Interim Results
Plexus Holdings Plc
28 March 2006
FOR IMMEDIATE RELEASE 28 March 2006
Plexus Holdings plc
Interim Results for the six months ended 31st December 2005
Plexus Holdings plc (Plexus or 'the Company') the oil wellhead services company
and owner of the proprietary POS-GRIP(TM) method of wellhead engineering
announces its maiden interim results for the six months to 31 December 2005.
Highlights
. successful flotation on AIM in December 2005 and the raising of circa £9.7
million net of expenses and before repayment of loans and debt
. transfer to larger 25,000 sq. ft. facility in Aberdeen
. completion of 'Extended Field Life Testing' of 18 3/4 inch POS-GRIP HG(TM)
(metal to metal)seals to 15,000 psi
Continuing Progress
. securing of Plexus' first high pressure/high temperature (HP/HT) rental
contract for BP Egypt with a value in excess of £750,000
. formation of a presence in Egypt to capitalise on the initial success of the
BP Egypt rental contract win
. BP Shah Deniz on schedule to deliver the first 5 wellhead sets (out of a total
of 9) before the financial year end
. continuing development of proprietary intellectual property to broaden scope
and applications of the POS-GRIP method of engineering
Plexus' CEO, Ben van Bilderbeek, commented:
'Following the successful flotation of Plexus and its admission to AIM the
Company has rapidly increased its investment in new facilities; personnel; and
associated infrastructure to accelerate growth in both rental of exploration
wellheads and sale of production wellheads. I am confident that the level of
interest in our proprietary technology, particularly in the HP/HT arena will
continue to strengthen as we are increasingly invited to present and demonstrate
the benefits of our technology to major operators around the world'.
For further details please contact:
Plexus Holdings plc Tel: +44 (0)20 7589 8555
Bernard van Bilderbeek, Chief Executive
Graham Stevens, Finance Director
Buchanan Communications Tel: +44 (0)20 7466 5000
Tim Thompson / James Strong
Notes to Editors
The Plexus Group is an established oil and gas engineering, and service business
based in Aberdeen, with an office in London and a presence in Houston, Texas
through Plexus Deepwater Technologies. Plexus has developed and patented a
method of engineering for oil and gas field wellheads and connectors, named POS-
GRIP, which involves deforming one tubular member against another to effect
gripping and sealing. Plexus was admitted to trading on AIM in December 2005
when it raised approximately £10m of new funds for the Company.
POS-GRIP wellhead systems have been used in more than 60 oil and gas wells to
date by international customers and end users including, ConocoPhillips, BHP
Billiton, Talisman Energy, Tullow Oil, Global Santa Fe, Gaz de France and
Wintershall. In February 2004, BP contracted to purchase POS-GRIP gas platform
production wellhead systems for the US$4.1 billion Shah Deniz development, one
of the major gas fields in the Caspian Sea. Between 2005 and the end of 2008,
the Directors estimate that this relationship has and will generate revenues in
excess of £6.5 million for the Group.
The Directors believe that the raising of the Company's corporate profile
following its recent Admission to AIM in December will accelerate the roll out
of POS-GRIP technology as a superior alternative to current wellhead technology,
and which has particular advantages in HP/HT oil and gas environments for which
there is increasing demand throughout the world. The Company's long-term goal is
to develop POS-GRIP technology as the future industry standard for wellhead
design. This objective includes the distribution of POS-GRIP technology through
licensees to maximise market penetration. The Directors believe that the Plexus
Group can over time become a member of the 'first tier' of global wellhead
systems suppliers.
Chairman's Statement
Introduction
The first half of the year was dominated by the AIM flotation process, following
which Plexus has made significant progress in capitalising on its new public
company status enabling the company to accelerate the establishment of an
operational infrastructure that will allow it to support and service future
sales growth. This is particularly important as the focus of Plexus' targeted
customer base is moving away from renting exploration wellheads to the smaller
North Sea independent 'turn key' operators, and moving to the rental and sale of
wellheads to the major oil company operators around the world.
It is particularly exciting to note that as anticipated at the time of float
there is growing evidence of increased exploration and production activity
(particularly of gas fields) in evermore technically challenging unconventional
fields, which are often HP/HT environments where equipment requirements are
increasingly stringent. We are confident that this trend, and in particular the
growing need for HP/HT applications supports Plexus' strategy of becoming over
time a new wellhead standard: this will generate significant sales growth over
the years ahead as the company's HG metal to metal seal production wellheads
gain increased industry recognition.
AIM listing and share issue
On the 9th December the company issued 18.6 million new ordinary shares by way
of an institutional placing at £0.59 per share and the shares were admitted to
trading on AIM. The placing raised £9.7 million net of expenses from which £2.7
million was allocated to satisfy debt.
The strengthened balance sheet increases Plexus ability to tender for more
significant contracts, and funds have been invested to support our ambitious
growth plans in rental inventory; expanding the territorial reach of the sales
force; recruiting additional high calibre engineering and sales staff; and
developing and expanding the company's intellectual property portfolio for both
upstream and downstream applications.
Interim Results
Turnover for the 6 month period was £1.55m up 35% from £1.15m the previous year.
The rental business continued to represent the majority of Plexus' business
activities during the current period. In the second half and into the next
financial year the manufacture and delivery of the Shah Deniz production
wellhead contract for BP will then become a significant contributor. Gross
margins have improved due to the increased utilisation of the rental assets with
minimal additional costs. Administration expenses have increased significantly,
partly as a result of costs connected to the AIM listing, but principally due to
Plexus investing in personnel and associated infrastructure to enable the
business to expand both in terms of product and service offering in our
traditional North Sea market, as well as in new markets, such as Egypt.
The loss before tax of £0.16m was slightly higher than the previous year due to
increased overhead, and tax has been recognised at nil effective rate which with
the losses brought forward is the estimated tax charge for the full year. Loss
per share was 0.4p (2004 - 0.39p).
The balance sheet has changed significantly following the new share issue and
the use of the funds. The Shah Deniz contract has also given rise to significant
payments received in advance to assist the financing of the production and
manufacture of the POS-GRIP wellheads, and this is shown as long term contract
payments on account.
Operating Review
Plexus operations up until flotation had been focused on inventing, patenting
and proving POS-GRIP technology in the upstream oil and gas wellhead market,
with operations being centred around the rental of its wellhead equipment to
third party 'turn key' well management companies operating on behalf of mainly
'independent' exploration and production companies in the North Sea. Over time
we anticipate that this will reduce as a percentage of total revenues as sales
of production wellhead equipment and rentals elsewhere grow much more rapidly.
In addition, we anticipate that in time licence income arrangements will develop
into an important contributor.
In the short term it has become evident as previously announced that there has
been a significant tightening of exploration and appraisal well rig availability
in the North Sea. This development has led to delays in the commencement of
certain rental projects as wells are deferred. Although this impacts Plexus'
wellhead rental income in the current financial year, we believe we will benefit
once more rigs become available for exploration drilling. This assumes that the
recently announced increase in the supplementary corporation tax rate on North
Sea profits will not curtail current investment plans in the region.
Despite the impact of rig shortages the opportunities and interest in the more
specialised HP/HT areas with the larger oil companies is continuing to grow with
recent rental contract tender wins generating work for BP Egypt and
ConocoPhillips. This provides a sound base for our future growth.
Of particular note is the level of interest in Plexus' proprietary HG metal to
metal seal production wellheads and discussions are now ongoing with a number of
operators about significant longer term contract opportunities. This follows the
successful completion of qualification testing to 15,000 psi of the 18 3/4 inch
HG metal to metal seal carried out to Plexus 'Extended Field Life Testing'
standards, which are more stringent than current industry standards. We now plan
to extend the qualified performance envelope of HG seal technology above 20,000
psi, and to higher temperatures: this has already been achieved in prototype
testing. The importance and relevance of such progress is supported by the
recent HSE (Health and Safety Executive) Report No. 409 which noted that there
are seal and integrity problems with current wellhead technology when applied in
HP/HT conditions: this underlines the exciting opportunities available for our
technology.
The supply of our equipment for the BP Shah Deniz project, which uses the
qualified HG seals, continues to make good progress and the testing and
manufacturing programme is on track to deliver the first five wellhead systems
(out of a total of 9) before the financial year end. This project is a
tremendous showcase for our technology and we expect the commercial benefits of
this to be forthcoming in the future.
The infrastructure of the company in terms of physical resources associated with
our new facilities in Aberdeen and the increased number of personnel (doubled
over the last 12 months) is now such that we have capacity for sales growth. We
are also able to increase our rental inventory and service capabilities as a
result of our move into the new Aberdeen facilities.
Outlook
The global market for the exploration and production of oil and gas continues to
expand in response to growing global demand and higher prices. Oil and gas
companies are having to explore in more extreme operating environments to
replace/add reserves. This means that oil and gas companies are increasingly
interested in technological solutions as established technologies and methods
reach their limits especially in HP/HT wells. We believe that Plexus'
proprietary POS-GRIP technology and its alternative method of wellhead design is
uniquely positioned to capitalise on these market developments. We have
established a solid platform from which we believe excellent growth can be
achieved. The increasing level of interest in our equipment confirms that our
strategy of convincing the oil and gas industry of the technical, performance,
cost, and safety benefits of wellheads utilising POS-GRIP remain firmly on
track.
I would also add that I have been very impressed by the inventiveness,
enthusiasm and hard work put in by Ben and his team. I am therefore confident
that Plexus will show excellent growth, as we continue to work towards becoming
a new 'standard' for the industry.
Robert Adair
Chairman
28th March 2006
Unaudited Consolidated Profit and Loss Account for the half year ended 31
December 2005
Six Six Year
months months
ended ended ended
31/12/05 31/12/04 30/06/05
£000 £000 £000
Turnover 1,552 1,147 2,637
=======================
Gross profit 961 421 1,327
Administration expenses (988) (406) (903)
Operating (loss)/profit before amortisation (27) 15 424
Amortisation (68) (27) (55)
Operating (loss)/profit (95) (12) 369
Net interest payable (62) (67) (137)
-----------------------
(Loss)/profit on ordinary activities before
taxation (157) (79) 232
Taxation (note 5) - - (81)
-----------------------
(Loss)/profit on ordinary activities after
taxation (157) (79) 151
=======================
(Loss)/earnings per ordinary share (note 6) (0.40)p (0.39)p 0.76p
Fully diluted (loss)/earnings per ordinary
share (note 6) (0.40)p (0.13)p 0.25p
Summary Unaudited Group Balance Sheet at 31 December 2005
31/12/05 31/12/04 30/06/05
£000 £000 £000
Fixed assets
Tangible assets 1,569 1,204 1,631
Intangible assets 6,448 1,002 1,095
---------------------------
8,017 2,206 2,726
Working capital
Stocks 2,948 1,011 1,285
Debtors 842 759 2,009
Creditors (1,565) (297) (1,387)
Long term contract payments on account (2,739) (226) (595)
---------------------------
(514) 1,247 1,312
===========================
Net cash/(debt) 7,313 (3,478) (3,753)
Taxation 85 180 100
---------------------------
14,901 155 385
============================
Capital and reserves (note 7)
Ordinary share capital 802 200 200
Preference share capital - 400 400
Share premium account 15,611 1,140 1,140
Profit and loss reserve (1,512) (1,585) (1,355)
----------------------------
14,901 155 385
============================
Summary Unaudited Consolidated Cash Flow Statement for the half year ended 31
December 2005
Six Six Year
months months
ended ended ended
31/12/05 31/12/04 30/06/05
£000 £000 £000
Net cash inflow/(outflow) from operating
activities (note 8) 1,969 (397) 104
Net interest paid (62) (67) (137)
----------------------------
Returns on investment and servicing of
finance 1,907 (464) (33)
Taxation 15 - -
Purchase of intangible fixed assets (5,421) - (121)
Purchase of tangible fixed assets (108) - (585)
----------------------------
Capital expenditure (5,529) - (706)
Net cash outflow before financing (3,607) (464) (739)
Financing
Proceeds of share issues net of issue
expenses 14,673 - -
Repayment of loans (2,250) (454) (587)
----------------------------
Increase/ (decrease) in cash 8,816 (918) (1,326)
---------------------------
Reconciliation of net cash/(debt)
Opening net debt (3,753) (3,014) (3,014)
Net cash inflow/ (outflow) 11,066 (464) (739)
----------------------------
Closing net cash/ (debt) 7,313 (3,478) (3,753)
============================
Reconciliation of Movements in Consolidated Shareholders' Funds for the half
year ended 31 December 2005
Six Six Year
months months
ended ended ended
31/12/05 31/12/04 30/06/05
£000 £000 £000
(Loss)/profit for the period (157) (79) 151
Dividends - - -
----------------------------
Result for period (157) (79) 151
Share Capital
Ordinary shares issued 602 - -
Preference shares converted (400) - -
----------------------------
202 - -
Share Premium
On issue of ordinary shares 15,740 - -
Less: Expenses of share issues (1,269) - -
-----------------------------
14,471 - -
Net increase /(decrease) in
shareholders' 14,516 (79) 151
funds
Opening shareholders' funds 385 234 234
-----------------------------
Closing shareholders' funds 14,901 155 385
=============================
Notes to the Interim Report December 2005
1. This unaudited interim report has been prepared on the basis of the
accounting policies set out in the annual report for the year ended 30 June
2005.
2. This interim report was approved by the board of directors on 27th March
2006.
3. The directors do not recommend payment of an interim dividend.
4. There were no other gains or losses to be recognised in the
financial period other than those reflected in the profit and loss account.
5. Taxation on the operating loss after interest has been provided
at a rate of 0% for the six months ended 31 December 2005 (2004: 0%) which is
the estimated rate of tax for the full year, after accounting for brought
forward tax losses.
6. Basic and pre exceptional earnings per share are based on the
weighted average of ordinary shares in issue during the half-year of 39,261,962
(2004: 20,000,000). In order to aid understanding and comparison, the number of
shares used for the calculation of shares in issue has been rebased at the
comparative dates following the conversion in November 2005 of each £1 ordinary
share into 100 1p ordinary shares. The calculation of fully diluted earnings per
share is based on the weighted average number of ordinary shares in issue plus
the dilutive effect of outstanding share options being 300,824 (2004: nil) and
convertible preference shares being nil (2004: 40,000,000). The number of shares
included in the calculation of fully diluted earnings per share was 39,562,786
(2004: 60,000,000).
7. Share Issues / Capital Reorganisation and Initial Use of Funds from IPO
On 18 October 2005, the preference share capital of 400,000 £1 shares was
converted to ordinary shares of £1 each; on the same date the authorised share
capital was increased to £615,385 to accommodate the issue of 15,385 ordinary £1
shares at £48.75 each.
On 25 November 2005 each ordinary share of £1 was converted to 100 ordinary
shares of 1p each and the authorised share capital was increased to 110,000,000
ordinary shares.
On 8 December 2005 one ordinary share at a premium of £4,191,976.99 was issued
to Plexus International Limited to satisfy loans arising in connection with the
consideration payable by the Company pursuant to agreements relating to the
restructuring of IP ownership.
On 9 December 2005 an Initial Public Offering on the London AIM resulted in
18,644,068 new ordinary shares being placed at an issue price of 59p per share,
raising gross proceeds of £11.0m. Net proceeds after expenses were £9.7m from
which £2.7m was allocated to satisfy debt.
Initial Use of Funds from IPO: £000
Gross proceeds of IPO 11,000
Less: Expenses of share issue 1,269
------
9,731
Repayment of bank overdraft 1,408
Repayment of loans from participating companies 1,320
Net proceeds of issue after settlement of debt 7,003
=======
8. Net cash inflow/ (outflow) from operating activities
Six months Six Year
months
ended ended ended
31/12/05 31/12/04 30/06/05
£000 £000 £000
Operating (loss)/ profit (95) (12) 369
Amortisation 68 27 55
Depreciation 170 124 282
Decrease/ (increase) in working capital 1,826 (536) (602)
-----------------------------
1,969 (397) 104
===========================
9. The comparative figures for the financial year ended 30 June 2005 are not the
Company's statutory accounts for that financial year. Those accounts have been
reported on by the Company's auditors and delivered to the Registrar of
Companies. The report of the auditors was unqualified and did not contain a
statement under section 237(2) or (3) of the Companies Act 1985. The comparative
figures reflected in this report reflect consolidated numbers and previously
consolidated accounts were not prepared. Consolidated accounts have been
prepared to aid understanding and comparison for the current reporting period.
10. Copies of this report will be sent to all Shareholders and will be available
to the public for at least one month, free of charge, from the registered office
of the Company, Plexus House, 1 Cromwell Place, London, SW7 2JE.
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