TIDMPOS
RNS Number : 2309U
Plexus Holdings Plc
27 March 2023
This announcement contains inside information
Plexus Holdings PLC / Index: AIM / Epic: POS / Sector: Oil
equipment & services
27 March 2023
Plexus Holdings plc
('Plexus' or 'the Group')
Interim Results for the 6 months to 31 December 2022
Plexus Holdings plc, the AIM quoted oil and gas engineering
services business and owner of the proprietary POS-GRIP(R) method
of wellhead engineering, announces its interim results for the six
months to 31 December 2022 ("H1 FY23").
Financial Results
-- Sales revenue GBP709k (2021: GBP734k)
-- Continuing operations EBITDA loss (GBP1,098k) (2021: GBP1,061k loss)
-- Continuing operations operating loss (GBP2,018k) (2021: GBP1,908k loss)
-- Continuing operations loss before tax (GBP2,073k) (2021: GBP1,953k)
-- Basic loss per share from continuing activities (2.06p) (2021: 1.94p loss)
-- Cash of GBP1.14m (2021: GBP3.38m), GBPnil in financial assets (2021: GBP4.7m)
-- Bank Lombard facility repaid in full during the year (2021: GBP3.29m drawn down)
-- Total assets of GBP17.3m (2021: GBP26.3m)
-- Total liabilities of GBP3.7m (2021: GBP5.3m)
Operational overview
-- September 2022 - shortlisted in the 'Environmental
Sustainability Innovation' and 'Significant Contribution to the
Industry' categories of the Offshore Network's OWI Global
Awards.
-- October 2022 - raised GBP1.55m through the issue of
Convertible Loan Notes to Ben van Bilderbeek, CEO of Plexus, and
Jeff Thrall, Non-executive Director of Plexus; with the proceeds to
be used for working capital purposes as the Company seeks to
capitalise on the increasing pipeline of opportunities within
Plexus' target markets - as announced on 20 October 2022.
-- Post period end, March 2023 - agreed sale of Leasehold
Interest along with associated leasehold liabilities of Burnside
House, a building surplus to requirements in Aberdeen for a
consideration of GBP1.05 million in cash.
-- Post period end, March 2023 - secured a GBP5m+ contract for
the rental of proprietary POS-GRIP "HG(R)" wellhead equipment and
sealing technology for a specialised subsea project application
(the "Special Project") to be deployed over the next 12 months.
-- Multiple reports support the fact that the world runs on oil
and gas and will continue to do so for decades. Transocean's CEO
recently stated that "...it is clear that we have finally emerged
from eight exceptionally challenging years and are now in the early
stages of what we believe will be a multi-year upcycle".
Trading Update and Outlook
Despite challenging market conditions, the Company's activity
levels in the financial year to 30 June 2023 ("FY23") have so far
been broadly in line with managements' expectations at the start of
FY23. On 6 March 2023, the Company was pleased to announce that
Plexus had secured a GBP5m+ order for its proprietary POS-GRIP HG
wellhead equipment and sealing technology for a special subsea
project application, and the Company has a growing pipeline of
opportunities and potential orders which it continues to pursue
with customers.
As a consequence of the timing of certain revenues, in
particular approximately GBP2.5m of revenue related to the Special
Project which, as a rental rather than a sold contract, will now be
recognised as deferred revenue in FY23 and sales revenue in the
year ending 30 June 2024 ("FY24"), the Board expects that revenues
in the second half of FY23 will be only slightly higher than
revenue in H1 FY23. Whilst this will result in the Company
generating revenues for FY23 materially lower than market
expectations, the Board is confident that revenues in FY24 will be
significantly higher than FY23 as a result of recognising the full
value of the Special Project, ongoing discussions with customers
regarding rental exploration wellhead projects (for which inventory
is manufactured and ready to deploy at short notice), and an
increased pipeline of near-term opportunities on which to
capitalise.
Chief Executive Ben van Bilderbeek said: "While the first half
of this financial year continued to be challenging with low sales
revenue and trading losses, I am encouraged by a number of positive
internal and external indicators and developments. Most
importantly, we announced earlier this month a major GBP5m+ order
for our HG wellhead equipment and sealing technology for a
specialised subsea project. This is the largest contract Plexus has
won and is a true validation of the technical advantages our
POS-GRIP technology can offer to the industry. I believe that this
order, which underpins visibility for the next financial year,
together with the increasing level of opportunities we are
pursuing, is a turning point, and we will be making every effort to
bring these to fruition.
"At the industry level, in a recent statement relating to the
release of its Global Methane Tracker report published February
2023, the IEA said that there was "no excuse" for the oil and gas
('O&G') industry's failure to cut methane emissions last year,
adding that the technologies are "available and are cheaper than
ever to implement". As the CEO of a company that has committed to
delivering leak free wellhead equipment solutions to O&G
companies for over 20 years, I also believe that there is indeed
'no excuse', and agree with IEA executive director Faith Birol who
recently urged policymakers to double down the energy industry
pressure to clean up its methane pollution, mainly from leakage and
distribution, adding that tackling methane "...is one of the most
important, if not the most important thing, that can be done to
tackle near-term global warming".
"For these reasons it has therefore never been more important to
ensure that equipment used by O&G companies works smarter,
harder and delivers leak proof integrity whenever and wherever
possible, including wellhead annular seals. This need is
particularly apparent as the industry experiences a new lease of
life resulting from the emergence from Covid-19, the impact of the
war in Ukraine demonstrating the need for countries to secure
reliable energy supplies, and the unfolding of the natural gas led
transition towards alternative and renewable energy strategies over
the coming decades.
"As evidence of the industry's revival, GlobalData Energy
expects 494 O&G projects in Europe to commence operations
during the period 2023-2027, of which 147 would be upstream.
Further, according to a recent Rystad Energy report, the O&G
sector is set for its highest growth in a decade with $214 billion
of new project investments lined up, including in the North Sea
where from 2022-2023 spending in the UK and Norway will jump 30%
and 22%, to $7 billion and $21.4 billion respectively. This
increasing level of activity will be a "boon" for the offshore
services market and Plexus is working hard to secure a share of
this opportunity.
"I am encouraged by the increased activity within the oil
services sector, particularly exploration and production drilling,
and this, combined with the raised awareness of the industry's
impact on climate change, strengthens the investment case for
Plexus. This is because Plexus has a suite of disruptive
technologies focused on eliminating wellhead leaks at the well site
due to the integrity that is delivered by its HG(R) metal to metal
annular seals. We believe that our technology driven ability to
prevent leaks rather than just 'detecting and repairing' leaks must
be the optimal way forward for the industry, and one which cannot
logically be ignored.
"While we continue to focus on what had become our core
offering, namely generating revenue from the sale of production
wellheads, we are particularly excited to return to the niche
exploration drilling from Jack-up rigs market and have been working
hard on expanding our new wellhead rental inventory that enables us
to pursue tenders and order opportunities. We are making good
progress with the building and testing of our newly designed
Exact-15 wellhead, in anticipation of securing inaugural rental
orders, and I hope to report further progress on this over the
coming months.
"It should not be forgotten that our proprietary POS-GRIP
friction grip method of engineering has many advantages in the
field including enhanced safety, time savings, and reduced
operational expenditure ("OPEX") costs relating to leak repairs and
down time. The provision of special solutions has also been one of
our strengths for some time, and we were therefore delighted to
secure earlier this month a major rental equipment order with a
value of more than GBP5m for our POS-GRIP "HG(R)" wellhead
equipment and sealing technology for a specialised project
application in a subsea environment, which is to be deployed over
the next 12 months. Although the full value of the contract will be
recognised as sales revenues in the financial year ending 30 June
2024, there will be approximately GBP2.5m of milestone payments to
be received and accounted for as deferred revenue in the current
financial year. Importantly, this contract will help to demonstrate
key elements and functionality of a full "Python(R)" Subsea
Wellhead, including leak proof metal to metal HG seals. Our Python
wellhead was developed within a Joint Industry Project supported by
a number of major operators, and was designed to achieve a new best
in class and safest standard for subsea wellheads. This contract, I
believe, will further develop the potential for the rental of such
specialised wellhead systems.
"Our licensee partnership with SLB (previously Schlumberger) is
also progressing well, with the test marketing of SLB's new
low-cost surface production wellhead design that incorporates
POS-GRIP and HG seal technology expected to commence early in the
next financial year ending 30 June 2024.
"Furthermore, our diversification strategy is gaining traction
as we continue to develop new applications and Plexus Products for
our technology; wherever metal-to-metal annulus sealing is
required, POS-GRIP can deliver a true, leak-proof solution, and
importantly one that can last for the 'field life' of a well,
thereby avoiding expensive remedial and maintenance costs.
"One growing target area is Plug & Abandonment ('P&A') -
the decommissioning of retiring O&G assets, which can have
complex long-term financial and environmental impacts. While Rystad
Energy estimates the cumulative costs involved in this sector may
reach $42 billion by 2024, in the UK Continental Shelf ('UKCS')
alone it suggests that the ratio of decommissioning expenditure to
OPEX by O&G companies operating in the North Sea will increase
from the current level of c.10% to 25-30% in the next two
decades.
"With this background, we were delighted to announce in June
last year a significant new development in the P&A space,
winning an order for equipment and services from subsea engineering
specialist Oceaneering International (NYSE: OII). Feedback has been
encouraging, and we anticipate expanding our presence in the
P&A market both in the North Sea and internationally. In
addition, we continue to provide equipment and services such as
tieback tools and handling equipment to partner companies
undertaking P&A project work and hope to see an increase in
this category of work as well.
"In October 2022, we raised GBP1.55m through the issue of
convertible loan notes, which I supported along with our Chairman,
Jeff Thrall. Additionally, post period end, we agreed to sell the
Leasehold Interest in Plexus' Burnside House property in Aberdeen
along with associated leasehold liabilities to a private company
owned by certain members of my family, for GBP1.05 million in cash.
The cash from these transactions will be used to strengthen Plexus'
working capital position, enabling us to take advantage of the many
opportunities that we are pursuing, as well as enabling capital
expenditure commitments such as those required to build up our
exploration wellhead rental inventory. I hope my support
demonstrates my ongoing confidence and belief in the potential of
Plexus and our POS-GRIP technology.
"For 2023 and beyond, we have a clear growth strategy focused on
leveraging the unique features of POS-GRIP into value creation for
our shareholders. This centres around the pursuit of sales
opportunities in sectors where we believe we can provide superior
technical solutions and responsive service times, including the
rental of exploration wellheads from Jack-up rigs; sale of
production wellheads where superior POS-GRIP HG annular seals can
be proven to provide leak free performance; innovative Plexus
Products solutions for special projects and decommissioning and
P&A, and working closely with our licencee SLB where feedback
on our licenced technology continues to be positive. While t he
O&G industry narrative is clearly complex, challenging and at
times fast changing, as a small, nimble operator with a plethora of
valuable IP, know-how and applications for its core technology, I
believe Plexus is well placed to take advantage of the
opportunities in our markets, and help others succeed in a
sustainable ESG and Net Zero compliant manner."
Chairman's Statement
Business Progress and Operating Review
Just over a year on from Russia's invasion of Ukraine that
triggered the global energy crisis, energy supply chains remain
potentially vulnerable, and countries are scrambling to secure long
term supply relationships, particularly for LNG. In response,
worldwide activity in the O&G sector is increasing, with Wood
Mackenzie suggesting demand for oil will increase by 2.3m barrels
per day in 2023. Indeed, longer term, BP warned in its annual
energy outlook published in January that if the world is to avoid
more shortages, price swings, and economic and social disruptions
as existing production sources decline, upstream O&G
investments will be needed for another 30 years. Most relevantly
for Plexus, Spencer Dale, chief economist at BP said investment in
new wells would therefore be needed until 2050 to ensure the supply
of fossil fuels matches demand, to enable an orderly transition
away from hydrocarbons.
As part of this story, counting the cost of carbon across every
vertical is essential, particularly in the case of natural gas,
where its main constituent methane is now recognised as being many
times worse for the environment and global warming than CO2. In
fact, Yasjka Meijer, a scientist with the European Space Agency,
has estimated that if just "3% to 4% of natural gas produced at
O&G wells leaks into the atmosphere, power produced by natural
gas plants is on par with coal plants in terms of the overall
climate impact". This underlines the importance of minimising
methane emissions, and the value of leak proof annular wellhead
seals which Plexus offers its customers.
Such considerations also have implications for UK energy policy
in relation to backing domestically produced gas versus imports.
Rystad Energy suggests that "LNG production and transport generates
10x the amount of carbon emissions compared with pipeline gas", yet
LNG imports to the UK from the USA are up nearly 150% from 2021 to
October 2022 to 9.7bcm. This may have been essential shorter term,
but longer term it is more detrimental to the environment and no
better measure can be found to encourage increased investment in
local UK gas production.
A sustainable solution therefore must be to invest in and build
more local production in the North Sea, which has some of the
strictest environmental regulations in the world, making UK
hydrocarbons cleaner than those from other parts of the world.
Despite the windfall tax, the North Sea Transition Authority has
begun the process of awarding over 100 new O&G licenses, and
Plexus hopes that this will help underpin opportunities in what has
always been its key market.
Such new drilling activity prospects is where Plexus' return to
the exploration rental wellhead from Jack-up rigs market can excel;
offering proven "through the BOP" technology in an agile and
responsive manner to exploration companies, combined with marketing
support from SLB is a compelling proposition. In anticipation of
such increased activity and with the proceeds from the October 2022
GBP1.55m raise via the issue of convertible loan notes, and the
post period end sale of a surplus property in Aberdeen for
GBP1.05m, Plexus has been building its new wellhead rental
inventory, and hopes to begin to win rental contracts over the
coming months.
Fittingly, post period end, Plexus had won a significant GBP5m+
contract for the rental of our proprietary POS-GRIP "HG(R)"
wellhead equipment and sealing technology, and while lead times can
be lengthy for such specialised projects, we believe that more of
these opportunities will present themselves over time. This major
contract will utilise our leak proof metal to metal seals in a
subsea environment and will demonstrate key elements of a full
Python Subsea Wellhead, which will help our efforts to break into
this growing market, where Wood Mackenzie said in its 2022 global
deepwater report that deepwater "....is the fastest growing oil and
gas theme".
Furthermore, our partnership with SLB continues to strengthen
ahead of the launch of its own low-cost surface production wellhead
that utilises our POS-GRIP technology to offer leak-free
performance for the lifetime of a well. Alongside this, we are
progressing Plexus' diversification strategy by expanding into the
fast-growing decommissioning space and developing our growing range
of Plexus products.
Key functions that support our operations are Human Resources,
Quality Health and Safety, Information Technology and Engineering
through the generation of Intellectual Property (IP').
The Company maintains its Competency Management System through
an internally developed system 'Competency@Plexus' ('C@P'). This is
monitored and accredited by OPITO, the training and qualifications
standards board. The annual monitoring audit was successfully
conducted in July 2022, where full accreditation was maintained
with no findings raised by the auditor. Since outright approval was
achieved, and as the system is robust and well-established, OPITO
has advised that a reduced site audit frequency of every 15 - 24
months will be applied going forward.
Health and Safety remains at the centre of what we do, and
Plexus remains fully committed to continually improving safety
standards, and the safety culture across the business and its
people. This is reflected in the business being once again lost
time injury ('LTI') free this year. Plexus passed its seventh
anniversary of this milestone in September 2022.
Plexus has undertaken a recertification audit with API for API
Q1/ISO 9001 in September 2022 and an annual audit with LRQA for ISO
45001 in December 2022. No major findings were raised in either
audit, resulting in the issue of new certification. Therefore,
Plexus continues to comply with the requirements of API Q1/ISO 9001
and ISO 45001 standards retaining API 6A and 17D Licences. These
accreditations demonstrate Plexus' capability and determination to
operate to the highest standards, and this will assist in gaining
new work.
Plexus has been able to rely on robust IT and security systems,
including its self-written ERP system, which are constantly under
review for improvement.
We continue to develop our suite of IP both through patent
protection, know-how, and ongoing research and development.
Capitalised R&D salary costs for the 6 months ended 31 December
2022 was GBP256k.
Interim Results
Plexus' results for the six months to December 2022, and the
activities carried out during this period, reflect the Group's
ongoing investment in and support of its strategy to grow existing
and new revenue streams organically and with licencing partners.
Progress is being made as demonstrated by the announcement post
period end of a GBP5m+ contract for the rental of POS-GRIP HG
wellhead equipment and sealing technology for a specialised subsea
project application.
Continuing operations revenue for the six-month period ended 31
December 2022 decreased to GBP709k, compared to the previous year's
figure of GBP734k.
During the period, Plexus has looked to conserve Group cash
whilst at the same time ensuring that its engineering capabilities
and operational service to customers was not compromised, and
controlling investment on capex, opex and non-essential R&D,
and post period end secured additional cash resources through the
issue of GBP1.55m of convertible loans, and GBP1.05m from the
disposal of Burnside House, a building which had become surplus to
requirements in Aberdeen.
Continuing activities administrative expenses have increased for
the six months to December 2022 to GBP2.64m (2021: GBP2.51m).
Personnel numbers, including non-executive board members are
broadly in line with the prior year at 36 (2021: 35). The staff
structure provides a mix of skills that balances ongoing and future
organic operational opportunities, particularly in relation to the
ongoing move back into the rental wellhead exploration market, and
development and support for our IP-led strategy involving external
partners and licensees, against the need to carefully manage the
Group's costs and cash resources. The current staff level is
designed to reflect the minimum required to maintain the
operational infrastructure that has been developed to date,
including maintaining the Group's Business Management System, and
retaining all relevant and necessary accreditations, in addition to
meeting operational requirements. Future growth in employee numbers
is anticipated, driven as required by expansion in operational
activities.
The Group has reported a loss of GBP2.07m in the period, which
is broadly in line with the prior year. The loss comes after
absorbing depreciation and amortisation costs of circa GBP0.8m.
Included in the statement of comprehensive income is a charge of
GBP122k to recognise the fair value of the derivative financial
instrument embedded in the convertible loan.
The Group has not provided for a charge to UK Corporation Tax at
the prevailing rate of 19%. This is consistent with the prior
year.
Basic loss per share for continuing operations was 2.06p per
share, which compares to a 1.94p loss per share for the same period
last year.
The balance sheet continues to remain strong, with the current
level of intangible and tangible property, plant and equipment
asset values at GBP8.9m and GBP0.8m respectively illustrating the
amount of cumulative investment that has been made in the business.
Total asset values at the end of the period stood at GBP17.3m.
As at 31 December 2022, the Group had cash and cash equivalents
of GBP1.1m and no bank borrowing.
Outlook
With the resurgence in demand for O&G, we believe that
exploration and production activities should be carried out in as
safe a manner as possible, and that leaks should be prevented
rather than allowed to happen before they are located and repaired;
these repairs are often only temporary fixes and, in many instances
leaks are not identified at all. This is a message we are
determined to continue promoting to the industry as we work to
overcome established practices.
It is encouraging to see a range of statements over the past six
months in relation to the ongoing need for O&G, and that there
are certainly no 'quick fixes' in terms of switching off
hydrocarbon dependence. ExxonMobil CEO Darren Woods has a pragmatic
approach towards exploration and production, recognising that
O&G will be necessary for years to come and that stopping
exploration and production in Europe will lead to higher emissions
when produced elsewhere: "So, asking us to stop investing or
producing diesel and gas... just means that somebody else out there
who is less efficient and more emissions-intensive making it to
meet that demand. Again, the world does not benefit from that.".
Clearly the answer is to produce and consume O&G as cleanly and
as leak free as possible, and Plexus of course believes that this
should include the wellhead and associated equipment.
However, it should be recognised that there are headwinds in
Europe, and particularly in the UK. These take the form of very
high profit windfall taxes, which are showing signs of compromising
investment decisions by operators, and also ongoing pressure from
the green lobby, which does not seem to recognise that it is better
to produce more responsible cleaner O&G locally, rather than
import long distance from parts of the world where standards may
not be quite as high as in Europe, and where transport costs
(financial and environmental) come into play. This is particularly
the case with imported LNG versus locally produced 'pipeline
gas'.
Despite all of the challenges over the past few years, the
global wellhead equipment market is now beginning to thrive, and
this can only be positive for Plexus. I was particularly encouraged
to note that Research and Markets published a report in January
2023 estimating that the Global Wellhead Equipment Market will have
a Compound Annual Growth Rate ("CAGR") of 9.3%, with a global
market value estimated to almost double to $11.8bn by 2030.
Further, the decommissioning sector is also reported as a growth
market, and one where we are already having some success in
relation to POS-GRIP based well P&A solutions. Polaris Market
Research reported in 2022 that it calculated that the global
offshore decommissioning market is expected to grow at a CAGR of
7.6% thereby almost doubling to $10.1 billion by 2030, and that by
2027, around 2,400 wells in the North Sea and West of Shetland are
projected to be decommissioned.
These are great opportunities for Plexus, and it should not be
forgotten that beyond these markets there are numerous other areas
and applications we believe can benefit from our proprietary
technology, which include carbon capture and storage, natural gas
storage, offshore wind, hydrogen and geothermal. These are all
areas where very long-term sealing integrity would be an enormous
advantage if not essential, especially where high temperature, high
pressure and corrosive environments are concerned.
Against this positive industry backdrop, and with a growing
inventory of rental wellhead equipment, a solid partner in SLB, a
strengthened order book, new tender opportunities, an improved
working capital position, and a shift in attitude towards the
O&G sector, all signs point to Plexus as an opportunity that I
believe should be attractive to investors as we advance into 2023
and beyond.
J Jeffrey Thrall
Non-Executive Chairman
24 March 2023
For further information please visit www.plexusplc.com or
contact:
Plexus Holdings PLC info@plexusplc.com
Ben van Bilderbeek, CEO
Graham Stevens, CFO
Cenkos Securities PLC Tel: 0131 220 6939
Derrick Lee
Pete Lynch
------------------------------
St Brides Partners Ltd plexus@stbridespartners.co.uk
Isabel de Salis
Ana Ribeiro
------------------------------
Plexus Holdings Plc
Unaudited Interim Consolidated Statement of Comprehensive
Income
For the Six Months Ended 31 December 2022
Six months Six months Year to
to to 30 June
31 December 31 December 2022
2022 2021
GBP'000 GBP'000 GBP'000
Revenue 709 734 2,306
Cost of sales (91) (130) (813)
------- ------- -------
Gross profit 618 604 1,493
Administrative expenses (2,636) (2,512) (5,784)
Operating loss (2,018) (1,908) (4,291)
Finance income 4 81 164
Finance costs (40) (159) (640)
Other income 38 11 125
Remeasurement of financial instrument (122) - -
Share in profit of associate 115 22 111
------- ------- -------
Non-recurring item
Fair-value adjustment on asset
held for sale (note 10) (50) - (1,025)
Loss before taxation (2,073) (1,953) (5,556)
Income tax credit (note 6) - - (1,901)
------- ------- -------
Loss after taxation from continuing
operations (2,073) (1,953) (7,457)
------- ------- -------
Loss for period/year (2,073) (1,953) (7,457)
Other comprehensive income - - -
------- ------- -------
Total comprehensive income (2,073) (1,953) (7,457)
------- ------- -------
Loss per share (note 7)
Basic from continuing operations (2.06p) (1.94p) (7.42p)
Diluted from continuing operations (2.06p) (1.94p) (7.42p)
Basic from discontinued operations - - -
Plexus Holdings PLC
Unaudited Interim Consolidated Statement of Financial
Position
As at 31 December 2022
31 December 31 December 30 June
2022 2021 2022
GBP'000 GBP'000 GBP'000
ASSETS
Goodwill 767 767 767
Intangible assets 8,948 9,435 9,165
Property, plant and equipment
(note 9) 779 2,798 821
Non-current financial asset - 4,705 101
Investment in associate 838 743 723
Deferred tax asset - 1,899 -
Right of use asset 876 1,093 941
------- ------- -------
Total non-current assets 12,208 21,440 12,518
------- ------- -------
Asset held for sale (note10) 1,050 - 1,100
Inventories 2,109 663 1,394
Trade and other receivables 805 852 971
Cash and cash equivalents 1,142 3,379 5,840
------- ------- -------
Total current assets 5,106 4,894 9,305
------- ------- -------
TOTAL ASSETS 17,314 26,334 21,823
------- ------- -------
EQUITY AND LIABILITIES
Called up share capital (note
12) 1,054 1,054 1,054
Shares held in treasury (2,500) (2,500) (2,500)
Share based payments reserve 674 674 674
Retained earnings 14,234 21,811 16,307
To tal equity attributable ------- ------- -------
to equity holders
of the parent 13,462 21,039 15,535
Convertible loans 1,576 - -
Lease liabilities 782 1,015 761
------- ------- -------
Total non-current liabilities 2,358 1,015 761
Trade and other payables 1,056 670 1,245
Bank Lombard facility - 3,294 3,958
Derivative financial instrument 122 - -
Lease liabilities 316 316 324
------- ------- -------
Total current liabilities 1,494 4,280 5,527
------- ------- -------
Total liabilities 3,852 5,295 6,288
------- ------- -------
TOTAL EQUITY AND LIABILITIES 17,314 26,334 21,823
------- ------- -------
Plexus Holdings Plc
Unaudited Interim Statement of Change in Equity
For the Six Months Ended 31 December 2022
Called Shares Share Based Retained Total
Up Held in Payments Earnings
Share Capital Treasury Reserve
Balance as at 30 June
2021 1,054 (2,500) 674 23,764 22,992
Total comprehensive
loss for the year - - - (7,457) (7,457)
------- ------- ------- ------ ------
Balance as at 30 June
2022 1,054 (2,500) 674 16,307 15,535
Total comprehensive
loss for the period - - - (2,073) (2,073)
------- ------- ------- ------- -------
Balance as at 31 December
2022 1,054 (2,500) 674 14,234 13,462
------- ------- ------- ------- -------
Plexus Holdings Plc
Unaudited Interim Statement of Cash Flows
For the Six months ended 31 December 2022
Six months Six months Year to
to 31 December to 31 December 30 June
2022 2021 2021
GBP 000's GBP 000's GBP 000's
Cash flows from operating activities
Loss before taxation from continuing
activities (2,073) (1,953) (5,556)
------- ------- -------
Loss before tax (2,073) (1,953) (5,556)
Adjustments for:
Depreciation, amortisation and
impairment charges 768 838 1,679
Gain on disposal of property,
plant and equipment - (1) (4)
Remeasurement of financial instrument 122
Fair value adjustment of on financial
assets 1 112 513
Fair value adjustment on asset
held for sale 50 - 1,025
Share in profit of associate (115) (22) (111)
Impairment of associate - - 109
Other income (38) (11) (114)
Investment income (4) (81) (164)
Interest expense 40 47 127
Changes in working capital:
Increase in inventories (715) (88) (819)
Decrease in trade and other receivables 166 199 80
(Decrease) / Increase in trade
and other payables (189) 27 602
------- ------- -------
Cash used in operating activities (1,987) (933) (2,633)
Net income taxes received - - (2)
------- ------- -------
Net cash used in operating activities (1,987) (933) (2,635)
------- ------- -------
Cash flows from investing activities
Funds divested / (invested) in
financial instruments 100 (1,775) 2,428
Other income 38 11 114
Purchase of intangible assets (256) (252) (447)
Interest and investment income
received 4 81 164
Purchase of property, plant and
equipment (102) (62) (253)
Preparation costs for asset held
for sale - - (180)
Net proceeds from of sale of property,
plant and equipment - 2 3
------- ------- -------
Net cash (used) / generated from
investing activities (216) (1,995) 1,829
------- ------- -------
Cash flows from financing activities
(Repayment)/drawdown of banking
facility (3,958) 1,250 1,914
Repayments of lease liability (87) (87) (347)
Convertible loan funding received 1,550 - -
Interest paid - (31) (96)
------- ------- -------
Net cash (outflow) / inflow
from financing activities (2,495) 1,132 1,471
------- ------- -------
Net decrease in cash and cash
equivalents (4,698) (1,796) 665
Cash and cash equivalents at
brought forward 5,840 5,175 5,175
------- ------- -------
Cash and cash equivalents carried
forward 1,142 3,379 5,840
------- ------- -------
Notes to the Interim Report December 2022
1. This interim financial information does not constitute
statutory accounts as defined in section 435 of the Companies Act
2006 and is unaudited.
The comparative figures for the financial year ended 30 June
2022 are not the Company's statutory accounts for that financial
year. Those accounts have been reported on by the company's
auditors, Crowe U.K. LLP, and delivered to the registrar of
companies. The report of the auditors was (i) unqualified, (ii) did
not include a reference to any matters to which the auditors drew
attention by way of emphasis without qualifying their report and
(iii) did not contain a statement under section 498(2) or (3) of
the Companies Act 2006.
The interim financial information is compliant with IAS 34 -
Interim Financial Reporting.
2. Except as described below the accounting policies applied in
these interim financial statements are the same as those applied in
the Group's consolidated financial statements as at and for the
year ended 30 June 2022 and which are also expected to apply for 30
June 2023.
There are a number of standards, amendments to standards, and
interpretations which have been issued by the IASB that are
effective in future accounting. The Directors' have assessed the
impact of these standards and do not expect any significant impact
to the Group on their adoption. The Group financial statements are
presented in sterling and all values are rounded to the nearest
thousand pounds except where otherwise indicated.
3. This interim report was approved by the board of directors on
24 March 2023.
4. The directors do not recommend payment of an interim dividend
in relation to this reporting period.
5. There were no other gains or losses to be recognised in the
financial period other than those reflected in the Statement of
Comprehensive Income.
6. No corporation tax provision has been provided for the six
months ended 31 December 2022 (2021: nil). As a result, there is no
effective rate of tax for the six months ended 31 December 2022
(2021: 0%).
7. Basic earnings per share are based on the weighted average of
ordinary shares in issue during the half-year of 100,435,744 (2021:
100,435,744).
8. The Group derives revenue from the sale of its POS-GRIP
friction-grip technology and associated products, and licence
income derived from its various licensing agreements. These income
streams are all derived from the utilisation of the technology
which the Group believes is its only segment. Business activity is
not subject to seasonal fluctuations.
9. The company accounts for convertible loans having regard to
the specific terms of the instrument. The company considers the
instrument to be made up of a host instrument that it is measured
at amortised cost and a derivative forward contract that is
recognised at fair value through the profit and loss account. The
company has elected to account for the two elements separately
rather than assign a fair value to the instrument as a whole. The
redemption premium is recognised over the life of the instrument
and an accelerated charge will be recognised if a conversion event
occurs prior to the end of the term.
10. Property plant and equipment
Tenant Assets Motor
Buildings Improvements Equipment under construction vehicles Total
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
Cost
------------ -------------- ------------ -------------------- ---------- ---------
As at 30 June
2021 3,740 714 5,561 - 17 10,032
------------ -------------- ------------ -------------------- ---------- ---------
Additions - 130 69 54 - 253
------------ -------------- ------------ -------------------- ---------- ---------
Transfers - - 54 (54) - -
------------ -------------- ------------ -------------------- ---------- ---------
Reclassified to
assets held for
sale (3,055) - (3) - - (3,058)
------------ -------------- ------------ -------------------- ---------- ---------
Disposals - - (321) - - (321)
------------ -------------- ------------ -------------------- ---------- ---------
----- ----- ----- ----- ----- -----
------------ -------------- ------------ -------------------- ---------- ---------
As at 30 June
2022 685 844 5,360 - 17 6,906
------------ -------------- ------------ -------------------- ---------- ---------
Additions - 10 7 85 - 102
------------ -------------- ------------ -------------------- ---------- ---------
Transfers - - 85 (85) - -
------------ -------------- ------------ -------------------- ---------- ---------
----- ----- ----- ----- ----- -----
------------ -------------- ------------ -------------------- ---------- ---------
As at 31 December
2022 685 854 5,452 - 17 7,008
------------ -------------- ------------ -------------------- ---------- ---------
----- ----- ----- ----- ----- -----
------------ -------------- ------------ -------------------- ---------- ---------
Depreciation
------------ -------------- ------------ -------------------- ---------- ---------
As at 30 June
2021 1,643 566 4,851 - 11 7,071
------------ -------------- ------------ -------------------- ---------- ---------
Charge for the
year 153 40 252 - 4 449
------------ -------------- ------------ -------------------- ---------- ---------
Reclassified to
assets held for
sale (1,111) - (3) - - (1,114)
------------ -------------- ------------ -------------------- ---------- ---------
On disposals - - (321) - - (321)
------------ -------------- ------------ -------------------- ---------- ---------
----- ----- ----- ----- ----- -----
------------ -------------- ------------ -------------------- ---------- ---------
As at 30 June
2022 685 606 4,779 - 15 6,085
------------ -------------- ------------ -------------------- ---------- ---------
Charge for the
year - 36 106 - 2 144
------------ -------------- ------------ -------------------- ---------- ---------
On disposals - - - - - -
------------ -------------- ------------ -------------------- ---------- ---------
----- ----- ----- ----- ----- -----
------------ -------------- ------------ -------------------- ---------- ---------
As at 31 December
2022 685 642 4,885 - 17 6,229
------------ -------------- ------------ -------------------- ---------- ---------
----- ----- ----- ----- ----- -----
------------ -------------- ------------ -------------------- ---------- ---------
Net book value
------------ -------------- ------------ -------------------- ---------- ---------
As at 31 December
2022 - 212 567 - - 779
------------ -------------- ------------ -------------------- ---------- ---------
----- ----- ----- ----- ----- -----
------------ -------------- ------------ -------------------- ---------- ---------
As at 30 June
2022 - 238 581 - 2 821
------------ -------------- ------------ -------------------- ---------- ---------
----- ----- ----- ----- ----- -----
------------ -------------- ------------ -------------------- ---------- ---------
11. Asset held for sale
2022
GBP'000
Cost 3,058
Accumulated depreciation (1,114)
-----
Net book value 1,944
Preparation costs 172
Cost of sale 9
-----
Fair value adjustment (1,025)
-----
Fair value at 30 June 2022 1,100
-----
Fair value adjustment (50)
-----
Fair value at 31 December 2022 1,050
-----
The asset held for sale relates to a property which was sold
post period end on 28(th) February 2023.
The Group had agreed a sale in principle prior to the period end
to a related party, with the building having been previously
marketed for sale. In line with IFRS5 the asset was held for sale
at the lower of its carrying value and fair value. A fair value
adjustment to reduce the carrying value of the asset to its fair
value has been recognised as shown above. The fair value was
assessed by reference to an independent property agent.
12. Investments
GBP'000
Investment in associate at 30 June
2021 721
Share of profit for the period 111
Impairment of investment (109)
-----
Investment in associate at 30 June
2022 723
Share of profit for the period 115
-----
Investment in associate at 31 December
2022 838
-----
On 14 December 2018 Plexus Ocean Systems Limited acquired a 49%
interest in Kincardine Manufacturing Services Limited ('KMS') for a
consideration of GBP735k plus associated legal fees. KMS is a
precision engineering company which serves the oil and gas
industry. This is viewed as a long-term strategic investment by
Plexus. KMS is based at Sky House, Spurryhillock Industrial Estate,
Stonehaven, Aberdeenshire AB39 2NH.
Following the investment Graham Stevens, Plexus' Finance
Director was appointed to the board of KMS. The company remains
under the control and influence of the 51% majority
shareholders.
The summary financial information of KMS, extracted on a 100%
basis from the draft accounts for the year to 31 December 2022 is
as follows:
2022
GBP'000
Assets 3,033
Liabilities 1,623
Revenue 4,813
Profit after tax 2 46
13. Share Capital
Six months Six months Year to
to 31 December to 30 June
2022 31 December 2022
2021
GBP'000 GBP'000 GBP'000
Authorised:
Equity: 110,000,000 (June 2022
& Dec 2021: 110,000,000) Ordinary
shares of 1p each 1,100 1,100 1,100
Allotted, called up and fully ----- ----- -----
paid:
Equity: 105,386,239 (June 2022
& Dec 2021: 105,386,239) 1,054 1,054 1,054
----- ----- -----
14. Convertible loans
Non-current liabilities GBP'000
Convertible loan notes issued 1,550
Redemption premium 26
-----
1,556
-----
Current liabilities GBP'000
Fair value of derivative instrument 122
--------
-----
--------
122
--------
-----
--------
On 19th October 2022, the Company issued convertible loan notes
to the value of GBP1,550,000 from OFM Investment Limited (an entity
connected to the van Bilderbeek family), Ben van Bilderbeek and
Jeff Thrall, and represents a related party transaction.
The loan notes are non-interest bearing and have a long stop
maturity date on the second-year anniversary of the date of the
instrument. On conversion, the holders of the loan notes will
receive new ordinary shares at a 20% discount to the prevailing
share price in addition a redemption premium is payable being 20%
of the loan note value. The derivative instrument is remeasured at
each balance date, with any fair value adjustment recognised in the
Income Statement.
At the reporting date the financial instrument has been
remeasured resulting in a charge of GBP122k in the statement of
comprehensive income. Additionally, a charge of GBP26k has been
included in finance costs relating to a redemption premium.
15. Subsequent Event
On 28th February 2023 the Group completed the sale of the
Burnside Property, which at the reporting date is classified as an
asset held for sale, for a consideration of GBP1.05m.
The property was sold to Burnside House Limited, a private
company which has been established for the purpose of the
Transaction and is owned by Ben van Bilderbeek, CEO of Plexus, and
certain members of Mr van Bilderbeek's family, including his
spouse, and thus represents a related party transaction.
NOTES
Plexus Holdings plc (AIM: POS)
Plexus is an IP led company focussed on establishing its
patented leak-proof POS-GRIP(R) wellhead and associated equipment
as the go-to technology for energy markets whilst making a genuine
contribution to the oil and gas industry's ESG and NetZero goals by
championing "through the BOP" (Blow-out Preventer) designs, and
lifetime leak-proof HG(R) metal-to-metal sealing systems. Having
protected the environment for many years through these
technological innovations, the Company was awarded the London Stock
Exchange's Green Economy Mark in July 2021 and continues to place
emphasis on its ability to reduce harmful methane emissions and
unnecessary maintenance and intervention costs.
Headquartered in Aberdeen, the Company has provided leak-free
wellhead performance in over 400 wells worldwide and worked with an
array of blue-chip oil and gas company clients. As well as
generating direct revenues from securing orders for surface
production wellheads particularly in the UK and European North Sea
regions, the Company has several licencing/collaboration agreements
with major partners including FMC Technologies, which is a
subsidiary of TechnipFMC, and SLB (Schlumberger Ltd). SLB has a
non-exclusive licence to use the POS-GRIP and HG(R) metal-to-metal
seal method of wellhead engineering for the development of
conventional and unconventional oil and gas surface wellheads.
Further, Plexus has also entered into a Licencing Agreement with
SLB which enables Plexus to return to the Exploration (Adjustable)
Wellhead rental business from Jack-up rigs for 'through the BOP'
applications, where SLB will help to provide Plexus with sales
leads and market insight through a formal Sales Advisory Board.
Plexus' current suite of products and applications include: "HG"
wellheads, which combine POS-GRIP technology with gas tight leak
free metal-to-metal sealing; the Python(R) subsea wellhead,
developed in a Joint Industry Project with several industry
leaders; the POS-SET(TM) Connector for the de-commissioning and
abandonment market; and Tersus-PCT, an innovative HP/HT tie back
connector product. Having proved the superior uniquely enabling
qualities of POS-GRIP Technology, Plexus is now also focused on
identifying opportunities for its technology and equipment in other
markets such as Plug and Abandonment de-commissioning, carbon
capture, gas storage, hydrogen and geothermal where it can play an
important role in reducing harmful methane emission risks as
operators strive to deliver on ESG commitments and NetZero goals in
a safe and cost-effective way.
For more information visit: https://www.plexusplc.com
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END
IR VQLFLXXLEBBF
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March 27, 2023 02:00 ET (06:00 GMT)
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