Revenue down 25% for exploration business

Minerals and oil and gas exploration group Getech has said its results for the period ended 31 December 2019 will be below market expectations.

The Leeds-based listed business said negotiations on several substantial transactions overran from December 2019. This means revenue for the 12 months to 31 December is expected to be down 25% and total c£6m (2018: £8m).

Its update adds: “We remain in negotiation on these sales, the value of which had the potential to deliver material 2019 revenue growth. The fact that they did not complete in 2019 however is expected to result in a c£2 million year-on-year fall in revenue.

“Getech’s results for the period ended 31 December 2019 will therefore be below market expectations.

“Lower total costs and continued investment in the drivers of multi-year sales will however limit the year-on-year impact on profitability, and across H2 2019 cash balances rose by £0.6 million.”

Jonathan Copus, Getech CEO, said: “Getech began December 2019 financially ahead year-on-year and with a high-value sales pipeline that was commercially well-advanced. The shortfall in 2019 revenue is therefore disappointing.

“Alongside the growth delivered in 2018, this highlights how Getech’s earnings remain exposed to lumpy transactions, the exact timings of which can be difficult to influence.

“We have begun 2020 with a full and diverse sales pipeline, this benefiting from 2019 sales campaigns in new regions, with new potential customers.”

He added that despite a volatile macroeconomic and commercial backdrop for oil and gas exploration spending, Getech increased its new forward sales by 41%, expanded its order book by 48% and the Group’s cash balance closed the year at c£3.6m (31 December 2018: £1.4m).

Based on early unaudited management accounts, Getech closed another c£2.4m of new forward sales (2018: £1.7m) – a significant portion of which will unwind to revenue in 2020.

Getech’s order book grew to c£3.1m at 31 December 2019 (31 December 2018: £2.1m) And the firm expects to have at least maintained its gross profit margin (2018: 47%) and however forecasts its EBITDA to potentially be down 54%, to between £0.6m and £0.8m (2018: £1.1m).

The company’s audited results for 2019 are due to be released in April 2020.