Source - LSE Regulatory
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 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

-







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

30 September 2023

Six months to

30 September 2022

Year to

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.

 

This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact rns@lseg.com or visit www.rns.com.

RNS may use your IP address to confirm compliance with the terms and conditions, to analyse how you engage with the information contained in this communication, and to share such analysis on an anonymised basis with others as part of our commercial services. For further information about how RNS and the London Stock Exchange use the personal data you provide us, please see our Privacy Policy.
 
END
 
 
IR FFFFILDLSLIV
Find out how to deal online from £1.50 in a SIPP, ISA or Dealing account. AJBell logo

Related Charts

Enteq Technologies PLC (NTQ)

-0.25p (-2.56%)
delayed 16:57PM