SHARES in Plexus Holdings have fallen around five per cent after the company said the sale of one of its divisions could be worth less than was thought possible, amid tough times in oil and gas markets.
The Aberdeen-based oil well engineering firm struck a deal in October last year to sell a division that supplies equipment used on exploration wells to TechnipFMC for up to £42.5m.
The deal provided for Plexus to receive a £15m initial payment plus a further £27.5m depending on the performance of the business over the following three years.
Aim-listed Plexus said yesterday that based on current revenue forecasts provided by the buyer “the earn-out has been accrued at £8,839k”. If TFMC’s latest forecasts are correct Plexus would receive around £19m less than the maximum expected.
The company’s house broker Cenkos said the accrued earn-out appeared to be based on a very conservative estimate of revenues. It noted Plexus generated peak revenues of £28m plus in 2015.
Announcing annual results yesterday, Plexus said: “During the year to June 2018 the discontinued operation ...continued to be challenging and generated sales of £3.91m compared to £4.52m in the prior year.”
The division has been hit by cuts in exploration activity amid the slump in the crude price since 2014.
But directors believe the sale of the jack-up exploration business has left the firm well placed, with cash in the bank, to maximise the potential of its technology in other markets. Plexus booked a £5.8m gain on the sale of the division
Sales by continued operations rose to £0.32m in the latest year, from £0.22m. Plexus shares closed down 2.5p at 50.5p.
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