TIDMGTC
RNS Number : 3210Z
GETECH Group plc
31 August 2018
Getech Group plc
("Getech" or the "Company" and with its subsidiaries the "Getech
Group")
Trading Update: 6 months to 30 June 2018
The Getech Group (AIM; GTC) provides geoscience and geospatial
products and services to companies and governments, which they use
to de-risk exploration programmes and improve their management of
natural resources. In 2017, through a programme of commercial,
operational and cultural change, we refocused Getech's activities
around a suite of data, software and information products; the
value of which we enhance through services that leverage our
products and geoscience-geospatial skills.
This product-led strategy targets growth in high-margin
recurring-revenue opportunities and the evolution of our business
is evident in the scale and structure of the sales closed in H1
2018.
Maiden January to June H1 interim results
Having recently moved our Accounting Reference Date to 31
December, this is Getech's first Trading Update for the 1 January
to 30 June period. As previously noted, the new Reference Date
introduces seasonality to our financial results, H1:H2 revenue
historically being split in a 40:60 ratio. Interim results for the
Getech Group will be published on or around the end of September
2018.
Operational summary
In repositioning Getech we have placed the customer at the heart
of our business. We do this through customer collaboration, a focus
on how we add value, the provision of training and a commitment to
product and service enhancement.
In H1 2018 we expanded the content and functionality of Globe to
include innovative new heat flow and palaeo-surface geology
modules, which draw on our geoscience expertise and graphical
analysis tools, which leverage our software skills. Having moved
Globe to an annual release-cycle, the first of these was completed
on time/on budget in H1 2018 and delivered to customers in July
2018. We upgraded our geospatial software products to include a
range of new customer-focused functionality, and we promoted our
data offering through licensing rounds and integrated product
sales. We are using these products and our geoscience-geospatial
skills to reshape and differentiate our services. In H1 2018 our
Gravity & Magnetic team worked to full capacity and the
Geospatial team won an additional long-term support contract with a
super-major. We also diversified our revenues with contracts in the
environmental, utilities and maritime sectors. As a part of the
roadmap to improving the profitability of our Geoscience Services,
in H1 2018 we strengthened our tendering process and took steps to
consolidate our Henley and London activities into a single London
location.
H1 Revenue and Sales
Having aligned our Information Products with the programme of
continuous improvement already established in Software, in H1 2018
we launched a sales campaign to target new customers and multi-year
subscriptions for both. Early success in this campaign lifted the
total value of sales closed in H1 2018 to GBP4.3 million, a 39%
increase on the total sales closed in H1 2017 (GBP3.1 million).
Given the multi-year nature of many of these sales, revenue
recognition splits them between products and services delivered in
H1 2018 and those that will be delivered in future periods. H1 2018
revenues totalled c. GBP2.9 million (H1 2017: GBP3.1 million) with
the GBP1.4 million balance (H1 2018 total sales closed, less H1
2018 revenue recognised) being the increase in sales of products
and services that will be delivered in future periods. The majority
of these forward sales will be delivered in H2 2018 and FY 2019 and
at 30 June 2018 we had invoiced for c. 50% of the total forward
sales value.
In addition, echoing the lumpy sales pattern that we are working
to dilute through recurring revenue growth, a $0.9 million data
sale negotiated in H1 2018 frustratingly missed the 30 June
period-end. This sale is now closed. With it H1 revenue would have
risen 16% year-on-year and total H1 sales would have risen 69%.
Cost base*
Having lowered our cost base by 32% between 2016 and 2017, in H1
2018 we focused on balancing capital discipline with a continued
programme of product investment. We also strengthened our sales and
project management capabilities. Inclusive of these investments,
our cost base totalled GBP3.5 million (H1 2017: GBP3.7 million) a
c. 4% year-on-year reduction.
Net Cash and Receivables
Net Cash balances at 30 June 2018 totalled GBP1.4 million. This
was higher than at 30 June 2017 (GBP0.8 million). Reflecting the
seasonal H2-weighting of Getech's revenue, Net Cash was lower than
at 31 December 2017 (GBP1.8 million). However, with the rate of
sales ramping up through H1 2018 and c. 50% of forward sales yet to
be invoiced at 30 June 2018, receivables grew to GBP2.5 million (31
December 2017: GBP2.1 million). As such, net cash plus receivables
was flat across the period.
Jonathan Copus, Getech CEO, commented:
"We continue to work in a volatile investment environment,
targeting customer budgets set 12 months or more previous. It is
therefore encouraging to have expanded H1 sales, particularly since
this has been driven by a significant and growing number of our
customers signing-up to multi-year sales agreements. These
commitments speak to the practical value that our customers find in
our product and service offering, which in turn strengthens
Getech's pipeline of recurring revenue."
* Cost base is measured as: cost of sales, administrative costs
and development costs capitalised, less depreciation and
amortisation, and adjusted for movement in inventories, foreign
exchange and non-cash provisions. These are Getech's cash
costs.
The information contained within this announcement is deemed by
the Company to constitute inside information stipulated under the
Market Abuse Regulation (EU) No. 596/2014. Upon the publication of
this announcement via the Regulatory Information Service, this
inside information is now considered to be in the public
domain.
Getech Group plc Tel: 0113 322 2200
Jonathan Copus, Chief Executive
WH Ireland Limited (NOMAD & Broker) Tel: 0161 832 2174
Katy Mitchell
James Sinclair-Ford
Notes to Editors:
The Getech Group provides the expertise, support and knowledge
that companies and governments need to better discover, develop and
manage natural resources. Our data-rich products, geospatial
solutions and government advisory services help our customers to
achieve their business goals of risk-management, cost control,
operational excellence, regulatory compliance and environmental
responsibility.
For more information, please visit our website at
www.getech.com.
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
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