Plexus Reports Increased Financial Results (UK)

Plexus Holdings plc, the AIM quoted oil and gas engineering services business and owner of the proprietary POS-GRIP® method of wellhead engineering, announces its preliminary results for the year ending 30 June 2013.

Results

· Record revenue, EBITDA, profit before tax and profit after tax

· 29.7% increase in revenue to £25.57m (2012: £19.71m)

· 38.3% increase in profit before tax to £4.27m (2012: £3.09m)

· 25.7% increase in profit after tax to £3.06m (2012: £2.43m)

· 21.8% increase in EBITDA to £7.60m (2012: £6.24m)

· 23.6% increase in basic earnings per share to 3.69p (2012: 2.99p)

Highlights

· Strong sales revenues as a result of POS-GRIP® friction-grip rental wellhead equipment continuing to gain market share following contract wins with a number of new international oil and gas operators, and existing customers

· Growing evidence of heightened awareness for the need to adopt the best available and safest technology (‘BAST’) driven by regulator and industry bodies leading to calls for initiatives to solve long term challenges such as subsea annulus monitoring and management

· Further industry support secured for on-going Joint Industry Project (‘JIP’) for the development of the new Plexus POS-GRIP HGSS™ subsea wellhead design, with Total E&P Recherche Developpement SAS (‘Total’) signing up as an additional consulting partner alongside existing partners Eni S.p.A. (‘Eni’), Maersk Oil North Sea UK Ltd (‘Maersk’), Shell International Exploration and Production B.V. (‘Shell’), Tullow Oil plc (‘Tullow’), and Wintershall Noordzee B.V. (‘Wintershall’)

· Secured initial High Pressure/High Temperature (‘HP/HT’) contracts from three new customers totalling £3.7m: Lotos Exploration and Production Norge AS (‘Lotos’) for £1.0m, Lundin Norway AS (‘Lundin’) for £2.0m, and Glencore Exploration Cameroon Ltd (‘Glencore’) for £0.7m

· HP/HT contract wins with existing customers included Talisman Energy Inc. (‘Talisman’) for £1.15m, Maersk for £1.5m, Gaz de France Suez E&P UK Ltd (‘GDF’) for £1.0m, and Det Norske Oljeselskap ASA (‘DetNor’) for £2.0m

· Additional 4 year multi-well contract secured with Brunei Shell Petroleum Sdn Bhd (‘Shell Brunei’) for the supply of standard pressure and HP/HT exploration wellhead equipment with an initial value of circa £2.0m

· Post period end secured a first time contract with new customer Eni Australia Limited (‘Eni Aus’) for the supply of standard pressure equipment, an HP/HT contract from Statoil Petroleum AS (‘Statoil’) for £2.5m, a standard pressure contract for Centrica Energy Norway (‘Centrica’) for £0.75m, and an additional standard pressure contract for BG International Egypt (‘BG Egypt’) for £0.35m

· Post period end acquisition of a 25% interest in a private manufacturer of specialist oil and gas equipment for a consideration of £0.73m

· Post period end, HP/HT Tie-Back has successfully completed the full ‘internals’ testing cycle and will be shortly completing the ‘externals’ testing requirements after which we will begin to engage through the sales team with the industry

· Initiatives underway to strengthen Plexus presence in the important Asian region, particularly Singapore, Malaysia, and Brunei with new subsidiaries incorporated in Singapore and Brunei

· Capital investment, primarily in additional wellhead rental inventory sets, increased by 76.2% to £8.14m (2012: £4.62m)

· Research and Development (‘R&D’) spend, excluding costs of building new test fixtures, increased by 22.0% to £1.46m (2012: £1.20m)

· Renewal of bank facilities in October 2013 of £5m credit facility on a three year revolving basis with an additional £1m overdraft on a yearly term

· The Board is today proposing a 10% increased final dividend of 0.55p per share (2012: 0.5p), which will be subject to shareholder approval at the Annual General Meeting (‘AGM’) to be held on 5th December 2013. That follows on from the 12.8% increase in the interim dividend (to 0.44p) making a total dividend for the financial year of 0.99p per share. If approved the final dividend will be paid on 13th December 2013 to all members appearing on the register of members on the record date 1st November 2013. The ex-dividend date for the shares is 30th October 2013

Chief Executive Ben van Bilderbeek said:

“It is once again pleasing to be able to report an excellent set of financial results achieved in a year that was particularly active for Plexus, which delivered record revenues, profits, and earnings per share. This strong on-going progress means that I am delighted to announce that the Board proposes a 10% increase in the final dividend of 0.55p per share for the year ended 30 June 2013, which will be submitted for approval at the Annual General Meeting.

“The strong year on year growth in revenues is an important indicator of the momentum that we are continuing to build in a market dominated by a small number of large multi-national oil service companies. I have always believed in the superior nature of our proprietary patented POS-GRIP friction-grip method of engineering when compared to conventional technology, and at a time when the industry is calling for solutions to problems such as long term wellhead integrity including seal life, monitoring, and pressure management, this belief can only strengthen. The number of new and repeat orders that we have reported, and expect to report in the current year with major oil and gas operators around the world is an endorsement of our technology and the multiple benefits and advantages that our equipment offers customers in terms of safety, functionality, and cost and time savings.

“Post the 2010 Gulf of Mexico incident there is an increased awareness among regulators and operators of the need for improved safety procedures, the selection of BAST equipment, and of heightened standards and practices. I should note that as has been widely reported, July 2013 marked twenty five years since the Piper Alpha tragedy, and this anniversary highlights the need to focus on safety with a renewed sense of purpose. The Cullen Inquiry twenty five years ago transformed the approach to oil and gas safety in the North Sea and helped propel UK standards to be recognised as some of the best in the world. Nevertheless, as the Oil & Gas UK Piper 25 Conference held in June reminded the audience there is no room for complacency. Such a warning is wholly appropriate because although operators are required to demonstrate a safety case that they have reduced the risks of operation to ‘as low as reasonably practical’ (‘ALARP’), there is still room for ambiguity with regard to certain key practices and equipment selection options. For example, unlike POS-GRIP wellheads which are known as “through the blow out preventer (‘BOP’)”, some designs of surface wellheads require the blowout preventers to be removed to allow access to install the casing hanger and annulus seal assembly. I have been saying for over twenty five years that such a practice is dangerous, unless absolutely necessary, as there is a risk that the well may become unstable which can lead to an uncontrolled major blowout incident, as indeed happened with the Montara well offshore Australia in 2009. The Health and Safety Executive (‘HSE’) and Oil & Gas UK state that the use of such a wellhead, “should be discouraged” and “should not be used.”. I maintain that clearer direction is warranted and that “should” ought to in fact be “must”. The need for such clearer industry guidelines is something we are actively encouraging, and I will once again be communicating these messages later this month when presenting at the Oil & Gas iQ “HP/HT Wells Summit 2013”.

“In addition to our organic operational activities we continue to actively pursue various strategic initiatives. The HP/HT Tie-Back system design up to 20,000 psi JIP is progressing well and subject to final testing, we are preparing to initiate sales promotion activity. Meanwhile, although the design process of the HGSS subsea wellhead design JIP has been completed, in response to industry demands we are now considering accelerating the inclusion of annulus monitoring, one of the target features which has gained prominence alongside instant casing lock down, as evidenced by a recent call made by the Industry Technology Facilitator (‘ITF’). With regard to on-going sales and marketing initiatives, we are putting in place a strategy to expand our sales activities in Asia, including Australia, and this is already generating a number of exciting opportunities.

“I believe our proprietary patented technology places us in a unique position to benefit from industry demands both in terms of safety and operational capability. This is particularly the case for HP/HT and X-HP/HT where the Chairman of BG Group, one of our customers, only last month wrote that “HP/HT subsea well systems will be a game-changer in terms of cost and reliability”. We agree with such comments and fully expect to be able to play an important role in such future developments, which is why the Board remains confident about the future and our ability to continue to deliver significant value to shareholders over the comings years.”

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Press Release, October 23, 2013