REG - Plexus Holdings Plc - Final Results
22/10/2024 07:00
For best results when printing this announcement, please click on link below:
https://newsfile.refinitiv.com/getnewsfile/v1/story?guid=urn:newsml:reuters.com:20241022:nRSV0325Ja&default-theme=true
RNS Number : 0325J Plexus Holdings Plc 22 October 2024
Plexus Holdings PLC / Index: AIM / Epic: POS / Sector: Oil equipment &
services
22 October 2024
Plexus Holdings plc ('Plexus' or 'the Group')
Final Results
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 Final Results for the year ending 30 June 2024.
Financial Summary
· Sales revenue £12.7m (2023: £1.5m)
· Adjusted EBITDA £5.4m (2023: £2.5m loss)
· Profit before tax (reported) £2.8m (2023: £4.2m loss)
· Profit before tax (adjusted) £3.5m (2023: £4.2m loss)
· Profit after tax £2.9m (2023: £4.0m loss)
· Basic earnings per share 2.83p (2023: 4.00p loss)
· Cash and cash equivalents of £2.5m (2023: £1.4m)
· Total assets £19.9m (2023: £18.6m)
· Total equity £15.4m (2023: £11.5m)
Operational Overview
· August 2023 - value of the major rental contract announced on 6 March
2023 increased materially from c.£5m to c.£8m.
· September 2023 - successful completion of Oceaneering Plug and
Abandonment ('P&A') campaign originally announced in June 2022. Plexus Mud
Containment System used sequentially on four different wells generated
revenues of £850,000, a 70% increase on initial estimates.
· October 2023 - contract for a P&A project secured through
licensor SLB for the rental of Exact adjustable wellhead system and Centric
Mudline tooling for a leading North Sea operator with a value of c. £100,000.
· November 2023 - contract with a value of c. £175,000 awarded by
Neptune Energy UK for the rental of Exact adjustable wellhead system and
Centric Mudline Suspension equipment to allow the permanent abandonment of a
UK North Sea well.
· December 2023 - completed a licensing agreement with SLB replacing an
existing surface production wellhead license for a cash consideration of
$5.2m.
· February 2024 - contract valued in excess of £1m to provide
specialised equipment and services for multiple P&A activities in the
North Sea.
· February 2024 - successful completion of a customer sponsored R&D
project to develop a bespoke lifetime leak-proof replacement tubing hanger
neck seal assembly ('HG-R') to upgrade and extend the field life of existing
surface production wellheads.
· R&D expenditure, including patents, rose from £516k in 2023 to
£558k in 2024, reflecting ongoing investment to protect, develop, and expand
the Group's product range.
Post period end
· Work commenced on North Sea P&A contract announced February 2024
as above.
· Major rental contract nearing completion with full revenues now
anticipated to reach £9m.
· Manufacturing in process of additional sets of Exact™ wellhead
equipment to support growth in the Jack-up rental wellhead market.
· Signed a new Master Services Agreement with a well management company
- anticipated to generate a variety of work in the P&A sector as well as
in Jack-up exploration and appraisal drilling worldwide.
· Annual API audit successfully completed with Company retaining its
API Q1 accreditation.
· Changes to the Board announced in July 2024, including founder Ben
van Bilderbeek becoming Non-executive Chair and Craig Hendrie appointed as
CEO.
Chief Executive Craig Hendrie said: "During the year to 30th June 2024, the
Group made a profit before tax of £2.80m compared to a loss in the prior year
of £4.23m. This return to profitability is due to an exceptional licence deal
and a large special project, in addition to progress made in the underlying
revenue of the core business of Jack-up rental wellheads.
"The conclusion of the $5.2m licencing deal to SLB in December 2023 was a
welcome cash boost, which also enabled us to begin consolidating Plexus'
remaining products and licence rights into a new business direction. This
strategy builds upon our long-standing success in the Jack-up wellhead market
while adapting to the changing trends in the global offshore oil and gas
drilling market. Notably, it addresses the North Sea's shift from traditional
drilling to Carbon Capture Storage ('CCS') and Plug and Abandonment
('P&A') projects.
"The £8m major rental contract has been a highlight as it has combined
Plexus' POS-GRIP Technology and "HG" Seals deployed in a subsea application
for P&A work, whilst also heavily supported by its specialised engineering
capability. Once this project is completed, it will free up resources to
pursue other similar work.
"The strategy now is to focus on short-term growth in Jack-up rental revenue,
to maintain profitability, and to establish a diversified mix of income that
can be more resilient to future cycles of the energy market and local
government policies. This solid base will allow us to incubate and develop
more of the underlying value in applications of POS-GRIP Technology that
Plexus retains, including HG-R production wellhead remediation technology, HG
Trees, the P&A market, and subsea infrastructure, such as the Python
subsea wellhead system.
"Our recent achievements, including securing a major contract for subsea
wellhead rental equipment and specialised P&A services for a North Sea
operator, underscore Plexus' commitment to innovation and growth. By focusing
on expanding our Exact™ rental wellhead inventory and forging strong global
partnerships, we are not only advancing our technology but also positioning
ourselves to deliver exceptional value to our shareholders. The momentum we
are building is the beginning of an exciting new chapter for Plexus.
"In closing, we recently announced changes in the Plexus Board, and as the new
CEO, I would like to thank Ben van Bilderbeek and Graham Stevens for their
contribution and leadership and look forward to working with Mike Park and
Stas van Bilderbeek as we build the Company, our technology and products
towards an exciting future."
For further information please visit www.plexusplc.com
(http://www.plexusplc.com) or contact:
Plexus Holdings PLC Tel: 01224 774222
Craig Hendrie, CEO
Mike Park, CFO
Cavendish Capital Markets Limited Tel: 0131 220 6939
Derrick Lee
Adam Rae
St Brides Partners Ltd plexus@stbridespartners.co.uk
Isabel de Salis
Paul Dulieu
Will Turner
CHAIRMAN'S STATEMENT
Business progress
The Group's revenues increased in the 12 months to 30 June 2024 to £12.7m
(2023: £1.5m), with a profit before tax of £2.80m compared to loss of £4.2m
in the prior year.
With the SLB licence deal concluded and the new Executive team in place, we
are well placed to add growth in the new energy marketplace, in particular
supporting offshore activities in P&A work, gas and CCS storage, as well
as continued oil and gas drilling and development.
The December 2023 IP Licence Agreement with SLB was a significant endorsement
of Plexus' POS-GRIP Technology. We hope to see SLB flourish with this
technology as it introduces derivative products into the market, leveraging
the advantages of POS-GRIP-enabled wellheads, including reduced component
complexity and the leak-proof seal integrity provided by POS-GRIP "HG"
Technology. Following this exclusive licence for onshore and offshore surface
production wellheads, we have had to readjust our expectations of the market
still available to Plexus as we now only have the right to pursue smaller
development projects and more technically challenging applications such as
production wellheads requiring adjustability.
The August 2021 Exact Adjustable Wellhead licence agreement with SLB enabled
Plexus to re-enter the Jack-up adjustable wellhead market with the proven
Exact and Centric wellhead and mudline suspension products, which we
originally invented and developed during the 1990's. This product range and
market sector, which in the past was core to Plexus' product range is once
again active and is now a key part of our short-term growth strategy. The
market for rental wellheads for Jack-up rigs is somewhat different today to
what we have seen in the last two decades, especially in the North Sea where
the market has switched from Exploration Drilling and Development to P&A
work with some gas and CCS storage work as well. The Exact wellhead range is
perfectly suited to both P&A and drilling work (whether it be oil and gas
exploration, or CCS) and so we have continued to expand our rental inventory
of this equipment to meet strong growth expected in the Jack-up rental
wellhead market at home and abroad.
Our execution of the North Sea P&A campaign (see RNS dated 16.02.2024)
using Exact rental wellhead equipment is progressing smoothly with both the
equipment and Plexus' operational support teams performing well. In a recent
development, the MR Connector, previously deployed on a floating-vessel-based
P&A campaign with Oceaneering (see RNS dated 06.10.2023), has also been
ordered for one well, which is additional work scope to the original contract.
This addition to the contract for Jack-up rig operations shows the flexibility
of the product as well as Plexus' capability to widen the scope of work and
increase revenue with customers once work is underway.
To meet demand and further support growth in the Jack-up rental wellhead
market, Plexus is manufacturing additional sets of Exact™ wellhead
equipment. The next four sets are scheduled for completion by the end of 2024,
positioning them for deployment from the start of 2025. Plexus has also signed
a new Master Services Agreement with a well management company. This agreement
will facilitate orders for Exact™ wellhead services for global projects,
anticipated to generate a variety of work in the P&A sector, as well as in
Jack-up exploration and appraisal drilling worldwide.
The £8 million major rental contract announced last year is progressing on
schedule and is expected to conclude within the next two months. This will
free up internal resources for new ventures. Upon completion, Plexus plans
to share its technical advancements with operators worldwide, which we
anticipate will lead to similar opportunities.
Recently, Plexus secured a new order for subsea wellhead rental equipment and
services tailored for specialised P&A work for a North Sea operator. This
project is projected to generate in excess of £0.5 million in revenue within
the current financial year.
Intellectual Property
Plexus' IP and decades-long track record of successful invention and
innovation are the core of the Company, distinguishing it from many other
wellhead and oilfield service companies.
In the Jack-up wellhead business, Plexus has a rich history of involvement in
many of the wells which have been drilled around the world. Together with the
Exact licence and collaboration with SLB we have a strong and unique position
to be able to provide services for P&A work as it arises, in addition to
new oil and gas or storage developments.
POS-GRIP Technology remains central to Plexus and has been endorsed by TFMC,
which has the exclusive licence for POS-GRIP Jack-up Wellheads, and SLB, which
is licenced for standard surface production wellheads. Plexus retains the
rights to all subsea applications of the technology and other special
applications; a longer-term strategy is to expand in these applications
creating opportunities to broaden our product range or explore potential
licensing to existing service companies.
POS-GRIP is heavily protected by patents, as well as proprietary information
and know-how. This protection is in the process of further enhancement with
two new method patents, which have now been published as applications, and are
expected to be granted in the coming months. This will give all applications
of POS-GRIP, including those already licenced to others, a renewed protection
period of 20 years.
Staff
On behalf of the Board, I would once again like to thank all our employees for
their dedication and hard work during the year. I am confident that the
anticipated increase in exploration and production drilling activity, are
already beginning to show positive results this year, and will not only
benefit our staff but also create future employment opportunities within
Plexus.
Outlook
Despite the current climate of negativity towards offshore oil and gas, we are
very optimistic about the growth of the business and the opportunities which
are suited to our unique mix of proprietary products and engineering
capability. The global demand for Jack-up rigs remains strong, and our product
mix is well suited to many of the activities that these rigs are performing,
such as P&A and CCS work in the North Sea, as well as exploration and
production drilling in locations such as the Middle East and South-East Asia
where demand remains strong.
With a strategy to focus on our products that provide a shorter lead time to
profitability, collaboration with SLB, and robust IP for the medium and longer
term, we have a solid foundation for growth, which will benefit our customers
whilst enhancing shareholder returns. Additionally, by diversifying into
P&A and emerging areas such as CCS and geothermal, we are reducing our
reliance on oil and gas exploration and development.
In closing, I thank the Board and, in particular, the new Executive team, the
Aberdeen management team and our staff for their continued hard work and
support over the course of the year. I look forward to working with them all
in the year ahead as we focus on delivering on our overriding objective, which
remains to generate increasing value for all our shareholders.
Ben van Bilderbeek
Non-Executive Chairman
21 October 2024
STRATEGIC REPORT
The Directors present their strategic report for the year ended 30 June 2024.
Principal Activity
The Group provides wellhead equipment and related equipment and services, for
oil and gas drilling and production, CCS and gas storage, and well P&A
activities. Plexus specialises in adjustable wellhead equipment which has
particular benefits for work based on Jack-up rigs. Other specialised
equipment based on Plexus POS-GRIP Technology are also offered.
Business review
A review of the development and performance of the business during the year
consistent with its size and complexity, together with commentary on future
developments including the main trends and factors likely to affect the
business, is given in the Chairman's Statement. Where guidelines refer to the
provision of key performance indicators, the directors are of the opinion
certain financial and non-financial indicators included in the highlights and
the Directors' Report meet this requirement.
Financial Results
Statement of Comprehensive Income
Revenue
Revenue for the year was £12,723k, a significant increase from £1,487k in
the previous year. This has been driven by the major contract noted in the
operational review, which has generated £7,644k in the current year and the
SLB licensing agreement £4,082k.
Margin
Gross margin was broadly in line with last year at 72.2% (compared to 73.1% in
the previous year). A year-to-year comparison on margin adds little value
given the significant difference in the revenue mix in addition to the low
revenue levels in the prior year. The licensing income has no associated
cost of sales. Additionally, the specialised project has led to significant
capex leading to increased rental asset depreciation which is included in cost
of sales.
Overhead expenses
Administrative expenses have increased compared to the prior year with
expenditure of £5,579k (2023: £5,348k).
Continuing salary and benefit costs remain the largest component of
administrative expenses at £3,267k compared to £2,930k in the prior year.
Non-recurring items
The statement of comprehensive income includes a gain of £83k on the sale of
an associate undertaking, which was recognised as an asset held for sale in
the prior year.
Additionally, non-recurring items includes a payable of £693k relating to
compensation for loss of office to two directors which was approved pre-year
end and will become payable prior to or on 31 December 2024. Further details
are included in the Remuneration Committee Report.
Profit Before Tax
Profit before tax of £2,803k compared to a loss in the prior year of
£4,228k.
Adjusted profit before tax of £3,496k is stated prior to Non-recurring
expense of £693k for compensation for loss of office for two directors,
details of which are given in the Remuneration Committee Report.
Adjusted EBITDA
The Directors use, amongst other things, Adjusted EBITDA as a non-GAAP measure
to assess the Group's financial performance. The Directors consider Adjusted
EBITDA to be the most appropriate measure of the underlying financial
performance of the Group in the period. Adjusted EBITDA for the year was a
profit of £5,446k, compared to a loss of £2,451k in the previous year.
Adjusted EBITDA on continuing operations is calculated as follows:
2024 2023
£'000 £'000
Operating profit / (loss) 2,910 (4,261)
Add back:
-Depreciation 560 307
-Amortisation 1,281 1,253
Non-recurring - Compensation for loss of office 693 -
Other income 2 69
Share in profit of associate - 182
Fair value adjustment on financial assets - (1)
----- -----
Adjusted EBITDA on continuing operations 5,446 (2,451)
------- -------
Tax
The Group shows a total income tax credit of £130k for the year compared to a
tax credit of £213k for the prior year.
Earning / (loss) per share
The Group reports basic earnings per share of 2.83p compared to a loss per
share of 4.00p in the prior year.
Statement of Financial Position
Intangible Assets and Intellectual Property ("IP")
The net book value of intangible assets was £8,312k, a decrease of 5% from
£8,731k last year. This movement represents total investment of £558k less
the annual amortisation charge of £977k.
Plexus owns 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 methods and applications. In addition to registered IP, Plexus
has developed over many years a vast body of specialist know-how. Plexus is
also currently pursuing the registration of Method Patents, which would
further extend the scope of current patent protections.
The market capitalisation of the Company at the reporting date is £13.72m,
which is less than the carrying value of the assets (£19.91m); this is an
indicator of impairment. Following a thorough review, including a discounted
cashflow model which has included cashflows for 20 years, the Directors have
concluded no impairment of IP is required. Therefore, the Directors consider
the current carrying values to be appropriate.
Research and Development ("R&D")
R&D expenditure including patents increased from £516k in 2023 to £558k
in 2024. Continued investment in R&D demonstrates the Group is protecting,
developing, and broadening the range of its product offering.
Tangible Assets
The net book value of property, plant and equipment and items under
construction at the year-end was £3,908k compared to £1,404k last year.
Capital expenditure on tangible assets increased to £3,064k compared to
£890k in the prior year. The capex in the year was largely to service the
major contract, and the equipment used can be deployed again in the future.
Investments / Asset held for sale
The asset held for sale in the prior year relates to Plexus' 49% investment in
Kincardine Manufacturing Services Limited ("KMS"). The investment was
subsequently sold for a total consideration of £1m in the year. The sale gave
rise to a gain on sale of £83k which is included in the statement of
comprehensive income.
Cash and Cash Equivalents
Cash at the year-end was £2,486k compared to £1,149k in the prior year,
reflecting a net cash inflow for the year of £1,037k.
The expected future cash inflows and the cash balances held are anticipated to
be adequate to meet current on-going working capital, capital expenditure,
R&D, and project related commitments.
Convertible loans
On 31 January 2024, the Company made a cash payment to redeem £850k of loan
notes. Including a redemption premium of £170k, a total payment of £1,020k
was made. At the reporting date the outstanding loan notes have a fair value
of £856k (2023: £1,702).
Dividends
The Company has not paid any dividends in the year and does not propose to pay
a final dividend. Whilst the Company remains committed to distributing
dividends to its shareholders when appropriate, the Directors believe that it
is prudent to suspend the payment of dividends considering the ongoing capital
and operational requirements of the business.
Operations
The Group's primary focus during the year has been the successful delivery of
the major contract noted in the operational overview. This has generated
revenue of £7,644k in the current year.
Plexus continued to invest in R&D during the year, with significant focus
on optimising the Exact rental exploration wellhead product range for the
current market and completing product development and testing required for the
specialised project. R&D remains an important operational activity and
further develops the value of our IP and ability to extend the range of
applications of our technology.
Staff at the end of June 2024 (excluding non-executive directors) comprised 37
employees, including one international employee, with a weighted average total
of 36 which remains unchanged from the prior year.
Staff development remains a significant focus with the completion of a
comprehensive evaluation and revision of the in-house training modules to
ensure they continue to provide the necessary underpinning knowledge and
skills which is required of those fulfilling technical roles.
The Company continues to maintain the OPITO accreditation for its competency
management system, with continual developments and improvements to the
process, ensuring a robust assessment of employees in safety--critical roles.
Health and Safety continues to be a pivotal part of the business and remains a
key focus. Plexus remains fully committed to continually improving safety
standards and the safety culture across the business. This is reflected in the
business being once again lost time injury ("LTI") free this year. Plexus has
now passed its ninth anniversary of this milestone in September 2024.
Plexus continues to comply with the requirements of the API Q1/ISO 9001 and
ISO 45001 standard leading to the retention of both API 6A and 17D Licences.
These accreditations demonstrate Plexus' capability and determination to
operate under the highest standards. Post period end API conducted an audit,
with Plexus retaining its API Q1 accreditation.
Strategy and Future Developments
Plexus has been involved in the design of specialised wellhead equipment for
the offshore market for over 40 years, and this history and knowledge
continues to drive the products and services that are offered.
In 2021, Plexus licenced the Exact wellhead and Centric mudline systems back
from SLB and set about updating and improving this product range to compete in
the current market. This has resulted in the Exact EX adjustable wellhead
system, which is optimised for use on modern Jack-up rigs when they are used
for exploration drilling, development, or CCS pre-drilling or P&A
activities. This optimised system is significantly more cost effective than
competing through-BOP adjustable wellheads, and Plexus is developing a fleet
of rental wellhead systems to be deployed in this market, which forms the core
of the short-term business growth.
Plexus retains the right to offer POS-GRIP surface production for small
projects of less than four systems and in specialised applications such as
adjustable wellheads. These types of opportunities are usually 12 months or
more in the planning and manufacturing stages, and so this market sector will
continue to be developed as a medium-term growth objective.
In the longer term, Plexus is working on leveraging the remaining applications
of POS-GRIP, which are for subsea and other specialised applications. POS-GRIP
has been successfully deployed in subsea applications recently, such as the
Oceaneering P&A campaign and the current special application. These
projects have used technology from the Python subsea wellhead system, and such
successful deployments are significant steps along the way of field-testing
elements of the system, making a full deployment of the Python system more
viable.
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, adjusted EBITDA, profit/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.
Non-financial indicators include Health and Safety statistics, R&D
activity, equipment utilisation rates, the level of ongoing customer interest
and support. 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 aims to participate in a global market where the exploration and
production of oil and gas reserves, and 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 and net zero goals, continues to
demonstrate how such factors can generate risks and uncertainties that can
present a risk to trading. Such risks also extend to legal and regulatory
issues, and it is important to understand that these can change at short
notice. Regulatory changes can have an adverse impact on investment levels, as
of course does a country's decision-making process in relation to granting new
exploration and production drilling opportunities. 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, and potential licencees.
(b) Oil and Gas Sector Trends
New technologies, particularly in relation to renewables such as wind and
solar, alternative energies and current developments such as the increasing
use of electric vehicles could all in the future prove very disruptive to the
traditional oil and gas industry and the corresponding demand for exploration
and production equipment and services. To help mitigate this risk Plexus is
committed to work in areas such as renewables, carbon capture and
decommissioning, ensuring diversification from exploration and production.
(c) Technology
It is critical to the success of the Group to be able to anticipate changes in
technology or in industry standards and to successfully develop and introduce
new, enhanced and competitive products on a timely basis and keep pace with
technological change.
As noted above, the Company is committed to widening the application of its
technology. In order to ensure that the Group's technology and IP develop, the
Group commits resources annually to research and development and is open to
completing sponsored R&D projects on behalf of customers. Additionally,
senior management have regular meetings with key end-customers to maintain
visibility over their technological requirements.
(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. This risk has become more concentrated over recent years
following a series of mergers and acquisitions by competitors creating larger
entities. The major oil service and equipment company consolidations have
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 has an
active R&D programme, and maintains an extensive suite of patents and
trademarks, and actively continues to develop and improve its IP, including
adding to its existing extensive 'know-how' to ensure that it continues to be
able to offer unique superior wellhead design solutions.
(e) Operational
The Group operates in highly competitive markets, often directly against large
multi-national corporations who have greater resources, are more established
and have a larger geographical footprint. As a smaller group, the main
operational risk is not obtaining work due to availability of equipment and
resources. Plexus is mitigating this risk by focussing on increasing its
rental fleet, and attempting to increase its geographical reach, by targeting
work in new regions.
(f) Going Concern, liquidity, and finance requirements
As a relatively small business with adequate, but not excess cash resources,
and following a number of loss-making years, Plexus has to closely monitor and
manage cash flow. Additionally, Plexus' smaller market cap can be a negative
factor if consideration is given to raising additional funds in the public
markets.
The Group undertakes cashflow forecasting throughout the year to ensure the
going-concern assumption is still appropriate. As disclosed, the Group is
reliant on raising additional funding, an event that was indicated at the time
the convertible loan arrangements were entered into in October 2022, and there
can be no certainty regarding the timing and quantum of future funding and
therefore this indicates a material uncertainty which may cast significant
doubt regarding the Group's ability to continue as a going concern.
(g) Credit
The main credit risk is attributable to trade receivables. Where the Group's
customers are large international oil and gas companies the risk of
non-payment is significantly reduced, and therefore is more likely to be
related to client satisfaction. Where smaller independent oil and gas
companies are concerned, credit risk can be a factor. Customer payments can
potentially involve extended payment terms. This risk can be mitigated by
agreeing structured payment terms on larger value contracts with milestone
stage payments. The Group's exposure to credit risk is monitored continuously,
and to date its collections record has been extremely reliable.
(h) Risk assessment
The Board has established an on-going process for identifying, evaluating, and
managing 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 area (which includes IT), compliance,
finance, cash, receivables, fixed assets, other debtors/prepayments,
creditors, legal, and personnel. These risks are assessed and updated as and
when appropriate 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.
Section 172 Statement
This section serves as the section 172 statement and should be read in
conjunction with the full Strategic Report and the Corporate Governance
Report. Section 172 of the Companies Act 2006 requires directors to take into
consideration the interests of stakeholders in their decision making. The
Directors continue to have regard to the interests of the Company's employees
and other stakeholders, including shareholders, customers and suppliers,
Licence Partners and the community and environment, through positive
engagement and when making decisions. Acting in good faith and fairly between
members, the Directors consider what is most likely to promote the success of
the Company for its members in the long term and to protect the reputation of
the Company.
Shareholders
Plexus seeks to develop an investor base of long-term shareholders that are
aligned to our strategy, whether institutional or private retail investors. By
communicating our strategy and objectives, we seek to maintain continued
support from our investor base. Important issues include financial stability
and the strength of the statement of financial position and protecting and
strengthening the value of our intellectual property. Engagement with
shareholders is a key element to this objective and methods of engagement are
detailed in the Corporate Governance Report. During the year, the Finance
Director supported by other members of the executive team, the Company's
broker, and the Investor Relations advisor, engaged where possible with
investors by email, presentations, direct conversations, and ad-hoc meetings.
The Company also continues to update its website to provide investors and
other stakeholders with access to information about the Company. During the
year, several key decisions were made by the Board, including extending the
licensing agreement with SLB which raised funds of $5.2m. This fund-raising
related decision was aimed at increasing shareholder value.
Employees
The Group's UK staff are engaged by the Company's subsidiary Plexus Ocean
Systems Limited based in Aberdeen, Scotland. As a relatively small company
with fewer than 40 employees largely operating in one location, there is a
high level of visibility regarding employee engagement and satisfaction. The
Company is engaged with a specialist firm of benefits advisers who can offer a
comprehensive service to employees as well as to the Company. The Company
consults with employees on matters of competency, training, and health and
safety as detailed in the Corporate Governance Report. Since the last report,
the Company successfully achieved nine continuous years with no Lost Time
Injuries ("LTI") and this successful safety culture has continued beyond that
anniversary to the date of writing.
Customers and Suppliers
The Company is committed to acting ethically and with integrity in all
business dealings and relationships. Fostering good business relationships
with key stakeholders including customers and suppliers is important to the
Company's success. The Board seeks to implement and enforce effective systems
and controls to ensure its supply chain is maintaining the highest standard of
business conduct in line with best practice including in relation to
anti-bribery and modern slavery.
Licence Partners
The Company engages with Licence Partners in a way that follows the same
principles as those applied to relationships with other customers and
suppliers. Additionally, the Company engages with its Licence Partners to
support their efforts to achieve commercial success by holding, as and when
required, technical workshops, technical training, and data transfer.
Following the announcement in November 2020 of entering into a non-exclusive
surface wellhead licencing agreement with Cameron (SLB) and the extension of
this agreement in December 2021, and the further agreement signed in December
2023, regular Teams meetings and occasional face to face meetings have been
held as part of the process of transferring Plexus' relevant IP so that
Cameron can design and develop its own low-cost wellhead with POS-GRIP
technology inside. In May 2023 SLB exercised its option to extend its
non-exclusive licence agreement with Plexus for an additional six years
effective from November 2023. This was then the followed with the additional
licensing agreement in December 2023.
Community and Environment
The Company has minimal environmental impact in the localities in which it
operates. This clearly helps the Company meet its corporate objectives in this
regard but is never taken for granted. In the year under review, the Company
met its target for waste management and in general continues to operate in a
manner that is open, honest, and socially responsible.
M Park
Chief Financial Officer
21 October 2024
Consolidated Statement of Comprehensive Income
for the year ended 30 June 2024
2024 2023
£'000 £'000
Revenue 12,723 1,487
Cost of sales (3,541) (400)
------- -------
Gross profit 9,182 1,087
Administrative expenses (5,579) (5,348)
Non-recurring - Compensation for loss of office (693) -
------- -------
Operating profit / (loss) 2,910 (4,261)
Finance income 4 7
Finance costs (196) (175)
Other income 2 69
Non-recurring items
Gain on sale of associate undertaking 83 -
Share in profit of associate - 182
Fair-value adjustment on asset held for sale - (50)
------- -------
Profit / (loss) before taxation 2,803 (4,228)
Income tax credit 130 213
------- -------
Profit / (loss) for year 2,933 (4,015)
Other comprehensive income - -
------- -------
Total comprehensive profit / (loss) 2,933 (4,015)
for the year attributable to the owners of the parent
------- -------
Earning / (loss) per share
Basic 2.83p (4.00p)
Diluted 2.83p (4.00p)
Consolidated Statement of Financial Position
at 30 June 2024
2024 2023
£'000 £'000
Assets
Goodwill 767 767
Intangible assets 8,312 8,731
Property, plant and equipment 3,908 1,404
Right of use asset 334 638
------- -------
Total non-current assets 13,321 11,540
------- -------
Asset held for sale - 905
Corporation tax 132 153
Inventories 1,099 2,265
Trade and other receivables 2,874 2,318
Cash and cash equivalents 2,486 1,449
------- -------
Total current assets 6,591 7,090
------- -------
Total assets 19,912 18,630
------- -------
Equity and liabilities
Called up share capital 1,054 1,054
Shares held in treasury - (2,500)
Share based payments reserve 674 674
Retained earnings 13,682 12,292
------- -------
Total equity attributable to equity holders of the parent
15,410 11,520
------- -------
Liabilities
Convertible loans - 1,702
Lease liabilities 88 428
------- -------
Total non-current liabilities 88 2,130
------- -------
Trade and other payables 3,217 4,647
Convertible loans 856 -
Lease liabilities 341 333
------- -------
Total current liabilities 4,414 4,980
------- -------
Total liabilities 4,502 7,110
------- -------
Total equity and liabilities 19.912 18,630
------- -------
Consolidated Statement of Changes in Equity
for the year ended 30 June 2024
Called Up Shares Held in Treasury Share Based Payments Reserve Retained Total
Earnings
Share Capital
£'000 £'000 £'000 £'000 £'000
Balance as at 30 June 2022 1,054 (2,500) 674 16,307 15,535
Total comprehensive loss for the year - - - (4,015) (4,015)
------- ------- ------- ------ ------
Balance as at 30 June 2023 1,054 (2,500) 674 12,292 11,520
Total comprehensive income for the year - - - 2,933 2,933
Sale of shares held in treasury - 957 - - 957
Loss on shares held in treasury - 1,543 - (1,543) -
------- ------- ------- ------ ------
Balance as at 30 June 2024 1,054 - 674 13,682 15,410
------- ------- ------- ------- -------
Consolidated Statement of Cash Flows
for the year ended 30 June 2024
2024 2023
£'000 £'000
Cash flows from operating activities
Profit/(loss) before taxation 2,803 (4,228)
Adjustments for:
Depreciation and amortisation charges 1,841 1,560
Redemption premium on convertible loans 174 152
Gain on sale of associate undertaking (83) -
Share in profit of associate - (182)
Other income (2) (69)
Fair value adjustment on asset held for sale - 50
Fair value adjustment on financial assets - 1
Investment income (4) (7)
Interest expense 22 23
Changes in working capital:
Decrease / (increase) in inventories 1,166 (871)
Increase in trade and other receivables (556) (1,347)
(Decrease) / increase in trade and other payables (1,430) 3,401
------- -------
Cash generated / (used) in operating activities 3,931 (1,517)
Income tax receipts 151 80
------- -------
Net cash generated / (used) in operating activities 4,082 (1,437)
------- -------
Cash flows from investing activities
Funds divested from financial instruments - 102
Property rental and dilapidations income - 50
Purchase of intangible assets (558) (516)
Purchase of property, plant and equipment (3,064) (890)
Net proceeds from sale of associate undertaking 987 -
Proceeds of sale of property, plant and equipment - 1,052
Interest and investment income received - 7
------- -------
Net cash used in investing activities (2,635) (195)
------- -------
Cash flows from financing activities
Repayment of Lombard facility - (3,958)
Repayment of convertible loans (1,020) -
Net proceeds from sale of treasury shares 957 -
Funds raised from convertible loans 1,550
Repayments of lease liabilities (347) (347)
Interest paid - (4)
------- -------
Net cash (outflow) / inflow from financing activities (410) (2,759)
------- -------
Net increase / (decrease) in cash and cash equivalents 1,037 (4,391)
Cash and cash equivalents at 1(st) July 1,449 5,840
------- -------
Cash and cash equivalents at 30(th) June 2,486 1,449
------- -------
Notes to the Consolidated Financial Statements
1. Revenue
2024 2023
£'000 £'000
By geographical area
UK 8,591 963
USA 4,082 -
Europe - 524
Rest of World 50 -
----- -----
12,723 1,487
----- -----
The revenue information above is based on the location of the customer.
2024 2023
£'000 £'000
By revenue stream
Rental 6,629 589
Service 532 146
Sold equipment 12 540
Licensing fees 4,082 -
Rebillables 204 36
Support services and engineering 1,264 176
----- -----
12,723 1,487
----- -----
Substantially all of the revenue in the current and previous periods derives
from the sale, licensing, short-term rentals and the provision of services
relating to the Group's patent protected equipment.
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:
2024 2023
£'000 £'000
Customer 1 7,644 524
Customer 2 4,082 444
Customer 3 - 235
Customer 4 - 156
3. Income tax credit
(i) The taxation credit for the year comprises: 2024 2023
£'000 £'000
UK Corporation tax:
Foreign taxation 2 -
Adjustment in respect of prior years (132) (217)
----- -----
Total current tax credit (130) (217)
----- -----
Deferred tax:
Origination and reversal of timing differences (117) 4
Adjustment in respect of prior years 117 -
----- -----
Total deferred tax - 4
(
(
----- -----
Total tax credit (130) (213)
----- -----
The effective rate of tax is 25.00% (2023: 20.5%)
(ii) Factors affecting the tax charge on continuing activities for the year 2024 2023
£'000 £'000
Profit / (loss) on ordinary activities before tax 2,803 (4,228)
Tax on profit / (loss) at standard rate of UK 701 (867)
corporation tax of 25.00% (2023: 20.5%)
Effects of:
Fixed asset differences 1 18
Income not taxable (111) -
Expenses not deductible for tax purposes 2 133
Effect of change in tax rate - (171)
Other differences (1) -
Adjustments in respect of prior year (132) (217)
Adjustments in respect of prior year - deferred tax 117 -
Foreign tax 2 -
Deferred tax not recognised - 891
Utilisation of brought forward losses (709) -
----- -----
Total tax credit (130) (213)
----- -----
(iii) Movement in deferred tax asset balance 2024 2023
£'000 £'000
Deferred tax asset at beginning of year - -
Debit to Statement of Comprehensive Income - -
----- -----
Deferred asset at end of year - -
----- -----
(iv) Deferred tax asset balance 2024 2023
£'000 £'000
The deferred tax asset balance is made up of the following items:
Difference between depreciation and capital allowances 2,333 2,055
Tax losses (2,333) (2,055)
----- -----
Deferred tax asset at end of year - -
----- -----
As outlined in the accounting policy, deferred tax assets are recognised only
to the extent that it is probable that future taxable profit will be
available. The deferred tax asset relates to losses to the value of the
deferred tax losses and is reviewed at the end of each reporting period. The
Group has previously recognised a deferred tax asset based upon its mid-term
forecast profitability. On the basis losses have not been fully utilised in
the current financial year management consider that the probable threshold is
not met and have released the asset to the extent there are not sufficient
taxable temporary differences. Once this threshold can be demonstrated an
asset will be recognised. At 30 June 2024 the Group has tax losses available
of £21.4m (2023: £24.5m).
4. Profit / (loss) per share
2024 2023
£'000 £'000
Profit / (loss) attributable to shareholders 2,933 (4,015)
----- -----
Number Number
Weighted average number of shares in issue 103,576,297 100,435,744
Dilution effects of share schemes - -
---------- ----------
Diluted weighted average number of shares in issue 103,576,297 100,435,744
---------- ----------
Loss per share
Basic Earning / (loss) per share 2.83p (4.00p)
Diluted Earning / (loss) per share 2.83p (4.00p)
------ ------
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 the exercise prices are all
higher than the average share price during the year the option schemes are
considered to be anti-dilutive.
5. Intangible Assets
Patent and Other
Intellectual Property Development Computer
Software
Total
£'000 £'000 £'000 £'000
Cost
As at 30 June 2022 4,600 14,137 244 18,981
Additions - 516 - 516
----- ----- ----- -----
As at 30 June 2023 4,600 14,653 244 19,497
Additions - 558 - 558
----- ----- ----- -----
As at 30 June 2024 4,600 15,211 244 20,055
----- ----- ----- -----
Amortisation
As at 30 June 2022 3,788 5,785 243 9,816
Charge for the year 238 712 - 950
----- ----- ----- -----
As at 30 June 2023 4,026 6,497 243 10,766
Charge for the year 238 738 1 977
----- ----- ----- -----
As at 30 June 2024 4,264 7,235 244 11,743
----- ----- ----- -----
Net Book Value
As at 30 June 2024 336 7,976 - 8,312
----- ----- ----- -----
As at 30 June 2023 574 8,156 1 8,731
----- ----- ----- -----
When assessing the carrying value of the Group's assets the key assumptions on
which the valuation is based are that:
· Industry acceptance will result in continued growth of the business
above long-term industry growth rates. Management considers this to be
appropriate for a new technology gaining industry acceptance;
· Prices will rise with inflation;
· Costs, in particular direct costs and staff costs, are based on past
experiences and management's knowledge of the industry.
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 2044 to
ensure the full benefit of all current projects is realised. The rationale for
using a timescale up to 2044 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 surface, subsea and other
equipment markets, including the recent re-entry into the Jack-up exploration
rental wellhead sector. This has been evidenced with an increase in enquiries
following the work undertaken in the year on the major rental contract. As the
Group is starting from a base point of trading, the growth rates are expected
to be high in the initial years then in later years, where the technology
becomes established, the expected rate of growth declines.
The key assumptions used in these calculations include the discount rate
(10.87%), 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,
including a sensitivity analysis on the discount rate flexing it by 5% both
positively and negatively. It would require significant adjustments to key
assumptions before the goodwill and other intangibles would be impaired.
Patent and other development costs are internally generated.
The impairment review has been conducted on two CGUs, split by the category of
IP: Deepwater and Conventional.
6. Property plant and equipment
Tenant Assets under construction Motor vehicles
Buildings Improvements Equipment £000 £000 Total
£000 £000 £000 £000
Cost
As at 30 June 2022 685 844 5,360 - 17 6,906
Additions - 15 123 752 - 890
Transfers - - 367 (367) - -
----- ----- ----- ----- ----- -----
As at 30 June 2023 685 859 5,850 385 17 7,796
Additions - - 183 2,881 - 3,064
Transfers - - 2,862 (2,862) - -
----- ----- ----- ----- ----- -----
As at 30 June 2024 685 859 8,895 404 17 10,860
----- ----- ----- ----- ----- -----
Depreciation
As at 30 June 2022 685 606 4,779 - 15 6,085
Charge for the year - 74 231 - 2 307
----- ----- ----- ----- ----- -----
As at 30 June 2023 685 680 5,010 - 17 6,392
Charge for the year - 76 484 - - 560
----- ----- ----- ----- ----- -----
As at 30 June 2024 685 756 5,494 - 17 6,952
----- ----- ----- ----- ----- -----
Net book value
As at 30 June 2024 - 103 3,401 404 - 3,908
----- ----- ----- ----- ----- -----
As at 30 June 2023 - 179 840 385 - 1,404
----- ----- ----- ----- ----- -----
During the year additions to Assets under construction included £1,160k
previously recognised in inventory.
The value in use of property, plant and equipment is not materially different
from the carrying value.
7. Asset held for sale
£'000
Asset held for sale as at 30 June 2023 905
Disposal in the year (905)
-----
Fair value at 30 June 2024 -
-----
The asset held for sale in the prior year relates to Plexus' 49% investment in
Kincardine Manufacturing Services Limited ("KMS"). The investment was
subsequently sold for a total consideration of £1m. The sale gave rise to a
gain on sale of £83k which is included in the statement of comprehensive
income.
8. Share Capital
2024 2023
9
£'000 £'000
Authorised:
Equity: 110,000,000 (2023: 110,000,000) Ordinary shares of 1p each 1,100 1,100
----- -----
Allotted, called up and fully paid:
Equity: 105,386,239 (2023: 105,386,239) Ordinary shares of 1p each 1,054 1,054
----- -----
9. Shares held in treasury
2024 2023
£'000 £'000
Buyback of shares - 2,500
----- -----
During the year the company sold all shares held in treasury raising net funds
of £957k. Following the sale of the Treasury Shares, the Company has a total
of 105,386,239 Ordinary Shares in issue, and there are no remaining shares
held in treasury. The figure of 105,386,239 may be used by shareholders as the
denominator for the calculations by which they will determine if they are
required to notify their interest in, or a change to their interest in, the
Company under the FCA's Disclosure Guidance and Transparency Rules.
The loss on sale of shares of £1,543k has been transferred to retained
earnings.
10. Reconciliation of net cash flow to movement in net cash/debt
2024 2023
£'000 £'000
Movement in cash and cash equivalents 1,037 (4,391)
Repayment of Lombard facility - 3,958
----- -----
Increase / (decrease) in net cash in year 1,037 (433)
Net cash at start of year 1,449 1,882
----- -----
Net cash at end of year 2,486 1,449
----- -----
11. Analysis of net debt
2024: At beginning of year Cashflow Non-cash movements At end of year
£'000 £'000 £,000 £'000
Cash and cash equivalents 1,449 1,037 - 2,486
Lease Liability (761) 347 (15) (429)
Convertible loan notes (1,702) (1,020) (174) (856)
----- ----- ----- -----
Total (1,014) 2,404 (189) 1,201
----- ----- ----- -----
2023: At beginning Cashflow Non-cash movements At end of year
of year
£'000 £'000 £'000 £'000
Cash and cash equivalents 5,840 (4,391) - 1,449
Bank Lombard facility (3,958) 3,958 - -
Lease Liability 1,085 347 (23) (761)
Convertible loan notes - (1,550) (152) (1,702)
----- ----- ----- -----
Total 797 (1,632) (175) (1,014)
----- ----- ----- -----
12. Convertible loans
2024
£'000
Convertible loans issued 1,550
Redemption premium 152
-----
Amortised cost at 30 June 2023 1,702
-----
Redemption premium to 31 January 2024 113
Repayment of Convertible loans (1,020)
Redemption premium as a result of cash repayment 25
-----
Amortised cost at 31 January 2024 820
Redemption premium 36
-----
Amortised cost at 30 June 2024 856
-----
In October 2022 Plexus raised £1,550,000 through the issue of 1,550,000
convertible loan notes. The loan notes are non-interest bearing and have a
maturity date being 24 months after issue.
The loan notes can be settled in cash, with an additional 20% redemption
interest on the principal amount or converted into new shares where the
principal amount will be settled at a 20% discount to the share price paid by
investors in a qualifying financing event. The 20% discount noted above
equates to a 25% premium on the principal amount. Therefore, a redemption
premium of £387,500 will be recognised over the two-year term.
On 31 January 2024 it was announced that the company would make a cash payment
to redeem £849,992 loan notes, plus redemption premium of £169,998- a total
payment of £1,019,990, leaving £700,008 loan notes outstanding.
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 (mailto:rns@lseg.com)
or visit
www.rns.com (http://www.rns.com/)
.
RNS may use your IP address to confirm compliance with the terms and conditions, to analyse how you engage with the information contained in this communication, and to share such analysis on an anonymised basis with others as part of our commercial services. For further information about how RNS and the London Stock Exchange use the personal data you provide us, please see our
Privacy Policy (https://www.lseg.com/privacy-and-cookie-policy)
. END FR QKDBPKBDBKKBRecent news on Plexus Holdings
See all newsREG - AIM - AIM Notice - 08/04/2025
AnnouncementREG - Plexus Holdings Plc - Result of General Meeting
AnnouncementREG - Plexus Holdings Plc - Directors’ Subscription and Loan Note Conversion
AnnouncementREG - Plexus Holdings Plc - Interim Results
AnnouncementRCS - Plexus Holdings Plc - Investor Presentation via IMC
Announcement