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| Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
|---|---|---|---|---|---|
| Enteq Technologies Plc | LSE:NTQ | London | Ordinary Share | GB00B41Q8Q68 | ORD 1P |
| Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|---|---|
| 0.00 | 0.00% | 9.00 | 8.50 | 9.50 | 9.00 | 9.00 | 9.00 | 0.00 | 08:00:00 |
| Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
|---|---|---|---|---|---|
| Oil & Gas Field Machy, Equip | 6.25M | -2.8M | -0.0397 | -2.27 | 6.36M |
From Apr 2019 to Apr 2024
TIDMNTQ
RNS Number : 9958H
Enteq Upstream PLC
14 June 2017
Enteq Upstream plc
("Enteq", the "Company" or the "Group")
Final results for the year ended 31 March 2017
AIM traded Enteq Upstream plc, the oil and gas drilling technology company, today announces its financial results for the year ended 31 March 2017.
Key features
-- Cash balances have been maintained
-- On-going overhead control, whilst maintaining core competencies, has resulted in a reduced loss before tax.
-- Reduced revenues reflect the difficult conditions experienced in the industry.
Financial metrics
Years ended 31 March:
Hot Features
Premium
2017 2016
* Revenue $4.8m $6.3m
* Adjusted EBITDA(1) $(0.5)m $(0.6)m
* Loss before tax $1.1m $4.7m
1.7 cents 3.6 cents
* Adjusted loss per share(2)
2.0 cents 8.0 cents
* Loss per share
* Cash balance $15.3m $15.1m
Outlook
-- Increasing drilling activity in North America is restoring customer confidence, however, capital expenditure remains constrained.
-- Investment in technology and business development will continue to enhance the Group's product range.
-- Management to maintain focus on cash and overhead control.
Martin Perry, CEO of Enteq Upstream plc, commented:
"Enteq has maintained a sustainable business through difficult market conditions. Core competencies remain, technical differentiation is being improved and market share maintained. The business is secure and ready to respond to growth opportunities around the world and in North America when market conditions allow."
For further information, please contact:
Enteq Upstream plc +44 (0) 1494 618739
Martin Perry, Chief Executive Officer
David Steel, Finance Director
Investec Bank plc (Nomad and Broker) +44 (0) 20 7597 5970
Chris Treneman, Patrick Robb, David Anderson
(1) Adjusted EBITDA is reported profit before tax adjusted for interest, depreciation, amortisation, foreign exchange movements, Performance Share Plan charges and exceptional items.
(2) Adjusted loss per share is reported loss per share adjusted for exceptional items, amortisation and foreign exchange movements.
Chairman's Statement
Review of the Year
Whilst the first nine months of the financial year were extremely challenging, market conditions have seen some improvement since the beginning of 2017. The number of drilling rigs operating in North America has risen from approximately 420 in April 2016 to the March 2017 level of approximately 840. However, global factors continue to cause some instability in the oil price and accordingly the Board's expectations for capital investment by customers in new drilling equipment remain cautious.
Enteq has continued to develop its markets outside North America, including the fulfillment of its first contract in Saudi Arabia.
Post the financial year end, in May 2007, Enteq received a grant from the Technology Strategy Board of Innovate UK related to the Newton Fund: China - UK Research and Innovation Bridges Competition 2015. In conjunction with Imperial College, London and the Chinese institute of Petroleum in Beijing, Enteq will be developing technologies for optimal drilling of geothermal wells over the next two years.
Whilst still maintaining a low-cost base, Enteq has continued to invest in new product development. This has resulted in the recent filing of two UK and two U.S. patent applications.
Employee numbers have further reduced from 21 at the end of March 2016 to 19 at the end of March 2017. This number not only enables the business to maintain key functions necessary for a solid core business but also provides a base from which to react to any market recovery.
At the AGM, held in September 2016, the previous Chairman, Neil Warner, left the Board and the Company; his contribution is very much appreciated. Raymond Garcia also stepped down from the Board but remains as Chief Operating Officer. During a difficult time in the industry all members of staff have made a significant contribution to the control and discipline in the business; the Board thanks them for their support, understanding and loyalty.
Prospects
World oil prices have recently been under-pinned by Russian / Middle Eastern volume agreements which should result in more favorable market conditions for oil and gas companies and their service providers. In North America, through a combination of stable oil prices and increased efficiencies, the shale drillers are maintaining activities which will drive the need for further equipment in due course.
Enteq continues to enhance its technology and make gains in establishing new international customers. Tight cost management has led to a strong cash position that give Enteq a platform from which to develop in a potentially recovering market.
Iain Paterson
Chairman
Chief Executive's Operating and Strategic Review
Market Overview
Enteq supplies Measurement While Drilling (MWD) equipment to the oil and gas industry world-wide to enable directional drilling.
Directional drilling is carried out by oilfield service companies who either purchase equipment from third parties such as Enteq or develop the equipment themselves. Measurement While Drilling equipment is used on every rig which drills directional wells.
Due to an uncertain oil price since the end of 2015, the development of new oil fields and hence overall drilling activity has reduced. A key indicator of activity is the number of drilling rigs in operation, which is reported by Baker Hughes International. The number of drilling rigs operating in the USA has risen from approximately 420 in April 2016, to 840 in March 2017 and on to the current levels in excess of 910, but is still well below previous levels of 2,000 plus.
This rise of activity in USA is a sign that oil companies are now finding that, at the more stable oil price (West Texas Intermediate oil price has remained between $45 and $50 for the last six months) and through increased efficiencies in drilling activity, it is again economic to continue development of certain oilfields.
The directional drilling market continues to be divided between those 'major' service companies who are vertically integrated using their own equipment, and the 'independents' who need to acquire equipment, such as the Measurement While Drilling equipment provided by Enteq, from third parties. In North America, the major service companies have historically owned approximately 50% of the market but are currently offering competitive solutions for drilling which will have increased this share. The independents continue to have excess capacity of equipment meaning their new purchases remain slow. Enteq has, however, successfully offered some 'update' options which have allowed some of the larger customers to upgrade their equipment, assuring their loyalty to Enteq remains as the market recovers.
Outside North America, where drilling projects by the National and the larger International Oil Companies tend to be longer term, activities have remained slow, and the lower revenue flows from oil production have created tight cash flows throughout the market.
Enteq has maintained good relations in the international market and continued to generate revenues in China, Russia, the Middle East and India all of which have good longer term potential. Notable is a new contract for Saudi Arabia which has now been fulfilled and should lead to further opportunities.
Due to some consolidation in the market, and within competitors, management believe that Enteq has improved its market share in a potentially recovering market.
Competition
Some further consolidation has taken place amongst other third-party suppliers of equipment, although some new providers have also emerged. Enteq remains a strong and recognised independent solution and technology provider of Measurement While Drilling equipment.
Product development and introductions
Enteq has maintained its core disciplines within engineering and software development. Further functionality, as requested by the market, has been added to the Group's equipment offering. Two patent applications, both in the UK and in USA have been completed. The first application of the patents is part of a new product development which will add incremental capability when completed.
After the year-end, in May 2017, Enteq received a grant from the Technology Strategy Board of Innovate UK related to the Newton Fund: China - UK Research and Innovation Bridges Competition 2015. In conjunction with Imperial College, London and the Chinese institute of Petroleum in Beijing, Enteq will be developing technologies for optimal drilling of geothermal wells over the next two years.
Sales & Marketing
Regular contact is maintained with the customer base from the Group's operational hub in Houston and by the Chief Operations Officer in North America. International opportunities and sales are generated from the UK office and by a representative in China. Business development trips are made as and when required. Trade shows have been attended, including the Middle East Oil Show, where an exhibition booth was shared with the new Saudi Arabian partner.
Future strategic direction
Enteq will maintain a sustainable small business suitable to market conditions. The Group is well positioned for a recovering or stabilised market. Technology development, both in-house and with partners will continue to position the business with technical differentiation. Customer relationships both in North America and internationally remain strong. Enteq continues to believe in a long-term strategy of consolidation of technologies and distribution.
Conclusion
Enteq has maintained a sustainable business through difficult market conditions. Core competencies remain, technical differentiation is being improved and market share maintained. The business is secure and ready to respond to growth opportunities around the world and in North America when market conditions allow.
Martin Perry
Chief Executive Officer
Financial Review
Income Statement
Year to 31 March: 2017 2016
$ million $ million
Revenue 4.8 6.3
Cost of Sales (1.7) (2.2)
Gross profit 3.1 4.1
Overheads (3.6) (4.7)
----------------------------- ---------- ----------
Adjusted EBITDA (0.5) (0.6)
Depreciation & amortisation (0.5) (1.3)
Foreign exchange - -
Other charges (0.2) (0.2)
Ongoing operating loss (1.2) (2.1)
Inventory write down - (2.7)
Other exceptional items - -
Interest 0.1 0.1
----------------------------- ---------- ----------
Loss before tax (1.1) (4.7)
Tax (0.1) (0.1)
----------------------------- ---------- ----------
Loss after tax (1.2) (4.8)
============================= ========== ==========
The results for the year ended 31 March 2017 were significantly impacted by the dramatic decline in oil price between June 2014 and a recent low in February 2016. The price reduction of 69% (to approximately $33 per barrel) led to the number of drilling rigs operating in North America declining from 1,854 in June 2014 to a low of 404 in May 2016, reflecting the lag between oil price and rig count. Since May 2016 there has been recovery in the number of active rigs with a rise of 435 to 839, as at March 2017. Enteq's revenue is derived from both rigs being added to customers' fleets and on-going replacement of equipment during rig operation. The dramatic fall in the number of active (revenue generating) rigs up to May 2016 and a lag between the increase in rigs through to March 2017 and the consequent increase in the market for Enteq's products, has resulted in the 24% fall in worldwide revenue, to $4.8m. International revenue (customers outside North America) was $1.4m, which was a significant increase over the $0.6m in the previous year. This international revenue was, primarily, from the Group's first contract in Saudi Arabia.
The full year gross margin was 65%, the same as the previous year. This reflected the continuing product mix of predominately the higher margin lines (electronic components and rental).
Total overheads, at $3.6m, were down $1.1m (24%) on last year's figure. This reduction can be split into $0.4m relating to staff reductions (a further two posts being removed at the start of the year, plus the impact of posts removed during the year ended 31 March 2016) and $0.7m relating to non-staff costs. This latter figure covers all overheads areas such as travel, marketing, maintenance, IT support, advisor and audit fees. In addition, there was the impact of closing both the Austin and North Houston offices during the previous year.
The combined depreciation and amortisation charge was significantly down, due to the year to 31 March 2016 incurring an element of accelerated depreciation of the rental fleet, plus items of production equipment being fully depreciated during the year to 31 March 2017.
The "Other charges" included in the ongoing operating loss for the year, primarily, relate to the non-cash charge associated with the Performance Share Plan.
Statement of Financial Position
Enteq's assets and liabilities at the year-end were as follows:
As at 31 March: 2017 2016
$million $million
Other intangible assets 0.6 0.3
Property, plant & equipment 2.9 2.9
Net working capital 4.9 6.1
Cash 15.3 15.1
----------------------------- ---------- ----------
Net assets 23.7 24.4
============================= ========== ==========
Capital & reserves 23.7 24.4
============================= ========== ==========
The "Other intangible assets" represent the value of the R&D work, carried out by the engineering team, capitalised to date, less the amortisation relating to the products fully commercialised (primarily software releases).
The value of property, plant & equipment has remained constant due the depreciation charge of $0.4m being balanced by the increase in the cost of the rental fleet. $2.2m of the total comprises the freehold land and buildings of the South Houston facility.
The $1.2m decrease in net working capital is due to a reduction in inventory ($0.8m) and an increase in trade creditors ($0.3m); the increase in trade debtors ($0.6m) being balanced by an increase in year-end accruals.
Cash flows
Year to 31 March: 2017 2016
$ million $ million
Adjusted EBITDA (0.5) (0.6)
Change in operational
working capital 0.8 1.4
------------------------------ ------------ -----------
Operational cash generated 0.3 0.8
Investment in R&D (0.4) (0.3)
Warranty settlement received - 0.3
Severance payments - (0.1)
Interest and share issues 0.3 0.3
Net cash movement 0.2 1.0
Opening cash balances 15.1 14.1
Foreign exchange movements - -
------------------------------ ------------ -----------
Closing cash balances 15.3 15.1
============================== ============ ===========
Due to the senior management's concentration on preserving cash since the major reduction in oil prices, the closing cash balance of $15.3m is higher than both the previous year end ($15.1m) and that at 30 September 2016 ($15.2m).
Financial Capital Management
Enteq's financial position continues to be robust. Enteq had no bank borrowings or other debt and had a closing cash position of $15.3m as at 31 March 2017.
Enteq monitors its cash balances daily and operates under treasury policies and procedures which are set by the Board.
The financial statements are presented in US dollars as the Company's primary economic environment, in which it operates and generates cash flows, is one of US dollars. Apart from its UK based overhead costs, substantially all other transactions are transacted in US dollars.
Enteq is subject to the foreign exchange rate fluctuations to the extent that it holds non-US Dollar cash deposits. These GBP denominated holdings are now approximately 6% of total cash holdings, up from last year's 2% as USD1.0m was transferred to GBP in early January 2017 to take advantage of the favorable exchange rate at that date.
Annual Report and Accounts
The 2017 Annual Report and Accounts has today been sent to shareholders and is available on the Company's website, www.enteq.com.
Annual General Meeting
The Company's Annual General Meeting will be held on 19 September 2017 at 12.00 noon at the offices of Investec Bank plc, 2 Gresham Street, London EC2V 7QP.
Copies of these documents can also be obtained during normal business hours at the registered office of the company:
The Courtyard
High Street
Ascot
Berks SL5 7HP
David Steel
Finance Director
Enteq Upstream Plc
Consolidated Income
Statement
Year to
Year to 31 March 31 March
2017 2016
Notes $ 000's $ 000's $ 000's $ 000's
Ongoing Exceptional
operations items Total Total
Revenue 4,762 - 4,762 6,289
Cost of Sales (1,661) - (1,661) (2,201)
Gross Profit 3,101 - 3,101 4,088
Administrative expenses
before amortisation (4,235) - (4,235) (6,225)
Amortisation of acquired
intangibles 6 (68) - (68) (30)
Other exceptional items 3 - (54) (54) (2,585)
Foreign exchange loss
on operating activities (8) - (8) (1)
------------ ------------ -------- ----------
Total Administrative
expenses (4,311) (54) (4,365) (8,841)
Operating loss (1,210) (54) (1,264) (4,753)
Finance income 127 - 127 93
Loss before tax (1,083) (54) (1,137) (4,660)
Tax expense 4 (48) - (48) (81)
Loss for the period (1,131) (54) (1,185) (4,741)
============ ============ ======== ==========
Loss attributable to:
------------ ------------ -------- ----------
Owners of the parent (1,131) (54) (1,185) (4,741)
------------ ------------ -------- ==========
Loss per share (in
US cents): 5
Basic (2.0) (8.0)
Diluted (2.0) (8.0)
Adjusted loss per share
(in US cents): 5
Basic (1.7) (3.6)
Diluted (1.7) (3.6)
Enteq Upstream Plc
Year to Year to
Consolidated Statement of Comprehensive 31 March 31 March
Income 2017 2016
$ 000's $ 000's
Loss for the year (1,185) (4,741)
Other comprehensive income for
the year:
Items that will not be reclassified
subsequently to profit and loss - -
Items that will be reclassified
subsequently to profit and loss - -
----------------------------------------------- ----------- -----------
Total comprehensive income for
the period (1,185) (4,741)
=============================================== =========== ===========
Total comprehensive income attributable
to:
Owners of the parent (1,185) (4,741)
=============================================== =========== ===========
Enteq Upstream Plc
Consolidated Statement of Financial
Position
As at As at
31 March 31 March
2017 2016
Notes $ 000's $ 000's
Assets
Non-current
Goodwill 6a - -
Intangible assets 6b 645 267
Property, plant and equipment 2,858 2,903
Non-current assets 3,503 3,170
---------- ----------
Current
Trade and other receivables 3,924 3,423
Inventories 3,366 4,214
Cash and cash equivalents 15,335 15,121
Current assets 22,625 22,758
---------- ----------
Total assets 26,128 25,928
========== ==========
Equity and liabilities
Equity
Share capital 963 950
Share premium 90,718 90,558
Share based payment reserve 806 549
Retained earnings (68,747) (67,562)
Total equity 23,740 24,495
---------- ----------
Liabilities
Current
Trade and other payables 2,388 1,433
Total liabilities 2,388 1,433
---------- ----------
Total equity and liabilities 26,128 25,928
========== ==========
Enteq Upstream Plc
Consolidated Statement of Changes in Equity
Share
Called
up based
share Retained Share payment Total
capital earnings premium reserve equity
$ 000's $ 000's $ 000's $ 000's $ 000's
Issue of share capital 13 - 160 - 173
Share based payment
charge - - - 257 257
Transactions with
owners 13 - 160 257 430
Loss for the year - (1,185) - - (1,185)
Other comprehensive
income for the year - - - - -
Total comprehensive
income - (1,185) - - (1,185)
Total movement 13 (1,185) 160 257 (755)
As at 1 April 2016 950 (67,562) 90,558 549 24,495
-------- --------- -------- -------- --------
As at 31 March 2017 963 (68,747) 90,718 806 23,740
======== ========= ======== ======== ========
Called Share
up based
share Retained Share payment Total
capital earnings premium reserve equity
$ 000's $ 000's $ 000's $ 000's $ 000's
Issue of share capital 11 - 163 - 174
Share based payment
charge - - - 185 185
Transactions with
owners 11 - 163 185 359
-------- --------- -------- -------- --------
Loss for the year - (4,741) - - (4,741)
Other comprehensive
income for the year - - - - -
Total comprehensive
income - (4,741) - - (4,741)
Total movement 11 (4,741) 163 185 (4,482)
As at 1 April 2015 939 (62,821) 90,395 364 28,877
As at 31 March 2016 950 (67,562) 90,558 549 24,495
======== ========= ======== ======== ========
Enteq Upstream Plc
Consolidated Statement of Cash Flows
Year to Year to
31 March 31 March
2017 2016
$ 000's $ 000's
Cash flows from operating
activities
Loss for the year (1,185) (4,741)
Tax charge 48 81
Net finance income (127) (93)
Loss on disposal of fixed
assets 25 43
Share-based payment non-cash
charges 257 185
Foreign exchange difference 8 1
Depreciation and Amortisation
charges 494 1,349
(480) (3,175)
Interest received 127 93
Tax paid (4) (15)
Decrease in inventory 440 3,714
(Increase)/decrease in
trade and other receivables (498) 1,595
Decrease/(increase) in
trade and other payables 910 (1,065)
Net cash from operating
activities 495 1,147
---------- ----------
Investing activities
Purchase of tangible fixed
assets - (66)
Disposal proceeds of tangible
fixed assets - 72
Purchase of intangible
fixed assets (446) (297)
Net cash from investing
activities (446) (291)
---------- ----------
Financing activities
Share issue 173 175
Net cash from financing
activities 173 175
---------- ----------
Increase in cash and cash
equivalents 222 1,031
Non-cash movements - foreign
exchange (8) (1)
Cash and cash equivalents
at beginning of period 15,121 14,091
Cash and cash equivalents
at end of period 15,335 15,121
========== ==========
Enteq Upstream plc
Notes to the consolidated financial statements
1. BASIS OF PREPARATION
The results for the year ended 31 March 2017 have been prepared using the accounting policies and methods of computation consistent with those used in the Group's annual report for the year ended 31 March 2016. The results have also been presented and prepared in a form consistent with that which will be adopted in the Group's annual report for the year ended 31 March 2017 and in accordance with the recognition and measurement requirements of the International Financial Reporting Standards as adopted by the European Union.
The financial information set out above does not constitute the Company's statutory accounts for the year ended 31 March 2017 and the year ended 31 March 2016, but is derived from those accounts. Statutory accounts for 2016 have been delivered to Companies House. Those for the year ended 31 March 2017 will be delivered following the Company's Annual General Meeting on 19 September 2017.
The financial information has been extracted from the Group's Annual Report for the year ended 31 March 2017. The auditors have reported on these accounts; their reports were unqualified, did not draw attention to any matters by way of emphasis without qualifying their report and did not contain statements under s498(2) or (3) Companies Act 2006. The Group intends to publish its 2017 Annual Report and Accounts in June 2017.
2. SEGMENTAL REPORTING
For management purposes, the Group is currently organised into a single business unit, the Drilling Tools
division, which is currently based solely in the USA.
The principal activities of the Drilling Tools division are the design, manufacture and selling of specialised parts and products for Directional Drilling and Measurement While Drilling operations for use in the energy exploration and services sector of the Oil and Gas industry.
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. A key measurement used by the board is Adjusted EBITDA. This reconciliation is included in note 3, below.
The revenues, net assets and non-current assets of the Group can be analysed by geographic location (post-consolidation adjustments) as follows:
Revenues
31 March 31 March
2017 2016
USD 000's USD 000's
United States 3,325 5,651
Rest of the world 1,437 638
--------------------- -------------------
Total Group revenue 4,762 6,289
===================== ===================
Net Assets
31 March 31 March
2017 2016
USD 000's USD 000's
Europe (UK) 13,985 14,569
United States 9,755 9,926
--------------------- ---------------------
Total Group net assets 23,740 24,495
===================== =====================
Non-current Assets
31 March 31 March
2017 2016
USD 000's USD 000's
Europe (UK) - -
United States 3,503 3,170
---------- ---------------------
Total Group non-current
assets 3,503 3,170
========== =====================
All of the Group's revenue arises from the sale and rental of specialised parts and products for Directional Drilling and Measurement While Drilling operations.
The Group had 4 customers that contributed in excess of 10% of the Group's total sales for the year (2016: 3). These customers contributed $1,222k, $1,030k, $853k and $513k. (2016: $1,826k, $1,006k and $914k). No revenue relates to customers based in the UK (2016: none).
3. PROFIT AND LOSS ANALYSIS
The following analysis illustrates the performance of the Group's activities, and reconciles the Group's loss for the period, as shown in the consolidated income statement, to adjusted earnings and adjusted EBITDA.
Adjusted earnings and adjusted EBITDA are presented to provide a better indication of overall financial performance and to reflect how the business is managed and measured on a day-to-day basis.
31 March 31 March
2017 2016
USD 000's USD 000's
Loss attributable
to ordinary shareholders (1,185) (4,741)
Other exceptional
items 54 2,585
Amortisation of acquired
intangible assets 68 30
Foreign exchange
movements 8 1
---------- ----------
Adjusted earnings (1,055) (2,125)
Depreciation charge 426 1,319
Finance income (127) (93)
Performance Share
Plan charge 252 199
Tax charge (note
4) 48 81
Adjusted EBITDA (456) (619)
========== ==========
The other exceptional items result from non-recurring costs. The total can be analysed as follows:
31 March 31 March
2017 2016
USD 000's USD 000's
Inventory write down - 2,697
Warranty settlement - (255)
Severance payments 43 119
Other 11 24
---------- ----------
Total exceptional
items 54 2,585
========== ==========
4. INCOME TAX
Analysis of tax expense
No liability to UK corporation tax arose on ordinary activities for the period.
Factors affecting the tax charge
The tax assessed for the period is different from the standard rate of corporation tax in the UK. The difference is explained below:
31 March 31 March
2017 2016
USD 000's USD 000's
Loss on ordinary activities
before tax (1,137) (4,660)
---------- ----------
Loss on ordinary activities
multiplied by the
standard rate of corporation
tax in the UK of 20% (2016:
20%): (227) (932)
Effects of:
Items not subject to corporation
tax 99 270
Tax losses to carry forward 128 662
Texas State Franchise Tax 48 81
Total income tax 48 81
========== ==========
There has been no deferred taxation recognised in these financial statements due to the uncertainty surrounding the timing of the recovery of these amounts. The total losses available to the Group in the relevant tax jurisdictions are as follows: UK $2.6m (tax value of $0.4m at 17%) and in the US $14.1m (tax value of $4.2m at 30%) (2016: UK $3.1m; United States $11.5m). There were no significant deferred tax liabilities.
5. EARNINGS PER SHARE AND DIVIDS
Basic earnings per share
Basic earnings per share is calculated by dividing the loss attributable to ordinary shareholders for the year of $1,185k (31 March 2016: loss of $4,741k) by the weighted average number of ordinary shares in issue during the year of 60,351k (31 March 2016: 59,336k).
Adjusted earnings per share
Adjusted earnings per share is calculated by dividing the earnings attributable to ordinary shareholders, excluding exceptional items, amortisation of intangible assets and foreign exchange profits or losses for the year of a loss of $1,055k (31 March 2016: loss of $2,125k), by the weighted average number of ordinary shares in issue during the year of 60,351k (31 March 2016: 59,336k).
As the Group is loss making, any potential ordinary shares have the effect of being anti-dilutive. Therefore, the diluted EPS is the same as the basic EPS. As the year end share price is below the weighted average option price of all the options issued, the adjusted diluted EPS is the same as adjusted EPS.
The adjusted diluted earnings per share information are considered to provide a fairer representation of the Group's trading performance. A reconciliation between basic earnings and adjusted earnings is shown below.
March 2017: EPS Weighted
average
number Per-share
Earnings of shares amount
USD 000's 000's US cents
Loss attributable to
ordinary shareholders (1,185) 60,351 (2.0)
Exceptional items 54
Amortisation of acquired
intangible assets 68
Foreign exchange movements 8
Adjusted loss attributable
to ordinary shareholders (1,055) 60,351 (1.7)
========== ========== =========
March 2016: EPS Weighted
average
number Per-share
Earnings of shares amount
USD 000's 000's US cents
Loss attributable to
ordinary shareholders (4,741) 59,336 (8.0)
Exceptional items 2,585
Amortisation of acquired
intangible assets 30
Foreign exchange movements 1
Adjusted loss attributable
to ordinary shareholders (2,125) 59,336 (3.6)
========== ========== =========
During the year Enteq Upstream Plc did not pay any dividends (2016: nil).
6. INTANGIBLE ASSETS
a) Goodwill
USD
000's
Cost:
As at 31 March 2016
and as at 31 March 2017 19,619
-------
Impairment:
As at 31 March 2016
and as at 31 March 2017 19,619
-------
Net Book Value:
-------
As at 1 April 2016 and -
as at 31 March 2017
=======
b) Other Intangible Assets
Developed IPR&D Brand Customer Non- Total
technology technology names relationships compete
agreements
USD USD 000's USD USD 000's USD 000's USD
000's 000's 000's
Cost:
As at 1 April
2016 12,500 7,225 1,240 20,586 5,931 47,482
Transfers 176 (176) - - - -
Capitalised
in period - 446 - - - 446
------------ ------------ -------- --------------- ------------ ---------
As at 31 March
2017 12,676 7,495 1,240 20,586 5,931 47,928
------------ ------------ ---------
Amortisation/Impairment:
As at 1 April
2016 (12,350) (7,108) (1,240) (20,586) (5,931) (47,215)
Charge for
the year (68) - - - - (68)
As at 31 March
2017 (12,418) (7,108) (1,240) (20,586) (5,931) (47,283)
------------ ------------ -------- --------------- ------------ ---------
Net Book Value:
------------ ------------ -------- --------------- ------------ ---------
As at 1 April
2016 150 117 - - - 267
============ ============ ======== =============== ============ =========
As at 31 March
2017 258 387 - - - 645
============ ============ ======== =============== ============ =========
Developed IPR&D Brand Customer Non- Total
technology technology names relationships compete
agreements
USD 000's USD 000's USD 000's USD 000's USD 000's USD
000's
Cost:
As at 1 April
2015 12,320 7,108 1,240 20,586 5,931 47,185
Transfers 180 (180) - - - -
Capitalised
in period - 297 - - - 297
------------ ------------ ---------- --------------- ------------ ---------
As at 31 March
2016 12,500 7,225 1,240 20,586 5,931 47,482
------------ ------------ ---------- --------------- ------------ ---------
Amortisation/Impairment:
As at 1 April
2015 (12,320) (7,108) (1,240) (20,586) (5,931) (47,185)
Charge for
the year (30) - - - - (30)
As at 31 March
2016 (12,350) (7,108) (1,240) (20,586) (5,931) (47,215)
------------ ------------ ---------- --------------- ------------ ---------
Net Book Value:
------------ ------------ ---------- --------------- ------------ ---------
As at 1 April - - - - - -
2015
============ ============ ========== =============== ============ =========
As at 31 March
2016 150 117 - - - 267
============ ============ ========== =============== ============ =========
The main categories of Intangible 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 within the next 12 months.
Brand names:
The value associated with the various trading names used within the Group.
Customer relationships:
The value associated with the on-going trading relationships with the key customers acquired.
Non-compete agreements:
The value associated with the agreements signed by the Vendors of the acquired businesses not to compete in the markets of the businesses acquired.
Goodwill and Impairment
The Group tests goodwill and other intangible assets annually for impairment. The impairment test carried out on the balances as at 31 March 2017 indicated that there was no impairment of the full carrying value of both goodwill and intangibles assets.
There is deemed to be just one cash generating unit ("CGU") within the Company. In previous years there were deemed to be two, but from a financial & operational perspective both US locations are now being run as one unit.
The recoverable amount of the CGU is determined from value in use calculations. The key assumptions for the value in use calculations are those regarding the discount rates, growth rates and expected changes to selling prices and direct costs during the period. Management estimates discount rates using pre-tax rates that reflect current market assessment of the time value of money and the risks specific to the CGU. The growth rates are based on management forecasts for the five years to March 2021. Cash flow forecasts are prepared from the most recent financial plans approved by the Board.
The forecasts assume annual growth rates between 2% and 30% until 2021 and 3% thereafter in the long term. These long-term growth rates do not exceed the long-term average growth rates for the industry as a whole.
The pre-tax rate used to discount cash flow forecasts is 13.5% (2016: 13.2%). Management have based this rate on the following factors: a Risk Free Rate of 3.0%; a levered equity beta of 1.5; a market risk premium of 5.5%; a small cap premium of 3.81% and an implied cost of debt of 4.53%.
Intangible assets
The intangible assets acquired during the year represent their fair value at the date of acquisition.
Amortisation
All categories of intangible assets, apart from the Goodwill and the IPR&D technology, are being amortised over their respective useful lives, on a straight-line basis. The remaining amortisation period of the intangible assets is 22 months.
7. GOING CONCERN
After considering the current financial projections of the Group and taking into account the cash needs of the business and availability of funds, the Directors have a reasonable expectation that the group has adequate resources to continue its operations for the foreseeable future. For this reason, they continue to adopt a "going concern" basis in preparing the Statement of Annual Results.
8. RESPONSIBILITY STATEMENT OF THE DIRECTORS
To the best of the knowledge of the Directors (whose names and functions are set out below), the preliminary announcement has been prepared using accounting policies and methods of computation consistent with those used in the Group's annual report for the year ended 31 March 2016 and adopted for the financial year ended 31 March 2017, gives a true and fair view of the assets, liabilities, financial position and profit for the Company and the undertakings included in the consolidation taken as a whole; and
Pursuant to Disclosure and Transparency Rules, Chapter 4, the Directors' Report of the Company's annual report will include a fair review of the development and performance of the business taken, together with a description of the principal risks and uncertainties faced by the business.
Executive Directors
Martin Perry Chief Executive Officer David Steel Finance Director
Non-Executive Directors
Iain Paterson Chairman
Robin Pinchbeck
This information is provided by RNS
The company news service from the London Stock Exchange
END
FR UOONRBUANAAR
(END) Dow Jones Newswires
June 14, 2017 02:00 ET (06:00 GMT)
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