REG - Enteq Technologies - Half-year Report
15/11/2023 07:00
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RNS Number : 4602T Enteq Technologies PLC 15 November 2023
Enteq Technologies plc
("Enteq", the "Company" or the "Group")
Interim results for the six months ended 30 September 2023
Enteq Technologies plc (AIM: NTQ.L) is pleased to announce its interim results
for the six months ended 30 September 2023.
Key Highlights (FY24 year to date)
Enteq Technologies is a specialist energy services engineering and technology
company with the flagship product being the SABER Tool (Steer-At-Bit Enteq
Rotary Tool) for directional drilling technology.
· The SABER project, a novel and disruptive method of drilling
boreholes, has progressed well with the technology operating as expected
during successful field-testing in Oklahoma. SABER tools are currently in
manufacture for commercial deployment.
· Investment in the SABER engineering has continued using existing
balance sheet resources, with a closing cash position of $5.1m at the end of
the period ($5.4m at end of March 2023) following realisation of capital from
the sale of XXT IP and assets.
· Appointment of David MacNeill as an independent non-executive
director, based in Dubai, UAE and bringing over 30 years' extensive experience
across drilling businesses, notably having direct exposure to rotary steerable
system development and operations.
Financial metrics
Six months ended 30 September:
2023 2022
US$m US$m
· Revenue* 0.0 4.9
· Adjusted EBITDA** (1.6) 0.1
· Post tax loss for the period 0.6 0.8
· Loss per share (cents) 1.0 1.1
· Cash balance 5.1 1.8
Andrew Law, CEO of Enteq Technologies plc, commented:
"Enteq continues to focus on the global Rotary Steerable market with a value
of $3.6bn annually***, where SABER has the potential to deliver value
to customers through a differentiated, high quality and lower operating cost
alternative to the incumbent, limited, competition. A fleet of the first
generation of commercial SABER tools is currently being manufactured to
support a customer contract which includes a first phase of customer testing,
as well as other potential opportunities. The team and resources, from the
existing balance sheet, are in place for this pending commercialisation
phase."
For further information, please contact:
Enteq Technologies
plc
+44
(0)20 8087 2202
www.enteq.com (http://www.enteq.com)
Andrew Law, Chief Executive Officer
Mark Ritchie, Chief Financial Officer
Cavendish Capital Markets Limited (NOMAD and
Broker) +44 (0)20 7220 0500
Ed Frisby, Fergus Sullivan (Corporate Finance)
Andrew Burdis, Barney Hayward (ECM)
(*)Revenue from continued operations only. Revenue reported in financial
section relates to the recently disposed of XXT business.
(**)Adjusted EBITDA is reported (loss)/profit before tax adjusted for
interest, depreciation, amortisation, foreign exchange movements, performance
share plan charges and exceptional items - see note 5
***Source: Spears & Associates Directional Drilling Report (2023).
Interim Report
CHAIRMAN & CHIEF EXECUTIVE OFFICER'S REPORT
Overview
Enteq Technologies is a specialist energy services engineering and technology
company with the flagship product being the revolutionary, field-test proven
SABER Tool (Steer-At-Bit Enteq Rotary Tool) directional drilling technology.
The SABER Tool is based on a concept originally developed by Shell, where
rather than using pads or pistons to create steering forces, the SABER Tool
uses an internally directed fluid pressure differential system. By removing
these external contact points, the SABER Tool achieves true at-bit steering
for the first time and the mechanically simple design gives the potential to
improve reliability and project uptime versus conventional RSS (rotary
steerable system) solutions.
Enteq has the exclusive license for this novel rotary steerable technology and
IP from Shell. Enteq has developed and refined the concept, generating
additional protected IP. The SABER Tool is field-test proven from downhole
drilling and is being readied for commercial deployment.
The global RSS market is worth approximately $3.6 billion annually according
to a recent (2023) report from Spears. The SABER Tool has the potential to
drive operational efficiency across the world's directional drilling
applications, including hydrocarbon production, geothermal energy, methane
capture and CCS (carbon capture and storage). Enteq will provide the SABER
Tool to customers through rental or purchase, enabling independent and
regional directional drilling companies to compete with major integrated
service companies which have to date dominated this segment.
Financial performance
There has been a strong and ongoing focus on managing the Company's cash
position to underpin investment in product line development, primarily the
deployment of SABER. In April 2023, following the previous financial year
end, Enteq divested of the assets and IP related to the XXT product line, for
up to $3.2m, $0.9m of which has been received in cash during this period.
$0.8m has been invested in SABER between 1 April 2023 and 30 September 2023,
and the first generation of commercial tools is currently being manufactured.
A contract is in place to progress from customer-testing in the new calendar
year, on to commercial operations.
The cash position at the end on the period was $5.1m
Cash balance and cashflow
On 30 September 2023, the Group had a cash balance of US$5.1m down US$0.2m on
the US$5.4m reported as at 31 March 2023. As at the date of this announcement
the cash balance is US$4.6m.
The half year cash movement can be analysed as follows:
US$m
Adjusted loss (0.6)
Change in trade and other receivables 1.1
Change in trade and other payables (1.0)
Change in inventory 0.0
Operational cashflow (0.5)
Sale of tangible fixed assets 1.0
R&D expenditure (0.8)
Net cash movement (0.3)
Cash balances as at 1 April 2023 5.4
Cash balances as at 30 September 2023 5.1
The cash inflow on trade receivables relates to ongoing deferred proceeds from
the sale of the XXT business, as announced at the time of the XXT disposal.
The R&D expenditure was primarily relating to the SABER Rotary Steerable
System development program. Management expects that the future cash balances
are sufficient to complete SABER's field-testing phase and to bring it to a
successful commercial launch.
Operations
Enteq has a rented operations facility in Houston (having sold a freehold
property in the year ending March 2023), a technology centre in Cheltenham, UK
and a support office in Aberdeen, UK. The Houston, Texas and Cheltenham, UK,
facilities are all close to the main global centres of expertise for Rotary
Steerable Systems, with access to highly specialised engineering and machining
firms.
Organisation
The in-house product development team leads project engineering and works
closely with a number of specialist contractors in Houston and in the UK as
necessary. The product development team in Houston has been strengthened,
with the recent addition of an Engineering Director (non-Board).
The in-house operations team (supporting field-testing and customer
operations) is based in Houston and the team has been recently strengthened
with the addition of a RSS reliability engineer.
International business is led by the in-house team and is supported through a
network of international sales agents.
There were a total of 11 employees at the end of September 2023.
Outlook
The SABER project has been substantially de-risked after the recent successful
field-testing, with a fleet of the first generation of commercial tools
currently being manufactured for deployment, to a customer contract which
includes a first phase of customer testing, in addition to other potential
opportunities.
The global RSS sector is estimated at $3.6bn annually and needs additional
competition. Extensive and continued industry engagement, including recent
attendance at the ADIPEC global trade show, has confirmed a high level of
potential demand for SABER across the key regions, including applications to
support energy transition.
Andrew
Law
Martin Perry
Chief
Executive
Chairman
Enteq Technologies plc
15 November 2023
Enteq Technologies plc
Condensed Consolidated Income Statement
Six months to 30 September 2023 Six months to 30 September 2022 Year to
31 March 2023
Unaudited Unaudited Audited
Notes US$ 000's US$ 000's US$ 000's
Revenue 774 4,912 6,245
Cost of Sales (1,326) (3,518) (4,777)
Gross Profit (552) 1,394 1,467
Administrative expenses before amortisation (1,056) (1,866) (3,489)
Amortisation of acquired intangibles 10 - (241) (408)
Other exceptional items 6 988 (25) (696)
Foreign exchange (loss)/gain on operating activities (11) (34) 5
Total Administrative expenses (79) (2,166) (4,588)
Operating loss (631) (772) (3,121)
Finance income 37 6 37
Loss before tax (594) (766) (3,084)
Tax expense 9 - - 280
Loss for the period 5 (594) (766) (2,804)
Loss attributable to:
Owners of the parent (594) (766) (2,804)
Earnings/loss per share (in US cents): 8
Basic (1.0) (1.1) (2.0)
Diluted (1.0) (1.1) (2.0)
Enteq Technologies plc
Condensed Statement of Financial Position
30 September 2023 30 September 2022 31 March 2023
Unaudited Unaudited Audited
Notes US$ 000's US$ 000's US$ 000's
Non-current assets
Intangible assets 10 7,316 5,051 6,484
Property, plant and equipment 57 2,142 63
Rental fleet - 98 -
Trade and other receivables greater than one year - 54 -
Non-current assets 7,374 7,345 6,547
Current assets
Trade and other receivables 517 5,342 237
Inventories - 2,006 -
Cash and cash equivalents 5,037 319 5,351
Assets held for sale 1,229 - 2,184
Bank deposits - 1,500 -
Current assets 6,784 9,167 7,772
Total assets 14,158 16,512 14,319
Equity and liabilities
Equity
Share capital 11 1,080 1,081 1,080
Share premium 92,037 92,038 92,037
Share based payment reserve 686 410 448
Retained earnings (80,045) (78,660) (80,489)
Total equity 13,757 14,869 13,076
Current Liabilities
Trade and other payables 400 1,643 1,243
Total equity and liabilities 14,158 16,512 14,319
Enteq Technologies plc
Condensed Consolidated Statement of Changes in Equity
Six months to 30 September 2023
Share
Called up Profit based
share and loss Share payment Total
capital account premium reserve Equity
US$ 000's US$ 000's US$ 000's US$ 000's US$ 000's
Issue of share capital - - - - -
Share based payment charge - - - 238 238
Transactions with owners - - - 238 238
Loss for the period - 444 - - 444
Total comprehensive income - 444 - - 444
Movement in period: - 444 - 238 682
As at 1 April 2023 (audited) 1,080 (80,489) 92,037 448 13,076
As at 30 September 2023 (unaudited) 1,080 (80,045) 92,037 686 13,757
Six months to 30 September 2022
Share
Called up Profit based
share and loss Share payment Total
capital account premium reserve Equity
US$ 000's US$ 000's US$ 000's US$ 000's US$ 000's
Issue of share capital 9 - 119 - 128
Share based payment charge - - - (22) (22)
Transactions with owners 9 - 119 (22) 106
Loss for the period - (766) - - (766)
Total comprehensive income (766) - - (766)
Movement in period: 9 (766) 119 (22) (660)
As at 1 April 2022 (audited) 1,072 (77,894) 91,919 432 15,529
As at 30 September 2022 (unaudited) 1,081 (78,660) 92,038 410 14,869
Enteq Technologies plc
Condensed Consolidated Statement of Cash Flows
Six months to Six months to Year to
30 September 2023 30 September 2022 31 March 2023
Unaudited Unaudited Audited
US$ 000's US$ 000's US$ 000's
Cash flows from operating activities:
Loss for the period (594) (766) (3,084)
Gain on disposal of fixed assets 1,000 - (292)
Net finance income 37 (6) (37)
Share-based payment non-cash charges - (22) 225
Impact of foreign exchange movement (11) (34) 5
Depreciation, amortisation and exceptional charges (13) 784 1,162
419 (44) (2,021)
(Increase)/decrease in inventory - 404 1,681
Tax received from continuing operations - - 280
Decrease/(increase) in trade and other receivables 734 (1,859) 1,853
(Decrease)/increase in trade and other payables (663) (219) (617)
Increase in rental fleet assets - (256) (255)
Net cash from operating activities 490 (1,974) 921
Investing activities
Purchase of tangible fixed assets - (22) (25)
Disposal proceeds of tangible fixed assets - - 2,266
Purchase of intangible fixed assets (832) (1,148) (2,639)
Funds placed on interest bearing deposit - - 1,500
Interest received 37 6 37
Net cash from investing activities (305) (1,164) 1,139
Financing activities
Share issue - 127 -
Net cash from financing activities - 127 -
Increase/(decrease) in cash and cash equivalents (305) (3,011) 2,060
Non-cash movements - foreign exchange (8) 34 (5)
Cash and cash equivalents at beginning of period 5,351 3,296 3,296
Cash and cash equivalents at end of period 5,038 319 5,351
Cash and cash equivalents at end of period 5,038 319 5,351
Funds placed on interest bearing deposit - 1,500 -
5,038 1,819 5,351
ENTEQ TECHNOLOGIES PLC
NOTES TO THE FINANCIAL STATEMENTS
For the six months to 30 September 2023
1. Reporting entity
The Company is a public limited company incorporated and domiciled in England
and Wales (registration number 07590845). The Company's registered address
is The Courtyard, High Street, Ascot, Berkshire, SL5 7HP.
The Company's ordinary shares are traded on the AIM market of The London Stock
Exchange.
Both the Company and its subsidiaries (together referred to as the "Group")
provides equipment to energy service companies for use in the hydrocarbon and
geothermal extraction sectors.
2. General information and basis of preparation
The information for the period ended 30 September 2023 does not constitute
statutory accounts as defined in section 434 of the Companies Act 2006. A copy
of the statutory accounts for the period ended 31 March 2023 has been
delivered to the Registrar of Companies
The annual financial statements of the Group are prepared in accordance with
IFRS as adopted by the European Union. The condensed set of financial
statements included in this half-yearly financial report has been prepared in
accordance with International Accounting Standard 34 'Interim Financial
Reporting', as adopted by the European Union.
The Group's consolidated interim financial statements are presented in US
Dollars (US$), which is also the functional currency of the parent company.
These condensed consolidated interim financial statements (the interim
financial statements) have been approved for issue by the Board of directors
on 15 November 2023
This half-yearly financial report has not been audited and has not been
formally reviewed by auditors under the Auditing Practices Board guidance in
ISRE 2410.
3. Accounting policies
The interim financial statements have been prepared on the basis of the
accounting policies and methods of computation applicable for the period
ending 31 March 2024. These accounting policies are consistent with those
applied in the preparation of the accounts for the period ended 31 March 2023.
4. Estimates
When preparing the interim financial statements, management undertakes a
number of judgements, estimates and assumptions about recognition and
measurement of assets, liabilities, income and expenses. The actual results
may differ from the judgements, estimates and assumptions made by management,
and will seldom equal the estimated results. The judgements, estimates and
assumptions applied in the interim financial statements, including the key
sources of estimation uncertainty were the same as those applied in the
Group's last annual financial statements for the year ended 31 March 2023.
5. Adjusted earnings and adjusted EBITDA
The following analysis illustrates the performance of the Group's activities,
and reconciles the Group's loss, as shown in the condensed consolidated
interim income statement, to adjusted earnings. Adjusted earnings are
presented to provide a better indication of overall financial performance and
to reflect how the business is managed and measured on a day-today basis.
Adjusted earnings before interest, taxation, depreciation and amortisation
("adjusted EBITDA") is also presented as it is a key performance indicator
used by management.
Six months to 30 September 2023 Six months to 30 September 2022 Year to 31 March 2023
US$ 000's US$ 000's US$ 000's
Unaudited Unaudited Audited
Loss attributable to ordinary shareholders (594) (766) (787)
Exceptional items (988) 25 7
Amortisation of acquired intangible assets 0 240 199
Foreign exchange movements 11 34 40
Adjusted loss (1,571) (467) (541)
Depreciation charge 6 543 643
Finance income (37) (6) (16)
PSP credit/(charge) - (49) 220
Other - 34 -
Adjusted EBITDA (1,601) 55 306
6. Exceptional items
The exceptional items can be analysed as follows:
Six months to 30 September 2023 Six months to 30 September 2022 Year to 31 March 2023
US$ 000's US$ 000's US$ 000's
Unaudited Unaudited Audited
Severance payments 25 20 37
Loss/(gain) on sale of fixed assets (1,000) 5 (30)
Other (13) - -
Exceptional items (988) 25 7
7. Segmental Reporting
For management purposes, the Group is currently organised into a single
business unit which is based, operationally, primarily in the USA but with a
support centre based in the UK.
At present, there is only one operating segment and the information presented
to the Board is consistent with the consolidated income statement and the
consolidated statement of financial position.
The net assets of the Group by geographic location (post-consolidation
adjustments) are as follows:
Net Assets 30 September 2023 30 September 2022 31 March 2023
US$ 000's US$ 000's US$ 000's
Unaudited Unaudited Audited
Europe (UK) 4,519 1,282 3,649
United States 9,238 13,587 11,880
Total Net Assets 13,757 14,869 15,529
The net assets in Europe (UK) are represented, primarily, by cash balances
denominated in US$.
8. Earnings Per Share
Basic earnings per share
Basic earnings per share is calculated by dividing the loss attributable to
ordinary shareholders for the six months of US$594,000 (September 2022: loss
of US$766,000) by the weighted average number of ordinary shares in issue
during the period of 69,724,006 (September 2022: 69,247,129).
9. Income Tax
No tax liability arose on ordinary activities for the six months under
review.
10. Intangible Fixed Assets
Other Intangible Fixed Assets
Developed technology IPR&D technology Brand names
Total
US$ 000's US$ 000's US$ 000's US$ 000's
Cost:
As at 1 April 2023 13,339 17,804 1,240 32,383
Capitalised in period - 832 - 1,149
As at 30 September 2023 13,339 18,636 1,240 33,215
Amortisation:
As at 1 April 2023 13,339 11,320 1,240 25,899
Charge for the period - - - -
As at 30 September 2023 13,339 11,320 1,240 25,899
Net Book Value:
As at 1 April 2023 - 6,484 - 6,484
As at 30 September 2023 - 7,316 - 7,316
The main categories of Intangible Fixed Assets are as follows:
Developed technology:
This is technology which is currently commercialised and embedded within the
current product offering.
IPR&D technology:
This is technology, which is in the final stages of field testing, has
demonstrable commercial value and is expected to be launched in the
foreseeable future.
Brand names:
The value associated with various trading names used within the Group.
11. Share capital
Share capital as at 30 September 2023 amounted to US$1,081,000 (31 March 2023:
US$1,080,000 and 30 September 2022: US$1,080,000).
12. Going concern
The Directors have carried out a review of the Group's financial position and
cash flow forecasts for the next 12 months by way of a review of whether the
Group satisfies the going concern tests. These have been based on a
comprehensive review of revenue, expenditure and cash flows, taking into
account specific business risks and the current economic environment. With
regards to the Group's financial position, it had cash and cash equivalents at
30 September 2023 of US$5.1 million.
Having taken the above into consideration the Directors have reached a
conclusion that the Group is well placed to manage its business risks in the
current economic environment. Accordingly, they continue to adopt the going
concern basis in preparing the Interim Condensed Financial Statements.
13. Principal risks and uncertainties
Further detail concerning the principal risks affecting the business
activities of the Group is detailed on pages 11 to 13 of the Annual Report and
Accounts for the period ended 31 March 2023. Consideration has been given to
whether there have been any changes to the risks and uncertainties previously
reported. None have been identified.
14. Events after the balance sheet date
There have been no material events subsequent to the end of the interim
reporting period ended 30 September 2023.
15. Copies of the interim results
Copies of the interim results are available from the Group's website at
www.enteq.com.
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