Plexus Holdings plc, the AIM quoted oil and gas engineering services business and owner of the proprietary POS-GRIP® method of wellhead engineering, announces its preliminary results for the year ending 30 June 2016.

Financial Results

  • Sales revenue £11.23m (2015: £28.53m)
  • Adjusted EBITDA (£1.56m) loss (2015: £9.53m profit)
  • Loss after tax (£5.79m) (2015: £5.43m profit)
  • Basic loss per share (6.39p) (2015: 6.40p profit per share)
  • Net cash of £9.9m (2015: net debt £2.9m)
  • No proposed final dividend (2015: 1.75p per share)

Whist the Company remains committed to distributing dividends to its shareholders, the Directors believe that in view of the challenging oil price environment and resulting reduction in exploration drilling activity and resultant financial performance it is prudent to continue the suspension of the payment of dividends. The Company will look to reinstate the dividend at the earliest opportunity.

Overview

  • Continuing low oil prices resulting in global exploration drilling activity falling to 60 year lows, with the UK North Sea reporting the lowest levels recorded, significantly impacted the performance of the Company’s core business of renting its proprietary POS-GRIP® friction-grip exploration wellhead equipment to major international oil and gas customers – resulting in a 61% fall in full year revenues
  • Significant realignment of Company’s cost base in response to lower revenues achieved without compromising ongoing ability to service customers, whilst retaining a commitment to Research and Development (‘R&D’) so as to support ongoing Plexus innovative and proprietary technology driven focus:
    • Near 50% reduction in annualised personnel costs and general overheads from £14.0m to £7.4m
    • R&D spend in the period, excluding costs of building test fixtures, totalled £1.98m compared to £4.12m in the same period last year, a reduction of 52%
  • Focus on diversifying revenues away from the Company’s traditional shallow water exploration jack-up market in the Scottish and European North Sea continental shelf where Plexus is the dominant supplier. Progress being made in expanding both Plexus’ geographical footprint and the number of POS-GRIP based products:
    • Licence agreement signed with Yantai Jereh Oilfield Services Group Co., Ltd (‘Jereh’) in China to facilitate the rental, sale, and manufacture of Plexus’ wellhead equipment
    • Licence agreement signed with LLC Gusar (OOO Gusar) Ltd (‘Gusar’), and CJSC Konar (ZAO Konar) (‘Konar’), two independent Russian oil and gas equipment manufacturers, for the rental, manufacture and servicing of Plexus’ jack-up drilling wellhead exploration equipment into the Russian Federation and the other CIS states oil and gas markets
    • Winning of a local Petronas licence to manufacture and supply Plexus’ POS-GRIP wellhead equipment in Malaysia through Plexus Products (Asia) Sdn Bhd (‘PPA’), the Malaysian company set up with a local partner as part of an Asian business hub
    • Python® Subsea Wellhead launched in September 2015 as a result of a successful Joint Industry Project (‘JIP’) supported by BG, Royal Dutch Shell, Wintershall, Maersk, Total, Tullow Oil, eni, Senergy, and Oil States Industries Inc., as a new best in class and safest standard for the multi-billion dollar subsea market sector – the next milestone for this project will be an initial order for the deployment of the prototype
    • Collaboration with Aquaterra Energy to develop lightweight HPHT dual barrier marine risers to provide a safer, technically superior and cost efficient solution for use on jack-up rigs as an alternative to semi-submersible installation
    • Tersus Mudline equipment supplied to Masirah Oil Limited where the safety and time savings of POS-GRIP were evaluated against traditional slip and seal systems which cannot offer installation through the blow out preventer
  • Reduction in capital investment in POS-GRIP rental wellhead assets as part of cash conservation measures to £1.76m (2015: £2.53m) – prior years capex spend on rental wellhead inventory has resulted in surplus capacity during the current down cycle. As a result Plexus will be able to respond quickly when drilling activity picks up and will avoid the need for further investment for the foreseeable future
  • Four purchase orders for rental wellhead equipment awarded in the second half of the year, including two outside the North Sea
    • US$0.6m initial well contract with new customer Masirah Oil Limited (‘Masirah’), majority owned by leading technology driven oil and gas company REX International Holdings Limited (REXIH: Singapore) for oil exploration offshore Oman; a new country and new region
    • £0.9m purchase order with Talisman Malaysia Limited (‘Talisman’), part of integrated global energy group REPSOL (MC: REP), for an exploration well offshore Malaysia
    • £0.6m purchase order with Det norske for HPHT rental exploration equipment offshore Norway
    • £0.6m additional purchase order with Det norske for an exploration well offshore Norway

Corporate Highlights

  • Initiatives taken to strengthen balance sheet to navigate the current challenging low oil price environment and support specific initiatives:
    • Subscription by Jereh China in new shares of the Company, representing 5% of the new issued share capital of Plexus for c. £8m net of expenses
    • Subscription by Gusar in new shares of the Company, representing 7% of the new issued share capital of Plexus for c. US$5m net of expenses
    • £6m placing of new shares of the Company with new and existing shareholders which included CEO Ben van Bilderbeek investing £200,000 in new Ordinary Shares – proceeds to enable Plexus to pursue global opportunities and support target activities in new regions; supporting Python subsea wellhead prototype trial programme; strengthen working capital position and support targeted R&D spend towards complementary products
  • Board changes:
    • Appointment of Ms Kunming Liu to the Board as a Non-Executive Director in place of another Non-Executive Director
  • Post period end the Bank of Scotland Corporate have agreed to renew facilities for a two year £5m revolving credit facility – in addition the Group has a reducing five year £1.5m term loan (with a current balance of £0.9m) which was put in place in September 2014 to part fund the purchase of an additional building in Aberdeen and which runs to August 2019



Article Tags

Plexus Group
Norway
West Europe

Finance
AIM
Aberdeen

North Sea

Subsea


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