Last checked at 1 Aug 2017 07:00
Thalassa Holdings Ltd
(Reuters: THAL.L. Bloomberg: THAL:LN)
("Thalassa" or the "Company")
Results for the 6 months ended 30 June 2017
The Company is pleased to announce its financial results for the 6 months ended 30 June 2017. A summary of the results is set out below.
Highlights for the 6 months ended 30 June 2017
GROUP RESULTS 1H 2017 versus 1H 2016
Revenue | $8.2 vs. $5.2m |
Gross Profit | $4.9m vs. $2.9m |
Gross Margin | 59.6% vs. 56.7% |
Operating Profit before depreciation (EBITDA) | $2.4m vs. $0.5m |
Group Net Profit | $0.8m vs. $0.8m |
Group Earnings Per Share - basic and diluted*1 | $0.04/£0.03 vs. $0.03/£0.02 |
Book value per share*2 | $1.29/£0.99 vs. $1.17/£0.77 |
Cash | $3.1m vs. 1H16 $13.2m |
Debt | $nil vs $nil |
*1 based on weighted average number of shares in issue of 21,657,704 (1H16: 22,806,734) | |
*2 based on actual number of shares in issue as at 30 June 2017 of 21,633,865 | |
1H17 OPERATIONAL HIGHLIGHTS
WGP
· Completion of PRM surveys over Snorre and Grane in the North Sea
· Completion of PRM survey over Ekofisk in the North Sea
· Ongoing operations over Eldfisk In the North Sea
ARL
· Completion of 1st stage testing of prototype flying node
· Progress with the development of autonomous operational software
Contacts: | |
Thalassa Holdings Ltd: | |
Duncan Soukup, Executive Chairman | +33 (0)6 78 63 26 89 |
WH Ireland Limited (Nominated adviser): | |
Chris Fielding, Head of Corporate Finance | +44 (0)207 220 1650 |
Press Enquiries: | |
Square1 Consulting (Public Relations) | |
David Bick/Brian Alexander | +44 (0)207 929 5599 |
Chairman's Statement
Operations
1H 2017 results surpassed the Board's expectations. However, the continued non-performance of certain operating equipment is a major concern. The Board hopes to resolve these equipment issues equitably and without the need for litigation. The Company has served notice on the supplier under the terms of the warranty, however, there is no certainty that the Company will succeed in exchanging equipment, nor that it will be able to recover costs or damages. If resolution of the equipment problems is unsuccessful, WGP has potential exposure in excess of $1m, to write down and replace the non-performing equipment.
Clearly, after so much hard work, this would be a very annoying and disappointing result.
M&A
During the period under review the Board spent a significant amount of time involved in potential acquisition and partial acquisition discussions of WGP and ARL respectively.
As reported in the Company's RNS of 13 July 2017, the Board terminated these discussions as the final offer was, in the aggregate, far removed from the indicative offer.
WGP
The seismic market's recovery remains elusive, as the price of Brent crude dropped back during the first half of 2017 to around $50/bbl, and market commentators do not expect a recovery in seismic service day rates until at least mid-2018.
Given the difficult market environment, WGP's operational performance was solid and it successfully completed three and a quarter life of field surveys in the first half of 2017. Unfortunately, one of WGP's projects continues to suffer from significant operational issues which are yet to be resolved. These issues have resulted in unacceptably high levels of downtime due to equipment failure. Fortunately, however, data quality has not been affected and data delivered is deemed better than 2016 by the client.
In the first half of 2017 WGP continued with a solid HSE performance with zero recordable incidents for the period. Also, WGP's quality, occupational health & safety and environmental management systems were successfully audited by BSI in May for their compliance with ISO 9001, 18001 and 14001.
ARL
The development and testing of the prototype 'Flying Node' for OBN seismic survey is progressing as planned with 1st stage testing complete using partial control via a tether cable. Software for autonomous operation is currently under development with testing of the autonomous functions planned for Q3 of 2017. This 2nd stage test of autonomous operation will also include initial testing of the underwater acoustic communications and positioning technology.
Outlook
I am hopeful that we can resolve our equipment problems swiftly under which circumstances 2H 2017 and Full Year 2017 results should show further improvement.
Duncan Soukup
Chairman
Thalassa Holdings Ltd
28 July 2017
Financial Review
Group results for the 6 months to 30 June 2017 showed an increase in revenue of 58% to $8.2m versus $5.2m in 1H16. Revenue from Seismic Operations has been generated from the Spring survey's over the Snorre and Grane fields in the North Sea with the addition of surveys over Ekofisk and Eldfisk in 1H17, also in the North Sea.
Cost of Sales increased by 43% to $3.3m in 1H17 (1H16: $2.3m) as a result of operational costs associated with the additional surveys over Ekofisk and Eldfisk.
Gross profit was $4.9m versus $2.9m in 1H16, an increase of 69% with gross margin of 59.6%, an increase of 2.9% points from 56.7% in 1H16 and 1.6% points up from the full year 2016 gross margin of 58%.
Administrative expenses increased by $0.1m to $2.5m (1H16: $2.4m) resulting in operating profit before depreciation of $2.4m (1H16: $0.5m) with a margin of 29.3% (1H16: 10.0%).
Depreciation increased by 164% to $1.0m (1H16: $0.4m) reflecting additional depreciation charged on new equipment acquired and put into use in Q416. Operating Profit was therefore $1.3m (1H16 $0.1m) with a margin of 15.8%.
Net financial income of $1.0m included foreign exchange gains/losses and interest income (1H16: $1.0m).
Interest Expense of $1.3m (1H16: $0.2m) reflects accrued interest on inter company loans between the parent company and its subsidiaries.
Profit before tax was therefore $1.0m versus $0.9m in 1H16 with Tax in the period of $0.2m incorporating an estimate of the tax liability incurred from the Company's operations across its different regions (1H16 $0.2m), resulting in a Net profit of $0.8m compared to $0.8m in 1H16.
Net assets at 30 June 2017 amounted to $27.8m (1H16: $26.4m, 2016: $27.3m) resulting in net assets per share of $1.29/£0.99 based on 21,633,865 shares in issue versus $1.17/£0.77 in 1H16 (based on 22,578,865 shares in issue) and $1.24/£1.01 in 2016 (based on 21,958,865 shares in issue). Included is $3.1m of cash, equivalent to $0.15/£0.11 per share (1H16: $0.58/£0.39, 2016: $0.35/£0.29).
The Company had no net debt at the period end (1H16: $nil).
Included within Trade and Other Receivables was $5.7m of trade receivables, of which $3.0m has since been received.
Net cash outflow from operating activities amounted to $(3.4)m however this includes $5.7m of trade receivables and does not reflect the $3.0m of outstanding trade receivables at 30 June 2017 subsequently received.
Net cash outflow from investing activities amounted to $0.9m relating to the purchase of available for sale investments and investments in associates.
Net cash outflow from financing activities amounted to $0.3m relating to the buy back of 325,000 Thalassa ordinary shares into Treasury.
Net decrease in cash and cash equivalents was $4.6m resulting in Cash and Cash Equivalents of $3.1m as at 30 June 2017. Cash at the time of reporting is $4.8m (1H16: $13.2m, Y/E 2016: $7.7m).
Consolidated Statement of Income
For the six months ended 30 June 2017
Six months | Six months | Year | ||
ended | ended | ended | ||
30 Jun 17 | 30 Jun 16 | 31 Dec 16 | ||
Unaudited | Unaudited | Audited | ||
Note | $ | $ | $ | |
Revenue | 8,195,290 | 5,195,619 | 13,987,926 | |
Cost of sales | (3,309,225) | (2,250,995) | (5,877,401) | |
Gross profit | 4,886,065 | 2,944,624 | 8,110,525 | |
Administrative expenses | (2,530,871) | (2,423,061) | (5,885,970) | |
Operating profit before depreciation | 2,355,194 | 521,563 | 2,224,555 | |
Depreciation | (1,027,361) | (389,225) | (1,100,445) | |
Operating profit | 1,327,833 | 132,338 | 1,124,110 | |
Net financial income | 995,358 | 1,001,226 | 1,907,533 | |
Interest Expense | (1,268,711) | (194,820) | (600,505) | |
Share of profits less losses of associated entities | (7,167) | - | 60,741 | |
Profit before taxation | 1,047,313 | 938,744 | 2,491,880 | |
Taxation | (242,002) | (181,097) | (523,299) | |
Profit for the financial period | 805,311 | 757,647 | 1,968,581 |
Earnings per share - US$ (using weighted averagenumber of shares) | ||||
Basic and Diluted | 3 | 0.04 | 0.03 | 0.09 |
Consolidated Statement of Comprehensive Income
For the six months ended 30 June 2017
Six months | Six months | Year | |
ended | ended | ended | |
30 Jun 17 | 30 Jun 16 | 31 Dec 16 | |
Unaudited | Unaudited | Audited | |
$ | $ | $ | |
Profit/(loss) for the financial period | 805,311 | 757,647 | 1,968,581 |
Other comprehensive income: | |||
Exchange differences on re-translating foreign operations | 37,110 | (49,287) | (86,587) |
Unrealised losses on available for sale investments | - | (24,800) | 11,130 |
Total comprehensive income | 842,421 | 683,560 | 1,893,124 |
Consolidated Statement of Financial Position
At 30 June 2017
Six months | Six months | Year | |
ended | ended | ended | |
30 Jun 17 | 30 Jun 16 | 31 Dec 16 | |
Assets | Unaudited | Unaudited | Audited |
$ | $ | $ | |
Non-current assets | |||
Goodwill | 368,525 | 368,525 | 368,525 |
Property, plant and equipment | 9,888,076 | 9,642,600 | 10,985,757 |
Available for sale financial assets | 1,379,826 | - | 826,022 |
Intangible assets | 197,200 | - | - |
Loans | 1,572,953 | 1,526,522 | 1,549,564 |
Investments in associated entities | 8,833,565 | - | 8,636,972 |
Total non-current assets | 22,240,145 | 11,537,647 | 22,366,840 |
Current assets | |||
Inventories | 517,104 | 372,325 | 491,151 |
Derivative financial asset | - | 295,000 | - |
Trade and other receivables | 6,693,666 | 6,128,395 | 836,908 |
Cash and cash equivalents | 3,145,345 | 13,247,222 | 7,732,215 |
Total current assets | 10,356,115 | 20,042,942 | 9,060,274 |
Liabilities | |||
Current liabilities | |||
Trade and other payables | 4,769,314 | 5,217,842 | 4,162,534 |
Total current liabilities | 4,769,314 | 5,217,842 | 4,162,534 |
Net current assets | 5,586,801 | 14,825,100 | 4,897,740 |
Net assets | 27,826,946 | 26,362,747 | 27,264,580 |
Shareholders equity | |||
Share capital | 250,675 | 250,675 | 250,675 |
Share premium | 45,202,810 | 45,202,810 | 45,202,810 |
Treasury shares | (2,238,109) | (1,650,322) | (1,958,054) |
Foreign exchange reserve | (72,579) | (83,520) | (109,689) |
Retained earnings | (15,315,851) | (17,356,896) | (16,121,162) |
Total shareholders equity | 27,826,946 | 26,362,747 | 27,264,580 |
Total equity | 27,826,946 | 26,362,747 | 27,264,580 |
These financial statements were approved by the board on 28 July 2017.
Signed on behalf of the board by: Duncan Soukup
Consolidated Statement of Cash Flows
For the six months ended 30 June 2017
Six months | Six months | Year | |
ended | ended | ended | |
30 Jun 17 | 30 Jun 16 | 31 Dec 16 | |
Unaudited | Unaudited | Audited | |
$ | $ | $ | |
Cash flows from operating activities | |||
Profit for the period before taxation | 1,047,313 | 938,744 | 2,491,879 |
Decrease/(increase) in inventories | (25,953) | 18,710 | (100,116) |
Decrease/(increase) in trade and other receivables | (5,940,430) | (5,316,668) | (25,180) |
Increase/(decrease) in trade and other payables | 690,451 | 205,122 | 1,622,756 |
Net foreign exchange gain | 37,110 | (49,288) | (86,587) |
Accrued interest income | (23,389) | (22,699) | (45,740) |
Taxation | (242,002) | (181,095) | (523,299) |
Cash generated by/(used in) operations | (4,456,900) | (4,407,174) | 3,333,713 |
Depreciation | 1,027,361 | 389,225 | 1,100,445 |
Amortisation of multi-client library | - | - | - |
Net cash flow (used in)/from operating activities | (3,429,539) | (4,017,949) | 4,434,158 |
Net cash flow used in/from investing activities | (877,276) | (2,328,068) | (15,987,450) |
Cash flows from financing activities | |||
(Purchase)/disposal of treasury shares | (280,055) | (709,897) | (1,017,629) |
Net cash flow from financing activities | (280,055) | (709,897) | (1,017,629) |
Net decrease in cash and cash equivalents | (4,586,870) | (7,055,914) | (12,570,921) |
Cash and cash equivalents at the start of the period | 7,732,215 | 20,303,136 | 20,303,136 |
Cash and cash equivalents at the end of the period | 3,145,345 | 13,247,222 | 7,732,215 |
Consolidated Statement of Changes in Equity
For the six months ended 30 June 2017
Foreign | Total | |||||
Share | Share | Treasury | Exchange | Retained | Total | |
Capital | Premium | Shares | Reserve | Earnings | Equity | |
$ | $ | $ | $ | $ | $ | |
Balance as at 30 June 2016 | 250,675 | 45,202,810 | (1,650,322) | (83,520) | (17,356,896) | 26,362,747 |
Share option expense | - | - | - | - | - | - |
Purchase of treasury shares | - | - | (307,732) | - | - | (307,732) |
Total comprehensive income for the period | - | - | - | (26,169) | 1,235,734 | 1,209,565 |
Balance as at31 December 2016 | 250,675 | 45,202,810 | (1,958,054) | (109,689) | (16,121,162) | 27,264,580 |
Purchase of treasury shares | - | - | (280,055) | - | - | (280,055) |
Total comprehensive income for the period | - | - | - | 37,110 | 805,311 | 842,421 |
Unrealised losses on available for sale investments | - | - | - | - | - | - |
Balance as at 30 June 2017 | 250,675 | 45,202,810 | (2,238,109) | (72,579) | (15,315,851) | 27,826,946 |
Notes to the Consolidated Interim Financial Information
1. General information
Thalassa Holdings Ltd (the "Company") is a British Virgin Island ("BVI") International business company ("IBC"), incorporated and registered in the BVI on 26 September 2007. The Company was established as a holding company, and currently has three directly owned subsidiaries, WGP Group Ltd ("WGP"), GO Science Group Ltd ("GO") and WGP Geosolutions Limited (together with Thalassa Holdings Ltd, the "Group").
WGP Group Ltd is a wholly owned subsidiary of Thalassa which owns the seismic operating assets of the Thalassa Group and whose subsidiaries are:
• WGP Energy Services Ltd ("WESL")
• WGP Exploration Ltd ("WGPE")
• WGP Technical Services Ltd ("WGPT")
• WGP Professional Services Ltd ("WGPP")
• WGP Survey Ltd ("WGPS")
GO Science Group Ltd is a wholly owned subsidiary of Thalassa and is an Autonomous Underwater Vehicle ("AUV") research and development company with one subsidiary:
• Autonomous Robotics Limited ("ARL" - formerly GO Science 2013 Ltd)
WGP Geosolutions Limited is a wholly owned subsidiary of Thalassa which has an additional subsidiary, WGP Group AT GmbH, both currently non-operational.
The Group's interest in each of the subsidiaries is 100%.
2. Significant Accounting policies
The Group prepares its accounts in accordance with applicable International Financial Reporting Standards ("IFRS") as adopted by the EU.
The accounting policies applied by the Company in this unaudited consolidated interim financial information are the same as those applied by the Company in its consolidated financial statements as at and for the period ended 31 December 2016.
2.1. Basis of preparation
The condensed consolidated interim financial information for the six months ended 30 June 2017 has been prepared in accordance with International Accounting Standard No. 34, 'Interim Financial Reporting'. They do not include all of the information required for full annual financial statements and should be read in conjunction with the consolidated financial statements of the Company as at and for the period ended 31 December 2016.
All intra-group transactions, balances, income and expenses are eliminated in full on consolidation.
2.2. Going concern
The financial information has been prepared on the going concern basis as management consider that the Group has sufficient cash to fund its current commitments for the foreseeable future.
3. Earnings per share
Six months | Six months | Year | |
ended | ended | ended | |
30 Jun 2017 | 30 Jun 2016 | 31 Dec 2016 | |
Unaudited | Unaudited | Audited | |
The calculation of earnings per share is based onthe following loss and number of shares: | |||
Profit/(loss) for the period ($) | 805,311 | 757,648 | 1,968,581 |
Weighted average number of shares of the Company | 21,657,704 | 23,420,184 | 22,806,734 |
Earnings per share: | |||
Basic and Diluted (US$) | 0.04 | 0.03 | 0.09 |
4. Loans and receivables
Six months | Six months | Year | ||
| ended | ended | ended | |
| 30 Jun 17 | 30 Jun 16 | 31 Dec 16 | |
| Unaudited | Unaudited | Audited | |
| $ | $ | $ | |
| ||||
| Loans | 1,572,953 | 1,526,522 | 1,549,564 |
Loans and receivables includes a loan of $1,503,823 plus accrued interest of $69,130 to the THAL Discretionary Trust. Interest is payable at 3% per annum (reviewed periodically).
The THAL Discretionary Trust is a trust, independent of Thalassa, established for the benefit of individuals or parties to whom the Trustees wish to make awards at their discretion.
5. Related party balances and transactions
Under the consultancy and administrative services agreement entered into on 23 July 2008 with a company in which the Chairman has a beneficial interest, the Group was invoiced $280,000 for consultancy and administrative services provided to the Group. At 30 June 2017 the amount owed to this company was $nil (1H16: $40,694).
6. Share capital and share premium
Six months | Year | ||
ended | ended | ||
30 Jun 17 | 31 Dec 16 | ||
Unaudited | Audited | ||
$ | $ | ||
Authorised share capital: | |||
100,000,000 ordinary shares of $0.01 each | 1,000,000 | 1,000,000 | |
Allotted, issued and fully paid | 250,675 | 250,675 | |
Number of | |||
Number | Treasury | Treasury | |
of shares | shares | Shares $ | |
Number of shares outstanding at the period end: | |||
Balance as 31 December 2016 | 21,958,865 | 3,108,657 | 1,958,054 |
Shares purchased | (325,000) | 325,000 | 280,055 |
Balance as 30 June 2017 | 21,633,865 | 3,433,657 | 2,238,109 |
7. Subsequent events
There have been no material subsequent events to report.
8. Copies of the Interim Report
The interim report is available on the Company's website: www.thalassaholdingsltd.com.