TIDMPOS
RNS Number : 5906U
Plexus Holdings Plc
19 October 2010
Plexus Holdings PLC / Index: AIM / Epic: POS / Sector: Oil
equipment & services
19 October 2010
Plexus Holdings plc ('Plexus' or 'the Group')
Preliminary Results for the year to 30 June 2010
Plexus Holdings plc, the AIM quoted oil and gas engineering
services business and owner of the proprietary POS-GRIP(R) method
of wellhead engineering announces its preliminary results for the
year ending 30 June 2010.
Results
-- Revenue of GBP13.1m (2009: GBP15.1m)
-- Profit before tax of GBP0.6m (2009: GBP1.8m)
-- EBITDA of GBP3.4m before IFRS 2 share based payment charges
of GBP0.21m (2009: GBP4.3m before IFRS 2 share based payment
charges of GBP0.19m)
-- Gross margin increase to 58.5% (2009: 57.9%)
-- Basic earnings per share of 0.88p (2009: 1.27p)
Highlights
-- EBITDA and profit before tax in line with market
expectations; profit after tax ahead of market expectations
-- Increasing industry awareness of the benefits of POS-GRIP(R)
friction grip technology wellhead equipment following recent events
in the Gulf of Mexico
-- Initiation of Joint Industry Project ('JIP') inviting
investment for the accelerated development of a POS-GRIP "HGSS"(TM)
subsea wellhead
-- New assembly and test facility building in Aberdeen opened
May 2010 to support anticipated future growth in High Pressure/High
Temperature ('HP/HT') and Extreme High Pressure/High Temperature
('X-HP/HT') activities
-- HP/HT contract wins with GDF Suez Egypt for GBP0.6m, Maersk
Oil North Sea UK Limited ('Maersk') for an estimated initial
GBP3.0m, Sonangol Pesquisa e Producao ('Sonangol') for GBP0.7m, and
new customer Senergy Limited at GBP0.7m
-- Expanding geographic reach - winning of business with new
customers in three new territories; offshore Cameroon in West
Africa with Bowleven plc, offshore Tunisia in North Africa with
Cairn Energy PLC Group, and offshore Angola in South West Africa
with Sonangol
-- Further contract wins with Dubai Petroleum Establishment,
Transocean Drilling U.K. Limited and Wintershall Noordzee B.V.
-- Post period end Plexus is confident that it will be awarded
its first contract win in Australia with another new customer
-- Continued capital investment of GBP3.3m (2009: GBP3.1m)
including the addition of two more HP/HT wellhead equipment sets at
a cost of circa GBP1.5m
-- Research and Development ('R&D') spend, excluding costs
of building new test fixtures, increased by 114% to GBP0.75m (2009:
GBP0.35m)
-- Strengthened the Board - appointed industry and wellhead
equipment specialist Geoff Thompson as Non-Executive Director in
June 2010
-- Post period end, renewal, increase, and extension of bank
facilities in September 2010. New GBP5m credit facility on a three
year revolving basis increased from GBP4m, with additional GBP1m
overdraft on a yearly term
-- The Board is today proposing an increased final dividend of
0.39p per share (2009: 0.38p), which will be subject to shareholder
approval at the Annual General Meeting ('AGM') to be held on 30
November 2010. If approved the dividend will be paid on 10 December
2010 to all members appearing on the register of members on the
record date 29 October 2010. The ex-dividend date for the shares is
27 October 2010.
For further information please visit www.posgrip.com or
contact:
Ben van Bilderbeek Plexus Holdings PLC Tel: 020 7795 6890
Graham Stevens Plexus Holdings PLC Tel: 020 7795 6890
Jon Fitzpatrick Cenkos Securities PLC Tel: 020 7397 8900
Ken Fleming Cenkos Securities PLC Tel: 0131 220 6939
Felicity Edwards St Brides Media & Finance Tel: 020 7236 1177
Ltd
Susie Geliher St Brides Media & Finance Tel: 020 7236 1177
Ltd
Results
Chief Executive Ben van Bilderbeek said:
"I am pleased to report that Plexus has maintained its level of
key POS-GRIP HP/HT wellhead revenues and has also continued to win
new customers in new territories around the world. This resulted in
sales being wider spread than ever before with our UK and European
sales in the year accounting for under half of revenues. This has
been achieved despite the difficult trading conditions faced by the
oil and gas industry and the world economy as a whole over the last
financial year, from which Plexus was not immune. Continuing oil
and gas price volatility, which by mid 2009 had taken prices close
to levels last seen in 2005, combined with continuing bank funding
constraints for smaller operators, inevitably meant that oil
companies reduced investment plans, and the associated expenditure
on oil services is only anticipated to strengthen in the second
half of 2010 and beyond. In the meantime a number of large mergers
and acquisitions have taken place between oil services companies,
particularly in the USA, which further underlines the changing
nature of the industry.
"Looking to the future it is inevitable that many of our current
engineering initiatives, which form an important part of our growth
strategy, have to be considered against the back-drop of the recent
incident in the Gulf of Mexico earlier this year. Although it is
still unclear what the definitive causes were as the official
reports have not yet been published, or indeed what the full
regulatory impact and industry responses will be over the coming
months and years, what is clear is that there will be more scrutiny
and assessment of current drilling practices and technologies than
ever before.
"Plexus has consistently maintained that the unique advantages
of its proprietary POS-GRIP technology in terms of safety,
operational performance, and cost savings will result in its wider
acceptance and deployment, not only for jack-up surface drilling
but also for production wellheads and subsea wellhead applications,
and we believe that the conditions for communicating this message
are now more favourable than ever before.
"In view of these developments we make no apologies for
repeating that we advocate, in the strongest possible terms, a
number of basic engineering and common sense principles which
POS-GRIP wellhead technology addresses. In simple terms these are
that for all oil and gas drilling applications the blow out
preventers ('BOP') should not be lifted from the well to enable the
landing of casing and energising of seals; that all casing and
tubing hangers should be locked down with sufficient capacity to
withstand the forces that can manifest themselves in the well; that
wellheads which have to provide effective sealing throughout and
beyond the productive life of a well should be designed using seals
which avoid the loss of integrity over time as is often the case
with alternative sealing methods; and that wellhead equipment test
standards need to reflect a system's ability to withstand 'true'
field life conditions, and need to match the accepted higher
standards of other critical performance items of equipment in the
well such as casing and tubing couplings.
"For these reasons we remain confident that our organic business
and relationships with key customers will continue to develop and
grow, whilst at the same time we pursue commercial opportunities
with potential licensees and alliance partners over the coming
years. Finally I am pleased to announce that the Directors propose
an increased final dividend of 0.39p per share for the year ended
30 June 2010 which will be submitted for formal approval at the
Annual General Meeting."
Summary of Results for the year ended 30 June 2010
2010 2009
GBP'000 GBP'000
Revenue 13,142 15,105
EBITDA - before the effect of
IFRS 2 3,416 4,316
EBITDA - after the effect of IFRS
2 3,202 4,126
Profit before taxation 645 1,798
Basic earnings per share (pence) 0.88 1.27
Chairman's Statement
Business progress
I am pleased to report that the Group made strong progress in a
number of strategic areas including the winning of new customers
and expansion into new territories together with the ongoing
development of key intellectual property and associated research
and development. A stronger second half resulted in a full year
EBITDA of GBP3.4m (before IFRS 2 share based payment charges of
GBP0.21m) in line with market expectations, resulting in earnings
per share of 0.88p.
Strategy
As Plexus continues to extend its geographic reach, which during
the last financial year included for the first time offshore
Cameroon, Tunisia, and Angola we are in no doubt that the industry
is becoming increasingly aware of our proprietary and patented
friction grip technology and the significant advantages that it can
deliver in terms of safety, time savings, and operational
performance throughout the field life of a well. We are committed
to the growth of our organic exploration wellhead rental business
and are continuing to invest in the necessary infrastructure,
systems, and processes to support this strategy. At the same time
we fully recognise that the POS-GRIP method of engineering also
delivers particular advantages for production wellhead applications
and for subsea wellheads, as well as related new product
development opportunities such as our 15,000psi Tieback project
which we hope will be of major benefit to the HP/HT jack-up
drilling exploration sector, hence the 114% increase in our R&D
spend (excluding costs of building new test fixtures) during the
last financial year.
Our continued investment in a number of key areas has given
strategic support to our day to day operations during the last
financial year, and is an indicator of the continuing maturity of
the business and our ability to play an important role in the oil
services arena. These included the GBP0.6m investment in a new
assembly and test building at our facility in Aberdeen which opened
on time and on budget in May 2010, the initiation of a number of
new patents which we believe will have considerable value over the
coming years, and the successful certification of the Plexus
management system for both ISO 9001:2008 and OHSAS 18001:2007. Such
systems and health and safety initiatives are an increasingly
important part of our customers' requirements and both standards
are recognised throughout the industry as important operational and
commercial milestones.
Turning to non organic strategic initiatives these inevitably
centre on POS-GRIP friction grip technology and our ongoing drive
and determination to gain the widest acceptance of our technology
within the oil and gas industry. We believe that there are very
good reasons for revisiting certain industry standards and
practices surrounding wellhead equipment testing and design, some
of which have been highlighted as a result of the Gulf of Mexico
subsea incident in April 2010. For example the importance of casing
being locked down in place in the seal assembly with sufficient
force, and in a timely manner with the minimum opportunity for
delays and failures as can happen with lock down rings has been
cited by the USA Department of Interior. The simplicity and
predictable nature of POS-GRIP technology addresses these issues in
a uniquely beneficial way as inherent in the POS-GRIP design is
anti-rotation and preloaded lockdown as friction works in all
directions (i.e. tubular members are held radially and axially).
Furthermore we believe that effective seals that provide protection
beyond the productive life of a well and which do not rely on the
use of elastomeric/resilient seals which lose integrity should be a
basic requirement of well design. This is even more the case with
subsea wellheads where unlike surface wellheads remedial solutions
are not readily available, and where POS-GRIP can deliver true
metal to metal seals with a large contact area activated by large
external forces. To accelerate the possibility of developing a
superior POS-GRIP subsea wellhead we have launched a JIP initiative
that invites a number of key operators and oil service companies to
participate in funding the development of a POS-GRIP HGSS subsea
wellhead.
The subsea wellhead JIP is an exciting new development. We are
proposing to develop and build a subsea wellhead system that will
have fewer parts in the well bore than any other wellhead equipment
available on the market, a system which seals and locks hangers
down as soon as cementing is complete, and a system which is
inherently resistant to contamination as our system has no moving
parts exposed to well bore fluids.
Such Plexus initiatives to improve existing standards and
practices extend also to surface wellheads where the chance of
avoiding and controlling potential blow outs are clearly
significantly increased by the use of "through the BOP" wellhead
designs such as POS-GRIP, as opposed to spool type (often known as
'slip and seal') wellheads where the removal of the BOP is required
to cut casing. Such established procedures cost time and generate
unnecessary risk to personnel and the environment, and are related
to the fact that such designs are based around generally accepted
American Petroleum Institute ('API') standards for conventional and
historical wellhead designs. These standards are in turn supported
by test standards for wellheads that do not require multi-sample
testing, and some seals are not tested at all. Such tests do not
reflect real field conditions, and are much less stringent than
those required for example for casing and tubing couplings. We
believe that this is because unlike POS-GRIP designs these
conventional wellhead designs have been unable to pass such higher
standards due to seals moving during testing and because annular
pockets are non concentric.
Alongside our strategic focus on leveraging the technical
benefits of POS-GRIP technology we continue to address the funding
of future projects. I am pleased therefore to confirm that we have
further strengthened our relationship with Bank of Scotland
Corporate and have agreed the renewal, increase, and extension of
bank facilities for a new GBP5m (increased from GBP4m) three year
revolving credit facility plus a GBP1m overdraft on a yearly term.
We do not intend to utilise all of these facilities during the
current financial year, but believe that it is sensible to have
secured the ability to invest in the future growth of the business
as the need arises.
Staff
On behalf of the Board, I would like to thank all our employees
for their dedication and hard work during a year which has seen a
continued broadening of our geographical areas of operation,
further raising the awareness of the benefits of POS-GRIP friction
grip technology. I would also like to welcome Geoff Thompson, a
specialist in the design, testing and specifications of oil
industry well equipment, as a non-executive director to the
Board.
Outlook
Plexus has continued to make strong progress during the year
through a number of key strategic activities all of which centre
around our patented proprietary POS-GRIP friction grip technology.
We believe that we are able to offer the oil and gas industry a
range of superior wellhead equipment not only for exploration, but
also for production operations whether for surface or in due course
subsea. The fact that we continue to win business from some of the
largest operators for some of the most challenging conditions
particularly for use in HP/HT wells, demonstrates that our
technology has an increasingly important role to play at a time
when access to innovative and enabling technology with clear safety
advantages is so necessary, particularly as the incidence of blow
outs is significantly higher in HP/HT versus normal pressured
wells. Furthermore we believe these initiatives will also enable us
to over time broaden our range of products to include for example
valves and connectors. In the meantime our main goal is to address
some of the technical and engineering issues that have been brought
sharply into focus following the recent Gulf of Mexico incident. Of
particular note is the importance of full metal to metal sealing
capability for the life of a well together with the provision of
effective and fast locking down of the casing, where we believe
conventional technology and traditional methods have performance
limitations which can be empirically proven. This is especially
relevant where HP/HT conditions exist and which lead to axial and
radial movement of tubular members which if not contained can be so
damaging to the integrity of wellhead seals. This is why we have
launched our JIP initiative inviting the industry to participate in
the development of a new and we believe superior POS-GRIP HGSS
subsea wellhead.
For these reasons I look forward to the future with confidence,
and although global economic conditions remain volatile, and indeed
in some areas fragile, Plexus is beginning to see signs of
increased organic activity as energy prices stabilise and demand
strengthens. At the same time a number of important dialogues are
being maintained with a range of key industry entities. These
include operators, oil services companies, regulators, standards
organisations, and health and safety bodies which we hope will
further move us towards a point where we will be able to secure the
interest of potential licensees and alliance partners which will
help accelerate the roll out of our technology which we believe
will deliver significant value for our shareholders.
Robert Adair
Non-Executive Chairman
18 October 2010
Chief Executive's Review
Plexus as reported at the half year has been operating in
challenging market conditions both in global economic terms and
within an oil and gas industry where the prospects of oil service
companies are unavoidably related to energy prices. At the
beginning of the financial year continuing oil and gas price
volatility had reduced oil prices to levels last seen in 2005 of
c.$45USD per barrel which was approximately one third of peak
levels that had been reached in mid-2009 of c.$140USD per barrel.
The subsequent slow down and reduction in investment plans,
combined in some instances with constraints on securing adequate
capital funding, impacted on the sector as a whole.
I am pleased to report however that despite a difficult trading
environment Plexus has continued to make strong progress in terms
of increasing the awareness of POS-GRIP friction grip technology
wellhead equipment. With the stabilising of the oil price at levels
which ensures the viability of more projects, we are beginning to
see an increasing level of activity as we move into 2011.
In particular our focus on winning new contracts both from
existing customers and new customers in new regions around the
world has continued to be successful, and resulted for FY2010 in
our Rest of the World (non UK and non European) sales accounting
for 56.3% of revenue. The most significant contract wins together
with certain other notable commercial developments were as
follows:-
-- In July 2009 Plexus signed a two year contract with a further
two year option with Talisman Energy Inc. with an initial value of
approximately GBP1.5m for the supply of HP/HT and standard pressure
wellhead and mudline suspension equipment in the Norwegian North
Sea.
-- In July 2009, and following on from a first agreement in 2007
with Gaz de France Britain Ltd to supply wellhead systems in the
North Sea, Plexus won a contract to supply GDF Suez Egypt with its
POS-GRIP 15 000psi HP/HT and standard 10,000psi wellhead equipment.
This was not only a new customer win but also the addition of a
third customer in the region to add to Shell Egypt and BP
Egypt.
-- In December 2009 Maersk extended the working relationship
with Plexus by awarding a three year contract with a further two
year option for the supply of HP/HT wellhead equipment with an
initial estimated value of GBP3m for the exploration of a minimum
of two wells in the UK's central North Sea.
-- Over the three month period of January to March 2010 Plexus
won a series of contracts with three new customers in West Africa,
North Africa, and South West Africa. These were for supplying
standard pressure equipment for exploration drilling to Bowleven
plc in offshore Cameroon, Cairn Energy plc Group in offshore
Tunisia, and for HP/HT wellhead equipment for Sonangol in offshore
Angola. It is hoped that as our reputation grows in these important
regions additional contract opportunities will follow.
-- In May 2010 Plexus won a further HP/HT contract in the North
Sea from Senergy Limited, which is managing exploration activities
for Valiant Petroleum plc, with an approximate value of GBP0.7m.
This further underpins Plexus' strong presence in the North Sea
where we are one of the leading suppliers for wellhead equipment
for HP/HT drilling activities.
-- Post year end Plexus has been pursuing its first contract win
opportunity in Australia with another new customer and is confident
that this will be secured over the coming weeks and which will be
announced in due course.
-- Since August 2009 as part of Plexus' ongoing expansion plans,
GBP0.6m has been invested in the construction of a new assembly and
test building at our main facility in Dyce Aberdeen. The building
was completed on time at the end of April and officially opened in
May and has been specially designed to allow more efficient
handling, assembly, qualification and testing of our POS-GRIP HP/HT
and X-HP/HT wellhead systems.
-- Continuing focus on the 15,000psi HP/HT Mudline Tieback
project to demonstrate to the industry that tie back can for the
first time be achieved for HP/HT exploration wells and pre-drilled
production wells by using POS-GRIP set metal to metal "HG"(R)
seals. The technical specification, detailed design of the system,
and the test fixture for qualification testing of the prototype
have now been completed, and the testing and manufacture of the
prototype will begin shortly.
-- In response to the growing focus on subsea drilling standards
and technology Plexus has initiated the call for a JIP to look at
funding the accelerated development of a POS-GRIP "HGSS" subsea
wellhead system. This product would have fewer parts in the well
bore than conventional systems, reliable metal to metal system
seals, and locks hangers down as soon as cementing is complete. The
system has an inherent resistance to contamination as there would
be no moving parts exposed to well bore fluids.
It can be clearly seen that Plexus has been able to combine
important organic developments together with a number of strategic
initiatives which have underpinned our financial performance during
the year, which strengthened significantly at the EBITDA and PBT
level in the second half. I believe this has resulted in Plexus
significantly raising industry awareness of the unique advantages
of POS-GRIP technology as we pursue our goal of improving current
industry wellhead equipment standards, particularly for HP/HT
applications where our superior and enabling POS-GRIP technology is
increasingly being recognised as having safety, operational, and
time saving benefits.
The results for the year as indicated at the interims stage
reflect the fact that Plexus was not immune from a range of adverse
trading conditions particularly during the first half of the year.
It should be noted that the reduction in sales revenues of GBP13.1m
from GBP15.1m the previous year was achieved after a GBP1.1m
reduction in sales relating to the BP Shah Deniz contract as this
winds down from its inception in 2004. Our HP/HT rental revenues
held steady year on year at GBP9.4m and our confidence that our
expertise and growing reputation in this arena will become a key
element of future trading was demonstrated by the addition of two
new HP/HT wellhead equipment sets at a capital expenditure cost of
c.GBP1.5m.
Perhaps one of the most important components of the year's
activities concerns the investment in and expenditure on research
and development and engineering and testing. These activities focus
on the ongoing development of our patented POS-GRIP friction grip
method of engineering both through patent improvements and
continuations, and the design and development of new products such
as our 15,000psi Tieback initiative, and the launching of a JIP
seeking to fast-track the development of a POS-GRIP HGSS subsea
wellhead. Such investment comes at an important time as following
the incident in the Gulf of Mexico earlier this year a greater
amount of attention has been directed both by regulators and the
industry itself at current drilling practices and technologies than
ever before. Instead of what historically has been a gradually
evolving process for the development of methods and standards, it
may well be that a number of 'step changes' will be required and in
this environment it is essential that Plexus continues to invest in
its POS-GRIP technology. As a result research and development
spending (excluding the costs of building new test fixtures used in
development testing) increased by 114% to GBP0.75m from GBP0.35m
last year.
In summary I am pleased with the progress made during the year
in a difficult market, particularly with regard to the winning of
new customers and the expansion of our geographic reach around the
world. However, what is particularly exciting is the progress we
are making on a number of technical and product development fronts
including the ongoing 15,000psi Tieback equipment project and the
product design work that is now being aimed at accelerating our
future role in the increasingly important subsea exploration and
production arena. These initiatives are taking place at a time when
the sector is showing signs of growth due to a recovery in the oil
price, oil majors' capex spend recovering, increased global demand
for oil and gas as the world economy recovers, and the ongoing
trend of extraction from challenging locations. Indeed some
industry observers are saying that the North Sea is about to embark
on a "renaissance", and that according to UK Oil & Gas 24bn of
oil and gas equivalent have yet to be recovered. Such factors,
combined with ever more stringent health and safety regulations I
believe place Plexus in an excellent position from which to
capitalise on the safety, operational, and time saving advantages
that our technology offers.
Ben van Bilderbeek
Chief Executive
18 October 2010
Financial Review
Revenue
Revenue for the year was GBP13.1m, compared to GBP15.1m in the
previous year.
The rental of exploration wellhead equipment and related
services accounted for over 95% of revenue which was a 10% increase
from last year reflecting the fact that wellhead product sales
associated with the historic BP Shah Deniz contract reduced to
GBP0.2m compared to GBP1.3m in the prior year. Despite challenging
market conditions the rental of HP/HT equipment remained stable at
GBP9.4m and accounted for 71.6% of total sales revenues compared to
62.5% in the previous year. Revenue includes GBP0.2m of engineering
and testing which is an increase from the prior year's level of
GBP0.1m. This is a result of an increased level of development of
the Company's proprietary POS-GRIP technology as part of the
strategy to capitalise on the significantly increased levels of
interest in new technologies and methods following the recent major
incident in the Gulf of Mexico.
Margin
Gross margins have increased slightly to 58.5% from 57.9% in the
previous year as HP/HT rental sales continue to dominate sales and
generate higher margins than low pressure equipment contracts.
Overhead expenses
Overhead expenses were essentially unchanged year on year at
GBP6.9m compared to GBP6.8m the prior year following a significant
31% increase in 2008/09 when it was necessary to provide a broader
global operational support structure to service a growing number of
customers across a wider range of territories and regions. In line
with year on year total overhead expenses comparables, employee
headcount as at the year end was also essentially unchanged at 88
compared to 89 for the prior year.
EBITDA
The EBITDA for the year (before IFRS2 share based payment
charges of GBP0.21m) was GBP3.4m, down from GBP4.3m (before IFRS2
share based payment charges of GBP0.19m) the previous year, a
decrease of 20.9%. This performance was in line with market
expectations and was achieved during a twelve month period which
continued to be volatile for the oil and gas industry and during
which a number of major international oil services companies
reported significantly reduced sales and earnings numbers.
Furthermore oil and gas prices fell back in 2009 to levels which
resulted in nearly all oil companies reducing investment plans in
2009/2010 which impacted Plexus during the year. EBITDA margin for
the year was marginally lower at 26% as compared to 29% last year
which demonstrates that the proprietary nature of the Plexus
POS-GRP technology helps protect margins which bodes well for the
future as sales revenues recover.
Profit before tax
Profit before tax of GBP0.65m compares to a profit last year of
GBP1.8m, and again was in line with market expectations. It should
be noted that profit before tax was in part adversely impacted as a
result of absorbing a 14.7% increase in rental asset and other
property, plant and equipment depreciation and amortisation
totalling GBP2.43m, up from GBP2.1m last year. This once again
reflects significant ongoing levels of capital expenditure and the
higher level of depreciation of rental assets due to the steady
increase in the size of the rental asset inventory. The profit
before tax is stated after a higher IFRS2 charge for share based
payments under reporting standard IFRS 2; the charge for the full
year is GBP0.21m compared to GBP0.19m last year.
Tax
The Group UK Corporation Tax charge resulted in a tax credit of
GBP0.06m for the year as compared to a tax charge of GBP0.78m for
the prior year as a result of research and development related tax
credit claims.
EPS
The Group reports basic earnings per share of 0.88p compared to
1.27p in the prior year.
Cash and Balance Sheet
The balance sheet reflects the development of the business
during the year and ongoing capital expenditure with the net book
value of property plant and equipment including items in the course
of construction increasing to GBP8.9m up from GBP8.3m last year.
Capital expenditure on tangibles totalled GBP2.6m compared to
GBP2.7m last year, of which GBP1.5m was for the addition of two
more HP/HT wellhead equipment sets. Receivables increased to
GBP6.6m as compared to GBP4.8m as a result of an increase in the
level of business being generated from outside the UK and Europe
leading to corresponding increases in debtor days but with no
perceived increase in credit risk due to the 'blue chip' nature of
existing and new customers. Net bank borrowings closed at GBP2.9m
compared to GBP1.3m last year reflecting net cash outflow for the
year of GBP1.6m, as compared to net cash inflow of GBP1.8m last
year before the draw down on the bank loan of GBP4m. This movement
is accounted for by a combination of debtor inflows reducing to
GBP13m compared to GBP17.2m in the prior year, an increase of
GBP0.6m in corporation tax payments totalling GBP1.1m as opposed to
GBP0.5m in the prior year, and dividends paid of GBP0.6m which was
a GBP0.3m increase over the prior year. In ongoing recognition of
the unpredictable nature of the economy and capital markets, and
the continued constraints on many banks' lending capacities the
Group once again took the decision to review the level of its
lending facilities with Bank of Scotland Corporate. As a result
post period end in September 2010 Bank of Scotland Corporate agreed
to increase the bank facilities available to the Group from GBP5m
to GBP6m of which GBP5m of the credit facility is on a three year
revolving basis, and GBP1m is an overdraft facility on a yearly
term. This places Plexus in a strong position to fund ongoing
R&D, capital expenditure, and associated development
programmes.
Intellectual property
The Group carries in its balance sheet goodwill and intangible
assets of GBP7.62m. The Directors have considered whether there
have been any indications of impairment and have concluded that
there have been no such indications. The Directors therefore
consider the current carrying values to be appropriate. Indications
of impairment are considered annually.
Research and Development
Ongoing R&D programme continues to be an important element
of Plexus' future growth strategy and focuses on the further
development of the proprietary POS-GRIP method of engineering both
in terms of patent continuations and improvements to extend the
life of its extensive patent suite, and also to design and develop
new products that incorporate and benefit from the unique
advantages of POS-GRIP technology. Examples of these include the
15,000psi Tieback initiative, and the initiation of a JIP for the
fast track development of a POS-GRIP HGSS subsea wellhead system
which addresses a number of concerns and issues that have arisen
following the recent incident in the Gulf of Mexico. Consequently,
and excluding this year's spend of GBP0.14m and last year's spend
of GBP0.55m on the costs of building new test fixtures used in
development testing, R&D spend increased by 114% to GBP0.75m
from GBP0.35m in the prior year.
IFRS 2 (Share Based Payments)
IFRS2 charges have been included in the accounts, in line with
reporting standards. The "fair value" of share based payments has
been computed independently by specialist consultants and is
amortised evenly over the expected vesting period from the date of
grant. The charge for the year was GBP0.21m which compares to
GBP0.19m for last year.
Dividends
The Company announced on 18 March 2010 the payment of an interim
dividend of 0.33p per share which was approved for payment on 1
April 2010.
The Directors have further decided to propose an increased final
dividend of 0.39p per share for the year ending 30 June 2010
compared to 0.38p last year, which will be recommended for formal
approval at the Annual General Meeting to be held on 30 November
2010. Subject to this the dividend will be paid on 10 December
2010.
Graham Stevens
Finance Director
18 October 2010
Consolidated Income Statement
for the year ended 30 June 2010
2010 2009
Notes GBP'000 GBP'000
Revenue 1 13,142 15,105
Cost of sales (5,453) (6,364)
Gross profit 7,689 8,741
Administrative expenses (6,918) (6,799)
Operating profit 771 1,942
Finance income - 8
Finance costs (127) (197)
Share of profit of associate 1 45
Profit before taxation 645 1,798
Income tax expense 58 (780)
Profit after taxation and comprehensive
income for the year attributable to the
owners of the parent 703 1,018
Earnings per share 4
Profit for the year attributable to Plexus
Holdings shareholders
Basic 0.88p 1.27p
Diluted 0.87p 1.27p
Consolidated Balance Sheet
at 30 June 2010
2010 2009
Notes GBP'000 GBP'000
Assets
Goodwill 722 722
Intangible assets 5 6,897 6,618
Financial assets 60 60
Investment in associate 4 1
Property, plant and equipment 6 8,866 8,335
Total non-current assets 16,549 15,736
Inventories 3,332 3,794
Trade and other receivables 6,624 4,799
Current income tax assets 451 -
Cash and cash equivalents 1,470 2,655
Total current assets 11,877 11,248
Total Assets 28,426 26,984
Equity and Liabilities
Called up share capital 7 802 802
Share premium account 15,596 15,596
Share based payments reserve 764 550
Retained earnings 1,674 1,499
Total equity 18,836 18,447
Liabilities
Deferred tax liabilities 469 546
Bank loans 4,000 4,000
Total non-current liabilities 4,469 4,546
Trade and other payables 4,748 3,331
Current income tax liabilities - 660
Borrowings 373 -
Total current liabilities 5,121 3,991
Total liabilities 9,590 8,537
Total Equity and Liabilities 28,426 26,984
These financial statements were approved and authorised for
issue by the board of directors on 18 October 2010 and were signed
on its behalf by:
B van Bilderbeek G Stevens
Director Director
Consolidated Statement of Changes in Equity
for the year ended 30 June 2010
Share
Called Share Based
Up Share Premium Payments Retained
Capital Account Reserve Earnings Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Balance as at 1
July 2008 802 15,596 360 787 17,545
Total comprehensive
income for the
period - - - 1,018 1,018
Share based
payments reserve
charge - - 190 - 190
Deferred tax
movement on share
options - - - (56) (56)
Dividends - - - (250) (250)
Balance as at 30
June 2009 802 15,596 550 1,499 18,447
Total comprehensive
income for the
period - - - 703 703
Share based
payments reserve
charge - - 214 - 214
Deferred tax
movement on share
options - - - 41 41
Dividends - - - (569) (569)
Balance as at 30
June 2010 802 15,596 764 1,674 18,836
Consolidated Cash Flow Statement
for the year ended 30 June 2010
2010 2009
GBP'000 GBP'000
Cash flows from operating activities
Profit before taxation 645 1,798
Adjustments for:
Depreciation, amortisation and impairment
charges 2,430 2,139
Loss on disposal of property, plant and
equipment 19 24
Charge for share based payments 214 190
Investment income - (8)
Interest expense 127 197
Changes in working capital:
Decrease/(increase) in inventories 462 (316)
(Increase)/decrease in trade and other
receivables (1,825) 2,084
Increase/(decrease) in trade and other
payables 1,417 (29)
Cash generated from operations 3,489 6,079
Income taxes paid (1,089) (517)
Net cash generated from operations 2,400 5,562
Cash flows from investing activities
Deferred consideration in respect of acquisition
of subsidiary entity - (151)
Acquisition of financial asset - (80)
Adjustment to value of associate undertaking (3) (1)
Purchase of intangible assets (707) (370)
Purchase of property, plant and equipment (2,560) (2,736)
Proceeds of sale of property, plant and
equipment 8 -
Net cash used in investing activities (3,262) (3,338)
Cash flows from financing activities
Loans drawn down - 4,000
Interest paid (127) (207)
Interest received - 32
Equity dividends paid (569) (250)
Net cash (used in)/generated from financing
activities (696) 3,575
Net (decrease)/increase in cash and cash
equivalents (1,558) 5,799
Cash and cash equivalents at 1 July 2009 2,655 (3,144)
Cash and cash equivalents at 30 June 2010 1,097 2,655
Notes to the Consolidated Financial Statement
1. Revenue
2010 2009
GBP'000 GBP'000
By geography
UK 1,341 5,314
Europe 4,427 4,933
Rest of World 7,374 4,858
13,142 15,105
Revenue is shown by destination as the origin of revenues is all
from the UK.
By type
Sale of goods 2,096 2,193
Services 10,859 11,613
Construction contract 187 1,299
13,142 15,105
2. Segment reporting
The Group derives revenue from the sale of its POS-GRIP
technology and associated products, the rental of wellheads
utilising the POS-GRIP technology and service income principally
derived in assisting with the commissioning and ongoing 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.
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 revenue:
2010 2009
GBP'000 GBP'000
Customer 1 2,098 -
Customer 2 1,840 905
Customer 3 1,759 3,249
Customer 4 1,536 203
Customer 5 1,383 1,025
3. Dividends
2010 2009
GBP'000 GBP'000
Ordinary Shares
Interim paid of 0.33p (2009: 0.3118p) per share
for the year ended 30 June 2010 265 250
Ordinary Shares
Final dividend after the year end of 0.39p (2009:
0.38p) per share 313 305
The proposed final dividend has not been accrued
at the balance sheet date.
4. Earnings per share
2010 2009
GBP'000 GBP'000
Profit attributable to shareholders 703 1,018
Number Number
Weighted average number of shares in issue 80,182,569 80,182,569
Dilution effects of share schemes 47,294 205,301
Diluted weighted average number of shares in
issue 80,229,863 80,387,870
Basic earnings per share 0.88p 1.27p
Diluted earnings per share 0.87p 1.27p
Basic earnings 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 employee share schemes and
share option schemes.
5. Intangible fixed assets
Patent and
Intellectual Other Computer
Property Development Software Total
GBP'000 GBP'000 GBP'000 GBP'000
Cost
As at 1 July 2008 6,440 1,052 74 7,566
Additions - 331 39 370
As at 1 July 2009 6,440 1,383 113 7,936
Additions - 701 6 707
As at 30 June 2010 6,440 2,084 119 8,643
Amortisation
As at 1 July 2008 713 131 61 905
Charge for the year 330 61 22 413
As at 1 July 2009 1,043 192 83 1,318
Charge for the year 329 85 14 428
As at 30 June 2010 1,372 277 97 1,746
Net Book Value
As at 30 June 2010 5,068 1,807 22 6,897
As at 30 June 2009 5,397 1,191 30 6,618
As at 30 June 2008 5,727 921 13 6,661
Patent and other development costs are internally generated.
6. Property, plant and equipment
Assets under Motor
Buildings Equipment Construction Vehicles Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Cost
As at 1 July
2008 - 9,694 222 22 9,938
Additions - 189 2,547 - 2,736
Transfers - 2,631 (2,631) - -
Disposals - (63) - - (63)
As at 1 July
2009 - 12,451 138 22 12,611
Additions 661 213 1,684 2 2,560
Transfers - 1,646 (1,646) - -
Disposals - (64) - (10) (74)
As at 30 June
2010 661 14,246 176 14 15,097
Depreciation
As at 1 July
2008 - 2,595 - 14 2,609
Charge for the
year - 1,702 - 4 1,706
On disposals - (39) - - (39)
As at 1 July
2009 - 4,258 - 18 4,276
Charge for the
year 10 1,990 - 2 2,002
On disposals - (39) - (8) (47)
As at 30 June
2010 10 6,209 - 12 6,231
Net book value
As at 30 June
2010 651 8,037 176 2 8,866
As at 30 June
2009 - 8,193 138 4 8,335
As at 30 June
2008 - 7,099 222 8 7,329
7. Share Capital
2010 2009
GBP'000 GBP'000
Authorised:
Equity: 110,000,000 Ordinary shares of 1p each 1,100 1,100
Allotted, called up and fully paid:
Equity: 80,182,569 (2009: 80,182,569) Ordinary
shares of 1p each 802 802
8. Reconciliation of net cash flow to movement in net debt
2010 2009
GBP'000 GBP'000
(Decrease)/increase in cash in the year (1,558) 5,799
Cash inflow from increase in net debt - (4,000)
Movement in net debt in year (1,558) 1,799
Net debt at start of year (1,345) (3,144)
Net debt at end of year (2,903) (1,345)
9. Analysis of net debt
At beginning At end
of year Cash flow of year
GBP'000 GBP'000 GBP'000
Cash in hand and at bank 2,655 (1,185) 1,470
Overdrafts - (373) (373)
2,655 (1,558) 1,097
Bank loans (4,000) - (4,000)
Total (1,345) (1,558) (2,903)
The financial information above does not constitute the
company's statutory accounts for the year ended 30 June 2010 but is
derived from those statements.
The statutory financial statements and this preliminary
statement for the year ended 30 June 2010 were approved by the
Board on 18 October 2010. On the same date the company's auditors,
Crowe Clark Whitehill LLP. issued an unqualified report on those
financial statements. The audit report did not include reference to
any matters to which the auditor drew attention by way of emphasis
without qualifying the report or contain a statement under section
498(2) or (3) of the Companies Act 2006. The Company's financial
statements have been prepared in accordance with International
Financial Reporting Standards, as adopted by the EU. A copy of the
statutory accounts will be delivered to the Registrar of Companies
in due course.
The Annual Report will be circulated to all shareholders and
thereafter, copies will be available from the registered office of
the company, Thames House, Portsmouth Road, Esher, Surrey, KT10
9AD.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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