TIDMGTC
RNS Number : 8449J
GETECH Group plc
22 August 2019
Getech Group plc
("Getech" or the "Company" and with its subsidiaries the "Getech
Group")
Trading Update: 6 months to 30 June 2019
Getech (AIM; GTC) provides geoscience and geospatial products
and services to companies and governments who use them to de-risk
exploration programmes and improve their management of natural
resources. The Group's activities focus on a suite of data,
knowledge and analytical products, the value of which are enhanced
through services that leverage Getech's products and technical
skills.
The Company produces this trading update ahead of the
publication of its interim results on or around 30 September
2019.
Operational update
Development of Globe remains on time and to cost - Globe 2019
was released to customers at end-July. In H1 2019 Getech completed
the upgrade of its software products to ArcGIS Pro, added to its
data holdings and began feasibility work on the potential to
enhance MultiSat.
Gravity & Magnetic and Geospatial Service teams continued to
be fully utilised and work to reposition Geoscience Services was
rewarded with further governmental engagement and new contracts
from customers expanding their investment in exploration.
Getech is exploring a range of organic and acquisitional
opportunities to further enhance and extend its product and service
offering.
H1 2019 - revenue, sales, costs and cash
Revenue in H1 2019 is expected to total GBP2.5 million (H1 2018:
GBP2.9 million). In addition, in H1 2019 Getech closed GBP1.6
million of new forward sales (H1 2018: GBP1.4 million). A
significant portion will unwind to revenue in H2 2019.
-- Lower H1 revenue in large part reflects a near-term reduction
in the size of the Geoscience Services team, a step taken in Q4
2018 to address the team's lossmaking position.
-- Higher new forward sales of products and services grew
Getech's order book by GBP1 million (30 June 2019: GBP3.0 million;
30 June 2018: GBP2.0 million) and increased the level of annualised
recurring revenue by GBP0.8 million (30 June 2019: GBP2.3 million;
30 June 2018: GBP1.5 million).
-- The total value and diversity of data sales in H1 2019 rose year-on-year.
Cost savings that resulted from the restructuring and relocation
of Geoscience Services were partly used to expand investment across
Getech's workforce. Inclusive of this, the total cost base[1] in H1
2019 is expected to have reduced by 10% to GBP3.2 million (H1 2018:
GBP3.5 million).
Getech expects the net impact of the reduction in cost base and
revenue to have a neutral impact on the Group's profitability
position when compared to H1 2018.
Capital discipline, and the settlement of receivables, increased
cash to GBP3.0 million at 30 June 2019 (30 June 2018: GBP1.9
million; 31 Dec 2018: GBP1.4 million). Cash at 30 June 2018
included tax credits totalling GBP0.6 million. Receipt of tax
credits in 2019 is due in H2 2019.
Overall, the Company continues to trade in line with current
market expectations.
Outlook
Getech is growing its baseline of recurring revenue by
broadening its customer base and expanding its geographic reach.
This has required focused new sales and marketing campaigns for
software and Globe, whilst developing a range of opportunities in
the markets of data, geospatial, geoscience and gravity and
magnetic services. This investment has been rewarded with an
expansion of the sales pipeline and new focus regions include
Southeast Asia, Japan and UAE.
For Globe and software, Getech is working with a strong list of
new customer trials. In data, with the bar set by a record sales
performance in H2 2018, the Group is managing a portfolio of
high-value opportunities; key catalysts for which lie in H2 2019.
In services, H1 2019 projects have entered H2 2019 with new phases
of work and Getech continues to add new customers.
With global macroeconomic uncertainty driving crude price
volatility, Getech's oil and gas customers continue to carefully
manage the release of their investment budgets. The Group's focus
therefore is to keep its tangible and growing sales pipeline in
step with its customers' key business requirements.
Jonathan Copus, Getech CEO, commented:
"We have reshaped Getech around a suite of high-value products
and skills. This is changing the mix and timing of our sales and
revenues. In H1 2018 and H1 2019 a large proportion of new sales
that we closed relate to forward contracts that secure revenue for
future periods. Most of this revenue is also recurring in nature.
Superimposed on this are steps that we are taking to strengthen our
service offering, which in the near-term prioritise profitability
over top-line growth. As a result, although H1 2019 revenue was
lower than in H1 2018, new sales have strengthened Getech's forward
earnings path. By covering an ever-larger portion of our costs with
forward and recurring revenue, this means that event-driven 'spot'
sales, such as high-value data, can be used to maximise
profitability."
The information contained within this announcement is deemed by
the Company to constitute inside information stipulated under the
Market Abuse Regulation (EU) No. 596/2014. Upon the publication of
this announcement via the Regulatory Information Service, this
inside information is now considered to be in the public
domain.
Getech Group plc Tel: 0113 322 2200
Jonathan Copus, Chief Executive
WH Ireland Limited Tel: 0161 832 2174
Katy Mitchell
Notes to Editors:
The Getech Group provides the expertise, support and knowledge
that companies and governments need to better discover, develop and
manage natural resources. Our data-rich products, GIS solutions and
government advisory services help our customers to achieve their
business goals of cost control, operational excellence, regulatory
compliance and environmental responsibility.
For more information, please visit our website at
www.getech.com
[1] Cost base is measured as: cost of sales, administrative
costs and development costs capitalised, less depreciation and
amortisation, and adjustments for movements in inventories, foreign
exchange and non-cash provisions. These are Getech's cash operating
costs.
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
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