The strong position of wellhead services supplier Plexus (POS) on the North Sea continental shelf has caused it some considerable heartache in the past year. With global oil prices falling to a 13-year low in January, exploration drilling activity in the North Sea dropped to the lowest level ever recorded. The subsequent diminished demand for the group's POS-GRIP wellhead equipment saw the company swing to an adjusted net loss of £5.8m from a £5.4m profit in the prior year.
Responding to the downturn, the group has taken considerable steps to reduce its cost base. In the reported period, almost half of annualised personnel costs and general overheads were stripped out and research and development expenditure dropped from £4.1m to £2.0m. This has helped protect the balance sheet through the current turbulence.
But the cyclical low point has clearly exposed the group's narrow geographical exposure and limited number of products. Management is actively searching for new contracts away from the North Sea, and secured two such purchase orders in the reported period. It is also expanding the number of its friction-grip products through collaborations with big drilling companies.
Nevertheless, broker Cenkos expects losses to endure in the year to June 2017 and has forecast a pre-tax loss of £5.9m and a loss per share of 5.6p (losses of £6.2m and 5.6p in FY2016).
PLEXUS HOLDINGS (POS) | ||||
|---|---|---|---|---|
| ORD PRICE: | 59p | MARKET VALUE: | £ 62m | |
| TOUCH: | 58-60p | 12-MONTH HIGH: | 190p | LOW: 41p |
| DIVIDEND YIELD: | nil | PE RATIO: | na | |
| NET ASSET VALUE: | 44.6p* | NET CASH: | £9.9m | |
| Year to 30 Jun | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2012 | 19.7 | 3.1 | 3.0 | 0.89 |
| 2013 | 25.6 | 4.3 | 3.7 | 0.99 |
| 2014 | 27.0 | 5.4 | 6.0 | 1.10 |
| 2015 | 28.5 | 5.9 | 6.4 | 2.26 |
| 2016 | 11.2 | -6.9 | -6.4 | nil |
| % change | -61 | - | - | - |
Ex-div: na Payment: na *Includes intangible assets of £14.8m, or 14p a share | ||||
