REG - Plexus Holdings Plc - Interim Results
27/03/2023 07:00
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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® method of wellhead engineering,
announces its interim results for the six months to 31 December 2022 ("H1
FY23").
Financial Results
· Sales revenue £709k (2021: £734k)
· Continuing operations EBITDA loss (£1,098k) (2021: £1,061k loss)
· Continuing operations operating loss (£2,018k) (2021: £1,908k loss)
· Continuing operations loss before tax (£2,073k) (2021: £1,953k)
· Basic loss per share from continuing activities (2.06p) (2021: 1.94p
loss)
· Cash of £1.14m (2021: £3.38m), £nil in financial assets (2021:
£4.7m)
· Bank Lombard facility repaid in full during the year (2021: £3.29m
drawn down)
· Total assets of £17.3m (2021: £26.3m)
· Total liabilities of £3.7m (2021: £5.3m)
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 £1.55m 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 £1.05 million in cash.
· Post period end, March 2023 - secured a £5m+ contract for the rental
of proprietary POS-GRIP "HG®" 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 £5m+ 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 £2.5m 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 £5m+ 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® 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
£5m for our POS-GRIP "HG®" 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 £2.5m 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®" 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 £1.55m 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 £1.05 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 the 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 £1.55m raise via the issue of convertible
loan notes, and the post period end sale of a surplus property in Aberdeen for
£1.05m, 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 £5m+ contract for
the rental of our proprietary POS-GRIP "HG®" 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 £256k.
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 £5m+ 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 £709k, compared to the previous year's figure of £734k.
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 £1.55m of convertible loans, and £1.05m 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 £2.64m (2021: £2.51m). 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 £2.07m in the period, which is broadly in
line with the prior year. The loss comes after absorbing depreciation and
amortisation costs of circa £0.8m. Included in the statement of comprehensive
income is a charge of £122k 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 £8.9m
and £0.8m 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 £17.3m.
As at 31 December 2022, the Group had cash and cash equivalents of £1.1m 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
(http://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 to Six months to Year to
31 December 31 December 2021 30 June
2022 2022
£'000 £'000 £'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 2022 31 December 2021 30 June
2022
£'000 £'000 £'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
Total 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 Up Shares Held in Treasury Share Based Payments Reserve Retained Total
Earnings
Share Capital
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 to 31 December 2022 Six months to 31 December 2021 Year to
30 June
2021
£ 000's £ 000's £ 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 under construction Motor vehicles
Buildings Improvements Equipment £000 £000 Total
£000 £000 £000 £000
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
£'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
£'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
£735k 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
£'000
Assets 3,033
Liabilities 1,623
Revenue 4,813
Profit after tax 246
13. Share Capital
Six months to 31 December 2022 Six months to Year to
31 December 2021 30 June
2022
£'000 £'000 £'000
Authorised:
Equity: 110,000,000 (June 2022 & Dec 2021: 110,000,000) Ordinary shares of 1,100 1,100 1,100
1p each
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 £'000
Convertible loan notes issued 1,550
Redemption premium 26
-----
1,556
-----
Current liabilities £'000
Fair value of derivative instrument 122
-----
122
-----
On 19th October 2022, the Company issued convertible loan notes to the value
of £1,550,000 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 £122k in the statement of comprehensive income. Additionally,
a charge of £26k 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 £1.05m.
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® 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® 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® 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® subsea wellhead, developed in a Joint Industry Project
with several industry leaders; the POS-SET™ 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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