Plexus losses narrow as its trades in line with forecasts

Oil and gas engineering services company Plexus reported sales revenue from continuing operations of £0.42m in its first half on Monday, rising from £0.05m year-on-year.

The AIM-traded firm said its figures for the six months ended 31 December were on a continuing operations basis, following the sale of the wellhead jack-up exploration rental wellhead application business to FMC Technologies on 1 February 2018.

It said it made a continuing operations EBITDA loss of £1.21m, narrowing from £1.81m a year earlier, while its continuing operations loss before tax came in at £2m, compared to £2.76m a year earlier.

Basic losses per share from continuing activities totalled 1.99p, narrowing from 2.75p 12 months earlier, while net cash fell to £2.3m from £4.5m.

The group also had £3.04m in financial assets, rising from £2.96m at the end of the first half of the 2020 financial year.

“In what has been without doubt a challenging 12 months for the global economy, and in particular for our industry due to the effects of the Covid-19 pandemic, the UK is, at the time of writing, making excellent progress with the rollout of its mass vaccination programme which provides cause for optimism that the green shoots of recovery can begin to surface and grow into the second half of 2021,” said chief executive officer Ben van Bilderbeek.

“In tandem, momentum continues to grow for a carbon neutral world, and the oil and gas industry is positioning itself to be in the mainstream rather than on the fringes of this movement.

“For our industry to be able to make this journey, there is a growing recognition that outdated technologies are no longer fit for purpose and must be replaced by cleaner, more efficient, and more reliable methods and equipment in order for the industry to have any realistic chance of meeting net-zero targets.”

Van Bilderbeek said the board believed that the company, with its ‘POS-GRIP’ technology, was “well-positioned” to maximise the opportunities that were now beginning to open up, especially in relation to natural gas, which was expected to increasingly be used to produce hydrogen in the coming years.

“The ongoing pandemic and associated lockdowns both in the UK and around the world, while highly disruptive, did not prevent progress being made towards rolling out the dual focused strategy we have put in place to establish our POS-GRIP technology in new markets through licencing and direct sales activity.

“In July, we announced the award of an order for a POS-GRIP surface production wellhead system from Spirit Energy.

“The contract is progressing as planned, and as a result we would expect to recognise the majority of revenues from this contract in the second half of the 2021 financial year.”

In terms of licencing, van Bilderbeek noted that in November the company reached an initial licence agreement with Schlumberger subsidiary Cameron, with the board “excited” about the potential that the new relationship offered for POS-GRIP technology in the surface production wellhead sector.

“Good progress has been made in relation to the technology transfer process, and the design of an initial low-cost wellhead product is advancing.

“We very much look forward to updating our shareholders on progress in the months and years to come.”

Ben van Bilderbeek said the Cameron licence agreement was the third secured for Plexus technology in recent years, along with the collaboration agreement with service provider TFMC, and the agreement with licence partner Gusar for the Russia and Commonwealth of Independent States (CIS) markets.

“Building a portfolio of diversified revenue streams both in conjunction with licencees and partners, as well as organically, is central to our business model.

“Our technology lends itself to this.

“Being able to deliver a higher standard wellhead solution, particularly wherever metal to metal sealing is required opens a host of potential markets for POS-GRIP, including in the fast-growing 'green' space such as carbon storage, as well as geothermal which is one of many sub sectors and applications we have identified where POS-GRIP can make a difference.”

Nuclear energy was another, van Bilderbeek said, especially where exotic materials were relevant, and which did not always lend themselves to threaded connectors.

“For now, the half year results, including revenues of £0.42m, are in line with internal budgets, and the group's revenues are projected to be higher in the second half of the financial year.

“Results for the full year are anticipated to be in line with market expectations.”

At 0900 BST, shares in Plexus Holdings were up 3.27% at 18.33p.