Half Yearly Report

RNS Number : 4591J

GETECH Group plc

31 March 2010

 



GETECH Group plc

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

Interim results

for the 6 months ended 31 January 2010

GETECH Group plc (AIM: GTC), a leading geosciences business specialising in the provision of data, studies and interpretation services to the oil and mining exploration sectors, announces its Interim results for the six months ended 31 January 2010.

Financial Highlights

·      Revenue for the six months of £1,174,000 (six months ended 31 January 2009: £2,419,000)

·      Loss before tax of £392,000 (six months ended 31 January 2009: Profit of £187,000)

·      No interim dividend proposed (2009: interim 0.6p per share)

·      Trading affected by continued impact of economic crisis, volatility in oil prices and prolonged inactivity by oil company clients with budgets set for the calendar year 2009

·      Debt facility of £1m completed on favourable terms in September 2009

·      Cash levels sustained giving a balance of £1m at the end of the period

Operational highlights

·      Losses down 52% from previous half year

·      Six new geological studies under development during the period and due for completion in the second half year

·      US domestic data business, Lisle Gravity, returned notable profit in the period

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

"Although during this period we suffered from continued restrictions in major oil company budgets that had been set for the calendar year, we are happy to be able to report a considerable reduction in the loss compared with the prior half year. We plan to have six new geological studies available for sale in the second half of this financial year for which specific interest has been received. In addition the Company currently holds a larger forward order book for proprietary work than has been typical in previous years; accordingly we remain confident about our medium and long term prospects."

For further information:

GETECH Group plc
Raymond Wolfson, Chief Executive Officer	Tel: [phone]
WH Ireland
Katy Mitchell	Tel: [phone]
Eric Burns	Tel: [phone]
Walbrook PR
Ben Knowles	Tel: [phone] or Mob: [phone]
	[e-mail]
Paul McManus	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 geoscience business specialising in the provision of data, studies and services to the petroleum and mining exploration sectors, for the six month period ended 31 January 2010.

Results

GETECH is disappointed to report a Group loss before tax of £392,000 (six months ended 31 January 2009: profit £187,000) after interest receivable of £3,000 (six months ended 31 January 2009: £17,000) on revenue of £1,174,000 (six months ended 31 January 2009: £2,419,000). The post-tax loss was £330,000 (six months ended 31 January 2009: profit £73,000).

The accounts have been prepared under IFRS.

Dividend

Your Board does not recommend an interim dividend.

Business review

During the half year under review, we continued to suffer from the restrictions in the budgets of our clients. These clients are, in the main, major international oil companies and their budgets are typically set for whole calendar years. As a result, the period from August to December 2009 followed a similar pattern to the period from January to July 2009. However, the loss in the six month period ended 31 January 2010 was substantially less than the loss of £815,000 in the previous half year.

During the period we have been developing the next generation of geological studies, six of which are planned for completion during the second half year. Indications from our clients are that these will be well received. We have also been successful in developing relationships which have led to an increase in proprietary work; these will in large part fall in the second half year.

Despite the low and volatile gas price, and the downturn in exploration, the US gravity data business that we acquired in December 2008 returned a notable profit in this period. We have now recruited additional staff to support the sales activity in Denver, Colorado.

As reported in September 2009, we completed a £1m debt facility with the National Westminster Bank plc at extremely favourable rates. Although we drew this down in November 2009 we have maintained a cash level generally in excess of £1m since then, with a closing balance at 31 January 2010 slightly in excess of £1m. In February 2010 we also received a corporation tax refund amounting to £176,000.

Outlook

Looking forward to the second half of this financial year, we plan to complete six new geological studies by the end of July 2010 which, with sales from our existing library and increased levels of proprietary work, we anticipate will lead to substantially more income than in the first half year.

The first new study in the current financial year was completed in February (Equatorial Atlantic Phase I). This has already attracted significant interest in view of major discoveries in the area, with deliveries to four clients in February and March making a significant contribution to revenue for the second half year. The next study due to be completed is our South East Asia Structure and Tectonics study, which already has four clients under contract.

The oil price appears to be less volatile and has remained generally above $70 per barrel for several months, and we believe we are now seeing a return towards normality of client buying patterns. The gas price, however, has not rallied in the same way as the oil price due in part to a world surplus of liquefied natural gas (LNG).

GETECH's result for the full year to July 2010 is, as usual, dependent on the crystallisation of a number of deals and the pattern of demand in the remaining few months of the year. However, we have a larger forward order book for proprietary work than has been typical in prior years, and we have clear statements from a number of clients of their wish to purchase our studies and services.

We remain confident about our medium and long-term prospects.

PETER STEPHENS

NON-EXECUTIVE CHAIRMAN

31 MARCH 2010

CONDENSED CONSOLIDATED INCOME STATEMENT

FOR THE SIX MONTHS ENDED 31 JANUARY 2010

Six months		Six months	Year
ended		ended	ended
31 January		31 January	31 July
2010		2009	2009
Unaudited		Unaudited	Audited
£'000		£'000	£'000
Revenue	1,174	2,419	3,306
Cost of sales	(175)	(335)	(511)
Gross profit	999	2,084	2,795
Administrative costs	(1,389)	(1,908)	(3,441)
Operating (loss)/profit	(390)	176	(646)
Finance income	3	17	28
Finance costs	(5)	(6)	(10)
(Loss)/profit before tax	(392)	187	(628)
Income tax income/(expense)	62	(114)	256
(Loss)/profit for the period attributable to owners of the
parent	(330)	73	(372)
(Loss)/earnings per share
Basic (loss)/earnings per share	(1.13)p	0.26p	(1.30)p
Diluted (loss)/earnings per share	(1.13)p	0.26p	(1.30)p

CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

FOR THE SIX MONTHS ENDED 31 JANUARY 2010

Six months		Six months	Year
ended		ended	ended
31 January		31 January	31 July
2010		2009	2009
Unaudited		Unaudited	Audited
£'000		£'000	£'000
(Loss)/profit for the period	(330)	73	(372)
Other comprehensive income
Currency translation differences	(2)	120	(19)
Income tax relating to components of other comprehensive
income	-	(33)	-
Other comprehensive income, net of tax	(2)	87	(19)
Total comprehensive income for the period attributable
to owners of the parent	(332)	160	(391)

All activities relate to continuing operations.

CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION

AS AT 31 JANUARY 2010

31 January		31 January	31 July
2010		2009	2009
Unaudited		Unaudited	Audited
£'000		£'000	£'000
Assets
Non-current assets
Property, plant and equipment	2,711	2,788	2,748
Intangible assets	1,035	1,890	1,098
Deferred tax assets	228	47	168
3,974		4,725	4,014
Current assets
Inventories	454	20	293
Trade and other receivables	831	1,125	655
Other current assets	189	-	190
Cash and cash equivalents	1,007	1,626	580
2,481		2,771	1,718
Total assets	6,455	7,496	5,732
Liabilities
Current liabilities
Current portion of long-term borrowings	190	-	-
Trade and other payables	1,323	1,751	1,270
Current tax liabilities	-	122	-
1,513		1,873	1,270
Non-current liabilities
Long-term borrowings	810	-	-
Trade and other payables	83	558	99
Deferred tax liabilities	28	27	27
921		585	126
Total liabilities	2,434	2,458	1,396
Net assets	4,021	5,038	4,336
Equity
Equity attributable to owners of the parent
Share capital	73	73	73
Share premium account	2,841	2,841	2,841
Share option reserve	211	169	194
Currency translation reserve	(22)	87	(20)
Retained earnings	918	1,868	1,248
Total equity	4,021	5,038	4,336

CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS

FOR THE SIX MONTHS ENDED 31 JANUARY 2010

Six months		Six months	Year
ended		ended	ended
31 January		31 January	31 July
2010		2009	2009
Unaudited		Unaudited	Audited
£'000		£'000	£'000
Cash flows from operating activities
(Loss)/profit before tax	(392)	187	(628)
Share-based payments	17	36	60
Depreciation and amortisation charges	105	73	209
Impairment loss recognised	-	-	463
Finance income	(3)	(17)	(28)
Finance costs	5	5	10
Exchange adjustments	(4)	120	189
(Increase)/decrease in inventories	(161)	421	148
(Increase)/decrease in debtors	(175)	500	947
Increase/(decrease) in creditors	53	(382)	(497)
Cash (used in)/generated from operations	(555)	943	873
Income taxes refunded/(paid)	3	(172)	(181)
Net cash (used in)/generated from operating activities	(552)	771	692
Cash flows from investing activities
Purchase of property, plant and equipment	(3)	(36)	(39)
Purchase of data holdings, trade and domain names	-	(1,004)	(1,893)
Interest received	3	17	28
Net cash used in investing activities	-	(1,023)	(1,904)
Cash flows from financing activities
Proceeds from issue of share capital	-	384	384
Proceeds from long-term borrowings	984	-	99
Equity dividends paid	-	(194)	(369)
Interest paid	(5)	-	(10)
Net cash generated from financing activities	979	190	104
Net increase/(decrease) in cash and cash equivalents	427	(62)	(1,108)
Cash and cash equivalents at beginning of period	580	1,688	1,688
Cash and cash equivalents at end of period	1,007	1,626	580

CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

FOR THE SIX MONTHS ENDED 31 JANUARY 2010

	Unaudited
Share			Share	Currency
Share		premium	option	translation	Retained	Total
capital		account	reserve	reserve	earnings	equity
£'000		£'000	£'000	£'000	£'000	£'000
Balance at 1 August 2009	73	2,841	194	(20)	1,248	4,336
Share-based payments	-	-	17	-	-	17
Transactions with owners	-	-	17	-	-	17
Loss for the period	-	-	-	-	(330)	(330)
Other comprehensive income
Currency translation differences	-	-	-	(2)	-	(2)
Total comprehensive income for the period	-	-	-	(2)	(330)	(332)
Balance at 31 January 2010	73	2,841	211	(22)	918	4,021

NOTES TO THE INTERIM REPORT

FOR THE SIX MONTHS ENDED 31 JANUARY 2010

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 for the six months ended 31 January 2010 and 31 January 2009 has not been audited and does not constitute full financial statements within the meaning of Section 434 of the Companies Act 2006. These condensed consolidated interim financial statements (the "interim financial statements") have been approved by the Board.

The financial information relating to the year ended 31 July 2009 does not constitute full financial statements within the meaning of Section 434 of the Companies Act 2006. This information is based on the Group's statutory accounts for that period. The statutory accounts were prepared in accordance with International Financial Reporting Standards as adopted by the European Union (IFRS) and received an unqualified audit report and did not contain statements under Section 498(2) or (3) of the Companies Act 2006. These financial statements have been filed with the Registrar of Companies.

3 Basis of preparation

The interim financial statements are for the six months ended 31 January 2010. 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 2009.

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 2009 except for the adoption of IAS 1 'Presentation of Financial Statements' (revised 2007) which became effective for accounting periods commencing on or after 1 January 2009.

The adoption of IAS 1 (revised 2007) does not affect the financial position of the Group but gives rise to additional disclosures. The measurement and recognition of the Group's assets, liabilities, income and expenses is unchanged. Under IAS 1 (revised 2007) a statement of comprehensive income is required. This includes some income and expenses previously recognised in equity without effect on income. IAS 1 (revised 2007) also requires a statement of changes in equity. The condensed consolidated statement of changes in equity shows all changes affecting the shareholders in their capacity as owners and all other changes in equity are presented in the condensed consolidated statement of comprehensive income.

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

4 Dividends

Six months		Six months	Year
ended		ended	ended
31 January		31 January	31 July
2010		2009	2009
Unaudited		Unaudited	Audited
£'000		£'000	£'000
Paid during the period
Final (2009: 0.7p per share)	-	194	194
Interim (2009: 0.6p per share)	-	-	175
-		194	369
Proposed after the period end (not recognised as a liability)
Interim (2009: 0.6p per share)	-	175	-

5 Earnings per share

Basic earnings per share is calculated on the basis of the loss for the period after tax, divided by the weighted average of ordinary shares in issue in the period of 29,237,151 (six months ended 31 January 2009: 28,076,922; year ended 31 July 2009: 28,651,166).

Diluted earnings per share is calculated on the basis of the loss 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 2010 is 1,256,573 (six months ended 31 January 2009: 338,294; year ended 31 July 2009: 780,849). All options in issue at 31 January 2010 and 31 July 2009 were anti-dilutive.

6 Interim Report

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

 

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