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Plexus Holdings Plc Interim Results

28/03/2019 7:00am

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1 Year : From Oct 2018 to Oct 2019

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RNS Number : 2366U

Plexus Holdings Plc

28 March 2019

Plexus Holdings PLC / Index: AIM / Epic: POS / Sector: Oil equipment & services

28 March 2019

Plexus Holdings PLC ('Plexus', 'the Company' or 'the Group')

Interim Results

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 interim results for the six months to 31 December 2018.

Financial Results

-- Following the sale of the wellhead Jack-up exploration application business (the "Jack-up Business") to FMC Technologies Limited ('FMCT'), a subsidiary of major oil services provider TechnipFMC (Paris:FTI)(NYSE:FTI), on 1 February 2018, the interim results and prior periods are reported as required on a continuing and a discontinued operations basis.

   --     Continuing operations sales revenue GBP1,312k (2017: GBP40k) 

o Discontinued operations sales revenue GBPnil (2017: GBP2,411k)

   --     Continuing operations EBITDA loss (GBP1,504k) (2017: GBP1,883k loss) 

o Discontinued operations EBITDA GBPnil (2017: GBP105k)

   --     Continuing operations loss after tax (GBP2,337k) (2017: Loss GBP2,743k) 

o Discontinued operations loss after tax GBPnil (2017: Loss GBP1,008k)

   --     Basic loss per share from continuing activities (2.22p) (2017: 2.60p loss) 

o Basic loss per share from discontinued activities (nil) (2017: 0.96p loss)

   --     Net cash of GBP9.5m (2017: GBP5.3m). 
   --     The Group in addition has GBP2.85m in financial assets (2017: nil) 

-- As previously announced, following the sale of the Jack-up Business to FMCT the Board has assessed the on-going capital requirements of the business and declared earlier this month a GBP1.0m special interim dividend (equivalent to approximately 0.99566 pence per Ordinary Share (excluding the 4,950,495 existing Ordinary Shares held in treasury) due for payment on the 8 April 2019

-- In addition, the Company previously announced that it is undertaking a court approved reduction of capital by way of a cancellation of its share premium account in order to increase its distributable reserves, and a General Meeting has been convened to seek Shareholder approval of the reduction of capital. The principal benefit of a reduction in capital is to increase the Company's future flexibility, subject to the financial position and prospects of the Company, to pay dividends, to facilitate any prospective buy back of shares (including by way of tender offer) or to provide flexibility for any other general corporate purposes

Overview and Corporate Highlights

-- New IP led strategy focused on rolling out applications enabled by Plexus' proprietary POS-GRIP(R) technology which is proven to raise standards across the energy sector, including wellhead exploration from Jack-up rigs and surface production equipment

o Follows sale of Plexus' Jack-up Business to FMCT, a subsidiary of top tier industry supplier TechnipFMC, in February 2018 which demonstrated industry recognition of POS-GRIP technology

-- Significant progress made towards delivering on strategy to establish POS-GRIP technology in new markets

-- August 2018 - Contract secured for a second rental order for the POS-SET(TM) Connector from Oceaneering A/S, Norway for well abandonment operations in the North Sea

-- September 2018 - Initial breakthrough agreement secured by Russian partner Gusevsky Valves Plant LLC ('Gusar') to supply Gazprom with two sets of Plexus' Tersus(TM) - TRT Mudline Suspension System ('MLS') for shallow water exploration gas wells on the Kara Sea Shelf in 2019

-- December 2018 - Acquisition of a 49% interest in Kincardine Manufacturing Services Limited ('KMS'), a specialist precision engineering business with a blue-chip customer base in the oil and gas sector

o KMS distribution/dividend policy expected to generate annual returns for Plexus

o Provides Plexus with future access to machining capability which can support R&D development projects for alternative applications of POS-GRIP technology

-- Post period end - February 2019 - buyback of 4,950,495 Ordinary Shares held by Gusar at 50.5p per share to accelerate the completion of Plexus' sale of two POS-GRIP Jack-up exploration wellhead sets and associated equipment to Gusar in anticipation of an initial rental order in Russia and the CIS

o As per the 2016 Licensing Agreement, Plexus earns a 20% royalty on POS-GRIP wellhead and associated equipment rented by Gusar - potential to generate a significant revenue stream for Plexus

-- March 2019 - following the share buyback and equipment sale transactions, a first major breakthrough contract was secured by Gusar with global energy giant Gazprom to supply POS-GRIP rental wellhead gas exploration equipment. This covers the first year of a five year gas exploration drilling programme. An additional Royalty Agreement was entered into with Gusar at the time of the share buyback whereby an additional 20% royalty of the invoice values of this contract will apply

-- Step-up in interest in POS-GRIP equipment for use in surface production projects in line with reports of major increases in new projects being sanctioned for development in 2019

o Actively engaged in tendering processes for large-scale projects

-- Bank facilities available to the Group with the Bank of Scotland comprise of a reducing five year GBP1.5m term loan (with a current minimal balance of GBP0.2m) which was put in place in September 2014 to part fund the purchase of a building in Aberdeen and which runs to September 2019

Chief Executive Ben van Bilderbeek said:

"Looking back 12 months, the publication of the 2018 half year report closely followed the sale of our Jack-up exploration wellhead business to TechnipFMC ('FMCT') and so provided us with a timely opportunity to detail our strategy going forward: 'focus is no longer centred on the day to day running of the Jack-up Business. The sale and Collaboration Agreement with FMCT therefore not only provide us with cash resources and an industry major as a partner, but also creates capacity to develop and monetise other products based on our ground-breaking technology which, through the Jack-up Business, has been selected above conventional equipment many times over out in the field.' In line with this, the half year period under review saw our focus pivot towards expanding the footprint of our proprietary POS-GRIP technology, and, as the jump in our year on year H1 revenues to GBP1.3m from H1 2018's GBP40k level demonstrates, progress is being made.

"We set ourselves three initial priorities to help achieve our overall objective: support our local partner's efforts to win a first order for POS-GRIP enabled equipment in the major Russian market; secure orders for markets outside Jack-up exploration where we already have fully developed products, such as production, abandonment and subsea; and work on developing new POS-GRIP applications for deployment in fast-growing sub-sectors, such as geothermal and renewables. Progress has been made on all three fronts, providing us with an excellent foundation with which to build on our reputation as a supplier of critical equipment that delivers a quantum leap in terms of setting higher performance and safety standards, particularly in terms of gas proof seal performance.

"In Russia and the CIS, there was an outstanding development during the six months under review, and importantly a further one post period end. In September 2018, our Russian partner, Gusar, secured an initial agreement to supply supermajor Gazprom with two sets of Plexus' Tersus - TRT Mudline Suspension System ('MLS') for the construction of shallow water exploration gas wells on the Kara Sea Shelf in 2019. Then post period end, earlier this month Gazprom placed a first major breakthrough contract with Gusar for POS-GRIP rental exploration equipment for use in the same location. The order covers the first year of a five year Jack-up gas exploration drilling programme and I am hopeful there will be more orders to come. Taken together, these two contracts bode well for Gusar and ourselves and we look forward to working with Gazprom in Russia, a top three producing nation, and the holder of the world's largest gas reserves.

"It is against this backdrop of supporting Gusar's efforts to secure a first order that our February post period end buyback of 4,950,495 Ordinary Shares in Plexus beneficially held by Gusar should be seen. The buyback accelerated the completion of the sale and shipment to Russia of the two sets of wellhead equipment that Gusar had ordered from Plexus in H1 2018 for circa GBP1.4m to Russia which, in turn, enables Gusar to act swiftly to fulfil the Gazprom rental wellhead exploration order. Looking to the future, as our technology is proven to be superior to conventional solutions in terms of seal performance, reliability and safety, especially in high pressure / high temperature environments ('HP/HT') associated with gas, I am quietly confident that once Gazprom experiences first-hand the benefits of our equipment they will not look back to conventional designs, and that this new opportunity will lead to further activity within the CIS in the coming years.

"In terms of markets outside Jack-up exploration, Plexus has POS-GRIP applications for production, subsea and abandonment operations; all are ready for commercial roll-out. These include "HG"(TM) Wellheads, which combine POS-GRIP Technology with gas tight metal sealing; the Python Subsea Wellhead; the POS-SET(TM) Connector for the decommissioning and abandonment market; and Tersus-PCT, an innovative HP/HT Tie-Back connector product. Our growing family of POS-GRIP products is integral to our post-FMCT sale strategy and so it is highly encouraging that, during the half year period, we were awarded a contract from Oceaneering for our POS-SET Connector for a well abandonment operation. This follows an order from Spirit Energy to supply a production wellhead in the North Sea in the Company's last financial year, and which is being installed currently. We are working hard to build on this, and we are actively engaged in pursuing further order opportunities for all our products, particularly for the large and lucrative surface production market which, according to Rystad, is set for a surge in investment in 2019. The consultancy estimates non-shale projects representing over 45 billion barrels of oil equivalent ('boepd') could be sanctioned this year, a near three-fold increase on the 17.5 billion boepd in 2018.

"As well as our target markets in the hydrocarbon space, we are also interested in pursuing opportunities outside the energy industry, including alternative energy sources such as geothermal. To progress these, ongoing R&D is important as is the need for Plexus to have access, when required, to machining capability to design and develop new POS-GRIP enabled applications. With this in mind, during the period we acquired a 49% interest in KMS, a precision engineering business with a blue-chip customer base. While KMS is an attractive investment in its own right, it also has the potential to provide us with access to machining capability in support of new equipment design initiatives.

"Our goal has always been to establish our patent-protected, friction-grip method of engineering as an enabling technology for the wider energy industry. For a junior supplier such as Plexus to have become the dominant player in the North Sea for Jack-up exploration drilling wellheads, despite having to compete against top tier multinationals with substantial resources at their disposal, is testament to the strength of our technology. For one of these top tier players, TechnipFMC, to then acquire our Jack-up Business and sign a Collaboration Agreement with us, represents industry endorsement of the strength of our technology. Together with a recovery in oil prices to an average of US$74 per barrel in 2018, compared to 2017's US$54, a structural shift among majors and the wider economy towards cleaner natural gas, and the growing calls for operators to use gas-proof equipment throughout the supply chain to prevent harmful methane leaks, we believe the outlook for Plexus is very positive. It has been a long time since favourable cyclical and structural drivers have coincided with significant developments at the corporate level. We now have industry partners, a cash rich balance sheet, and we are being invited to tender for large surface production projects. This is an exciting period for Plexus, and I look forward to providing further updates as we focus on capitalising on POS-GRIP's potential to be a game-changer in terms of delivering a step-change in performance and wellhead safety standards.

"Finally, I am pleased to acknowledge our recent declaration of a GBP1.0m interim dividend payable in April 2019, as well as the initiation of a court approval reduction of capital process by way of a cancellation of our share premium account in order to generate additional distributable reserves. The principal benefit of a reduction in capital is to increase the Company's future flexibility, subject to the financial position and prospects of the Company, to pay dividends, to facilitate any prospective buyback of shares (including by way of tender offer) or to provide flexibility for any other general corporate purposes. These initiatives are a sign of our growing confidence in the future."

For further information please visit 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 

Chairman's Statement

Business progress

Historically, the vast majority of Plexus' revenues have been generated by the Jack-up exploration wellhead rental business which we sold to TechnipFMC in February 2018. Over the years, the Jack-up Business supplied blue chip operators such as Royal Dutch Shell, Equinor, BP, and Total with our proprietary POS-GRIP wellhead technology for hundreds of wells drilled all over the world, and in the process enabled Plexus to grow the business, fund further R&D to increase its suite of POS-GRIP products and when appropriate distribute dividends to shareholders. The sale of the Jack-up Business was therefore always going to necessitate a reset in terms of the Company's revenue streams, as highlighted in last year's Interim Statement which reported sales revenue generated from continuing operations amounted to GBP40k. A year on from the sale, H1 2018 revenues of GBP1,313k demonstrate the significant progress that is being made to build up the Company's revenue profile once again from what was effectively a standing start, notwithstanding that the Company's IP has never been more relevant. Crucially, we are not merely focused on regaining previous levels of turnover, we are also working hard to ensure our revenues going forward are more diversified and derive from significantly larger market sectors.

At the time of last year's half yearly report, we set out how we intend to grow our revenues both over the short and long-term. In the short term, our focus is centred on securing sales for our equipment in lucrative markets outside Jack-up rental wellhead exploration where we already have products ready for commercial roll-out, such as production, abandonment and subsea, as well as supporting our Russian licencee partner's efforts to win orders in the huge Russian market which, post period end in March 2019, has resulted in a major breakthrough after Gazprom awarded Gusar a first gas exploration drilling contract. Over the medium to long-term, resources will continue to be directed towards capitalising on POS-GRIP's proven superior performance over conventional technologies to develop equipment for use in markets both inside and outside the energy industry, specifically where the integrity of metal-to-metal sealing under challenging operating conditions is crucial. In our view, there is no shortage of applications and markets where POS-GRIP technology has the potential to raise performance and safety standards, just as it has been proven to do in Jack-up exploration drilling.

A breakdown of the GBP1.3 million of revenues generated in H1 shows just how far we have come in a short period of time. For the first time since Plexus was admitted to AIM in 2005, essentially all of the Company's revenues were generated from activities outside of Jack-up exploration: over GBP1 million as a result of an order for one of our production wellheads from Spirit Energy we secured in September 2017; while the remainder originated from an order from Oceaneering for equipment for use on abandonment operations. While recognising we have come from a low base, we have made an encouraging start post the TechnipFMC sale, and we believe we are well placed to build on this further and are actively engaged in the pursuit of tenders for operations outside of Jack-up exploration, including surface production projects.

In the meantime, further growth in the top line is already guaranteed in H2 2018. The second half of the year will include the proceeds of the circa GBP1.4 million sale of two of our POS-GRIP wellhead rental systems and associated equipment to Gusar, in addition to a further GBP0.2m of equipment supplied which is currently included in deferred income. This follows our post period end buyback of 4,950,495 Ordinary Shares in Plexus from Gusar, which helped accelerate the mobilisation of this equipment in-country. Gusar is well placed to fulfil any rental wellhead exploration orders in Russia such as the major breakthrough contract just awarded by Gazprom. Such progress has given us the confidence to declare the interim dividend of GBP1.0m, which is payable in April, as well as initiating the proposed cancellation of our share premium account where the resulting reduction of capital will increase the Company's flexibility to pay dividends and facilitate any prospective buyback of shares (including by way of tender offer) in the future.

As we found in the North Sea, securing initial orders for ground-breaking equipment such as ours does take time but, once achieved, additional contracts follow as operators experience for themselves the superior performance, safety and cost savings associated with our equipment. Prior to the oil price induced downturn in activity in 2015, POS-GRIP had become established as the go-to technology for HP/HT wells with nearly a 100% market share in the North Sea, a significant achievement given Plexus was operating very much on its own. By contrast, in Russia we are working with a well-established local supplier and thanks to our Licensing Agreement, we do not have to shoulder the fixed and operating costs associated with managing a wellhead rental inventory and business. Furthermore, the Licensing Agreement sees Plexus receive an additional 20% royalty on the value of the order secured by Gusar from Gazprom, which also has the potential to accelerate the uptake of our technology in Russia without incurring additional overhead cost.

The second half of the financial year is scheduled to include cash flow from our first-year payment from TechnipFMC as part of the three year earn-out. As per the agreement, Plexus stands to receive a third of rental revenues, and ten percent of equipment sales generated from the Jack-up Business, and FMCT provide us with quarterly progress reports with payments made annually to Plexus. The earn-out is proceeding as anticipated, and we look forward to receiving a first payment before our financial year end.

Following the sale of our rental exploration wellhead business, Plexus is today an IP-led company with a proven design and development capability. Our core IP is our suite of patent-protected POS-GRIP technology, which, as we have shown many times over out in the field, delivers products that raise performance and safety standards while at the same time generating material cost savings. Wherever a metal-to-metal seal is required, particularly for gas applications where leaks are now increasingly recognised as being unacceptable, we believe a POS-GRIP enabled product can replicate these same benefits. Having successfully rolled-out products for production, subsea exploration and abandonment operations, we have the know-how and expertise to develop new applications for markets, such as geothermal and renewable energy. Following the acquisition in December 2018 of a 49% interest in KMS, an independent oil and gas precision engineering business, we not only have an investment that has the potential to provide us with an additional cash income in the form of dividends, but also one that can provide Plexus with machining capability, a key component in new product development.

Operating Review

The half year under review is our first discrete reporting period post the sale of the Jack-up exploration wellhead business to TechnipFMC. Following the sale and in line with our strategy, Plexus has reverted to an IP-led research and development business, enabling resources and focus to be centred on both addressing the much larger surface production and subsea exploration and production markets, together with developing and rolling out new and existing POS-GRIP applications outside Jack-up drilling, both organically and with partners, including FMCT via our Collaboration Agreement, which provides a framework to work together on potential new applications.

Oil prices and their impact on activity within the energy sector remain highly relevant to Plexus' operational activity levels. In 2018, the average oil price was US$74 per barrel, over 30% higher than the US$54 recorded over the course of 2017. A combination of demand and supply side worries, including the impact of slower growth in China and the effects of the ongoing US-China trade dispute on global demand for oil, have seen Brent trade at around the US$65 per barrel level since the turn of the year. Importantly, following a much-needed period of retrenchment during the oil price downturn of 2014 - 2017, specifically in terms of activity and costs, many operators have brought their respective breakeven oil prices to sub US$60 per barrel. Sentiment is recovering, and projects which are profitable at current oil prices are being given the green light to proceed. In a recent article in the FT, Readul Islam, analyst at Rystad, was quoted as saying, "Several years of trimming the fat from project economics, coupled with a sturdier price outlook, has helped to convince operators to sanction long-delayed projects".

These developments are in line with our own experience, which together with a global drive for gas-proof methane leak reducing technologies bodes well for the future. In terms of operational activity, Spirit Energy is currently deploying one of our production wellheads in the UK Southern North Sea following a contract award in September 2017, and Oceaneering has deployed our POS-SET Connector product for a well abandonment operation. Beyond this, the half year period has seen us secure the sale of two wellhead sets to our Russian licensing partner Gusar which will be used to service the first major order placed by Gazprom with Gusar for Plexus rental equipment as well. We are also participating in several tenders for substantial surface production projects. The tender processes are ongoing and while there can be no guarantee that we will be successful, they are indicative of the pickup in activity we are seeing. Regardless of the outcome, it is highly encouraging that Plexus is being invited to participate in such tenders against top tier suppliers. We view this as a mark of how far Plexus has come and how our POS-GRIP-enabled equipment outside Jack-up exploration is being viewed as a serious alternative to the conventional technologies available from our much larger competitors.

Our proprietary POS-GRIP equipment is proven to be superior to competing systems in terms of performance, reliability and safety, whilst at the same time offering considerable time and cost savings, particularly in terms of lower maintenance throughout field life. At the heart of our technology's superiority is its simplicity, and its ability to be tested to the highest standards as a 'system' rather than as a series of individual components, thereby replicating 'real world' field conditions. As we progress our new strategy, I feel that it is warranted to remind our investors and followers about POS-GRIP, a friction-grip method of engineering, which can be applied to a diverse range of tubular connections. It involves applying an external hydraulic force to squeeze housing until it engages a special-design end connection (casing or tubing hanger in wellheads), to generate a gripping force. This initially eliminates assembly tolerances and eventually merges the two members with such force that, for practical purposes, the parts become one. The process is accurately controlled by hydraulic pressure, is calibrated to deliver monitored results and occurs within the elastic limits of material, so that the connection is reversible.

POS-GRIP's simple design has significantly raised wellhead standards for HP/HT applications, and by default for standard pressure operations, to levels that equal or exceed the standard of premium couplings. By doing so, POS-GRIP enables operators to bypass the shortcomings that can be associated with conventional wellhead technology. For example, the POS-GRIP system does not require penetrations to be energised, allowing alternative annulus pressure management procedures to be deployed in place of conventional outlet connections. Conventional technologies are typically comprised of many more individual components, each of which has the potential to compromise seal integrity. These and other benefits lie behind POS-GRIP being able to deliver a lifetime gas-proof metal seal solution and achieve higher industry test standards, which we believe delivers the only true long-term wellhead metal seal available to the industry.

It is important that I draw attention to the fact that we have been extolling the gas-proof benefits of our technology for many years, but what is giving us considerable encouragement are the growing calls for the energy industry to tackle the major threat to the climate posed by methane leaks. This is a major issue and one that I need to explain the importance of in relation to our metal sealing technology. It is widely known that natural gas when burnt is a far cleaner fossil fuel than coal and oil, and because of this and advances in storage and transportation facilities, natural gas is fast gaining market share in the hydrocarbon fuel mix, none more so than in the US. As reported in the NY Times (, "When burned for electricity, natural gas produces about half the carbon dioxide (CO2) that coal does. The shift from coal to gas has helped lower CO2 emissions from America's power plants by 27 per cent since 2005". According to Shell's latest annual LNG Outlook, "Gas emits between 45% and 55% lower greenhouse gas emissions than coal when used to generate electricity. Coal to gas switching has led to a 78% improvement in Beijing's winter air quality over the last five years. Blue skies are not the only benefit of the measures China has taken to improve air quality in Beijing. There has been a calculated annual reduction of 176 million tonnes of CO2 in Beijing and surrounding areas."

There is however an important caveat to note, which is that natural gas is a powerful greenhouse agent. The same article in the New York Times continues, "methane, the main component of natural gas, can warm the planet more than 80 times as much as the same amount of carbon dioxide over a 20-year period if it escapes into the atmosphere before being burned." Preventing natural gas leaking from oil and gas operations is therefore critical. The industry's track record leaves room for improvement, and major efforts are now being made to address this through organisations such as the OGCI. According to a study published in the journal Science 'Assessment of methane emissions from the U.S. oil and gas supply chain', 2.3% of the total annual production of gas in the US escapes from oil and gas operations, which translates into approximately 13 million metric tonnes of natural gas escaping every year, which is enough to fuel 10 million homes. The Environmental Defence Fund, a group, which works with companies to improve environmental performance, estimates methane accounts for 25% of global warming, and Bob Dudley, CEO of BP, has even described methane as "the Achilles Heel of a natural low carbon fuel." By having a gas-proof sealing design solution at the wellhead, Plexus is well positioned to play its role in meeting such methane reduction goals.

As previously reported, to accommodate the increased interest we are seeing in our technology and to support the number of tenders we are participating in, we took the decision during the period to bring forward certain additional costs from the next financial year to build up our operational capabilities. This increase in overhead impacted on our margins, but we believe that this is a necessary investment for the future. The increased interest levels extended post period end to Russia where our Licensing Agreement with Gusar made a breakthrough with the completion of the sale of two wellhead sets to Gusar for circa GBP1.4m, together with the confirmation of an important contract awarded to Gusar by Gazprom earlier this month. While the supply of the equipment to Gusar had the effect of lowering H1's gross margin due to the need to manufacture some additional equipment items, it importantly accelerates the deployment of POS-GRIP Jack-up exploration wellheads in the major Russian market.

Key functions that support our operations are Human Resources ('HR'), Quality Health and Safety ('QHSE'), Information technology ('IT') and Intellectual Property ('IP').

HR's focus during the period has included a detailed review and subsequent overhaul of the the Competency Management System, ensuring that the Group's employees have the necessary skills, qualifications and experience required to operate efficiently not only now but into the future, following the Group restructure.

QHSE also continues to be an important area not only internally, but also externally with our trading partners. Plexus remains fully committed to delivering the highest safety standards, and we maintain a positive safety culture which is aligned with our Company Safety Values. We are therefore pleased to report that our HSE culture remains strong across the business with no major findings identified during the most recent LRQA certification surveillance audit against OHSAS 18001 standard and ISO 9001. Safety risks continue to be managed through assessment, implementation of controls, continual monitoring, engaging and developing staff to ensure that the required competency levels are met. Plexus continues to reinforce the important message that the health and well-being of our employees is a crucial feature of our QHSE and HR strategies. The restructuring of the business created an opportunity to review and improve the OPITO accredited competency system, allowing the technical standards to be more closely aligned with the strategy of the business going forward. As such a detailed review and subsequent update of the competency systems has now been completed and was subject to the successful LRQA audit noted above.

Robust IT systems, and the delivery of a safe and secure service to customers and Plexus itself is paramount, especially as is widely reported there is no reduction in external threats of hacking and viruses. Ensuring confidentiality, integrity and accessibility of information is essential, and Plexus continually reviews and develops its computer network and security monitoring systems capability. Precautions include penetration testing and network monitoring to ensure our IT systems have not been breached, while our anti-virus software is continually updated to newer version malware protection, and internet filtering is used to keep our data secure. Plexus continues to work towards ISO 27001 accreditation, designed to help ensure that both internal and external risks are minimised. Certification further provides customers and key stakeholders with the confidence that security risks are taken and addressed seriously. Plexus relies on its own in-house developed software systems, and these have the advantage of allowing the Company to develop software solutions that can react quickly to any IT issues that may arise.

Innovative IP is at the core of Plexus, with a focus on oil and gas equipment design and development utilising our proprietary POS-GRIP friction grip method of engineering. POS-GRIP was designed to address limitations associated with conventional technology particularly in terms of metal sealing, and this has led to the raising of safety standards for HP/HT wellhead applications whilst delivering significant operational and cost advantages. The ongoing development of our extensive IP suite, in conjunction with partners where appropriate, continues to be a priority for the Company, and ongoing investment in research and development in a wide range of areas and applications outside of Jack-up rental wellhead exploration including surface production and subsea wellhead equipment, as well as proprietary connector technology, is an important part of this strategy. This diversification is even more relevant following the sale of the Jack-up Business to FMCT where, having now proven the merits of POS-GRIP in the Jack-up exploration niche market, we have the resources and expertise to pursue the larger market sector opportunities.

Ongoing operational activities and necessary R&D and capex continue to be funded from cash reserves. The Group has minimal debt which comprises of a term loan with a current balance of GBP0.2m which runs to September 2019.

Interim Results

The six months to December 2018 results and activities reflect the Group's movement away from the discontinued Jack-up Business towards new areas, including the significantly larger surface production wellhead market, and the use of the POS-SET Connector for abandonment applications. Post period end, important progress has been made in relation to a breakthrough order placed by Gazprom for POS-GRIP wellhead Jack-up exploration equipment with Gusar, and the ongoing installation of the production wellhead for Spirit Energy in the North Sea.

Continuing operations revenue for the six-month period ended 31 December 2018 increased significantly to GBP1,312k, compared to the previous year's figure of GBP40k, and will increase further in the second half following the completion of circa GBP1.4m of rental wellhead equipment to Gusar our Russian licensing partner.

During the period Plexus continued to focus on preserving Group cash by minimising spending and investment on capex, opex and non-essential R&D, without compromising operations. This discipline helped generate the confidence for the board to declare a GBP1m interim dividend earlier this month.

Continuing activities administrative expenses are broadly in line with the prior year with expenditure for the 6 months to December 2018 of GBP2.83m (2017: GBP2.71m). Within this total the continuing salary component remained the largest at GBP1.14m which is a 3.6% increase compared to the prior year first half which totalled GBP1.07m. Personnel numbers for continuing staff are in line with the prior year which have increased by 1 from 36 as at 31 December 2017 to 37 at 31 December 2018, although this will increase in the second half as additional capacity is put in place so as to be able to service a greater level of enquiries.

For continuing operations, the Group has reported a loss of GBP2.3m which is GBP400k lower compared to the prior year loss of GBP2.7m. The loss comes after absorbing similar rental asset and other property, plant and equipment depreciation and amortisation costs of circa GBP0.8m a reduction of GBP0.1m when compared to the prior year.

Following the sale of the discontinued Jack-up Business, the Group has been wholly focussed on its continuing business. For discontinued operations for the six months to December 2018, sales revenue was GBPnil, compared to GBP2.4m the prior year. Administrative expenditure for discontinued operations was GBPnil (2017: GBP3.4m). The Group made a loss of GBPnil compared to a loss of GBP1m in the prior year.

The Group has not provided for a charge to UK Corporation tax at the prevailing rate of 19%. Basic loss per share for continuing operations was 2.22p per share which compares to a 2.60p loss per share for the same period last year. For discontinued operations the loss per share was nil per share which compares to a 0.96p loss per share for the same period last year.

The balance sheet continues to remain strong, and the current level of intangible and tangible property, plant and equipment asset values at GBP11.1m and GBP13.3m respectively illustrate the amount of cumulative investment that has been made in the business. Total asset values at the end of the period stood at GBP41.1m. The non-essential R&D spend is in line with the prior year at GBP0.1m. Such control on investment activity will not compromise our IP and its ongoing development, or our ability to provide customers with a high standard of equipment and service.

The Group's cash position remains strong. The Group closed the period with net cash of approximately GBP9.5m and in addition has financial assets with a value of GBP2.8m at 31 December 2018.

The Group has minimal debt, which comprises of a term loan with a current balance of GBP0.2m which runs to September 2019.


The strategic progress that we have made during the period and post period end I believe is highly encouraging for the future, particularly in respect of the technical and operational advantages of POS-GRIP technology gaining further traction. Of particular note was the first Gazprom order with our licencee Gusar which we have been working on securing for some time. Russia represents a key market for Plexus as our friction grip technology and HG metal sealing have been proven to be ideally suited to Jack-up gas drilling applications, especially for high pressure, high temperature. However, it is often the case that new and superior technology needs a boost from macro developments outside of its own control, and fortunately Plexus is seeing such a trend with the accelerating transition from coal and oil to natural gas. It is important therefore to properly analyse these developments, and I make no apologies for doing so.

If the ambitious targets for electric vehicle ('EV') uptake and the predictions of rapid growth in the energy storage market are anything to go by, the energy transition we have referred to in previous reports is gaining momentum as, in the words of Bob Dudley, CEO of BP, "the world seeks to move to a pathway consistent with meeting the climate goals outlined in the Paris Agreement." Volvo has pledged to electrify all new models in 2019; Volkswagen is aiming for EVs to account for 25% of sales by 2025; Denmark intends to ban the sale of new petrol and diesel cars by 2030 and hybrids in 2035; while France and the UK want all new vehicles sold to produce zero emissions by 2040. Meanwhile, according to Bloomberg New Energy Finance's report in November 2018, the global energy storage market is expected to grow to 942GW/2,857GWh by 2040, attracting US$620 billion in investment in the process. Such major industry developments underline the need and desire during this energy transition for hydrocarbons to be as clean as possible.

In an article for Energy Voice, Louise Kingham, CEO of the Energy Institute, wrote, "The IEA reports that the proportion of the world's energy sourced from fossil fuels is still around 80% - the same as it was more than three decades ago - and that's 80% of 2.5 times the amount of energy!" And that is before future growth in the world economy is factored in. According to BP's recent 2019 Energy Outlook: "In all the scenarios considered, world GDP more than doubles by 2040 driven by increasing prosperity in fast-growing developing economies. In the Evolving Transition ('ET') scenario this improvement in living standards causes energy demand to increase by around a third over the Outlook, driven by India, China and Other Asia which together account for two-thirds of the increase." In an interview with the FT in March 2018, Chris Midgley from S&P Global Platts adds, "S&P Global Platts Analytics' projections are that oil production will have to increase from about 100m b/d today to just under 125m b/d in 2040 under the 'most likely' reference case to meet rising demand from transport. Even with aggressive penetration of EVs, it will take until late in the next decade before an inflection in oil demand is observed, with most demand destruction in the next 10 years coming from fuel efficiency rather than EV displacement." It is clear therefore that hydrocarbons will need to play a key role in meeting the world's energy needs for many years to come.

As Mr Midgley alludes to above, the energy industry faces a dilemma. In his introduction to this year's Energy Outlook, BP's Bob Dudley provides a neat summary: "The outlook facing major energy providers, like BP, is both challenging and exciting. One of the biggest challenges of our time is a dual one: the need to meet rising energy demand while at the same time reducing carbon emissions." This we believe is where our gas-proof sealing technology has an increasingly important role to play.

Big Oil has a readymade solution at its disposal: natural gas. In terms of harmful CO2 emissions, natural gas is by far the cleanest fossil fuel. The IEA has estimated natural gas emits 117 pounds of CO2 per million British thermal units ('Btu') of energy. The equivalent number for coal is 228.6 pounds of CO2; diesel fuel and heating oil 161.3 pounds of CO2; and gasoline 157.2 pounds of CO2. Natural gas' clean credentials have seen its share of the hydrocarbon mix grow and inform predictions for further growth in the decades ahead. BP's Energy Outlook forecasts, "In the ET scenario, natural gas grows at an average rate of 1.7% p.a. - increasing nearly 50% by 2040 - the only source of energy, along with renewables, whose share in primary energy increases over the Outlook."

In its latest annual LNG Outlook, Shell forecasts demand for LNG will reach c. 384 million tonnes in 2020, a 20% increase on 2018's 319 million tonnes. To meet this demand, new sources of LNG will be needed with Shell expecting 35 million tonnes of additional LNG supplies to come online in 2019. Maarten Wetselaar, Shell's Integrated Gas and New Energies Director, said, "We saw Asian LNG demand growth exceed expectations again in 2018 and we expect this strong growth to continue. Investment in new supply projects is picking up, but more will be needed soon." Mr Wetselaar continues, "The continued surge in Chinese LNG imports has helped improve air quality in some of its biggest cities over the last few years. China's success in making the air cleaner for millions of people shows the critical role that natural gas can play in providing more and cleaner energy to the world".

The key challenge, however, is for the damage caused by methane leaks to be comprehensively and effectively dealt with. In an article for Energy Voice, Louise Kingham explained that more than "80% of international oil and gas professionals surveyed by the IEA last year were unaware of the extent of the possibilities to tackle the problem." Our focus at Plexus therefore is on ensuring that the 80% of oil and gas professionals who are not aware of "the possibilities to tackle the problem" are aware of POS-GRIP as the 'gas-proof' solution that prevents methane leaks at the wellhead end of the supply chain, (which is one of the OGCI's areas of focus). This is what we are doing, and we are highly encouraged by the level of engagement we are experiencing. The heightened level of interest in our metal-to-metal sealing surface production technology is not just down to our equipment having been successfully deployed on hundreds of oil and gas exploration well applications, including ultra-high pressure and temperature projects to 20,000 psi at 375 F, but also due to operators' increasing focus on the need to tackle methane leaks.

The step-up in the scale of the projects we are tendering for lay behind our decision to bring forward certain investment costs in the half year period from the next financial year. Although this impacts on margins in the shorter term, this will enable us to service the higher than expected number of opportunities we are pitching for. The increased investment will, in our view, prove to be money well spent and we look forward to providing further updates on our progress in due course. Following the sale of our niche Jack-up exploration business, Plexus is undergoing its own transition, just like the energy industry we supply. Plexus' transition into an IP-led oil and gas services engineering company is advancing well, and we are confident we remain on course to establish POS-GRIP as a superior enabling gas-proof technology for the broader energy sector, and in the process generate substantial value for our shareholders.

J Jeffrey Thrall

Non-Executive Chairman

27 March 2019

Plexus Holdings Plc 
Unaudited Interim Consolidated Statement of Comprehensive 
For the Six Months Ended 31 December 2018 
                                          Six months       Six months      Year to 
                                         to 31 December   to 31 December   30 June 
                                              2018             2017          2018 
                                           GBP 000's        GBP 000's     GBP 000's 
Revenue                                           1,312               40        318 
Cost of sales                                     (828)             (88)      (290) 
                                        ---------------  ---------------  --------- 
Gross profit                                        484             (48)         28 
Administrative expenses                         (2,833)          (2,705)    (5,313) 
                                        ---------------  ---------------  --------- 
Operating loss                                  (2,349)          (2,753)    (5,285) 
Finance income                                      100               19         73 
Finance costs                                      (88)              (9)       (37) 
Loss before taxation                            (2,337)          (2,743)    (5,249) 
Income tax expense (note 6)                           -                -        555 
Loss after taxation from continuing 
 operations                                     (2,337)          (2,743)    (4,694) 
(Loss) / Profit after taxation 
 from discontinued operations                         -          (1,008)      4,322 
                                        ---------------  ---------------  --------- 
Loss for Year                                   (2,337)          (3,751)      (372) 
Other comprehensive income                            -                -          - 
Total comprehensive income                      (2,337)          (3,751)      (372) 
                                        ===============  ===============  ========= 
(Loss)/earning per share (note 
Basic from continuing operations                (2.22p)          (2.60p)    (4.45p) 
Diluted from continuing operations              (2.22p)          (2.60p)    (4.45p) 
Basic from discontinued operations                    -          (0.96p)      4.10p 
Diluted from discontinued operations                  -          (0.96p)      4.08p 
Plexus Holdings Plc 
Unaudited Interim Consolidated Statement of Financial Position 
As at 31 December 2018 
                                  31 December   31 December   30 June 
                                      2018          2017        2018 
                                   GBP 000's     GBP 000's   GBP 000's 
Goodwill                                   767          767        767 
Intangible assets                       11,129       13,257     11,469 
Property, plant and equipment 
 (note 9)                                3,673        4,203      4,004 
Non-current Financial Asset              2,849            -      2,124 
Deferred tax asset                         984          287        984 
Other Receivables                        6,337            -      6,337 
Investment in associate (note 
 10)                                       785            -          - 
Total non-current assets                26,524       18,514     25,685 
                                  ------------  -----------  --------- 
Asset held for sale (note 11)                -       13,134          - 
Inventories                              1,350        1,251      1,871 
Trade and other receivables              3,187          705      4,888 
Cash and cash equivalents                9,765        5,828     13,296 
Current income tax asset                   371          420        414 
Total current assets                    14,673       21,338     20,469 
                                  ------------  -----------  --------- 
TOTAL ASSETS                            41,197       39,852     46,154 
                                  ============  ===========  ========= 
Called up share capital (note 
 13)                                     1,054        1,054      1,054 
Share premium account                   36,893       36,893     36,893 
Share based payments reserve               674          767        674 
Retained earnings                         (42)      (1,176)      2,295 
Total equity attributable to 
 equity holders 
                                  ------------  -----------  --------- 
of the parent                           38,579       37,538     40,916 
                                  ------------  -----------  --------- 
Bank loans                                   -          225         75 
Other non-current liabilities              493            -        493 
Total non-current liabilities              493          225        568 
                                  ------------  -----------  --------- 
Bank loans                                 225          300        300 
Trade and other payables                 1,900        1,789      4,370 
Total current liabilities                2,125        2,089      4,670 
                                  ------------  -----------  --------- 
Total liabilities                        2,618        2,314      5,238 
                                  ------------  -----------  --------- 
TOTAL EQUITY AND LIABILITIES            41,197       39,852     46,154 
                                  ============  ===========  ========= 
  Plexus Holdings Plc 
Unaudited Interim Statement of Changes in Equity 
For the six months ended 31 December 2018 
                                 Called      Share  Share Based 
                               Up Share    Premium     Payments   Retained 
                                Capital    Account      Reserve   Earnings      Total 
                              GBP 000's  GBP 000's    GBP 000's  GBP 000's  GBP 000's 
Balance as at 1 July 2017         1,054     36,893          767      2,575     41,289 
Total comprehensive income 
 for the period                       -          -            -      (372)      (372) 
Net deferred tax movement 
 on share options                     -          -          (1)          -        (1) 
Reallocation following 
 lapse/expiry/forfeit of 
 share options                        -          -         (92)         92          - 
Balance as at 30 June 2018        1,054     36,893          674      2,295     40,916 
                              =========  =========  ===========  =========  ========= 
Total comprehensive income 
 for the period                       -          -            -    (2,337)    (2,337) 
Balance as at 31 December 
 2018                             1,054     36,893          674       (42)     38,579 
                              =========  =========  ===========  =========  ========= 
Plexus Holdings Plc 
Unaudited Interim Statement of Cash Flows 
For the six months ended 31 December 2018 
                                                Six months       Six months    Year to 
                                            to 31 December   to 31 December    30 June 
                                                      2018             2017       2018 
                                                 GBP 000's        GBP 000's  GBP 000's 
Cash flows from operating activities 
Loss before taxation from continuing 
 activities                                        (2,337)          (2.743)    (5,249) 
(Loss)/profit before taxation 
 from discontinued activities                            -          (1,008)      4,232 
                                           ---------------  ---------------  --------- 
Loss before tax                                    (2,337)          (3,751)    (1,017) 
Adjustments for: 
  Depreciation, amortisation and 
   impairment charges                                  833            1,982      3,030 
  Gain on sale of discontinued 
   operation                                             -                -    (5,825) 
  Fair value adjustment of on financial 
   assets                                               72                -         21 
  Profit loss on disposal of property, 
   plant and equipment                                   -                -       (87) 
  Investment income                                  (100)             (19)       (73) 
  Interest expense                                      88                9         37 
Changes in working capital: 
  Decrease/(Increase) in inventories                   521            (305)    (1,860) 
  Decrease/(Increase) in trade 
   and other receivables                             1,701            (429)    (1,377) 
  (Decrease)/Increase in trade 
   and other payables                              (2,470)              658      2,667 
Cash generated from operations                     (1,692)          (1,855)    (4,484) 
Net income taxes received                               43              546     500 
Net cash used in operating activities              (1,649)          (1,309)    (3,984) 
                                           ---------------  ---------------  --------- 
Cash flows from investing activities 
 Investment in associate                             (785)                -          - 
Funds invested in financial instruments              (797)                -    (2,145) 
Net initial proceeds from sale 
 of discontinued operation                               -                -     14,050 
Associated cost on sale of discontinued 
 operation                                               -                -    (1,585) 
Purchase of intangible assets                        (110)            (100)      (231) 
Interest received                                      100               19         73 
Purchase of property, plant and 
 equipment                                            (52)            (197)      (447) 
Net proceeds from sale of asset 
 held for sale                                           -                -        395 
Net proceeds of sale of property, 
 plant and equipment                                     -              396        329 
Net cash (used in)/generated 
 from investing activities                         (1,644)              118     10,439 
                                           ---------------  ---------------  --------- 
Cash flows from financing activities 
Repayment of loans                                   (150)            (150)      (300) 
Interest paid                                         (88)              (9)       (37) 
Net cash generated from financing 
 activities                                          (238)            (159)      (337) 
                                           ---------------  ---------------  --------- 
Net (decrease)/increase in cash 
 and cash equivalents                              (3,531)          (1,350)      6,118 
Cash and cash equivalents at 
 brought forward                                    13,296            7,178      7,178 
Cash and cash equivalents carried 
 forward                                             9,765            5,828     13,296 
                                           ===============  ===============  ========= 

Notes to the Interim Report December 2018

1. This interim financial information does not constitute statutory accounts as defined in section 435 of the Companies Act 2006 and is unaudited.

This unaudited interim report has been prepared based on the accounting policies set out in the annual report for the year ended 30 June 2018 and which are also expected to apply for 30 June 2019.

The comparative figures for the financial year ended 30 June 2018 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.

The accounting policies are based on current International Financial Reporting Standards ("IFRS"), International Financial Reporting Interpretation Committee ("IFRIC") interpretations and current International Accounting Standards Board ("IASB") exposure drafts that are expected to be issued as final standards and adopted by the EU such that they are effective for the year ending 30 June 2019. These standards are subject to on-going review and endorsement by the EU and further IFRIC interpretations and may therefore be subject to change.

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 2018.

The changes in accounting policy set out below will also be reflected in the Group's consolidated financial statements for the year ended 30 June 2019.

IFRS 15 Revenue from contracts with Customers

The Group has adopted IFRS 15 Revenue from Contracts with Customers from 1 July 2018 using the cumulative effect transition method. Under the cumulative effect method, the impact of initially applying the standard will be reflected as an adjustment to the opening balance of retained earnings as of 1 July 2018 and the comparative period will not be restated. The new standard requires revenue to be recognised using a five-step model which requires the transaction price for each contract to be apportioned to separate performance obligations arising under the contract either when the performance obligation in the contract has been performed (point in time recognition) or over time as control of the performance obligation is transferred to the customer. The five-step model is as follows

1) Identify the contract(s) with a customer

2) Identify the performance obligations in the contract

3) Determine the transaction price

4) Allocate the transaction price to the performance obligations in the contract

5) Recognise revenue when or as the entity satisfies its performance obligations

The Group has completed its assessment of IFRS 15 and has not identified any material differences between the requirements of IFRS 15 and the previous revenue recognition policy. Accordingly, no financial restatement has been made.

IFRS 9 Financial Instruments

The Group has adopted IFRS 9 Financial Instruments from 1 July 2018, replacing IAS 39 Financial Instrument: Recognition and Measurement.

IFRS 9 replaces the existing credit loss model with a forward looking expected credit loss model for assessing the impairment of financial assets. Adopting this new model has not had a material impact and accordingly no financial restatement has been made. The new standard has not had a significant effect on the Group's accounting policy.

IFRS 9 largely retains the existing requirements in IAS 39 for the classification and measurement of financial liabilities and has not had a significant effect on the Group's accounting policy.

3. This interim report was approved by the board of directors on 27 March 2019.

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 2018 (2017: nil). As a result there is no effective rate of tax for the six months ended 31 December 2018 (2017: 0%) after adjustments made to reflect R&D tax credits received relating to the current and prior years and offsets for disallowable expenditure.

7. Basic earnings per share are based on the weighted average of ordinary shares in issue during the half-year of 105,386,239 (2017: 105,386,239). On February 2019, Plexus Holdings PLC ("the Company") completed the acquisition of 4,950,495 Ordinary Shares held by LLC Gusar. The Buyback Shares have been transferred to the CREST account of the Company and will be held in treasury and will not rank for any future dividends and no voting rights will be exercised in respect of such Ordinary Shares. Following the transaction, the Company's issued share capital comprises 105,386,239 Ordinary Shares, of which 4,950,495 Ordinary Shares are held in treasury. The Company now has a total of 100,435,744 Ordinary Shares in issue with voting rights. The calculation of EPS has not been adjusted for this transasction.

8. The Group derives revenue from the sale of its POS-GRIP friction-grip technology and associated products, the rental of wellheads utilising the POS-GRIP friction-grip technology and service income principally derived in assisting with the commissioning and on-going service requirements of its equipment. 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. Property, plant and equipment

                                               Tenant                          under 
                                        Improve-ments                  Constru-ction        Motor 
                          Buildings           GBP'000     Equipment          GBP'000     Vehicles       Total 
                            GBP'000                         GBP'000                       GBP'000     GBP'000 
 As at 1 July 2017            3,924               706        28,832               22           32      33,516 
 Additions                        -                10           198              222           17         447 
 Transfers                        -                 -           229            (229)            -           - 
 Disposals                    (317)                 -      (23,750)              (5)         (32)    (24,104) 
 As at 30 June 2018           3,607               716         5,509               10           17       9,859 
 Additions                        -                 -             5               47            -          52 
 Transfers                        -                 -            57             (57)            -           - 
 Disposals                        -                 -           (1)                -            -         (1) 
 As at 31 December 
  2018                        3,607               716         5,570                -           17       9,910 
 As at 1 July 2017            1,007               296        20,210                -           27      21,540 
 Charge for the 
  year                          225                85         1,733                -            3       2,046 
 On disposals                  (74)                 -      (17,628)                -         (29)    (17,731) 
 As at 30 June 2018           1,158               381         4,315                -            1       5,855 
 Charge for the 
  year                          106                43           232                -            2         383 
 On disposals                     -                 -           (1)                -            -         (1) 
 As at 31 December 
  2018                        1,264               424         4,546                -            3       6,237 
 Net book value 
  As at 31 December 
  2018                        2,343               292         1,024                -           14       3,673 
 As at 30 June 2018           2,449               335         1,194               10           16       4,004 
 As at 30 June 2017           2,917               410         8,622               22            5      11,976 

10. Investments

On 17(th) December 2018 the Group made an investment of GBP785k, (including associated legal costs) to acquire a 49% interest in KMS, an independent precision engineering business focused on the oil and gas. 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.

   11.    Assets held for sale 
                                       31 December 2018   Six months to 31 December 2017    Year to 
                                                                                            30 June 
                                                GBP'000                          GBP'000    GBP'000 
 Buildings                                            -                                -          - 
 Equipment                                            -                            6,489          - 
 Assets under construction                            -                               16          - 
 Motor vehicles                                       -                                4          - 
 Inventories                                          -                            5,894          - 
 Trade debtors and other receivables                  -                              732          - 
 Trade creditors                                      -                              (1)          - 
 Fair value adjustment                                -                                -          - 
 Cost of sale                                         -                                -          - 
                                                      -                           13,134          - 
                                      =================  ===============================  ========= 

The assets held for sale in the prior financial period relates to the sale of a discontinued operation. On 19 October 2017 Plexus Holdings PLC announced the sale of its wellhead exploration equipment and services business for Jack-up applications (the "Jack-up Business") to FMC Technologies Limited ("FMCT"), a subsidiary of TechnipFMC (Paris:FTI) (NYSE:FTI) one of the leading oil & gas service and equipment companies (the "Disposal"). The sale completed on 1 February 2018.

In addition, and as part of the Transaction, the company and FMCT entered into a Collaboration Agreement ("CA") which establishes a framework to work together both on the development of existing POS-GRIP IP for applications outside of Jack-up exploration, as well as future new technologies.

The Disposal follows the signing of a conditional Business Purchase Agreement ("BPA") by Plexus, POSL and FMCT. Under the terms of the BPA, the Plexus Group received an initial gross cash consideration of GBP15,000,000, subject to certain adjustments which led to a net receipt on 1(st) February 2018 of GBP14,050,497 with an additional sum of up to GBP27,500,000 payable dependent on the future performance of the Jack-up Business during a three-year earn-out period. The earn-out has the potential to increase the total cash gross consideration to GBP42,500,000.

Under IFRS5 those assets which were identified as transferring to FMCT on 1(st) February 2018 were included in the table above at fair value less cost of sale.

12. Discontinued operations

                                            Six months to 31 December 2018   Six months to 31 December 2017    Year to 
                                                                                                               30 June 
                                                                   GBP'000                          GBP'000    GBP'000 
 Revenue                                                                 -                            2,411      3,907 
 Expenses                                                                -                          (3,419)    (5,500) 
                                          --------------------------------  -------------------------------  --------- 
 (Loss)/Profit before tax of 
  discontinued operations                                                -                          (1,008)    (1,593) 
 Income tax credit                                                       -                                -         90 
                                          --------------------------------  -------------------------------  --------- 
 (Loss)/Profit after tax of discontinued 
  operations                                                             -                          (1,008)    (1,503) 
                                          ================================  ===============================  ========= 
   13.          Share Capital 
                                            Six months to 31 December 2018   Six months to 31 December 2017    Year to 
                                                                                                               30 June 
                                                                   GBP'000                          GBP'000    GBP'000 
 Equity: 110,000,000 (2017: 110,000,000) 
  Ordinary shares of 1p each                                         1,100                            1,100      1,100 
 Allotted, called up and fully paid: 
 Equity: 105,386,239 (Dec 2017: 
  105,386,239, June 18: 105,386,239) 
  Ordinary shares of 1p each                                         1,054                            1,054      1,054 

This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact or visit



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