TIDMNTQ
RNS Number : 0473F
Enteq Upstream PLC
12 November 2020
Enteq Upstream plc
Interim results for the six months ended 30 September 2020
AIM traded Enteq Upstream plc ("Enteq", the "Company" or the
"Group"), the energy services technology and equipment supplier,
today announces its interim results for the six months ended 30
September 2020.
Key Highlights
-- International revenue share increased to 74%. (September 2019: 42%)
-- Growth in revenue from China; new deployments in Middle East
-- Challenging market conditions in North America
-- Cash balance of $8.8m at 30 September 2020 (March 2020: $10.2m)
-- Focused investment and value creation in innovative technology development
-- Board succession plan in place
Financial metrics
6 Months ended 30 September:
2020 2019
US$m US$m
* Revenue 2.6 6.5
* Adjusted EBITDA(1) 0.1 1.5
* Post tax loss for the period 0.7 0.5
* Adjusted loss per share (cents) (2) 0. 5 0. 4
* Cash balance 8.8 10.7
Outlook
-- North American drilling market likely to remain subdued for medium term
-- Markets outside USA show increasing demand for Enteq equipment
-- New technology will greatly expand Enteq's addressable market
-- Value creation from new technologies as milestones are met
-- Continuing strong balance sheet enables on-going investment
Martin Perry, CEO of Enteq Upstream plc, commented:
"2020 has dramatically changed the market for Enteq. The USA
land shale drilling market has significantly reduced with on-going
over capacity likely. Outside North America, despite the effects of
oil price uncertainties and COVID-19, Enteq has succeeded in
developing a strong customer base in China and the Middle East with
good further opportunities. New technology will drive the
efficiency of future drilling in all markets, and Enteq has some
exciting product release plans which have the potential to change
the scale of our business.
A rapid response to the market challenges through reducing
overheads whilst maintaining investment in our new product
engineering has given Enteq stability, supported by a secure cash
balance.
As of 1 April 2021, I have elected to step down from the CEO
role, and take up the position of Non-Executive Chairman. I am
delighted to congratulate Andrew Law (currently Commercial
Director) on his planned appointment as CEO. Andrew has significant
experience in the industry, strategy and finance, and will continue
to drive our new technologies and new market penetration. I look
forward to supporting him with this and with an on-going drive to
achieve incremental growth opportunities."
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 Sim, 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 earnings per share is reported profit per share
adjusted for foreign exchange movements, amortisation, performance
share plan charges and exceptional items .
Interim Report
CHAIRMAN & CHIEF EXECUTIVE OFFICER'S REPORT
Overview
Enteq Upstream supplies Measurement While Drilling (MWD)
technologies and equipment to companies in the energy services
sector. The equipment enables the well-bore to be accurately
positioned and assists in optimising the efficiency of drilling
operations.
The six-month reporting period ended 30 September 2020 was
dominated by both the ongoing impact of the mid-March 2020 oil
price slump and the effects of the COVID-19 pandemic. The price of
a barrel of West Texas Intermediate Crude oil ("WTI") fell to $16
per barrel during April 2020 and has since recovered to around $40,
having previously averaged $57 for the year to 31 March 2020. The
number of active drilling rigs in North America started the period
at 664 (31 March 2019: 1,028) before falling by around 60% to 263
at the end of June 2020. Since then the number has remained stable,
ending this reporting period at 266.
As a result of the oil price drop and dramatic drilling rig
reduction, Enteq's revenue derived from North America has fallen to
approximately $0.7m ($3.8m to September 2019). During the period, a
significant number of the equipment on rental in North America
reached the end of its full rental term, with legal title passing
to the renter. In addition, a number of kits came off rental and
were placed back in inventory at their appropriately depreciated
values.
International revenue (sales outside North America), at $1.9m,
represents 74% of total revenue, compared to approximately 30% in
the previous full year period ($3.2m) and 42% in equivalent period
ending September 2019 ($2.8m). New customers in China represent 70%
of the period's international sales. Enteq's success in China is
due to the strategic demand for gas from wells which are drilled in
harsh and high temperature conditions, where Enteq's proven
reputation for reliable and technically advanced technology
provides customer confidence. Equipment has also been ordered and
delivered to Enteq's new strategic partner in Saudi Arabia who is
currently undergoing the final stages of accreditation with Saudi
Aramco. When this process is successful, the ownership of this
equipment will transfer and Enteq will recognise the revenue with
the expectation of a medium-to-long term supply contract being
awarded to our partner. The outcome of the accreditation is
expected to be known before the end of March 2021.
Technology Update
Enteq continues to invest in the re-engineering and
commercialisation of the Rotary Steerable System ("SRSS")
development program licensed from Shell in September 2019. The
project has continued to meet the required technical and market
milestones, with prototype deployment and field trials scheduled
for 2021. This product range will enable Enteq to enter the Rotary
Steerable Drilling service market which has an estimated world-wide
annual value of $1.7bn in 2020, of which approximately 40% is
accessible by the SRSS technology. This compares to an
approximately $100m addressable market for Enteq's current MWD
products. As at 30 September 2020, Enteq has invested $0.6m in the
system and expects to invest approximately $2.0m over the next two
years to bring the product to market.
Further investment in a high-speed data transmission project, a
key requirement for the optimisation and efficiency of drilling in
the future energy industry, has been continued with a partner in
Poland, where initial phases of surface prototype proving have been
successfully completed.
The combination of existing Enteq Measurement While Drilling
technology, the novel Rotary Steerable solution, high-speed
telemetry and integration with further third-party sensors will
provide the core of a focused Geosteering strategy for Enteq.
Operations
The core engineering, manufacturing and distribution functions
continue to operate from the Enteq owned facility in South Houston,
Texas, with additional contract engineering, in particular for the
SRSS project, carried out in the UK.
In response to the dramatic mid-March 2020 downturn in the oil
price and drilling activity, substantial overhead and headcount
reductions were made in Houston and some non-core engineering staff
furloughed in the UK. The core skill sets required to support
customers, maintain quality and complete international deliveries
of equipment have been maintained. Investment has continued in the
internal and contract engineering for strategic projects. In April
2020 Raymond Garcia, a co-founder of Enteq and President /COO in
USA, left the company.
Board Succession Plan
On 29 September 2020 Andrew Law was appointed to the Board of
Directors, as Commercial Director. Andrew joined Enteq on 2 January
2019 as Director of International Sales, a non-Board appointment.
Initially Andrew's focus was on expanding Enteq's market share
outside North America and since March 2020 Andrew has additionally
taken responsibility for Enteq's worldwide sales and fulfilment
functions.
As set out in a separate announcement, the Board has today
announced its orderly succession plan that will enable and support
the delivery of a focused strategy for technology innovation and
earnings growth in a consolidating sector.
As of 1 April 2021, Andrew Law, currently the Commercial
Director, will become the Chief Executive Officer (CEO). Martin
Perry, who is currently the CEO and a founding shareholder, will
become the Non-executive Chairman. Neil Hartley will assume the
role of Senior Independent Director. Iain Paterson, the current
Chairman, will continue as a Non-executive Director. David Steel
continues to serve on the Board with the new title of Chief
Financial Officer.
Overview of results
The half year revenue of US$2.6m represents a reduction of 60%
over the US$6.5m for the first half of last year and a 40% fall
over the previous half year.
The above reductions reflect the severe impact on overall demand
resulting from the mid-March 2020 oil price slump and the effects
of COVID-19.
The North American market remains extremely subdued with the
number of active drilling rigs continuing to fall from 664 at the
start of April 2020 to 266 at the end of September 2020, with
resulting over capacity of equipment in the market.
The international customer base for Enteq has grown
significantly in the last six months, primarily through expanding
market share in China. The international market represents 74% of
the first half year revenue (September 2019: 42%; Full year to
March 2020: 30%) with China representing 71% of the total
international revenue (September 2019: 39%; Full year to March
2020: 29%).
Revenue from the sale of full kits, primarily into China, was
$1.3m, an increase from $0.6m in the equivalent period to September
2019. The equipment rental market revenue continues be a
significant part of the first half revenue, even though reducing in
absolute terms due to the lack of opportunity to replace kits that
come to the end of their rental period. Rental revenue of $0.9m was
33% of the first half total, down from $2.6m in the six months to
September 2019 (40%).
The reported gross margin of 60% earned in the first half of
this year was up on the 55% achieved for the six months to 30
September 2019. This was primarily due to the product mix,
including a higher proportion of the high margin rental
revenue.
In the six months ended 30 September 2020, administrative
expenses before amortisation, depreciation and long-term incentive
scheme charges were US$1.5m, down from the $2.1m in the six months
to September 2019. This was primarily due to the cost cutting
measures made in response to the market down turn seen in mid-March
2020, primarily in headcount, but across all other areas of
overhead spend.
The adjusted EBITDA profit in the period was US$0.1m. Despite
being down from the $1.5m in the equivalent period last year,
achieving a positive EBITDA during a period of severe reduction in
overall demand was pleasing. A reconciliation between the reported
loss and the adjusted EBITDA is shown in note 5 to the Financial
Statements below.
Cash balance and cashflow
As at 30 September 2020 the Group had a cash balance of US$8.8m,
down US$1.4m over the figure as at 31 March 2020.
The half year cash movement can be analysed as follows:
US$m
Adjusted EBITDA 0.1
Change in trade and other receivables 0.2
Change in trade and other payables (0.9)
Change in inventory 0.2
Operational cashflow (0.4)
Increase in the rental/demo fleet (0.6)
R&D expenditure (0.5)
Other items 0.1
--------------------------------------- ---------
Net cash movement (1.4)
Cash balances as at 1 April 2020 10.2
--------------------------------------- ---------
Cash balances as at 30 September 2020 8.8
======================================= =========
Out of the net $0.5m change in working capital, $0.1m related to
settling fees associated with potential acquisitions. The majority
of the increase in the rental/demo fleet relates to the new partner
in Saudi Arabia. The related revenue will only be recognised by
Enteq when the equipment completes the Saudi Aramco accreditation
process; this is expected to be before the end of March 2021.
The R&D expenditure was predominately on the Rotary
Steerable System development program that includes elements
licensed from Shell which continues to meet the project milestones,
with prototype deployment scheduled for 2021.
Martin Perry Iain Paterson
Chief Executive Chairman
Enteq Upstream plc
11 November 2020
Enteq Upstream plc
Condensed Consolidated Income Statement
Six months Six months Year to
to 30 to 30 31 March
September September 2020
2020 2019
Unaudited Unaudited Audited
Notes US$ 000's US$ 000's US$ 000's
Revenue 2,596 6,546 10,903
Cost of Sales (1,029) (2,950) (4,256)
Gross Profit 1,567 3,596 6,647
Administrative expenses before
amortisation (1,998) (4,020) (7,269)
Amortisation of acquired intangibles 10b - (148) (217)
Other exceptional items 6 (420) (2) (7,286)
Foreign exchange (loss)/gain
on operating activities 46 (25) 37
----------- ----------- ----------
Total Administrative expenses (2,372) (4,195) (14,735)
Operating loss (805) (599) (8,088)
Finance income 46 142 250
Loss before tax (759) (457) (7,838)
Tax expense 9 29 - -
Loss for the period 5 (730) (457) (7,838)
========================================= ====== =========== =========== ==========
Loss attributable to:
Owners of the parent (730) (457) (7,838)
========================================= ====== =========== =========== ==========
Earnings/loss per share (in
US cents): 8
Basic (1.1) (0.7) (12.1)
Diluted (1.1) (0.7) (12.1)
Condensed Consolidated Statement
of Comprehensive Income
Six months Six Year to
to 30 September months 31 March
2020 to 30 2020
September
2019
Unaudited Unaudited Audited
US$
US$ 000's 000's US$ 000's
Loss for the period (730) (351) (7,838)
Other comprehensive income
for the period:
Items that will not be reclassified
subsequently to profit or loss - - -
Items that will be reclassified
subsequently to profit or loss - - -
Total comprehensive income
for the period (730) (351) (7,838)
-------------------------------------- ----------------- ----------- ----------
Total comprehensive income
attributable to:
------------------------------------- ----------------- ----------- ----------
Owners of the parent (730) (351) (7,838)
-------------------------------------- ----------------- ----------- ----------
Enteq Upstream plc
Condensed Statement of Financial
Position
30 September 30 September 31 March
2020 2019 2020
Unaudited Unaudited Audited
Notes US$ 000's US$ 000's US$ 000's
Assets
Non-current
Goodwill 10a - - -
Intangible assets 10b 665 2,940 134
Property, plant and
equipment 2,394 2,487 3,433
Rental fleet 854 2,489 -
----------------------------- ------ -------------
Non-current assets 3,913 7,916 3,567
----------------------------- ------ ------------- ------------- ----------
Current
Trade and other receivables 1,617 2,347 2,025
Inventories 2,790 5,301 3,110
Cash and cash equivalents 8,827 10,662 10,183
----------------------------- ------ ------------- -------------
Current assets 13,234 18,310 15,318
----------------------------- ------ ------------- ------------- ----------
Total assets 17,147 26,226 18,885
============================= ====== ============= ============= ==========
Equity and liabilities
Equity
Share capital 11 1,051 1,027 1,027
Share premium 91,724 91,579 91,579
Share based payment
reserve 751 867 1,048
Retained earnings (77,673) (69,562) (76,943)
----------------------------- ------ ------------- ----------
Total equity 15,853 23,911 16,711
----------------------------- ------ ------------- ------------- ----------
Liabilities
Current
Trade and other payables 1,294 2,315 2,174
----------------------------- ------ ------------- ------------- ----------
Total equity and
liabilities 17,147 26,226 18,885
============================= ====== ============= ============= ==========
Enteq Upstream plc
Condensed Consolidated Statement of Changes
in Equity
Six months to 30 September 2020
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 24 - 145 - 169
Share based payment
charge - - - (297) (297)
---------- ----------
Transactions with owners 24 - 145 (297) (128)
------------------------------ ---------- ---------- ---------- ---------- ----------
Loss for the period - (730) - - (730)
Total comprehensive
income - (730) - - (730)
------------------------------ ---------- ---------- ---------- ---------- ----------
Movement in period: 24 (730) 145 (297) (858)
As at 1 April 2020 (audited) 1,027 (76,943) 91,579 1,048 16,711
------------------------------ ---------- ---------- ---------- ---------- ----------
As at 30 September 2020
(unaudited) 1,051 (77,673) 91,724 751 15,853
============================== ========== ========== ========== ========== ==========
Six months to 30 September 2019
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 22 - 181 - 203
Share based payment
charge - - - 117 117
---------- ----------
Transactions with owners 22 - 181 117 320
------------------------------ ---------- ---------- ---------- ---------- ----------
Loss for the period - (457) - - (457)
Total comprehensive
income - (457) - - (457)
------------------------------ ---------- ---------- ---------- ---------- ----------
Movement in period: 22 (457) 181 117 (137)
As at 1 April 2019 (audited) 1,005 (69,105) 91,398 750 24,048
------------------------------ ---------- ---------- ---------- ---------- ----------
As at 30 September 2019
(unaudited) 1,027 (69,562) 91,579 867 23,911
============================== ========== ========== ========== ========== ==========
Enteq Upstream plc
Condensed Consolidated Statement of Cash
flows
Six months Six months Year
to to to
30 September 30 September 31 March
2020 2019 2020
Unaudited Unaudited Audited
US$ 000's US$ 000's US$ 000's
Cash flows from operating activities
Loss for the period (730) (457) (7,838)
Tax credit (29) - -
Net finance income (46) (142) (250)
Share-based payment non-cash charges (297) 116 298
Impact of foreign exchange movement (46) 25 (37)
Depreciation ,amortisation and exceptional
charges 820 1,934 7,822
(328) 1,476 (5)
(Increase)/decrease in inventory 321 (787) 1,402
Decrease/(increase) in trade and
other receivables 409 5 329
(Decrease)/increase in trade and
other payables (851) (720) (863)
Net cash from operating activities (449) (26) 863
---------------------------------------------- -------------- -------------- ----------
Investing activities
Purchase of tangible fixed assets (18) (127) (208)
Increase in rental fleet assets (618) (743) (742)
Purchase of intangible fixed assets (531) (693) (2,150)
Interest received 46 142 250
---------------------------------------------- -------------- -------------- ----------
Net cash from investing activities (1,121) (1,421) (2,850)
---------------------------------------------- -------------- -------------- ----------
Financing activities
Share issue 168 204 203
---------------------------------------------- -------------- -------------- ----------
Net cash from financing activities 168 203 203
---------------------------------------------- -------------- -------------- ----------
Increase/(decrease) in cash and cash
equivalents (1,402) (1,243) (1,784)
Non-cash movements - foreign exchange 46 (25) 37
Cash and cash equivalents at beginning
of period 10,183 11,930 11,930
Cash and cash equivalents at end
of period 8,827 10,662 10,183
============================================== ============== ============== ==========
ENTEQ UPSTREAM PLC
NOTES TO THE FINANCIAL STATEMENTS
For the six months to 30 September 2020
1. Reporting entity
Enteq Upstream plc ("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") are focused on the provision of specialist products
and technologies to the upstream oil and gas services market.
2. General information and basis of preparation
The information for the period ended 30 September 2020 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 2020 has been delivered to the Registrar of
Companies. The auditors have reported on these accounts; their
reports were unqualified, but did draw attention to the uncertainty
regarding the carrying value of the inventory by way of emphasis
without qualifying their report and did not contain statements
under s498(2) or (3) Companies Act 2006
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$), which is also the functional
currency of the parent company. These condensed consolidated
interim financial statements (the interim financial statements)
have been approved for issue by the Board of directors on 11
November 2020.
This half-yearly financial report has not been audited, and has
not been formally reviewed by auditors under the Auditing Practices
Board guidance in ISRE 2410.
3. Accounting policies
The interim financial statements have been prepared on the basis
of the accounting policies and methods of computation applicable
for the period ended 31 March 2020. These accounting policies are
consistent with those applied in the preparation of the accounts
for the period ended 31 March 2020.
4. Estimates
When preparing the interim financial statements, management
undertakes a number of judgements, estimates and assumptions about
recognition and measurement of assets, liabilities, income and
expenses. The actual results may differ from the judgements,
estimates and assumptions made by management, and will seldom equal
the estimated results. The judgements, estimates and assumptions
applied in the interim financial statements, including the key
sources of estimation uncertainty were the same as those applied in
the Group's last annual financial statements for the year ended 31
March 2020.
5. Adjusted earnings and adjusted EBITDA
The following analysis illustrates the performance of the
Group's activities, and reconciles the Group's loss, as shown in
the condensed consolidated interim income statement, to adjusted
earnings. Adjusted earnings are presented to provide a better
indication of overall financial performance and to reflect how the
business is managed and measured on a day-today basis. Adjusted
earnings before interest, taxation, depreciation and amortisation
("adjusted EBITDA") is also presented as it is a key performance
indicator used by management.
Six months Six months Year to
to 30 September to 30 September 31 March
2020 2019 2020
US$ 000's US$ 000's US$ 000's
Unaudited Unaudited Audited
Loss attributable to ordinary
shareholders (730) (457) (7,838)
Exceptional items 420 2 7,286
Amortisation of acquired intangible
assets - 147 217
Foreign exchange movements (46) 25 (37)
----------------- ----------------- ----------
Adjusted earnings (356) (283) (372)
Depreciation charge 820 1,787 3,412
Finance income (46) (142) (250)
PSP credit/(charge) (302) 114 298
Tax credit (29) - -
Adjusted EBITDA 87 1,476 3,088
================= ================= ==========
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
2020 2019 2020
US$ 000's US$ 000's US$ 000's
Unaudited Unaudited Audited
Write down of intangible assets - - 4,192
Write down of inventory - - 2,700
Severance payments 363 - 98
Aborted project costs incurred 57 - 296
Other - 2 -
----------------- ----------------- ----------
Adjusted earnings 420 2 7,286
================= ================= ==========
7. Segmental Reporting
For management purposes, the Group is currently organised into a
single business unit, the Drilling Division, which is based,
operationally, solely in the USA.
The principal activities of the Drilling Division are the
design, manufacture and selling of specialised products and
technologies for Directional Drilling and Measurement While
Drilling operations used 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.
The net assets of the Group by geographic location
(post-consolidation adjustments) are as follows:
Net Assets 30 September 30 September 31 March
2020 2019 2020
US$ 000's US$ 000's US$ 000's
Unaudited Unaudited Audited
Europe (UK) 7,768 14,086 8,712
United States 8,085 9,825 7,999
------------- ------------- ----------
Total Net Assets 15,853 23,911 16,711
============= ============= ==========
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$730,400 (September 2019: loss of US$457,400) by the weighted
average number of ordinary shares in issue during the period of
66,452,000 (September 2019: 65,488,000).
Adjusted earnings per share
Adjusted earnings per share is calculated by dividing the
adjusted earnings loss for the six months of US$356,000 (September
2019: loss of US$283,400), by the weighted average number of
ordinary shares in issue during the period of 66,452,000 (September
2019: 65,488,000).
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 in Note 5.
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 share price, as at 30 September
2020, was below the weighted average option price of all the
options issued, the adjusted diluted EPS the same as adjusted
EPS.
9. Income Tax
No tax liability arose on ordinary activities for the six months
under review. The tax credit of $29,000 relates to the receipt of
UK R&D tax reclaimed.
10. Intangible Fixed Assets
a) Goodwill
US$ 000's
Cost:
As at 30 September 2020 and
1 April 2020 19,619
----------
Impairment:
As at 30 September 2020 and
1 April 2020 (19,619)
----------
Net Book Value:
----------
As at 30 September 2020 and -
1 April 2020
==========
b) Other Intangible Fixed Assets
Developed IPR&D technology Brand Customer Non- compete
technology names relationships agreements Total
US$ 000's US$ 000's US$ US$ 000's US$ 000's US$ 000's
000's
Cost:
As at 1 April
2020 12,823 11,454 1,240 20,586 5,931 52,034
Capitalised in
period - 531 - - - 531
------------ ----------------- ------- --------------- ------------- ----------
As at 30 September
2020 12,823 11,985 1,240 20,586 5,931 52.565
------------ ----------------- ------- --------------- ------------- ----------
Amortisation:
As at 1 April
2020 12,823 11,320 1,240 20,586 5,931 51,900
Charge for the - - - - - -
period
As at 30 September
2020 12,823 11,320 1,240 20,586 5,931 51,900
------------ ----------------- ------- --------------- ------------- ----------
Net Book Value:
------------ ----------------- ------- --------------- ------------- ----------
As at 1 April
2020 - 134 - - - 134
============ ================= ======= =============== ============= ==========
As at 30 September
2020 - 665 - - - 665
============ ================= ======= =============== ============= ==========
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.
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.
11. Share capital
Share capital as at 30 September 2020 amounted to US$1,051,000
(31 March 2020 and 30 September 2019: US$1,027,000).
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 2020 of US$8.8 million.
The impact of both COVID-19 and the significant deterioration in
the oil and gas drilling market, particular in North America have
been fully factored into various financial scenarios relating to
future trading. The output of this modelling demonstrates that even
in the case of a significant reduction in revenue the corresponding
cost reduction measures and reduction in CAPEX and development
spend will enable the Group to retain significant cash balances in
both the near and medium term.
The uncertainty as to the future impact on the Group of the
recent Covid-19 outbreak in particular has been considered as part
of the Group's adoption of the going concern basis. To date, we
have not observed any material impact on our activities due to
Covid-19 over and above that of the significant reduction in the
North America rig count since the start of March 2020 and, indeed,
the recently announced $1.0m contract award in China demonstrates
the robustness of the post Covid-19 oil and gas drilling market in
that country.
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 10 and 11 of
the Annual Report and Accounts for the period ended 31 March 2020.
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 2020.
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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END
IR KKDBPOBDDODD
(END) Dow Jones Newswires
November 12, 2020 02:00 ET (07:00 GMT)
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