Tailender - this sums it up 1/24 Jun 2015 21:21
One can have some sympathy for companies operating in the oil & gas support services sector: clearly with the oil price having dropped so much last year their products are going to be less in demand. But with SeaEnergy (SEA) there is another issue: that of spurning an opportunity.
I won’t go back over what Tom Winnifrith had to say in yesterday’s bearcast – you can listen for yourselves HERE. There were, unsurprisingly, contract delays and thus a profit warning but that does not, for me, fully explain the 27% share price fall in the wake of yesterday’s RNS. The company indicates that it too saw a fall-off in activity coming and had identified ‘a number of specific opportunities which are expected to contribute to revenue in 2015’. For that, read ‘we think we still have still got some work in the book for this year’.
The financial mainstay of the company is the ‘R2S Visual Asset Management software/service’ and we are told that the company expects R2S revenues to be marginally below last year. Overall the company, we are told, ‘expects to achieve broadly comparable performance to 2014’. The ShareProphets translation service says that means ‘expects not quite to achieve the performance of 2014’ which was an operating profit of just £151k, itself a figure quoted before an impairment write down of £2.5m relating to shares held in Lansdowne Oil & Gas (LOGP) which have fallen off a cliff. I shall come to that, but first a wee look back at the last set of FY results, released on 8 April.
Now today’s RNS may not have come as a surprise to some, but the amazing thing is that there was no mention of any deterioration in the results RNS of less than two months ago. In fact, we were told then that ‘In the face of weaker oil prices, the Company has shown resilience by continuing to grow its client base across the globe……looking forward, the Board is confident that its new focus will enable the Company to achieve faster growth in the months and years ahead.” Hmmmm. ‘in the months…ahead’. And so, just two months on we have a profit warning. Given the forward expectations intimated just a couple of months back, I’d say there is more than a smattering of uncertainty over visibility of earnings. Or did the Board not notice until just the other day?
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