TIDMNTQ
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
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 $3.6bn annually and needs
additional competition. Extensive and continued industry
engagement, including recent attendance at the ADIPEC global trade
show, has confirmed a high level of potential demand for SABER
across the key regions, including applications to support energy
transition.
Andrew Law Martin Perry
Chief Executive Chairman
Enteq Technologies plc
15 November 2023
Enteq Technologies plc
Condensed Consolidated Income
Statement
Six months Six months Year to
to 30 to 30 31 March
September September 2023
2023 2022
Unaudited Unaudited Audited
Notes US$ 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 30 September 31 March
2023 2022 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 - 54 -
greater than one year
------------------------------- ----------
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 Six Year
to months to
30 September to 31 March
2023 30 September 2023
2022
Unaudited Unaudited Audited
US$
US$ 000's 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$), which is also the functional
currency of the parent company. These condensed consolidated
interim financial statements (the interim financial statements)
have been approved for issue by the Board of directors on 15
November 2023
This half-yearly financial report has not been audited and has
not been formally reviewed by auditors under the Auditing Practices
Board guidance in ISRE 2410.
3. Accounting policies
The interim financial statements have been prepared on the basis
of the accounting policies and methods of computation applicable
for the period ending 31 March 2024. These accounting policies are
consistent with those applied in the preparation of the accounts
for the period ended 31 March 2023.
4. Estimates
When preparing the interim financial statements, management
undertakes a number of judgements, estimates and assumptions about
recognition and measurement of assets, liabilities, income and
expenses. The actual results may differ from the judgements,
estimates and assumptions made by management, and will seldom equal
the estimated results. The judgements, estimates and assumptions
applied in the interim financial statements, including the key
sources of estimation uncertainty were the same as those applied in
the Group's last annual financial statements for the year ended 31
March 2023.
5. Adjusted earnings and adjusted EBITDA
The following analysis illustrates the performance of the
Group's activities, and reconciles the Group's loss, as shown in
the condensed consolidated interim income statement, to adjusted
earnings. Adjusted earnings are presented to provide a better
indication of overall financial performance and to reflect how the
business is managed and measured on a day-today basis. Adjusted
earnings before interest, taxation, depreciation and amortisation
("adjusted EBITDA") is also presented as it is a key performance
indicator used by management.
Six months Six months Year to
to 30 September to 30 September 31 March
2023 2022 2023
US$ 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 Six months Year to
to 30 September to 30 September 31 March
2023 2022 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 30 September 31 March
2023 2022 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$766,000) by the weighted
average number of ordinary shares in issue during the period of
69,724,006 (September 2022: 69,247,129).
9. Income Tax
No tax liability arose on ordinary activities for the six months
under review.
10. Intangible Fixed Assets
Other Intangible Fixed Assets
Developed IPR&D Brand
technology technology names Total
US$ 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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IR FFFFILDLSLIV
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