Last checked at 29 Oct 2013 07:00
Getech Group plc
("Getech" or the "Company")
Final Results for the 12 months ended 31 July 2013
Getech, the geoscience services business specialising in the provision of data, studies and services to the oil, gas and mining exploration sectors, announces its Preliminary Results for the year ended 31 July 2013.
Financial highlights
• | Revenue for the year increased by 24% to £8,011,250 (2012: £6,441,107) |
• | Profit before tax increased by 80% to £2,246,496 (2012: £1,246,838) |
• | Cash level, including fixed term deposits, increased from £3,010,782 to £4,857,927 |
• | Proposed final dividend for the year of 1.6p (2012: 0.8p), a total of 2.0p for the full year (2012: 1.0p) |
Operational highlights
• | Five further Globe sponsors committed during the year |
• | Data sales continued to grow from the record level in the prior year |
• | Major data sales included several global gravity and magnetic datasets |
• | Cryosat pilot project converted to full scale three-year project with committed funding in excess of £500k |
• | Next stage in the Globe flagship product launched - Earth Systems Models which include climate, tide and predictive modelling |
• | Demand for proprietary work strong |
• | Leeds offices refurbished to provide better working environment and professional image for visitors |
For further information, please contact:
Getech Group plc Raymond Wolfson, Chief Executive
| Tel: 0113 322 2200 | |
WH Ireland Limited Katy Mitchell
| Tel: 0113 394 6618
| |
Walbrook PR Limited Helen Cresswell
| Tel: 020 7933 8790 |
Chairman's statement
I am pleased to make my third report as Chairman of the Company, on the eighth 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 2013. 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 £2,246,496 (2012: £1,246,838) after interest receivable of £30,897 (2012: £6,016) on revenue of £8,011,250 (2012: £6,441,107). The post-tax profit was £1,634,612 (2012: £930,018), giving earnings per share of 5.57p (2012: 3.18p).
Dividends
Getech intends to continue its policy of progressive dividends as appropriate and is proposing a final dividend of 1.6p per share in respect of the year ended 31 July 2013 (2012: 0.8p per share) in addition to the interim dividend of 0.4p per share announced in April 2013.
The final dividend will be paid on 19 December 2013 to shareholders on the register of members on 22 November 2013.
Business review
I am pleased to report for the second year running very strong growth in the performance of the Group following on from the turnaround in 2010-2011. The Group generated a record level of revenue which was an increase of 24% on the previous year. Pre-tax profits increased 80% year on year. Both revenue and profits were again significantly ahead of expectations.
We announced a number of major successes during the year in three key areas.
First, our strategic Globe framework has continued to strengthen and during the year we doubled the number of core sponsors from five to ten. We have also seen a continuing benefit in co-marketing Globe and our traditional gravity and magnetic datasets and proprietary consultancy.
Second, demand for our gravity and magnetic data continued to be very strong and we completed a number of major licence deals for our global gravity and magnetic datasets.
Third, we were very pleased that our commitment to R&D was validated when the Cryosat project, which we had previously announced as a multi-client funded pilot study, was converted to a full global study with commitments from three clients. In addition, a significant number of Getech staff along with key collaborators presented papers at major international conferences, with very positive feedback.
Outlook
The continuing high oil and gas prices (including a significant recovery in the US) have sustained the ongoing strong performance of 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 now have a substantial client base for our core Globe framework and have begun delivery of the next stage in its development - the Earth Systems Models. These are attracting significant interest and we anticipate they will make a strong contribution in 2013-14. Further, Globe continues to provide an environment which encourages increased interaction with our clients, which is essential to the longer term benefits. With the increased number of clients the annual Globe workshops in Leeds and Houston have become a major event in the year.
During the year we have also seen the demand for proprietary projects increasing. This is particularly gratifying as we have been increasingly working with smaller companies at geographical scales which are considerably smaller than previously and where there is a more direct link between our work and the development of these companies.
With the requirement for Exploration and Production (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.
In order to grow our business, we are looking for ways to expand into new areas. We are particularly focused on new business streams which build on our key strengths in accessing and marketing data and integrating the data with a broad multidisciplinary geoscience capability to provide real value to our clients.
With our continuing strong cash position and proven ability to develop the business, we continue to actively look for acquisition opportunities, particularly targeting those which will grow our core areas of expertise. The increase in the market capitalisation of the Group has also increased the range of acquisition targets.
Finally, I would like to say how pleased I am to continue to be involved with the Group 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 its eighth year as a public quoted company, Getech Group plc ("Getech" or "the Group") returned a pre-tax profit of £2,246,496 (2012: £1,246,838) for the year ended 31 July 2013.
Business setting
The exploration market in the oil and gas sector continued to be 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 from global to block level. 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 increased our core Globe sponsorship from five to ten clients and have extended the scope of our offering to provide Earth Systems Models (ESM) which take the existing Globe framework to the next level of utility. ESM comprises a suite of climate, tide and, importantly, predictive models. These build on the core Globe framework, particularly our class-leading palaeogeographies, and provide increasing insight into the origin and development of petroleum systems. The first ESM delivery was made in July 2013 and the interest level from our clients gives us confidence that this will build into a very significant extension of Globe.
We have for many years promoted the value of our larger scale "regional" geological understanding as a means of obtaining stronger insights into exploration at much smaller scales. The Globe framework and the higher resolution studies within that framework provide an ideal platform from which to deliver this regional understanding across the world. During the year, we have generated increasing demand for our consultancy services particularly with companies working at smaller geographical scales. This has enabled us to contribute to exploration at block and prospect scales. The levels of client satisfaction provide validation for our view that the regional scale work facilitates improved and valuable understanding at these much smaller scales.
During the year we have extended our relationships with leading universities. Previously we reported we were working with Bristol for climate modelling and Imperial for tide modelling. We have now joined the Basin Structural Group in Leeds. We are also increasing the number and range of commercial associates with whom we work. This provides a highly effective balance of experience, skill and mentoring for our in-house staff and is particularly beneficial in such a tight market for key technical personnel.
In April 2012 we announced that our fully funded Cryosat pilot development project to improve the resolution of satellite data was going ahead. After completion of this project and evaluation of the results, we were very pleased to be able to demonstrate the potential value of our improved methods. We subsequently announced in July 2013 that the pilot would be rolled out to the full global project which is planned to run over three years with confirmed funding in excess of £500,000. This is particularly pleasing as it represents the conversion of the pilot R&D project into a full-scale global study.
This year continued the strong upward trend in revenue and profits. The main reason for this was the growth in our multi-year Globe framework, where income grew by 71% year on year. This was well supported by continued growth in data sales from the record level we achieved in 2011/12.
During the year we made a number of significant individual sales:
• | In September 2012 we announced the signature of a call-off contract with total value of €1m and that the first items ordered included part of Globe. |
• | In October 2012 we announced the signature of two major contracts which included the Globe core sponsorship but also sales of other products, which between them totalled $2.75m. |
• | In January 2013, we announced data sales from our global gravity and magnetic datasets amounting to $1,500k and $500k respectively. |
• | In June 2013 we announced a further major sale from these datasets amounting to $962k. |
During the year we have continued to develop and extend Globe, making it increasingly valuable to its sponsors. In October 2013 we had our second year Globe sponsors meetings in Leeds and Houston and these were even more successful than the previous year. The increased number of Globe clients combined with the growing experience of working with Globe, generated a lively and extremely constructive set of discussions and workshops.
During the year we carried out major refurbishment of the offices, providing an improved working environment for staff and a significantly more professional experience for visitors. All our visitors seem impressed with the refurbished offices, and we were particularly pleased to have received so many staff from overseas oil companies at the second set of Globe workshops.
Staff and corporate identity
Our staff are critical to the development of new ideas, insights and delivery of our products. We have continued to strengthen our team in the last year and are leveraging this through collaborations with universities, other geoscience companies and experienced consultants. The office refurbishment was part of our programme to improve the experience for our staff.
We noted last year that we had undergone a strategic rebranding exercise. The results, which include corporate strategies, styles of working, and personal and corporate values, have now been in place for over a year and are increasingly becoming part of our culture. The new brand style (including the logo), which was one of the products of the exercise, has been very well received and we regularly hear strongly positive views on it.
The future
Getech has continued to invest in developing and extending Globe and now has ten clients signed up to the core Globe framework. As noted above, we have launched the next major stage in Globe which comprises the suite of Earth Systems Models. This is attracting increasing interest and we anticipate it will make a significant contribution in the coming years. Globe is increasingly a framework from which we are leveraging additional business including data sales and proprietary work.
We are particularly pleased by the evidence of strongly increasing demand for our proprietary services, at a range of geographical scales and with a range of clients. It is, in our view, significant that the type of work has extended from being predominantly based on our long-established expertise in gravity and magnetic data interpretation to include a much wider range of skills. Further, we are increasingly working with smaller clients and we anticipate that the contribution from this type of work will increase significantly in the coming years.
We are increasingly working with universities that are well known in their fields to make sure that we can deliver leading-edge solutions to our clients, and with commercial associates who can not only contribute to the delivery of project work but also provide a source of expertise that extends our current skillsets. We believe that these will help to reinforce our technical credibility, extend the range of services we can provide and help underpin our future growth.
Finally, for the second year running we have delivered record trading results and once again I 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 2013
2013 | 2012 | ||
£ | £ | ||
Revenue | 8,011,250 | 6,441,107 | |
Cost of sales | (2,520,500) | (2,692,338) | |
Gross profit | 5,490,750 | 3,748,769 | |
Administrative costs | (3,269,391) | (2,495,161) | |
Operating profit | 2,221,359 | 1,253,608 | |
Finance income | 30,897 | 6,016 | |
Finance costs | (5,760) | (12,786) | |
Profit before tax | 2,246,496 | 1,246,838 | |
Income tax expense | (611,884) | (316,820) | |
Profit for the year attributable to owners of the parent | 1,634,612 | 930,018 | |
Other comprehensive income | |||
Items that may be reclassified subsequently to profit or loss: | |||
Currency translation differences on translation of foreign operations | (38,539) | 10,949 | |
Total comprehensive income for the year attributable to owners of the parent | 1,596,073 | 940,967 | |
Earnings per share | |||
Basic earnings per share | 5.57p | 3.18p | |
Diluted earnings per share | 5.30p | 2.97p | |
All activities relate to continuing operations.
Consolidated statement of financial position
As at 31 July 2013
2013 | 2012 | |
£ | £ | |
Assets | ||
Non-current assets | ||
Property, plant and equipment | 2,752,597 | 2,639,915 |
Intangible assets | 616,257 | 737,886 |
Deferred tax assets | 128,543 | 249,470 |
| 3,497,397 | 3,627,271 |
Current assets | ||
Inventories | 166,000 | 60,000 |
Trade and other receivables | 2,123,384 | 2,962,928 |
Other financial assets | 500,000 | - |
Current tax assets | 138,885 | 19,416 |
Cash and cash equivalents | 4,357,927 | 3,010,782 |
7,286,196 | 6,053,126 | |
Total assets | 10,783,593 | 9,680,397 |
Liabilities | ||
Current liabilities | ||
Borrowings | 119,048 | 285,714 |
Trade and other payables | 3,524,420 | 3,300,164 |
Current tax liabilities | 108,932 | 410,199 |
3,752,400 | 3,996,077 | |
Non-current liabilities | ||
Borrowings | - | 119,048 |
Trade and other payables | 16,338 | 31,833 |
Deferred tax liabilities | 110,175 | 49,518 |
126,513 | 200,399 | |
Total liabilities | 3,878,913 | 4,196,476 |
Net assets | 6,904,680 | 5,483,921 |
Equity | ||
Equity attributable to owners of the parent | ||
Share capital | 75,319 | 73,093 |
Share premium account | 2,993,092 | 2,841,538 |
Capital redemption reserve | 6 | 6 |
Share option reserve | 122,717 | 188,502 |
Currency translation reserve | (35,727) | 2,812 |
Retained earnings | 3,749,273 | 2,377,970 |
Total equity | 6,904,680 | 5,483,921 |
The financial statements were approved by the Board of Directors on 28 October 2013.
Dr S M Paton
Director
Consolidated statement of cash flows
For the year ended 31 July 2013
2013 | 2012 | |
£ | £ | |
Cash flows from operating activities | ||
Profit before tax | 2,246,496 | 1,246,838 |
Share-based payment charge | 22,574 | 11,341 |
Depreciation and amortisation charges | 213,592 | 202,604 |
Finance income | (30,897) | (6,016) |
Finance costs | 5,760 | 12,786 |
Exchange adjustments | (77,058) | (35,259) |
(Increase)/decrease in inventories | (106,000) | 412,634 |
Decrease/(increase) in trade and other receivables | 839,544 | (1,362,648) |
Increase in trade and other payables | 208,761 | 1,715,801 |
Cash generated from operations | 3,322,772 | 2,198,081 |
Income taxes paid | (851,036) | (82,564) |
Net cash generated from operating activities | 2,471,736 | 2,115,517 |
Cash flows from investing activities | ||
Purchase of property, plant and equipment | (190,463) | (51,256) |
Funds transferred into fixed term deposits | (500,000) | - |
Interest received | 30,897 | 6,016 |
Net cash used in investing activities | (659,566) | (45,240) |
Cash flows from financing activities | ||
Proceeds from issue of share capital | 153,780 | - |
Repayment of long term borrowings | (285,714) | (285,714) |
Equity dividends paid | (351,668) | (116,949) |
Interest paid | (5,760) | (12,786) |
Net cash used in financing activities | (489,362) | (415,449) |
Net increase in cash and cash equivalents | 1,322,808 | 1,654,828 |
Cash and cash equivalents at beginning of year | 3,010,782 | 1,345,327 |
Exchange adjustments to cash and cash equivalents at beginning of year | 24,337 | 10,627 |
Cash and cash equivalents at end of year | 4,357,927 | 3,010,782 |
Consolidated statement of changes in equity
For the year ended 31 July 2013
Share | Capital | Share | Currency | Retained | Total | ||
Share | premium | redemption | option | translation | |||
capital | account | reserve | reserve | reserve | earnings | ||
£ | £ | £ | £ | £ | £ | £ | |
At 1 August 2011 | 73,093 | 2,841,538 | 6 | 177,161 | (8,137) | 1,564,901 | 4,648,562 |
Dividends | - | - | - | - | - | (116,949) | (116,949) |
Share-based payment charge | - | - | - | 11,341 | - | - | 11,341 |
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 |
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 |
Notes to the consolidated financial statements
For the year ended 31 July 2013
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 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.
Financial information
The financial information set out above, which was approved by the Board on 28 October 2013, is derived from the full Group accounts for the year ended 31 July 2013 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 2013, will be delivered to the Registrar of Companies in due course.
The statutory accounts for the year ended 31 July 2012 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
2013 | 2012 | |
£ | £ | |
Paid during the year | ||
Final dividend in respect of the year ended 31 July 2012 at 0.8p per share (2011: 0.2p) | 234,442 | 58,474 |
Interim dividend at 0.4p per share (2012: 0.2p) | 117,226 | 58,475 |
351,668 | 116,949 | |
Proposed after the year end (not recognised as a liability) | ||
Final dividend in respect of the year ended 31 July 2013 at 1.6p per share (2012: 0.8p) | 482,125 | 233,897 |
The proposed final dividend for the year ended 31 July 2013 is subject to approval by shareholders at the Annual General Meeting on 10 December 2013.
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.
2013 | 2012 | |
Profit attributable to equity holders of the Group | £1,634,612 | £930,018 |
Weighted average number of Ordinary Shares in issue | 29,323,481 | 29,237,151 |
Basic earnings per share | 5.57p | 3.18p |
Diluted earnings per share | 5.30p | 2.97p |
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 2013 is 1,494,138 (2012: 2,040,924).
Of the share options granted at 31 July 2013, 600,000 were anti-dilutive because the conditions for exercise had not been met (2012: 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 10 December 2013 at 12 noon.