Getech Grp Regulatory News (GTC)

30 Oct 2006 07:01

GETECH Group plc30 October 2006 For Immediate Release 30 October 2006 GETECH Group plc PRELIMINARY RESULTS For the year ended 31 July 2006 FINANCIAL HIGHLIGHTS •Profit before tax of £1,010,013 (2005: £730,460) •Turnover of £3,228,573 (2005: £3,481,743) •Earnings per share of 2.65p (2005: 2.47p) •Dividend payment of 0.6p per share (subject to shareholder approval at the Annual General Meeting) •Total dividend for the year 1.0p per share OPERATIONAL HIGHLIGHTS •Securing through the Company's reputation, two R&D projects with a major European oil company to a value in excess of £0.5m •Signing a Memorandum of Understanding with the China Geological Survey to market their digital products outside China •One complete sale and several part sales of our Global Continental Margins Gravity Study •Winning the British Chamber of Commerce in Singapore 2005 Award in the Category 'Energy and Utilities'. •Continued growth of the PSEG with recruitment of technical specialists with a range of experience to fill key roles For further information, please contact: Derek Fairhead, Managing Director, GETECH Group Plc 0113 343 5240 Colin Glass, Finance Director, GETECH Group Plc 07831 258494 Rob Naylor, Teather & Greenwood 020 7426 9000 Kelly-Ann French, Buchanan Communications 01943 883990 www.getech.com CHAIRMAN'S STATEMENT I am pleased to report the inaugural full year results of GETECH Group plc("GETECH" or "the Company") as an AIM listed company for the year ended 31 July2006. GETECH is in the oil services sector specialising in the provision andinterpretation of exploration data and petroleum systems evaluations. Results The Company, including its US subsidiary, reported a profit before tax of£1,010,013 (2005: £730,460) after interest receivable of £140,124 (2005:£33,126) on a turnover of £3,228,573 (2005: £3,481,743). The post tax profit was£733,560 (2005: £534,140) giving earnings per share of 2.65p (2005: 2.47p)adjusted. Admission to AIM On 23 September 2005 the Company was admitted to AIM, simultaneously raising £3mfor the Company from a share issue at 39p. Prior to Admission and also atAdmission, share options under an Enterprise Management Incentive Scheme and anUnapproved Scheme, were granted to ensure that key management and staff wereappropriately incentivised to deliver shareholder value. Dividends As the Company is strongly capitalised and continues to generate cash from itstrading operations, I am delighted to report that your Board intends to pay afinal dividend for the year, subject to shareholder approval at the Annual General Meeting, of 0.6p per share, to shareholders registered on 10 November 2006.The final dividend will cost the Company £166,154 and will be paid on 8 December2006. This dividend, together with the interim dividend of 0.4p per share paidon 5 May 2006, will bring the total dividend for the year to 1.0p per share,which is in line with our stated intention to operate a progressive dividendpolicy. Business Review In my interim report I reminded shareholders that a substantial part of theCompany's turnover tends to be made up of large contracts whose nature andtiming cannot always be accurately predicted. This is still the case but GETECHcontinues to broaden its client base both in its core business and through thesteady growth of the Petroleum Systems Evaluation Group (PSEG). The PSEG hasbeen working throughout the year on a number of projects with a diverse range ofestablished and newer resource companies in many areas of the world on either anon-exclusive or proprietary basis. Where the project is on a non-exclusivebasis we expect to make multiple sales of the resultant report. The existingprojects should be completed in the current financial year and new projects arebeing commenced in line with expectations. This has resulted in the requirementto employ additional, highly qualified, staff which was recognised at the timeof our Admission to AIM as a key area of investment. We are confident that underthe leadership of Dr Paul Markwick, this division will continue to grow in theforeseeable future. A further consequence of the dependence on a relatively small number of largeprojects, is that the gross margin on sales income is highly dependent on theproduct sales mix - significant external costs are associated with some salesbut not others. During the year reported upon, the product mix resulted in ahigher gross margin than in the previous year by ten percentage points. Generally, your Board believes that oil exploration budgets will increase toreflect the need to replace reserves in the context of a buoyant oil price.GETECH expects to benefit from this situation, and with its strong balance sheetand increased profile as a quoted company, it will be in a good position toexploit opportunities to acquire key data and prove an attraction for thecalibre of geoscientists it requires to develop all aspects of its business. Premises GETECH has expanded beyond the capacity of its accommodation on the Universityof Leeds campus and the Board recognised that it was vital to find suitablepremises for the anticipated further growth of the business. I am pleased to report that the Company has exchanged contracts to purchasefreehold premises at Roundhay, north east of Leeds city centre, for £2.5m toprovide superb facilities to cope with our expansion plans. Completion isanticipated before the end of 2006. In order to avoid the disruption of havingto move again as we expand, the facilities purchased will exceed our immediateneeds and we intend to rent out the surplus accommodation on shortterm leases.We fully expect the rental received to cover the deposit interest foregone andwe will have an unencumbered asset should we wish to raise funding in thefuture. The new premises will be able to accommodate our staff in excellent workingconditions with modern IT and communications support. Outlook Your Board believes there is an exciting future for GETECH given its first classreputation as a supplier and interpreter of gravity and magnetic data to a hostof blue-chip oil, gas and mineral companies worldwide. We intend to build on these relationships and develop new ones, and to continueto recruit the best geoscientists available to enable us to provide anunrivalled service to our clients. In addition, having now established ourselves as a quoted company we will belooking for appropriate acquisitions to enhance the Company's value. Finally, on behalf of the Board, I would like to thank our employees for theircontinued dedication and commitment to the Company. PETER STEPHENS Chairman OPERATING REVIEW Business Setting Hydrocarbon exploration is currently experiencing significant investment due tostrong global demand for oil, high commodity prices and the need for oil and gascompanies to replace their depleting reserves. These factors have resulted inoil and gas companies searching more widely, in fact globally, for newresources. As a result many companies are entering countries for the first timeand need to come up-to-speed on hydrocarbon exploration opportunities. Ourproducts and services allow them to do just this in a cost effective manner andin a way that will help these companies to reduce their exploration risk. GETECH's products and services in oil and gas consulting have been developedover 20 years by the compilation of one of the world's most extensive globalgravity and magnetic databases based on a dozen or so oil and mineral industryfunded studies since 1986. These data enable the imaging of subsurfacegeological structures based on corresponding changes in rock density (gravity)and rock magnetisation (magnetic). Careful analysis of such data enables themapping of tectonic structures (faults and contacts), calculation of depth ofsedimentary basins and delineation of areas affected by volcanics. Oil andmining companies license our data when they are evaluating a new explorationarea and/or when they wish to expand their current exploration activities intoneighbouring regions. Company History GETECH has its origins as a small research group at the University of Leeds,Department of Earth Sciences, which in 1986 initiated the compilation of gravitydata for the continent of Africa supported by a group of oil and mining companysponsors. By 1996 GETECH had amassed a global gravity and magnetic databasethrough compilation studies covering almost the whole world. GETECH opened anoffice in Houston, Texas in 1996, as a separate company, Geophysical ExplorationTechnology Inc. In 1999 GETECH Inc acquired the business of Precision MappingInc - further enhancing the Company's data assets. In 2000 GETECH, includingGETECH Inc, spun out from the University of Leeds as a private company(Geophysical Exploration Technology Limited). The subsequent success of thebusiness resulted in the flotation of the company on AIM in September 2005 witha name change to GETECH Group plc. GETECH was the first spin out company fromthe University of Leeds to float on AIM. Close links with its clients and an understanding of their future needs hasencouraged the Company to be innovative and to develop a global strategy thathas resulted in the development of new datasets for the continental margins ofthe world and the frontier areas such as Russia and China. In addition GETECHhas developed the PSEG which is a rapidly expanding part of the Company. Business Activities GETECH's business is primarily: •licensing global gravity and magnetic data to oil and mineral companies; •undertaking integrated geophysical interpretation studies; and •evaluating the petroleum systems within basins The first two elements currently contribute to the majority of the Company'srevenue. The third element relates to the PSEG, which provides oil companieswith detailed insights into the key source, reservoir and seal issues relatingto hydrocarbon basins. Since 2004 the group has grown from 2 to 9 staff andfurther growth is anticipated during the current year. Our business success in Southeast Asia, helped by the pro-active marketingactivities of our representative based in Singapore, resulted in GETECH beingawarded "The British Business Award, 2005 (category Energy and Utilities)". Thecomment by Mervyn Davies of the British Chamber of Commerce in Singapore, whopresented the award, stated " GETECH stands out as a company which has found itsplace by enlarging the boundaries of knowledge and cutting through the fog ofgravity and magnetic data interpretation. The Company has, at the same time,brought this knowledge into successful commercial application." The success of the PSEG has been its ability to integrate traditional andinnovative methods through the latest GIS (Geographic Information System)technology to help clients reduce exploration risk in frontier areas. Much ofthis type of work was traditionally carried out in-house within oil companies.The PSEG is rapidly establishing its reputation for its quality of work andexpertise and has developed an international portfolio of non-exclusive andproprietary studies funded by a range of "super majors" to medium size oilcompanies. One of our particular strengths which differentiates us from our competitors, isthe ability to integrate our global gravity and magnetic data holdings intoregional geological and petroleum systems interpretation studies. These arepreserved as non-exclusive, thus allowing us to resell each study many times.This then provides the option for clients to follow up these regional studieswith proprietary studies as oil companies focus on specific exploration blocks.Such an approach maximises the value of our innovative skills in projectgeneration and minimises the need to compete for work offered by oil companies. In summary, the strength of the business during the year reflects: •strong demand for our products and services on a global scale from a wide spectrum of oil and mining companies; •the ever growing range of products for key frontier areas; •the growth of the PSEG business which has helped the oil industry to appreciate how gravity and magnetic data can be used as an integral part of reducing risk in frontier areas. This has helped to 'lever' sales of gravity and magnetic data; and •the re-structuring of our US office (in 2004) enabling us to focus on marketing to the key North American client base. The Future The rapid and continued growth of the PSEG has resulted in GETECH needing tomove off the University of Leeds campus as the company has completely outgrownits present facilities. To enable the Company to cope with its anticipatedexpansion we have exchanged contracts to purchase the freehold of part of ElmeteHall in Roundhay, located north east of Leeds city centre. This commitment to purchase quality premises with excellent communicationequipment reflects the importance we place on our most important asset - ourpeople. Communication is very important to GETECH and therefore a high speedinternet connection capable of delivering 100 Mbits/second is being installed.The accommodation will provide a new stimulating working environment and ourstaff are looking forward to the move, which we hope will be completed beforethe end of 2006. The prognosis for the current year is continued growth of the PSEG and its everwider acceptance within the industry. Discussions are well advanced withorganisations in many countries to allow GETECH to market their data so that ourdata holdings continue to grow. Some of these data sets are in key explorationareas, where clients have expressed strong interest in obtaining data. With GETECH continuing to expand the scope of its products and services, and todraw together the skills and experience of its growing team of geosciencespecialists, I am confident we will continue to build on this year's success. Finally I would like to thank all my colleagues for their unstinting efforts onbehalf of the Company and we all look forward to an exciting future. PROFESSOR J DEREK FAIRHEAD Managing Director FULL RESULTS BELOW CONSOLIDATED PROFIT AND LOSS ACCOUNT for the year ended 31 July 2006 2006 2005 TURNOVER - continuing activities 3,228,573 3,481,743 Cost of sales (783,875) (1,317,375) __________ __________GROSS PROFIT 2,444,698 2,164,368 Distribution costs (870) (2,839) Administrative expenses (1,573,910) (1,464,195) __________ __________OPERATING PROFIT - continuing activities 869,918 697,334 Interest receivable 140,124 33,126 Interest payable (29) - __________ __________PROFIT ON ORDINARY ACTIVITIES BEFORE TAXATION 1,010,013 730,460 Tax on profit on ordinary activities (276,453) (196,320) __________ __________PROFIT ON ORDINARY ACTIVITIES AFTER TAXATION and FOR THE YEAR £733,560 £534,140 ========= ========= Basic earnings per share 2.76p 10.14p Diluted earnings per share 2.76p 10.14p There were no recognised gains or losses other than profit or loss for theperiod. All the group's activities are classed as continuing for the period. CONSOLIDATED BALANCE SHEET 31 July 2006 2006 2005FIXED ASSETS Intangible assets 1,415 1,592Tangible assets 37,907 34,337 _________ _________ 39,322 35,929CURRENT ASSETS Stocks 166,504 -Debtors 807,905 645,404Investments 23,880 -Cash at bank and in hand 4,317,913 1,423,703 _________ _________ 5,316,202 2,069,107 _________ _________ CREDITORS - amounts falling duewithin one year 1,357,135 1,209,596 _________ _________ NET CURRENT ASSETS 3,959,067 859,511 _________ _________ TOTAL ASSETS LESS CURRENT LIABILITIES £3,998,389 £895,440 ======== ======== CAPITAL AND RESERVES Called up share capital 69,231 94Share premium account 2,460,927 -Capital redemption reserve 6 6Profit and loss account 1,468,225 895,340 _________ _________ SHAREHOLDERS' FUNDS - equity £3,998,389 £895,440interests ======== ======= CONSOLIDATED CASH FLOW STATEMENT for the year ended 31 July 2006 2006 2005 NET CASH INFLOW FROM OPERATINGACTIVITIES 653,496 780,647 RETURNS ON INVESTMENTS ANDSERVICING OF FINANCEInterest received 140,124 33,126Interest paid (29) - _________ _________ 140,095 33,126 TAXATION - corporation tax paid (222,453) (32,851) CAPITAL EXPENDITURE and FINANCIALINVESTMENTPayments to acquire tangible fixed (46,317) (28,346)assets _________ _________ (46,317) (28,346) EQUITY DIVIDENDS PAID (110,769) (50,000) _________ ________NET CASH INFLOW BEFORE USE OFLIQUID RESOURCES and FINANCING 414,052 702,576 FINANCINGIssue of share capital 3,000,000 -Costs of share issue (519,842) -Amount paid for redemption of - (78,750)shares _________ _________ 2,480,158 (78,750) _________ ________ INCREASE IN CASH IN THE YEAR £2,894,210 £623,826 ======== ======= NOTES: There are no recognised gains or losses other than the profit for the year andtherefore no separate statement of total recognised gains and losses has beenpresented. There is no difference between the profit on ordinary activities before taxationand the retained profit for the year as stated above, and their historical costequivalents. The above financial information does not constitute statutoryaccounts for the year ended 31 July 2006 or 2005. Statutory accounts for theyear ended 31 July 2005 have been delivered to the Registrar of Companies. Theauditors have reported on the year ended 31 July 2006 financial statements andtheir report was unqualified and did not contain a statement under section 237(2) or (3) of the Companies Act 1985. The statutory accounts for the year ended31 July 2006 will be delivered to the Registrar of Companies following theCompany's Annual General Meeting. EARNINGS PER SHARE Basic earnings per share is calculated on the basis of the profit for the yearafter tax, divided by the weighted average number of the ordinary shares inissue in the year. Diluted earnings per share is calculated on the basis of the profit for the yearafter tax, divided by the weighted average number of shares which would beissued if all options granted were exercised. All options were anti-dilutive at 31 July 2006. Reconciliations of the earnings and weighted average number of shares used inthe calculations are set out below: 2006 2005 Per share Earnings Weighted Per Share Earnings Weighted amount average amount average number of number of shares shares Profit £733,560 £ 534,140 attributable to shareholders Basic earnings per share Earnings attributable to ordinary £733,560 26,575,666 2.76p £534,140 5,268,403 10.14pshare- holders An adjusted earnings per share has also been presented based on the earningsattributable to ordinary shareholders and is calculated as if all shares inissue at 31 July 2006 had been in issue for the whole of the year and theprevious year. This basis has been used because as a result of the Admission to AIM on 23September 2005 there was a significant restructuring of the share capital of theCompany to make it more suitable for a publicly traded company. Details of thisare disclosed in Note 17. 2006 2005 Per share Earnings Weighted Per share Earnings Weighted amount average amount average number of number of shares shares Basic earnings per share £733,560 26,575,666 2.76p £534,140 5,268,403 10.14p Adjustments: Issue of shares - 1,116,641 150,000 22,423,904 Basic earnings per share Earnings attributable to ordinary share- £733,560 27,692,307 2.65p £684,140 27,692,307 2.47pholders DIVIDENDS 2006 2005 Paid during the year: £110,769 £Interim dividend at 0.4p per share (2005:£Nil) Proposed after the year end (not recognised as a liability): Final dividend at 0.6p per share £166,154 £(2005:£Nil) Copies of this preliminary report will be distributed to all holders of theCompany's ordinary shares. Copies will also be available at the Company'sregistered office: Convention House, St Mary's Street, Leeds LS9 7DP. In addition, this report will be available on the Company's website:www.getech.com -ENDS- This information is provided by RNS The company news service from the London Stock Exchange