Global Marine Energy losses widen, as EMER deal progresses

Global Marine Energy (GME) has built itself into a heavy lifting and handling equipment group, with a focus of offshore drilling, through a series of acquisitions. It is currently the subject of a proposed takeover by EMER International Group, a Hong-Kong listed offshore equipment manufacturer. EMER is offering 16p per share for GME, valuing it at £11.6m.

In its interim results for the six months to September 30 2007, the company reported that provisions for losses on future crane contracts had risen to £1.6m from £750,000 in the first half of 2006/07. Revenues rose to £14.55m, from £6.05m in the first half of 2006/07. The company reported a cost of sales for the current period of £13.15m, up from £5.74m.

This gave a gross profit of £1.39m, up from £305,731. Other costs were £2.59m on selling and administration expenses, roughly the same as last year, and a £372,717 exceptional charge relating to the costs of advice on takeover approaches from IDM and EMER.

Overall, losses from continuing operations for the first half were £2.93m, up from £2.58m in the six months to September 30 2006; for the full year to March 30 2007, losses from continuing operations were £8.3m, with a further £1.58m loss from discontinued operations.

The company had a busy year in 2007. It initiated a strategic review in December 2006, as mounting losses appeared to put its survival at risk. In April, it gained 100% ownership of three operations divisions of, until then, 81%-owned Patriot Mechanical Handling (Patriot’s remaining business renamed, and went into manufacturing heavy industrial equipment). This gave GME full ownership of a group of businesses in the UK, US, Brazil and Singapore.

The company’s full year results to 30 March 2007, showing an almost £10m loss, came out on September 27 2007, and shares were suspended the next day. The company became the subject of a reverse takeover bid from IDM Group Ltd, but this approach never progressed to a formal offer.

When EMER offered 13p a share in October, and help with finding new financing, IDM backed away. GME returned to trading on London's smallcap market AIM at the end of October. It recently received a loan from Singapore-based Spring Capital, which chairman Brent Fitzpatrick says will be used to “improve the business operationally and improve financial planning”. The EMER offer is progressing (and now stands at 16p per share), Fitzpatrick says, and a formal offer document is expected in early February.