Final Results

RNS Number : 1957R

GETECH Group plc

01 November 2011

 



                                                               GETECH Group plc

("GETECH" or the "Company")

Final Results

for the 12 months ended 31 July 2011

GETECH, the oil services business specialising in the provision of exploration data and petroleum systems studies and evaluations, announces its Preliminary Results for the year ended 31 July 2011.

Financial highlights

·      Revenue for the year increased by 63% to £5,326,866 (2010: £3,254,758)

·      Profit before tax up £898,199 to £669,702 (2010: loss £228,497)

·      Net cash after outstanding debt rose by £784,170 to £654,851

·      Dividends to be resumed with proposed final dividend for the year of 0.2p (2010: no dividend)

Operational highlights

·      New Chairman and new Director of International Sales appointed

·      Interest in data, services and studies continued to be strong

·      Major new proprietary contract ($1.1m gross revenue) signed and completed in the year

·      New Iraq data marketing agreement with significant sales in the year

·      First sale of new Russian aeromagnetic datasets

·      Equatorial Atlantic study continues to sell well and ongoing investment in the Global Programmes

Commenting on outlook, Stuart Paton, Non-Executive Chairman of GETECH Group plc, said:

 "With the increased strength of our balance sheet by July 2011, the increased extent of our data library and the ongoing integrated study work, I believe that we have now built a strong foundation for the coming years. We have already reported two significant data sales after July this year and anticipate that there will be further positive developments during the year".

Enquiries

GETECH Group plc                                                                               Tel: [phone]  

Raymond Wolfson, Chief Executive

WH Ireland Limited                                                                               Tel: [phone]

Katy Mitchell

Walbrook PR                                                                                        Tel: [phone]

Helen Westaway                                                                                 [e-mail]

Chairman's statement

I am pleased to make my first report as Chairman of the Company, on the sixth full year results since its admission to AIM, of GETECH Group plc and its subsidiary company ("GETECH" or "the Group"), for the year ended 31 July 2011. 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 £669,702 (2010: loss £228,497) after interest receivable of £5,356 (2010: £10,927) on revenue of £5,326,866 (2010: £3,254,758). The post-tax profit was £574,987 (2010: loss £258,362) giving earnings per share of 1.97p (2010: loss 0.88p).

Dividends

GETECH intends to reinstate its policy of progressive dividends as appropriate and is proposing a dividend of 0.2p per share in respect of the year to 31 July 2011. The dividend will be paid on 22 December 2011 to shareholders on the register on 25 November 2011.

Business review

I am pleased to report a turnaround in the performance of the Company, generating a record level of revenue, and profit of £669,702 which was ahead of our expectations for the full year. Revenue increased by 63% year on year, marking a significant improvement in the demand for our products and services and the market in general.

We announced a number of major successes during the year, of which the rights to market the Iraqi gravity and magnetic data, and the $1.1m proprietary contract, were the most significant. Each of these made a significant contribution in the year.

The oil price has remained at strong levels in the region of $100 per barrel, although the gas price, which affects our US business, has remained lower than the level we believe is necessary to stimulate the US domestic business.

As previously reported, in anticipation of continuing risks and uncertainty in the market at that time, we completed a £1m debt facility with the National Westminster Bank plc in September 2009. This debt facility was important in ensuring stability in the difficult conditions at that time. The interest rate on the facility is 1.6% above the London Interbank Offered Rate (LIBOR) which has kept the overall cost of the facility low. With improved market conditions, we are pleased to note that, as at 31 July 2011, we had a gross cash position of £1,345,000, debt of only £690,000 and hence a net cash position of £655,000.

Outlook

The historically high oil and gas prices (outside the US) have resulted in what we perceive to be a continued recovery, particularly for exploration and production companies. We also believe this is likely to lead to increased spending from companies in exploration and hence on the services we offer.

We have made a solid start to 2011/12. As reported on 12 August 2011, we completed the second delivery of the full Iraq aeromagnetic dataset with gross revenue in excess of $500,000. We are also very pleased that the major proprietary project we announced in September 2010 was completed and delivered within the period and are optimistic that this will lead to further substantial projects.

We anticipate that in the first half of the year 2011/12 there will be a continuation of the strong trend in gravity and magnetic data sales and we will begin to see the benefits from the major investment in our geological initiatives. We are already receiving encouraging signs of interest in our multi-year Global Programmes.

We believe that the combination of our increasing library of products and data, and the significantly strengthened sales team, will reinforce the growth path and we are optimistic about the coming years.

Finally, I would like to say how pleased I am to have been appointed by the Company and to thank the staff and my fellow Directors for all their hard work.

Dr Stuart Paton

Non-executive Chairman

Operating review

I report that in our sixth year as a public quoted company, GETECH Group plc ("GETECH" or "the Group") returned a pre-tax profit of £669,702 (2010: loss £228,497) for the year ended 31 July 2011.

Business setting

As anticipated, the global markets continued to recover and the present year was effectively business as usual.

The oil price has now been at historically strong levels for more than two years. We believe that the level and relative stability of the oil price will continue to provide a sound market environment for exploration.

Company history

GETECH has its origins as a research group at the University of Leeds, Department of Earth Sciences (now part of the School of Earth and Environment). It started in 1986 by initiating the compilation of gravity data for the continent of Africa supported by a group of international oil and mining company sponsors.

In 1996, GETECH opened an office in Houston, Texas. In 2000, GETECH spun out from the University of Leeds as a private company (Geophysical Exploration Technology Limited) and subsequent business success and the formation of the Petroleum Systems Evaluation Group in 2004 resulted in the flotation of the Company on AIM in September 2005, with a name change to GETECH Group plc. GETECH was the first spin out Company from the University of Leeds to float on AIM.

Business activities

The Directors were very pleased that Dr Stuart Paton, formerly Chief Executive Officer of Dana Petroleum plc, agreed to join us as Chairman in April 2011 and believe he has already made an impact in the Company. Also, in May 2011, Professor Paul Carey joined us as Director of International Sales.

In recent years GETECH has developed a major strength in the provision of integrated exploration solutions to clients. This has been achieved through a focus on the technical quality of our geophysical and geological work, and a commitment to the development of new and improved techniques and methodologies. We have been able to develop and incorporate in our work new proprietary geophysical interpretation methods and integrate these into studies which provide insights into key exploration issues.

Oil and gas (and to a lesser extent) mining companies license our data and studies when they are evaluating new exploration areas and/or when they wish to expand their current exploration activities into neighbouring regions. One of our great strengths in generating these integrated solutions is the ability to bring together staff across a broad range of disciplines including, amongst others, potential field geophysics, structural geology, plate tectonics, palaeodrainage and palaeogeography analysis and geochemistry.

While the general market for our products and services was severely depressed throughout the calendar year 2009, it started to recover in early 2010. I am particularly pleased to note that sales from our global database of gravity and magnetic data have remained strong and that we were able to announce the completion of an exclusive marketing agreement covering Iraq gravity and magnetic data in December 2010. Iraq reportedly has the third largest oil reserves in the world and the dataset has potentially major value, particularly in anticipation of the current Iraq licensing round.

In September 2010 we announced the signing of a major new proprietary integrated interpretation contract with gross revenue of $1.1m. This involved a wide range of our technical disciplines and was completed and delivered within the year.

We have continued to invest in and develop our Global Programmes initiative and believe that we will have our first clients for this multi-year project in the near future. We believe that our clients recognise the potential value of these programmes for their new ventures and exploration work. In addition, the programmes will provide operational benefits to GETECH: increased flexibility in meeting client specific needs; a platform which improves the efficiency of production and time to completion for future products; and increased responsiveness to emerging market opportunities.

After the year end we concluded an agreement which significantly reduces the revenue shares that we pay on some datasets. Since we had previously accrued the costs in our accounts, we were able to write back a substantial accrual. This affected the year under review and, while the amounts are uncertain, it also affects future years as it will reduce the cost of sales on an ongoing basis.

The future

GETECH has invested heavily over the last few years in a number of areas. We believe the time and effort spent in establishing international relationships has begun to pay off. The long-standing relationship in Russia has developed further, and newly confirmed relationships have led to the Iraqi data marketing agreement as well as a $1.1m integrated interpretation project. In the latter case we understand that the client is very satisfied with our work and are very optimistic that there will be follow-on projects. Further such international discussions are also underway. We are now actively marketing the Global Programmes and believe that the interest we have already generated will soon lead to specific commitments.

We have recognised for some while that we needed to make a step change in our sales capability, as a consequence of our enhanced business activities. In particular, the range of geological based studies needs proactive selling by technically competent staff. The role is very specialised and Professor Paul Carey, who has a strong technical background as well as extensive sales and business experience, has taken on this role.

Finally I would like to thank all our staff and Board colleagues for their unstinting efforts on behalf of GETECH. We believe we have made it a Company that people want to work for and our team looks forward to the new challenges that the future years will bring.

Raymond Wolfson

Chief Executive Officer

The financial information set out in the announcement does not constitute the group's statutory accounts for the years ended 31 July 2011 or 31 July 2010. The financial information for the year ended 31 July 2010 is derived from the statutory accounts for that year which have been delivered to the Registrar of Companies. The auditor reported on those accounts; their report was unqualified and did not include any statement under s498(2) or s498(3) of the Companies Act 2006. The consolidated statement of comprehensive income, the consolidated statement of financial position, the consolidated statement of cash flows, the consolidated statement of changes in equity and the notes to the consolidated financial statements for the year then ended have been extracted from the Group's 2011 statutory financial statements upon which the auditor's opinion is unqualified and does not include any statement under s498(2) or s498(3) of the Companies Act 2006. The announcement has been agreed with the company's auditor for release. In accordance with Rule 20 of the AIM Rules, GETECH Group plc confirms that the annual report and accounts for the year ended 31 July 2011 will be posted to shareholders and will be available to view on the Company's website at www.getech.com on 11 November 2011.

Consolidated statement of comprehensive income
For the year ended 31 July 2011

2011			2010
		£	£
Revenue		5,326,866	3,254,758
Cost of sales	(2,677,516)		(1,915,402)
Gross profit	2,649,350		1,339,356
Administrative costs	(1,966,673)		(1,562,822)
Operating profit/(loss)		682,677	(223,466)
Finance income		5,356	10,927
Finance costs		(18,331)	(15,958)
Profit/(loss) before tax	669,702		(228,497)
Income tax (expense)		(94,715)	(29,865)
Profit/(loss) for the year attributable to owners of the parent	574,987		(258,362)
Other comprehensive income
Currency translation differences on translation of foreign operations	(44,477)		55,999
Total comprehensive income for the year attributable to owners of the parent	530,510		(202,363)
Earnings/(loss) per share
Basic earnings/(loss) per share		1.97p	(0.88)p
Diluted earnings/(loss) per share		1.84p	(0.86)p

All activities relate to continuing operations.

The accompanying notes form an integral part of these financial statements.

Consolidated statement of financial position
As at 31 July 2011

2011			2010
		£	£
Assets
Non-current assets
Property, plant and equipment		2,656,227	2,684,659
Intangible assets		837,341	1,018,369
Deferred tax assets		99,519	59,000
		3,593,087	3,762,028
Current assets
Inventories		472,634	509,994
Trade and other receivables		1,600,280	1,150,278
Other current assets		32,461	87,764
Cash and cash equivalents		1,345,327	846,871
		3,450,702	2,594,907
Total assets	7,043,789		6,356,935
Liabilities
Current liabilities
Borrowings		285,714	285,714
Trade and other payables		1,557,094	1,199,544
Current tax liabilities	52,975		-
1,895,783			1,485,258
Non-current liabilities
Borrowings		404,762	690,476
Trade and other payables		59,102	82,710
Deferred tax liabilities		35,580	-
499,444			773,186
Total liabilities	2,395,227		2,258,444
Net assets	4,648,562		4,098,491
Equity
Equity attributable to owners of the parent
Share capital		73,093	73,093
Share premium account	2,841,538		2,841,538
Capital redemption reserve	6		6
Share option reserve	177,161		157,600
Currency translation reserve	(8,137)		36,340
Retained earnings	1,564,901		989,914
Total equity	4,648,562		4,098,491

The financial statements were approved by the Board of Directors on 31 October 2011.       

Dr S M Paton

Director

The accompanying notes form an integral part of these financial statements.

Consolidated statement of cash flows

For the year ended 31 July 2011

2011			2010
		£	£
Cash flows from operating activities
Profit/(loss) before tax	669,702		(228,497)
Share-based payment charge/(credit)	19,561		(35,574)
Depreciation and amortisation charges		207,244	211,405
Profit on disposal of fixed assets	-		(500)
Finance income	(5,356)		(10,927)
Finance costs	18,331		15,958
Exchange adjustments	11,899		(3,505)
Decrease/(increase) in inventories	37,360		(217,000)
(Increase) in trade and other receivables	(450,002)		(495,422)
Increase/(decrease) in trade and other payables	340,204		(94,374)
Cash generated from/(used in) operations	848,943		(858,436)
Income taxes refunded	7,389		155,209
Net cash generated from/(used in) operating activities	856,332		(703,227)
Cash flows from investing activities
Purchase of property, plant and equipment		(46,568)	(13,040)
Proceeds of disposal of property, plant and equipment	-		500
Interest received	5,356		10,927
Net cash (used in) investing activities	(41,212)		(1,613)
Cash flows from financing activities
Proceeds from long-term borrowings	-		1,000,000
Repayment of long-term borrowings	(285,714)		(23,810)
Interest paid	(18,331)		(15,958)
Net cash (used in)/generated from financing activities	(304,045)		960,232
Net increase in cash and cash equivalents	511,075		255,392
Cash and cash equivalents at beginning of year	846,871		580,331
Exchange adjustments to cash and cash equivalents at beginning of year	(12,619)		11,148
Cash and cash equivalents at end of year		1,345,327	846,871

The accompanying notes form an integral part of these financial statements.

Consolidated statement of changes in equity

For the year ended 31 July 2011

Share			Capital	Share	Currency	Retained	Total
Share		premium	redemption	option	translation
capital		account	reserve	reserve	reserve	earnings
£		£	£	£	£	£	£
At 1 August 2009	73,093	2,841,538	6	193,174	(19,659)	1,248,276	4,336,428
Share-based payment credit	-	-	-	(35,574)	-	-	(35,574)
Transactions with owners	-	-	-	(35,574)	-	-	(35,574)
Loss for the year	-	-	-	-	-	(258,362)	(258,362)
Other comprehensive
income
Currency translation differences	-	-	-	-	55,999	-	55,999
Total comprehensive income for the year	-	-	-	(35,574)	55,999	(258,362)	(237,937)
At 31 July 2010	73,093	2,841,538	6	157,600	36,340	989,914	4,098,491
Share-based payment charge	-	-	-	19,561	-	-	19,561
Transactions with owners	-	-	-	19,561	-	-	19,561
Profit for the year	-	-	-	-	-	574,987	574,987
Other comprehensive
income
Currency translation differences	-	-	-	-	(44,477)	-	(44,477)
Total comprehensive income for the year	-	-	-	19,561	(44,477)	574,987	550,071
At 31 July 2011	73,093	2,841,538	6	177,161	(8,137)	1,564,901	4,648,562

The accompanying notes form an integral part of these financial statements.

Notes to the consolidated financial statements for the year ended 31 July 2011

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 set out below have been applied consistently throughout the Group for the purpose of preparation of the financial statements.

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 recovery in the market, the continued investment in new products and services, and the improved cash levels, the Directors are fully satisfied that the Group is a going concern and will be able to continue trading for the foreseeable future.

Dividends

GETECH intends to reinstate its policy of progressive dividends as appropriate, and is proposing a final dividend of 0.2p per share in respect of the year to 31 July 2011. The dividend will be paid on 22 December 2011 to shareholders on the register on 25 November 2011.

2011		2010
£		£
Proposed after the year end (not recognised as a liability)
Final dividend in respect of the year ended 31 July 2011 at 0.2p per share (2010: no dividend)	58,474	-

Earnings/(loss) per share

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

2011		2010
Profit/(loss) attributable to equity holders of the Group	£574,987	(£258,362)
Weighted average number of Ordinary Shares in issue	29,237,151	29,237,151
Basic earnings/(loss) per share	1.97p	(0.88)p
Diluted earnings/(loss) per share	1.84p	(0.86)p

Diluted earnings/(loss) per share is calculated by dividing the profit/(loss) 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 average number of the Ordinary Shares used in the calculation of diluted earnings per share for the year ended 31 July 2011 is 2,088,414 (2010: nil).

Of the options in issue at 31 July 2011, 529,789 were anti-dilutive because the conditions for exercise have not been met. The majority of options granted at 31 July 2010 were anti-dilutive.

Annual General Meeting

The Annual General Meeting of GETECH Group plc will be held at 12 noon on 14 December 2011 at Kitson House, Elmete Lane, Leeds LS8 2LJ.

 

END

 

 

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