GETECH Group plc Final Results (5448O)

TIDMGTC

RNS Number : 5448O

GETECH Group plc

08 November 2016

Getech Group plc

("Getech" or the "Company"

and with its subsidiaries the "Group")

Final Results for the 12 months ended 31 July 2016

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 2016.

Financial highlights

 
 --   Revenue GBP7,031,000 (2015: GBP8,639,000) 
 --   Profit before tax GBP671,000 (2015: GBP1,992,000) 
 --   Earnings per share 3.25p (2015: 5.77p) 
 

Operational highlights

 
 --   Knowledge base growth: year six of Globe, 
       five new Regional Reports, Multi-Sat completed 
 --   Sonangol multi-disciplinary review completed 
       (our largest single contract to date) 
 --   New business with National Oil Companies: 
       World Bank funded contract in Sierra Leone 
 --   Diversification into new markets: new contract 
       in the nuclear energy sector 
       -- 
 

Counter cyclical M&A

 
 --   Acquisition of Exprodat, a leading specialist 
       in geographic information systems 
 

Chairman's statement

With oil prices remaining low and volatile throughout the financial year ended 31 July 2016, the market backdrop to my sixth report as Chairman remained challenging for a Group largely focussed on the provision of products and services to the natural resources industries. In the first half of the financial year, Getech acted decisively to strengthen its operations through innovation around its core products and by implementing significant cost control measures. These steps resulted in a considerable improvement in Getech's trading performance in the second half of the year, when compared to the first half of the year. Building on this momentum, the Group acquired Exprodat Consulting Limited (Exprodat), largely by issue of new shares. We believe this counter-cyclical acquisition redefines our skill base within geographic information systems (GIS), which is already transforming the value proposition around the Group's core activities and opening new opportunities to markets outside of oil and gas.

Beyond 2016, having built an unparalleled suite of global geological and geophysical data, analysis and products, Getech is now focussed on enhancing this offering through providing better access to its data sets and refocussing its offering to more practically address the day-to-day commercial challenges faced by our customers. I am excited by the value potential that this looks to unlock.

Results

For the financial year ended 31 July 2016, the Group reports a profit before tax of GBP671,000 (2015: GBP1,992,000) on revenue of GBP7,031,000 (2015: GBP8,639,000). The post-tax profit was GBP1,089,000 (2015: GBP1,813,000), giving earnings per share of 3.25p (2015: earnings per share of 5.77p).

Dividends

The Directors are not proposing a final dividend in respect of the financial year to 31 July 2016 (2015: final dividend of 1.74p per share). Getech intends to continue its policy of progressive dividends as appropriate, but given the ongoing market conditions, the Directors do not consider it prudent to pay a dividend at this time.

Business Review

The continuing low oil price throughout the 2016 financial year resulted in challenging conditions for the Group. Getech was initially affected by the reduction in exploration expenditure in late 2013. The sustained low oil price since the middle of 2014 led to ongoing low levels of capital expenditure across the whole exploration and production (E&P) sector, with exploration expenditure particularly hard hit. There have been numerous major redundancy rounds in many E&P and service companies. A wide range of service companies have been severely affected, both in terms of their incomes and their profits, with a number going bankrupt and consolidation taking place across the sector. The low oil price has also detrimentally influenced national oil companies' (NOCs') abilities to finance exploration efforts as their national budgets have been severely impacted.

The Group has relentlessly pursued sales opportunities in all markets in which it operates. Many clients express strong support for the Group's products but they do not currently have any budget available to make purchases. Our strong relationships with clients ensure that we stay up-to-date with their requirements and hence we believe we are well positioned to act on an improvement in the market. The acquisition of Exprodat in June 2016 has significantly strengthened the Group's capabilities, both in terms of the range of services we can offer and by creating synergies to the Group's existing services. A key focus in the coming year will be to develop these synergies to create new products and services and to broaden Exprodat's software offering. Exprodat also provides very close links to ESRI, a key geographical information services platform, which has already brought connections to other businesses outside E&P.

Getech has made some very hard decisions during the year, including making a number of staff redundant, reducing staff hours and salaries, and cutting back nonessential expenditure. It is incredibly difficult to make these decisions as they directly impact individual people and their families; however, these steps have had to be taken to ensure the resilience of the Group.

Outlook

The oil price has strengthened recently, from lows of around US$30/bbl in early 2016 to around US$50/bbl by the end of Getech's financial year in July 2016. This strengthening in the oil price, combined with a reduced cost profile, should make future E&P investment more attractive. Many analysts and market commentators consider that US onshore will become the 'swing producer' and hence should be the focus of short-term capital; however, there has been very limited exploration spend across the whole sector for the last two or more years. Therefore, in the medium term, as has happened in previous cycles, we are likely to see the oil price strengthen further due to supply constraints caused

by the reduced level of investment. This strengthening in oil price will presumably also affect the level of investment from NOCs, who will need to maintain production levels while encouraging new investment through license rounds to increase longer-term production.

At the same time, the deep cuts to staffing in many companies, including the International Oil Companies (IOCs) and large US Independents, mean that their capability to undertake exploration is severely curtailed. In the medium term, this provides a real opportunity for Getech to provide focussed, high-quality advice to these companies. The Group continues to believe that its range of products provides a strong foundation upon which it can grow the business. We work with a wide range of clients across the world, from NOCs and Super Majors to mid-size and small companies.

The Group's key focus in the coming year will be to maximise the value of combining the knowledge and data from Getech with the skills we have gained through the ERCL and Exprodat acquisitions to create a portfolio of products that are an essential part of the exploration process. This will involve a clear understanding of the issues faced by explorationists and the application of our integrated approach to address these issues in a timely and cost-efficient manner.

We believe the Group will require organisational changes and strong leadership to identify, build and deliver these products. The appointment of Dr Jonathan Copus as CEO provides the leadership required to make these organisational changes and to drive the business forward for its next stage of growth. Jonathan brings extensive industry, corporate finance and capital markets experience, having worked as an Exploration Geologist at Shell, as the top-rated E&P Sell-side Equity Analyst at a number of City companies (including Investec and Deutsche Bank) and most recently as Chief Financial Officer at Salamander Energy plc, which was acquired by Ophir plc in 2015. His professional training as a geologist, his industry experience with both Super Major and UK-listed Independent Oil and Gas Companies, and his extensive City experience make him uniquely suited for this role. The Board is very pleased to have been able to attract an individual of this calibre to the role and look forward to working with him to grow the Group.

I am very pleased that Mr Chris Flavell joined the Board in November 2015. Chris has 35 years' experience in operating E&P companies and consultancies, and he brings a wealth of knowledge and industry contacts. Most recently, he managed Tullow Oil's exploration geoscience team from 2007 to 2013, which was a period of outstanding success and growth for the company. In 2013, he left Tullow Oil to form a geoscience-focussed recruitment consultancy.

The last year has seen many changes in Directors and staff in the business. I would like to reiterate our thanks to Mr Raymond Wolfson for his outstanding contribution and commitment to Getech over many years. I would also like to thank both Mr Colin Glass, who stepped down as a Director in November 2015 after 16 years of involvement with Getech, and Dr Paul F. Carey, who announced that he is stepping down as a Director and leaving the Group with effect from 1 January 2017. A number of staff have also left the business through the redundancy process; I would like to thank each and every one of them for their commitment to the Group.

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. I am delighted to welcome the Exprodat staff based in London. The whole organisation has shown great fortitude in challenging circumstances.

Dr Stuart M. Paton

Non-executive Chairman

 
 Getech Group plc       Tel: [phone] 
  Jonathan Copus, CEO 
---------------------  ------------------- 
 WH Ireland Limited     Tel: [phone] 
  Katy Mitchell 
---------------------  ------------------- 
 

Operating Review

I am pleased to make my first report as CEO of Getech, having joined the Group at the beginning of

August 2016. I take up the reins in what continues to be a challenging business environment for both our customers and the Group. Across Getech's financial year to July 2016, budgets for drilling exploration wells did not see any significant signs of recovery and the market for proprietary consulting work remained weak. Our customers, however, continue to refresh and rework their views around the opportunity sets within and outside of their exploration portfolios, which has resulted in continued demand for our data and regional multiclient consulting activities. Across our broad client base, our customers have continued to value Getech's core products and services, many of which form important components of their day-to-day operational workflows.

Getech's focus is to deliver to our customers value creative products from a diversified and stable business platform. To achieve this, the Group must produce a high-quality, innovative, technical offering and maintain a steady focus on costs. It must also retain the vision to see this market as an opportunity to significantly strengthen the Group's offering. The most recent step along this path was the acquisition of Exprodat Consulting Limited (Exprodat), a geographical information systems (GIS) services and software specialist.

In partnership with our customers to deliver data and analysis at a global scale

Getech remains committed to the continued expansion of our unrivalled inventory of gravity and magnetics data and expertise, and our Globe products and services.

In 2016, the Group enhanced its capabilities in gravity and magnetics through the formation of a dedicated centre of excellence. As a low-cost alternative to seismic data, gravity and magnetic data continues to be seen as an attractive purchase for Getech's natural resources clients. As such, data sales remain an important revenue stream for the Group. In July 2016, Getech also delivered the three-year Multi-Satellite Altimeter Gravity Programme (Multi-Sat project), which has provided a route for our customers to greatly enhance the quality of their satellite data.

Globe, as a client-funded product suite, is now in its sixth year of support and continues to gain more interest and use. Activity throughout 2016 was pre-funded by a broad grouping of International Oil Company and large Independent Oil Company customers. Through Globe, Getech delivers to its customers the most comprehensive reconstruction of past geography, depositional environments, tectonics and climate undertaken by any organisation to date. Globe continues to provide an environment that encourages regular interaction with our clients. The work also feeds through into Getech's multiclient Regional Report products and focussed consultancy work, both of which draw on the full spectrum of Getech's knowledge bases and operations.

Within consulting, 2016 saw the completion of work on Getech's extensive, multi-disciplinary Angolan basin review for Sonangol. This contract was one of the largest Getech have had and it is testament to our strong relationship with Sonangol. Against a depressed consultancy market, we have recently been awarded further consultancy work by the government of Sierra Leone (see below). We remain confident that as the market improves, we will secure other contracts with national oil companies (NOCs) who see the value of our integrated, multi-disciplinary approach that is underpinned by excellent data and a strong GIS platform.

The continued demand throughout 2016 for Getech's Regional Reports indicates that although our customers are not drilling, they continue to refresh and rework their views around the opportunity sets within and outside of their exploration portfolios. This pattern has continued into the first half of Getech's 2017 financial year, although the market remains both fragile and volatile.

Finding Opportunity within a Turbulent Market

Against this backdrop, Getech's Board took an active decision to not just hunker-down and wait for an oil-price driven market recovery. Instead, the Board saw a number of clear partnership or transactional opportunities across a range of companies. The Board's focus continues to be on companies that are not in direct competition with Getech and where there is the potential to deliver significant value enhancement through complementary skills and customer relationships.

The first of these acquisitions, ERCL, was completed in 2015. Its operations were progressively integrated into the Group during the course of 2016. ERCL has extended Getech's commercial reach beyond its traditional regional gravity and magnetics new business venture market into a more seismic-linked sphere where the Group is now able to offer detailed well planning, field development and asset and data management advice to companies, governments and NOCs.

Throughout 2016, under the ERCL brand, Getech continued to support the Mozambique Government's petroleum activities through the provision of commercial and geotechnical advice and training. As part of this work, 2016 saw the completion of the country's fifth licensing round (a program assisted by ERCL) and work commenced on the preparation of data products for future rounds. In addition to this work, ERCL recently won a World Bank contract to support the government of Sierra Leone in its petroleum activities and it has ongoing work in a number of other countries, including Lebanon, Namibia, Palestine and Pakistan. Complementing these government and NOC projects, ERCL also provides exploration and development-based technical/commercial assistance to a range of independent upstream companies; recent activity includes operations in China, Equatorial Guinea, Mexico, Morocco and Spain.

In June 2016, Getech completed a second significant transaction: the acquisition of Exprodat. Exprodat specialises in the provision of services and consultancy relating to data management and the use of GIS. GIS, in the form of ESRI's ArcGIS(TM) product suite, is an industry-standard tool that is fundamental in supporting many aspects of oil and gas operations. Getech already has a long-standing and highly skilled GIS team, but this team had to date been focussed on servicing Getech's internal business needs. Exprodat therefore brings an additional skilled GIS resource that is dedicated to generating an external income stream for the Group.

As a key part of its activities, Exprodat has developed, and licenses commercially, several GIS software packages that support petroleum exploration. During the current downturn, the client retention of these subscription-based software products has been approximately 95%; this brings a substantial client base to Getech, with a significant proportion of recurring income. For Getech, it is particularly relevant that although the Exprodat staff specialise in GIS and software skills, they are also predominantly geologists by training, giving them an understanding of our clients' commercial and data management needs. Exprodat also delivers GIS training in both public and private environments; since 2007, Exprodat has trained approximately 2,500 oil and gas professionals in GIS.

Exprodat is an ESRI Gold Partner (one of only two in Europe) and it has ISO 9001 certification. Each of these features represents an external validation and recognition of the quality of the company's services. With GIS being used in many industries other than the exploration and production (E&P) service sector, it is very pleasing to note that through the acquisition of Exprodat, Getech is now using its geoscience, GIS, software and consulting skills to extend its operations beyond its core oil and gas customer base; the Group is currently engaged in operations within the nuclear, mining, agriculture and water management industries.

A Focus on Costs

Getech's management team is focussed on opportunities that strengthen and broaden the Group's product offering, while at the same time taking steps that balance the Group's cost base with our customer's ability to pay for our products.

By taking advantage of the current turbulent market to build a broader service offering, the two acquisitions completed to date have also brought increased operational costs into the Group. Management has therefore kept a close watch on Group profitability, and in the first half of the 2016 financial year, a significant cost reduction program was launched. In the second half of the 2016 financial year, the delivery of this program resulted in a material step-down in the Group's cost structure: staff, general and administrative costs were lowered by 22% on an annualised basis.

Continuing the Group's focus on profitability, following the acquisition of Exprodat, a further series of cost reduction measures are currently being enacted across the Group.

Outlook

While the market is at best uncertain, our dialogue with our customers remains vigorous and the Group has a pipeline of significant sales proposals awaiting approval. As we approach the end of our customers' budget year, for the first time in several years, feedback from clients leaves us encouraged by the market mood; the recent increase in the oil price gives our customers more confidence that their budgets will become available in 2017.

Getech's management, however, is focussed on optimising the Group's positioning regardless of any potential recovery in the market. Having built an unparalleled suite of global geological and geophysical knowledge bases, Getech is now moving towards a model where the Group is focussed on enhancing this offering through providing better access to its data sets and refocussing its products and services so that they more specifically address the commercial challenges faced by our customers.

Key to achieving this goal will be further integration of both ERCL and Exprodat into the Getech Group. The 2017 financial year has seen far greater movement of staff between the Group's offices and a blurring of the project staffing and management lines between Leeds, Henley-on-Thames and London.

Test marketing has already demonstrated that the application of Exprodat's software and advanced GIS skills to Getech's core products and services has the potential to revolutionise the way that our customers access these offerings. This is expected, in turn, to open up new potential for the commercial application of information held within the Group's knowledge bases, which subsequently should redefine the value proposition to our customers. This potential is evident on a single-product basis (e.g. Globe or Regional Reports) as well as through multi-disciplinary/multi-product programs of work (e.g. proprietary work for government agencies and NOCs).

Although not yet significant as standalone revenue streams, Getech's recent advances into sectors beyond oil and gas highlight the fact that the Group's geoscience and GIS skills have the potential to be applied to a much broader spectrum of activities. These opportunities are under investigation and have the potential to diversify the Group's revenue base.

Dr Jonathan Copus

Chief Executive Officer

Financial Review

With oil prices falling a further 38% across the 2016 financial year, the exploration budgets of our customers remained under considerable pressure. For Getech, the financial year was one of two halves: the first half reflected lower revenues and pre-integration costs associated with the acquisition of ERCL; the second half saw a revenue-driven trading improvement and the benefits of a program of significant cost management.

Operating Income and Cash Flow

Revenue for the 2016 financial year amounted to GBP7,031,000 (2015: GBP8,639,000), a reduction of 19% from the previous financial year. While we have seen continued interest in Getech's industry-leading products and services, the restricted exploration budgets for the majority of E&P companies have had a direct effect on Getech's operating income.

In the first half of the 2016 financial year, slow trading conditions compounded a post-acquisition expansion in the Group's cost base, resulting in a first half loss before tax of GBP704,000 on revenues of GBP3,288,000. Getech rationalised its cost base towards the end of the first half of the 2016 financial year, which led to a cost base reduction of 17%(1) in the second half of the financial year. The combination of these reductions and a 14% increase in revenues to GBP3,743,000 resulted in improved underlying performance in the second half of the year. Getech's second half profit before tax amounted to GBP1,375,000. This included an GBP845,000 write-down adjustment made to the fair value of the ERCL acquisition earn-out provision (the amount by which the total cash consideration for the ERCL acquisition has reduced from our original expectation). Full year profit before tax was GBP671,000 (2015: GBP1,992,000).

The Group's cost base is predominantly in pound sterling, but a significant proportion of its revenue is denominated in US dollars. Recently, currency markets have been favourable to the Group, with gain on foreign exchange movement reaching GBP123,000 for the 2016 financial year (2015: GBP99,000).

Having reported a net operating cash out-flow of GBP488,000 in the first half of the 2016 financial year (prior to the changes in working capital, which are detailed below), this was more than reversed by a GBP978,000 in-flow in the second half of the year; the full year operating cash in-flow figure totals GBP489,000 (2015: GBP2,348,000).

During the year, trade and other receivables balances reduced by GBP1,491,000 (2015: GBP202,000). A significant contributing factor to this was the payment during 2016 of the debtor balances from National Oil Companies that had been outstanding at the end of the 2015 financial year. Trade and other payables balances fell by GBP1,164,000 during the year (2015: increased by GBP483,000); the primary reason for this decrease was the release of deferred income relating to Globe deliverables throughout the 2016 financial year. Inventories have increased by GBP775,000 over the year (2015: GBP112,000) due to the timing of the multiclient Regional Reports product cycle, with several new reports nearing completion at the end of the financial year, creating new products to be sold in 2017.

Taking these changes in working capital into account, Getech's total cash in-flow from pre-tax operations during the 2016 financial year was GBP41,000 (2015: GBP2,921,000).

During the 2016 financial year, Getech made cash tax payments of GBP326,000 (2015: tax refund of GBP456,000). These payments relate to: profits in the 2015 financial year (predominantly payable in the US), payments on account for the current financial year and tax withheld in Angola. We anticipate tax refunds in the 2017 financial year from both the US and UK tax authorities as a result of our Group-wide research and development commitments as well as refunds for tax overpaid through payments on account - the GBP434,000 current tax asset in the Consolidated Statement of Financial Position.

Investment and Capital Expenditure

During the 2016 financial year, Getech continued its strategy of identifying counter-cyclical investment opportunities, and on 14 June 2016, it completed the acquisition of Exprodat Consulting Limited (Exprodat) in a deal valued at GBP1,760,000. The deal brought new areas of expertise to the extended Group, allowing us to offer a wider suite of products and services to exploration customers and other markets. The acquisition presents new opportunities for Getech, which are discussed in the Chairman's Statement and the Operating Review. The financial statements reflect the revenue and expenses incurred from the Exprodat assets for the 6 week period from the acquisition until the end of the financial year. Full year pro-forma numbers are also stated in the relevant sections of the notes to the financial statements.

Net cash out-flow from all investing activities was GBP1,061,000 (2015: GBP2,481,000). Within this figure, acquisition costs net of cash received were GBP240,000 (2015: GBP1,130,000), relating to the acquisitions of ERCL and Exprodat.

Getech has continued to invest in its Globe platform, with expenditure of GBP824,000 (2015: GBP977,000). The Globe platform is amortised over a 3 to 7 year period, and the first full year of amortisation has resulted in an increase in the Group amortisation costs from GBP186,000 in the 2015 financial year to GBP479,000 in the 2016 financial year. The Globe platform continues to be a key asset to Getech, forming the basis for many of the Company's cutting-edge products.

Financing

In the 2015 financial year, Getech used a GBP1,100,000 loan to partially fund the ERCL acquisition. During the 2016 financial year, capital repayments of the loan amounted to GBP132,000 (2015: GBP68,000).

Cash dividend payments totalled GBP572,000 (2015: GBP683,000).

Liquidity and Going Concern

At the end of the 2016 financial year, Getech held GBP2,788,000 in cash and cash equivalents, and a gross debt of GBP900,000 (2015: GBP4,727,000 in cash and cash equivalents, and a gross debt of GBP1,032,000).

The Group's business activities and the factors likely to affect its future development, performance and position are set out in the Chairman's Statement and the Operating Review. The financial position of the Group, its cash flows and its liquidity position are described in the financial statements.

In making the going concern assessment, the Board of Directors has considered Group budgets and cash flow forecasts. As a result of this review, the Directors consider that the Company and the Group are going concerns and the financial statements are prepared on that basis.

Andrew Darbyshire

Finance Manager

(1) Cost base is measured as cost of sales, administrative costs and development costs capitalised, less depreciation and amortisation, and adjusted for movement in work in progress, foreign exchange (as this predominantly relates to income for the Group) and fair value adjustments. The 6 weeks of Exprodat's costs were also excluded for comparative purposes.

Consolidated statement of comprehensive income

For the year ended 31 July 2016

 
                                         2016      2015 
                                      GBP'000   GBP'000 
-----------------------------------  --------  -------- 
 Revenue                                7,031     8,639 
 Cost of sales                        (3,503)   (3,002) 
-----------------------------------  --------  -------- 
 Gross profit                           3,528     5,637 
 Administrative costs                 (2,835)   (3,650) 
-----------------------------------  --------  -------- 
 Operating profit                         693     1,987 
 Finance income                             8        14 
 Finance costs                           (30)       (8) 
-----------------------------------  --------  -------- 
 Profit before tax                        671     1,992 
 Income tax (expense)/credit              418     (179) 
-----------------------------------  --------  -------- 
 Profit for the year attributable 
  to owners of the Parent               1,089     1,813 
 Other comprehensive income 
 Items that may be reclassified subsequently 
  to profit or loss: 
 Currency translation differences 

  on translation of foreign 
  operations                              110        20 
-----------------------------------  --------  -------- 
 Total comprehensive income 
  for the year attributable 
  to owners of the Parent               1,199     1,833 
-----------------------------------  --------  -------- 
 Earnings per share 
 Basic earnings per 
  share                                 3.25p     5.77p 
-----------------------------------  --------  -------- 
 Diluted earnings per 
  share                                 3.17p     5.61p 
-----------------------------------  --------  -------- 
 

All activities relate to continuing operations.

Consolidated statement of financial position

As at 31 July 2016

Company registration number 02891368

 
                                     2016      2015 
                                  GBP'000   GBP'000 
-------------------------------  --------  -------- 
 Assets 
 Non-current assets 
 Property, plant and 
  equipment                         2,691     2,853 
 Goodwill                           3,428     3,132 
 Intangible assets                  2,948     2,046 
 Deferred tax assets                  283       160 
-----------------------------    --------  -------- 
                                    9,350     8,190 
-------------------------------  --------  -------- 
 Current assets 
 Inventories                        1,067       292 
 Trade and other receivables        3,372     4,235 
 Current tax assets                   434       118 
 Cash and cash equivalents          2,788     4,727 
-----------------------------    --------  -------- 
                                    7,661     9,371 
-----------------------------------------  -------- 
 Total assets                      17,011    17,561 
-------------------------------  --------  -------- 
 Liabilities 
 Current liabilities 
 Borrowings                           133       266 
 Trade and other payables           3,549     4,628 
 Current tax liabilities               13       395 
-----------------------------    --------  -------- 
                                    3,695     5,289 
-----------------------------------------  -------- 
 Non-current liabilities 
 Borrowings                           767       766 
 Trade and other payables               -       980 
 Deferred tax liabilities             387       319 
-----------------------------    --------  -------- 
                                    1,154     2,065 
-----------------------------------------  -------- 
 Total liabilities                  4,849     7,354 
-------------------------------  --------  -------- 
 Net assets                        12,162    10,207 
-------------------------------  --------  -------- 
 Equity 
 Equity attributable to owners of the Parent 
 Share capital                         94        82 
 Share premium account              3,053     3,037 
 Merger relief reserve              2,407     1,159 
 Share option reserve                 173       155 
 Currency translation reserve         (1)     (111) 
 Retained earnings                  6,435     5,885 
-------------------------------  --------  -------- 
 Total equity                      12,162    10,207 
-------------------------------  --------  -------- 
 

The financial statements were approved by the Board of Directors on 7 November 2016.

Dr Stuart Paton

Director

Consolidated statement of cash flows

For the year ended 31 July 2016

 
                                           2016       2015 
                                        GBP'000    GBP'000 
-------------------------------------  --------  --------- 
 Cash flows from operating activities 
 Profit before tax                          671      1,992 
 Share-based payment charge                  52         59 
 Depreciation and amortisation 
  charges                                   671        367 
 Disposal of fixed assets                   (4)          - 
 Impairment of intangible assets              -        298 
 Fair value adjustments                   (845)      (304) 
 Finance income                             (8)       (13) 
 Finance costs                               30          8 
 Exchange adjustments                      (77)       (59) 
 Increase in inventories                  (775)      (112) 
 Decrease/(increase) in trade 
  and other receivables                   1,491        202 
 Increase/(decrease) in trade 
  and other payables                    (1,164)        483 
-------------------------------------  --------  --------- 
 Cash generated/(used in) from 
  operations                                 41      2,921 
 Income taxes paid                        (326)        456 
-------------------------------------  --------  --------- 
 Net cash generated/(used in) 
  from operating activities               (285)      3,377 
-------------------------------------  --------  --------- 
 Cash flows from investing activities 
 Purchase of property, 
  plant and equipment                      (32)      (259) 
 Proceeds from sale of fixed                 27          - 
  assets 
 Purchase of intangible assets                -      (128) 
 Development costs capitalised            (824)      (977) 
 Acquisition costs, net of 
  cash received                           (240)    (1,130) 
 Interest received                            8         13 
-------------------------------------  --------  --------- 
 Net cash (used in)/generated 
  from investing activities             (1,061)    (2,481) 
-------------------------------------  --------  --------- 
 Cash flows from financing activities 
 Proceeds from issue of share 
  capital                                    16         24 
 New term loan                                -      1,100 
 Repayment of long-term borrowings        (132)       (68) 
 Equity dividends paid                    (572)      (683) 
 Interest paid                             (30)        (8) 
-------------------------------------  --------  --------- 
 Net cash generated from/(used 
  in) financing activities                (718)        365 
-------------------------------------  --------  --------- 
 Net increase/(decrease) in 
  cash and cash equivalents             (2,064)      1,261 
 Cash and cash equivalents 
  at beginning of year                    4,727      3,423 
 Exchange adjustments to cash 
  and cash equivalents at beginning 
  of year                                   125         43 
-------------------------------------  --------  --------- 
 Cash and cash equivalents 
  at end of year                          2,788      4,727 
-------------------------------------  --------  --------- 
 

Consolidated statement of changes in equity

For the year ended 31 July 2016

 
                               Share    Merger     Share      Currency 
                     Share   premium    relief    option   translation   Retained 
                   capital   account   reserve   reserve       reserve   earnings     Total 
                   GBP'000   GBP'000   GBP'000   GBP'000       GBP'000    GBP'000   GBP'000 
--------------------------  --------  --------  --------  ------------  ---------  -------- 
 At 1 August 
  2014                  76     3,013         -       126         (131)      4,726     7,810 
---------------------  ---  --------  --------  --------  ------------  ---------  -------- 
 Dividends               -         -         -         -             -      (684)     (684) 
 Issue of 
  capital 
  under share--based 
  payment 
  options                1        24         -      (30)             -         30        25 
 Share-based 
  payment 
  charge                 -         -         -        59             -          -        59 
 Issue of 
  share capital          5         -     1,159         -             -          -     1,159 
---------------------  ---  --------  --------  --------  ------------  ---------  -------- 
 Transactions 
  with owners            6        24     1,159        29             -      (654)       564 
---------------------  ---  --------  --------  --------  ------------  ---------  -------- 
 Profit for 
  the year               -         -         -         -             -      1,813     1,813 
 Currency 
  translation 
  differences            -         -         -         -            20          -        20 
---------------------  ---  --------  --------  --------  ------------  ---------  -------- 
 Total comprehensive 
  income for 
  the year               -         -         -         -            20      1,813     1,813 
---------------------  ---  --------  --------  --------  ------------  ---------  -------- 
 At 31 July 
  2015                  82     3,037     1,159       155         (111)      5,885    10,207 
---------------------  ---  --------  --------  --------  ------------  ---------  -------- 
 Dividends               -         -         -         -             -      (572)     (572) 
 Issue of 
  capital 
  under share--based 
  payment 
  options                -        16         -      (34)             -         34        16 
 Share-based 
  payment 
  charge                 -         -         -        52             -          -        52 
 Issue of 
  share capital         12         -     1,248         -             -          -     1,260 
---------------------  ---  --------  --------  --------  ------------  ---------  -------- 
 Transactions 
  with owners           12        16     1,248        18             -      (538)       756 
---------------------  ---  --------  --------  --------  ------------  ---------  -------- 
 Profit for 
  the year               -         -         -         -             -      1,089     1,089 
 Currency 
  translation 
  differences            -         -         -         -           110          -       110 
---------------------  ---  --------  --------  --------  ------------  ---------  -------- 
 Total comprehensive 
  income for 
  the year               -         -         -         -           110      1,089     1,199 

---------------------  ---  --------  --------  --------  ------------  ---------  -------- 
 At 31 July 
  2016                  94     3,053     2,407       173           (1)      6,435    12,162 
---------------------  ---  --------  --------  --------  ------------  ---------  -------- 
 

Notes to the consolidated financial statements

For the year ended 31 July 2016

Nature of operations

The principal activity of Getech Group plc and its subsidiary companies Geophysical Exploration Technology Inc., ERCL Limited and Exprodat Consulting 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.

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 and principal place of business 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.

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 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 7 November 2016, is derived from the full Group accounts for the year ended 31 July 2016 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 2016, will be delivered to the Registrar of Companies in due course.

The statutory accounts for the year ended 31 July 2015, 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.

The annual report will be posted to shareholders and available on the web site on 12 November 2016.

Dividends

 
                                   2016      2015 
                                GBP'000   GBP'000 
---------------------------------------  -------- 
 Paid during the year 
 Final dividend in respect of 
  the year ended 31 July 2015 at 
  1.74p per share (2014: 1.76p)     572       534 
 No interim dividend (2015: 0.46p 
  per share)                          -       150 
---------------------------------  ----  -------- 
                                    572       684 
---------------------------------------  -------- 
 Proposed after the year end (not recognised 
  as a liability) 
 No final dividend in respect 
  of the year ended 31 July 2016 
  (2015: 1.74p per share)             -       572 
---------------------------------  ----  -------- 
 

There is no final dividend proposed.

Earnings per share

A 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.

 
                                                2016           2015 
----------------------------------------------------  ------------- 
 Profit attributable to equity          GBP1,089,000   GBP1,813,000 
  holders of the Group 
 Weighted average number of Ordinary 
  Shares in issue                         33,490,000     31,417,000 
 Basic earnings per share                      3.25p          5.77p 
 Diluted earnings per share                    3.17p          5.61p 
-------------------------------------  -------------  ------------- 
 

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 2016 is 884,259 (2015: 918,010).

Notice of Annual General Meeting

The Annual Report and Accounts, and notice convening the Annual General Meeting of the Company will be posted to shareholders on 12 November 2016 and will be available from the Company's website www.getech.com, from that date. The Annual General Meeting of Getech Group plc ("the Company") will be held at Kitson House, Elmete Hall, Elmete Lane, Leeds LS8 2LJ on 13 December 2016 at 12 noon.

This information is provided by RNS

The company news service from the London Stock Exchange

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November 08, 2016 02:00 ET (07:00 GMT)