Plexus shares tumble as oil well technology firm highlights pressure on sales

Shares in Plexus Holdings have plunged 13 per cent after the oil and gas well technology firm warned that revenues would fall next year amid tough market conditions.

After posting a fourth successive annual loss, Aberdeen-based Plexus said: “It is expected at this stage that revenues in FY20 will be H2-weighted and materially lower than the prior year.”

The expected fall in revenues reflects the challenges Plexus faces in developing revenue streams after selling a division that had generated most of its turnover. This supplied wellheads for use in exploration.

 The sale reduced Plexus’s direct exposure to the exploration market in the North Sea, in which drilling activity plunged in response to the sharp fall in the crude price from 2014.

Plexus reckons it can use its expertise to win business in markets such as oil and gas production.

The company’s chairman Jeffrey Thrall said its directors were pleased with the progress that has been made during the current year on the development of a project pipeline for future work.

However, he added: “These are not likely to begin to yield meaningful revenues until the last quarter of the year to 30 June 2020 (“FY20”).”

 Led by chief executive Ben van Bilderbeek, Plexus continues to be affected by the slowdown in North Sea exploration activity.

This may mean the proceeds of the 2018 sale of the division that supplies equipment used on exploration wells to TechnipFMC will be less than hoped.

The deal provided for Plexus to receive an initial £15m plus up to £27.5m depending on the performance of the business over three years. Plexus said yesterday that based on current revenue forecasts the earnout has been accrued at £8.8m.

Mr van Bilderbeek noted a report by KPMG in September found oilfield service providers had recorded their lowest level of transactions in five years.

 Aim market-listed Plexus had signalled confidence in its prospects in April when it paid a 1p per share dividend. This was the first the firm had declared since the 1.75p per share dividend paid for the 2014-15 financial year.

Plexus lost £3.3m in the year to June 30. The company lost £0.4m in the preceding year after recording a £5.8m gain on the disposal of the exploration-focused division.

Total sales fell to £3.6m in the latest year, from £4.2m.

The company was pleased that revenues from continued operations rose more than ten-fold, from £320,000 last time.

Plexus shares closed down 4.5p at 29p.

Source: The Herald