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Plexus revenues climb 14% with several key contract wins; Brewin Dolphin says “buy”

Published: 11:46 20 Oct 2009 BST

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Oil and gas engineering services group Plexus Holdings (AIM: POS) said turnover and EBITDA (earnings before interest, tax, depreciation and amortisation) for what it said was a challenging year increased 14% and 13% respectively as the company benefitted from its strong client base, securing a number of contracts and extensions with energy giants including BP, ConocoPhillips and Shell.

The company’s High Pressure/High Temperature (HP/HT) sales hiked 35%, helped by a £1.7 million contract win from ConocoPhillips and a £1.2 million deal with the Red Sea Petroleum Operating Company (RSPOC). Plexus has also scored deals with Shell Brunei, Talisman Energy and expanded its presence in the Egyptian market with a £0.6 million contract with GDF Suez, Shell Egypt and BP Egypt.


“We have been fortunate as a combination of longer term contracts with blue chip international oil companies, resultant forward order visibility, and the more stable trading platform that comes from owning a patented proprietary technology has allowed us to report an excellent set of results,” said Non-Executive Chairman Robert Adair.


Pre-tax profits were roughly unchanged at £1.8 million compared to last year’s £1.9 million, while gross margin increased to 57.9% from 54.7%. Earnings per share were down to 1.27 pence from 1.61 pence last year as personnel, infrastructure and depreciation costs increased.


Total capital expenditure for the year reached £3.2 million, of which £2.7 million was in property, plant and equipment reflecting the 20% growth in rental inventory. The group was able to increase its bank facility by 25% to £4 million during the year, while net cash inflow before drawdown of bank loan amounted to £1.8 million compared to last year’s outflow of £1.4 million.


Plexus has declared a maiden dividend of 0.3118 pence per share with the Board proposing a final dividend of 0.38 pence.


The group said the “challenging trading conditions” continued into this financial year with investment decisions and exploration activity getting postponed, leading it to view the current year with a “degree of caution.”


Investment banker Brewin Dolphin was upbeat on Plexus following the release of the results, issuing a “buy” recommendation for the stock and setting a target price of 51 pence per share, saying the group lived up to its expectations by taking advantage of the benefits of its proprietary technology and continuing to grow throughout the downturn.

Brewin noted the lower book visibility and certain project delays, which led it to reduce the full year revenue outlook for 2010 to £14.5 million from £17.5 million. These numbers, however, represented a worst case scenario with Brewin expecting an upturn in 2011 as the mid-long term case for increasing oil service activity remained “compelling.”


Shares in Plexus last traded at 41 pence.

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