Last checked at 24 Mar 2015 07:00
Getech Group plc
("Getech" or the "Group" or the "Company")
Interim Report for the six months ended 31 January 2015
Getech, the geoscience services business specialising in the provision of data, studies and services to the oil, gas and mining exploration sectors, announces its interim results for the six months ended 31 January 2015.
Highlights
• | Revenue for the six months of £3,619,000 (six months ended 31 January 2014: £3,110,000) |
• | Profit before tax of £707,000 (six months ended 31 January 2014: £233,000) |
• | Interim dividend proposed of 0.46p per share (2014: 0.44p per share) |
• | Cash levels strong at £4,733,000 |
• | Strong demand for consultancy work through the half year |
• | Inertia in the market led to slowdown in major sales |
Stuart Paton, Non-Executive Chairman of Getech Group plc, said:
"We start the second half of our year with strong cash balances and a substantial pipeline of sales opportunities. Our strategy of seeking major contracts which, individually, are material to Getech has continued to demonstrate success and we have signed two ongoing major contracts with further discussions underway. This is also a key part of our strategy to increase the level of forward committed income, the other components of which are Globe sponsorship, research and development projects (Multi-satellite altimeter gravity and Global depth‑to‑basement studies) and a portfolio of smaller proprietary projects."
GETECH Group plc Raymond Wolfson, Chief Executive
| Tel: 0113 322 2200 |
WH Ireland Limited Katy Mitchell | Tel: 0161 832 2174
|
Chairman's statement
"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. The annual Globe workshops in Leeds and Houston have become a major event in the year."
Results
Getech reports a Group profit before tax of £707,000 (six months ended 31 January 2014: £233,000) after interest receivable of £5,000 (six months ended 31 January 2014: £16,000) on revenue of £3,619,000 (six months ended 31 January 2014: £3,110,000). The post-tax profit was £691,000 (six months ended 31 January 2014: £193,000).
The accounts have been prepared under International Financial Reporting Standards (IFRS) in issue as adopted by the European Union.
Dividend
Your Board recommends an interim dividend of 0.46p per share.
Business review
Highlights:
• | half-year profit before tax was £707,000; |
• | cash at 31 January was £4,733,000; |
• | interim dividend increased to 0.46p per share; |
• | satisfactory half-year position despite the difficult market; |
• | Commissions Group continued to perform strongly; |
• | largest ever contract signed in September 2014 - $5,000,000 with Sonangol; and |
• | first successes for strategy of major new contracts which are individually material. |
During the half year the business has continued to be affected by the difficult market conditions. The very significant drop in oil price since mid-2014 has led to cuts in capital expenditure across the full range of exploration and production (E&P) companies and across the E&P business lifecycle. This has had a direct negative impact on the service companies, in particular those focused on exploration. Our previous experience of working through oil price cycles has led to a number of conclusions. First, the market can be difficult for a period of time. During this time it is important to focus on the key needs of clients and companies that are less affected by spending cuts. Second, short-term reductions in expenditure, and hence, activity, led to reduced reserves additions, and hence, a longer-term increase in activity. This observation gives us support for the longer-term prospects for the business. Third, downturns lead to opportunities for robust companies, such as Getech, to recruit good staff and consider acquisition opportunities. The Company remains in a very strong financial position. By the end of the period the cash balance amounted to £4,733,000, which is an increase of £1,310,000 on the position at 31 July 2014, despite the payment of a dividend costing £534,000 in December 2014.
Outlook
We start the second half of our year with strong cash balances and a substantial pipeline of sales opportunities. Our strategy of seeking major contracts which, individually, are material to Getech has continued to demonstrate success and we have signed two ongoing major contracts with further discussions underway. This is also a key part of our strategy to increase the level of forward committed income, the other components of which are Globe sponsorship, research and development projects (Multi-satellite altimeter gravity and Global depth‑to‑basement studies) and a portfolio of smaller proprietary projects.
We are continuing to build the Globe framework with the aim of making it the pre-eminent exploration tool for oil and gas explorers. As well as increasing the resolution of Globe, we are providing additional functionality to make it more accessible to a wider group of users and more flexible in terms of the sub-global and bespoke products that it can deliver.
While we are fully aware of the need to be vigilant about the potential impact of the current market conditions on our business, our strong position means that we are able to adopt the perspective that this represents an opportunity, and we continue to seek good staff and complementary acquisitions.
We remain confident about our medium and longer-term prospects.
Dr Stuart Paton
Non-executive Chairman
24 March 2015
Consolidated statement of comprehensive income
For the six months ended 31 January 2015
Six months | Six months | Year | ||
ended | ended | ended | ||
31 January | 31 January | 31 July | ||
2015 | 2014 | 2014 | ||
Unaudited | Unaudited | Audited | ||
Note | £'000 | £'000 | £'000 | |
Revenue | 3,619 | 3,110 | 6,593 | |
Cost of sales | (1,111) | (1,137) | (2,126) | |
Gross profit | 2,508 | 1,973 | 4,467 | |
Administrative costs | (1,805) | (1,755) | (3,498) | |
Operating profit | 703 | 218 | 969 | |
Finance income | 5 | 16 | 33 | |
Finance costs | (1) | (1) | (1) | |
Profit before tax | 707 | 233 | 1,001 | |
Income tax (expense)/credit | (16) | (40) | 574 | |
Profit for the period attributable to owners of the parent | 691 | 193 | 1,575 | |
Other comprehensive income | ||||
Currency translation differences on translation of foreign operations | 95 | (90) | (95) | |
Total comprehensive income for the period attributable to owners of the parent | 786 | 103 | 1,480 | |
Earnings per share | 5 | 2.28p | 0.64p | 5.21p |
Basic earnings per share | ||||
Diluted earnings per share | 2.21p | 0.60p | 4.95p | |
Consolidated statement of financial position
As at 31 January 2015
Company registration number 2891368
31 January | 31 January | 31 July | |
2015 | 2014 | 2014 | |
Unaudited | Unaudited | Audited | |
£'000 | £'000 | £'000 | |
Assets | |||
Non-current assets | |||
Property, plant and equipment | 2,861 | 2,713 | 2,748 |
Intangible assets | 1,109 | 505 | 513 |
Deferred tax assets | 332 | 123 | 312 |
4,302 | 3,341 | 3,573 | |
Current assets | |||
Inventories | 199 | 301 | 180 |
Trade and other receivables | 4,333 | 1,124 | 2,850 |
Other financial assets | - | 500 | - |
Current tax assets | 100 | 118 | 813 |
Cash and cash equivalents | 4,733 | 3,603 | 3,423 |
9,365 | 5,646 | 7,266 | |
Total assets | 13,667 | 8,987 | 10,839 |
Liabilities | |||
Current liabilities | |||
Trade and other payables | 5,214 | 2,291 | 2,708 |
Current tax liabilities | 183 | 53 | - |
5,397 | 2,344 | 2,708 | |
Non-current liabilities | |||
Deferred tax liabilities | 174 | 88 | 321 |
174 | 88 | 321 | |
Total liabilities | 5,572 | 2,432 | 3,029 |
Net assets | 8,096 | 6,555 | 7,810 |
Equity | |||
Equity attributable to owners of the Parent | |||
Share capital | 76 | 76 | 76 |
Share premium account | 3,016 | 3,013 | 3,013 |
Share option reserve | 154 | 115 | 126 |
Currency translation reserve | (36) | (126) | (131) |
Retained earnings | 4,886 | 3,477 | 4,726 |
Total equity | 8,096 | 6,555 | 7,810 |
Consolidated statement of cash flows
For the six months ended 31 January 2015
Six months | Six months | Year | |
ended | ended | ended | |
31 January | 31 January | 31 July | |
2015 | 2014 | 2014 | |
Unaudited | Unaudited | Audited | |
£'000 | £'000 | £'000 | |
Cash flows from operating activities | |||
Profit before tax | 707 | 233 | 1,001 |
Share-based payment charges | 31 | 10 | 21 |
Depreciation and amortisation charges | 152 | 119 | 240 |
Finance income | (5) | (16) | (33) |
Finance costs | 1 | 1 | 1 |
Exchange adjustments | (55) | 28 | 44 |
Increase in inventories | (19) | (135) | (14) |
(Increase)/decrease in trade and other receivables | (1,482) | 1,000 | (727) |
Decrease/(increase) in trade and other payables | 2,380 | (1,250) | (833) |
Cash generated from/(used in) operating activities | 1,710 | (10) | (300) |
Income taxes refunded/(paid) | 713 | (102) | (180) |
Net cash generated from/(used in) operating activities | 2,423 | (112) | (480) |
Cash flows from investing activities | |||
Purchase of property, plant and equipment | (196) | (14) | (107) |
Development costs capitalised | (482) | - | (83) |
Funds transferred from fixed term deposits | - | - | 500 |
Interest received | 5 | 16 | 33 |
Net cash (used in)/generated from investing activities | (673) | 2 | 343 |
Cash flows from financing activities | |||
Proceeds from issue of share capital | 2 | 20 | 20 |
Repayment of long-term borrowings | - | (119) | (119) |
Dividends paid | (534) | (483) | (616) |
Interest paid | (1) | (1) | (1) |
Net cash used in financing activities | (533) | (583) | (716) |
Net increase/(decrease) in cash and cash equivalents | 1,217 | (693) | (853) |
Cash and cash equivalents at beginning of period | 3,423 | 4,358 | 4,358 |
Exchange adjustments to cash and cash equivalents at beginning of period | 93 | (62) | (82) |
Cash and cash equivalents at end of period | 4,733 | 3,603 | 3,423 |
Consolidated statement of changes in equity
For the six months ended 31 January 2015
Share | Share | Currency |
| |||
Share | premium | option | translation | Retained | Total | |
capital | account | reserve | reserve | earnings | equity | |
£'000 | £'000 | £'000 | £'000 | £'000 | £'000 | |
At 1 August 2014 - audited | 76 | 3,013 | 126 | (131) | 4,726 | 7,810 |
Issue of share capital under share-based payment options | - | 3 | (3) | - | 3 | 3 |
Share-based payment charge | - | - | 31 | - | - | 31 |
Dividends paid | - | - | - | - | (534) | (534) |
Transactions with owners | - | 3 | 28 | - | (531) | (500) |
Profit for the period | - | - | - | - | 691 | 691 |
Other comprehensive income | ||||||
Currency translation differences | - | - | - | 95 | - | 95 |
Total comprehensive income for the period | - | - | - | 95 | 691 | 786 |
At 31 January 2015 - unaudited | 76 | 3,016 | 154 | (36) | 4,886 | 8,096 |
Notes to the interim report
For the six months ended 31 January 2015
1 Nature of operations
The principal activity of Getech Group plc ("the Company") 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.
2 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. The Company's shares are admitted to trading on the London Stock Exchange's AIM.
The financial information for the six months ended 31 January 2015 and 31 January 2014 has not been audited and does not constitute full financial statements within the meaning of Section 434 of the Companies Act 2006. These consolidated interim financial statements ("the interim financial statements") have been approved by the Board.
The financial information relating to the year ended 31 July 2014 is based on the Group's statutory accounts for that period. The statutory accounts were prepared in accordance with IFRS in issue as adopted by the European Union. IFRS include interpretations issued by the International Financial Reporting Interpretations Committee (IFRIC). The statutory accounts received an unqualified audit report, did not contain statements under Sections 498(2) or (3) of the Companies Act 2006 and have been filed with the Registrar of Companies.
3 Basis of preparation
The interim financial statements are for the six months ended 31 January 2015. They have been prepared using the recognition and measurement principles of IFRS. The interim financial statements do not include all the information required for full annual financial statements and should be read in conjunction with the financial statements of the Group for the year ended 31 July 2014.
The interim financial statements have been prepared under the historical cost convention except in relation to financial instruments held at face value through profit or loss. They have been prepared in accordance with the accounting policies adopted in the last annual financial statements for the year ended 31 July 2014.
The accounting policies have been applied consistently throughout the Group for the purpose of preparation of the interim financial statements.
4 Dividends
Six months | Six months | Year | |
ended | ended | ended | |
31 January | 31 January | 31 July | |
2015 | 2014 | 2014 | |
Unaudited | Unaudited | Audited | |
£'000 | £'000 | £'000 | |
Paid during the period | |||
At: 1.76p per share (six months ended 2014: 1.60p per share; year ended 31 July 2014: 2.04p per share) | 534 | 483 | 617 |
Proposed after the period end (not recognised as a liability) | |||
At: 0.46p per share (six months ended 2014: 0.44p per share; year ended 31 July 2014: 1.76p per share) | 140 | 133 | 534 |
The proposed dividend is payable on 1 May 2015 to members on the register at 7 April 2015.
5 Earnings per share
Basic earnings per share is calculated on the basis of the profit for the period after tax, divided by the weighted average number of Ordinary Shares in issue in the period of 30,327,196 (six months ended 31 January 2014: 30,183,332; year ended 31 July 2014: 30,249,212).
Diluted earnings per share is calculated on the basis of the profit for the period after tax, divided by the weighted average number of Ordinary Shares in issue plus the weighted average number of Ordinary Shares which would be issued if all options granted were exercised. The addition to the weighted average number of Ordinary Shares used in the calculation of diluted earnings per share for the six months ended 31 January 2015 is 905,712 (six months ended 31 January 2014: 1,820,077; year ended 31 July 2014: 1,560,109).
6 Interim Report
This Interim Report is being sent to the shareholders of Getech and will be available at its registered office, Convention House, St Mary's Street, Leeds LS9 7DP, UK, and from its website, www.getech.com, from 2 April 2015.
Directors, secretary and advisors
Directors
Dr Stuart Paton
Non-executive Chairman
Raymond Wolfson
Chief Executive Officer
Professor Paul Carey
Marketing and Sales Director
Dr Paul Markwick
Technical Director
Peter Stephens
Non-executive Director
Colin Glass
Non-executive Finance Director
Dr Alison Fielding
Non-executive Director
Company Secretary
Colin Glass
Registered office
Convention House
St Mary's Street
Leeds LS9 7DP
Company registration number
2891368
Nominated advisor and broker
WH Ireland Limited
Third Floor
Royal House
28 Sovereign Street
Leeds LS1 4BJ
Auditor
Grant Thornton UK LLP
No. 1 Whitehall Riverside
Whitehall Road
Leeds LS1 4BN
Solicitors
Walker Morris
Kings Court
12 King Street
Leeds LS1 2HL
Principal bankers
NatWest
PO Box 183
8 Park Row
Leeds LS1 1QT
Registrars
Capita Asset Services
Northern House
Woodsome Park
Fenay Bridge
Huddersfield HD8 0LA