10th Jun 2014 07:16
LONDON (Alliance News) - Getech Group PLC saw its shares slump to the bottom of AIM at the market open Tuesday after the company said it will deliver full-year pretax profit "significantly below the market expectation" after client purchasing slowed in comparison to the previous year.
In a trading update for the 12 months to July 31, 2014, the geoscience business said that while it has continued to see strong demand for its consultancy work, actual purchasing by clients has been slow by comparison with last year and predicting the timing of new contracts has been difficult.
Getech said it has built a sales pipeline of close to GBP2 million of leads and remains confident that a number of these contracts will soon be signed. However, due to the expected cycle time to convert the sales pipeline into contracts and then revenue, the company has revised its forecasts, stating Getech will deliver pretax profit for the 12 month period which is significantly below the market expectation.
The company, which specialises in the provision of data, studies and services to the oil, gas and mining exploration sectors, is optimistic when looking ahead, however, stating that it is seeing increasing signs that clients are disposed to start spending again and that the market is returning to normal. "This, when combined with the strength of the sales pipeline, gives confidence about the short and medium term prospects," said Getech.
The geoscience business also said that its multi-satellite project, Globe, which is a three-year project running from mid 2013 to mid 2016 now has GBP800,000 of funding, after sponsors committed to a second wave of funding for the period from July 2014 to July 2017.
"We continue to believe that the present position is the result of an industry-wide slowdown, and are disappointed that this has lasted longer than we expected. However, since mid-May we have signed more than $1.2m worth of new contracts, including our first contractual commitment to the second phase of Globe. There are clear signs that the inertia in the market is lifting and, given the favourable reception we are receiving from our clients, we believe normal trading conditions have resumed," said Raymond Wolfson, Getech's Chief Executive.
Shares in Getech were trading 13.40% lower at 42 pence per share shortly after the market open Tuesday, the biggest faller on AIM.
By Alice Attwood; [email protected]; @AliceAtAlliance
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