Getech ready to step out on buying trail again

Shares in the Leeds-based company gained 7.9 per cent yesterday, rising 1.5p to 20.5p, after beating market expectations and resuming dividends.

The University of Leeds spin-out yesterday reported £670,000 pre-tax profits for the year to the end of July compared with £228,000 losses a year earlier. Revenues increased 63 per cent to £5.3m.

Getech sells complex geological and geophysical data to help oil companies including Shell, BP and Exxon Mobil decide where to sink new wells. It has been boosted by consistently high oil prices, which are encouraging spending.

It plans to pay a dividend of 0.2p per share, its first since early 2009.

“We put acquisitions on hold because of a combination of the cash position not being sufficiently strong and the share price being low,” said chief executive Raymond Wolfson.

“Our strategy is to look at acquisitions and we are doing that. It’s focused on businesses where we can see synergies.”

Currently, about 51 per cent of the company’s shares are held by staff and directors, with university research incubator IP Group holding another 25 per cent.

New chairman Stuart Paton, the former chief executive of Scottish oil firm Dana Petroleum who quit after its takeover by Korea National Oil Corporation (KNOC), said the company needs to free up its shares to improve liquidity.

“That’s a position we would like to move towards,” he said. “As the share price moves up that might encourage people to look at opportunities.”

Mr Paton said takeover targets, which tend to be privately-owned businesses, could be companies focused on drilling or those with complementary stores of data.

“As the balance sheet strengthens we obviously have paper,” he said. “It’s really important that we do the correct deal and not feel pressured into doing a deal, but if the correct opportunity comes along we can move very quickly.”

Getech ended July with net cash of £654,851. Its profits were boosted by terminating a revenue-share agreement with an unnamed party. Typically, it shares revenues with the original owners of the data, which include state oil companies and universities. Mr Wolfson said there was “ambiguity” in the licence, which in his view had expired.

Eric Burns, analyst at house broker WH Ireland, said: “An unexpected early return to the dividend list suggests to us the generally cautious management team believe the company has definitively turned the corner.

“The high-profile appointment of Stuart Paton as chairman has also improved the look and feel of the business and may open up future opportunities in the sector.”