Life for Plexus's (POS) shareholders just got tougher. Following a stinging profit warning in January, the struggling wellhead technology engineer has now suspended all dividends in an effort to shore up the net cash position.
The decision, compounded by a post-tax loss of £3.5m in the half year to December, wiped 7 per cent off the shares following publication of half-year results. Given that many of the financial woes detailed in these results were priced in to the shares after the January trading update, the most interesting details centred on the expansion of the company's international profile and product range.
Encouragingly, Plexus recently signed licence agreements with two independent oil and gas equipment manufacturers for the rental, manufacture and servicing of its jack-up drilling wellhead equipment in Russia and the CIS. Purchase orders worth $0.6m (£0.42m) and £0.9m have also been signed outside the core North Sea market. Should that market swiftly rebalance following a surge in the oil price, Plexus has enough inventory to support sales of up to £40m.
Cenkos Securities predicts a pre-tax loss of £6.7m for the year to June, giving an 8p loss per share, a swing from a pre-tax profit of £5.6m and EPS of 6p in 2015.
PLEXUS (POS) | ||||
|---|---|---|---|---|
| ORD PRICE: | 51p | MARKET VALUE: | £45.6m | |
| TOUCH: | 51-52.75p | 12-MONTH HIGH: | 245p | LOW: 41p |
| DIVIDEND YIELD: | nil | PE RATIO: | 340 | |
| NET ASSET VALUE: | 46p* | NET CASH: | £4.4m | |
| Half-year to 31 Dec | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2014 | 13.5 | 2.2 | 2.32 | 0.5 |
| 2015 | 6.8 | -3.5 | -3.93 | nil |
| % change | -50 | - | - | - |
Ex-div:na Payment:na *Includes intangible assets of £14.8m, or 16.5p a share | ||||
