Press Releases

Interim Results 2015

22 Sep 2015

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Greka Engineering & Technology Ltd. (AIM: GEL), the unconventional gas sector engineering and technology business with pipeline, gas compression and power generation assets in China, announces its unaudited financial results for the six months ended 30 June 2015.
 
FINANCIAL HIGHLIGHTS
 
  • Group revenue of US$2.7m (H1 2014: US$2.7m)
  • Unconventional Gas Gathering revenue increased 29% to US$0.9m (H1 2014: US$0.7m)
  • Electricity Generation revenue increased 83% to US$1.1m (H1 2014: US$0.6m)
  • Engineering and Technologies revenue decreased 64% to US$0.5m (H1 2014: US$1.4m)
  • Construction revenue of US$0.2m
  • Gross profit increased 26% to US$0.7m (H1 2014: US$0.6m)
  • EBITDA of US$0.3m (H1 2014: US$0.3m)
  • Loss per share reduced 20% to US$0.12 (1H 2014: loss per share of US$0.15)
  • Cash and bank deposits of US$3.0m at period end (FY 2014: US$2.6m)
 
OPERATIONAL HIGHLIGHTS
 
  • Unconventional Gas Gathering and Transmission
 
  • Gas volume processed of 661,244 MCF (18.7MCM), a 21% increase over comparative period (H1 2014: 548,137 MCF or 15.5MCM)
  • Sales volume of 577,656 MCF (16.4 MCM), representing growth of 21% over comparative period (H1 2014: 477,720 MCF processed for sale (13.5 MCM))
  • Total pipeline owned and managed by the Company of 51.9km
  • No lost time due to injury or accident
 
  • Electricity Generation
 
  • 8,676,154 kwh of electricity generated during period, a 23% increase over comparative period (H1 2014: 7,067,193 kwh)
  • Sales volume of 7,080,091 kwh, representing growth of 29% over comparative period (H1 2014: 5,486,457 kwh)
  • Total power line owned and managed by the Company of  79.6km
  • Signed power supply contract with CUCBM (China United Coalbed Methane Corporation, Ltd. , a CNOOC subsidiary)
  • No lost time due to injury or accident
 
  • Engineering & Technologies
 
  • Sales volume of 31 gas dispensers, 48% decrease in equipment sales
  • Total customers 156 (2014:147)
  • No lost time due to injury or accident
  • Developed two new products (LNG pump & intelligent movable CNG dispensers)
 
Mr. Randeep S. Grewal, Chairman of Greka Engineering, commented:
 
"We are quite pleased with the results at half year. The expected reduction in equipment sales was well off-set by an increase in the core business of processing and transporting gas and generating power.  The continuing expansion in the client base for power sales demonstrates the potential within this new market segment for the Company.””
 
For more information of Greka Engineering, please visit the company website at www.grekaengineering.com or contact:
 
Smith & Williamson
Nominated Adviser
Dr Azhic Basirov / David Jones / Ben Jeynes
       +44 20 7131 4000
WH Ireland
Broker
Tim Feather / Liam Gribben
 
   +44 113 394 6600
Walbrook
Media & Investor Relations
Paul Cornelius / Guy McDougall
 
   + 44 20 7933 8780
 
 
About Greka Engineering & Technology
 
Greka Engineering & Technology Ltd., (AIM; GEL) was demerged from Green Dragon Gas Ltd. (AIM; GDG) via a dividend in specie and was admitted to trading on AIM in September 2013.
 
Greka Engineering offers turnkey solutions to over 100 upstream, midstream and downstream gas suppliers. The Company's technologies include Compressed Natural Gas/Liquefied Natural Gas (CNG/LNG) compressor equipment, CNG retail dispenser equipment and CBM wellhead extraction technologies. The Company also supplies proprietary Integrated Circuit Card Point of Sale (ICC POS) and Supervisory Control and Data Acquisition (SCADA) software and hardware solutions for the remote management of transmission systems, power facilities, vehicle management and retail services.
 
In addition, the Company invests in, operates and maintains wholly owned assets for its customers in return for service contracts based on the volume management.
 
The Company has historically completed several Engineering, Procurement, Construction and Management (EPCM) contracts including the design, construction and management of gas gathering systems, a gas pipeline in Shanxi Province to the China West-East pipeline, the installation and commissioning of a 10MW gas-fired power facility in the Shanxi province and the construction of CNG retail stations.
 

Chairman’s Statement

 
During the six months under review, the Company made progress in several areas including expanding the Integrated Production Facility and signing a new power contract with CUCBM.  As a result, I am pleased to report H1 revenue of US$2.7m despite revenue from equipment sales bring significantly lower than the comparative period in 2014.
 
The Company continued to build and improve on our infrastructure assets to increase capacity with the objective of providing continued revenue growth and at the same time meeting the demand from our key customer, Green Dragon Gas.  It is notable that CUCBM, also within the same gas production block, as expected continues to increase its demand for services from the Company.  Furthermore, the Company successfully negotiated a connecting fee structure based on length of required pipelines from its clients so as to reduce our capital expenditure exposure.
 
In this first half, 9 new wells with 10km of additional pipe line were successfully connected to our gas gathering system which, along with some optimisation, increased our processed gas volume by 21% from 548,137 MCF or 15.5MCM in H1 2014 to 661,244 MCF (18.7MCM), a 19% increase in average daily volume.  This provided 33% of revenue, a 7% increase over 26% in H1 2014.
 
We built an additional 7.8 km of power lines to supply an additional 21 wells for Green Dragon Gas.  As a result, the Company now has a total of 79.6km of power lines.  We also saw substantial growth within our power generation business.  Jiaqin Agriculture Company (our first unaffiliated client for power) completed its equipment test process and began to use our power.  We also signed a milestone power contract with CUCBM for an additional 54 wells following the successful implementation of the initial test of the 9 wells previously connected into the Company’s power station last year.  As a result, 8,676,154 kwh of electricity was generated during the period, a 23% increase over comparative period (H1 2014: 7,067,193 kwh), resulting in an 83% increase in power revenue (H1 2015: US$1.1m compared to H1 2014: US$0.5m).  Revenue from power generation provided 41% of the Company’s overall revenue (H1 2014: 22%).
 
In accordance with our objective this year, the Company successfully completed research on the development of C/LNG pump skids, a new product which will be launched later this year.  We expect this new product to meet the evolving industry demand for dual fuel capability.  Once in production, we hope to reverse our declining product sales.
 
In our technology division, the Company signed two contracts including 10 SCADA systems for wellheads and one SCADA system for a CNG retail gas station with Green Dragon Gas.  These projects are ongoing and we expect to complete them by the year end.
 
It has been a busy first half year within each of our segments.  While the equipment manufacturing division focused on evolving from CNG dispensers to C/LNG dispensers, each of the other segments saw organic growth.  This is expected to continue in the second half of the year.
 
I look forward to providing further updates in due course.
 
 
Randeep S. Grewal
Chairman
22 September 2015