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| Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
|---|---|---|---|---|---|
| Plexus Holdings Plc | LSE:POS | London | Ordinary Share | GB00B0MDF233 | ORD 1P |
| Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|---|---|
| 0.00 | 0.00% | 12.75 | 12.00 | 13.50 | 12.75 | 12.75 | 12.75 | 0.00 | 07:42:09 |
| Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
|---|---|---|---|---|---|
| Oil & Gas Field Machy, Equip | 1.49M | -4.02M | -0.0381 | -3.35 | 13.44M |
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Plexus Holdings Plc
31 March 2008
FOR IMMEDIATE RELEASE 31st March 2008
Plexus Holdings plc ('Plexus' or 'the Group')
Interim Results for the six months ended 31st December 2007
Plexus Holdings plc ("Plexus" or "the Group") 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 2007.
Highlights
* 50% increase in turnover to £6.7m (2006: £4.4m)
* 261% increase in EBITDA to £2.1m (2006: £0.589m). EBITDA is stated
before the effects of charges for share based payments.
* 640% increase in profit before tax to £1.3m (2006: £0.17m)
* Successful installation of the first 20,000 psi extreme high pressure
high temperature rental wellheads for BG International Ltd
* Wellhead rental wins with GDF Britain Ltd, Wintershall Noordzee B.V.,
and StatoilHydro ASA
* First subsea contract win for the supply of a subsea cross-over wellhead
system for AGR Petroleum on behalf of Silverstone Energy Ltd
* Ongoing capital investment in expansion of rental inventory and in
particular high pressure/high temperature wellheads
* 292% increase in rental turnover of high pressure/high temperature and
extreme high pressure/high temperature wellhead equipment
* 28% increase in personnel to 68 (2006: 53)
Plexus' CEO, Ben van Bilderbeek, commented:
"These results reflect the strength of our business model and the benefits of
our capital expenditure programme as additional rental exploration wellhead
systems continue to be added to our growing equipment inventory. Furthermore the
growing exploration rental wellhead market continues to provide substantial
upside for our company, and independent research shows that there are 52 new
Jack-up rigs scheduled for delivery within the next four years. As these new rig
units are designed to be able to drill deeper and higher pressure wells, they
are generally equipped with well control equipment for which our proprietary
POS-GRIP technology is ideally suited.
In addition to our rental activities Plexus continues to make substantial
progress in developing alternative applications for POS-GRIP technology, such as
the recently built and tested subsea cross-over wellhead system for Silverstone
Energy Ltd. This ongoing investment in the future expansion of new markets is
essentially funded by the rental business activities, partially obscuring its
underlying value. However every day our engineers learn more about the
application and operation of our proprietary technology and how it can be
applied across a broad equipment spectrum generating additional commercial
opportunities for us, and I would like to extend my congratulations to our
employees, who during this busy period successfully tested and delivered the
world's first 20,000 psi, through the BOP, wellhead systems, which is currently
being used by BG International Ltd in the North Sea."
For further information please visit www.posgrip.com or contact:
Plexus Holdings plc
Bernard van Bilderbeek, Chief Executive Tel: +44 (0)20 7589 8555
Graham Stevens, Finance Director
St Brides Media & Finance
Felicity Edwards Tel: +44 (0)20 7236 1177
Isabel Crossley
Brewin Dolphin (Nominated Advisor and Broker)
Elizabeth Kennedy, Director Corporate Broking Tel: +44 (0)141 221 7733
Ken Fleming, Director Corporate Finance
Chairman's Statement
Introduction
I am pleased to report that the Group has continued to make strong progress
during the first half of the year delivering a 50% increase in turnover and a
261% increase in EBITDA against the same period last year. This increase in
sales and profitability has been generated from a broader base of operations
which in addition to our traditional market in the North Sea, included
activities in the Caspian Sea, Egypt, Brunei, and Trinidad. It is also important
to note that as a company built around the exploitation and commercialisation of
POS-GRIP(R) technology, our strategy is to extend over time the range of
applications we offer beyond wellheads. In line with this we won our first
subsea contract for the supply of a subsea cross-over wellhead system.
Interim Results
This is the first time that Plexus has reported under International Financial
Reporting Standards ("IFRS"). The Interim Report is therefore longer as it
contains a number of reconciliations between UK GAAP and IFRS. The accounts for
prior periods have been restated under IFRS and whilst audited under UK GAAP
have not been audited under IFRS. The adjustments between UK GAAP and IFRS are
detailed at note 7 and are not considered material.
Turnover for the six month period was £6.7m, up 50% from £4.4m the previous
year. The wellhead rental business and supply of related equipment and services
account for the majority of Plexus' business activities. It is important to note
that our market share of the high pressure/high temperature ("HP/HT") and
extreme high pressure/high temperature ("X-HP/HT") applications continues to
grow, with sales up 292% for the six months to December 2007 versus the same
period to December 2006.
Gross margins have increased to 55.9% in the first half of the year from 43.3%
in the comparative period last year as a result of the lower margin BP Shah
Deniz business activities moving nearer to the end of their project cycle. At
the same time the average higher contract value and consequently higher gross
margins associated with the HP/HT contracts have provided a further boost to
gross margin levels.
Administration expenses have continued to increase year on year and totalled
£2.38m for the period up from £1.88m last year. This 26.4% increase reflects the
ongoing investment in and expansion of our personnel and infrastructure so as to
be able to meet the demands of our growing sales and their added diversity both
in terms of product mix and geographical spread.
The profit before tax of £1.29m compares to a profit before tax for the same
period last year of £0.17m, with depreciation and amortisation increasing to
£0.69m in the period against £0.40m for the same period last year. This increase
of 73% primarily reflects the ongoing growth in Plexus' rental asset inventory.
The profit before tax is stated after charging amortisation of share based
payments under IFRS 2; the charge for the half-year to December 2007 is £0.09m
compared to £0.06m in the corresponding period last year. The Group has
provided for a charge to UK Corporation Tax of £0.46m equivalent to a rate of
36% which compares to a £0.02m charge last year when unutilised losses were
available. Earnings per share amounted to 1.02p per share (2006 - 0.19p) on a
fully diluted basis.
The balance sheet reflects the growth in operations during the period with
property, plant and equipment including items in the course of construction
increasing to £7.3m at the end of December 2007 from £4.7m at the end of
December 2006. This is primarily due to continued investment in expansion of
rental inventory which continues to be income generating as it comes on stream.
Debtors have increased to £7.0m at the end of the period as compared to £4.6m at
the end of December 2006. Net borrowings closed at £2.35m compared to £0.17m at
the end of December 2006 reflecting the Group's investment in expanding the
rental fleet of equipment and growth in debtors resulting from new business
wins. In recognition of the capital expenditure programme either completed or
under construction, the Group is in the process of increasing its bank
facilities from £2.5m to £4.5m.
Operating Review
Plexus' focus during the first half of the year has been a combination of
building upon existing key contracts whilst at the same time promoting our
proprietary POS-GRIP technology around the world to new customers. Of particular
note was the successful installation of the first 20,000 psi extreme high
pressure high temperature rental wellhead for BG International Ltd in the North
Sea, and we are confident that by meeting the technical challenges that such a
project presents other operators will be encouraged to select our equipment over
the coming months.
As Plexus' reputation and industry reach continues to gain momentum we were
particularly pleased to add to our customer base GDF Britain Ltd, Wintershall
Noordzee B.V., and StatoilHydro ASA. In addition an important milestone was
reached by our research and development team with the announcement in September
that Plexus had secured an order from AGR Petroleum on behalf of Silverstone
Energy Ltd to supply a subsea cross-over wellhead system enabling the conversion
of pre-drilled wells to subsea production. This event marked the first subsea
application for POS-GRIP and incorporates our metal-to-metal POS-GRIP activated
HG seals which are integral to the performance, safety, and time saving
advantages that we believe we can demonstrate to the industry when comparing our
proprietary equipment to conventional systems.
The market for oil and gas services continues to grow and as Plexus' role within
the industry strengthens it is essential that we continue to invest in people,
infrastructure, and equipment so as to be able to support the increasing levels
of business activity that we are generating. For this reason the number of
Plexus personnel has increased by 28% to 68 as compared to 53 last year and our
administration costs have increased by a similar amount. In parallel to our
operating activities we have maintained an active capital expenditure programme,
and added in the period rental inventory equipment to the value of £1.5m which
added to the £4.8m in the previous financial year..
As energy prices continue to rise and the demand for oil and gas grows, Plexus
is confident that as well as securing further market share gains there will be
an increasing need for solutions to the challenges presented by unconventional
HP/HT and X-HP/HT drilling environments for which our POS-GRIP technology is
particularly suited, and which in some instances is a potentially uniquely
enabling alternative to existing wellhead engineering. In this regard we are
were particularly pleased to learn from independent research that it is
predicted that the global Jack-up fleet will over the next four years increase
by 52 rigs equipped with Blow Out Preventers ("BOP") that are designed in a way
that is particularly suited to our HP/HT through the BOP adjustable method of
engineering. We are confident that this additional modern generation rig
capacity will further underpin and indeed facilitate the accelerating growth of
our HP/HT and X-HP/HT sales activities.
An important element of our growth strategy has been and continues to be the
diversification away from our traditional North Sea area of operation. Plexus
sees the Asian market as an important commercial opportunity for building
significantly further on the success that we already achieved with Shell Brunei.
For this reason Plexus has recently established an entity in Malaysia called
Plexus Ocean Systems (Malaysia) Sdn Bhd, and one of the Groups most experienced
senior executives has relocated to Malaysia to establish our first new base of
operation outside of Aberdeen, and will be targeting new customers in the region
including Petronas and CTOC where discussions have already taken place.
As part of our growth and development we are proud of a new and important
operations initiative concerning "Quality, Health, Safety and Environment" ("
QHSE"). Whilst Plexus has always ensured that it meets all necessary industry
standards of QHSE it is becoming increasingly obvious that health and safety
requirements are becoming fundamental to the industry's ability to provide
products and services and to meet the need to operate at the highest possible
safety level. Indeed high QHSE standards can be at the forefront of contract
approval by contractors and operators. To meet these goals we recently
implemented the Plexus Excellence Programme to create, manage, and monitor all
aspects of our health and safety policies which we believe will help underpin
our growth plans and ongoing acceptance by major international customers. It
should also be noted that the protection of both personnel and the environment
is enshrined in health and safety and general law and this is evidenced for
example by the new "The Corporate Manslaughter and Homicide Act 2007" that comes
into effect next month. Plexus believes that such legal responsibilities should
over time provide further impetus for the selection by contractors and operators
of safer through the BOP technology such as POS-GRIP wellheads rather than
traditional 'slip and seal' wellheads where the BOP equipment has to be removed
during the exploration drilling process and which still make up the vast
majority of the wellhead equipment market by volume.
Outlook
As we enter into our third year as an AIM listed company I look forward to the
future with great confidence, and remain convinced that our proprietary POS-GRIP
technology has a very special role to play in servicing the oil and gas
exploration and production industry. Our continued success in attracting new
customers and winning business for our rental exploration wellheads against
strong competition illustrates to us the benefits of being able to supply a
unique wellhead design which delivers time savings and safety advantages in a
growing market where we calculate that we only currently have a global market
share of approximately 7.5% which itself we believe represents in turn about 5%
of the overall market for POS-GRIP technology. This market position can only
help deliver significant shareholder value over time, and as our results
demonstrate we are already delivering strong year on year performance. This is
particularly the case where we are becoming the supplier of choice for HP/HT and
X-HP/HT applications where major international operators are choosing to specify
and deploy our equipment in preference to traditional alternatives which we
believe have performance limitations which are severely tested if not
compromised at the 20,000 psi plus pressure levels.
The underlying performance of our rental activities is extremely robust, and to
a degree is masked by our continued investment in facilities, personnel,
development and testing in support of new product development and additional
applications for our POS-GRIP technology. Such investment however is already
making good progress such as the recently built and tested first subsea
cross-over wellhead system which we anticipate will open up further new markets.
I believe that in the future such initiatives will not only deliver strong
rental growth, but also lead to licensing and much increased production wellhead
sales opportunities.
Finally I would like to thank all those involved with the Company for their hard
work and commitment during the last six months.
Robert Adair
Chairman
31st March 2007
Plexus Holdings Plc
Unaudited Interim Consolidated Income Statement
For the six months ended 31 December 2007
Six months to Six months to 31 Year to
31 December December 30 June
2007 2006 2007
Restated Restated
£ 000's £ 000's £ 000's
Revenue 6,666 4,439 10,274
Cost of Sales (2,941) (2,519) (5,640)
Gross Profit 3,725 1,920 4,634
Administrative Expenses (2,379) (1,882) (3,862)
Operating Profit 1,346 38 772
Other Income - - 789
Income from Participating Interest - 94 -
Finance Revenue 7 42 52
Finance Costs (65) - (47)
Profit Before Tax 1,288 174 1,566
Income Tax Expense (note 5) (463) (17) (450)
Profit After Tax 825 157 1,116
Earnings Per Share (pence)
Basic (note 6) 1.03p 0.19p 1.39p
Diluted (note 6) 1.02p 0.19p 1.39p
Plexus Holdings Plc
Unaudited Interim Consolidated Balance Sheet
As at 31 December 2007
31 December 31 December 30 June
2007 2006 2007
Restated Restated
£ 000's £ 000's £ 000's
ASSETS Non-current assets
Intangible 6,285 6,272 6,333
assets
Property, plant 7,294 4,653 6,549
and equipment
Investments - 200 -
13,579 11,125 12,882
Current assets
Inventories 3,253 1,644 3,123
Trade and other 7,044 4,563 4,976
receivables
Cash and cash 3 170 128
equivalents
10,300 6,377 8,227
TOTAL ASSETS 23,879 17,502 21,109
EQUITY and LIABILITIES
Capital and reserves
attributable to equity
holders of the company
Called-up share 802 802 802
capital
Share premium 15,596 15,596 15,596
account
Share based 270 120 179
payments
reserve
Retained 323 (1,461) (502)
earnings
Total equity 16,991 15,057 16,075
Non-current liabilities
Deferred tax liabilities 470 - 322
470 - 322
Current liabilities
Trade and other 3,648 2,445 2,707
payables
Current income 414 - 104
tax liabilities
Borrowings 2,356 - 1,901
6,418 2,445 4,712
Total liabilities 6,888 2,445 5,034
TOTAL EQUITY AND 23,879 17,502 21,109
LIABILITIES
Plexus Holdings Plc
Unaudited Interim Cash Flow Statement
For the six months ended 31 December 2007
Six months Six months
to 31 to 31 Year to 30
December December June
2007 2006 2007
Restated Restated
£ 000's £ 000's £ 000's
Cash flows from operating
activities
Profit before taxation 1,288 174 1,566
Adjustments for:
Depreciation and amortisation 692 399 981
Profit on disposal of property, (17) - (2)
plant and equipment
Profit on disposal of investment - - (789)
Charge for share based payments 91 57 116
Investment income (7) (42) (52)
Interest expense 65 - 47
2,112 588 1,867
Increase in inventories (130) (406) (1,885)
Increase in trade and other (2,061) (1,923) (2,326)
receivables
Increase in trade and other 936 1,504 1,761
payables
Cash generated from operations 857 (237) (583)
Income taxes paid (5) (17) (24)
Net cash used in operating 852 (254) (607)
activities
Cash flows from investing activities
Purchase of intangible fixed (118) - (230)
assets
Purchase of property, plant and (1,512) (2,528) (4,863)
equipment
Proceeds of sale of property, 258 - 28
plant and equipment
Proceeds of sale of fixed asset - - 989
investments
Net cash used in investing (1,372) (2,528) (4,076)
activities
Cash flows from financing
activities
Interest paid (61) - (41)
Interest received 1 42 41
Net cash from financing (60) 42 -
activities
Net decrease in cash and cash (580) (2,740) (4,683)
equivalents
Cash and cash equivalents at 1 (1,773) 2,910 2,910
July
Cash and cash equivalents at 31 (2,353) 170 (1,773)
December
Plexus Holdings Plc
Unaudited Interim Statement of Changes in Equity
For the six months ended 31 December 2007
Six months Six months
to 31 to 31 Year to
December December 30 June
2007 2006 2007
Restated Restated
£ 000's £ 000's £ 000's
Profit for the period 825 157 1,116
Total recognised income for the 825 157 1,116
period
Share based payments 91 57 116
Net change in shareholders' funds 916 214 1,232
Shareholders' funds brought 16,075 14,843 14,843
forward
Shareholders' funds at the end 16,991 15,057 16,075
of the period
Notes to the Interim Report December 2007
1. This interim financial information does not constitute statutory accounts as
defined in section 240 of the Companies Act 1985 and is unaudited.
This unaudited interim report has been prepared on the basis of the accounting
policies set out in the annual report for the year ended 30 June 2007 as revised
by the change to International Financial Reporting Standards ("IFRS") reporting
as detailed in the IFRS Transition Note (note 7).
Accordingly, this interim financial information has been prepared for the first
time in accordance with the recognition and measurement criteria of IFRSs, which
have been adopted from 1 July 2006 with comparative figures restated
accordingly. The interim financial information is compliant with IAS 34 -
Interim Financial Reporting.
The accounting policies are based on current 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 2008. These standards are subject to
ongoing review and endorsement by the EU and further IFRIC interpretations and
may therefore be subject to change. The Group's first IFRS financial statements
may consequently be prepared on the basis of accounting policies or
presentations that are different to those set out in the interim financial
information.
IFRS 1 permits companies adopting IFRS for the first time to take certain
exemptions from the full requirements of IFRS in the transition period. These
interim financial statements have been prepared on the basis of taking the
following exemption:
* business combinations prior to 1 July 2006, the Group's date of
transition to IFRS, have not been restated to comply with IFRS 3 - Business
Combinations.
2. This interim report was approved by the board of directors on 28th March
2008.
3. The directors do not recommend payment of an interim dividend.
4. There were no other gains or losses to be recognised in the financial period
other than those reflected in the income statement.
5. Taxation on the operating profit after interest has been provided at a rate
of 36% for the six months ended 31 December 2007 (2006: 10%) which is the
estimated rate of UK tax for the full year.
6. Basic and pre-exceptional earnings per share are based on the weighted
average of ordinary shares in issue during the half-year of 80,182,569 (2006:
80,182,569). The calculation of fully diluted earnings per share is based on
the weighted average number of ordinary shares in issue plus the dilutive
effect of outstanding share options being 426,245 (2006: 193,472). The
number of shares included in the calculation of fully diluted earnings per
share was 80,608,814 (2006: 80,376,041).
7. For all periods up to and including the year ended 30 June 2007, the Group
prepared its financial statements in accordance with United Kingdom Generally
Accepted Accounting Principles ("UK GAAP"). Financial Statements for the year
ending 30 June 2008 will be the first the Group is required to prepare in
accordance with International Financial Reporting Standards ("IFRS") as
adopted by the European Union ("EU").
Accordingly the Group has prepared interim financial statements which comply
with the recognition and measurement criteria of IFRS which have been adopted
from 1 July 2006 with comparative figures restated accordingly.
In preparing this interim financial report, the Group has started from an
opening balance sheet as at 1 July 2006, the Group's transition date to IFRS,
and made those changes in accounting policies and other restatements required by
IFRS 1 for the first time adoption of IFRS. This note explains the principal
adjustments made by the Group in restating its UK GAAP balance sheet at 1 July
2006 and its previously published UK GAAP financial statements for the year
ended 30 June 2007.
Group reconciliation of equity as at 1 July 2006
Note UK GAAP in Effect of
IFRS transition to
format IFRS IFRS
£000's £000's £000's
ASSETS
Non-current assets
Intangible assets a 6,375 46 6,421
Property, plant and equipment a 2,421 (46) 2,375
Investments 200 - 200
8,996 - 8,996
Current assets
Inventories 1,238 - 1,238
Trade and other receivables 2,640 - 2,640
Cash and cash equivalents 2,910 - 2,910
6,788 - 6,788
TOTAL ASSETS 15,784 - 15,784
EQUITY and LIABILITIES
Capital and reserves attributable
to equity holders of the company
Called-up share capital 802 - 802
Share premium account 15,596 - 15,596
Share based payments reserve 63 - 63
Retained earnings c (1,585) (33) (1,618)
Total equity 14,876 (33) 14,843
Non-current liabilities
None - - -
- - -
Current liabilities
Trade and other payables c 908 33 941
Current income tax liabilities - - -
Borrowings - - -
908 33 941
Total liabilities 908 33 941
TOTAL EQUITY AND LIABILITIES 15,784 - 15,784
Group reconciliation of equity as at 30 June 2007
Note UK GAAP in Effect of
IFRS transition to
format IFRS IFRS
£000's £000's £000's
ASSETS
Non-current assets
Intangible assets a,b 6,264 69 6,333
Property, plant and equipment a 6,577 (28) 6,549
Investments - - -
12,841 41 12,882
Current assets
Inventories 3,123 - 3,123
Trade and other receivables 4,976 - 4,976
Cash and cash equivalents 128 - 128
8,227 - 8,227
TOTAL ASSETS 21,068 41 21,109
EQUITY and LIABILITIES
Capital and reserves attributable to equity holders of the company
Called-up share capital 802 - 802
Share premium account 15,596 - 15,596
Share based payments reserve 179 - 179
Retained earnings b,c (501) (1) (502)
Total equity 16,076 (1) 16,075
Non-current liabilities
Deferred tax liabilities 322 - 322
322 - 322
Current liabilities
Trade and other payables c 2,665 42 2,707
Current income tax liabilities 104 - 104
Borrowings 1,901 - 1,901
4,670 42 4,712
Total liabilities 4,992 42 5,034
TOTAL EQUITY AND LIABILITIES 21,068 41 21,109
Group reconciliation of income statement for the year ended 30 June 2007
Note UK GAAP in Effect of
IFRS transition to
format IFRS IFRS
£000's £000's £000's
Revenue 10,274 - 10,274
Cost of Sales (5,640) - (5,640)
Gross Profit 4,634 - 4,634
Administrative Expenses b,c (3,894) 32 (3,862)
Operating Profit 740 32 772
Other Income 789 - 789
Finance Revenue 52 - 52
Finance Costs (47) - (47)
Profit Before Tax 1,534 32 1,566
Income Tax Expense (450) - (450)
Profit After Tax 1,084 32 1,116
Group reconciliation of equity as at 31 December 2006
Note UK GAAP in Effect of IFRS
IFRS format transition to
IFRS
£000's £000's £000's
ASSETS
Non-current assets
Intangible assets a,b 6,208 64 6,272
Property, plant and equipment a 4,696 (43) 4,653
Investments 200 - 200
11,104 21 11,125
Current assets
Inventories 1,644 - 1,644
Trade and other receivables 4,563 - 4,563
Cash and cash equivalents 170 - 170
6,377 - 6,377
TOTAL ASSETS 17,481 21 17,502
EQUITY and LIABILITIES
Capital and reserves attributable to
equity holders of the company
Called-up share capital 802 - 802
Share premium account 15,596 - 15,596
Share based payments reserve 120 - 120
Retained earnings b (1,482) 21 (1,461)
Total equity 15,036 21 15,057
Non-current liabilities
None - - -
- - -
Current liabilities
Trade and other payables 2,445 - 2,445
Current income tax liabilities - - -
Borrowings - - -
2,445 - 2,445
Total liabilities 2,445 - 2,445
TOTAL EQUITY AND LIABILITIES 17,481 21 17,502
Group reconciliation of income statement for the period ended 31 December 2006
Note UK GAAP in Effect of IFRS
IFRS format transition to
IFRS
£000's £000's £000's
Revenue 4,439 - 4,439
Cost of Sales (2,519) - (2,519)
Gross Profit 1,920 - 1,920
Administrative Expenses b,c (1,936) 54 (1,882)
Operating Profit (16) 54 38
Income from Participating Interest 94 - 94
Finance Revenue 42 - 42
Profit Before Tax 120 54 174
Income Tax Expense (17) - (17)
Profit After Tax 103 54 157
The following changes to accounting policies and presentation resulted from the
transition to IFRS:
a) Intangible assets
IAS 38 - Intangible Assets requires that software costs which are not integral
to the operation of the piece of machinery be classified as intangible assets.
The costs and depreciation relating to expenditure on such software has been
reclassified from Property, plant and equipment to intangible assets.
A reclassification of £45,666 was made on transition to IFRS on 1 July 2006 and
further reclassifications were made during the period to 31 December 2006
(£42,947) and the year to 30 June 2007 (£27,973).
b) Goodwill
Under UK GAAP the Group amortised goodwill over its useful economic life. IFRS 3
- Business Combinations requires that goodwill is not amortised but is subject
to an annual impairment review instead. IFRS requires that an impairment test is
carried out at transition date based on the conditions at that date. No
impairment was identified at the date of transition and no adjustments to the
carrying value of goodwill were made. Subsequent impairment tests performed in
accordance with IAS 38 have similarly resulted in no impairment having been
identified.
The remeasurement adjustments made to the Group balance sheet reverse the
amortisation of goodwill charged since 1 July 2006 as follows:
Amortisation charged in the 6 months to 31 December 2006 £20,541
Amortisation charged in the year to 30 June 2007 £41,083
c) Holiday pay accrual
IAS 19 - Employee Benefits requires that where an entity compensates employees
for holiday, an accrual be recognised to the extent that accumulated untaken
entitlement can be carried forward and taken or paid in a future period. Holiday
pay accruals were not recognised by the Group under UK GAAP. The following
accruals were made in accordance with IAS 19:
At 1 July 2006 £ 32,791
At 31 December 2006 £ NIL
At 30 June 2007 £ 41,711
8. The Group derives turnover 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 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 or cyclical fluctuations.
9. The comparative figures for the financial year ended 30 June 2007 are not
the company's statutory accounts for that financial year. Those accounts
have been reported on by the company's auditors, Horwath Clark Whitehill 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 237(2) or (3) of the
Companies Act 1985.
This information is provided by RNS
The company news service from the London Stock Exchange
END
IR ILFLTVRITFIT
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