Last checked at 31 Oct 2012 07:00
Getech Group plc
("Getech" or the "Group" or the "Company")
Final Resultsfor the 12 months ended 31 July 2012
Getech, the oil services business specialising in the provision of exploration data and petroleum systems studies and evaluations, announces its Preliminary Results for the year ended 31 July 2012.
Financial highlights
• | Revenue for the year increased by 21% to £6,441,107 (2011: £5,326,866) |
• | Profit before tax up 86% to £1,246,838 (2011: £669,702) |
• | Net cash after outstanding debt rose by £1,951,169 to £2,606,020 |
• | Proposed final dividend for the year of 0.8p (2011: 0.2p), a total of 1.0p for the year (2011:0.2p) |
Operational highlights
• | Successful launch of the Global Programmes (Globe) with five sponsors committed by 31 July and four post year end | |
• | Strong data sales with 45% year on year growth |
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• | Continued development of Getech's position as a technology leader |
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• | Two innovative pilot studies funded during the year - Cryosat funded by six clients and a new study in the Red Sea funded by Aramco |
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• | Major data sales included Russian Arctic Shelf aeromagnetic data ($1.28m) and Global Continental Margins data ($600k) |
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• | Corporate rebranding exercise initiated with successful relaunch under the new brand in September 2012 |
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• | Average number of staff up 13% with minimal staff turnover |
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Stuart Paton, Non-Executive Chairman of GETECH Group plc, said:
"I am extremely pleased to present such a strong set of results for the Company, which builds on the good results from last year. Continued high oil prices have led to companies expanding their international exploration efforts, and hence to the increased requirements for our products. In particular, the development of Globe, which utilises our key skills in integration of data, has been embraced by industry. The roll out of Globe, with nine sponsors now signed up to the programme, is transformational for the Company both in terms of revenue growth and visibility of future income. The strength of our technical team, our library of geophysical data and integrated studies, and our proven ability to consistently sell products, make us very optimistic about continuing to grow the Company in the coming years."
Enquiries
GETECH Group plc Raymond Wolfson, Chief Executive
| Tel: 0113 322 2200 |
WH Ireland Limited Katy Mitchell | Tel: 0161 832 2174
|
Walbrook PR Helen Westaway | Tel: 020 7933 8790 Mob: 07841 917 679 helen.westaway@walbrookpr.com |
Chairman's statement
I am pleased to make my second report as Chairman of Getech, on the seventh full year results since its admission to AIM, for the year ended 31 July 2012. 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 £1,246,838 (2011: £669,702) after interest receivable of £6,016 (2011: £5,356) on revenue of £6,441,107 (2011: £5,326,866). The post-tax profit was £930,018 (2011: £574,987), giving earnings per share of 3.18p (2011: 1.97p).
Dividends
Getech intends to continue its policy of progressive dividends as appropriate and is proposing a final dividend of 0.8p per share in respect of the year to 31 July 2012 (2011: 0.2p per share) in addition to the interim dividend of 0.2p per share announced in April 2012. The final dividend will be paid on 20 December to shareholders on the register of members on 23 November 2012.
Business review
I am pleased to report very strong growth in the performance of the Company this year following on from the turnaround in 2010-2011. The Company generated a record level of revenue which was an increase of 21% on the previous year. Pre-tax profits also increased 86% year on year. Both revenue and profits were significantly ahead of expectations.
The business is generating significant cash flow from operations and, at 31 July 2012, we had a gross cash position of £3,010,782, outstanding debt under the National Westminster Bank facility of £404,762 and hence a net cash position of £2,606,020.
We announced a number of major successes during the year in three key areas.
First, our strategic aim to diversify from our core business of sales of gravity and magnetic data and multi-client studies into multi-year Global Programmes has been very successful with five sponsors already signed up. Since the financial year end, we have signed up a further four major companies to the Global Programmes. We have now developed and extended the scope of the work and rebranded the Global Programmes as Globe. Globe is aimed initially at major companies but we are seeing increasing interest from smaller companies with significant international exploration portfolios who want to access our products, skills and expertise.
Second, gravity and magnetic data sales, and associated proprietary studies, have continued to strengthen and demonstrate the continued requirement for our traditional products in exploration. Further, we are actively adding to our global database through agreements with host countries and we see a continuing demand for such products.
Third, we strive to be thought leaders in our field. Our staff regularly present at major international conferences across a range of topics where their papers are highly regarded; we are leading a consortium on the use of new satellite-based gravity data; and we are undertaking a ground-breaking study for Aramco to map sub-salt structures using new potential field methods. We believe that this intellectual lead differentiates us from our competitors and builds the basis for future business.
Outlook
The continuing high oil and gas prices (outside the USA) have resulted in an ongoing recovery in the oil and gas sector, particularly for exploration and production companies. We continue to believe strong commodity prices are likely to lead to further increased spending from companies in exploration and hence on the services we offer.
We are pleased to report that we have made a solid start to 2012-13. As reported, we have already signed up four further sponsors for Globe since the period end. One of these sponsors has committed to a €1m call-off contract for a range of services including the core Globe products.
The very strong level of initial commitments to Globe covers a three year work programme which substantially improves the forward visibility of earnings. We also believe that the close relationships with the sponsoring companies will lead to the sale of further Globe products and proprietary contracts, and that we will establish further sales as a "provider of choice" in the field of integrated global geoscience.
With the requirement for E&P companies to expand into new frontier basins, and to minimise cost at the early stages of such exploration, we consider that there will be a continuation of the strong trend in gravity and magnetic data sales. We believe that the combination of our ever increasing library of products and data and our strong sales presence in the UK and USA will reinforce the growth path and we are optimistic about the coming years.
With our current strong cash position and proven ability to develop the business, we are actively looking for acquisition opportunities which will grow our core areas of expertise.
Finally, I would like to say how pleased I am to be involved with the Company and to thank the staff and my fellow Directors for all their hard work and dedication. I would particularly like to thank Mr Ian Somerton and Dr David Roberts, who both left the Board of Directors during the last year, for their substantial contributions to the Company.
Dr Stuart Paton
Non-executive Chairman
Operating review
I report that in our seventh year as a public quoted company, Getech Group plc returned a pre‑tax profit of £1,246,838 (2011: £669,702) for the year ended 31 July 2012.
Business setting
The exploration market in the oil and gas sector has been strong throughout the year. This has been well supported by the continuing firm oil price.
We believe that the relative stability of the oil price at historically high levels will continue to provide a sound market environment for exploration giving a very positive outlook for our business.
Business activities
Getech's strength lies in its ability to provide a range of data, services and solutions at scales ranging from global to sub-regional. Key to our success is the ability to understand the needs of our clients and provide high quality solutions to help them in their goal of finding oil and gas resources. We have now developed and expanded the scope of the Global Programmes and rebranded it as Globe, which incorporates the data, knowledge and experience that we have acquired over many years and at many levels of resolution. Globe enables us to deliver the core Global Programmes to our sponsors but will also provide an effective and efficient way of delivering information and solutions to clients whose needs are regional or sub-regional.
Oil, gas and mining companies license our data and studies when they are evaluating new exploration areas and when they wish to expand their current exploration activities into neighbouring regions. We are uniquely able to provide integrated solutions across a broad range of disciplines including, amongst others, potential field geophysics, structural geology, plate tectonics, palaeolandscape analysis and geochemistry. We actively work with a number of universities that are at the forefront of their disciplines (e.g. in palaeo-climate modelling) and also attend a range of international conferences to ensure we continue our technical excellence.
This year continued the strong upward trend in revenue and profits. The main reasons for this were the continued strong growth in data sales and the very successful launch and market entry of our multi-year Global Programmes, now within the Globe brand. Data sales were up by 45% on the previous year and we made a number of significant individual data sales:
• | In April, we announced a licence of US gravity and magnetic data valued at $1.2m. These data were licensed out of the assets we acquired from Lisle Gravity Inc. in December 2008. While there has been a stream of licences of various sizes for these data over the period since the acquisition, this sale is the largest to date. |
• | In July, we issued two licences for our global continental margins gravity and magnetic datasets with an aggregate value in excess of $600,000. The global continental margin datasets are part of the library of gravity and magnetic data to which Getech has acquired access over the past 25 years and demonstrate the continuing value of global datasets to E&P companies in their exploration efforts. |
• | Also in July, the Company signed a further licence for its Russian Arctic Shelf magnetic data set with a gross sales value of $1.28m. The Russian Arctic Shelf is a major under‑explored area which is still in the early stages of exploration for oil and gas due to its harsh climate conditions and high exploration and production costs. |
• | We also made substantial sales of the Iraqi and Russian onshore magnetic datasets (gross values $500k and $550k respectively). |
The last year has seen the fruition of a number of years of strategic investment in Globe. This was launched to the market in November 2011 and by July 2012 we had five sponsors signed up to the three year programme of deliverables. The aim of Globe is to provide exploration teams in oil and gas companies with a robust and constantly updated platform which supports their understanding, investigation and risking of new areas of interest. Initial development work started in 2009 and Globe now encompasses a range of products that build on Getech's traditional strengths in potential field geophysics as well as its unique global plate model and palaeogeographic mapping techniques. These provide insights into the shape and evolution of sedimentary basins and the geographic context of the deposition within those basins. The palaeogeographies will then be used as the boundary conditions for state-of-the-art palaeoclimate, ocean and tide modelling. The successful market entry of Globe has resulted from a combination of the innovative thought-leading content which results from the technical work of Dr Paul Markwick and his team, combined with the sales direction and drive from Dr Paul Carey.
The Company recognises that, in order to continue to grow the business, it is vital to stay in the forefront of our technologies. In this context three particular areas are of note:
• | In July 2012, we announced a nine month research and development study, funded by six companies, to develop and improve methodologies and techniques to integrate the latest results of the CryoSat-2 satellite data into the existing Getech satellite gravity map of the Earth's oceans. The inclusion of the CryoSat-2 data will improve the quality of the gravity map and make such data of even greater value for oil exploration in marine areas. The R&D study has focused on four test areas chosen by the study sponsors, who will provide terrestrial gravity data for comparison purposes. This R&D study costs £15,000 per sponsor and it is intended that a successful outcome of this study will lead in early 2013 to a full scale study. |
• | In April 2012, we announced an Advanced Geophysical Services study with Aramco Overseas Company B.V. to map the sub-salt basin structures and depth to basement in a part of the Red Sea. The study uses new methodologies and techniques that have been developed by Getech to specifically map sub-salt basin areas that are difficult to map with conventional seismic reflection data. The Advanced Geophysical Services study results from over two years of developing and testing new 2D and 3D potential field inversion methods allowing better imaging and clearer understanding of deep basement structures. We believe this method can be applied more widely and aid international exploration efforts. |
• | We have implemented new studies to evaluate the potential of unconventional resources in currently unexplored areas. The success of the shale gas business in the USA has had a dramatic effect on the US economy. Although the surface aspects, in respect of permitting, access to infrastructure and drilling technology, are vital to the success of an unconventional play, understanding the subsurface is absolutely key. Getech has a range of data, skills and expertise which can be applied to this new and exciting exploration concept. |
Staff and corporate identity
Our staff are critical to the development of new ideas, insights and delivery of our products. We have strengthened our team in a number of key areas in the last year and are increasing our cooperation with key universities. In particular we continue to strengthen our sales team to help us to capitalise on the global interest in our products and services.
At the end of the year we started a strategic rebranding exercise. This has led to a set of clear statements about our aspirations and values which in turn led to fresh and innovative new branding concepts and imagery. We are actively using these to inform our actions at all scales from short-term plans through to long-term strategy development.
The future
Getech has invested heavily over the last few years in a number of areas ranging from developing Globe, through long-term relationship building with national oil companies and other partner organisations, to the development of new and innovative methodologies and techniques across a range of disciplines. The results of these technical investments, combined with our strongly directed sales team, are increasingly being reflected in our trading performance and we anticipate this trend will continue.
Since the year-end we have announced that a further four sponsors have committed to Globe, which now include, amongst others, ConocoPhillips and ENI bringing the total to nine. These give us a significantly improved forward visibility of income but also provide what we hope will be a series of long-term relationships through which we can continue to develop and deliver innovative and valuable services to our clients. We believe that these sponsors will increasingly use Getech for proprietary studies which build on the strong technical basis of our programmes.
We continue to develop our technical skills with internal R&D but we are also working with universities that are well known in their fields to make sure that we can deliver leading-edge solutions to our clients. We believe that these will help to reinforce our technical credibility and underpin our future growth.
Finally we have delivered a record result for the year and once again would like to thank all our staff and Board colleagues for their unstinting efforts on behalf of Getech. We believe 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.
Raymond Wolfson
Chief Executive Officer
Consolidated statement of comprehensive income
For the year ended 31 July 2012
2012 | 2011 | |
£ | £ | |
Revenue | 6,441,107 | 5,326,866 |
Cost of sales | (2,692,338) | (2,677,516) |
Gross profit | 3,748,769 | 2,649,350 |
Administrative costs | (2,495,161) | (1,966,673) |
Operating profit | 1,253,608 | 682,677 |
Finance income | 6,016 | 5,356 |
Finance costs | (12,786) | (18,331) |
Profit before tax | 1,246,838 | 669,702 |
Income tax expense | (316,820) | (94,715) |
Profit for the year attributable to owners of the parent | 930,018 | 574,987 |
Other comprehensive income | ||
Currency translation differences on translation of foreign operations | 10,949 | (44,477) |
Total comprehensive income for the year attributable to owners of the parent | 940,967 | 530,510 |
Earnings per share | ||
Basic earnings per share | 3.18p | 1.97p |
Diluted earnings per share | 2.97p | 1.84p |
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 2012
2012 | 2011 | |
£ | £ | |
Assets | ||
Non-current assets | ||
Property, plant and equipment | 2,639,915 | 2,656,227 |
Intangible assets | 737,886 | 837,341 |
Deferred tax assets | 249,470 | 99,519 |
3,627,271 | 3,593,087 | |
Current assets | ||
Inventories | 60,000 | 472,634 |
Trade and other receivables | 2,962,928 | 1,600,280 |
Other current assets | 19,416 | 32,461 |
Cash and cash equivalents | 3,010,782 | 1,345,327 |
6,053,126 | 3,450,702 | |
Total assets | 9,680,397 | 7,043,789 |
Liabilities | ||
Current liabilities | ||
Borrowings | 285,714 | 285,714 |
Trade and other payables | 3,300,164 | 1,557,094 |
Current tax liabilities | 410,199 | 52,975 |
3,996,077 | 1,895,783 | |
Non-current liabilities | ||
Borrowings | 119,048 | 404,762 |
Trade and other payables | 31,833 | 59,102 |
Deferred tax liabilities | 49,518 | 35,580 |
200,399 | 499,444 | |
Total liabilities | 4,196,476 | 2,395,227 |
Net assets | 5,483,921 | 4,648,562 |
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 | 188,502 | 177,161 |
Currency translation reserve | 2,812 | (8,137) |
Retained earnings | 2,377,970 | 1,564,901 |
Total equity | 5,483,921 | 4,648,562 |
The financial statements were approved by the Board of Directors on 30 October 2012.
Dr S M Paton
Director
The accompanying notes form an integral part of these financial statements.
Consolidated statement of cash flows
For the year ended 31 July 2012
2012 | 2011 | |
£ | £ | |
Cash flows from operating activities | ||
Profit before tax | 1,246,838 | 669,702 |
Share-based payment charge | 11,341 | 19,561 |
Depreciation and amortisation charges | 202,604 | 207,244 |
Finance income | (6,016) | (5,356) |
Finance costs | 12,786 | 18,331 |
Exchange adjustments | (35,259) | 11,899 |
Decrease in inventories | 412,634 | 37,360 |
(Increase) in trade and other receivables | (1,362,648) | (450,002) |
Increase in trade and other payables | 1,715,801 | 340,204 |
Cash generated from operations | 2,198,081 | 848,943 |
Income taxes (paid)/refunded | (82,564) | 7,389 |
Net cash generated from operating activities | 2,115,517 | 856,332 |
Cash flows from investing activities | ||
Purchase of property, plant and equipment | (51,256) | (46,568) |
Interest received | 6,016 | 5,356 |
Net cash used in investing activities | (45,240) | (41,212) |
Cash flows from financing activities | ||
Repayment of long-term borrowings | (285,714) | (285,714) |
Equity dividends paid | (116,949) | - |
Interest paid | (12,786) | (18,331) |
Net cash used in financing activities | (415,449) | (304,045) |
Net increase in cash and cash equivalents | 1,654,828 | 511,075 |
Cash and cash equivalents at beginning of year | 1,345,327 | 846,871 |
Exchange adjustments to cash and cash equivalents at beginning of year | 10,627 | (12,619) |
Cash and cash equivalents at end of year | 3,010,782 | 1,345,327 |
The accompanying notes form an integral part of these financial statements.
Consolidated statement of changes in equity
For the year ended 31 July 2012
Share | Capital | Share | Currency |
| |||
Share | premium | redemption | option | translation | Retained |
| |
capital | account | reserve | reserve | reserve | earnings | Total | |
£ | £ | £ | £ | £ | £ | £ | |
At 1 August 2010 | 73,093 | 2,841,538 | 6 | 157,600 | 36,340 | 989,914 | 4,098,491 |
Share-based payment charge | - | - | - | 19,561 | - | - | 19,561 |
Transactions with owners | - | - | - | 19,561 | - | - | 19,561 |
Profit for the year | - | - | - | - | - | 574,987 | 574,987 |
Other comprehensive income | |||||||
Currency translation differences | - | - | - | - | (44,477) | - | (44,477) |
Total comprehensive income for the year | - | - | - | - | (44,477) | 574,987 | 530,510 |
At 31 July 2011 | 73,093 | 2,841,538 | 6 | 177,161 | (8,137) | 1,564,901 | 4,648,562 |
Share-based payment charge | - | - | - | 11,341 | - | - | 11,341 |
Dividends | - | - | - | - | - | (116,949) | (116,949) |
Transactions with owners | - | - | - | 11,341 | - | (116,949) | (105,608) |
Profit for the year | - | - | - | - | - | 930,018 | 930,018 |
Other comprehensive income | |||||||
Currency translation differences | - | - | - | - | 10,949 | - | 10,949 |
Total comprehensive income for the year | - | - | - | - | 10,949 | 930,018 | 940,967 |
At 31 July 2012 | 73,093 | 2,841,538 | 6 | 188,502 | 2,812 | 2,377,970 | 5,483,921 |
Notes to the consolidated financial statements
For the year ended 31 July 2012
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. 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 set out below have been applied consistently throughout the Group for the purpose of preparation of the financial statements.
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 improved 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.
Dividends
Getech intends to continue its policy of progressive dividends as appropriate and is proposing a final dividend of 0.8p per share in respect of the year to 31 July 2012. The final dividend will be paid on 20 December to shareholders on the register of members on 23 November 2012.
2012 | 2011 | |
£ | £ | |
Paid during the year | ||
Final dividend in respect of the year ended 31 July 2011 at 0.2p per share (2011: £nil) | 58,474 | - |
Interim dividend at 0.2p per share (2011: £nil) | 58,475 | - |
116,949 | - | |
Proposed after the year end (not recognised as a liability) | ||
Final dividend in respect of the year ended 31 July 2012 at 0.8p per share (2011: 0.2p) | 233,897 | 58,474 |
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.
2012 | 2011 | |
Profit attributable to equity holders of the Group | £930,018 | £574,987 |
Weighted average number of Ordinary Shares in issue | 29,237,151 | 29,237,151 |
Basic earnings per share | 3.18p | 1.97p |
Diluted earnings per share | 2.97p | 1.84p |
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 2012 is 2,040,924 (2011: 2,088,414).
Of the share options granted at 31 July 2012, 529,789 were anti-dilutive because the conditions for exercise had not been met (2011: 529,789).
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 12 December 2012 at 12 noon.