Final Results

RNS Number : 0338W

GETECH Group plc

04 November 2014

 



Getech Group plc

("Getech",the "Group" or the "Company")

Final Results for the year ended 31 July 2014

GETECH, the oil services business specialising in the provision of exploration data and petroleum systems studies and evaluations, announces its Final Results for the year ended 31 July 2014.

Financial highlights

•     Profit after tax of £1,575,228 (2013: £1,634,612) including impact of R&D tax relief claim

•     EPS of 5.21p (2013: 5.57p)

•     Revenue of  £6,592,798 , 18% lower than prior year (2013: £8,011,250)

•     Profit before tax of £1,000,816 (2013: £2,246,496)

•     Proposed final dividend of 1.76p (up 10% on the final dividend for the year ended July 2013 of 1.60p) resulting in full-year dividend of 2.20p (2013: 2.00p)

•     Cash level £3,422,594 at 31 July 2014 (2013: £4,357,927)

Operational highlights

•     Strong growth in commissions revenue which doubled in year

•     Successful completion of the first three year build period of Globe

•     US$1.1m from two contracts related to the upgraded US domestic gravity data-set

•     6 clients are now supporting our innovative three year multi-satellite gravity project with funding exceeding £1m

•     Post year end, the Company has signed its largest contract ever ($5 million with Sonangol), made good progress in the second phase of Globe and is seeing very strong demand for its commission work

Stuart Paton, Non-Executive Chairman of GETECH Group plc, said: "Following challenging business conditions through much of 2013, the Company had a strong final quarter and delivered a solid set of results for the full year. We have seen a very good start to this financial year, including the Company's largest ever contract. The recent drop in oil price will likely impact on E&P companies' exploration spend. However, the strong start to the year, forward committed income, increasing interest from national oil companies and the strength of our data sales in the US (where exploration spend remains high), give us confidence in the performance of the business going forward."

Enquiries:

Getech Group plc Raymond Wolfson, Chief Executive	Tel:  [phone]
WH Ireland Limited Katy Mitchell	Tel:  [phone]
Walbrook PR Helen Cresswell Paul Cornelius	Tel:  [phone] or [e-mail] Mob: [phone] Mob: [phone]

Chairman's statement

I am pleased to make my fourth report as Chairman of Getech Group plc and its subsidiary company for the year ended 31 July 2014. Getech is a geoscience services business specialising in the provision of data, studies and services to the oil, gas and mining exploration sectors.

Results

I report a Group profit before tax of £1,000,816 (2013: £2,246,496) after interest receivable of £32,914 (2013: £30,897) on revenue of £6,592,798 (2013: £8,011,250). The post-tax profit was £1,575,228 (2013: £1,634,612), giving earnings per share of 5.21p (2013: earnings per share 5.57p). The post-tax profit was positively impacted by UK R&D tax credits.

Dividends

Getech intends to continue its progressive dividend policy as appropriate and is proposing a final dividend of 1.76p per share in respect of the year to 31 July 2014 (2013: 1.60p per share) in addition to the interim dividend of 0.44p per share announced in April 2014. The final dividend will be paid on 18 December to shareholders on the register of members on 21 November.

Business review

The financial year 2013-14 was a much more challenging operating environment for the business than the previous two years. There was significantly lower capital expenditure in the upstream sector, due largely to uncertainty about the global economy and hence downward pressure on the oil price, and the cyclical reassessment of expenditure following a number of strong years with cost growth. This reduction appears to have particularly impacted on exploration expenditure, much of which is discretionary and can be cut back without having immediate impact on production and hence earnings. In addition, the last year has been disappointing generally for international exploration with a number of key wells, in new plays, being unsuccessful, which has led to companies reconsidering their exploration expenditure. These trends significantly impacted on Getech's earnings in the first nine months of 2013-14 in particular.

The last quarter of the financial year showed a much stronger environment, with companies committing to expenditure with Getech and consequent impact on the sales pipeline and signed contracts. On 11 June 2014, the Company announced a US$2m contract for a range of products, followed by two contracts worth US$600k and US$500k for US domestic data. The Company also announced that it had secured six clients for its innovative multi-satellite gravity project with income in excess of £1m. These contracts underpinned a strong final quarter for Getech. They demonstrate that Getech's technical capabilities are still valued by the industry and that the Company offers key insights as part of the exploration process.

Outlook

Two interlinked factors will impact on Getech's business in the current year and for the near future. There appears to be increasing concern about the growth prospects for the global economy, largely due to concerns about China. This is already having an impact on oil prices, which have softened significantly in the last few months. Given the pullback in exploration spending in 2014, we believe expenditure will not reach the previous high points of 2012 in the near future. We have, however, seen a strong start to the current financial year with a number of large contracts already secured.

There are four areas where we believe we have a strong foundation for growing the business in the short to medium term:

First, our Globe framework, which entered its second phase in August 2014, has seen continued support from the larger exploration and production companies. They clearly see the value of Getech's support in improving their exploration performance. Globe continues to provide an environment that encourages increased interaction with our clients, which is essential to the longer-term benefits of improved exploration performance. With the increased number of clients the annual Globe workshops in Leeds and Houston have become a major event in the year.

Second, we have seen increased demand for proprietary projects. This is partly as a result of the Globe framework, but also increased interest from national oil companies (NOC), as most obviously witnessed by our largest ever contract of US$5m with Sonangol announced on 8 September. We are extremely pleased that we have continued our strong working relationship with Sonangol and hope that this will lead to further large contracts with other NOCs. The Globe framework also allows us to deal with a wider range of companies at geographical scales that are considerably smaller than previously and this will be a major focus of attention in the coming year.

Third, we have seen continuing sales of our gravity and magnetic data-sets, particularly in the US where exploration spend continues to be very strong.

Finally, our strong knowledge base and financial robustness allow us to look at new opportunities. We are in the process of developing new business streams, which build on our key strengths and which we hope will be major revenue generators in the medium term. We are also actively looking at acquisition opportunities, which will extend and grow our core areas of expertise.

I would like to say how pleased I am to continue to be involved with the Company and to thank the staff and my fellow Directors for all their hard work and dedication.

Dr Stuart Paton

Non-executive Chairman

Operating review

I report that in our ninth year as a public quoted company, Getech returned a pre-tax profit of £1,000,816 (2013: £2,246,496) for the year ended 31 July 2014.

Business setting

The exploration market in the oil and gas sector went through a difficult period during the year. Poor exploration success combined with increasing seismic and well costs generated a cautious environment and expenditure on exploration in general was reduced. Many of the exploration service companies and consultancies suffered as a result. Getech could not avoid this effect, although its increased resilience due to the Globe sponsorship and a number of longer-term projects reduced the short-term impact. As we had signalled, towards the end of the period our very strong sales pipeline started to crystallise into sales, and June and July were exceptional months for new contracts.

Although the oil price weakened towards the end of the period, this did not have an obvious impact on sales and the level of interest in our products.

Business activities

In July 2014, Getech completed the first three year programme of Globe build, with ten major international companies as committed sponsors. Globe as a product has demonstrated that it provides explorationists with a tool that they can use for exploration at a range of scales: from global new ventures through to supporting basin-scale risk reduction.

Our Commissions division, which handles all proprietary work, continued to strengthen and grew significantly during the year. Revenue in the year showed growth of more than 100% on the previous year, reflecting our strategic focus and support for this part of the business.

We continued to develop our reputation as a provider of leading-edge solutions and in July announced that our multi‑satellite project, which is a global roll-out of the Cryosat R&D pilot project, had achieved funding in excess of £1m to cover a three year programme to June 2017. This project combines the gravity data from several satellites in a way that generates higher resolution results than otherwise available, thereby increasing the value of the data for exploration purposes.

The performance of our US gravity data business during the year was exceptional. In June and July we announced two sales out of our upgraded data-set with aggregate value of US$1.1m. We believe that this resulted from a combination of the major upgrade to the data-set that we had completed the previous year, and an increased interest in North America as an exploration target.

While the year started slowly in terms of major contracts, it ended very strongly. In June, the Directors determined that it was necessary to give the market a trading update, but in view of the strength of the sales pipeline, we signalled in the same announcement that we anticipated a significant flow of new contracts in the near future. Following the trading update, we made the following announcements:

•	in June, we announced a new contract worth US$2m including the second three year Globe Programme, high resolution data-sets and subscription to our three year Global depth to basement project;
•	in June, we also announced a major new sale from our upgraded US gravity data-set valued at US$600k;
•	in July, we announced a further major sale from our upgraded US gravity data-set worth US$500k; and
•	in July, we announced that funding for our three year multi-satellite project had then exceeded £1m.

The future

The first Globe Programme developed a product which was primarily of interest to global new ventures teams. During the next period we will extend Globe as a flexible and robust data framework that is capable of meeting the needs of a much broader community of clients.

The second three year period of build for the Globe framework started in July 2014. Five sponsors have already committed to the core data-layers and discussions with others are on-going. In this second period the Globe framework will be upgraded to increase its resolution, within a structure that can be easily delivered to clients in several forms: as a global set of core deliverables; as regional deliverables; or in bespoke parts which can be at any scale and contain any constituent "data-layers" extracted from the overall framework. This will make it attractive to a wider range of clients, of all sizes, operating in all regions of the world and at smaller scales.

The full Globe framework comprises many "data-layers", some of which are delivered as part of the core Globe sponsorship, some of which are only available as additional products. It provides a springboard for the efficient development of new, more focused, regional reports and provides an added-value starting point for new proprietary contracts. Globe is therefore a major asset from which value will be derived in a number of different ways and through a number of different delivery mechanisms.

Our strategy for the Commissions division started to show success in the year just completed by doubling its income year on year. This strategy included an explicit objective to target key clients capable of having a material impact on our performance. In September this part of the strategy achieved its first success when we signed our largest ever contract, with a value of US$5m. This was with the Angolan national oil company, Sonangol, and involves interpretation work on the geological basins in Angola. Such contracts are in line with our corporate strategy to increase the visibility of income by a number of means, one of which is through longer-term proprietary contracts.

Finally, the feedback we have been receiving from clients suggests the Company and its products remain very well regarded and that there is a clear intent to include our products in their 2015 budgets. This, combined with the committed income we already have for the coming year, gives us confidence that 2014-15 will be a very much better year.

Raymond Wolfson

Chief Executive Officer

Consolidated statement of comprehensive income

For the year ended 31 July 2014

2014			2013
		£	£
Revenue		6,592,798	8,011,250
Cost of sales		(2,126,433)	(2,520,500)
Gross profit		4,466,365	5,490,750
Administrative costs		(3,497,841)	(3,269,391)
Operating profit		968,524	2,221,359
Finance income		32,914	30,897
Finance costs		(622)	(5,760)
Profit before tax		1,000,816	2,246,496
Income tax credit/(expense)		574,412	(611,884)
Profit for the year attributable to owners of the Parent		1,575,228	1,634,612
Other comprehensive income
Items that may be reclassified subsequently to profit or loss:
Currency translation differences on translation offoreign operations		(95,030)	(38,539)
Total comprehensive income for the year attributable to owners of the Parent		1,480,198	1,596,073
Earnings per share
Basic earnings per share		5.21p	5.57p
Diluted earnings per share		4.95p	5.30p

Consolidated statement of financial position

As at 31 July 2014

Company registration number 2891368

2014			2013
		£	£
Assets
Non-current assets
Property, plant and equipment		2,747,916	2,752,597
Intangible assets		513,476	616,257
Deferred tax assets		311,644	128,543
		3,573,036	3,497,397
Current assets
Inventories		180,092	166,000
Trade and other receivables		2,850,538	2,123,384
Other financial assets		-	500,000
Current tax assets		812,767	138,885
Cash and cash equivalents		3,422,594	4,357,927
7,265,991			7,286,196
Total assets		10,839,027	10,783,593
Liabilities
Current liabilities
Borrowings		-	119,048
Trade and other payables		2,707,710	3,524,420
Current tax liabilities		-	108,932
2,707,710			3,752,400
Non-current liabilities
Trade and other payables		-	16,338
Deferred tax liabilities		321,452	110,175
321,452			126,513
Total liabilities		3,029,162	3,878,913
Net assets		7,809,865	6,904,680
Equity
Equity attributable to owners of the Parent
Share capital		75,790	75,319
Share premium account		3,012,960	2,993,092
Capital redemption reserve		6	6
Share option reserve		125,948	122,717
Currency translation reserve		(130,757)	(35,727)
Retained earnings		4,725,918	3,749,273
Total equity		7,809,865	6,904,680

The financial statements on were approved by the Board of Directors on 3 November 2014.

Dr S M Paton

Director

Consolidated statement of cash flows

For the year ended 31 July 2014

2014			2013
		£	£
Cash flows from operating activities
Profit before tax		1,000,816	2,246,496
Share-based payment charge		21,186	22,574
Depreciation and amortisation charges		239,704	213,592
Finance income		(32,914)	(30,897)
Finance costs		622	5,760
Exchange adjustments		44,686	(77,058)
Increase in inventories		(14,092)	(106,000)
(Increase)/decrease in trade and other receivables		(727,154)	839,544
(Decrease)/increase in trade and other payables		(833,048)	208,761
Cash (used in)/generated from operations		(300,194)	3,322,772
Income taxes paid		(180,226)	(851,036)
Net cash (used in)/generated from operating activities		(480,420)	2,471,736
Cash flows from investing activities
Purchase of property, plant and equipment		(106,897)	(190,463)
Development costs capitalised		(82,867)	-
Funds transferred into fixed term deposits		500,000	(500,000)
Interest received		32,914	30,897
Net cash generated from/(used in) investing activities		343,150	(659,566)
Cash flows from financing activities
Proceeds from issue of share capital		20,339	153,780
Repayment of long-term borrowings		(119,048)	(285,714)
Equity dividends paid		(616,538)	(351,668)
Interest paid		(622)	(5,760)
Net cash used in financing activities		(715,869)	(489,362)
Net (decrease)/increase in cash and cash equivalents		(853,139)	1,322,808
Cash and cash equivalents at beginning of year		4,357,927	3,010,782
Exchange adjustments to cash and cash equivalents at beginning of year		(82,194)	24,337
Cash and cash equivalents at end of year		3,422,594	4,357,927

Consolidated statement of changes in equity

For the year ended 31 July 2014

Share				Capital	Share	Currency
Share			premium	redemption	option	translation	Retained
capital			account	reserve	reserve	reserve	earnings	Total
£			£	£	£	£	£	£
At 1 August 2012		73,093	2,841,538	6	188,502	2,812	2,377,970	5,483,921
Dividends	-		-	-	-	-	(351,668)	(351,668)
Issue of capital under share-based payment options	2,226		151,554	-	(88,359)	-	88,359	153,780
Share-based payment charge	-		-	-	22,574	-	-	22,574
Transactions with owners	2,226		151,554	-	(65,785)	-	(263,309)	(175,314)
Profit for the year	-		-	-	-	-	1,634,612	1,634,612
Other comprehensive income
Currency translation differences	-		-	-	-	(38,539)	-	(38,539)
Total comprehensive income for the year	-		-	-	-	(38,539)	1,634,612	1,596,073
At 31 July 2013	75,319		2,993,092	6	122,717	(35,727)	3,749,273	6,904,680
Dividends	-		-	-	-	-	(616,538)	(616,538)
Issue of capital under share-based payment options	471		19,868	-	(17,955)	-	17,955	20,339
Share-based payment charge	-		-	-	21,186	-	-	21,186
Transactions with owners	471		19,868	-	3,231	-	(598,583)	(575,013)
Profit for the year	-		-	-	-	-	1,575,228	1,575,228
Other comprehensive income
Currency translation differences	-		-	-	-	(95,030)	-	(95,030)
Total comprehensive income for the year	-		-	-	-	(95,030)	1,575,228	1,480,198
At 31 July 2014	75,790		3,012,960	6	125,948	(130,757)	4,725,918	7,809,865

Notes to the consolidated financial statements

For the year ended 31 July 2014

Nature of operations

The principal activity of Getech Group plc and its subsidiary company Geophysical Exploration Technology Inc. (collectively "Getech" or "the Group") is the provision of gravity and magnetic data, services and geological studies to the petroleum and mining industries to assist in their exploration activities.

General information

Getech Group plc is the Group's ultimate Parent Company ("the Parent Company"). It is incorporated in England and Wales and domiciled in England (CRN: 2891368). The address of its registered office is Convention House, St Mary's Street, Leeds LS9 7DP. Its principal place of business is Kitson House, Elmete Hall, Elmete Lane, Leeds LS8 2LJ. Getech Group plc shares are admitted to trading on the London Stock Exchange's AIM.

Basis of preparation

These consolidated financial statements ("the financial statements") have been prepared in accordance with International Financial Reporting Standards (IFRS) in issue as adopted by the European Union. IFRS include interpretations issued by the International Financial Reporting Interpretations Committee (IFRIC).

The financial statements have been prepared under the historical cost convention except in relation to financial instruments held at fair value through profit or loss.

The accounting policies have been applied consistently throughout the Group for the purpose of preparation of the financial statements.

The Parent Company financial statements have been prepared using United Kingdom Accounting Standards (United Kingdom Generally Accepted Accounting Practice).

The Directors have instituted regular reviews of trading and cash flow forecasts and have considered the sensitivity of these forecasts to different assumptions about future income and costs. With the sound cash levels and continued prospects for profitable trading, the Directors are fully satisfied that the Group is a going concern and will be able to continue trading for the foreseeable future.

Financial information

The financial information set out above, which was approved by the Board on 3 November 2014, is derived from the full Group accounts for the year ended 31 July 2014 and does not constitute the statutory accounts within the meaning of section 434 of the Companies Act 2006. The Group accounts on which the auditors have given an unqualified report, which does not contain a statement under section 498(2) or (3) of the Companies Act 2006 in respect of the accounts for 2014, will be delivered to the Registrar of Companies in due course.

The statutory accounts for the year ended 31 July 2013 which have been delivered to the Registrar of Companies, contained an unqualified audit report and did not include a statement under s498(2) or s498(3) of the Companies Act 2006.

Dividends

2014		2013
£		£
Paid during the year
Final dividend in respect of the year ended 31 July 2013 at 1.6p per share (2012: 0.8p)	482,125	234,442
Interim dividend at 0.44p per share (2013: 0.4p)	134,413	117,226
616,538		351,668
Proposed after the year end (not recognised as a liability)
Final dividend in respect of the year ended 31 July 2014 at 1.76p per share (2013: 1.6p)	533,565	482,125

The proposed final dividend per share for the year ended 31 July 2014 is subject to approval by shareholders at the Annual General Meeting on 9 December 2014.

Earnings per share

Basic earnings per share is calculated by dividing the profit attributable to equity holders of the Group by the weighted average number of the Ordinary Shares in issue in the year.

2014		2013
Profit attributable to equity holders of the Group	£1,575,228	£1,634,612
Weighted average number of Ordinary Shares in issue	30,249,212	29,323,481
Basic earnings per share	5.21p	5.57p
Diluted earnings per share	4.95p	5.30p

Diluted earnings per share is calculated by dividing the profit attributable to equity holders of the Group by the weighted average number of the Ordinary Shares which would be in issue if all the options granted, other than those which are anti-dilutive, were exercised. The addition to the weighted number of the Ordinary Shares used in the calculation of diluted earnings per share for the year ended 31 July 2014 is 1,560,109 (2013: 1,494,138).

Notice of Annual General Meeting

The Annual General Meeting of Getech Group plc ("the Company") will be held at Kitson House, Elmete Hall, Elmete Lane, Leeds LS8 2LJ on 9 December 2014 at 12 noon.

 

END

 

 

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