Getech swings to profit as product revenue drives growth
Getech Group on Tuesday swung to an annual profit with sales increasing as higher product revenue offset a drop in service sales.
The natural resource service provider narrowed its profit before tax to £0.2m in 2018, down from a loss of £0.5m in the year before, as revenue increased by 11% to £8.0m and administrative expenses dropped by 5% to £3.3m.
Product revenues, which accounted for 80% of group sales, grew by 24% to £6.4m.
This more than offset a 23% reduction in services revenue to £1.6m, which the AIM traded company blamed on "challenging" market conditions and a contraction in Geoscience Service income, with Geoscience's activities now improving after restructuring.
Chris Jepps, chief operating officer at Getech, said: "Our Geoscience Services team was relocated to our new London office in Q4 2018, having closed our Henley office. While the market for geoscience services has remained challenging following the period of low and volatile oil prices, we believe this re-organisation has put us back on the road to profitability."
Getech had cash and cash equivalents of £1.4m at the end of the year, down from £2.4m at the same point the year before, with the company attributing the drop to the timing of sales.
A statement from chairman Stuart Paton and chief executive Jonathan Copus said: "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 USD60 per barrel range."
Consequently, the duo added that they consider the conditions and need for upstream investment to have strengthened.
Getech Group's shares were down 3.00% at 29.10p at 1602 BST.