of a lower oil price and a corresponding
reduction in drilling activity and related levels of CapEx spend.
Therefore, with any upturn in drilling activity, it is possible
that the industry and Plexus could experience difficulties in
rehiring past or new employees and this could deprive Plexus of the
key personnel necessary for expanding operational activities, as
well as research and development initiatives, at the rate that may
be required. To help mitigate this risk Plexus has developed
effective recruitment and training procedures, which combined with
the appeal of working in a company with unique technology and
engineering solutions will hopefully minimise such risks.
(f) Liquidity and finance requirements
In an economic climate that remains in many ways uncertain it
has become increasingly possible for potential sources of finance
to be closed to businesses for a variety of reasons that have not
been an issue in the past. Some of these may even relate to the
lender itself in terms of its own capital ratios and lending
capacity. Furthermore, the sustained period of record low interest
rates is impacting on global finances in a number of ways and could
have a negative impact on business activity. Although access to
capital could be an issue, the successful completion of the
disposal of the Jack-up Business delivered additional cash to add
to existing reserves.
(g) Credit
The main credit risk is attributable to trade receivables. As
the majority of the Group's customers are large international oil
companies the risk of non-payment is significantly reduced, and
therefore is more likely to be related to client satisfaction
and/or trade sanction issues. Customer payments can therefore
potentially involve extended periods of time especially from
countries where exchange control regulations can delay the transfer
of funds outside those countries. As Plexus begins to establish
international licensee relationships there may be instances whereby
certain capital and royalty payments could be due some way into the
future and as such greater credit risk than exists under normal
payments terms could apply. The Group's exposure to credit risk is
monitored continuously.
(h) Risk assessment
The Board has established an on-going process for identifying,
evaluating and managing the more significant risk areas faced by
the Group. One of the Board's control documents is a detailed
"Risks assessment & management document" which categorises
risks in terms of - business (including IT), compliance, finance,
cash, debtors, fixed assets, other debtors/prepayments, creditors,
legal, and personnel. These risks are assessed and updated on a
regular basis and can be associated with a variety of internal and
external sources including regulatory requirements, disruption to
information systems including cyber-crime, control breakdowns and
social, ethical, environmental and health and safety issues.
G Stevens
Director
4 November 2019
Consolidated Statement of Comprehensive Income
for the year ended 30 June 2019
Notes 2019 2018
GBP'000 GBP'000
Revenue 1 3,611 318
------ --------- ---------
Cost of sales (1,865) (290)
------ --------- ---------
------- -------
------ --------- ---------
Gross profit 1,746 28
------ --------- ---------
Administrative expenses (5,756) (5,313)
------ --------- ---------
------- -------
------ --------- ---------
Operating loss (4,010) (5,285)
------ --------- ---------
Finance income 218 73
------ --------- ---------
Finance costs (41) (37)
------ --------- ---------
Share in profit of associate 122 -
------ --------- ---------
------- -------
------ --------- ---------
Loss before taxation (3,711) (5,249)
------ --------- ---------
Income tax credit 3 484 555
------ --------- ---------
------- -------
------ --------- ---------
Loss after taxation from continuing
operations (3,227) (4,694)
------ --------- ---------
Profit/(loss) after taxation from
discontinued operations 4 (88) 4,322
------ --------- ---------
Loss for year (3,315) (372)
------ --------- ---------
Other comprehensive income - -
------ --------- ---------
------- -------
------ --------- ---------
Total comprehensive
income for the year attributable to
the owners of the parent (3,315) (372)
------ --------- ---------
------- -------
------ --------- ---------
(Loss)/earnings per share 5
------ --------- ---------
Basic from continuing operations (3.12p) (4.45p)
------ --------- ---------
Diluted from continuing operations (3.12p) (4.45p)
------ --------- ---------
Basic from discontinued operations (0.09)p 4.10p
------ --------- ---------
Diluted from discontinued operations (0.09)p 4.08p
------ --------- ---------
Consolidated Statement of Financial Position
at 30 June 2019
Notes 2019 2018
GBP'000 GBP'000
Assets
---------- --------- ---------
Goodwill 767 767
---------- --------- ---------
Intangible assets 6 10,876 11,469
---------- --------- ---------
Property, plant and equipment 7 3,804 4,004
---------- --------- ---------
Non-current financial assets 9 2,835 2,124
---------- --------- ---------
Investment in associate 8 907 -
---------- --------- ---------
Deferred tax asset 3 1,259 984
---------- --------- ---------
Other receivables 4,515 6,337
---------- --------- ---------
------- -------
---------- --------- ---------
Total non-current assets 24,963 25,685
---------- --------- ---------
------- -------
---------- --------- ---------
Inventories 698 1,871
---------- --------- ---------
Trade and other receivables 4,948 4,888
---------- --------- ---------
Current income tax asset 617 414
---------- --------- ---------
Cash and cash equivalents 5,152 13,296
---------- --------- ---------
------- -------
---------- --------- ---------
Total current assets 11,415 20,469
---------- --------- ---------
------- -------
---------- --------- ---------
Total Assets 36,378 46,154
---------- --------- ---------
Equity and Liabilities
---------- --------- ---------
Called up share capital 10 1,054 1,054
---------- --------- ---------
Shares held in treasury 11 (2,500) -
---------- --------- ---------
Share premium account - 36,893
---------- --------- ---------
Share based payments reserve 674 674
---------- --------- ---------
Retained earnings 34,873 2,295
---------- --------- ---------
------- -------
---------- --------- ---------
Total equity attributable to equity
holders of the parent 34,101 40,916
---------- --------- ---------
Liabilities
---------- --------- ---------
Other non-current liabilities - 493
---------- --------- ---------
Bank loans - 75
---------- --------- ---------
------- -------
---------- --------- ---------
Total non-current liabilities - 568
---------- --------- ---------
------- -------
---------- --------- ---------
Trade and other payables 2,202 4,370
---------- --------- ---------
Bank loans 75 300
---------- --------- ---------
------- -------
---------- --------- ---------
Total current liabilities 2,277 4,670
---------- --------- ---------
------- -------
---------- --------- ---------
Total liabilities 2,277 5,238
---------- --------- ---------
Total Equity and Liabilities 36,378 46,154
---------- --------- ---------
------- -------
---------- --------- ---------
Consolidated Statement of Changes in Equity
for the year ended 30 June 2019
Called Shares Share Premium Share Based Retained Total
Up Share Held in Account Payments Earnings GBP'000
Capital Treasury GBP'000 Reserve GBP'000
GBP'000 GBP'000 GBP'000
Balance as at 30
June 2017 1,054 - 36,893 767 2,575 41,289
---------- ---------- -------------- ------------ ---------- ---------
Total comprehensive
income for the year - - - - (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 year - - - - (3,315) (3,315)
---------- ---------- -------------- ------------ ---------- ---------
Cancellation of share
premium - - (36,893) - 36,893 -
---------- ---------- -------------- ------------ ---------- ---------
Buyback of shares - (2,500) - - - (2,500)
---------- ---------- -------------- ------------ ---------- ---------
Dividend paid - - - - (1,000) (1,000)
---------- ---------- -------------- ------------ ---------- ---------
Balance as at 30
June 2019 1,054 (2,500) - 674 34,873 34,101
---------- ---------- -------------- ------------ ---------- ---------
Consolidated Statement of Cash Flows
for the year ended 30 June 2019
Notes 2019 2018
GBP'000 GBP'000
Cash flows from operating activities
------ --------- ---------
Loss before taxation from continuing
activities (3,711) (5,249)
------ --------- ---------
Profit/(loss) before taxation from
discontinued activities (108) 4,232
------ --------- ---------
Loss before tax (3,819) (1,017)
------ --------- ---------
Adjustments for:
------ --------- ---------
Depreciation, amortisation charges 1,625 3,030
------ --------- ---------
Gain on disposal of property, plant
and equipment - (87)
------ --------- ---------
Share in profit of associate (122) -
------ --------- ---------
Gain on sale of discontinued operation - (5,825)
------ --------- ---------
Fair value adjustment on financial
assets 3 21
------ --------- ---------
Investment income (218) (73)
------ --------- ---------
Interest expense 8 37
------ --------- ---------
Changes in working capital:
------ --------- ---------
Decrease / (increase) in inventories 1,173 (1,860)
------ --------- ---------
Decrease / (increase) in trade and
other receivables 1,762 (1,377)
------ --------- ---------
(Decrease) / increase in trade and
other payables (2,661) 2,667
------ --------- ---------
------- -------
------ --------- ---------
Cash used in operating activities (2,249) (4,484)
------ --------- ---------
Income taxes refunded 26 500
------ --------- ---------
Net cash used from operating activities (2,223) (3,984)
------ --------- ---------
------- -------
------ --------- ---------
Cash flows from investing activities
------ --------- ---------
Funds invested in financial instruments (714) (2,145)
------ --------- ---------
Net initial proceeds from sale of
discontinued operation - 14,050
------ --------- ---------
Associated costs on sale of discontinued
operation - (1,585)
------ --------- ---------
Purchase of intangible assets (311) (231)
------ --------- ---------
Investment in associate (785) -
------ --------- ---------
Purchase of property, plant and equipment (530) (447)
------ --------- ---------
Proceeds of sale of property, plant
and equipment 9 329
------ --------- ---------
Net proceeds from sale of asset held
for sale - 395
------ --------- ---------
Interest received 218 73
------ --------- ---------
------- -------
------ --------- ---------
Net cash (used) / generated in investing
activities (2,113) 10,439
------ --------- ---------
------- -------
------ --------- ---------
Cash flows from financing activities
------ --------- ---------
Repayment of loans and banking facilities (300) (300)
------ --------- ---------
Buyback of shares held in treasury (2,500) -
------ --------- ---------
Dividend paid (1,000) -
------ --------- ---------
Interest paid (8) (37)
------ --------- ---------
------- -------
------ --------- ---------
Net cash outflow from financing activities (3,808) (337)
------ --------- ---------
------- -------
------ --------- ---------
Net (decrease) / increase in cash
and cash equivalents (8,144) 6,118
------ --------- ---------
Cash and cash equivalents at 1 July
2018 13,296 7,178
------ --------- ---------
------- -------
------ --------- ---------
Cash and cash equivalents at 30 June
2019 13 5,152 13,296
------ --------- ---------
Notes to the Consolidated Financial Statements
1. Revenue
2019 2018
GBP'000 GBP'000
By geographical area
--------- ---------
UK 1,511 269
--------- ---------
Europe 2,086 -
--------- ---------
Rest of World 14 49
--------- ---------
3,611 318
--------- ---------
The revenue information above is based on the location of the
customer. Substantially all of the revenue in the current and
previous periods derives from the rental of equipment and the
provision of related services.
2. Segment reporting
The Group derives revenue from the sale of its POS-GRIP
technology and associated products, the rental of equipment
utilising the POS-GRIP technology and service income principally
derived in assisting with the commissioning and on-going service
requirements of our equipment. These income streams are all derived
from the utilisation of the technology which the Group believes is
its only segment.
Per IFRS 8, the operating segment is based on internal reports
about components of the group, which are regularly reviewed and
used by the board of directors being the Chief Operating Decision
Maker ("CODM").
All of the Group's non-current assets are held in the UK.
The following customers each account for more than 10% of the
Group's continuing revenue:
2019 2018
GBP'000 GBP'000
Customer 1 1,818 230
--------- ---------
Customer 2 1,447 49
--------- ---------
Customer 3 - 39
--------- ---------
3. Income tax credit
(i) The taxation charge for the year comprises: 2019 2018
GBP'000 GBP'000
UK Corporation tax:
------------------------------------------------ --------- ---------
Current tax on income for the year - -
------------------------------------------------ --------- ---------
Adjustment in respect of prior years (620) (434)
------------------------------------------------------ --------- ---------
(620) (434)
------------------------------------------------------ --------- ---------
Foreign tax
------------------------------------------------ --------- ---------
Current tax on income for the year 1 45
------------------------------------------------------ --------- ---------
Adjustment in respect of prior years 391 440
------------------------------------------------------ --------- ---------
392 485
------------------------------------------------------ --------- ---------
Total current tax (credit) / charge (228) 51
------------------------------------------------------ --------- ---------
Deferred tax:
------------------------------------------------ --------- ---------
Origination and reversal of timing differences (426) (690)
------------------------------------------------------ --------- ---------
Adjustment in respect of prior years 150 (6)
------------------------------------------------------ --------- ---------
Total deferred tax (276) (696)
------------------------------------------------------ --------- ---------
Total tax credit (504) (645)
------------------------------------------------------ --------- ---------
The effective rate of tax is 19% (2018: 19%)
------------------------------------------------ --------- ---------
Tax credit on discontinued activities (20) (90)
------------------------------------------------------ --------- ---------
Tax credit on continued activities (484) (555)
------------------------------------------------------ --------- ---------
Total tax credit (504) (645)
------------------------------------------------------ --------- ---------
(ii) Factors affecting the tax charge on continuing activities for the year 2019 2018
GBP'000 GBP'000
Loss on ordinary activities before tax (3,711) (5,249)
----------------------------------------------------------------------------------------- --------- ---------
Tax on (loss) / profit at standard rate of UK corporation tax of 19% (2018: 19%) (705) (997)
----------------------------------------------------------------------------------------- --------- ---------
Effects of:
---------------------------------------------------------------------------------- --------- ---------
Expenses not deductible for tax purposes 223 259
----------------------------------------------------------------------------------------- --------- ---------
Effect of change in tax rate 53 112
----------------------------------------------------------------------------------------- --------- ---------
Tax adjustments on share-based payments 22 70
----------------------------------------------------------------------------------------- --------- ---------
Adjustments in respect of prior year (78) 1
----------------------------------------------------------------------------------------- --------- ---------
Group income not subject to tax - -
---------------------------------------------------------------------------------- --------- ---------
Foreign tax rates 1
----------------------------------------------------------------------------------------- --------- ---------
Total tax credit on continuing activities (484) (555)
----------------------------------------------------------------------------------------- --------- ---------
(iii) Movement in deferred tax asset balance 2019 2018
GBP'000 GBP'000
Deferred tax asset at beginning of year (984) (287)
--------------------------------------------------------------------- --------- ---------
Credit to Statement of Comprehensive Income (275) (696)
--------------------------------------------------------------------- --------- ---------
Deferred tax movement on share options recognised in equity - (1)
--------------------------------------------------------------------- --------- ---------
Deferred asset at end of year (1,259) (984)
--------------------------------------------------------------------- --------- ---------
(iv) Deferred tax asset balance 2019 2018
GBP'000 GBP'000
The deferred tax asset balance is made up of the following items:
------------------------------------------------------------------- --------- ---------
Difference between depreciation and capital allowances 842 854
-------------------------------------------------------------------------- --------- ---------
Share based payments (4) (27)
-------------------------------------------------------------------------- --------- ---------
Tax losses (2,097) (1,811)
-------------------------------------------------------------------------- --------- ---------
Deferred tax asset at end of year (1,259) (984)
-------------------------------------------------------------------------- --------- ---------
The deferred tax asset is reviewed at the end of each reporting
period. Following a review of the Group's financial models and
taxable profitability in the future it is considered appropriate to
recognise the deferred tax asset in full.
4. Discontinued Operations
On 1(st) February 2018 the Group sold its "Jack-up Business" to
TFMC for an initial gross consideration of GBP15m, with an
additional sum of up to GBP27.5m payable dependent on the future
performance of the Jack-up Business during a three year earn-out
period.
Based on current revenue forecasts provided by TFMC, the earnout
has been accrued at GBP8,839k. GBP4,515k (2018: GBP6,337k) of this
balance is receivable in a period greater than one year and has
been included in non-current assets.
Included in the consideration adjustment is a balance of
GBP986k, which relates to the refurbishment of the sold rental
fleet which is deductible from the earn-out payments. This balance
is payable within one year and is included within trade and other
payables.
The gain on sale on disposal of discontinued operation was
determined as follows:
2018
GBP'000
Initial gross consideration received 15,000
---------
Accrued consideration 8,840
---------
Consideration adjustment (2,695)
---------
-------
---------
Total consideration 21,145
---------
Net assets disposed
---------
Equipment (6,122)
---------
Assets under consideration (5)
---------
Motor vehicles (3)
---------
Intellectual property (706)
---------
Patent and other development (750)
---------
Inventories (5,957)
---------
Trade and other payables (400)
---------
Associated cost of sale (1,377)
---------
-------
---------
(15,320)
---------
-------
---------
Gain on disposal of discontinued operation 5,825
---------
-------
---------
The gain on sale of the Jack-up Business did not give rise to a
corporation tax charge.
The loss after tax from discontinued operation was calculated as
follows:
2019 2018
GBP'000 GBP'000
Revenue - 3,907
--------- ---------
Expenses (108) (5,500)
--------- ---------
Loss before tax of discontinued operations (108) (1,593)
--------- ---------
Income tax credit 20 90
--------- ---------
Loss after tax of discontinued operations (88) (1,503)
--------- ---------
Profit / (Loss) after taxation from discontinued operations (88) 4,322
The Statement of cash flows includes the following amounts
related to discontinued operations:
2019 2018
GBP'000 GBP'000
Operating activities - (231)
---------- ---------
Investing activities - 12,424
---------- ---------
Financing activities - -
---------- ---------
Net cash generated / (used) from discontinued activities - 12,193
---------- ---------
5. Loss per share
2019 2018
GBP'000 GBP'000
Loss attributable to shareholders - continuing operations (3,227) (4,694)
------------ ------------
(Loss) / profit attributable to shareholders - discontinued operations (88) 4,322
------------ ------------
Loss attributable to shareholders (3,315) (372)
------------ ------------
Number Number
------------ ------------
Weighted average number of shares in issue 103,406,041 105,386,239
------------ ------------
Dilution effects of share schemes - 486,979
------------ ------------
Diluted weighted average number of shares in issue 103,406,041 105,873,218
------------ ------------
(Loss) / earning per share
------------ ------------
Basic Loss per share for continuing operations (3.12p) (4.45p)
------------ ------------
Diluted Loss per share for continuing operations (3.12p) (4.45p)
------------ ------------
Basic Loss per share for discontinued operations (0.09p) 4.10p
------------ ------------
Diluted loss per share for discontinued operations (0.09p) 4.08p
------------ ------------
Basic loss per share is calculated on the results attributable
to ordinary shares divided by the weighted average number of shares
in issue during the year.
Diluted earnings per share calculations include additional
shares to reflect the dilutive effect of share option schemes. As a
loss was made on continuing operations for the current year the
option schemes are considered to be anti-dilutive
6. Intangible assets
Intellectual Patent and Computer Total
Property Other Software GBP'000
GBP'000 Development GBP'000
GBP'000
Cost
------------- ------------- ------------ ---------
As at 30 June 2017 6,440 13,681 331 20,452
------------- ------------- ------------ ---------
Additions - 231 - 231
------------- ------------- ------------ ---------
Disposals (1,840) (1,088) - (2,928)
------------- ------------- ------------ ---------
As at 30 June 2018 4,600 12,824 331 17,755
------------- ------------- ------------ ---------
Additions - 310 1 311
------------- ------------- ------------ ---------
Disposals - (38) - (38)
------------- ------------- ------------ ---------
As at 30 June 2019 4,600 13,096 332 18,028
------------- ------------- ------------ ---------
Amortisation
------------- ------------- ------------ ---------
As at 30 June 2017 3,681 2,823 270 6,774
------------- ------------- ------------ ---------
Charge for the year 291 665 28 984
------------- ------------- ------------ ---------
On disposals (1,134) (338) - (1,472)
------------- ------------- ------------ ---------
As at 30 June 2018 2,838 3,150 298 6,286
------------- ------------- ------------ ---------
Charge for the year 238 646 20 904
------------- ------------- ------------ ---------
On disposals (38) - (38)
------------- ------------- ------------ ---------
As at 30 June 2019 3,076 3,758 318 7,152
------------- ------------- ------------ ---------
Net Book Value
------------- ------------- ------------ ---------
As at 30 June 2019 1,524 9,338 14 10,876
------------- ------------- ------------ ---------
As at 30 June 2018 1,762 9,674 33 11,469
------------- ------------- ------------ ---------
When assessing the valuation of the Group's intangible assets
the key assumptions on which the valuation is based are that:
l Industry acceptance will result in continued growth of the
business above long term industry growth rates, Management consider
this to be appropriate for a new technology gaining industry
acceptance,
l Prices will rise with inflation,
l Staff wage inflation will be higher than general inflation but
will not rise in line with sales.
These assumptions were determined from the directors' knowledge
and experience.
The value in use calculation is based on cash flow forecasts
derived from the most recent financial model information available.
Although the Group's technology is proven and has proven commercial
value the exploitation of opportunities beyond the rental wellhead
exploration equipment services market are at a relatively early
stage and the commercialisation process is expected to be a long
term one. The cash flow forecasts therefore extend to 2039 to
ensure the full benefit of all current projects is realised. The
rationale for using a timescale up to 2039 with growth projections
which increase in the first five years and decline thereafter, is
that as time progresses, Plexus expects to gain an increasing
foothold in the subsea and other equipment markets which are
already well established. As the Group are starting from a base
point of trading the growth rates are high in the initial years
(varying from 50% to 400% depending on the model employed) then in
later years where the technology becomes established the expected
rate of growth declines (varying from 5% to 10 depending on the
model employed).
The key assumptions used in these calculations include discount
rate, revenue projections, growth rates, expected gross margins and
the lifespan of the Group's technology. Management estimates the
discount rates using pre-tax rates that reflect current market
assessments of the time value of money and risks specific to the
Group and the markets in which it operates. Revenue projections,
growth rates, margins and technology lifespans are all estimated
based on the latest business models and the most recent discussions
with customers, suppliers and other business partners.
Management regularly assesses the sensitivity of the key
assumptions and the probability that any of them would change to
the degree that the carrying value would exceed the recoverable
amount. It would require significant adjustments to key assumptions
before the goodwill would be impaired.
Patent and other development costs are internally generated.
7. Property, plant and equipment
Buildings Tenant Equipment Assets under Motor Total
GBP'000 Improvements GBP'000 Construction Vehicles GBP'000
GBP'000 GBP'000 GBP'000
Cost
---------- -------------- ---------- -------------- ---------- ---------
As at 30 June 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 92 - 391 47 - 530
---------- -------------- ---------- -------------- ---------- ---------
Transfers - - 57 (57) - -
---------- -------------- ---------- -------------- ---------- ---------
Disposals - - (525) - - (525)
---------- -------------- ---------- -------------- ---------- ---------
As at 30 June 2019 3,699 716 5,432 - 17 9,864
---------- -------------- ---------- -------------- ---------- ---------
Depreciation
---------- -------------- ---------- -------------- ---------- ---------
As at 30 June 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 180 85 450 - 3 718
---------- -------------- ---------- -------------- ---------- ---------
On disposals - (513) - - (513)
---------- -------------- ---------- -------------- ---------- ---------
As at 30 June 2019 1,338 466 4,252 - 4 6,060
---------- -------------- ---------- -------------- ---------- ---------
Net Book Value
---------- -------------- ---------- -------------- ---------- ---------
As at 30 June 2019 2,361 250 1,180 - 13 3,804
---------- -------------- ---------- -------------- ---------- ---------
As at 30 June 2018 2,449 335 1,194 10 16 4,004
---------- -------------- ---------- -------------- ---------- ---------
8. Investment in associate
2019 2018
GBP'000 GBP'000
Investment in associate during the year 735 -
--------- ---------
Associated legal fees 50 -
--------- ---------
Share of profit in the year 122 -
--------- ---------
Investment in associate at 30 June 2019 907 -
--------- ---------
On December Plexus Ocean Systems Limited acquired a 49% interest
in Kincardine Manufacturing Services Limited ('KMS') for a GBP735k
plus associated legal fees.
The summary financial information of KMS, extracted on a 100%
basis from the accounts for the 6 months ended 30 June are as
follows:
2019
GBP'000
Assets 2,692
---------
Liabilities 1,467
---------
Revenue 1,495
---------
Profit 245
---------
9. Financial assets
2019 2018
GBP'000 GBP'000
Financial instruments held at fair value 2,835 2,124
--------- ---------
2,835 2,124
--------- ---------
The financial asset relates to cash invested in high-yield bonds
held at fair value in the statement of financial position. The
bonds can be redeemed for cash at any time. Included in the
statement of comprehensive income is a write-down in the carrying
value of the financial asset of GBP3k (2018: GBP21k). The fair
value of the investment is evaluated by reviewing a portfolio on a
quarterly basis.
10. Share Capital
2019 2018
GBP'000 GBP'000
Authorised:
--------- ---------
Equity: 110,000,000 (2018: 110,000,000) Ordinary shares of 1p each 1,100 1,100
--------- ---------
Allotted, called up and fully paid:
--------- ---------
Equity: 105,386,239 (2018: 105,386,239) Ordinary shares of 1p each 1,054 1,054
--------- ---------
11. Shares held in treasury
2019 2018
GBP'000 GBP'000
Buyback of shares 2,500 -
--------- ---------
On 1 February 2019 Plexus Holdings PLC completed the acquisition
of 4,950,495 Ordinary Shares beneficially held by LLC Gusar
Following the above 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. This
figure, 100,435,744, should be used by shareholders as the
denominator when determining whether they are required to notify
their interest in, or a change to their interest in the Company
under the Financial Conduct Authority's Disclosure Guidance and
Transparency Rules.
12. Reconciliation of net cash flow to movement in net cash/(debt)
2019 2018
GBP'000 GBP'000
Movement in cash and cash equivalents (8,144) 6,118
--------- ---------
Repayment of bank loans 300 300
--------- ---------
(Decrease) / increase in net cash in year (7,844) 6,418
--------- ---------
Net cash at start of year 12,921 6,503
--------- ---------
Net cash at end of year 5,077 12,921
--------- ---------
13. Analysis of net cash/(debt)
2019:
At beginning Cash flow At end
of year GBP'000 of year
GBP'000 GBP'000
------------- ---------- ---------
Cash in hand and at bank 13,296 (8,144) 5,152
------------- ---------- ---------
Bank loans (375) 300 (75)
------------- ---------- ---------
Total 12,921 (7,844) 5,077
------------- ---------- ---------
2018:
------------- ---------- ---------
At beginning Cash flow At end
of year GBP'000 of year
GBP'000 GBP'000
------------- ---------- ---------
Cash in hand and at bank 7,178 6,118 13,296
------------- ---------- ---------
Bank loans (675) 300 (375)
------------- ---------- ---------
Total 6,503 6,418 12,921
------------- ---------- ---------
The financial information above does not constitute the
company's statutory accounts for the year ended 30 June 2019 but is
derived from those statements.
The statutory financial statements and this preliminary
statement for the year ended 30 June 2019 were approved by the
Board on 4 November 2019. On the same date the company's auditors,
Crowe U.K. L.L.P issued an unqualified report on those financial
statements. The audit report did not include reference to any
matters to which the auditor drew attention by way of emphasis
without qualifying the report or contain a statement under section
498(2) or (3) of the Companies Act 2006.
The financial information for the year ended 30 June 2018 is
derived from the statutory accounts for that year which have been
delivered to the Registrar of Companies. The auditors reported on
those accounts; their report was unqualified and did not draw
attention to any matters be way of emphasis and not contain a
statement under s498(2) or (3) of the Companies Act 2006 or
equivalent preceding legislation. The Company's financial
statements have been prepared in accordance with International
Financial Reporting Standards, as adopted by the EU. A copy of the
statutory accounts will be delivered to the Registrar of Companies
in due course.
The Annual Report will be circulated to all shareholders and
thereafter, copies will be available from the registered office of
the company, Elder House, St Georges Business Park Brooklands Road,
Weybridge Surrey, KT13 0TS.
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
FR DMMGMNDGGLZM
(END) Dow Jones Newswires
November 05, 2019 02:00 ET (07:00 GMT)
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