Last checked at 5 Apr 2016 07:00
5 April 2016
Getech Group plc
("Getech" or the "Group" or the "Company")
Interim Report for the six months ended 31 January 2016
New $1million Contract signed
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 2016.
Highlights
• | Revenue for the six months of £3,288,000 (six months ended 31 January 2015: £3,619,000) |
• | Loss before tax of £704,000 (profit six months ended 31 January 2015: £707,000) |
• | Gross cash £2,700,000 (net cash after bank debt £1,800,000) |
• | Significant sales deferred rather than cancelled |
• | Strong start to the second half-year with record February sales and US$1m new contract in April |
• | Significant reductions in the cost base in early 2016 |
Stuart Paton, Non-Executive Chairman of Getech Group plc, said:
"Although the oil price has increased by almost 50% since its low point in January 2016, there is still considerable uncertainty as to the timing of a stronger recovery, and this continues to affect the availability of client budgets in 2016.
However, we entered the second half of our year with strong cash balances and a substantial pipeline of sales opportunities. A number of new sales, including the signature and delivery of a data licence valued at US$720k, led to a record February for sales and income. We can also announce that we have now signed a US$1million new contract, which includes parts of Globe and two regional reports, the global depth to basement study and our multi-satellite project,, most of which will be delivered in the half year to July 2016. The Directors are also optimistic that a number of other opportunities which either did not complete in the first half or have been generated recently, will complete in the second half year."
GETECH Group plc Raymond Wolfson, Chief Executive
| Tel: 0113 322 2200 |
WH Ireland Limited Katy Mitchell | Tel: 0161 832 2174
|
Chairman's statement
Results
Getech reports a Group loss before tax of £704,000 (six months ended 31 January 2015: profit of £707,000) after interest receivable of £5,000 (six months ended 31 January 2015: £5,000) on revenue of £3,288,000 (six months ended 31 January 2015: £3,619,000). The post-tax loss was £704,000 (six months ended 31 January 2015: profit of £691,000).
The accounts have been prepared under IFRS in issue as adopted by the European Union.
Dividend
Your Board does not propose an interim dividend. The Board intends to continue its policy of proposing a progressive dividend but will take into account prevailing market conditions.
Business review
Highlights:
• | Half year loss before tax £704,000 |
• | Gross cash at 31 January of £2.7m, net cash after bank debt of £1.8m and net assets of £9.0m |
• | Global oil and gas services continue to suffer a severe downturn with no certainty as to the timing of the recovery |
• | Significant sales were deferred rather than cancelled |
• | Strong start to second half year with record sales in February and a US$1m contract signed in April |
• | Significant reductions in the cost base in early 2016 while maintaining capability in all business streams |
During the period under review the business continued to be adversely affected by the difficult market conditions. After the significant decline in the oil price in the second half of 2014, it fell further during 2015, which resulted in a considerable tightening of exploration budgets by our oil and gas clients. As a consequence, there has been a large number of further redundancies both in the operators and the service companies that support them. Client budgets therefore continued to be affected throughout our first half year to January 2016.
ERCL Limited, which was acquired in April 2015, is subject to the same market conditions, but this subsidiary company primarily addresses a different part of the exploration cycle. The programme of integration with ERCL has continued, including a number of joint projects, and the Directors are confident that it will continue to be a major asset for the Group.
The Company remains in a strong financial position. By the end of the period the Group cash balance amounted to £2.7m (£1.8m net of £0.9m debt), notably after the payment of a dividend costing £572,000 in December 2015 and group net assets stood at £9.0m, supporting the underlying strength of the Company.
Outlook
Although the oil price has increased by almost 50% since its low point in January 2016, there is still considerable uncertainty as to the timing of a stronger recovery, and this continues to affect the availability of client budgets in 2016.
However, the Company entered the second half of its year with strong cash balances and a substantial pipeline of sales opportunities. A number of new sales, including the signature and delivery of a data licence valued at US$720,000, led to a record February for sales and income. We can also announce that we have now signed a new US$1m contract, which includes parts of Globe, two regional reports, the global depth to basement study and our multi-satellite project, most of which will be delivered in the half year to July 2016. The Directors are also optimistic that a number of other opportunities, which either did not complete in the first half or have been generated recently, will complete in the second half year.
In light of the challenging market conditions, the Company has significantly lowered its cost base through a range of measures, including cutting marketing costs and reducing staff costs through reduced working hours and voluntary and compulsory job losses. As a result, our month-on-month cost base will be down more than 20% from its peak in the period under review. However, the Directors believe they have been able to manage this in a way that has enabled the Company to retain the breadth of skills and experience necessary to allow all our current business streams to pick up again once the market recovers.
The Directors remain fully aware of the need to be vigilant about the impact of the current market conditions on the business, and plans continue to recognise a worst case position where the oil and gas market does not begin to recover until 2017. However, the Directors believe the Company's strong position means that the current market can still be seen as an opportunity. They continue to seek complementary acquisitions which have minimal impact on cash and risk, but which will present significant upside once the market recovers.
We remain confident about our medium and longer term prospects.
Dr Stuart Paton
Non-executive Chairman
5 April 2016
Consolidated statement of comprehensive income
For the six months ended 31 January 2016
Six months | Six months | Year | ||
ended | ended | ended | ||
31 January | 31 January | 31 July | ||
2016 | 2015 | 2015 | ||
Unaudited | Unaudited | Audited | ||
Note | £'000 | £'000 | £'000 | |
Revenue | 3,288 | 3,619 | 8,639 | |
Cost of sales | (2,015) | (1,111) | (3,002) | |
Gross profit | 1,273 | 2,508 | 5,637 | |
Administrative costs | (1,970) | (1,805) | (3,650) | |
Operating (loss)/profit | (697) | 703 | 1,987 | |
Finance income | 5 | 5 | 13 | |
Finance costs | (12) | (1) | (8) | |
(Loss)/profit before tax | (704) | 707 | 1,992 | |
Income tax expense | - | (16) | (179) | |
(Loss)/profit for the period attributable to owners of the Parent | (704) | 691 | 1,813 | |
Other comprehensive income | ||||
Currency translation differences on translation of foreign operations | 43 | 95 | 20 | |
Total comprehensive income for the period attributable to owners of the Parent | (661) | 786 | 1,833 | |
Earnings per share | 5 | (2.14)p | 2.28p | 5.77p |
Basic earnings per share | ||||
Diluted earnings per share | (2.10)p | 2.21p | 5.61p | |
Consolidated statement of financial position
As at 31 January 2016
Company registration number 2891368
31 January | 31 January | 31 July | |
2016 | 2015 | 2015 | |
Unaudited | Unaudited | Audited | |
£'000 | £'000 | £'000 | |
Assets | |||
Non-current assets | |||
Property, plant and equipment | 2,750 | 2,861 | 2,853 |
Goodwill | 3,131 | - | 3,131 |
Intangible assets | 2,334 | 1,109 | 2,046 |
Deferred tax assets | 161 | 332 | 159 |
8,376 | 4,302 | 8,189 | |
Current assets | |||
Inventories | 457 | 199 | 292 |
Trade and other receivables | 2,660 | 4,333 | 4,235 |
Current tax assets | 168 | 100 | 118 |
Cash and cash equivalents | 2,703 | 4,733 | 4,727 |
5,988 | 9,365 | 9,372 | |
Total assets | 14,364 | 13,667 | 17,561 |
Liabilities | |||
Current liabilities | |||
Borrowings | 266 | - | 266 |
Trade and other payables | 2,916 | 5,214 | 4,628 |
Current tax liabilities | 229 | 183 | 395 |
3,411 | 5,397 | 5,289 | |
Non-current liabilities | |||
Borrowings | 634 | - | 766 |
Trade and other payables | 980 | - | 980 |
Deferred tax liabilities | 321 | 174 | 319 |
1,935 | 174 | 2,065 | |
Total liabilities | 5,346 | 5,571 | 7,354 |
Net assets | 9,018 | 8,096 | 10,207 |
Equity | |||
Equity attributable to owners of the Parent | |||
Share capital | 82 | 76 | 82 |
Share premium account | 3,053 | 3,016 | 3,037 |
Merger relief reserve | 1,159 | - | 1,159 |
Share option reserve | 157 | 154 | 155 |
Currency translation reserve | (68) | (36) | (111) |
Retained earnings | 4,635 | 4,886 | 5,885 |
Total equity | 9,018 | 8,096 | 10,207 |
Consolidated statement of cash flows
For the six months ended 31 January 2016
Six months | Six months | Year | |
ended | ended | ended | |
31 January | 31 January | 31 July | |
2016 | 2015 | 2015 | |
Unaudited | Unaudited | Audited | |
£'000 | £'000 | £'000 | |
Cash flows from operating activities | |||
(Loss)/profit before tax | (704) | 707 | 1,992 |
Share-based payment charges | 28 | 31 | 59 |
Depreciation and amortisation charges | 307 | 152 | 366 |
Impairment of intangible assets | - | - | 298 |
Fair value adjustments | - | - | (304) |
Finance income | (5) | (5) | (13) |
Finance costs | 12 | 1 | 8 |
Exchange adjustments | (126) | (55) | (59) |
Increase in inventories | (165) | (19) | (112) |
Decrease/(increase) in trade and other receivables | 1,574 | (1,482) | 202 |
(Decrease)/increase in trade and other payables | (1,135) | 2,380 | 483 |
Cash (used in)/generated from operating activities | (214) | 1,710 | 2,920 |
Income taxes (paid)/refunded | (217) | 713 | 457 |
Net cash (used in)/generated from operating activities | (431) | 2,423 | 3,377 |
Cash flows from investing activities | |||
Purchase of property, plant and equipment | (19) | (196) | (259) |
Purchase of intangible assets | - | - | (128) |
Disposal of property, plant and equipment | 27 | - | - |
Development costs capitalised | (459) | (482) | (977) |
Acquisition costs, net of cash received | (576) | - | (1,130) |
Interest received | 5 | 5 | 14 |
Net cash used in investing activities | (1,022) | (673) | (2,480) |
Cash flows from financing activities | |||
Proceeds from issue of share capital | 16 | 2 | 24 |
New term loan | - | - | 1,100 |
Repayment of long-term borrowings | (132) | - | (68) |
Dividends paid | (572) | (534) | (684) |
Interest paid | (12) | (1) | (8) |
Net cash (used in)/generated from financing activities | (700) | (533) | 364 |
Net (decrease)/increase in cash and cash equivalents | (2,153) | 1,217 | 1,261 |
Cash and cash equivalents at beginning of period | 4,727 | 3,423 | 3,423 |
Exchange adjustments to cash and cash equivalents at beginning of period | 129 | 93 | 43 |
Cash and cash equivalents at end of period | 2,703 | 4,733 | 4,727 |
Consolidated statement of changes in equity
For the six months ended 31 January 2016
Share | Merger | Share | Currency |
| |||
Share | premium | relief | option | translation | Retained | Total | |
capital | account | reserve | reserve | reserve | earnings | equity | |
£'000 | £'000 | £'000 | £'000 | £'000 | £'000 | £'000 | |
At 1 August 2015 - audited | 82 | 3,037 | 1,159 | 155 | (111) | 5,885 | 10,207 |
Issue of share capital under share-based payment options | - | 16 | - | (26) | - | 26 | 16 |
Share-based payment charge | - | - | - | 28 | - | - | 28 |
Dividends paid | - | - | - | - | - | (572) | (572) |
Transactions with owners | - | 16 | - | 2 | - | (546) | (528) |
Loss for the period | - | - | - | - | - | (704) | (704) |
Other comprehensive income | |||||||
Currency translation differences | - | - | - | - | 43 | - | 43 |
Total comprehensive income for the period | - | - | - | - | 43 | (704) | (661) |
At 31 January 2016 - unaudited | 82 | 3,053 | 1,159 | 157 | (68) | 4,635 | 9,018 |
Notes to the interim report
For the six months ended 31 January 2016
1 Nature of operations
The principal activity of Getech Group plc ("the Company") and its subsidiary companies, Geophysical Exploration Technology Inc. and ERCL Limited (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 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 2016 and 31 January 2015 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 2015 is based on the Group's statutory accounts for that period. The statutory accounts were 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 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 2016. 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 2015.
The interim financial statements have been prepared under the historical cost convention except in relation to financial instruments held at fair 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 2015.
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 | |
2016 | 2015 | 2015 | |
Unaudited | Unaudited | Audited | |
£'000 | £'000 | £'000 | |
Paid during the period | |||
At: 1.74p per share (six months ended 31 January 2015: 1.76p per share; | |||
year ended 31 July 2015: 2.22p per share) | 572 | 534 | 684 |
Proposed after the period end (not recognised as a liability) | |||
At: 0.00p per share (six months ended 31 January 2015: 0.46p per share; | |||
year ended 31 July 2015: 1.74p per share) | - | 140 | 572 |
There is no interim dividend proposed.
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 32,886,729 (six months ended 31 January 2015: 30,327,196; year ended 31 July 2015: 31,416,845).
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 2016 is 650,725 (six months ended 31 January 2015: 905,712; year ended 31 July 2015: 1,510,171).
6 Interim Report
This Interim Report will be available on the Company's website, www.getech.com, from 5 April 2016.