TIDMPOS
RNS Number : 5871K
Plexus Holdings Plc
17 December 2018
Plexus Holdings PLC / Index: AIM / Epic: POS / Sector: Oil
Equipment & Services
This announcement contains inside information
Plexus Holdings PLC ('Plexus' or 'the Company')
Investment in precision engineering business -
Kincardine Manufacturing Services Ltd
Highlights
-- Investment of GBP735,000 in cash to acquire a 49% interest in
Kincardine Manufacturing Services Limited ('KMS'), a specialist
precision engineering business with a blue-chip customer base,
producing a variety of parts for the oil and gas sectors
-- KMS provides Plexus with future access to machining
capability which can support R&D development projects to
provide potential licensees with alternative applications of
POS-GRIP(R) technology
-- Plexus' investment is by way of a subscription for new
shares, and the proceeds will be used to fund expansion initiatives
at KMS
-- KMS distribution/dividend policy expected to generate annual returns for Plexus
Plexus Holdings PLC, the AIM quoted oil and gas engineering
services business and owner of the proprietary POS-GRIP(R)
friction-grip method of wellhead engineering, is pleased to
announce it has made an investment of GBP735,000 to acquire a 49%
interest in KMS, an independent precision engineering business
focused on the oil and gas industry ('the Transaction'). The
Transaction is in line with management's strategy to position
Plexus as an IP-led company based around its ground-breaking
POS-GRIP friction grip method of engineering with a design,
development and now a machining capability.
KMS was founded in 2001 and has grown to become a specialist
subcontracting manufacturer in precision engineering for the oil
and gas industry, providing world-class engineering solutions and
manufacturing services for complex components and assemblies. KMS
supplies a range of blue-chip international clients, including
Schlumberger, Halliburton, GE Oil & Gas, NOV and
Weatherford.
Post the sale of its niche wellhead exploration equipment
services business for jack-up applications to TechnipFMC ('TFMC')
in February 2018, Plexus is focused on commercialising and
exploiting its existing IP as well as developing new
POS-GRIP-enabled products either organically or with partners such
as TFMC, with whom the Company has entered into a Collaboration
Agreement. As well as a best in class jack-up exploration wellhead
that has been successfully used on over 350 wells worldwide, Plexus
has developed a suite of POS-GRIP-enabled products for larger
markets such as surface production, subsea production and
exploration and well abandonment and decommissioning. It is
anticipated that KMS will provide Plexus with additional means by
which to machine bespoke equipment for new applications and
technologies as well as for R&D testing, and will potentially
enable Plexus to more effectively supply specific markets.
Plexus is acquiring its 49% interest in KMS by means of a
subscription for new shares in KMS. KMS intends to use the proceeds
from the Transaction to expand existing capacity and fund other
growth initiatives. For example, KMS has recently acquired a new
large bore machine which has already resulted in a significant
expansion in capacity. KMS intends to use circa GBP310,000 of the
proceeds arising from Plexus' investment, in settlement for this
piece of machinery. Under the terms of the Transaction, Plexus will
be entitled to future distributions/dividend payments which would
provide an annual return on Plexus' investment, subject to KMS'
profitability, in addition to any capital appreciation in the value
of Plexus' 49% shareholding in KMS. An additional cash payment of
up to GBP150,000 may be payable by Plexus to the current owners of
KMS, subject to the future performance of KMS in the year to 31
December 2018.
Plexus' CEO Ben Van Bilderbeek said, "As a highly experienced
engineering company based in Aberdeenshire with a blue-chip
customer base, KMS shares many similarities with Plexus. We already
have first rate IP in the form of our POS-GRIP technology, and now
thanks to today's Transaction, we are further able to support our
programme to expand the application of our proprietary technology
throughout the oil and gas supply chain and beyond into areas such
as geothermal and decommissioning. Having established our jack-up
exploration wellhead business as the dominant supplier to the North
Sea HP/HT market, we know the challenges companies operating in the
sector face. Therefore, we look forward to working with and
supporting the KMS team going forward, as we look to grow our
business substantially over the coming years.
Further Information on KMS
KMS manufactures parts used in harsh and demanding subsea
environments within the oil and gas industry which range from 1mm
to up to 1m in diameter by 3m long, in materials including
plastics, carbon steels, alloy steels, stainless steels, and high
temperature alloys. The Company procures raw materials, sources
components and fully assembles test electro-mechanical systems for
inspection and QHSE (Quality, Health, Safety and Environment
policy) standards and processes.
In the year to 31 December 2017, KMS generated revenues of
GBP3.4m (2016: GBP2.6m) and profit before tax of GBP323k (2016:
loss GBP185k). As at 31 December 2017, KMS had gross assets of
GBP1.6m (2016: GBP1.4m).
**ENDS**
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
Derrick Lee Cenkos Securities PLC Tel: 0131 220 9100
Frank Buhagiar St Brides Partners Ltd Tel: 020 7236 1177
Isabel de Salis St Brides Partners Ltd Tel: 020 7236 1177
NOTES:
AIM-traded oil and gas engineering services company Plexus (AIM:
POS) is an IP-led company that has developed a range of products
and applications based on its patent-protected POS-GRIP
friction-grip technology. Having proved the superior qualities of
POS-GRIP within the jack-up wellhead exploration market through the
sale of this business to FMC Technologies Limited, a subsidiary of
TechnipFMC (Paris:FTI, NYSE:FTI) (jointly "TFMC"), in early 2018,
the Company is now focused on establishing its technology and
equipment in other markets including surface production wellheads,
subsea and de-commissioning.
Its suite of ongoing products and applications include: "HG"(TM)
Wellheads, which combine POS-GRIP Technology with Gas Tight metal
sealing; the Python(R) Subsea Wellhead (a new standard for subsea
wellheads - developed in a JIP supported by Royal Dutch Shell, BG
(now owned by Shell), Wintershall, Total, Maersk (now owned by
Total), Tullow Oil, eni, Senergy (now Lloyds register), and Oil
States Industries Inc); the POS-SET(TM) Connector for the growing
de-commissioning and abandonment market; and Tersus-PCT, an
innovative HP/HT Tie-Back connector product. Importantly, the
Company also has a Collaboration Agreement with TFMC, which
provides a platform to further develop and commercialise these and
other applications based on its POS-GRIP technology.
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END
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