IP GROUP 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
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