Last checked at 26 Oct 2010 07:00
GETECH Group plc
("GETECH", "Company" or "Group")
Preliminary results
for the 12 months ended 31 July 2010
GETECH, a leading geosciences business specialising in the provision of data, studies and interpretation services to the oil, gas and mining exploration sectors, announces its Preliminary Results for the year ended 31 July 2010.
Financial highlights
·; Revenue for the year stable at £3.25m (2009: £3.31m)
·; Loss before tax cut by 64% to £228,497 (2009: £627,901)
·; Profitable in second half of the financial year
·; Economic crisis and volatile oil price affected client budgets in first half of the year
·; £1m debt facility arranged on very favourable terms
Operational highlights
·; Major investment in new products
·; Sales of gravity and magnetic data improved in the second half year
·; Continued growth of libraries of studies and data
Post year end highlights
·; $1.1m new proprietary interpretation contract with new client
·; £230,000 data contract with blue chip oil company
Commenting on outlook, Peter Stephens, Non-Executive Chairman of GETECH Group plc,
said:
"We are pleased to be able to report a return to profit in the second half of the year that meant a significant reduction in the loss for the full year versus 2009.
"We anticipate that in the first half of the current year we will start to benefit from the recent investments we have made in developing new geological products and are optimistic that our other initiatives will begin to bear fruit".
Enquiries
| GETECH Group plc Raymond Wolfson, Chief Executive
|
| Tel: 0113 322 2200 |
| WH Ireland Limited Katy Mitchell |
| Tel: 0161 832 2174
|
| Walbrook PR Ben Knowles/Helen Westaway |
| Tel: 07900 346978 |
CHAIRMAN'S STATEMENT
I report the fifth 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 2010. 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 loss before tax of £228,497 (2009: loss £627,901) after interest receivable of £10,927 (2009: £27,749) on revenue of £3,254,758 (2009: £3,305,883). The post-tax loss was £258,362 (2009: loss £372,067) giving loss per share of 0.88p (2009: loss 1.30p).
The accounts have been prepared under International Financial Reporting Standards (IFRS) as adopted by the European Union.
Dividends
In view of the trading result for the year GETECH is not proposing a dividend.
Business review
While I am disappointed to report a loss for the whole year, I am pleased to report that the loss of £392,000 reported in the first half year was followed by a profit of £163,000 in the second half year.
As we had anticipated, oil companies continued their budgetary restrictions throughout the whole of the calendar year 2009. This resulted in the loss reported in our half year ended 31 January 2010. We also experienced an atypically poor December. This is normally the month in which clients spend their unused budgets ("end of year money"). We are pleased that the market generally has begun to recover in the calendar year 2010 and that our half year ended 31 July 2010 returned a profit, albeit not sufficient to cancel the loss in the first half year.
The oil price has remained at satisfactory levels above $70 per barrel, although the gas price, which affects our US business, has been lower than is necessary to stimulate the US domestic business.
The BP Macondo disaster had a major impact on the industry. While this did not affect our core business, it did have an immediate impact on one new initiative which had to be cancelled. In practice, the Icelandic volcano had a more direct impact than the BP disaster - it caused several staff to be stranded in various places and the cancellation of two major sales and marketing trips.
As previously reported, in anticipation of continuing risks and uncertainty in the market, we completed a £1m debt facility with the National Westminster Bank plc in September 2009. This was drawn down in November 2009. We are pleased to note that the gross cash at 31 July 2010 was £847,000 and cash levels have remained consistently well within expectations. 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.
The uncertainties in the marketplace over the last two years have forced us to take a prudent view about the timing of the recovery and therefore focus strongly on cash maintenance. One major consequence was the need to defer activities that would have involved significant external expenditure including M&A and data acquisition.
Outlook
The markets generally appear to be returning towards normality and the business has begun to recover since January 2010. We anticipate that in the first half of the year ending July 2011 we will start to benefit from the recent investments we have made in developing new geological products, and are optimistic that other initiatives will begin to bear fruit.
We have made an encouraging start to the year ending July 2011. As reported on 16 September 2010 we signed a significant new contract to deliver our integrated geophysical and geological services to a major new client. The gross revenue under this contract is $1,100,000 and this should be substantially delivered within the current financial year. Further, our sales of geophysical data have started well, including a licence of South American data which was signed and delivered in October 2010, generating gross revenue of £230,000.
Finally, once again I would like to thank the staff and my fellow Directors for all their hard work during what has proved to be a second difficult year.
PETER STEPHENS
NON-EXECUTIVE CHAIRMAN
OPERATING REVIEW
We report that in our fifth year as a public quoted company, GETECH Group plc ("GETECH" or "the Group") returned a pre-tax loss of £228,497 (2009: loss £627,901) for the year ended 31 July 2010.
Business setting
As anticipated, the global downturn in the hydrocarbon exploration market persisted through the whole of the calendar year 2009. However, many companies entered their new budget year in January 2010 and there have been encouraging signs of an upturn in activity, as evidenced by the profit of £163,000 in the second half of our financial year.
The oil price has now been comfortably above $70 per barrel for more than a year. We believe that the level and relative stability of the oil price mean it will not prove a barrier to oil company expenditure on 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
GETECH's strength lies in its ability to provide integrated solutions to its clients which can incorporate:
| • | global gravity and magnetic data; |
| • | proprietary geophysical and geological work; and |
| • | studies evaluating the petroleum potential of hydrocarbon-bearing basins. |
Oil, gas and 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. Our ability to provide integrated solutions is underpinned by the broad range of disciplines in which we have skilled staff, including amongst others potential field geophysics, structural geology, plate tectonics, petroleum geology, palaeolandscape 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. We are particularly pleased to note that sales from our global database of gravity and magnetic data were strong in our half year ended 31 July 2010. It is also noteworthy that this strength was evidenced by a significant number of modest sales, rather than being distorted by any major one-off sales.
Through this recent period we have continued to invest in and develop new geological products which will be available for sale in the first half of our new financial year. In parallel with this new product development, we have been developing a global thematic framework which will deliver a number of benefits: increased flexibility in meeting client specific needs (which will make it easier for them to buy from us); a platform which improves the efficiency of production and time to completion for future products; and increased responsiveness to emerging market opportunities.
During the year we completed "call-off" consultancy and product agreements with two major national oil companies which firmly establish our relationships with them. Such agreements aim to facilitate consultancy work and product purchases without the need for lengthy contractual processes. In addition, we initiated discussions with a further national oil company which resulted in the major new proprietary contract that we announced on 16 September 2010. This contract is for an integrated geological/geophysical interpretation which we believe few of our competitors can offer.
The future
GETECH has invested heavily over the last few years and we believe that from the year 2010/11 we will begin to see a return on these investments.
The first half of the year will see the launch of further new geological products, and performance of much of the work under the major new proprietary contract announced in September 2010.
In addition to the geological products, in the year 2010/11 we will be launching a new magnetic data compilation study of Europe and the Mediterranean, and a new data-driven study of the Haynesville Basin - a major unconventional play in the US.
Our business is founded on and requires the management of very large datasets covering a range of data types. In order to improve our overall efficiency, as previously mentioned we have developed a major Geographical Information Systems (GIS) database for use specifically with geophysical and geological data. This is also proving to be of interest to our clients and it is currently being evaluated by a major European national oil company.
Looking further ahead, we have also focused on developing our global thematic framework which will offer clients a more strategic programme and enable the development and production of future studies on a shorter turn-round time with lower costs.
Finally we would like to thank all our staff and Board colleagues for their unstinting efforts on behalf of GETECH. 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.
| PROFESSOR DEREK FAIRHEAD | RAYMOND WOLFSON |
| PRESIDENT | 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 2010 or 31 July 2009. The financial information for the year ended 31 July 2009 is derived from the statutory accounts for that year which have been delivered to the Registrar of Companies. The auditors 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 2010 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 2010 will be posted to shareholders and will be available to view on the Company's website at www.getech.com on 8 November 2010.
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
For the year ended 31 July 2010
| 2010 | 2009 | ||
| Restated | |||
| £ | £ | ||
| Revenue | 3,254,758 | 3,305,883 | |
| Cost of sales | (1,915,402) | (2,111,706) | |
| Gross profit | 1,339,356 | 1,194,177 | |
| Administrative costs | (1,562,822) | (1,839,823) | |
| Operating loss | (223,466) | (645,646) | |
| Finance income | 10,927 | 27,749 | |
| Finance costs | (15,958) | (10,004) | |
| Loss before tax | (228,497) | (627,901) | |
| Income tax (expense)/income | (29,865) | 255,834 | |
| Loss for the year attributable to owners of the parent | (258,362) | (372,067) | |
| Other comprehensive income | |||
| Currency translation differences on translation of foreign operations | 55,999 | (19,081) | |
| Total comprehensive income for the year attributable to owners of the parent | (202,363) | (391,148) | |
| Loss per share | |||
| Basic loss per share | 0.88p | (1.30)p | |
| Diluted loss per share | 0.86p | (1.30)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 2010
Company registration number 2891368
| 2010 | 2009 | |
| £ | £ | |
| Assets | ||
| Non‑current assets | ||
| Property, plant and equipment | 2,684,659 | 2,747,849 |
| Intangible assets | 1,018,369 | 1,098,478 |
| Deferred tax assets | 59,000 | 167,678 |
| 3,762,028 | 4,014,005 | |
| Current assets | ||
| Inventories | 509,994 | 292,994 |
| Trade and other receivables | 1,150,278 | 654,856 |
| Other current assets | 87,764 | 190,437 |
| Cash and cash equivalents | 846,871 | 580,331 |
| 2,594,907 | 1,718,618 | |
| Total assets | 6,356,935 | 5,732,623 |
| Liabilities | ||
| Current liabilities | ||
| Borrowings | 285,714 | - |
| Trade and other payables | 1,199,544 | 1,269,732 |
| 1,485,258 | 1,269,732 | |
| Non‑current liabilities | ||
| Borrowings | 690,476 | - |
| Trade and other payables | 82,710 | 98,834 |
| Deferred tax liabilities | - | 27,629 |
| 773,186 | 126,463 | |
| Total liabilities | 2,258,444 | 1,396,195 |
| Net assets | 4,098,491 | 4,336,428 |
| 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 | 157,600 | 193,174 |
| Currency translation reserve | 36,340 | (19,659) |
| Retained earnings | 989,914 | 1,248,276 |
| Total equity | 4,098,491 | 4,336,428 |
The financial statements were approved by the Board of Directors on 25 October 2010.
P F H STEPHENS
DIRECTOR
The accompanying notes form an integral part of these financial statements.
CONSOLIDATED STATEMENT OF CASH FLOWS
For the year ended 31 July 2010
| 2010 | 2009 | |
| £ | £ | |
| Cash flows from operating activities | ||
| Loss before tax | (228,497) | (627,901) |
| Share‑based (credits)/payments | (35,574) | 60,399 |
| Depreciation and amortisation charges | 211,405 | 209,138 |
| Profit on disposal of fixed assets | (500) | - |
| Impairment loss recognised | - | 463,223 |
| Finance income | (10,927) | (27,749) |
| Finance costs | 15,958 | 10,004 |
| Exchange adjustments | (3,505) | 172,194 |
| (Increase)/decrease in inventories | (217,000) | 147,984 |
| (Increase)/decrease in trade and other receivables | (495,422) | 946,669 |
| Decrease in trade and other payables | (94,374) | (497,102) |
| Cash (used in)/generated from operations | (858,436) | 856,859 |
| Income taxes refunded/(paid) | 155,209 | (180,261) |
| Net cash (used in)/generated from operating activities | (703,227) | 676,598 |
| Cash flows from investing activities | ||
| Purchase of property, plant and equipment | (13,040) | (38,627) |
| Purchase of data holdings, trade and domain name | - | (1,893,204) |
| Proceeds of disposal of property, plant and equipment | 500 | - |
| Interest received | 10,927 | 27,749 |
| Net cash used in investing activities | (1,613) | (1,904,082) |
| Cash flows from financing activities | ||
| Proceeds from issue of share capital | - | 384,473 |
| Proceeds from long-term borrowings | 1,000,000 | 98,834 |
| Repayment of long-term borrowings | (23,810) | - |
| Equity dividends paid | - | (369,269) |
| Interest paid | (15,958) | (10,004) |
| Net cash generated from financing activities | 960,232 | 104,034 |
| Net increase/(decrease) in cash and cash equivalents | 255,392 | (1,123,450) |
| Cash and cash equivalents at beginning of year | 580,331 | 1,687,632 |
| Exchange adjustments to cash and cash equivalents at beginning of year | 11,148 | 16,149 |
| Cash and cash equivalents at end of year | 846,871 | 580,331 |
The accompanying notes form an integral part of these financial statements.
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
For the year ended 31 July 2010
| Share | Capital | Share | Currency |
| |||||
| Share | premium | redemption | option | translation | Retained |
| |||
| capital | account | reserve | reserve | reserve | earnings | Total | |||
| £ | £ | £ | £ | £ | £ | £ | |||
| At 1 August 2008 | 69,231 | 2,460,927 | 6 | 132,775 | (578) | 1,989,612 | 4,651,973 | ||
| Share‑based payments | - | - | - | 60,399 | - | - | 60,399 | ||
| Issue of 1,538,461 shares at 26p each | 3,846 | 396,154 | - | - | - | - | 400,000 | ||
| Cost of placing | - | (16,157) | - | - | - | - | (16,157) | ||
| Issue of 6,383 shares relating to | |||||||||
| share‑based payment at 9.87p each | 16 | 614 | - | - | - | - | 630 | ||
| Dividends paid | - | - | - | - | - | (369,269) | (369,269) | ||
| Transactions with owners | 3,862 | 380,611 | - | 60,399 | - | (369,269) | 75,603 | ||
| Loss for the year | - | - | - | - | - | (372,067) | (372,067) | ||
| Other comprehensive income | |||||||||
| Currency translation differences | - | - | - | - | (19,081) | - | (19,081) | ||
| Total comprehensive income for the year | 3,862 | 380,611 | - | 60,399 | (19,081) | (741,336) | (315,545) | ||
| At 31 July 2009 | 73,093 | 2,841,538 | 6 | 193,174 | (19,659) | 1,248,276 | 4,336,428 | ||
| Share‑based credits | - | - | - | (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 | ||
The accompanying notes form an integral part of these financial statements.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 31 July 2010
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, a limited liability company, 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 accounts reflect the first time adoption of IAS 1 'Presentation of Financial Statements' (revised 2007). The effect of adoption of this standard is presentational only. The adoption of IAS 1 'Presentation of Financial Statements' (revised 2007) has introduced a number of terminology changes (including titles for the primary statements) and has resulted in a number of changes in presentation and disclosure. The revised standard has had no impact on the reported results or financial position of the Group. In certain circumstances IAS 1 (revised 2007) requires presentation of a third statement of financial position but this is not presented as the information is unchanged from that presented previously.
There has been a prior year restatement of cost of sales as explained in the Report of the Directors. This has resulted in a restatement in the Consolidated Statement of Comprehensive Income and in the cost of inventories recognised as an expense reported in note 6. There has been no impact on the reported results and the only effect is to transfer costs from "Administrative costs" to "Cost of Sales".
The Directors have considered the available cash resources of the Group and its current forecasts and are satisfied that the Group has adequate resources to continue in existence for the foreseeable future so the going concern basis has been adopted in the preparation of the financial statements.
The accounting policies set out below 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).
Dividends
| 2010 | 2009 | |
| £ | £ | |
| Paid during the year | ||
| Final dividend £nil (2009: 0.8p per share) | - | 193,846 |
| Interim dividend £nil (2009: 0.6p per share) | - | 175,423 |
| - | 369,269 | |
Loss per share
Basic loss per share is calculated by dividing the loss attributable to equity holders of the Group by the weighted average number of the Ordinary Shares in issue in the year.
| 2010 | 2009 | |
| Loss attributable to equity holders of the Group | £(258,362) | £(372,067) |
| Weighted average number of Ordinary Shares in issue | 29,237,151 | 28,651,166 |
| Basic loss per share | (0.88)p | (1.30)p |
| Diluted loss per share | (0.86)p | (1.30)p |
The majority of options in issue at 31 July 2010 and 31 July 2009 were anti-dilutive because the conditions for exercise have not been met.
Annual General Meeting
The Annual General Meeting of GETECH Group plc will be held at 12 noon on 2 December 2010 at Kitson House, Elmete Hall, Elmete Lane, Leeds LS8 2LJ