Plexus Regulatory News (POS)

31 Mar 2008 07:01

Plexus Holdings Plc31 March 2008 FOR IMMEDIATE RELEASE 31st March 2008 Plexus Holdings plc ('Plexus' or 'the Group') Interim Results for the six months ended 31st December 2007 Plexus Holdings plc ("Plexus" or "the Group") the AIM quoted oil and gasengineering services business and owner of the proprietary POS-GRIP(R) method ofwellhead engineering announces its interim results for the six months to 31December 2007. Highlights • 50% increase in turnover to £6.7m (2006: £4.4m) • 261% increase in EBITDA to £2.1m (2006: £0.589m). EBITDA is stated before the effects of charges for share based payments. • 640% increase in profit before tax to £1.3m (2006: £0.17m) • Successful installation of the first 20,000 psi extreme high pressure high temperature rental wellheads for BG International Ltd • Wellhead rental wins with GDF Britain Ltd, Wintershall Noordzee B.V., and StatoilHydro ASA • First subsea contract win for the supply of a subsea cross-over wellhead system for AGR Petroleum on behalf of Silverstone Energy Ltd • Ongoing capital investment in expansion of rental inventory and in particular high pressure/high temperature wellheads • 292% increase in rental turnover of high pressure/high temperature and extreme high pressure/high temperature wellhead equipment • 28% increase in personnel to 68 (2006: 53) Plexus' CEO, Ben van Bilderbeek, commented: "These results reflect the strength of our business model and the benefits ofour capital expenditure programme as additional rental exploration wellheadsystems continue to be added to our growing equipment inventory. Furthermore thegrowing exploration rental wellhead market continues to provide substantialupside for our company, and independent research shows that there are 52 newJack-up rigs scheduled for delivery within the next four years. As these new rigunits are designed to be able to drill deeper and higher pressure wells, theyare generally equipped with well control equipment for which our proprietaryPOS-GRIP technology is ideally suited. In addition to our rental activities Plexus continues to make substantialprogress in developing alternative applications for POS-GRIP technology, such asthe recently built and tested subsea cross-over wellhead system for SilverstoneEnergy Ltd. This ongoing investment in the future expansion of new markets isessentially funded by the rental business activities, partially obscuring itsunderlying value. However every day our engineers learn more about theapplication and operation of our proprietary technology and how it can beapplied across a broad equipment spectrum generating additional commercialopportunities for us, and I would like to extend my congratulations to ouremployees, who during this busy period successfully tested and delivered theworld's first 20,000 psi, through the BOP, wellhead systems, which is currentlybeing used by BG International Ltd in the North Sea." For further information please visit www.posgrip.com or contact: Plexus Holdings plcBernard van Bilderbeek, Chief Executive Tel: +44 (0)20 7589 8555Graham Stevens, Finance Director St Brides Media & FinanceFelicity Edwards Tel: +44 (0)20 7236 1177Isabel Crossley Brewin Dolphin (Nominated Advisor and Broker)Elizabeth Kennedy, Director Corporate Broking Tel: +44 (0)141 221 7733Ken Fleming, Director Corporate Finance Chairman's Statement Introduction I am pleased to report that the Group has continued to make strong progressduring the first half of the year delivering a 50% increase in turnover and a261% increase in EBITDA against the same period last year. This increase insales and profitability has been generated from a broader base of operationswhich in addition to our traditional market in the North Sea, includedactivities in the Caspian Sea, Egypt, Brunei, and Trinidad. It is also importantto note that as a company built around the exploitation and commercialisation ofPOS-GRIP(R) technology, our strategy is to extend over time the range ofapplications we offer beyond wellheads. In line with this we won our firstsubsea contract for the supply of a subsea cross-over wellhead system. Interim Results This is the first time that Plexus has reported under International FinancialReporting Standards ("IFRS"). The Interim Report is therefore longer as itcontains a number of reconciliations between UK GAAP and IFRS. The accounts forprior periods have been restated under IFRS and whilst audited under UK GAAPhave not been audited under IFRS. The adjustments between UK GAAP and IFRS aredetailed at note 7 and are not considered material. Turnover for the six month period was £6.7m, up 50% from £4.4m the previousyear. The wellhead rental business and supply of related equipment and servicesaccount for the majority of Plexus' business activities. It is important to notethat our market share of the high pressure/high temperature ("HP/HT") andextreme high pressure/high temperature ("X-HP/HT") applications continues togrow, with sales up 292% for the six months to December 2007 versus the sameperiod to December 2006. Gross margins have increased to 55.9% in the first half of the year from 43.3%in the comparative period last year as a result of the lower margin BP ShahDeniz business activities moving nearer to the end of their project cycle. Atthe same time the average higher contract value and consequently higher grossmargins associated with the HP/HT contracts have provided a further boost togross margin levels. Administration expenses have continued to increase year on year and totalled£2.38m for the period up from £1.88m last year. This 26.4% increase reflects theongoing investment in and expansion of our personnel and infrastructure so as tobe able to meet the demands of our growing sales and their added diversity bothin terms of product mix and geographical spread. The profit before tax of £1.29m compares to a profit before tax for the sameperiod last year of £0.17m, with depreciation and amortisation increasing to£0.69m in the period against £0.40m for the same period last year. This increaseof 73% primarily reflects the ongoing growth in Plexus' rental asset inventory.The profit before tax is stated after charging amortisation of share basedpayments under IFRS 2; the charge for the half-year to December 2007 is £0.09mcompared to £0.06m in the corresponding period last year. The Group hasprovided for a charge to UK Corporation Tax of £0.46m equivalent to a rate of36% which compares to a £0.02m charge last year when unutilised losses wereavailable. Earnings per share amounted to 1.02p per share (2006 - 0.19p) on afully diluted basis. The balance sheet reflects the growth in operations during the period withproperty, plant and equipment including items in the course of constructionincreasing to £7.3m at the end of December 2007 from £4.7m at the end ofDecember 2006. This is primarily due to continued investment in expansion ofrental inventory which continues to be income generating as it comes on stream.Debtors have increased to £7.0m at the end of the period as compared to £4.6m atthe end of December 2006. Net borrowings closed at £2.35m compared to £0.17m atthe end of December 2006 reflecting the Group's investment in expanding therental fleet of equipment and growth in debtors resulting from new businesswins. In recognition of the capital expenditure programme either completed orunder construction, the Group is in the process of increasing its bankfacilities from £2.5m to £4.5m. Operating Review Plexus' focus during the first half of the year has been a combination ofbuilding upon existing key contracts whilst at the same time promoting ourproprietary POS-GRIP technology around the world to new customers. Of particularnote was the successful installation of the first 20,000 psi extreme highpressure high temperature rental wellhead for BG International Ltd in the NorthSea, and we are confident that by meeting the technical challenges that such aproject presents other operators will be encouraged to select our equipment overthe coming months. As Plexus' reputation and industry reach continues to gain momentum we wereparticularly pleased to add to our customer base GDF Britain Ltd, WintershallNoordzee B.V., and StatoilHydro ASA. In addition an important milestone wasreached by our research and development team with the announcement in Septemberthat Plexus had secured an order from AGR Petroleum on behalf of SilverstoneEnergy Ltd to supply a subsea cross-over wellhead system enabling the conversionof pre-drilled wells to subsea production. This event marked the first subseaapplication for POS-GRIP and incorporates our metal-to-metal POS-GRIP activatedHG seals which are integral to the performance, safety, and time savingadvantages that we believe we can demonstrate to the industry when comparing ourproprietary equipment to conventional systems. The market for oil and gas services continues to grow and as Plexus' role withinthe industry strengthens it is essential that we continue to invest in people,infrastructure, and equipment so as to be able to support the increasing levelsof business activity that we are generating. For this reason the number ofPlexus personnel has increased by 28% to 68 as compared to 53 last year and ouradministration costs have increased by a similar amount. In parallel to ouroperating activities we have maintained an active capital expenditure programme,and added in the period rental inventory equipment to the value of £1.5m whichadded to the £4.8m in the previous financial year.. As energy prices continue to rise and the demand for oil and gas grows, Plexusis confident that as well as securing further market share gains there will bean increasing need for solutions to the challenges presented by unconventionalHP/HT and X-HP/HT drilling environments for which our POS-GRIP technology isparticularly suited, and which in some instances is a potentially uniquelyenabling alternative to existing wellhead engineering. In this regard we arewere particularly pleased to learn from independent research that it ispredicted that the global Jack-up fleet will over the next four years increaseby 52 rigs equipped with Blow Out Preventers ("BOP") that are designed in a waythat is particularly suited to our HP/HT through the BOP adjustable method ofengineering. We are confident that this additional modern generation rigcapacity will further underpin and indeed facilitate the accelerating growth ofour HP/HT and X-HP/HT sales activities. An important element of our growth strategy has been and continues to be thediversification away from our traditional North Sea area of operation. Plexussees the Asian market as an important commercial opportunity for buildingsignificantly further on the success that we already achieved with Shell Brunei.For this reason Plexus has recently established an entity in Malaysia calledPlexus Ocean Systems (Malaysia) Sdn Bhd, and one of the Groups most experiencedsenior executives has relocated to Malaysia to establish our first new base ofoperation outside of Aberdeen, and will be targeting new customers in the regionincluding Petronas and CTOC where discussions have already taken place. As part of our growth and development we are proud of a new and importantoperations initiative concerning "Quality, Health, Safety and Environment" ("QHSE"). Whilst Plexus has always ensured that it meets all necessary industrystandards of QHSE it is becoming increasingly obvious that health and safetyrequirements are becoming fundamental to the industry's ability to provideproducts and services and to meet the need to operate at the highest possiblesafety level. Indeed high QHSE standards can be at the forefront of contractapproval by contractors and operators. To meet these goals we recentlyimplemented the Plexus Excellence Programme to create, manage, and monitor allaspects of our health and safety policies which we believe will help underpinour growth plans and ongoing acceptance by major international customers. Itshould also be noted that the protection of both personnel and the environmentis enshrined in health and safety and general law and this is evidenced forexample by the new "The Corporate Manslaughter and Homicide Act 2007" that comesinto effect next month. Plexus believes that such legal responsibilities shouldover time provide further impetus for the selection by contractors and operatorsof safer through the BOP technology such as POS-GRIP wellheads rather thantraditional 'slip and seal' wellheads where the BOP equipment has to be removedduring the exploration drilling process and which still make up the vastmajority of the wellhead equipment market by volume. Outlook As we enter into our third year as an AIM listed company I look forward to thefuture with great confidence, and remain convinced that our proprietary POS-GRIPtechnology has a very special role to play in servicing the oil and gasexploration and production industry. Our continued success in attracting newcustomers and winning business for our rental exploration wellheads againststrong competition illustrates to us the benefits of being able to supply aunique wellhead design which delivers time savings and safety advantages in agrowing market where we calculate that we only currently have a global marketshare of approximately 7.5% which itself we believe represents in turn about 5%of the overall market for POS-GRIP technology. This market position can onlyhelp deliver significant shareholder value over time, and as our resultsdemonstrate we are already delivering strong year on year performance. This isparticularly the case where we are becoming the supplier of choice for HP/HT andX-HP/HT applications where major international operators are choosing to specifyand deploy our equipment in preference to traditional alternatives which webelieve have performance limitations which are severely tested if notcompromised at the 20,000 psi plus pressure levels. The underlying performance of our rental activities is extremely robust, and toa degree is masked by our continued investment in facilities, personnel,development and testing in support of new product development and additionalapplications for our POS-GRIP technology. Such investment however is alreadymaking good progress such as the recently built and tested first subseacross-over wellhead system which we anticipate will open up further new markets.I believe that in the future such initiatives will not only deliver strongrental growth, but also lead to licensing and much increased production wellheadsales opportunities. Finally I would like to thank all those involved with the Company for their hardwork and commitment during the last six months. Robert AdairChairman31st March 2007 Plexus Holdings PlcUnaudited Interim Consolidated Income StatementFor the six months ended 31 December 2007 Six months to Six months to 31 Year to 31 December December 30 June 2007 2006 2007 Restated Restated £ 000's £ 000's £ 000's Revenue 6,666 4,439 10,274 Cost of Sales (2,941) (2,519) (5,640) Gross Profit 3,725 1,920 4,634 Administrative Expenses (2,379) (1,882) (3,862) Operating Profit 1,346 38 772 Other Income - - 789Income from Participating Interest - 94 - Finance Revenue 7 42 52Finance Costs (65) - (47) Profit Before Tax 1,288 174 1,566 Income Tax Expense (note 5) (463) (17) (450) Profit After Tax 825 157 1,116 Earnings Per Share (pence)Basic (note 6) 1.03p 0.19p 1.39p Diluted (note 6) 1.02p 0.19p 1.39p Plexus Holdings PlcUnaudited Interim Consolidated Balance SheetAs at 31 December 2007 31 December 31 December 30 June 2007 2006 2007 Restated Restated £ 000's £ 000's £ 000's ASSETS Non-current assetsIntangible 6,285 6,272 6,333assetsProperty, plant 7,294 4,653 6,549and equipmentInvestments - 200 - 13,579 11,125 12,882 Current assetsInventories 3,253 1,644 3,123Trade and other 7,044 4,563 4,976receivablesCash and cash 3 170 128equivalents 10,300 6,377 8,227 TOTAL ASSETS 23,879 17,502 21,109 EQUITY and LIABILITIESCapital and reserves attributable to equity holders of the companyCalled-up share 802 802 802capitalShare premium 15,596 15,596 15,596account Share based 270 120 179paymentsreserveRetained 323 (1,461) (502)earningsTotal equity 16,991 15,057 16,075 Non-current liabilitiesDeferred tax liabilities 470 - 322 470 - 322 Current liabilitiesTrade and other 3,648 2,445 2,707payablesCurrent income 414 - 104tax liabilitiesBorrowings 2,356 - 1,901 6,418 2,445 4,712Total liabilities 6,888 2,445 5,034 TOTAL EQUITY AND 23,879 17,502 21,109LIABILITIES Plexus Holdings PlcUnaudited Interim Cash Flow StatementFor the six months ended 31 December 2007 Six months Six months to 31 to 31 Year to 30 December December June 2007 2006 2007 Restated Restated £ 000's £ 000's £ 000'sCash flows from operatingactivitiesProfit before taxation 1,288 174 1,566Adjustments for:Depreciation and amortisation 692 399 981Profit on disposal of property, (17) - (2)plant and equipmentProfit on disposal of investment - - (789)Charge for share based payments 91 57 116Investment income (7) (42) (52)Interest expense 65 - 47 2,112 588 1,867 Increase in inventories (130) (406) (1,885)Increase in trade and other (2,061) (1,923) (2,326)receivablesIncrease in trade and other 936 1,504 1,761payablesCash generated from operations 857 (237) (583)Income taxes paid (5) (17) (24)Net cash used in operating 852 (254) (607)activities Cash flows from investing activitiesPurchase of intangible fixed (118) - (230)assetsPurchase of property, plant and (1,512) (2,528) (4,863)equipmentProceeds of sale of property, 258 - 28plant and equipmentProceeds of sale of fixed asset - - 989investmentsNet cash used in investing (1,372) (2,528) (4,076)activities Cash flows from financingactivitiesInterest paid (61) - (41)Interest received 1 42 41Net cash from financing (60) 42 -activities Net decrease in cash and cash (580) (2,740) (4,683)equivalents Cash and cash equivalents at 1 (1,773) 2,910 2,910July Cash and cash equivalents at 31 (2,353) 170 (1,773)December Plexus Holdings PlcUnaudited Interim Statement of Changes in EquityFor the six months ended 31 December 2007 Six months Six months to 31 to 31 Year to December December 30 June 2007 2006 2007 Restated Restated £ 000's £ 000's £ 000's Profit for the period 825 157 1,116 Total recognised income for the 825 157 1,116period Share based payments 91 57 116 Net change in shareholders' funds 916 214 1,232 Shareholders' funds brought 16,075 14,843 14,843forward Shareholders' funds at the end 16,991 15,057 16,075of the period Notes to the Interim Report December 2007 1. This interim financial information does not constitute statutory accounts asdefined in section 240 of the Companies Act 1985 and is unaudited. This unaudited interim report has been prepared on the basis of the accountingpolicies set out in the annual report for the year ended 30 June 2007 as revisedby the change to International Financial Reporting Standards ("IFRS") reportingas detailed in the IFRS Transition Note (note 7). Accordingly, this interim financial information has been prepared for the firsttime in accordance with the recognition and measurement criteria of IFRSs, whichhave been adopted from 1 July 2006 with comparative figures restatedaccordingly. The interim financial information is compliant with IAS 34 -Interim Financial Reporting. The accounting policies are based on current IFRS, International FinancialReporting Interpretation Committee ("IFRIC") interpretations and currentInternational Accounting Standards Board ("IASB") exposure drafts that areexpected to be issued as final standards and adopted by the EU such that theyare effective for the year ending 30 June 2008. These standards are subject toongoing review and endorsement by the EU and further IFRIC interpretations andmay therefore be subject to change. The Group's first IFRS financial statementsmay consequently be prepared on the basis of accounting policies orpresentations that are different to those set out in the interim financialinformation. IFRS 1 permits companies adopting IFRS for the first time to take certainexemptions from the full requirements of IFRS in the transition period. Theseinterim financial statements have been prepared on the basis of taking thefollowing exemption: • business combinations prior to 1 July 2006, the Group's date of transition to IFRS, have not been restated to comply with IFRS 3 - Business Combinations. 2. This interim report was approved by the board of directors on 28th March 2008. 3. The directors do not recommend payment of an interim dividend. 4. There were no other gains or losses to be recognised in the financial period other than those reflected in the income statement. 5. Taxation on the operating profit after interest has been provided at a rate of 36% for the six months ended 31 December 2007 (2006: 10%) which is the estimated rate of UK tax for the full year. 6. Basic and pre-exceptional earnings per share are based on the weighted average of ordinary shares in issue during the half-year of 80,182,569 (2006: 80,182,569). The calculation of fully diluted earnings per share is based on the weighted average number of ordinary shares in issue plus the dilutive effect of outstanding share options being 426,245 (2006: 193,472). The number of shares included in the calculation of fully diluted earnings per share was 80,608,814 (2006: 80,376,041). 7. For all periods up to and including the year ended 30 June 2007, the Group prepared its financial statements in accordance with United Kingdom Generally Accepted Accounting Principles ("UK GAAP"). Financial Statements for the year ending 30 June 2008 will be the first the Group is required to prepare in accordance with International Financial Reporting Standards ("IFRS") as adopted by the European Union ("EU"). Accordingly the Group has prepared interim financial statements which complywith the recognition and measurement criteria of IFRS which have been adoptedfrom 1 July 2006 with comparative figures restated accordingly. In preparing this interim financial report, the Group has started from anopening balance sheet as at 1 July 2006, the Group's transition date to IFRS,and made those changes in accounting policies and other restatements required byIFRS 1 for the first time adoption of IFRS. This note explains the principaladjustments made by the Group in restating its UK GAAP balance sheet at 1 July2006 and its previously published UK GAAP financial statements for the yearended 30 June 2007. Group reconciliation of equity as at 1 July 2006 Note UK GAAP in Effect of IFRS transition to format IFRS IFRS £000's £000's £000's ASSETSNon-current assetsIntangible assets a 6,375 46 6,421Property, plant and equipment a 2,421 (46) 2,375Investments 200 - 200 8,996 - 8,996 Current assetsInventories 1,238 - 1,238Trade and other receivables 2,640 - 2,640Cash and cash equivalents 2,910 - 2,910 6,788 - 6,788 TOTAL ASSETS 15,784 - 15,784 EQUITY and LIABILITIESCapital and reserves attributable to equity holders of the companyCalled-up share capital 802 - 802Share premium account 15,596 - 15,596Share based payments reserve 63 - 63Retained earnings c (1,585) (33) (1,618)Total equity 14,876 (33) 14,843 Non-current liabilitiesNone - - - - - - Current liabilitiesTrade and other payables c 908 33 941Current income tax liabilities - - -Borrowings - - - 908 33 941Total liabilities 908 33 941 TOTAL EQUITY AND LIABILITIES 15,784 - 15,784 Group reconciliation of equity as at 30 June 2007 Note UK GAAP in Effect of IFRS transition to format IFRS IFRS £000's £000's £000's ASSETSNon-current assetsIntangible assets a,b 6,264 69 6,333Property, plant and equipment a 6,577 (28) 6,549Investments - - - 12,841 41 12,882 Current assetsInventories 3,123 - 3,123Trade and other receivables 4,976 - 4,976Cash and cash equivalents 128 - 128 8,227 - 8,227 TOTAL ASSETS 21,068 41 21,109 EQUITY and LIABILITIESCapital and reserves attributable to equity holders of the companyCalled-up share capital 802 - 802Share premium account 15,596 - 15,596Share based payments reserve 179 - 179Retained earnings b,c (501) (1) (502)Total equity 16,076 (1) 16,075 Non-current liabilitiesDeferred tax liabilities 322 - 322 322 - 322 Current liabilitiesTrade and other payables c 2,665 42 2,707Current income tax liabilities 104 - 104Borrowings 1,901 - 1,901 4,670 42 4,712Total liabilities 4,992 42 5,034 TOTAL EQUITY AND LIABILITIES 21,068 41 21,109 Group reconciliation of income statement for the year ended 30 June 2007 Note UK GAAP in Effect of IFRS transition to format IFRS IFRS £000's £000's £000's Revenue 10,274 - 10,274 Cost of Sales (5,640) - (5,640) Gross Profit 4,634 - 4,634 Administrative Expenses b,c (3,894) 32 (3,862) Operating Profit 740 32 772 Other Income 789 - 789 Finance Revenue 52 - 52Finance Costs (47) - (47) Profit Before Tax 1,534 32 1,566 Income Tax Expense (450) - (450) Profit After Tax 1,084 32 1,116 Group reconciliation of equity as at 31 December 2006 Note UK GAAP in Effect of IFRS IFRS format transition to IFRS £000's £000's £000's ASSETSNon-current assetsIntangible assets a,b 6,208 64 6,272Property, plant and equipment a 4,696 (43) 4,653Investments 200 - 200 11,104 21 11,125 Current assetsInventories 1,644 - 1,644Trade and other receivables 4,563 - 4,563Cash and cash equivalents 170 - 170 6,377 - 6,377 TOTAL ASSETS 17,481 21 17,502 EQUITY and LIABILITIESCapital and reserves attributable to equity holders of the companyCalled-up share capital 802 - 802Share premium account 15,596 - 15,596Share based payments reserve 120 - 120Retained earnings b (1,482) 21 (1,461)Total equity 15,036 21 15,057 Non-current liabilitiesNone - - - - - - Current liabilitiesTrade and other payables 2,445 - 2,445Current income tax liabilities - - -Borrowings - - - 2,445 - 2,445Total liabilities 2,445 - 2,445 TOTAL EQUITY AND LIABILITIES 17,481 21 17,502 Group reconciliation of income statement for the period ended 31 December 2006 Note UK GAAP in Effect of IFRS IFRS format transition to IFRS £000's £000's £000's Revenue 4,439 - 4,439 Cost of Sales (2,519) - (2,519) Gross Profit 1,920 - 1,920 Administrative Expenses b,c (1,936) 54 (1,882) Operating Profit (16) 54 38 Income from Participating Interest 94 - 94 Finance Revenue 42 - 42 Profit Before Tax 120 54 174 Income Tax Expense (17) - (17) Profit After Tax 103 54 157 The following changes to accounting policies and presentation resulted from thetransition to IFRS: a) Intangible assets IAS 38 - Intangible Assets requires that software costs which are not integralto the operation of the piece of machinery be classified as intangible assets.The costs and depreciation relating to expenditure on such software has beenreclassified from Property, plant and equipment to intangible assets. A reclassification of £45,666 was made on transition to IFRS on 1 July 2006 andfurther reclassifications were made during the period to 31 December 2006(£42,947) and the year to 30 June 2007 (£27,973). b) Goodwill Under UK GAAP the Group amortised goodwill over its useful economic life. IFRS 3- Business Combinations requires that goodwill is not amortised but is subjectto an annual impairment review instead. IFRS requires that an impairment test iscarried out at transition date based on the conditions at that date. Noimpairment was identified at the date of transition and no adjustments to thecarrying value of goodwill were made. Subsequent impairment tests performed inaccordance with IAS 38 have similarly resulted in no impairment having beenidentified. The remeasurement adjustments made to the Group balance sheet reverse theamortisation of goodwill charged since 1 July 2006 as follows: Amortisation charged in the 6 months to 31 December 2006 £20,541 Amortisation charged in the year to 30 June 2007 £41,083 c) Holiday pay accrual IAS 19 - Employee Benefits requires that where an entity compensates employeesfor holiday, an accrual be recognised to the extent that accumulated untakenentitlement can be carried forward and taken or paid in a future period. Holidaypay accruals were not recognised by the Group under UK GAAP. The followingaccruals were made in accordance with IAS 19: At 1 July 2006 £ 32,791 At 31 December 2006 £ NIL At 30 June 2007 £ 41,711 8. The Group derives turnover from the sale of its POS-GRIP technology and associated products, the rental of wellheads utilising the POS-GRIP technology and service income principally derived in assisting with the commissioning and ongoing service requirements of its equipment. These income streams are all derived from the utilisation of the technology which the Group believes is its only segment. Business activity is not subject to seasonal or cyclical fluctuations. 9. The comparative figures for the financial year ended 30 June 2007 are not the company's statutory accounts for that financial year. Those accounts have been reported on by the company's auditors, Horwath Clark Whitehill LLP, and delivered to the registrar of companies. The report of the auditors was (i) unqualified, (ii) did not include a reference to any matters to which the auditors drew attention by way of emphasis without qualifying their report and (iii) did not contain a statement under section 237(2) or (3) of the Companies Act 1985. This information is provided by RNS The company news service from the London Stock Exchange