IP : GETECH Group - Final Results for 12 Months Ended 31 December 2018

The Getech Group (AIM; GTC) announces its Final Results for the 12 months ended 31 December 2018.

In this RNS we summarise and discuss Getech's audited financial results for the 12-month accounting period ended 31 December 2018. Having moved our financial year-end to 31 December (from 31 July) Getech's prior audited accounts are for the 17-month period to 31 December 2017 (referred to as AP-2017). To aid analysis, we include unaudited financial comparators for the 12 months ended 31 December 2017 (referred to as FY-2017). The FY-2017 financial comparators have been derived by deducting the five-month period to 31 December 2016 unaudited management accounts from the audited 17-month period to 31 December 2017.

Chairman's and Chief Executive's Review

• Revenue of £8.0m (11% increase on FY-2017) from a leaner and more focused operational base.

• Products deliver a second year of significant growth (FY-2018 24% increase on FY-2017; FY-2017 19% increase on FY-2016) and the Group continued to build recurring revenue.
• Services losses were addressed through a Q4 restructuring of Geoscience Services.
• EBITDA† of £1.3m (32% up on FY-2017 before restructuring costs and FY-2017 write-downs).
• Year-end net cash plus net current receivables of £2.5 million (31 December 2017: £1.9 million); the mix between cash and receivables reflective of the Q4 timing of a significant multi-product sale.
  
• Operational strategy remains to grow investment whilst maintaining capital discipline; the focus being to build staff skills and the practical operational value of our products and services.
• With the sales cycle remaining long we continue to work closely with our customers to address their key needs and consider Getech well positioned to deliver diversified organic growth.
  
• We also look to leverage our sector knowledge and transferrable skills through acquisitions.

Getech provides geoscience and geospatial products and services to companies and governments who use them to de-risk exploration programmes and improve their management of natural resources.

The Group's activities focus on a suite of data, software and information products; the value of which we enhance through services that leverage these products and our geoscience-geospatial skills.

Our product-led strategy targets recurring revenue growth. Our investment programme is shaped by a culture of customer collaboration and a commitment to continuous product and service enhancement. This focus on products and the customer reflects a repositioning of Getech that began in 2016 with the appointment of a new CEO and management team.

Since 2016 we have strengthened our business operationally, commercially and financially. We have expanded investment in our people and products but also lowered like-for-like fixed costs by 31%. This leaves Getech's cash profitability significantly leveraged to growth; fixed costs accounting for c85% of the Group's total annual costs. We have also worked to expand Getech's activities beyond oil and gas exploration; key to diversification have been our geospatial software products and services.

In 2018, crude prices strengthened year-on-year, but price volatility left customer exploration and new business budgets constrained. We managed these budget constraints by working closely with our customers and by maintaining flexibility in our sales conversations, which kept them relevant to our customers' changing needs. Year-on-year this translated to new customers, 11% growth in revenue, 32% growth in profit[1], and an increase in our baseline of forward sales. Underpinning this performance is our central ethos - to continuously enhance the practical operational value of our products and services.

We have entered 2019 with a busy schedule of sales campaigns and we consider Getech to be well positioned to deliver diversified organic growth. With industry costs at a cyclical low, our customers' attitude to capital spending is balanced between spot oil prices, which have rallied since the start of 2019, and longer-dated crude prices, which continue to trade above $60 per barrel range. As such, and against a backcloth of falling reserve replacement, we consider the conditions and need for upstream investment to have strengthened. Balancing this, and as indicated in our Trading Update of 27 March, the lengthening of the sales cycle that emerged in Q4 2018 has persisted into 2019; the Directors believe that customers remain cautious over the early release of their exploration and new business budgets. Getech's 2019 sales campaigns and programme of investment are positioned to unlock these conversations.

The Board and Senior Management are focused on ensuring that Getech's assets and capital work hard for all shareholders. We believe volatile macroeconomic conditions have delayed the sale of our Leeds office and we have assumed that this will not happen before the next balance sheet date, however we remain committed to its disposal. We intend to build Getech through a mix of organic and acquisitional growth, and as the markets into which we sell stabilise, we also see potential to reinstate dividend payments.

On behalf of the Board and Executive we would like to thank Getech's staff for their hard work, creativity and professionalism throughout 2018.

Dr Stuart Paton, Chairman
Dr Jonathan Copus, Chief Executive

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Contact

Getech Group plc

Jonathan Copus, CEO

Tel: [phone]

WH Ireland Limited

Katy Mitchell

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