More annual reports from Globe Trade Centre:
2023 ReportGetech Group plc Annual Report and Accounts 2014 G e t e c h G r o u p p l c A n n u a l R e p o r t a n d A c c o u n t s 2 0 1 4 Annual Report and Accounts 2014 Getech Group plc Leaders in the world of natural resource location Getech is a leading petroleum and minerals consultancy, best known historically for its unique global gravity and magnetic data holdings and more recently for the addition of its flagship “Globe” framework. Driven by an entrepreneurial vision our company provides a suite of exploration tools ranging from data through to intelligent interpretations and insights which are derived from an extensive range of data‑sets by our multidisciplinary teams of talented geoscientists. STRATEGIC REPORT 01 Chairman’s statement 03 Operating review 06 Principal risks and uncertainties CORPORATE GOVERNANCE 08 Directors and advisors 10 Corporate governance report 11 Report of the Directors 12 Directors’ responsibilities Independent auditor’s report FINANCIAL STATEMENTS 13 14 Consolidated statement of comprehensive income 15 Consolidated statement of financial position 16 Consolidated statement of cash flows 17 Consolidated statement of changes in equity 18 Notes to the consolidated financial statements 44 Parent Company balance sheet – prepared under UK GAAP Notes to the Parent Company financial statements – prepared under UK GAAP 51 Notice of Annual General Meeting 45 Scan with your QR code reader to learn more about Getech or visit www.getech.com Getech Group plc Annual Report and Accounts 2014 01 Strategic report Chairman’s statement I am pleased to make my fourth report as Chairman of Getech Group plc and its subsidiary company (“Getech” or “the Group”), for the year ended 31 July 2014. Getech is a geoscience services business specialising in the provision of data, studies and services to the oil, gas and mining exploration sectors. Results I report a Group profit before tax of £1,000,816 (2013: £2,246,496) after interest receivable of £32,914 (2013: £30,897) on revenue of £6,592,798 (2013: £8,011,250). The post-tax profit was £1,575,228 (2013: £1,634,612), giving earnings per share of 5.21p (2013: earnings per share 5.57p). The post-tax profit was positively impacted by UK R&D tax credits. Dividends Getech intends to continue its progressive dividend policy as appropriate and is proposing a final dividend of 1.76p per share in respect of the year to 31 July 2014 (2013: 1.60p per share) in addition to the interim dividend of 0.44p per share announced in April 2014. The final dividend will be paid on 18 December to shareholders on the register of members on 21 November. Business review The financial year 2013–14 was a much more challenging operating environment for the business than the previous two years. There was significantly lower capital expenditure in the upstream sector, due largely to uncertainty about the global economy and hence downward pressure on the oil price, and the cyclical reassessment of expenditure following a number of strong years with cost growth. This reduction appears to have particularly impacted on exploration expenditure, much of which is discretionary and can be cut back without having immediate impact on production and hence earnings. In addition, the last year has been disappointing generally for international exploration with a number of key wells, in new plays, being unsuccessful, which has led to companies reconsidering their exploration expenditure. These trends significantly impacted on Getech’s earnings in the first nine months of 2013–14 in particular. The last quarter of the financial year showed a much stronger environment, with companies committing to expenditure with Getech and consequent impact on the sales pipeline and Dr Stuart Paton Non-executive Chairman Highlights of the Chairman’s Statement • Revenue for the year of £6,593k, generating a profit before tax of £1,001k and profit after tax of £1,575k • Proposed final dividend for the year ended 31 July 2014 of 1.76p (up 10% on the final dividend for the year ended July 2013 of 1.60p); full-year dividend for the year ended 31 July 2014 of 2.20p (2013: 2.00p) • Cash level of £3,422,594 at 31 July 2014 • Difficult year for the industry as a whole but very strong last quarter performance 02 Strategic report Annual Report and Accounts 2014 Getech Group plc Chairman’s statement continued “ 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. With the increased number of clients the annual Globe workshops in Leeds and Houston have become a major event in the year.” Business review continued signed contracts. On 11 June 2014, the Company announced a US$2m contract for a range of products, followed by two contracts worth US$600k and US$500k for US domestic data. The Company also announced that it had secured six clients for its innovative multi-satellite gravity project with income in excess of £1m. These contracts underpinned a strong final quarter for Getech. They demonstrate that Getech’s technical capabilities are still valued by the industry and that the Company offers key insights as part of the exploration process. Outlook Two interlinked factors will impact on Getech’s business in the current year and for the near future. There appears to be increasing concern about the growth prospects for the global economy, largely due to concerns about China. This is already having an impact on oil prices, which have softened significantly in the last few months. Given the pullback in exploration spending in 2014, we believe expenditure will not reach the previous high points of 2012 in the near future. We have, however, seen a strong start to the current financial year with a number of large contracts already secured. There are four areas where we believe we have a strong foundation for growing the business in the short to medium term: First, our Globe framework, which entered its second phase in August 2014, has seen continued support from the larger exploration and production companies. They clearly see the value of Getech’s support in improving their exploration performance. 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. With the increased number of clients the annual Globe workshops in Leeds and Houston have become a major event in the year. Second, we have seen increased demand for proprietary projects. This is partly as a result of the Globe framework, but also increased interest from national oil companies (NOC), as most obviously witnessed by our largest ever contract of US$5m with Sonangol announced on 8 September. We are extremely pleased that we have continued our strong working relationship with Sonangol and hope that this will lead to further large contracts with other NOCs. The Globe framework also allows us to deal with a wider range of companies at geographical scales that are considerably smaller than previously and this will be a major focus of attention in the coming year. Third, we have seen continuing sales of our gravity and magnetic data-sets, particularly in the US where exploration spend continues to be very strong. Finally, our strong knowledge base and financial robustness allow us to look at new opportunities. We are in the process of developing new business streams, which build on our key strengths and which we hope will be major revenue generators in the medium term. We are also actively looking at acquisition opportunities, which will extend and grow our core areas of expertise. I would like to say how pleased I am to continue to be involved with the Company and to thank the staff and my fellow Directors for all their hard work and dedication. Dr Stuart Paton Non-executive Chairman Getech Group plc Annual Report and Accounts 2014 03 Strategic report Operating review I report that in our ninth year as a public quoted company, Getech returned a pre-tax profit of £1,000,816 (2013: £2,246,496) for the year ended 31 July 2014. Business setting The exploration market in the oil and gas sector went through a difficult period during the year. Poor exploration success combined with increasing seismic and well costs generated a cautious environment and expenditure on exploration in general was reduced. Many of the exploration service companies and consultancies suffered as a result. Getech could not avoid this effect, although its increased resilience due to the Globe sponsorship and a number of longer-term projects reduced the short-term impact. As we had signalled, towards the end of the period our very strong sales pipeline started to crystallise into sales, and June and July were exceptional months for new contracts. Although the oil price weakened towards the end of the period, this did not have an obvious impact on sales and the level of interest in our products. Business activities In July 2014, Getech completed the first three year programme of Globe build, with ten major international companies as committed sponsors. Globe as a product has demonstrated that it provides explorationists with a tool that they can use for exploration at a range of scales: from global new ventures through to supporting basin-scale risk reduction. Our Commissions division, which handles all proprietary work, continued to strengthen and grew significantly during the year. Revenue in the year showed growth of more than 100% on the previous year, reflecting our strategic focus and support for this part of the business. We continued to develop our reputation as a provider of leading-edge solutions and in July announced that our multi-satellite project, which is a global roll-out of the Cryosat R&D pilot project, had achieved funding in excess of £1m to cover a three year programme to June 2017. This project combines the gravity data from several satellites in a way that generates higher resolution results than otherwise available, thereby increasing the value of the data for exploration purposes. The performance of our US gravity data business during the year was exceptional. In June and July we announced two sales out of our upgraded data-set with aggregate value of US$1.1m. We believe that this resulted from a combination of the major upgrade to the data-set that we had completed the previous year, and an increased interest in North America as an exploration target. Raymond Wolfson Chief Executive Officer Highlights of the Operating Review • Revenue and cash held up well in a difficult market due to increased forward commitments through Globe sponsorships, proprietary contracts, and long-term multi-client R&D projects • Revenue of £6,592,798 (down 18% from £8,011,250) and profits of £1,000,816 (down 55% from £2,246,496) • Successful completion of the first three year build period of Globe • Commissions division revenue more than doubled in the year • Major sales (US$1.1m from two contracts alone) out of the upgraded US domestic gravity data-set • Backdated claim for R&D tax relief boosts profits after tax to £1,575,228, giving earnings per share of 5.21p 04 Strategic report Annual Report and Accounts 2014 Getech Group plc Operating review continued The Group has had a strong end to the financial year with several new contracts signed. Going forward, we are well placed for growth and are seeing the results of investment in leading‑edge technology. New contract wins Largest ever new contract – US$5m This new proprietary services contract has a gross value of US$5m and will be undertaken by the Company’s Commissions division. The contract was awarded by the Angolan National Oil Company, Sonangol, which has responsibility for overseeing and managing the oil and gas exploration and production in the Republic of Angola. New contract worth US$2m The Company is pleased to announce that it has signed a major contract with a leading US oil and gas independent valued at US$2m. This contract includes: • renewal of the Globe subscription, which will cover the second period of Globe from July 2014 to July 2017; • a long-term licence for regional high resolution gravity and magnetic data; and • subscription to our global depth to basement project which started in April 2014 and is planned to complete in Q4 2015. New contract worth US$600k The Company is also pleased to announce that, as anticipated, it has signed a contract for delivery from its recently upgraded US gravity data-set at a price of US$600k. The data is for immediate delivery and all the income will be recognised in the current financial year. Multi-satellite project funding now exceeds £1m New contract worth US$500k Further contract for delivery of its US gravity data-set at a price of US$500k. Business activities continued While the year started slowly in terms of major contracts, it ended very strongly. In June, the Directors determined that it was necessary to give the market a profit warning, but in view of the strength of the sales pipeline, we signalled in the same announcement that we anticipated a significant flow of new contracts in the near future. Following the profit warning, we made the following announcements: • in June, we announced a new contract worth US$2m including the second three year Globe Programme, high resolution data-sets and subscription to our three year Global depth to basement project; • in June, we also announced a major new sale from our upgraded US gravity data-set valued at US$600k; • in July, we announced a further major sale from our upgraded US gravity data-set worth US$500k; and • in July, we announced that funding for our three year multi-satellite project had then exceeded £1m. Staff and corporate identity We continue to regard our staff as the key to our future. During the year we added a number of new features to continue to make working at Getech a satisfying and exciting career. In September 2013, we instituted a private health scheme, which has been very well received and is, we believe, a significant factor in helping us attract new staff in a difficult market. Many of our staff are involved in charitable activities outside work, and we have set up an internal charity committee which makes regular donations to charities as a result of funds raised from Getech staff through various activities. We also set up a social committee which had, by the start of October 2014, organised two highly successful events. Both the charity and the social committees have contributed in a significant way to building a strong Getech team ethos. We continued to build on the new brand architecture that we introduced in 2012. This is now well established and the imagery and brand design are easily recognised in all our external materials, ranging from exhibition stands through marketing collateral to products as delivered to clients. Getech Group plc Annual Report and Accounts 2014 05 Strategic report “ The first Globe Programme developed a product which was primarily of interest to global new ventures teams. During the next period we will extend Globe as a flexible and robust data framework that is capable of meeting the needs of a much broader community of clients.” The future The first Globe Programme developed a product which was primarily of interest to global new ventures teams. During the next period we will extend Globe as a flexible and robust data framework that is capable of meeting the needs of a much broader community of clients. The second three year period of build for the Globe framework started in July 2014. Five sponsors have already committed to the core data-layers and discussions with others are ongoing. In this second period the Globe framework will be upgraded to increase its resolution, within a structure that can be easily delivered to clients in several forms: as a global set of core deliverables; as regional deliverables; or in bespoke parts which can be at any scale and contain any constituent “data-layers” extracted from the overall framework. This will make it attractive to a wider range of clients, of all sizes, operating in all regions of the world and at smaller scales. The full Globe framework comprises many “data-layers”, some of which are delivered as part of the core Globe sponsorship, some of which are only available as additional products. It provides a springboard for the efficient development of new, more focused, regional reports and provides an added-value starting point for new proprietary contracts. Globe is therefore a major asset from which value will be derived in a number of different ways and through a number of different delivery mechanisms. Our strategy for the Commissions division started to show success in the year just completed by doubling its income year on year. This strategy included an explicit objective to target key clients capable of having a material impact on our performance. In September this part of the strategy achieved its first success when we signed our largest ever contract, with a value of US$5m. This was with the Angolan national oil company, Sonangol, and involves interpretation work on the geological basins in Angola. Such contracts are in line with our corporate strategy to increase the visibility of income by a number of means, one of which is through longer-term proprietary contracts. Finally, the feedback we have been receiving from clients suggests the Company and its products remain very well regarded and that there is a clear intent to include our products in their 2015 budgets. This, combined with the committed income we already have for the coming year, gives us confidence that 2014–15 will be a very much better year. Raymond Wolfson Chief Executive Officer 06 Strategic report Annual Report and Accounts 2014 Getech Group plc Principal risks and uncertainties Internal control and risk management The Board has overall responsibility for the Group’s systems of internal control and for reviewing their effectiveness. The Group maintains systems which are designed to provide reasonable but not absolute assurance against material loss and to manage rather than eliminate risk. The key features of the Group’s systems of internal control are as follows: • management structure with clearly identified responsibilities; • production of timely and comprehensive historical management information; • detailed budgeting and forecasting; • monthly analysis of risks and threats reviewed by the Board at each of its meetings; and • day-to-day hands-on involvement of the Executive Directors. The key financial indicators used by the Directors to monitor the performance of the Group are revenue, operating profit and gross cash. The Directors set out below the principal risks facing the business: Liquidity risk The Group’s cash reserves remained strong during the year. Internal cost levels rose during the year due to the increase in staff numbers but this reflects the increasing workload. The key risk assessment remains in relation to future income levels, although the year has started with a significantly increased level of forward sales commitments. Financial risk The most important components of financial risk are market borrowing interest rate risk, credit risk and currency risk. These are mitigated by regular monitoring of market rates, by the creditworthiness of the customer base and by the policy of matching, as far as possible, the timing of settling invoices where sales and purchases are made in currencies other than pounds sterling. Staff engagement and retention Recruitment and retention of specialist staff are key to the success of the business. The Group aims to ensure that it provides stimulating work in an attractive environment which, together with its employment policies and remuneration packages, is designed to attract and retain the high quality staff who are the basis for its success. Systems and infrastructure The Group is reliant on its IT infrastructure in order to trade. A failure in these systems could have a significant impact on its business. The Group committed to a major investment in new and updated IT infrastructure to improve the availability, resilience and performance. Controls are in place to maintain the integrity and efficiency of its systems, which are regularly backed up, updated and tested. Oil price At current price levels, fluctuations in the oil price are not regarded as presenting a material risk. However, in the event the oil price fell to significantly lower levels, there may be an adverse impact on demand for our products and services. Approval of the Strategic Report: The Strategic Report on pages 1 to 6 was approved by the Board on 3 November 2014. Dr Stuart Paton Director Getech Group plc Annual Report and Accounts 2014 Corporate governance and Financial statements CORPORATE GOVERNANCE 08 Directors and advisors 10 Corporate governance report 11 Report of the Directors 12 Directors’ responsibilities Independent auditor’s report FINANCIAL STATEMENTS 13 14 Consolidated statement of comprehensive income 15 Consolidated statement of financial position 16 Consolidated statement of cash flows 17 Consolidated statement of changes in equity 18 Notes to the consolidated financial statements 44 Parent Company balance sheet – prepared under UK GAAP Notes to the Parent Company financial statements – prepared under UK GAAP 51 Notice of Annual General Meeting 45 08 Corporate governance Annual Report and Accounts 2014 Getech Group plc Directors and advisors Dr Stuart Paton (aged 46) Non-executive Chairman Peter Stephens (aged 59) Non-executive Director Stuart was previously CEO of Dana Petroleum, a FTSE 250 company. Prior to that he was Technical and Commercial Director of Dana. He delivered a number of acquisitions for Dana which was taken over by the Korean National Oil Company. Prior to joining Dana he held a number of roles in Shell. He has a BA in Earth Sciences and a PhD in Geology from Cambridge University. Peter was previously Head of European Equities Sales at Salomon Brothers and Credit Lyonnais. Since 2001 he has been working as a Venture Capitalist. He has an MA in Jurisprudence from Oxford University and qualified as a Barrister in 1978. He is a founding shareholder of Desire Petroleum plc and is a Non-executive Director of Tristel plc, a company quoted on AIM. Dr Paul Markwick (aged 50) Technical Director Raymond Wolfson (aged 60) Chief Executive Officer Paul has a BA in Geology from St. Edmund Hall, Oxford, and a PhD in Geophysical Sciences from the University of Chicago. He worked for two years at BP’s Research Centre in Sunbury on Thames before moving to Chicago, where Paul studied with Professor Fred Ziegler’s oil industry sponsored Palaeogeographic Atlas Project. Paul is also a Research Fellow at the universities of Leeds and Bristol. Raymond has a BA in Physics from Magdalen College, Oxford. He worked for 13 years in BNFL in various management consultancy and commercial roles but with the industry decline in 1988 left to retrain as a Chartered Accountant, qualifying with Ernst and Young in 1991. He then joined the University of Leeds technology transfer company where he worked with and created many technology businesses, acting as Chairman or Non-executive Director for more than 20 companies. Getech Group plc Annual Report and Accounts 2014 09 Corporate governance Registered office Convention House St Mary’s Street Leeds LS9 7DP Nominated advisor and broker WH Ireland Limited Third Floor Royal House 28 Sovereign Street Leeds LS1 4BJ Auditor Grant Thornton UK LLP No. 1 Whitehall Riverside Leeds LS1 4BN Solicitors Walker Morris Kings Court 12 King Street Leeds LS1 2HL Principal bankers National Westminster Bank Plc PO Box 183 8 Park Row Leeds LS1 1QT Registrars Capita Asset Services Northern House Woodsome Park Fenay Bridge Huddersfield HD8 0LA Colin Glass (aged 71) Non-executive Finance Director Dr Alison Fielding (aged 50) Non-executive Director Colin is a Chartered Accountant and a Partner in Winburn Glass Norfolk, Chartered Accountants. He has been a founder Director and shareholder in a number of private and AIM-quoted companies where, as a Non-executive Director, he assisted in their flotation. He is a Non-executive Director of the British Business Bank, a Government-backed financial institution. Alison holds an MBA from Manchester Business School, a PhD in Organic Chemistry and a first class degree in Chemistry from the University of Glasgow. Early in her career she spent five years at McKinsey & Co. and more recently, while at IP Group, has sat on the board of, and advised, several early stage and quoted technology companies. Alison is currently a Director of several other companies. Professor Paul Carey (aged 47) Marketing and Sales Director Paul has a BSc in Geology and a PhD from Queens University Belfast where he lectured until joining Badley Ashton & Associates as a Reservoir Technologist. He was then appointed to the Chair in Petroleum Geology at the University of the Western Cape with academic, commercial and consulting positions. He then joined Fugro Robertson, taking roles including Head of Geochemistry and Head of Global Multi-client Products in Fugro Data Solutions. After a short return to Capetown he joined Getech in 2011. 10 Corporate governance Annual Report and Accounts 2014 Getech Group plc Corporate governance report The Group is committed to high standards of corporate governance, so far as practicable and appropriate for a Group of its size and nature, and as such has given careful consideration to the principles of the UK Corporate Governance Code (“the Code”). The Group does not comply with the Code, However, we have reported on our corporate governance arrangements by drawing upon best practice available, including those aspects of the Code we consider to be relevant. Board structure and meetings During the year, the Board of Directors included four Non‑executive Directors and four Executive Directors up to 20 December 2013, when Professor Derek Fairhead retired, after which there were three Executive Directors. The Non‑executive Directors ensure a balance to the Board by constructively challenging the Executive Directors. The Board met on eight occasions during the year and has met twice since the year end. All Directors attended all the Board meetings during the year with the exception of Peter Stephens and Colin Glass, who each attended seven. The Board is responsible for approving overall strategic, financial and operational matters and for the identification of risks faced by the Group. Board approval is required for certain matters, the more significant of which are: • the Annual Report and Accounts; • the dividend policy; and • acquisitions and alliances policies. The Board delegates certain matters to its principal committees regarding audit and remuneration. Audit Committee The Audit Committee comprises Colin Glass FCA (Chairman), Dr Stuart Paton and Peter Stephens. The Audit Committee deals with various matters on behalf of the Board during the year, the most significant of which are: • to monitor the Group’s internal financial controls and to assess their adequacy; • to review key estimates, judgements and assumptions applied by management in preparing the published financial statements; • to review the annual appointment of an external auditor; • to monitor the safeguards in place to ensure independence and objectivity of the auditor in respect of non‑audit services; and • to review the risks and returns associated with significant new contracts. The Committee receives reports from the Group’s management and from the external auditor relating to the annual and interim accounts and relating to the adequacy of internal financial controls. The Committee also reviews the requirement for an internal audit function and provides recommendations to the Board in this respect. Given the current size and composition of the Group, the Audit Committee is currently of the opinion that an internal audit function is not required, but this will continue to be monitored. The Audit Committee meets each year with the external auditor and on other occasions as necessary. Remuneration Committee The Remuneration Committee comprises Dr Alison Fielding (Chairman), Dr Stuart Paton and Colin Glass. The primary responsibility of the Remuneration Committee is to monitor the performance of the Executive Directors and to make recommendations to the Board in relation to their remuneration and terms of service. The Remuneration Committee meets a minimum of once per year and on other occasions as necessary to discuss and set the remuneration of the Executive Directors. Nomination Committee The Company does not have a formally constituted Nomination Committee. Such matters are dealt with by the Non‑executive Directors and the whole Board as appropriate. Investor relations The Group enters into dialogue with both institutional and private investors at the Annual General Meeting and throughout the year on an ad hoc basis. Such ad hoc communications are dealt with either by the Chief Executive Officer or the Chairman. At the Annual General Meeting, the Chairman presents a review of the results and provides a commentary on current business activity. It is the Directors’ intention that all shareholders will receive 20 working days’ notice of the Annual General Meeting. The Chairmen of the Audit and Remuneration Committees are made available to answer any investor’s questions. The Group publishes its Annual Report and Interim Report, along with other information on its website at www.getech.com. Going concern The Directors are of the view that, having given consideration to various possible outcomes of future performance, together with the current cash reserves and available bank facilities, the Group has adequate resources to continue as a going concern for the foreseeable future. Accordingly, they continue to adopt the going concern basis in preparing the Annual Report and Accounts. Getech Group plc Annual Report and Accounts 2014 11 Corporate governance Report of the Directors The Directors present their report and financial statements for the year ended 31 July 2014. Number of Ordinary Shares % of issued share capital Results and dividends The profit for the year before taxation was £1,000,816 (2013: £2,246,496). The revenue for the year was £6,592,798 (2013: £8,011,250). This result is discussed further in the Chairman’s Statement and the Operating Review. The Directors have considered the trading position of the Group. The market for exploration services was difficult for the first part of the year but picked up strongly towards the end of the year. IP Group plc Professor J D Fairhead Dr C M Green Hargreave Hale Quilter Cheviot Close Asset Management Investec Hargreaves Lansdown University of Leeds 7,413,943 4,393,474 1,797,080 1,250,000 1,225,000 973,976 973,330 971,636 940,426 24.46 14.49 5.93 4.12 4.04 3.21 3.21 3.21 3.10 On the basis of a value in use assessment, the Directors do not believe that there is a permanent impairment in the valuation of the property and land owned by the Parent Company. Corporate governance See separate Corporate Governance Report. The Directors recommend a dividend of 1.76p per share (2013: 1.6p). Directors The Directors of the Parent Company who served during the year were: Professor Paul Carey Professor Derek Fairhead (resigned 20 December 2013) Dr Alison Fielding Colin Glass Dr Paul Markwick Dr Stuart Paton Peter Stephens Raymond Wolfson Substantial shareholders The Parent Company has been notified at 21 October 2014 of the following interests in excess of 3% of its issued Ordinary Share capital. Please see the table opposite. Going concern The Directors have instituted regular reviews of trading and cash flow forecasts and have considered the sensitivity of these forecasts to different assumptions about future income and costs. With the existing cash levels and continued prospects for profitable trading, the Directors are fully satisfied that the Group is a going concern and will be able to continue trading for the foreseeable future. Directors’ indemnity Qualifying third party indemnity provisions (as defined in Section 234 of the Companies Act 2006) are in force for the benefit of Directors. Auditor Grant Thornton UK LLP has expressed its willingness to continue in office as auditor and a resolution to re‑appoint Grant Thornton UK LLP will be proposed at the forthcoming Annual General Meeting. By order of the Board Colin Glass Company Secretary 3 November 2014 12 Corporate governance Annual Report and Accounts 2014 Getech Group plc Directors’ responsibilities In respect of the preparation of the financial statements The Directors are responsible for keeping adequate accounting records that are sufficient to show and explain the Company’s transactions and disclose with reasonable accuracy at any time the financial position of the Company and of the Group and enable them to ensure that the financial statements comply with the Companies Act 2006. They are also responsible for safeguarding the assets of the Company and of the Group and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities. The Directors confirm that: • so far as each Director is aware there is no relevant audit information of which the Company’s auditor is unaware; and • the Directors have taken all steps that they ought to have taken to make themselves aware of any relevant audit information and to establish that the auditor is aware of that information. The Directors are responsible for the maintenance and integrity of the corporate and financial information included on the Group’s website. Legislation in the United Kingdom governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions. The Directors are responsible for preparing the Strategic Report and Annual Report and the financial statements in accordance with applicable law and regulations. Company Law requires the Directors to prepare financial statements for each financial year. Under that law the Directors have elected to prepare consolidated financial statements in accordance with International Financial Reporting Standards (IFRS) as adopted by the European Union and to prepare the Parent Company financial statements under United Kingdom Accounting Standards (United Kingdom Generally Accepted Accounting Practice). Under Company Law, the Directors must not approve the financial statements unless they are satisfied they give a true and fair view of the state of affairs of the Company and of the Group and of the profit or loss of the Company and of the Group for that period. In preparing these financial statements, the Directors are required to: • select suitable accounting policies and then apply them consistently; • make judgements and estimates that are reasonable and prudent; • state whether applicable IFRS have been followed in the consolidated financial statements and UK Accounting Standards have been followed in the Parent Company financial statements, subject to any material departures disclosed and explained in the financial statements; and • prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Company or the Group will continue in business. Getech Group plc Annual Report and Accounts 2014 13 Financial statements Independent auditor’s report To the members of Getech Group plc • the Parent Company financial statements have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice; and • the financial statements have been prepared in accordance with the requirements of the Companies Act 2006. Opinion on other matter prescribed by the Companies Act 2006 In our opinion the information given in the Strategic Report and Report of the Directors for the financial year for which the financial statements are prepared is consistent with the financial statements. Matters on which we are required to report by exception We have nothing to report in respect of the following matters where the Companies Act 2006 requires us to report to you if, in our opinion: • adequate accounting records have not been kept by the Parent Company, or returns adequate for our audit have not been received from branches not visited by us; or • the Parent Company financial statements are not in agreement with the accounting records and returns; or • certain disclosures of Directors’ remuneration specified by law are not made; or • we have not received all the information and explanations we require for our audit. Andrew Wood Senior Statutory Auditor For and on behalf of Grant Thornton UK LLP Statutory Auditor Chartered Accountants Leeds 3 November 2014 We have audited the financial statements of Getech Group plc for the year ended 31 July 2014 which comprise the consolidated statement of comprehensive income, the consolidated statement of financial position and Parent Company balance sheet, the consolidated statement of cash flows, the consolidated statement of changes in equity and the related notes. The financial reporting framework that has been applied in the preparation of the Group financial statements is applicable law and International Financial Reporting Standards (IFRS) as adopted by the European Union. The financial reporting framework that has been applied in the preparation of the Parent Company financial statements is applicable law and United Kingdom Accounting Standards (United Kingdom Generally Accepted Accounting Practice). This report is made solely to the Company’s members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the Company’s members those matters we are required to state to them in an auditor’s report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the Company and the Company’s members as a body, for our audit work, for this report, or for the opinions we have formed. Respective responsibilities of Directors and the auditor As explained more fully in the Directors’ Responsibilities Statement set out on page 12, the Directors are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view. Our responsibility is to audit and express an opinion on the financial statements in accordance with applicable law and International Standards on Auditing (UK and Ireland). Those standards require us to comply with the Auditing Practices Board’s (APB’s) Ethical Standards for Auditors. Scope of the audit of the financial statements A description of the scope of an audit of financial statements is provided on the FRC’s website at www.frc.org.uk/apb/scope/ private.cfm. Opinion on the financial statements In our opinion: • the financial statements give a true and fair view of the state of the Group’s and of the Parent Company’s affairs as at 31 July 2014 and of the Group’s profit for the year then ended; • the Group financial statements have been properly prepared in accordance with IFRS as adopted by the European Union; 14 Financial statements Annual Report and Accounts 2014 Getech Group plc Consolidated statement of comprehensive income For the year ended 31 July 2014 Revenue Cost of sales Gross profit Administrative costs Operating profit Finance income Finance costs Profit before tax Income tax credit/(expense) Profit for the year attributable to owners of the Parent Other comprehensive income Items that may be reclassified subsequently to profit or loss: Currency translation differences on translation of foreign operations Total comprehensive income for the year attributable to owners of the Parent Earnings per share Basic earnings per share Diluted earnings per share All activities relate to continuing operations. Note 5 6 8 9 10 2014 £ 6,592,798 (2,126,433) 4,466,365 (3,497,841) 968,524 32,914 (622) 1,000,816 574,412 2013 £ 8,011,250 (2,520,500) 5,490,750 (3,269,391) 2,221,359 30,897 (5,760) 2,246,496 (611,884) 1,575,228 1,634,612 (95,030) (38,539) 1,480,198 1,596,073 12 12 5.21p 4.95p 5.57p 5.30p The accompanying notes on pages 18 to 43 form an integral part of these financial statements. Getech Group plc Annual Report and Accounts 2014 15 Financial statements Consolidated statement of financial position As at 31 July 2014 Company registration number: 2891368 Assets Non-current assets Property, plant and equipment Intangible assets Deferred tax assets Current assets Inventories Trade and other receivables Other financial assets Current tax assets Cash and cash equivalents Total assets Liabilities Current liabilities Borrowings Trade and other payables Current tax liabilities Non-current liabilities Trade and other payables Deferred tax liabilities Total liabilities Net assets Equity Equity attributable to owners of the Parent Share capital Share premium account Capital redemption reserve Share option reserve Currency translation reserve Retained earnings Total equity Note 2014 £ 2013 £ 13 14 10 5 15 16 17 18 19 19 10 22 2,747,916 513,476 311,644 2,752,597 616,257 128,543 3,573,036 3,497,397 180,092 2,850,538 — 812,767 3,422,594 166,000 2,123,384 500,000 138,885 4,357,927 7,265,991 7,286,196 10,839,027 10,783,593 — 2,707,710 — 119,048 3,524,420 108,932 2,707,710 3,752,400 — 321,452 321,452 16,338 110,175 126,513 3,029,162 3,878,913 7,809,865 6,904,680 75,790 3,012,960 6 125,948 (130,757) 4,725,918 75,319 2,993,092 6 122,717 (35,727) 3,749,273 7,809,865 6,904,680 The financial statements on pages 14 to 43 were approved by the Board of Directors on 3 November 2014. Dr Stuart Paton Director The accompanying notes on pages 18 to 43 form an integral part of these financial statements. 16 Financial statements Annual Report and Accounts 2014 Getech Group plc Consolidated statement of cash flows For the year ended 31 July 2014 Cash flows from operating activities Profit before tax Share‑based payment charge Depreciation and amortisation charges Finance income Finance costs Exchange adjustments Increase in inventories (Increase)/decrease in trade and other receivables (Decrease)/increase in trade and other payables Cash (used in)/generated from operations Income taxes paid Note 2014 £ 2013 £ 13/14 1,000,816 21,186 239,704 (32,914) 622 44,686 (14,092) (727,154) (833,048) (300,194) (180,226) 2,246,496 22,574 213,592 (30,897) 5,760 (77,058) (106,000) 839,544 208,761 3,322,772 (851,036) Net cash (used in)/generated from operating activities (480,420) 2,471,736 Cash flows from investing activities Purchase of property, plant and equipment Development costs capitalised Funds transferred into fixed term deposits Interest received Net cash generated from/(used in) investing activities Cash flows from financing activities Proceeds from issue of share capital Repayment of long‑term borrowings Equity dividends paid Interest paid Net cash used in financing activities Net (decrease)/increase in cash and cash equivalents Cash and cash equivalents at beginning of year Exchange adjustments to cash and cash equivalents at beginning of year 13 14 11 (106,897) (82,867) 500,000 32,914 (190,463) — (500,000) 30,897 343,150 (659,566) 20,339 (119,048) (616,538) (622) (715,869) (853,139) 4,357,927 (82,194) 153,780 (285,714) (351,668) (5,760) (489,362) 1,322,808 3,010,782 24,337 Cash and cash equivalents at end of year 18 3,422,594 4,357,927 The accompanying notes on pages 18 to 43 form an integral part of these financial statements. Getech Group plc Annual Report and Accounts 2014 17 Financial statements Consolidated statement of changes in equity For the year ended 31 July 2014 Share capital £ Share premium account £ Capital redemption reserve £ Share option reserve £ Currency translation reserve £ Retained earnings £ Total £ At 1 August 2012 Dividends Issue of capital under share‑based payment options Share‑based payment charge Transactions with owners Profit for the year Other comprehensive income Currency translation differences Total comprehensive income for the year 73,093 2,841,538 — — 2,226 — 2,226 151,554 — 151,554 — — — — — — At 31 July 2013 75,319 2,993,092 Dividends Issue of capital under share‑based payment options Share‑based payment charge Transactions with owners Profit for the year Other comprehensive income Currency translation differences Total comprehensive income for the year — 471 — 471 — — — — 19,868 — 19,868 — — — At 31 July 2014 75,790 3,012,960 6 — — — — — — — 6 — — — — — — — 6 188,502 2,812 2,377,970 5,483,921 — — (351,668) (351,668) (88,359) 22,574 (65,785) — — — 88,359 — 153,780 22,574 (263,309) (175,314) — — 1,634,612 1,634,612 — (38,539) — (38,539) — (38,539) 1,634,612 1,596,073 122,717 (35,727) 3,749,273 6,904,680 — — (616,538) (616,538) (17,955) 21,186 3,231 — — — 17,955 — 20,339 21,186 (598,583) (575,013) — — 1,575,228 1,575,228 — (95,030) — (95,030) — (95,030) 1,575,228 1,480,198 125,948 (130,757) 4,725,918 7,809,865 18 Financial statements Annual Report and Accounts 2014 Getech Group plc Notes to the consolidated financial statements For the year ended 31 July 2014 1 Nature of operations The principal activity of Getech Group plc and its subsidiary company Geophysical Exploration Technology Inc. (collectively “Getech” or “the Group”) is the provision of gravity and magnetic data, services and geological studies to the petroleum and mining industries to assist in their exploration activities. 2 General information Getech Group plc is the Group’s ultimate Parent Company (“the Parent Company”). It is incorporated in England and Wales and domiciled in England (CRN: 2891368). The address of its registered office is Convention House, St Mary’s Street, Leeds LS9 7DP. Its principal place of business is Kitson House, Elmete Hall, Elmete Lane, Leeds LS8 2LJ. Getech Group plc shares are admitted to trading on the London Stock Exchange’s AIM. 3 Basis of preparation These consolidated financial statements (“the financial statements”) have been prepared in accordance with International Financial Reporting Standards (IFRS) in issue as adopted by the European Union. IFRS include interpretations issued by the International Financial Reporting Interpretations Committee (IFRIC). The financial statements have been prepared under the historical cost convention except in relation to financial instruments held at fair value through profit or loss. The accounting policies set out below have been applied consistently throughout the Group for the purpose of preparation of the financial statements. The Parent Company financial statements have been prepared using United Kingdom Accounting Standards (United Kingdom Generally Accepted Accounting Practice) and are on pages 44 to 50. The Directors have instituted regular reviews of trading and cash flow forecasts and have considered the sensitivity of these forecasts to different assumptions about future income and costs. With the sound cash levels and continued prospects for profitable trading, the Directors are fully satisfied that the Group is a going concern and will be able to continue trading for the foreseeable future. 4 Summary of accounting policies 4.1 Basis of consolidation The Group financial statements consolidate those of the Parent Company and of its subsidiary undertaking drawn up to 31 July 2014. A subsidiary is an entity controlled by the Group. Control is achieved where the Group has the power to govern the financial and operating policies of an entity so as to obtain benefits from its activities. All intra‑group transactions, balances, income and expenses are eliminated on consolidation. Amounts reported in the financial statements of subsidiaries have been adjusted where necessary to ensure consistency with the accounting policies adopted by the Group. Getech Group plc Annual Report and Accounts 2014 19 Financial statements 4 Summary of accounting policies continued 4.2 Revenue Revenue is measured by reference to the fair value of consideration received or receivable by the Group for goods and services provided, excluding VAT and comparable overseas taxes. Revenue from goods and services falls into the three categories below. Proprietary reports and commissions In respect of contracts which are long term in nature and contracts for proprietary reports and other commissions, revenue is recognised according to the value of work done in the period. Revenue in respect of such contracts is calculated on the basis of time spent on the project and estimated work to completion. Where the outcome of contracts cannot be estimated reliably or anticipated revenue is less than the anticipated costs, revenue is recognised only to the extent of the expenses recognised that are recoverable. Multi-client studies For sales of data and completed project studies, revenue is recognised when the transfer of risk and reward is made to the customer, on dispatch unless otherwise agreed. Multi-element contracts Where contracts for multiple element products with staged deliverables, such as Globe and Multi‑Sat, involve delivery of several different elements which are not fully delivered or performed by the year end, revenue is recognised based on the proportion of the fair value of the elements delivered to the fair value of the respective overall contracts. Where the outcome of contracts that are long term in nature and contracts for ongoing deliverables cannot be estimated reliably, revenue is recognised only to the extent of the expenses recognised that are recoverable. Revenue from multiple element contracts is recognised after separating the contract income as follows: • completed project elements and specific studies that are immediately deliverable: revenue is recognised when the transfer of risk and reward is made to the customer, on dispatch unless otherwise agreed; • specific studies that are to be completed in the future: revenue is recognised in line with the accounting treatment for “proprietary reports and commissions”; and • project elements that are to be delivered from development work that is yet to be completed: revenue is recognised when the transfer of risk and rewards is made to the customer, on dispatch unless otherwise agreed. 20 Financial statements Annual Report and Accounts 2014 Getech Group plc 4 Summary of accounting policies continued 4.3 Inventories Costs associated with contracts that are long term in nature are included in inventories to the extent that they cannot be matched with contract work accounted for as revenue. Amounts included in work in progress are stated at cost, including absorption of relevant overheads, after provision has been made for any foreseeable losses and the deduction of applicable payments on account. Full provision is made for losses on all contracts in the year in which the loss is first foreseen. In assessing the costs associated with deliverables that are long term in nature the following assumptions and estimates are made: • at the commencement of each deliverable an assumption is made concerning the likely revenue from potential sales of that project. Regular impairment reviews reconsider whether that revenue remains achievable; and • costs are carried forward only to the extent that they do not exceed estimates of the recoverable amounts. There is no inventory other than in relation to contracts that are long term in nature. 4.4 Foreign currency translation The Group’s financial statements are presented in pounds sterling which is also the functional currency of the Parent Company. Where supplies are obtained or sales made on terms denominated in foreign currency, such transactions are translated into the functional currency using the exchange rates prevailing at the dates of the transactions. Monetary assets and liabilities denominated in foreign currencies are translated at the rate of exchange ruling at the end of the reporting period. Exchange gains or losses arising on the settlement of monetary items, or the translation of monetary items, are included in profit or loss from operations. The assets and liabilities of the Group’s overseas subsidiary undertaking are translated using exchange rates prevailing at the end of the reporting period. Translation differences in respect of the assets and liabilities of the foreign subsidiary are accounted for in the Group’s currency translation reserve within equity. Income and expenses of this undertaking are translated at the exchange rates for the period which approximate to the actual rates on transaction dates. Exchange differences arising, if any, are recognised in other comprehensive income and the Group’s currency translation reserve. 4.5 Employee benefits Pension schemes The Group operates defined contribution pension schemes. The assets of the schemes are held separately from the Group in an independently administered fund. The pension charge represents contributions payable by the Group to the schemes. Share options Where share options are granted a charge is made to profit or loss and a reserve created to record the fair value of the awards in accordance with IFRS 2 ‘Share‑based Payment’. A charge is recognised in profit or loss in relation to share options granted based on the fair value (the economic value) of the grant, measured at the grant date. The charge is spread over the vesting period. The valuation methodology takes into account assumptions and estimates of share price volatility, future risk‑free interest rate and exercise behaviour and is based on the Black Scholes method. When share options are exercised there is a transfer from the share option reserve to retained earnings. At the end of each reporting period the Group revises its estimate of the number of share options that are expected to vest taking into account those which have lapsed or been cancelled. It recognises the impact of the revision to original estimates, if any, in profit or loss, with a corresponding adjustment to share option reserve. If the terms and conditions of share options are modified before they vest, the change in the fair value of the share options, measured immediately before and after the modification, is charged to profit or loss over the remaining vesting period. Notes to the consolidated financial statements continuedFor the year ended 31 July 2014 Getech Group plc Annual Report and Accounts 2014 21 Financial statements 4 Summary of accounting policies continued 4.6 Research Research expenditure is charged to profit or loss of the period in which it is incurred. 4.7 Lease contracts Operating leases exist where the lessee of a leased asset does not substantially bear all the risks and rewards relating to the ownership of the asset. Economic ownership of the leased asset is not transferred to the lessee. Payments made under operating leases are charged to profit or loss on a straight line basis over the lease term. 4.8 Property, plant and equipment Property, plant and equipment are carried at acquisition cost, net of depreciation and any provision for impairment. Depreciation is calculated to write down the cost less estimated residual value of all property, plant and equipment by equal instalments over their estimated useful economic lives at the following rates: Freehold property Plant and equipment – – 2% per annum on cost 33.3% and 25% per annum on cost Material residual value and useful life estimates are updated as required but at least annually. Freehold land is carried at acquisition cost. As no finite useful life for land can be determined, related carrying amounts are not depreciated. 4.9 Intangible assets Expenditure on development activities is capitalised if the product or process meets the recognition criteria for development expenditure as set out in IAS 38 ‘Intangible Assets’. The expenditure capitalised includes all directly attributable costs, from the date which the intangible asset meets the recognition criteria, necessary to create, produce and prepare the asset to be capable of operating in the manner intended by management. Development expenditure is identified as being capital in nature if the costs can be measured reliably, the product is technically and commercially feasible, future economic benefits are probable and the Group intends to and has sufficient resources to complete development and to use or sell the asset. Other development expenditure not meeting these criteria is recognised in profit or loss as incurred. Capitalised development expenditure is stated at cost less accumulated amortisation (see below) and impairment losses, once the asset is ready for use. Intangible assets not yet ready for use are tested for impairment annually. Other intangible assets include acquired data holdings that qualify for recognition as intangible assets in a business combination. They are accounted for using the cost model whereby capitalised costs are amortised on a straight line basis over their estimated useful lives, as these assets have finite useful economic lives. Residual values and useful lives are reviewed at each reporting date. In addition, intangible assets are subject to annual impairment review when there is an indication of impairment. The following useful lives are applied: Data holdings Development costs – – ten years ten years Amortisation is included within “Administrative costs”. 22 Financial statements Annual Report and Accounts 2014 Getech Group plc 4 Summary of accounting policies continued 4.10 Financial assets Financial assets are assigned to different categories by management on initial recognition, depending on the purpose for which they were acquired. All financial assets are recognised when the Group becomes a party to the contractual provisions of the instrument. Financial assets comprise the following categories: Loans and receivables Loans and receivables are non‑derivative financial assets with fixed or determinable payments that are not quoted in an active market. Trade and other receivables, cash and cash equivalents and other financial assets are classified as loans and receivables. Loans and receivables are measured initially at fair value plus transaction costs and subsequently at amortised cost using the effective interest rate method, less provision for impairment. Any change in their value through impairment or reversal of impairment is recognised in profit or loss. Provision against trade receivables is made when there is objective evidence that the Group will not be able to collect all amounts due under the original terms of those receivables. The amount of the write down is determined as the difference between the asset’s carrying value and the present value of estimated future cash flows. 4.11 Income taxes Current tax is the tax currently payable or receivable based on the taxable profit or loss for the year. Deferred income taxes are calculated using the liability method on temporary differences. Deferred tax is generally provided on the difference between the carrying amounts of assets and liabilities and their tax bases. However, deferred tax is not provided on the initial recognition of goodwill, nor on the initial recognition of an asset or liability unless the related transaction is a business combination or affects tax or accounting profit. Deferred tax on temporary differences associated with shares in subsidiaries is not provided if reversal of these temporary differences can be controlled by the Group and it is probable that reversal will not occur in the foreseeable future. In addition, tax losses available to be carried forward as well as other income tax credits are assessed for recognition as deferred tax assets. Deferred tax assets and liabilities are calculated in full, with no discounting. Deferred tax assets are recognised to the extent that it is probable that the underlying deductible temporary differences will be able to be offset against future taxable income. Current and deferred tax assets and liabilities are calculated at tax rates that are expected to apply to their respective period of realisation, provided they are enacted or substantively enacted at the end of the reporting period. Changes in deferred tax assets or liabilities are recognised as a component of tax expense in profit or loss, except where they relate to items that are charged or credited directly to equity in which case the related deferred tax is also charged or credited directly to equity, or where they relate to items of other comprehensive income in which case they are recognised in other comprehensive income. 4.12 Cash and cash equivalents Cash and cash equivalents comprise cash in hand and demand deposits. 4.13 Equity Equity comprises the following: • “share capital” represents the nominal value of equity shares; • “share premium account” represents the excess over nominal value of the fair value of consideration received for equity shares, net of expenses of the share issue; • “capital redemption reserve” represents the nominal value of equity shares redeemed; • “share option reserve” represents the fair value of share options in accordance with IFRS 2 ‘Share‑based Payment’; • “currency translation reserve” represents the value of exchange differences in translating the assets and liabilities of the foreign subsidiary; and • “retained earnings” represents retained profits. Notes to the consolidated financial statements continuedFor the year ended 31 July 2014 Getech Group plc Annual Report and Accounts 2014 23 Financial statements 4 Summary of accounting policies continued 4.14 Dividends Dividend distributions payable to equity shareholders are included in “Other short‑term financial liabilities” when dividends are approved in general meetings prior to the end of the reporting period. 4.15 Financial liabilities Financial liabilities are obligations to pay cash or other financial assets and are recognised when the Group becomes a party to the contractual provisions of the instrument. Financial liabilities categorised as at fair value through profit or loss are recorded initially at fair value and all transaction costs are recognised immediately in the profit or loss. All other financial liabilities are recorded initially at fair value, net of direct issue costs. Financial liabilities categorised as at fair value through profit or loss are re‑measured at each reporting date at fair value, with changes in fair value being recognised in profit or loss. All other financial liabilities are recorded at amortised cost using the effective interest method, with interest‑related charges recognised as an expense in finance costs in profit or loss. Finance charges, including premiums payable on settlement or redemption and direct issue costs, are charged to the profit or loss on an accruals basis using the effective interest method and are added to the carrying amount of the instrument to the extent that they are not settled in the period in which they arise. Financial liabilities are categorised as at fair value through profit or loss where they are designated as at fair value through profit or loss on initial recognition. Deferred consideration on acquisitions of assets, which is contingent on subsequent sales of such assets, is treated as financial liabilities at fair value through profit or loss and the value is allocated between current and non‑current liabilities in accordance with best estimates of the timing and amounts expected to fall due. A financial liability is derecognised only when the obligation is extinguished, that is, when the obligation is discharged or cancelled or expires. 4.16 Significant areas of judgement and estimation uncertainty In applying the above accounting policies, management has made appropriate estimates in key areas and the actual outcomes may differ from those calculated. Significant areas of judgement The key sources of judgement at the end of the reporting period are: Recognition of revenue from multiple element contracts It is judged that revenue from ongoing core development work is generated uniformly over the life of the contract. Capitalisation of development costs The capitalisation of development expenditure is dependent on the costs meeting the recognition criteria in accordance with IAS 38 ‘Intangible Assets’. In assessing the criteria, management makes judgements on the level of future economic benefits of the asset flowing to the Company. Management is assisted in making these judgements through the monitoring of sales forecasts and of the level of future cost benefits arising. Significant areas of estimation uncertainty The key sources of estimation uncertainty at the end of the reporting period are: Contracts that are long term in nature and contracts for ongoing services The value of revenue recognised during the year is dependent on estimates of work to completion. 24 Financial statements Annual Report and Accounts 2014 Getech Group plc 4 Summary of accounting policies continued 4.16 Significant areas of judgement and estimation uncertainty continued Significant areas of estimation uncertainty continued Multiple element contracts Management uses estimates in determining the fair value of individual elements of the multiple element contracts in order to appropriately recognise the revenue attributable to each element individually. The value of revenue recognised during the year is also dependent on estimates of work to completion, as with long‑term contracts. Carrying amount of non-current assets Where there is indication of impairment a review of the carrying values of non‑current assets is undertaken as follows: • freehold land and buildings are estimated on the basis of value in use; and • intangible non‑current assets are estimated on the basis of value in use. Share options Share‑based payments are dependent on estimates as to the number of shares which are expected to vest and by using the Black Scholes valuation model, estimates are made in expected volatility, the risk‑free rate and the expected time to exercise. Where appropriate, management uses historical market data as a basis for estimating the fair value of share options on grant. 4.17 Standards and interpretations not yet applied by Getech The following standards and interpretations, which are yet to become mandatory and are expected to be relevant to the financial statements, have not been applied in the 2014 financial statements. Standard or interpretation Effective for reporting periods starting on or after Annual improvements 2012–2014 cycle IFRS 9 ‘Financial Instruments’ IFRS 10 ‘Consolidated Financial Statements’ IAS 32 (amendments) ‘Offsetting Financial Assets and Liabilities’ IAS 36 (amendments) ‘Impairment of Assets’ IFRS 15 ‘Revenue from Contracts with Customers’ * Not yet adopted by the EU. 1 July 2016 1 January 2018* 1 January 2014 1 January 2014 1 January 2014* 1 January 2017 It is anticipated that the adoption of these standards will not have a significant impact on the financial statements of the Group except for additional disclosure and presentational requirements. 5 Segmental reporting 5.1 Products and services from which reportable segments derive their revenues Information reported to the chief operating decision maker for the purposes of resource allocation and assessment of segment performance focuses on the types of goods and services delivered or provided. The Directors of the Company have chosen to organise the Group around differences in products and services. Operating segments with similar characteristics, and where segments are similar in respect of the nature of the products and services, the nature of the production processes and the type of customer and have similar methods of distribution, have been aggregated into a single operating segment. Specifically, the Group’s reportable segments under IFRS 8 are as follows: • multi‑client products; and • proprietary reports. The sources of revenue included in “all other segments” are from the provision of training and other miscellaneous income. Notes to the consolidated financial statements continuedFor the year ended 31 July 2014 Getech Group plc Annual Report and Accounts 2014 25 Financial statements 5 Segmental reporting continued 5.2 Segment revenues and results The following is an analysis of the Group’s revenue and results from continuing operations by reportable segment. Multi‑client products Proprietary projects All other segments 2014 2013 Revenue £ 5,364,630 1,165,969 62,199 Profit £ 2,751,568 614,428 60,726 Revenue £ 7,760,767 240,777 9,705 Profit £ 4,381,037 191,573 9,705 6,592,798 3,426,722 8,011,249 4,582,315 Central administrative costs, Directors’ salaries and depreciation Finance income Currency translation differences on foreign operations Profit before tax (2,509,334) 32,292 51,136 1,000,816 (2,493,765) 25,137 132,809 2,246,496 Segment revenue reported above represents revenue generated from external customers. There were no inter‑segment sales in the current year (2013: £nil). The accounting policies of the reportable segments are the same as in the Group’s accounting policies described in Note 4. Segment profit represents the profit before tax earned by each segment without allocation of central administration costs and Directors’ salaries, finance costs and currency translation differences on foreign operations. This is the measure reported to the chief operating decision maker for the purposes of resource allocation and assessment of segment performance. 5.3 Geographical information The Group’s revenue from continuing operations from external customers by location of operations and information about its non‑current assets by location of assets are detailed below. USA United Kingdom Europe Asia Australasia Africa South/Central America 2014 2013 Revenue £ 3,880,106 288,020 1,073,010 746,804 264,883 259,975 80,000 Non-current assets £ 542,017 3,031,019 — — — — — Revenue £ 4,524,900 178,733 1,225,062 459,653 1,221,103 87,920 313,879 Non‑current assets £ 729,318 2,768,079 — — — — — 6,592,798 3,573,036 8,011,250 3,497,397 Revenue includes £nil (2013: £103,035) in respect of services rendered. Within revenue there are sales to two customers exceeding 10% of turnover. The values of those sales are £814,207 and £705,294 (2013: one, £986,250), all of which are included in the multi‑client operating segment. 26 Financial statements Annual Report and Accounts 2014 Getech Group plc 6 Operating profit The operating profit for the year has been arrived at after charging/(crediting): Cost of inventories recognised as an expense Depreciation of property, plant and equipment Amortisation of intangible assets Remuneration receivable by the Group’s auditor for audit services: – the auditing of the accounts Remuneration receivable by the Group’s auditor for non‑audit services: – interim review Operating leases: – rental costs of land and building Foreign exchange movement Share‑based payments charge Research and development costs expensed as incurred 2014 £ 263,041 110,769 128,935 2013 £ 680,228 77,955 135,637 25,300 24,500 3,800 3,700 22,024 20,183 21,186 953,411 23,945 (132,809) 22,574 1,130,102 The above are included in “Cost of sales” and “Administrative costs” in the consolidated statement of comprehensive income. 7 Directors and employees The employee benefit expenses during the year were as follows: Salaries Social security costs Pension costs Share‑based payment charge The average number employed by the Group, including Executive Directors, was: Directors Administration Technical 2014 £ 2,744,202 283,735 125,949 13,904 2013 £ 2,719,866 281,524 96,962 15,724 3,167,790 3,114,076 2014 Number 2013 Number 4 13 58 75 4 11 55 70 Notes to the consolidated financial statements continuedFor the year ended 31 July 2014 Getech Group plc Annual Report and Accounts 2014 27 Financial statements 7 Directors and employees continued Remuneration in respect of the Directors was as follows: Executive Professor P F Carey Professor J D Fairhead Dr P J Markwick R Wolfson Non-executive Dr A M Fielding1 C Glass2 Dr S M Paton P F H Stephens3 Executive Professor P F Carey Professor J D Fairhead Dr P J Markwick R Wolfson Non-executive Dr A M Fielding1 C Glass2 Dr S M Paton P F H Stephens3 2014 Fees/salary £ Pension contributions £ Benefits in kind £ 79,850 92,573 90,850 117,390 20,225 18,000 28,090 17,600 — — 4,880 5,832 — — — — 228 — 250 481 — — — — Total before share options £ 80,078 92,573 95,980 123,703 20,225 18,000 28,090 17,600 464,578 10,712 959 476,249 2013 Fees/salary £ Pension contributions £ Benefits in kind £ 116,650 102,655 119,265 129,650 18,930 16,960 26,500 17,040 547,650 — — 4,250 5,400 — — — — 9,650 — — — — — — — — — Total before share options £ 116,650 102,655 123,515 135,050 18,930 16,960 26,500 17,040 Share- based payment charge £ 4,905 — 4,905 4,905 — — 6,994 288 21,997 Share‑ based payment charge £ 2,742 — 5,520 6,038 — 24 6,994 319 1 Director’s fees for Dr A M Fielding were paid to IP Group Limited, a company of which she is a Director. 2 Director’s fees for C Glass were paid to Winburn Glass Norfolk, Chartered Accountants, a firm of which he is a partner. 3 Director’s fees for P F H Stephens were paid to Noon and Co. Limited, a company of which he is a Director. Included above is £50,085 paid to Professor J D Fairhead as compensation for loss of office (2013: £nil). Pension contributions represent payments made to defined contribution schemes. Non‑executive Directors are not entitled to retirement benefits. Remuneration of the Non‑executive Directors is determined by the Board. 557,300 21,637 28 Financial statements Annual Report and Accounts 2014 Getech Group plc 7 Directors and employees continued Directors’ share options Details of the share options held by Directors are: Date granted Exercise period Option price 2013 Granted Exercised 2014 Number of shares Professor P F Carey 13 December 2012 23 July 2014 Dr P J Markwick 13 December 2012 23 July 2014 R Wolfson 26 August 2005 26 August 2005 26 August 2005 26 August 2005 13 December 2012 23 July 2014 C Glass 26 August 2005 26 August 2005 26 August 2005 26 August 2005 Dr S M Paton 27 April 2011 27 April 2011 27 April 2011 27 April 2011 P F H Stephens 24 December 2010 13 December 2014 – 12 December 2022 23 July 2016 – 22 July 2024 21.30p 48.00p 200,000 — — 200,000 — 200,000 — 200,000 13 December 2014 – 12 December 2022 23 July 2016 – 22 July 2024 21.30p 48.00p 200,000 — — 200,000 — 200,000 — 200,000 31 July 2008 – 26 August 2015 31 July 2010 – 26 August 2015 31 July 2011 – 26 August 2015 31 July 2012 – 26 August 2015 13 December 2014 – 12 December 2022 23 July 2016 – 22 July 2024 31 July 2008 – 26 August 2015 31 July 2010 – 26 August 2015 31 July 2011 – 26 August 2015 31 July 2012 – 26 August 2015 27 April 2011 – 27 April 2021 27 April 2012 – 27 April 2021 27 April 2013 – 27 April 2021 27 April 2014 – 27 April 2021 9.87p 9.87p 9.87p 9.87p 21.30p 48.00p 9.87p 9.87p 9.87p 9.87p 17.50p 17.50p 17.50p 17.50p 25,532 19,149 19,149 19,149 200,000 — — — — — — 200,000 25,532 19,149 19,149 19,149 300,000 200,000 200,000 200,000 — — — — — — — — — — 25,532 — 19,149 — 19,149 — 19,149 — 200,000 — 200,000 — — — — 25,532 19,149 19,149 19,149 — 300,000 — 200,000 — 200,000 — 200,000 — 41,490 24 December 2012 – 24 December 2021 15.00p 41,490 The market price of the shares at the end of the financial year was 47.00p and the range of market prices during the year was between 43.00p and 107.18p. See Note 23, where full share‑based payment disclosures are provided. 8 Finance income Interest on bank deposits 2014 £ 2013 £ 32,914 30,897 Notes to the consolidated financial statements continuedFor the year ended 31 July 2014 Getech Group plc Annual Report and Accounts 2014 29 Financial statements 9 Finance costs Interest on bank borrowings 10 Income tax The income tax charge comprises: Current income tax Current year Prior year Total current tax Deferred tax Current year Prior year Total deferred tax Tax (credit)/expense on profit 2014 £ 622 2013 £ 5,760 2014 £ 2013 £ 22,086 (624,674) (602,588) 36,971 (8,795) 28,176 (574,412) 433,169 (2,869) 430,300 181,584 — 181,584 611,884 Factors affecting the tax charge for the year The taxation assessed for the year differs from the standard rate of corporation tax in the UK of 20% (2013: 24%). The tax (credit)/expense for the year can be reconciled to the profit per the consolidated statement of comprehensive income at the standard rate of corporation tax in the UK of 20% (2013: 24%) as follows: Profit on ordinary activities before tax Tax at UK corporation tax rate of 20% (2013: 24%) Effects of: Disallowed expenditure Depreciation not allowable Overseas franchise tax Adjustment in respect of tax rate changes Adjustment for tax rate changes in foreign jurisdictions Adjustment for tax computation in foreign jurisdictions Research and development enhanced expenditure Research and development enhanced expenditure in respect of prior years Adjustment to tax charge in respect of prior years Total tax (credit)/expense reported in the consolidated statement of comprehensive income 2014 £ 2013 £ 1,000,816 2,246,496 200,163 539,159 4,836 5,011 22,086 1,669 113,529 (8,237) (280,000) (493,715) (139,754) (574,412) 2,939 5,858 18,259 (10,633) 58,909 262 — — (2,869) 611,884 30 Financial statements Annual Report and Accounts 2014 Getech Group plc 10 Income tax continued Deferred taxation The net movement on the deferred tax asset and deferred tax liability accounts is as follows: Deferred tax assets Balance brought forward Share‑based payments Intangible assets of foreign subsidiary company Foreign tax jurisdictions Tax losses Balance carried forward Deferred tax liabilities Balance brought forward Accelerated capital allowances Foreign tax jurisdictions Balance carried forward 2014 £ 2013 £ 128,543 647 3,000 — 179,454 311,644 (110,175) (15,277) (196,000) (321,452) 249,470 (16,927) 7,000 (111,000) — 128,543 (49,518) (23,657) (37,000) (110,175) The deferred taxation recognised in the financial statements at 20% (2013: 20%) for UK taxation and 34% (2013: 34%) for USA taxation is set out below: Share‑based payments Accelerated capital allowances Foreign tax jurisdictions Intangible assets of foreign subsidiary company Tax losses Net deferred tax asset 2014 £ 25,190 (88,452) (233,000) 107,000 179,454 (9,808) 2013 £ 24,543 (73,175) (37,000) 104,000 — 18,368 The most appropriate tax rate for the Group is considered to be 20% (2013: 24%), the standard rate of profits tax in the UK, which is the primary source of profit for the Group. The deferred tax asset in respect of the UK company is calculated at 20% (2013: 20%) in the light of future tax rates announced. The deferred tax asset in respect of the intangible assets of the foreign subsidiary company arises as a result of future capital allowances available following the part‑payment of the deferred consideration for the acquisition of assets from Lisle Gravity Inc. in an earlier period. These will be relieved against profits of the foreign subsidiary. Notes to the consolidated financial statements continuedFor the year ended 31 July 2014 Getech Group plc Annual Report and Accounts 2014 31 Financial statements 11 Dividends Paid during the year Final dividend in respect of the year ended 31 July 2013 at 1.60p per share (2012: 0.80p) Interim dividend at 0.44p per share (2013: 0.40p) Proposed after the year end (not recognised as a liability) Final dividend in respect of the year ended 31 July 2014 at 1.76p per share (2013: 1.60p) 2014 £ 2013 £ 482,125 134,413 616,538 234,442 117,226 351,668 533,565 482,125 The proposed final dividend per share for the year ended 31 July 2014 is subject to approval by shareholders at the Annual General Meeting on 9 December 2014. 12 Earnings per share Basic earnings per share is calculated by dividing the profit attributable to equity holders of the Group by the weighted average number of the Ordinary Shares in issue in the year. Profit attributable to equity holders of the Group Weighted average number of Ordinary Shares in issue Basic earnings per share Diluted earnings per share 2014 2013 £1,575,228 30,249,212 5.21p 4.95p £1,634,612 29,323,481 5.57p 5.30p Diluted earnings per share is calculated by dividing the profit attributable to equity holders of the Group by the weighted average number of the Ordinary Shares which would be in issue if all the options granted, other than those which are anti‑dilutive, were exercised. The addition to the weighted number of the Ordinary Shares used in the calculation of diluted earnings per share for the year ended 31 July 2014 is 1,560,109 (2013: 1,494,138). 32 Financial statements Annual Report and Accounts 2014 Getech Group plc 13 Property, plant and equipment The carrying amounts of property, plant and equipment for the years presented in the consolidated financial statements are reconciled as follows: Cost At 1 August 2012 Additions Exchange differences At 31 July 2013 Additions Disposals Exchange differences At 31 July 2014 Depreciation At 1 August 2012 Charge for the period Exchange differences At 31 July 2013 Charge for the period Disposals Exchange differences At 31 July 2014 Carrying amount At 31 July 2014 At 31 July 2013 At 1 August 2012 Freehold land and buildings £ 2,749,631 45,617 — 2,795,248 3,150 — — 2,798,398 180,488 34,992 — 215,480 35,919 — — 251,399 Plant and equipment £ 634,616 144,846 4,524 783,986 103,747 (8,569) (16,370) Total £ 3,384,247 190,463 4,524 3,579,234 106,897 (8,569) (16,370) 862,794 3,661,192 563,844 42,963 4,350 611,157 74,850 (8,569) (15,561) 661,877 744,332 77,955 4,350 826,637 110,769 (8,569) (15,561) 913,276 2,546,999 2,579,768 2,569,143 200,917 172,829 2,747,916 2,752,597 70,772 2,639,915 The carrying amount of freehold land not subject to depreciation amounted to £1,000,000 (2013: £1,000,000). Depreciation charges are included in “Administrative costs” in the consolidated statement of comprehensive income. Notes to the consolidated financial statements continuedFor the year ended 31 July 2014 Getech Group plc Annual Report and Accounts 2014 33 Financial statements 14 Intangible assets The carrying amounts of intangible assets for the years presented in the consolidated financial statements are reconciled as follows: Cost At 1 August 2012 Exchange differences At 31 July 2013 Additions Exchange differences At 31 July 2014 Amortisation At 1 August 2012 Charge for the period Exchange differences At 31 July 2013 Charge for the period Exchange differences At 31 July 2014 Carrying amount At 31 July 2014 At 31 July 2013 At 1 August 2012 Development costs £ Data holdings £ Trade and domain names £ — — — 82,867 — 82,867 1,275,741 33,819 1,309,560 — (120,792) 1,188,768 — — — — — — — 82,867 — — 537,855 135,637 19,811 693,303 128,935 (64,079) 758,159 430,609 616,257 737,886 2,031 — 2,031 — — 2,031 2,031 — — 2,031 — — 2,031 — — — Total £ 1,277,772 33,819 1,311,591 82,867 (120,792) 1,273,666 539,886 135,637 19,811 695,334 128,935 (64,079) 760,190 513,476 616,257 737,886 Amortisation charges are included in “Administrative costs” in the consolidated statement of comprehensive income. 15 Inventories Work in progress 2014 £ 2013 £ 180,092 166,000 There is a charge included in profit or loss for the year of £nil (2013: £nil) as an expense arising from an impairment review of inventories. 34 Financial statements Annual Report and Accounts 2014 Getech Group plc 16 Trade and other receivables Trade receivables Social security and other taxes Other receivables Prepayments and accrued income 2014 £ 1,849,564 37,311 32,862 930,801 2013 £ 1,783,281 128,718 4,630 206,755 2,850,538 2,123,384 All amounts are short term. The carrying amounts of trade and other receivables are considered to be reasonable approximations to fair value. All of the Group’s trade and other receivables have been reviewed for indicators of impairment. No trade receivables were found to be impaired. In addition some of the unimpaired trade receivables are past due as at the reporting date. The age of financial assets past due but not impaired is as follows: Not more than three months More than three months but not more than six months More than six months but not more than one year 17 Other financial assets Fixed term bank deposits 18 Cash and cash equivalents 2014 £ 273,149 7,345 43,439 323,933 2014 £ — 2014 £ 2013 £ 174,073 57,290 — 231,363 2013 £ 500,000 2013 £ Cash at bank and in hand 3,422,594 4,357,927 19 Trade and other payables Current liabilities Trade payables Social security and other taxes Other payables Accruals and deferred income Non-current liabilities Other payables 2014 £ 2013 £ 1,447,968 76,325 20,862 1,162,554 1,286,832 76,477 37,343 2,123,768 2,707,709 3,524,420 — 16,338 The carrying amounts of trade and other payables are considered to be reasonable approximations to fair value. Notes to the consolidated financial statements continuedFor the year ended 31 July 2014 Getech Group plc Annual Report and Accounts 2014 35 Financial statements 20 Financial instruments The Group is exposed to financial risks. The Group’s risk management is co‑ordinated by its Directors who focus actively on securing the Group’s short to medium‑term cash flows through regular review of the operating activity of the business. The Group does not actively engage in the trading of financial assets for speculative purposes nor does it write options. The most significant financial risks to which the Group is exposed are described below: Foreign currency risk Exposure to currency exchange rates arises from the Group’s overseas sales and purchases, most of which are denominated in US dollars and some of which are denominated in euros. Assets and liabilities denominated in US dollars and euros give rise to foreign exchange exposures at the end of the reporting period. To mitigate the Group’s exposure to foreign currency risk, exchange rates are monitored and the timing of settling invoices, where sales and purchases are made in currencies other than pounds sterling, is matched as far as possible. Furthermore there is no systematic exposure to exchange rates because selling prices are not fixed in currencies other than sterling. The Group has a US‑based subsidiary whose net assets are exposed to foreign currency translation risk. With no matching borrowings denominated in US dollars it is the Group’s policy not to hedge against this translation exposure. The Group had short‑term exposure to the US dollar and the euro at 31 July 2014. The following table illustrates the sensitivity of the net result for the year with regard to the Group’s financial assets and financial liabilities. It assumes a +/‑10% change of the US dollar and the euro exchange rates for the year ended 31 July 2014. Sensitivity analysis is based on the Group’s foreign currency financial instruments held at the end of each reporting period. If pounds sterling had strengthened or weakened against the US dollar and the euro by 10% this would have had the following impact: Profit before tax Sensitivity to movement in currency exchange rates US dollar Euro Profit before tax 2014 +10% £ -10% £ 2013 +10% £ ‑10% £ 1,000,816 1,000,816 2,246,496 2,246,496 (282,707) (29,816) 418,301 36,441 (411,592) (123,057) 503,057 150,402 688,293 1,455,558 1,711,847 2,899,955 Exposures to foreign exchange rates vary during the year depending on the value of overseas transactions. Nonetheless, the analysis above is considered to be representative of Getech’s exposure to currency risk. There is no effect on equity in respect of currency exchange rate sensitivity. The Group’s actual currency exposures at the end of the reporting period were as follows: Denominated in US dollars Financial assets Financial liabilities Exposure Denominated in euros Financial assets Financial liabilities Exposure 2014 £ 2013 £ 2,500,757 (913,027) 1,587,730 2,042,443 (1,527,786) 514,657 327,971 (11,675) 316,296 293,131 (2,887) 290,244 36 Financial statements Annual Report and Accounts 2014 Getech Group plc 20 Financial instruments continued Credit risk analysis The Group’s exposure to credit risk is limited to the carrying amount of its financial assets at the end of the reporting period, as summarised below: Classes of financial assets – carrying amounts Trade and other receivables Other financial assets Cash and cash equivalents 2014 £ 2013 £ 2,695,193 — 3,422,594 1,786,946 500,000 4,357,927 6,117,787 6,644,873 In respect of trade and other receivables that are not impaired the Group is not exposed to any significant credit risk exposure to any single counterparty or group of counterparties having similar characteristics. The Group’s customers are generally major oil and mining companies with whom the Group has strong trading relationships with no recent history of default. The Group continually monitors its trade receivables and incorporates this information into its credit risk controls. Trade receivables are stated on the basis of factors such as historical trends, age of debts and debt specific information. Details of amounts past due but not impaired are set out in Note 16. The credit risk for liquid funds is considered negligible, since counterparties are reputable banks with high quality external credit ratings. The Group does not hold any collateral as security. Interest rate risk At 31 July 2014 the Group had cash subject to variable rates and fixed‑term deposits of £3,422,594 (2013: £2,772,340). There is no other material interest rate risk. To mitigate the Group’s exposure to interest rate risk, market rates are monitored. The following table illustrates the sensitivity of the profit before tax for the year to a reasonably possible change in interest rates of +/‑1% with effect from the beginning of the year. These changes are considered to be reasonably possible based on observation of current market conditions. The calculations are based on the Group’s financial instruments held at the end of each reporting period. All other variables are held constant. Profit before tax 1,016,392 985,240 2,276,940 2,243,774 2014 +1% £ -1% £ 2013 +1% £ ‑1% £ Notes to the consolidated financial statements continuedFor the year ended 31 July 2014 Getech Group plc Annual Report and Accounts 2014 37 Financial statements 20 Financial instruments continued Capital and liquidity risk The Group manages its liquidity needs by carefully monitoring scheduled cash outflows and anticipated inflows. Having regard to modest visibility of sales, the cash forecasts are regularly reviewed and cover alternative income scenarios. The contractual maturity of the Group’s financial liabilities at the end of the reporting period was as follows: Trade and other payables – held at amortised cost Trade and other payables – held at fair value through profit or loss Borrowings – held at amortised cost Trade and other payables – held at amortised cost Trade and other payables – held at fair value through profit or loss Within one year £ 1,569,837 14,808 1,584,645 Within one year £ 121,548 1,838,784 16,338 1,976,670 In one to two years £ In two to five years £ — — — — — — In one to two years £ In two to five years £ — — 16,337 16,337 — — — — 2014 £ 1,569,837 14,808 1,584,645 2013 £ 121,548 1,838,784 32,675 1,993,007 Summary of the Group’s financial assets and liabilities as defined in IAS 39 ‘Financial Instruments: Recognition and Measurement’ Current assets – loans and receivables Trade and other receivables Other financial assets Cash and cash equivalents Current liabilities Borrowings – held at amortised cost Trade and other payables – held at amortised cost Trade and other payables – held at fair value through profit or loss Non-current liabilities Trade and other payables – held at fair value through profit or loss Net financial assets and liabilities 2014 £ 2,695,193 — 3,422,594 2013 £ 1,786,946 500,000 4,357,927 6,117,787 6,644,873 — (1,569,837) (14,808) (119,048) (1,838,784) (16,338) (1,584,645) (1,974,170) — — (16,337) (16,337) 4,533,142 4,654,366 The Directors consider that the fair value of financial assets and liabilities equates to the carrying value for both 2014 and 2013. Items carried at fair value through profit or loss are valued in accordance with Level 2 as defined in IFRS 7 ‘Financial Instruments’, i.e. inputs other than quoted prices that are observable for the asset or liability, either directly or indirectly. 38 Financial statements Annual Report and Accounts 2014 Getech Group plc 21 Capital management policies and procedures The Group’s capital management objectives are: • to ensure the Group’s ability to continue as a going concern; and • to provide an adequate return to shareholders. These objectives are maintained by pricing products and services commensurately with the level of risk and exercising a policy of progressive dividends as appropriate. The Group monitors capital on the basis of the carrying amount of equity less cash and cash equivalents as presented on the face of the consolidated statement of financial position. Capital for the reporting period under review is set out below: Total equity Less: cash and cash equivalents 2014 £ 2013 £ 7,809,865 (3,422,594) 6,904,680 (4,357,927) 4,387,271 2,546,753 In order to achieve the Group’s objectives in capital management, the goal is to maintain adequate capital with the minimum appropriate borrowing. The Group has met its stated objectives for the year. 22 Share capital Authorised 90,000,000 Ordinary Shares of £0.0025 each (2013: 90,000,000) Issued, called up and fully paid 30,316,184 Ordinary Shares of £0.0025 each (2013: 30,127,465) Shares issued, called up and fully paid Balance brought forward Shares issued under share‑based payments Balance carried forward 2014 £ 2013 £ 225,000 225,000 75,790 2014 Number 75,319 2013 Number 30,127,465 188,719 29,237,151 890,314 30,316,184 30,127,465 The following additional Ordinary Shares of £0.0025 each, relating to share‑based payments, were issued during the year: Date 5 August 2013 21 August 2013 13 November 2013 10 December 2013 23 December 2013 21 January 2014 Number of shares 9.87p/share 15p/share — — 63,830 36,170 55,319 — 155,319 2,400 3,000 — — — 28,000 33,400 2014 2,400 3,000 63,830 36,170 55,319 28,000 188,719 Each share issued has the same right to receive dividends and the repayment of capital and represents one vote at the shareholders’ meeting of the Group. Notes to the consolidated financial statements continuedFor the year ended 31 July 2014 Getech Group plc Annual Report and Accounts 2014 39 Financial statements 23 Share-based payments At 31 July 2014 the Group operated an Approved Enterprise Management Incentive (EMI) share scheme and an Unapproved Options scheme. Under the share options plans, the Directors can grant options over shares in the Company to employees, subject to approval from the Remuneration Committee. Options are granted with a fixed exercise price and the contractual life of an option of ten years. Options will become exercisable on the second anniversary of the date of grant. Exercise of an option is subject to continued employment. During the year share options were granted for 720,000 Ordinary Shares as set out in the table. The fair value of these options was calculated using the Black Scholes model, the inputs into which were: Date of grant Share price Exercise price Expected volatility Risk‑free rate Expected time to exercise 22 July 2014 48.0p 48.0p 52.4% 2.6% Six years Volatility is calculated by applying a standard statistical model to the closing monthly share price over the twelve months immediately preceding the grant of options. At 31 July 2014 rights to options over Ordinary Shares of the Parent Company were outstanding as follows: EMI share scheme Number of shares Exercise period 2013 Granted Exercised Lapsed or redesignated as unapproved from EMI share scheme Granted 26 August 2005, exercise price: 9.87p per share 31 July 2008 – 26 August 2015 31 July 2010 – 26 August 2015 31 July 2011 – 26 August 2015 31 July 2012 – 26 August 2015 Granted 24 December 2010, exercise price: 15p per share 24 December 2012 – 24 December 2020 Granted 13 December 2012, exercise price: 21.3p per share 13 December 2014 – 12 December 2022 Granted 22 July 2014, exercise price: 48.0p per share 22 July 2016 – 21 July 2024 104,255 87,236 106,384 106,382 404,257 89,698 600,000 — — — — (53,191) (40,427) (40,425) (21,276) — (155,319) — — — — — 2014 51,064 46,809 65,959 85,106 248,938 — — (33,400) (6,000) 50,298 — — — — 600,000 720,000 — 720,000 Total EMI share scheme options 1,093,955 720,000 (188,719) (6,000) 1,619,236 40 Financial statements Annual Report and Accounts 2014 Getech Group plc 23 Share-based payments continued Unapproved options scheme Number of shares Exercise period 2013 Granted Exercised Granted 26 August 2005, exercise price: 9.87p per share 31 July 2008 – 26 August 2015 31 July 2010 – 26 August 2015 31 July 2011 – 26 August 2015 31 July 2012 – 26 August 2015 Granted 24 December 2010, exercise price: 15p per share 24 December 2012 – 24 December 2020 Granted 27 April 2011, exercise price: 17.5p per share 27 April 2011 – 27 April 2021 27 April 2012 – 27 April 2021 27 April 2012 – 27 April 2021 27 April 2012 – 27 April 2021 51,064 57,447 57,447 57,447 223,405 60,639 300,000 200,000 200,000 200,000 900,000 Total unapproved options 1,184,044 — — — — — — — — — — — — — — — — — — — — — — — — Lapsed or redesignated as unapproved from EMI share scheme — — — — — — — — — — — 2014 51,064 57,447 57,447 57,447 223,405 60,639 300,000 200,000 200,000 200,000 900,000 — 1,184,044 Total EMI share scheme and unapproved options 2,277,999 720,000 (188,719) (6,000) 2,803,280 Options outstanding at 31 July 2014 Options exercisable at 31 July 2014 The following share options were exercised during the year: Weighted average exercise price 14.88p 35.86p Date of grant 24 December 2010 24 December 2010 26 August 2005 26 August 2005 26 August 2005 24 December 2010 Share scheme EMI EMI EMI EMI EMI EMI Number exercised 2,400 3,000 63,830 36,170 55,319 28,000 Exercise date 5 August 2013 21 August 2013 13 November 2013 10 December 2013 23 December 2013 21 January 2014 Number 1,320,000 1,483,280 2,803,280 Share price at exercise date 71.00p 83.50p 92.50p 90.00p 94.00p 108.00p Notes to the consolidated financial statements continuedFor the year ended 31 July 2014 Getech Group plc Annual Report and Accounts 2014 41 Financial statements 23 Share-based payments continued At 31 July 2013 rights to options over Ordinary Shares of the Parent Company were outstanding as follows: EMI share scheme Number of shares Exercise period 2012 Granted Exercised Lapsed or redesignated as unapproved from EMI share scheme 2013 Granted 26 August 2005, exercise price: 9.87p per share 31 July 2008 – 26 August 2015 31 July 2010 – 26 August 2015 31 July 2011 – 26 August 2015 31 July 2012 – 26 August 2015 Granted 24 December 2010, exercise price: 15p per share 24 December 2012 – 24 December 2020 Granted 24 December 2010, exercise price: 20p per share 24 December 2012 – 24 December 2020 Granted 13 December 2012, exercise price: 21.3p per share 13 December 2014 – 12 December 2022 178,723 138,298 138,298 138,299 593,618 — — — — — (48,936) (31,913) (12,765) (12,768) (25,532) (19,149) (19,149) (19,149) 104,255 87,236 106,384 106,382 (106,382) (82,979) 404,257 310,498 — (218,400) (2,400) 89,698 540,000 — (540,000) — — — 600,000 — — 600,000 Total EMI share scheme options 1,444,116 600,000 (864,782) (85,379) 1,093,955 42 Financial statements Annual Report and Accounts 2014 Getech Group plc 23 Share-based payments continued EMI share scheme continued Number of shares Exercise period 2012 Granted Exercised Granted 26 August 2005, exercise price: 9.87p per share 31 July 2008 – 26 August 2015 31 July 2010 – 26 August 2015 31 July 2011 – 26 August 2015 31 July 2012 – 26 August 2015 Granted 24 December 2010, exercise price: 15p per share 24 December 2012 – 24 December 2020 Granted 27 April 2011, exercise price: 17.5p per share 27 April 2011 – 27 April 2021 27 April 2012 – 27 April 2021 27 April 2012 – 27 April 2021 27 April 2012 – 27 April 2021 51,064 38,298 38,298 38,298 165,958 60,639 300,000 200,000 200,000 200,000 900,000 Total unapproved options 1,126,597 — — — — — — — — — — — — (25,532) — — — (25,532) — — — — — — Lapsed or redesignated as unapproved from EMI share scheme 25,532 19,149 19,149 19,149 2013 51,064 57,447 57,447 57,447 82,979 223,405 — 60,639 — — — — — 300,000 200,000 200,000 200,000 900,000 (25,532) 82,979 1,184,044 Total EMI share scheme and unapproved options 2,570,713 600,000 (890,314) (2,400) 2,277,999 Options outstanding at 31 July 2013 Options exercisable at 31 July 2013 24 Contingent liabilities and financial commitments Contingent liabilities There were no contingent liabilities at 31 July 2014 (2013: £nil). Weighted average exercise price 21.30p 14.42p Number 600,000 1,677,999 2,277,999 Operating leases At 31 July 2014 the Group had outstanding commitments for future minimum lease payments under non‑cancellable operating leases which fall due as follows: In less than one year In one to two years In two to five years 2014 Land and buildings £ 22,295 22,946 5,777 51,018 2013 Land and buildings £ 6,032 — — 6,032 Notes to the consolidated financial statements continuedFor the year ended 31 July 2014 Getech Group plc Annual Report and Accounts 2014 43 Financial statements 24 Contingent liabilities and financial commitments continued Capital commitments There were no capital commitments at 31 July 2014 (2013: £nil). 25 Related party transactions During the year members of key management as defined by IAS 24 ‘Related Party Disclosures (revised 2009)’ included non‑Directors and their compensation was as follows: Short‑term employee benefits Post‑employment benefits Equity compensation benefits The remuneration of the Directors, who are all Directors of the Parent Company, is set out in Note 7. The Directors received dividends amounting to £60,118 during the year (2013: £72,144). At the end of the reporting period the following amounts were unpaid to related parties: IP Group Limited1 Noon and Co. Limited2 Winburn Glass Norfolk3 2014 £ 722,021 29,068 14,300 765,389 2013 £ 769,316 26,673 14,300 810,289 Amounts payable at 31 July 2014 £ — — 6,400 1 Director’s fees for Dr A M Fielding were paid to IP Group Limited, a company of which she is a Director. 2 Director’s fees and expenses for P F H Stephens were paid to Noon and Co. Limited, a company of which he is a Director. 3 Director’s fees for C Glass were paid to Winburn Glass Norfolk, Chartered Accountants, a firm of which he is a partner. In addition fees for services of £77,890 (2013: £76,094) provided on an arm’s length basis in its normal course of business were charged by Winburn Glass Norfolk. 26 Pensions The Group currently operates a Group personal pension plan for the benefit of employees. The amount recognised as an expense is £125,949 (2013: £96,962). 44 Financial statements Annual Report and Accounts 2014 Getech Group plc Parent Company balance sheet – prepared under UK GAAP As at 31 July 2014 Company registration number: 2891368 Fixed assets Tangible assets Intangible assets Investments Current assets Stocks Debtors Cash at bank and in hand Creditors – amounts falling due within one year Net current assets Total assets less current liabilities Provisions for liabilities Deferred taxation Net assets Representing: Capital and reserves Called up share capital Share premium account Capital redemption reserve Share option reserve Profit and loss account Shareholders’ funds Note 2014 £ 2013 £ 2 3 4 5 6 7 8 9 10 10 10 10 10 2,743,507 2,743,536 82,867 — — — 2,826,374 2,743,536 180,092 3,229,780 2,657,507 166,000 1,745,521 4,635,522 6,067,379 6,547,043 (1,929,584) (2,964,271) 4,137,795 3,582,772 6,964,169 6,326,308 — (73,175) 6,964,169 6,253,133 75,790 75,319 3,012,960 2,993,092 6 6 125,948 122,717 3,749,465 3,061,999 6,964,169 6,253,133 The financial statements on pages 44 to 50 were approved by the Board on 3 November 2014. Dr Stuart Paton Director The accompanying notes on pages 45 to 50 form an integral part of these financial statements. Getech Group plc Annual Report and Accounts 2014 45 Financial statements Notes to the Parent Company financial statements – prepared under UK GAAP For the year ended 31 July 2014 1 Principal accounting policies 1.1 Basis of preparation The financial statements have been prepared under the historical cost basis of accounting and under United Kingdom Generally Accepted Accounting Practice (UK GAAP). 1.2 Tangible fixed assets and depreciation For all tangible fixed assets depreciation is calculated to write down their cost to estimated residual value by equal instalments over their estimated economic lives at the following rates: Freehold property Plant and equipment – – 2% per annum on cost 33.3% and 25% per annum on cost No depreciation is provided on freehold land. 1.3 Intangible assets and amortisation Expenditure on development activities is capitalised if the product or process meet the recognition criteria for development expenditure. The expenditure capitalised includes all directly attributable costs, from the date which the intangible asset meets the recognition criteria, necessary to create, produce and prepare the asset to be capable of operating in the manner intended by management. Capitalised development expenditure is stated at cost less accumulated amortisation and impairment losses. Amortisation is calculated to write down their cost by equal instalments over their estimated economic lives at the following rate: Capitalised development costs – 10% per annum on cost 1.4 Revenue Revenue is measured by reference to the fair value of consideration received or receivable by the Company for goods and services provided, excluding VAT and comparable overseas taxes. Proprietary reports and commissions In respect of contracts which are long term in nature and contracts for proprietary reports and other commissions, revenue is recognised according to the value of work done in the period. Revenue in respect of such contracts is calculated on the basis of time spent on the project and estimated work to completion. Where the outcome of contracts cannot be estimated reliably or anticipated revenue is less than the anticipated costs, revenue is recognised only to the extent of the expenses recognised that are recoverable. Multi-client studies For sales of data and completed project studies, revenue is recognised when the transfer of risk and reward is made to the customer, on dispatch unless otherwise agreed. Multi-element contracts Where contracts for multiple element products with staged deliverables, such as Globe and Multi‑Sat, involve delivery of several different elements which are not fully delivered or performed by the year end, revenue is recognised based on the proportion of the fair value of the elements delivered to the fair value of the respective overall contracts. Where the outcome of contracts that are long term in nature and contracts for ongoing deliverables cannot be estimated reliably, revenue is recognised only to the extent of the expenses recognised that are recoverable. Revenue from multiple element contracts is recognised after separating the contract income as follows: • completed project elements and specific studies that are immediately deliverable: revenue is recognised when the transfer of risk and reward is made to the customer, on dispatch unless otherwise agreed; • specific studies that are to be completed in the future: revenue is recognised in line with the accounting treatment for “proprietary reports and commissions”; and • project elements that are to be delivered from development work that is yet to be completed: revenue is recognised when the transfer of risk and rewards is made to the customer, on dispatch unless otherwise agreed. 46 Financial statements Annual Report and Accounts 2014 Getech Group plc Notes to the Parent Company financial statements – prepared under UK GAAP continued For the year ended 31 July 2014 1 Principal accounting policies continued 1.5 Long-term contracts and work in progress Costs associated with contracts that are long term in nature are included in inventories to the extent that they cannot be matched with contract work accounted for as revenue. Amounts included in work in progress are stated at cost, including absorption of relevant overheads, after provision has been made for any foreseeable losses and the deduction of applicable payments on account. Full provision is made for losses on all contracts in the year in which the loss is first foreseen. In assessing the costs associated with projects that are long term in nature the following assumptions and estimates are made: • at the commencement of each project an assumption is made concerning the likely revenue from potential sales of that project. Regular impairment reviews reconsider whether that revenue remains achievable; and • costs are carried forward only to the extent that they do not exceed estimates of the recoverable amounts. There is no inventory other than in relation to contracts that are long term in nature. 1.6 Foreign currency translation Where supplies are obtained or sales made on terms denominated in foreign currency, such transactions are translated into the functional currency using the exchange rates prevailing at the dates of the transactions. Monetary assets and liabilities denominated in foreign currencies are translated at the rate of exchange ruling at the end of the reporting period. Exchange gains or losses arising on the settlement of monetary items, or the translation of monetary items, are included in profit or loss from operations. 1.7 Share options When share options are granted a charge is made to the Parent Company profit and loss account and a reserve created to record the fair value of the awards in accordance with FRS 20 ‘Share‑based Payment’. A charge is recognised in the profit and loss account in relation to share options granted based on the fair value (the economic value) of the grant, measured at the grant date. The charge is spread over the vesting period. The valuation methodology takes into account assumptions and estimates of share price volatility, future risk‑free interest rate and exercise behaviour and is based on the Black Scholes method. When share options are exercised there is a transfer from the share option reserve to retained earnings. At each balance sheet date the Parent Company revises its estimate of the number of share options that are expected to vest taking into account those which have lapsed or been cancelled. It recognises the impact of the revision to original estimates, if any, in the profit and loss account, with a corresponding adjustment to the share option reserve. If the terms and conditions of share options are modified before they vest, the change in the fair value of the share options, measured immediately before and after the modification, is also charged to the profit or loss over the remaining vesting period. 1.8 Deferred taxation Deferred taxation is provided in full on timing differences which result in an obligation at the balance sheet date to pay more tax, or a right to pay less tax, at a future date, at rates expected to apply when they crystallise based on current tax rates and laws. Timing differences arise from the inclusion of items of income and expenditure in taxation computations in periods different from those in which they are included in the financial statements. Deferred tax assets are recognised to the extent that it is regarded as more likely than not that they will be recovered. Deferred tax assets and liabilities are not discounted. Getech Group plc Annual Report and Accounts 2014 47 Financial statements 2 Tangible fixed assets Cost At 1 August 2013 Additions Disposals At 31 July 2014 Depreciation At 1 August 2013 Charge for the period On disposals At 31 July 2014 Net book value At 31 July 2014 At 31 July 2013 Freehold land and buildings £ Fixtures, fittings and equipment £ Total £ 2,795,248 3,150 — 2,798,398 215,480 35,919 — 251,399 609,119 102,830 (8,569) 3,404,367 105,980 (8,569) 703,380 3,501,778 445,351 70,090 (8,569) 506,872 660,831 106,009 (8,569) 758,271 2,546,999 2,579,768 196,508 163,768 2,743,507 2,743,536 The net book value of freehold land in the Parent Company, not subject to depreciation, amounted to £1,000,000 (2013: £1,000,000). 3 Intangible assets Cost At 1 August 2013 Additions At 31 July 2014 Net book value At 31 July 2014 At 31 July 2013 Development costs £ — 82,867 82,867 Total £ — 82,867 82,867 82,867 82,867 — — 4 Fixed asset investments The Parent Company owns 100% equity interest in Geophysical Exploration Technology Inc., a company incorporated in the USA. The principal activity of Geophysical Exploration Technology Inc. is the marketing of gravity and magnetic data, services and geological evaluations. The cost of US$10 capital stock was £1 and this has been written off in an earlier period. The results of Geophysical Exploration Technology Inc. are included in the consolidated figures for the year. 5 Stocks Work in progress 2014 £ 2013 £ 180,092 166,000 48 Financial statements Annual Report and Accounts 2014 Getech Group plc Notes to the Parent Company financial statements – prepared under UK GAAP continued For the year ended 31 July 2014 6 Debtors Trade debtors Amount owed by Group undertakings Corporation tax repayable Other debtors Prepayments and accrued income Deferred tax (see Note 8) 7 Creditors – amounts falling due within one year Bank loan Trade creditors Corporation tax Other taxation and social security Other creditors Accruals and deferred income 8 Deferred tax Balance brought forward Charge for the year Accelerated capital allowances Other short‑term timing differences Balance carried forward 9 Share capital Issued, called up and fully paid 30,316,184 Ordinary Shares of £0.0025 each (2013: 30,127,465) 2014 £ 784,652 1,175,418 663,597 70,173 444,938 91,002 2013 £ 693,309 734,761 2,947 133,348 181,156 — 3,229,780 1,745,521 2014 £ — 1,435,671 — 76,325 79 417,509 2013 £ 119,048 1,277,578 108,932 76,477 21,006 1,361,230 1,929,584 2,964,271 2014 £ 2013 £ (73,175) (49,518) (15,277) 179,454 91,002 (23,657) — (73,175) 2014 £ 2013 £ 75,790 75,319 Getech Group plc Annual Report and Accounts 2014 49 Financial statements 10 Shareholders’ funds At 1 August 2013 Profit for the year Share‑based payment charge Issue of capital under share‑based payment Dividends paid Share capital £ 75,319 — — 471 — Share premium account £ 2,993,092 — — 19,868 — At 31 July 2014 75,790 3,012,960 Capital redemption reserve £ 6 — — — — 6 Share option reserve £ 122,717 — 21,186 Profit and loss account £ 3,061,999 1,286,049 — Total £ 6,253,133 1,286,049 21,186 (17,955) — 17,955 (616,538) 20,339 (616,538) 125,948 3,749,465 6,964,169 11 Related party transactions The Parent Company has taken advantage of the exemption in FRS 8 ‘Related Party Disclosures’ and has not disclosed transactions with Group undertakings. The remuneration of the Directors of the Parent Company is set out in Note 7 to the consolidated financial statements. Transactions with Directors of the Parent Company during the year and outstanding amounts at the balance sheet date were as follows: Executive Directors Professor J D Fairhead Dr P J Markwick R Wolfson Non-executive Directors C Glass P F H Stephens Other related parties IP Group Limited1 Noon and Co. Limited2 Winburn Glass Norfolk3 Dividends paid £ 19,331 3,520 8,160 11,502 17,605 Amounts charged to the Group £ Amounts payable at 31 July 2014 £ — — — — — — — — — — 1,685 1,985 6,400 — — — 20,225 18,067 95,890 1 Director’s fees and expenses for Dr A M Fielding were paid to IP Group Limited, a company of which Dr A M Fielding is a Director. 2 Director’s fees and expenses for P F H Stephens were paid to Noon and Co. Limited, a company of which he is a Director. 3 Director’s fees for C Glass of £18,000 (2013: £16,960) and fees for services of £77,890 (2013: £76,094) provided on an arm’s length basis in its normal course of business were charged by Winburn Glass Norfolk, Chartered Accountants, a firm of which he is a partner. 50 Financial statements Annual Report and Accounts 2014 Getech Group plc Notes to the Parent Company financial statements – prepared under UK GAAP continued For the year ended 31 July 2014 11 Related party transactions continued Amounts for the year ended 31 July 2013 were as follows; Professor P F Carey Professor J D Fairhead Dr P J Markwick R Wolfson Non-executive Directors C Glass P F H Stephens Other related parties IP Group Limited Noon and Co. Limited Winburn Glass Norfolk Dividends paid £ — 52,721 280 520 6,885 11,736 Amounts charged to the Group £ Amounts payable at 31 July 2013 £ — — — — — — — — — — — — — — — 18,995 17,493 93,054 1,590 5,653 7,296 12 Ultimate controlling party The Directors consider that there is no ultimate controlling party. 13 Profit for the financial year The Parent Company has taken advantage of Section 408 of the Companies Act 2006 and has not included its own profit and loss account in these financial statements. The Parent Company’s profit after taxation for the year was £1,286,049 (2013: £1,232,631). Getech Group plc Annual Report and Accounts 2014 51 Financial statements Notice of Annual General Meeting NOTICE IS GIVEN that the twentieth Annual General Meeting of Getech Group plc (“the Company”) will be held at Kitson House, Elmete Hall, Elmete Lane, Leeds LS8 2LJ on 9 December 2014 at 12 noon to consider and pass the resolutions below. Resolutions 8 and 9 will be proposed as special resolutions. All other resolutions will be proposed as ordinary resolutions. Ordinary business To consider and, if thought fit, pass resolutions 1 to 6 as ordinary resolutions. 1 To consider and adopt the Report of the Directors, the Strategic Report and the audited accounts of the Company for the year ended 31 July 2014. 2 To declare a final dividend for the year ended 31 July 2014 of 1.76p per Ordinary Share. 3 To re‑elect Raymond Wolfson as a Director of the Company, in accordance with article 35 of the Company’s Articles of Association, who offers himself for re‑election as a Director of the Company. 4 To re‑elect Alison Fielding as a Director of the Company, in accordance with article 35 of the Company’s Articles of Association, who offers herself for re‑election as a Director of the Company. 5 To re‑elect Peter Stephens as a Director of the Company, in accordance with article 35 of the Company’s Articles of Association, who offers himself for re‑election as a Director of the Company. 6 To re‑appoint Grant Thornton UK LLP as auditor of the Company to hold office until the conclusion of the next general meeting at which accounts are laid before the Company and to authorise the Directors to determine the auditor’s remuneration. Special business To consider and, if thought fit, pass the following resolutions which in the case of resolution 7 will be proposed as an ordinary resolution and in the case of resolutions 8 and 9 will be proposed as special resolutions. 7 To authorise the Board generally and unconditionally pursuant to Section 551 of the Companies Act 2006 (“the Act”) to exercise all powers of the Company to allot shares in the Company and to grant rights to subscribe for or to convert any security into shares in the Company (“Rights”): 7.1 up to an aggregate nominal amount of £25,263.48 (being one third of the issued share capital of the Company as at the date of this notice); and 7.2 comprising equity securities (within the meaning of Section 560 of the Act) up to an aggregate nominal amount of £50,526.97 (after deducting from such amount any shares allotted under the authority conferred by virtue of resolution 8.1 in connection with or pursuant to an offer or invitation by way of a rights issue (as defined below), provided that such authorities shall expire on the earlier of the date falling six months from the expiry of the Company’s current financial year and the date of the next Annual General Meeting of the Company after the passing of this resolution unless varied, revoked or renewed by the Company in general meeting save that the Board may, before the expiry of the authorities granted by this resolution, make a further offer or agreement which would or might require shares to be allotted or Rights to be granted after such expiry and the Board may allot shares and grant Rights in pursuance of such an offer or agreement as if the authorities conferred by this resolution had not expired and the authorities granted by this resolution are in substitution for all previous authorities granted to the Directors to allot shares and grant Rights which (to the extent that they remain in force and unexercised) are revoked but without prejudice to any allotment or grant of Rights made or entered into prior to the date of this resolution 7. 52 Financial statements Annual Report and Accounts 2014 Getech Group plc Notice of Annual General Meeting continued Special business continued For the purposes of this resolution 7, rights issue means an offer or invitation to: (i) holders of Ordinary Shares of £0.0025 each in the capital of the Company (“Ordinary Shares”) in proportion (as nearly as may be practicable) to the respective numbers of Ordinary Shares held by them on the record date for such allotment; and (ii) persons who are holders of other classes of equity securities if this is required by the rights of such securities (if any) or, if the Directors of the Company consider necessary, as permitted by the rights of those securities, to subscribe for further securities by means of the issue of a renounceable letter (or other negotiable instrument) which may be traded for a period before payment for the securities is due, but subject in both cases to such exclusions or other arrangements as the Directors of the Company may deem necessary or expedient in relation to fractional entitlements, treasury shares, record dates or legal, regulatory or practical difficulties which may arise under the laws of, or the requirements of, any recognised regulatory body or any stock exchange in any territory or any other matter whatever. Special resolutions 8 To empower the Board (subject to the passing of resolution 7) pursuant to Sections 570 and 573 of the Act to allot equity securities (within the meaning of Section 560 of the Act) for cash: 8.1 pursuant to the authority conferred upon them by resolution 7.1 or where the allotment constitutes an allotment of equity securities by virtue of Section 560(3) of the Act, provided that this power shall be limited to the allotment of equity securities: 8.1.1 in connection with or pursuant to an offer of such securities by way of a pre‑emptive offer (as defined below); and 8.1.2 (otherwise than pursuant to sub‑paragraph 8.1.1 above) up to an aggregate nominal value of £11,368.56 (being 15% of the issued share capital of the Company as at the date of this notice); and 8.2 pursuant to the authority conferred upon them by resolution 7.2, not in connection with or pursuant to a rights issue, as if Section 561(1) and subsections (1)–(6) of Section 562 of the Act did not apply to any such allotment and the authorities given shall expire on the earlier of the date falling six months from the end of the current financial year of the Company and the date of the next Annual General Meeting after the passing of this resolution unless renewed or extended prior to such expiry save that the Company may, before the expiry of any power contained in this resolution, make a further offer or agreement which would or might require equity securities to be allotted after such expiry and the Board may allot equity securities in pursuance of such offer or agreement as if the powers conferred by this resolution had not expired. For the purpose of this resolution 8: (a) (b) “rights issue” has the meaning given in resolution 7; and “pre‑emptive offer” means a rights issue, open offer or other pre‑emptive issue or offer to: (i) holders of Ordinary Shares in proportion (as nearly as may be practicable) to the respective numbers of Ordinary Shares held by them on the record date(s) for such allotment; and (ii) persons who are holders of other classes of equity securities if this is required by the rights of such securities (if any) or, if the Directors of the Company consider necessary, as permitted by the rights of those securities, but subject in both cases to such exclusions or other arrangements as the Directors of the Company may deem necessary or expedient in relation to fractional entitlements, treasury shares, record dates or legal, regulatory or practical difficulties which may arise under the laws of, or the requirements of, any recognised regulatory body or any stock exchange in any territory or any other matter whatever. Getech Group plc Annual Report and Accounts 2014 53 Financial statements Special resolutions continued 9 To authorise the Company generally and unconditionally for the purpose of Section 701 of the Act to make one or more market purchases (within the meaning of Section 693(4) of the Act) of Ordinary Shares provided that: 9.1 the maximum aggregate number of Ordinary Shares authorised by this resolution to be purchased is 3,031,618 as at the date of this notice (representing 10% of the Company’s issued share capital); 9.2 the minimum price which may be paid for such Ordinary Shares is £0.0025 per share (exclusive of advance corporation tax and expenses); 9.3 the maximum price (exclusive of advance corporation tax and expenses) which may be paid for an Ordinary Share is not more than the higher of 5% above the average of the middle market quotations for an Ordinary Share as derived from the London Stock Exchange Daily Official List for the five business days immediately preceding the day on which the Ordinary Share is purchased and the amount stipulated by Article 5(1) of the Buy‑back and Stabilisation Regulation (Commission Regulation 2273/2003); and 9.4 unless previously revoked or varied, the authority conferred by this resolution shall expire on the earlier of the date falling six months from the end of the current financial year of the Company and the date of the next Annual General Meeting of the Company after the passing of this resolution save that the Company may, before such expiry, make a contract or contracts to purchase Ordinary Shares after such expiry as if the power conferred by this resolution had not expired. By order of the Board Colin Glass Company Secretary 10 November 2014 Registered Office Convention House St Mary’s Street Leeds LS9 7DP 54 Financial statements Annual Report and Accounts 2014 Getech Group plc Notice of Annual General Meeting continued Notes 1 This notice is the formal notification to shareholders of the Company’s Annual General Meeting, its date, time and place and the matters to be considered. If you are in doubt as to what action to take you should consult an independent advisor. 2 Pursuant to regulation 41 of the Uncertificated Securities Regulations 2001 (as amended) only those shareholders registered in the register of members of the Company as at 6.00pm on 7 December 2014 (or if the meeting is adjourned, at 6.00pm two days prior to the adjourned meeting) as holders of Ordinary Shares of £0.0025 each in the capital of the Company shall be entitled to attend or vote at the meeting in respect of the number of shares registered in their name at that time. Changes to entries in the register of members after 6.00pm on 7 December 2014 shall be disregarded in determining the rights of any person to attend or vote at the meeting. 3 A member of the Company entitled to attend, speak and vote is entitled to appoint a proxy to attend, speak and vote instead of him or her. A member may appoint more than one proxy in relation to the meeting, provided that each proxy is appointed to exercise the rights attached to a different share or shares held by him or her. A proxy need not be a member of the Company. Proxy forms must be in the hands of the registrars at least 48 hours before the meeting. Further details of how to appoint a proxy are set out in the notes to the proxy form, which is enclosed with this document. 4 The return of a proxy form will not prevent a member attending the Annual General Meeting and voting in person if he/she so wishes. 5 If a member appoints a proxy or proxies and then decides to attend the Annual General Meeting in person and vote using his/her poll card, then the vote in person will override the proxy vote(s). If the vote in person is in respect of the member’s entire holding, then all proxy votes will be disregarded. If, however, the member votes at the meeting in respect of less than the member’s entire holding, then if the member indicates on his/her polling card that all proxies are to be disregarded, that shall be the case; but if the member does not specifically revoke proxies, then the vote in person will be treated in the same way as if it were the last received proxy and earlier proxies will only be disregarded to the extent that to count them would result in the number of votes being cast exceeding the member’s entire holding. If you do not have a proxy form and/or believe that you should have one or if you require additional forms, please contact the Company at its registered office. 6 To change your proxy instructions simply submit a new proxy appointment using the methods set out above. Note that the cut‑off time for receipt of proxy appointments (see Note 3 above) also applies in relation to amended instructions; any amended proxy appointment received after the relevant cut‑off time will be disregarded. Where you have appointed a proxy using the hard‑copy proxy form and would like to change the instructions using another hard‑copy proxy form, please contact Capita Asset Services at Proxies Department, The Registry, 34 Beckenham Road, Beckenham, Kent BR3 4TU. If you submit more than one valid proxy appointment, the appointment received last before the latest time for the receipt of proxies will take precedence. 7 In order to revoke a proxy instruction you will need to inform the Company by sending a signed hard‑copy notice clearly stating your intention to revoke your proxy appointment to Capita Asset Services. In the case of a member which is a company, the revocation notice must be executed under its common seal or signed on its behalf by an officer of the company or an attorney for the company. Any power of attorney or any other authority under which the revocation notice is signed (or a duly certified copy of such power or authority) must be included with the revocation notice. The revocation notice must be received by Capita Asset Services at Proxies Department, The Registry, 34 Beckenham Road, Beckenham, Kent BR3 4TU no later than 12 noon on 7 December 2014. If you attempt to revoke your proxy appointment but the revocation is received after the time specified then, subject to paragraph 5 above, your appointment will remain valid. Getech Group plc Annual Report and Accounts 2014 55 Financial statements Notes continued 8 If a corporation is a member of the Company, it may by resolution of its Directors or other governing body authorise one or more persons to act as its representative or representatives at the Meeting and any such representative or representatives shall be entitled to exercise on behalf of the corporation all the powers that the corporation could exercise if it were an individual member of the Company. Corporate representatives should bring with them either an original or certified copy of the appropriate Board resolution or an original letter confirming the appointment, provided it is on the corporation’s letterhead and is signed by an authorised signatory and accompanied by evidence of the signatory’s authority. 9 Copies of Directors’ service contracts with the Company and with any of its subsidiary undertakings and letters of appointment of Non‑executive Directors will be available for at least 15 minutes prior to the meeting and during the meeting. 10 As at 7 November 2014 (being the last business day prior to the publication of this notice) the Company’s issued share capital consists of 30,132,865 Ordinary Shares, carrying one vote each. Therefore, the total voting rights in the Company as at 7 November 2014 is 30,316,184. Explanation of resolutions Resolution number 1 – accounts The Directors of the Company are obliged to present to shareholders the report of the Directors and the accounts for the Company for the year ended 31 July 2014. That report and those accounts, and the report of the Company’s auditor on those accounts, are set out on pages 11 to 50 of this document. Resolution number 2 – final dividend Final dividends must be approved by shareholders but must not exceed the amount recommended by the Directors. If the meeting approves resolution 2, the final dividend in respect of 2014 of 1.76p per Ordinary Share will be paid on 18 December 2014 to shareholders on the register of members on 21 November 2014. Resolution numbers 3, 4 and 5 – re-election of Directors At each general meeting one third of the Directors for the time being (other than those appointed since the latest Annual General Meeting) are required to retire. If the number of relevant Directors is not a multiple of three, the number nearest to but not less than one third of Directors should be obliged to retire. Directors due to retire by rotation are those who have been longest in office since their last re‑election and as between persons who become or were last re‑elected on the same day those due to retire shall (unless they otherwise agree among themselves) be determined by lot. A retiring Director is eligible for re‑election. Raymond Wolfson, Alison Fielding and Peter Stephens retire by rotation and are offering themselves for re‑election. Resolution number 6 – re-appointment of auditor and approving its remuneration The Company is required to appoint an auditor at each general meeting at which accounts are laid, to hold office until the next general meeting. The present auditor, Grant Thornton UK LLP, is willing to continue in office for a further year and this resolution proposes its re‑appointment and, in accordance with standard practice, authorises the Directors to determine the level of the auditor’s remuneration. 56 Financial statements Annual Report and Accounts 2014 Getech Group plc Notice of Annual General Meeting continued Explanation of resolutions continued Resolution number 7 – authority to allot shares The resolution grants the Directors authority to allot relevant securities up to an aggregate nominal amount of £25,263.48, being one third of the Company’s Ordinary Share capital in issue at 7 November 2014. In line with guidance issued by the Association of British Insurers in December 2008 (as amended in November 2009), resolution 7 grants the Directors of the Company authority to allot unissued share capital in connection with a rights issue in favour of ordinary shareholders up to an aggregate nominal amount of £50,526.96 (representing 20,210,789 Ordinary Shares of £0.0025 each) as reduced by the nominal amount of any shares issued under resolution 7.1. The amount, before any such reduction, represents approximately two thirds of the Company’s Ordinary Share capital in issue at 7 November 2014. It is not the Directors’ current intention to allot relevant securities pursuant to this resolution. This authority replaces the existing authority to allot relevant securities but does not affect the ability to allot shares under the share option schemes. Resolution number 8 – disapplication of statutory pre-emption rights This resolution disapplies the statutory pre‑emption rights which would otherwise apply on an issue of shares for cash and is limited to allotments in connection with rights issues or other pre‑emptive offers where the securities attributable to the interests of all shareholders are proportionate (as nearly as may be) to the number of shares held and generally up to a further £11,368.56, being 15% of the Company’s Ordinary Share capital in issue at 7 November 2014. This replaces the existing authority to disapply pre‑emption rights and expires at the conclusion of the next Annual General Meeting of the Company after the passing of this resolution or six months from the end of the Company’s current financial year, whichever is the earlier. Resolution number 9 – purchase of own shares In certain circumstances it may be advantageous for the Company to purchase its own shares and this resolution seeks authority to do this. The Directors would only consider making purchases if they believed that such purchases would be in the best interests of shareholders generally, having regard to the effect on earnings per share and the Company’s overall financial position. The resolution gives general authority for the Company to make purchases of up to 3,031,618 Ordinary Shares (being 10% of the Company’s Ordinary Share capital in issue at 7 November 2014 at a minimum price of £0.0025 and a maximum price being the higher of 5% above the average of the middle market quotations for Ordinary Shares for the five business days prior to the purchase and the price stipulated by Article 5(1) of the Buy‑back and Stabilisation Regulations 2003 (being the higher of the price of the last independent trade and the highest current independent bid on the trading venue where the purchase is carried out)). Companies are permitted to retain any of their own shares which they have purchased as treasury stock with a view to possible re‑issue at a future date, rather than cancelling them. The Company will consider holding any of its own shares that it purchases pursuant to the authority conferred by this resolution as treasury stock. This would give the Company the ability to re‑issue treasury shares quickly and cost effectively and would provide the Company with additional flexibility in the management of its capital base. Design Portfolio plants ten trees for each of its corporate report projects, in association with Trees for Cities. G e t e c h G r o u p p l c A n n u a l R e p o r t a n d A c c o u n t s 2 0 1 4 Getech Group plc Kitson House Elmete Hall Elmete Lane Leeds LS8 2LJ Tel: 0113 322 2200 Fax: 0113 273 5236 Email: info@getech.com Web: www.getech.com
Continue reading text version or see original annual report in PDF format above