TIDMGTC
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 GBP1,575,228 (2013: GBP1,634,612)
including impact of R&D tax relief claim
-- EPS of 5.21p (2013: 5.57p)
-- Revenue of GBP6,592,798 , 18% lower than prior year (2013: GBP8,011,250)
-- Profit before tax of GBP1,000,816 (2013: GBP2,246,496)
-- 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 GBP3,422,594 at 31 July 2014 (2013: GBP4,357,927)
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 GBP1m
-- 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 Tel: 0113 322 2200
Raymond Wolfson, Chief
Executive
------------------------ --------------------------------------------
WH Ireland Limited Tel: 0161 832 2174
Katy Mitchell
------------------------ --------------------------------------------
Walbrook PR Tel: 020 7933 8780 or getech@walbrookpr.com
Helen Cresswell Mob: 07841 917 679
Paul Cornelius Mob: 07866 384 707
------------------------ --------------------------------------------
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 GBP1,000,816 (2013:
GBP2,246,496) after interest receivable of GBP32,914 (2013:
GBP30,897) on revenue of GBP6,592,798 (2013: GBP8,011,250). The
post-tax profit was GBP1,575,228 (2013: GBP1,634,612), 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 GBP1m. 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 GBP1,000,816 (2013:
GBP2,246,496) 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 GBP1m 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 GBP1m.
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
GBP GBP
----------------------------------------- ------------ ------------
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
GBP GBP
------------------------------ ------------ ------------
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
GBP GBP
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
GBP GBP GBP GBP GBP GBP GBP
------------------------------ ---------- ----------- --------- ------------ ---------- ------------
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
GBP GBP
------------------------------------------------------- --------
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 GBP1,575,228 GBP1,634,612
the Group
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.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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