TIDMGTC
RNS Number : 2496I
GETECH Group plc
24 March 2015
Getech Group plc
("Getech" or the "Company")
Conditional Acquisition of ERCL by Getech
Getech (AIM; GTC), the geoscience business specialising in the
provision of data, studies and services to the oil, gas and mining
exploration sectors, is pleased to announce the execution of an
agreement to acquire the entire issued share capital of ERCL
Limited, an upstream oil and gas consultancy, (the
"Agreement").
Completion is scheduled for the week commencing 7 April 2015,
conditional on payment of the consideration.
Getech has previously stated a strategic aim of acquiring
companies with clear commercial fit and synergies, in parallel with
the strategic aim of organic growth.
Getech's market position has historically been focussed on
global and regional scale work, which are relatively early in the
exploration workflows. However, Getech has been extending its work
towards basin and block scale evaluation, where there is greater
expenditure and more focus on drilling risk reduction. ERCL's
skills, experience and reputation are primarily in the use and
application of seismic and well data in all stages of the workflow
and hence strongly complement Getech's current capabilities and
market position.
The directors believe the new combined Group will be able to
offer a significantly more comprehensive range of services and
products, addressing exploration and development issues across a
broader spectrum of client workflows. In particular ERCL brings to
the Group a proven track record of working with Governments and
National Oil Companies.
ERCL
ERCL is based in Henley-on-Thames, UK, and was formed in January
2014 by a merger of the businesses of two companies - Exploration
Reservoir Consultants Limited and SAER Limited. It is a specialist
upstream oil and gas consultancy currently employing 26 staff and
supported by a network of specialist associates who further enhance
its capabilities.
The directors of ERCL are all well respected within the industry
and each brings key technical skills developed from having operated
since 1971, in virtually every global petroleum province.
Collectively the directors and staff of ERCL have been involved in
projects in over 100 countries.
ERCL is a high technology company and has more than $1,000,000
of specialist oil industry geoscience software under license that
is utilised by its staff to analyse technical data on behalf of its
clients. The directors believe it's investment in technology,
innovative approach and creativity is well respected and is one of
the company's key differentiators in the industry.
ERCL works closely with governments and national oil companies
providing strategic and advisory services, together with associated
license round management, capacity building and training, data
management and multi-client products.
ERCL also provides geo-technical expertise to oil companies for
exploration and development projects, and to service companies on a
proprietary basis. It also applies this expertise to create new
multi-client data projects.
More information about the services ERCL provides can be found
by visiting www.ercl.com.
In its first year of trading as ERCL, it delivered (unaudited)
income of GBP3.8m and profit before tax in excess of GBP1.2m. This
was supported by exceptional contributions from work in Africa.
The net book value of the assets in the ERCL accounts is
GBP40,000.
Getech will acquire 100% of the issued share capital from the
existing shareholders: Huw Edwards, Richard Heath, Steve Lawrence
and Chris Irons, who will all remain with ERCL following
completion, and SAER Limited. It is proposed that, subject to due
diligence and Nominated Adviser approval, Huw Edwards will be
appointed a director of Getech at a date to be confirmed, after
completion.
The consideration
Getech will pay consideration as follows:
-- On the date of completion, an initial payment of cash GBP1,750,000
-- On the date of completion, an initial issue of 2,176,630
shares. Application will be made to admit these shares to trading
on AIM and it is anticipated that trading in the shares will
commence on 13 April 2015. It is agreed that the shares will be
retained by the ERCL shareholders for a minimum period of one year
from completion. A further announcement will be made when the
transaction completes and the shares are issued.
-- Deferred consideration, based on the performance of the
company over a three-year period. This has an expectation of
generating a total of GBP1,550,000 over the three years if
performance targets are met. The deferred consideration will be
based on the profit before tax to the extent it exceeds a hurdle
level in each year.
The expected value of the aggregate consideration is
GBP4,300,000.
Bank loan
Although Getech has strong cash levels, a loan has been arranged
with RBS/NatWest for GBP1.1m, repayable over four years or less (at
Getech's discretion), with interest rate at 2.04% above base rate.
The loan is secured against the Getech office building in Leeds.
The Directors believe this is the prudent approach and will reduce
the up-front net cash cost of the deal to GBP650,000.
Raymond Wolfson, Chief Executive of Getech Group plc, said: "We
are delighted that agreement has been reached with ERCL. We see a
very strong strategic fit between Getech and ERCL, and believe that
this will open up an extended range of opportunities for the
enlarged group to work with oil and gas exploration companies and
national oil companies. The combined group will have a strong asset
base, a broader range of skills and products, and the ability to
address exploration issues across the full spectrum of clients from
the smallest companies to the super-majors and NOCs.
"We have known a number of the ERCL directors and staff for
several years and are confident that there is both a cultural fit
and a strong ability to work together to grow the combined group.
We look forward to working with ERCL and the opportunities that
this will bring."
Enquiries:
Getech Group plc Tel: 0113 322 2200
Raymond Wolfson, Chief Executive
WH Ireland Limited Tel: 0161 832 2174
Katy Mitchell
This information is provided by RNS
The company news service from the London Stock Exchange
END
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