Half Yearly Report - Replacem

RNS Number : 6785P

GETECH Group plc

30 March 2009

 

REPLACEMENT: 'for the six months ended 31 January 2009'

30 March 2009

GETECH Group plc

('GETECH', the 'Company' or the 'Group')

Half yearly REPORT

for the six months ended 31 January 2009

GETECH Group plc (AIM: GTC), a leading oil services business specialising in the provision of data, studies and interpretation services to the oil and mining exploration sectors, announces its half yearly report for the year ended 31 July 2008. 

Highlights

• Revenue for the six months of £2,419,000 (six months ended 31 January 2008: £2,235,000)

• Profit before tax of £187,000 (six months ended 31 January 2008: £603,000)

• Interim dividend of 0.6p per share (2008: interim 0.6p, final 0.7p)

• Acquisition of data and related assets from Lisle Gravity Inc 

• Cash balances returned to £1,626,000 at the end of the period

• Net assets £5,038,000 (31 January 2008: £4,582,000)

• Four major new non-exclusive studies completed in the period

Commenting on outlook, Peter Stephens, Non-Executive Chairman of GETECH Group plc, said:

'Most major oil companies appear to be prepared to continue spending on our data and studies in order to help maintain their long-term reserves.'

'GETECH's result for the full year to July 2009 is dependent on the crystallization of a number of deals that are currently under negotiation and the pattern of demand in the remaining few months of the year.'

'We remain confident about our medium and long term prospects despite the current global economic climate. Indeed, the relative stability of the crude oil price since December 2008 is seen as a positive indicator in itself.' 

For further information:

GETECH Group plc
Raymond Wolfson, Chief Executive Officer	Tel: [phone]
WH Ireland
Katy Mitchell	Tel: [phone]
Gary Marshall	Tel: [phone]
Parkgreen Communications Ltd
Paul McManus	Tel: [phone] or Mob: [phone]
	[e-mail]
Ben Knowles	Tel: [phone] or Mob: [phone]
	[e-mail]

Chairman's statement

I report the interim accounts of GETECH Group plc and its subsidiary company (collectively 'GETECH'), the oil services business specialising in the provision of data, studies and services to the oil and mining exploration sectors, for the six month period to 31 January 2009.

Results

GETECH is pleased to report a Group profit before tax of £187,345 (six months ended 31 January 2008: profit of £603,630) after interest receivable of £16,924 (six months ended 31 January 2008: £32,267) on revenue of £2,418,756 (six months ended 31 January 2008: £2,235,275). The post-tax profit was £72,601 (six months ended 31 January 2008: profit of £413,897). 

The accounts have been prepared under IFRS.

Dividend

Your Board remains confident for the future and recommends an interim dividend of 0.6p per share, costing £175,384 to be paid on 7 May 2009 to shareholders on the register at 14 April 2009. 

Business review

During the half year under review, we completed and delivered four major non-exclusive geological studies, all of which have sold well, and the £441,000 of work in progress that had been carried in the accounts as inventory at July 2008 has now been fully recovered against sales, The impact of recovering the value of this inventory was that the costs accounted for in the period were increased, with the effect of reducing the profit despite the strong sales performance.

In December 2008, our US subsidiary acquired from Lisle Gravity Inc its data and a number of other assets. Lisle Gravity Inc held what we believe to be the largest commercial database of onshore US gravity data, along with other magnetic and magnetotelluric data. This acquisition is expected to be both earnings enhancing and to deliver medium and long-term strategic benefits in enhancing our presence in the US domestic market. The acquisition was paid for mainly by internal funds but supported by a placing of £400,000, which was oversubscribed. Despite the first payment of $1,400,000 in December 2008 for the acquisition, the group cash balances had returned to £1,626,000 by 31 January 2009 (31 January 2008: £1,589,000).

Outlook

Looking forward to the second half of this financial year, we will complete an additional new study which we anticipate will generate further sales along with additional sales from our existing library. A number of our major clients have already requested follow-on work arising from earlier studies and pre-committed to new non-exclusive studies that we will commence in the second half and later.

The turmoil in the financial markets and lower oil prices in the region of $45 per barrel appears to have had limited impact on GETECH's business in the first half of the year. This is in part due to the new diversity of GETECH's products with a global range of multi-client petroleum geology studies, and partly because the oil price, although around $45 per barrel, is still a healthy price on a historical basis. Most major oil companies appear to be prepared to continue spending on our data and studies in order to help maintain their long-term reserves.

The Directors believe that our reputation in the field of gravity and magnetic data and interpretation studies continues to be excellent, and several substantial proprietary non-exclusive geophysical projects are in advanced stages of discussion. The acquisition of the assets from Lisle Gravity Inc should also leverage our position and reputation in the US domestic oil and mining markets.

The pattern of follow-on purchases of our products by oil companies appears to confirm that within a period of less than four years we have also established a strong market position and an excellent reputation with our non-exclusive petroleum geology studies. We now have a significant library of completed multi-client studies available for sale.

GETECH's result for the full year to July 2009 is dependent on the crystallization of a number of deals that are currently under negotiation and the pattern of demand in the remaining months of the year. That result may well be adversely affected by budget restraints seen in oil companies since the start of 2009.

However, we remain confident about our medium and long term prospects despite the current global economic climate. Indeed, the relative stability of the crude oil price since December 2008 and its recent improvement are seen as encouraging. 

PETER STEPHENS

NON-EXECUTIVE CHAIRMAN

30 MARCH 2009

CONDENSED CONSOLIDATED INCOME STATEMENT

for the six months ended 31 January 2009

			Six months	Six months	Year
			ended	ended	ended
			31 January	31 January	31 July
			2009	2008	2008
			Unaudited	Unaudited	Audited
			£'000	£'000	£'000
Revenue			2,419	2,235	4,125
Cost of sales			(335)	(578)	(940)
Gross profit			2,084	1,657	3,185
Administrative costs			(1,908)	(1,086)	(2,363)
Operating profit			176	571	822
Finance income			17	32	78
Finance costs			(6)	-	-
Profit before tax			187	603	900
Income tax expense			(114)	(189)	(298)
Profit for the period attributable to equity holders
of the parent			73	414	602
Earnings per share
Basic earnings per share			0.26p	1.50p	2.17p
Diluted earnings per share			0.26p	1.38p	2.17p

CONDENSED CONSOLIDATED STATEMENT OF TOTAL RECOGNISED INCOME AND EXPENSE

for the six months ended 31 January 2009

	Six months	Six months	Year
	ended	ended	ended
	31 January	31 January	31 July
	2009	2008	2008
	Unaudited	Unaudited	Audited
	£'000	£'000	£'000
Profit for the period	73	414	602
Currency translation differences	120	1	28
Tax on items taken directly to equity	(33)	-	(7)
Net expense recognised directly in equity	87	1	21
Total recognised income and expense for the period
attributable to equity holders of the parent	160	415	623

All activities relate to continuing operations.

CONDENSED CONSOLIDATED BALANCE SHEET

as at 31 January 2009

			31 January	31 January	31 July
			2009	2008	2008
			Unaudited	Unaudited	Audited
			£'000	£'000	£'000
Assets
Non-current assets
Property, plant and equipment			2,788	2,805	2,791
Goodwill			-	1	-
Other intangible assets			1,890	-	-
Deferred tax assets			47	-	37
			4,725	2,806	2,828
Current assets
Inventories			20	344	441
Trade and other receivables			1,125	1,852	1,602
Other current assets			-	22	-
Cash and cash equivalents			1,626	1,589	1,688
			2,771	3,807	3,731
Total assets			7,496	6,613	6,559
Liabilities
Current liabilities
Trade and other payables			1,751	1,906	1,767
Current tax payable			122	125	99
			1,873	2,031	1,866
Non-current liabilities
Trade and other payables			558	-	-
Deferred tax liabilities			27	-	41
			585	-	41
Total liabilities			2,458	2,031	1,907
Net assets			5,038	4,582	4,652
Equity
Equity attributable to shareholders of the parent
Share capital			73	69	69
Share premium account			2,841	2,461	2,461
Share option reserve			169	105	133
Currency translation reserve			87	(21)	(1)
Retained earnings			1,868	1,968	1,990
Total equity			5,038	4,582	4,652

CONDENSED CONSOLIDATED CASH FLOW STATEMENT

for the six months ended 31 January 2009

	Six months	Six months	Year
	ended	ended	ended
	31 January	31 January	31 July
	2009	2008	2008
	Unaudited	Unaudited	Audited
	£'000	£'000	£'000
Cash flows from operating activities
Operating profit	187	571	900
Share-based payments	36	26	54
Depreciation and amortisation charges	73	36	73
Impairment loss recognised	-	-	1
Finance income	(17)	-	(79)
Finance costs	5	-	-
Exchange adjustments	120	1	28
Decrease/(increase) in inventories	421	(151)	(248)
Decrease in debtors	500	186	497
(Decrease)/increase in creditors	(382)	484	345
Cash generated from operations	943	1,153	1,571
Income taxes paid	(172)	(254)	(453)
Net cash generated from operating activities	771	899	1,118
Cash flows from investing activities
Purchase of property, plant and equipment	(36)	(41)	(64)
Purchase of other intangible assets	(1,004)	-	-
Interest received	17	32	79
Net cash (used in)/generated from investing activities	(1,023)	(9)	15
Cash flows from financing activities
Proceeds from issue of share capital	400	-	-
Costs of issue of share capital	(16)	-	-
Equity dividends paid	(194)	(222)	(388)
Net cash generated from/(used in) financing activities	190	(222)	(388)
Net (decrease)/increase in cash and cash equivalents	(62)	668	745
Cash and cash equivalents at beginning of period	1,688	921	943
Cash and cash equivalents at end of period	1,626	1,589	1,688

NOTES TO THE INTERIM REPORT

for the six months ended 31 January 2009

1 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.

2 GENERAL INFORMATION

GETECH Group plc, a limited liability company, is the Group's ultimate 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's shares are admitted to trading on the London Stock Exchange's AIM.

The financial information set out in this interim report does not constitute statutory accounts as defined in Section 240 of the Companies Act 1985. These condensed consolidated interim financial statements (the 'interim financial statements'), which have neither been audited nor reviewed by the Group's auditor, have been approved by the Board.

The Group's statutory financial statements for the year ended 31 July 2008, which were prepared under International Financial Reporting Standards (IFRS) as adopted by the European Union, have been filed with the Registrar of Companies. The auditor's report on those financial statements was unqualified and did not contain a statement under Section 237(2) of the Companies Act 1985.

3 BASIS OF PREPARATION 

The interim financial statements are for the six months ended 31 January 2009. They have been prepared using the recognition and measurement principles of IFRS. They do not include all the information required for full annual financial statements and should be read in conjunction with the financial statements of the Group for the year ended 31 July 2008. 

The interim financial statements have been prepared under the historical cost convention. 

The interim financial statements have been prepared in accordance with the accounting policies adopted in the last annual financial statements for the year ended 31 July 2008 except in respect of the accounting policies on other intangible assets and financial liabilities, detailed below, as a result of the acquisition of assets from Lisle Gravity Inc. during the period. 

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

4 CHANGES TO ACCOUNTING POLICIES

4.1 OTHER INTANGIBLE ASSETS

Other intangible assets include acquired data holdings, trade name and domain name that qualify for recognition as intangible assets in a business combination. They are accounted for using the cost model whereby capitalised costs are amortised on a straight line basis over their estimated useful lives, as these assets are considered finite. Residual values and useful lives are reviewed at each reporting date. In addition, they are subject to impairment review. The following useful lives are applied:

Data holdings    -    10 years

Trade name    -    10 years
Domain name    -    10 years

Amortisation has been included within 'depreciation, amortisation and impairment of non-financial assets'.

4.2 FINANCIAL LIABILITIES

There has been no change to the Group's policy in this regard, other than in respect of the recognition of a financial liability categorised as at fair value through profit or loss to account for the contingent consideration described in Note 5. Financial liabilities are obligations to pay cash or other financial assets and are recognised when the Group becomes a party to the contractual provisions of the instrument. Financial liabilities categorised as at fair value through profit or loss are recorded initially at fair value and all transaction costs are recognised immediately in the income statement. All other financial liabilities are recorded initially at fair value, net of direct issue costs. 

Financial liabilities categorised as at fair value through profit or loss are remeasured at each reporting date at fair value, with changes in fair value being recognised in the income statement. All other financial liabilities are recorded at amortised cost using the effective interest method, with interestߛrelated charges recognised as an expense in finance costs in the income statement. Finance charges, including premiums payable on settlement or redemption and direct issue costs, are charged to the income statement on an accruals basis using the effective interest method and are added to the carrying amount of the instrument to the extent that they are not settled in the period in which they arise.

Financial liabilities are categorised as at fair value through profit or loss where they are classified as heldߛfor-trading or designated as at fair value through profit or loss on initial recognition. Financial liabilities are designated as at fair value through profit or loss where they eliminate or significantly reduce a measurement (or recognition) mismatch.

A financial liability is derecognised only when the obligation is extinguished, that is, when the obligation is discharged or cancelled or expires.

5 PURCHASE OF NON-CURRENT ASSETS IN THE PERIOD

On 11 December 2008 the Group acquired assets from Lisle Gravity Inc., a US company based in Denver, Colorado. The acquisition was made to enhance the geographical reach of the Group's data holdings.

The total cost of the acquisition was £1.9m, of which £0.7m is the fair value of contingent consideration which is designated as a financial liability through profit or loss. The contingent consideration is an estimate of the final purchase price, the exact amount of which depends on the income generated by the assets acquired over the first three years of trading following the acquisition.

The amounts recognised for each class of the assets acquired recognised at the acquisition date are as follows:

	Recognised
	at acquisition
	date
	£'000
Non-current assets
Property, plant and equipment	28
Intangible assets	1,896
	1,924
Cost of acquisition
Designated as financial liabilities
Trade and other payables - current liabilities	362
Trade and other payables - non-current liabilities	558
	920
Satisfied in cash and net outflow on acquisition	1,004
	1,924

6 SHARE CAPITAL

	31 January	31 January	31 July
	2009	2008	2008
	Unaudited	Unaudited	Audited
	£'000	£'000	£'000
Authorised
90,000,000 ordinary shares of £0.0025 each
(2008: 90,000,000)	225	225	225
	225	225	225
Issued, called up and fully paid
29,230,768 ordinary shares of £0.0025 each
(2008: 27,692,307)	73	69	69
	73	69	69

On 17 December 2008 1,538,461ordinary shares of £0.0025 each were allotted at 26p per share. The total consideration was £400,000. The amount credited to the share premium account was £379,997 after deducting costs of the issue amounting to £16,157.

7 DIVIDENDS

	Six months	Six months	Year
	ended	ended	ended
	31 January	31 January	31 July
	2009	2008	2008
	Unaudited	Unaudited	Audited
	£'000	£'000	£'000
Paid during the period
Final at 0.7p per share (2008: 0.8p)	194	222	222
Interim at 0.6p per share	-	-	166
	194	222	388
Proposed after the period end (not recognised as a liability)
Final at 0.7p per share	-	-	194
Interim at 0.6p per share (2008: 0.6p)	175	166	-

The proposed dividend is payable on 7 May 2009 to members on the register at 14 April 2009.

8 EARNINGS PER SHARE

Basic earnings per share is calculated on the basis of the profit for the period after tax, divided by the weighted average of ordinary shares in issue in the period of 28,076,922 (six months ended 31 January 2008 and year ended 31 July 2008: 27,692,307). 

Diluted earnings per share is calculated on the basis of the profit for the year after tax, divided by the weighted average number of shares in issue plus the weighted average number of shares which would be issued if all options granted were exercised. The addition to the weighted average number of ordinary shares used in the calculation of diluted earnings per share for the six months ended 31 January 2009 is £197,723 (six months ended 31 January 2008: 2,372,346, and year ended 31 July 2008: nil). 

9 INTERIM REPORT 

This statement is being sent to the shareholders of GETECH and will be available at its registered office.

 

END

 

 

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