REG - GETECH Group plc - Final Results
19/05/2022 07:00
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RNS Number : 0246M GETECH Group plc 19 May 2022
Getech Group plc
("Getech" or "the Company" and with its subsidiaries "the Group")
Final Results for the 12 months ended 31 December 2021
The Getech Group (AIM; GTC) announces its Final Results for the 12 months
ended 31 December 2021.
Highlights
A transformational year, investing for future growth.
Key financial highlights
· FY2021 revenue rose c. 20% to £4.3m (2020: £3.6m);
· Orderbook grew by 25% to £3.3m at 31 December 2021 (31 December
2020: £2.7m);
· Annualised recurring revenue* stable at £2.1m at 31 December 2021
(31 December 2020: £2.1m);
· Cost base increased to £6.5m, through equity funded low carbon
investment (2020: £5.2m);
· Loss for the year of £1.6m, adjusted for exceptional items**
(2020: £1.5m loss);
· Reported loss for the year of £1.9m (2020: £1.6m loss); and
· Strong net cash*** position of £5.1m at 31 December 2021 (31
December 2020: £1.4m).
Key corporate and operational highlights
· Repositioned strategy with new 'locate-develop-operate' business
model designed to accelerate a secure and sustainable path to decarbonisation;
· Expanded the application of geoscience data and software products
into essential tools enabling the energy transition and enhancing the security
of energy supply;
· Acquired a green hydrogen developer, and secured the first two
development projects;
· Developed key strategic partnerships with Shoreham Port, SGN
Commercial Services (SGN), Eversholt Rail and the Highland Council; and
· Continued to invest in new talent and skills.
Strong outlook
· Focused on accelerating the global energy transition and ensuring a
secure supply of energy; all whilst delivering transformative shareholder
value through:
o expanding our robust pipeline of products and services for the energy
transition;
o ambition to establish at least 500MW of new geoenergy and green hydrogen
assets by 2030 by:
§ replicating and scaling up our green hydrogen asset development model, both
in UK and internationally;
§ building strategic partnerships to secure and develop geothermal energy
projects; and
§ pursuing energy co-location opportunities in the critical minerals sector.
Getech CEO, Dr Jonathan Copus commented:
"2021 was a transformational year for Getech, during which we invested to
diversify the application of our world-leading petroleum products into new
geoenergy and green hydrogen growth sectors. We also established a new
'locate-develop-operate' business model.
We delivered this against a turbulent macroeconomic backdrop that continues to
highlight the urgent need for the world to significantly increase energy
investment. To ensure energy security and the transition to a low carbon
future, governments have materially increased their clean energy targets and
are fast-tracking policies to accelerate the pace of energy system investment.
In this environment, demand for Getech's products increased - revenue grew 20%
and our orderbook expanded by 25%. We also acquired a hydrogen development
company, H2 Green, and signed a range of valuable strategic partnerships,
securing exclusivity over our first two hydrogen development projects.
Building on this momentum, our ambition is to establish a portfolio of at
least 500MW of new geoenergy and green hydrogen assets by 2030. These could
save c.2 million tonnes of CO2 production annually, and would deliver
transformational value to our shareholders.
Getech moved into 2022 with confidence and we look forward to building our
position in a primary energy market that is undergoing unprecedented change
and growth."
Letter from Chair and CEO
Getech - a geoenergy and green hydrogen company
FY2021 was a year of strategic advancement and robust delivery for Getech.
With a diversification plan focused on green hydrogen, geothermal, critical
minerals and energy/carbon storage, our shareholders supported us in a £6.25
million capital raise to position Getech at the vanguard of the energy
transition.
Through this investment, we are repurposing our world-leading geoscience data
and unique geospatial software products, and successfully extending their
application to geoenergy sectors beyond petroleum, and green hydrogen. During
the year, we have added new content, modules and workflows to our platforms,
solutions and software and have grown our customer base in the energy
transition sectors. Our mission is now firmly set on delivering an
accelerated, secure and sustainable path to decarbonisation through the
application of our products, technologies, and skills.
As we strengthen our status as a trusted partner in the energy transition,
this in turn enables us to establish new revenue-generative relationships that
we can expand into strategic partnerships and build our own portfolio of
scalable repeatable low carbon projects. Our locate-develop-operate business
model has been designed to maximise the value of our unique offering and to
deliver transformational growth in shareholder value.
In FY2021, we purchased H2 Green, a company developing green hydrogen networks
of production, storage, and distribution facilities. Since this acquisition,
we have secured exclusive development rights on two green hydrogen hubs - at
Shoreham Port and in Inverness.
We have also invested in new talent: adding senior executives with significant
engineering, economics, project delivery and business development experience;
and Board skills in business scale up, ESG and low carbon asset management. We
have also enhanced our marketing and communication resources.
Through the recruitment of Max Brouwers - who joined Getech as Chief Business
Development Officer, having previously led the Energy Transition at Shell
Global Exploration - we have established a physical presence in Europe, which
we are growing further in 2022.
Our progress during the year and into 2022 is notable, as evidenced by growth
in revenue, an expanding orderbook, and new asset agreements. We anticipate
further upward momentum as the pace to net zero accelerates.
Business environment
The need to substantially increase energy investment on a global scale has
never been clearer or more urgent. Governments across the world are responding
with new strategy statements, to deliver affordable, secure, and sustainable
low carbon energy. War in Ukraine has heightened this, and in 2022 energy
investment could total as much as 13% of global GDP - the highest level on
record.
This action is underlain by governments' broader commitments to address
climate change. The EU has pledged to be climate-neutral by 2050, with each
member state required to develop a national long-term strategy on how they
plan to achieve this.
Similar trends can be mapped around the world, with decision-makers defining
the budgets, incentives and regulatory structures that are needed to enable
the required investments to proceed within the aspired timetables to deliver
on their energy security and decarbonisation goals. The energy transition
presents governments, regional authorities, cities, and companies with a
complex web of decision making, which Getech can help unlock using its data,
knowledge and analytics.
There is a growing momentum behind the view that low-carbon hydrogen will play
a significant role in the decarbonisation of the energy system, and as a
result, global projections for growth in hydrogen capacity have been revised
upwards in each of the last three years.
This momentum is backed by governments' policies, incentives and funding
support. REPowerEU has quadrupled the EU's green hydrogen supply target to
75GW by 2030 - half of which will be supplied by imported hydrogen. The EU
Commission has also pledged to fast-track market reforms to promote
development of hydrogen projects and infrastructure such as storage.
In the UK, the government has announced various funding programmes and
incentives for low-carbon hydrogen, including the £240 million Net Zero
Hydrogen Fund, a £26 million Industrial Hydrogen Accelerator innovation
programme, and the launch of the world's first national subsidy for clean
hydrogen production. This is aimed at advancing the UK government's ambition
to have up to 2GW of low-carbon hydrogen production capacity by 2025 and up to
10GW installed by 2030 - at least half of which is to be from green hydrogen.
By using our geospatial and economic analytics to identify optimal sites,
Getech is ideally positioned to accelerate the adoption of green hydrogen,
both in UK and internationally.
Our ambition is to establish at least 500MW of new geoenergy and green
hydrogen assets by 2030.
Moving from pledge to action on our sustainability objectives
In 2021, Getech joined the United Nations' Race to Zero
(https://unfccc.int/climate-action/race-to-zero-campaign) campaign, pledging
to become carbon neutral by 2030. To support the delivery of this, we
established an ESG committee and appointed an ESG expert to our non-executive
directors' team.
As we build an ESG-centric business, we are establishing metrics and KPIs that
set a clear and auditable roadmap to assess Getech's 2030 net zero delivery.
We look forward to implementing this enhanced sustainability framework during
FY2022 and reporting on progress in the next annual report.
Outlook
Getech is an established, cash-generative, and diversified growth-focused
business that is well-funded to deliver on our strategy. In 2022, we plan to
continue growing our share of the global energy transition market.
In our foundation products and services business, this means expanding the low
carbon application of our geoscience data and geospatial software products,
through new content, new geoenergy capabilities and delivering innovations
around other key energy transition themes such as CCS.
In asset development, we are progressing our projects in Shoreham Port and
across the Scottish Highlands. Together these projects represent c. 50 MW of
full capacity - equivalent to 10% of our 500 MW ambition.
The tangible progress we are making in the decarbonisation of commercial
transport places us firmly on the hydrogen map. This is widening our
engagement to include larger volume off-takers - such as industrial players
seeking clean hydrogen to decarbonise their operations and organisations
outside of the UK looking to import green hydrogen. In the coming months, we
will progress these discussions as we work to expand our hydrogen portfolio.
We are also evaluating asset participation opportunities in geothermal energy
and energy co-location projects in the critical minerals sector. As further
projects are secured, we will continue to report on our progress towards the
500MW ambition.
On behalf of the board, we would like to thank our shareholders for their
support and our employees for their continued commitment during this exciting
and transformative period for the Group.
Being at the heart of the high growth geoenergy and green hydrogen sectors, we
have moved into 2022 with confidence and believe we are ideally positioned to
deliver substantial growth and value to our shareholders in the coming years.
Richard
Bennett
Jonathan Copus
Chairman
CEO
* Annualised Recurring Revenue is the annualised value of Getech's recurring
contracts, typically this is Globe contracts, Software and Product
subscriptions, and recurring support services.
** Adjusted for exceptional items.
*** Net cash is the balance of cash and cash equivalents after deducting
borrowings.
Getech Group plc Tel: 0113 322 2200
Jonathan Copus, Chief Executive
Cenkos Securities plc
Neil McDonald / Pete Lynch (Corporate Finance)
Michael Johnson / Dale Bellis (Sales) Tel: 0207 397 8900
Camarco Tel: 020 3781 8331
James Crothers / Toby Strong / Charles Dingwall
Operations review - Locate. Develop. Operate.
During 2021, our operational activities have been focused on accelerating the
energy transition by locating, developing and operating geoenergy and green
hydrogen projects.
To achieve this, we began a programme of investment to reshape our unique
petroleum products into essential tools for the energy transition, expanding
their application to high-growth geoenergy sectors beyond petroleum -
targeting geothermal, critical minerals, hydrogen and carbon storage. We
have broadened our operations through a 'locate, develop, operate' business
model, which has enabled us to strengthen our market share in the energy
transition - as demonstrated by growth in revenue, expansion of the orderbook
and securing of new asset agreements.
In 2021, sales of geophysical data and services to both deep and shallow
geothermal operators, as well as new contract wins with leading mining
companies, demonstrated the versatility and applicability of our products and
solutions to locating and de-risking a diverse range of geoenergy resources
across a global spread of geographies.
In turn, this helped with building strategic relationships, through which we
can evaluate unique participation opportunities in decarbonisation projects.
In the year, this led to our first low carbon development investment - the
acquisition of H2 Green, a green hydrogen network developer.
With a number of new senior executive appointments completed in the UK, Europe
and the US, we have strengthened Getech's geographical presence and extended
our talent in engineering, economics, project delivery and business
development to ensure success.
LOCATE
We apply our world-leading geoscience data and unique geospatial software to
help locate, de-risk and optimise geoenergy and green hydrogen projects to
deliver an accelerated energy transition.
Our product model is built on Getech's world-leading global geoscience data -
the value of which we have enhanced through the development of intuitive
geospatial delivery platforms and analytic software. The products are shaped
around our customers' most pressing commercial needs, and new content and
functionality is delivered through robust project management.
We deliver and manage energy and natural resources projects through the
following proprietary platforms, software products and solutions:
Our platforms - Globe and Maptium:
Globe is Getech's flagship earth modelling platform. It provides customers
with a powerful analytic application through which they can access valuable
global geoscience data and knowledge.
Demand and sales for Globe are growing amongst customers in the critical
minerals, geothermal and Carbon Capture and Storage (CCS) sectors. These
customers use Globe to help them understand the physical conditions and
processes that control subsurface energy extraction, energy and carbon
storage, and critical minerals recovery. This resulted in significant new
contract wins during 2021.
Globe's 2021 release was delivered on time and to cost, and further work on
expanding the product's content and functionality is currently underway.
Globe's 2022 release is scheduled for July 2022, and this will mark another a
key stepping-stone in ensuring the platform remains in step with the changing
landscape of the energy transition.
Maptium is a new Getech platform that leverages cutting-edge geospatial
technology to provide cost-effective modular access to essential targeted
data, workflows and analytics that previously were only available through our
global petroleum solutions.
Via a secure web-based gateway, users of Maptium can better visualise and
analyse energy and mineral resource information, which maximises their
understanding and the value of their projects and operations.
The platform's first modules were released in 2021. These modules target data
access and critical minerals workflows - with specific applications to
sedimentary copper exploration, a metal that is key to almost every aspect of
the energy transition. Maptium's content is now being expanded to enhance
exploration for new critical minerals, and applications to the geothermal
sector and carbon capture and storage.
Our software:
Getech's geospatial software empowers customers to streamline common workflows
across a variety of geoenergy projects - improving customers decision making
while increasing project efficiency and understanding of technical risk. The
three software products are:
Exploration Analyst is a favourability mapping tool that helps companies
quantitatively rank information essential to day-to-day business decisions.
Applications include resource prospectivity assessment, license evaluation,
and company/peer benchmarking. In 2021, we incorporated Exploration Analyst's
analytics into our critical minerals, geothermal and carbon storage
activities. This demonstrates the product's versatility across the energy
transition, which has widened Energy Analyst's target markets and user base.
Unconventionals Analyst is a production operations optimisation tool used in
unconventional resource projects, including shale gas and shale oil. Customers
use the product to reduce capital spending by delivering more efficient well
inventory planning and reserve evaluation.
Data Assistant enables easy data transfer between Esri's market-leading
geographic information system technology and commonly used subsurface
interpretation systems used in geoenergy operations, including CCS, petroleum
and geothermal. It helps users eliminate human error from data integration
workflows, and enhances operational data integration and analysis.
Solution delivery - leveraging our capabilities into the energy transition:
In 2021, we released Heat Seeker(TM), which unifies our data, platforms,
software and analytics to provide a proprietary geothermal project location
solution. Heat Seeker's' value lies in our ability to identify potential
geothermal resource sites that are within commercial reach of readily
available customer markets for heat or power.
Heat Seeker achieves this by integrating advanced geospatial analysis and
machine learning with geophysical, geological, commercial and social data, to
create favourability maps of geothermal suitability.
By helping users rapidly identify and evaluate development locations, this
saves them operational time/costs, increases profit-margins and reduces
pay-back times for geothermal projects.
DEVELOP AND OPERATE
Our products and services enable us to establish revenue-generative
relationships with both natural resource asset owners and energy consumers,
which we can then expand into strategic alliances to build our own portfolio
of low carbon assets.
Green Hydrogen
During 2021, we completed our first direct asset investment - purchasing H2
Green, a company working to develop green hydrogen networks of production,
storage, and distribution facilities to decarbonise commercial transport.
Since the acquisition, we have strengthened and advanced H2 Green's activities
by leveraging Getech's core geospatial analytical capabilities, and building
streams of excellence in facility design, project management, economic
modelling, and business development. Drawing on our collective experience in
developing energy assets, we have deployed a rigorous project maturation
process to identify the optimum investment opportunities with maximum capital
efficiency and impact.
These steps resulted in us signing milestone strategic alliances with several
industry and government partners - including SGN, Eversholt Rail, Shoreham
Port and the Highland Council - and securing exclusivity across a wide
portfolio of hub locations. We now hold a compelling position in the emergent
green hydrogen project pipeline.
Regional green hydrogen network in the Highlands
Under the agreement with the Highland Council, we are working to establish a
world-class regional green hydrogen network in the Scottish Highlands. At the
core of this network is a hydrogen hub with SGN in Inverness, the capital of
the Scottish Highlands.
The Inverness site will supply green hydrogen to large-volume commercial
transport customers, such as trains, buses, trucks and heavy goods vehicles.
In line with these goals, we secured agreements with Eversholt Rail to
facilitate the wide-scale deployment of their hydrogen-powered trains on the
Far North and West Highland Lines of Scotland.
Our activities, combined with the Highland Council decarbonisation
initiatives, are set to establish the Scottish Highlands as a leading UK
centre for decarbonisation and innovation - supporting job creation, energy
security and providing a sustainable path for the region's net zero
transition.
Groundworks began at the Inverness site in April 2022, with our strategic
partner SGN undertaking demolition of the former gas holder, expected to be
completed during 2H 2022.
Concurrently, we have continued to progress with finalising the Joint Venture
Agreement with the Highland Council, ahead of the commencement of Front-End
Engineering Design (FEED) for the Inverness hub later in 2022. During
2023-2024, we expect to apply for planning and regulatory approvals, make
Final Investment Decision (FID), procure the equipment, and commence
construction and installation of the production facilities. The first hydrogen
production at the Inverness hub is currently anticipated in H1 2025.
Shoreham Port - Green Energy Hub
At the other end of the country, we have entered the port and maritime energy
sector - securing exclusive development rights for hydrogen, renewable energy,
and ammonia importation at Shoreham Port in West Sussex to create a Green
Energy Hub.
We have been working with our strategic partner Shoreham Port on the phase 1
development plan for onsite hydrogen production, solar roof development and
installation of 6 onshore wind turbines, and we expect to complete this by the
end of June 2022. The phase 1 development is projected to supply green
hydrogen to a significant proportion of over 800 heavy goods vehicles and over
50 forklift trucks that operate within the port daily.
In parallel, we have been working towards a final commercial structure with
Shoreham Port with the intention of completing it in H2 2022, followed by the
commencement of Front-End Engineering Design (FEED) and application for
planning and regulatory approvals later in the year. During 2023-2024, we
expect to make Final Investment Decision (FID), procure the equipment, and
commence construction and installation of the hydrogen production facilities
and rooftop solar. The first hydrogen production, together with installation
of onshore wind is currently anticipated in 1H 2025.
We continue to identify further opportunities in the green hydrogen space
including early production systems. Each opportunity is assessed for economic
potential, so the optimum assets can be selected to progress to development.
The resulting asset funnel passes through a rigorous project maturation
process to quantify the highest value green hydrogen asset opportunities for
our investment.
Geothermal
Combining subsurface understanding with an in-depth overview of above-ground
commercial and operational factors allows us to identify the most prospective
geothermal opportunities.
Since the launch of Heat Seeker, we have been successful in engaging with
governments and private companies and have built a portfolio of business
opportunities around the world, comprised of services and equity entry. We are
currently involved in geothermal projects for clients across numerous
continents, ranging from shallow ground source heat pumps to closed-loop
systems in hot-dry rocks.
Operational focus for FY2022
In 2022, we look forward to advancing our work and alliances across each of
our focus sectors by:
· Expanding product offering for the energy transition:
o releasing new modules on Maptium;
o adding new geoenergy capabilities to Globe;
o increasing adoption of Heat Seeker; and
o delivering innovations around other key energy transition themes such as
CCS.
· Replicating, scaling up and diversifying our green hydrogen
portfolio, both in the UK and internationally;
· Building strategic partnerships to secure and develop geothermal
energy projects; and
· Pursuing energy co-location opportunities within the critical
minerals sector.
Chris Jepps
Chief Operating Officer
Sustainability
In recognition of the commercial and societal importance of sustainability and
ESG, Getech's focus is to both help our customers deliver their ESG
commitments and to define and live by our own ESG principles.
These principles are key to promoting value and resilience for Getech. Our
goal is to grow responsibly - delivering a company that cares about our
people, communities, customers, and the environment.
Getech's support to create a cleaner, greener and sustainable future
The world requires a secure and sustainable path to decarbonisation to create
a cleaner and greener future. In 2021, Getech joined the United Nations' Race
to Zero (https://unfccc.int/climate-action/race-to-zero-campaign) campaign -
pledging to become carbon neutral by 2030. In line with this commitment, we
have a number of initiatives to reduce scope 1 and 2 emissions:
· Reducing transportation footprint. We offer electric car and cycle to
work schemes for employees, which provide a tax efficient path for staff to
reduce their carbon footprint. We also encourage use of videoconferencing in
place of travel, where practical.
· Reducing energy consumption. Low energy LED lighting is used in our
workspace, and waste is recycled.
· Reducing emissions and carbon footprint. We switched to renewable
electricity and green gas suppliers.
· Developing our own portfolio of net zero assets. During the year, we
made targeted direct investments in carbon neutral energy projects to
accelerate decarbonision of our own operations.
We also support customers in reducing their emissions by applying our data,
technologies and skills to:
· Optimise existing, and deliver new energy assets in the transitioning
primary energy sector;
· Expand the range of low carbon energy sources: to produce heat and
power through geothermal energy; to decarbonise transport and heat through the
development of green hydrogen hubs;
· Future proof energy systems through subsurface energy and carbon
storage; and locate new deposits of metals critical to the energy transition;
and
· Innovate technologies and reshape our unique foundation products for
the energy transition.
Moving from pledge to action - FY 2022 objectives
During 2021, Getech established an ESG committee. The committee is chaired by
Emma Parker, who was appointed to the Board as non-executive independent
director during the year. Emma brings more than 18 years' experience as an ESG
and mining operations specialist, with a focus on leading innovative
approaches to sustainability-led value creation, responsible sourcing, and
ethical value chains.
The purpose of the ESG committee is to assist the Board of Directors in
ensuring the business delivers on the commitments and responsibilities related
to material ESG matters relevant to the activities of the Group. This may
include climate change impacts, emissions, environmental and supply chain
sustainability, human rights and diversity and inclusion objectives.
During FY2022, we plan to reshape our business to be ESG-centric through the
following actions:
· Establishing a unified view of ESG;
· Development and continuous appraisal of ESG strategy;
· Establishing ESG metrics and KPIs;
· Overseeing ESG; and
· Defining a clear and auditable roadmap to deliver on Getech's 2030
net zero commitment.
Getech aims to provide a caring, thriving and diverse work environment for its staff
Health, safety and wellbeing
Getech provides support for health, safety and wellbeing to its people and a
thriving work environment through:
· Employee Assistance Programmes to help staff deal with personal and
professional problems that could be affecting their life;
· Comprehensive private medical insurance and an extensive medical cash
plan;
· 24 / 7 bereavement support; and
· Discounts on gym memberships.
We also support a range of extracurricular activities including a workplace
cricket league and a sports and social club, which provide team building
opportunities for all staff.
Equality, inclusion and diversity
Equality, inclusion and diversity is vital to Getech to create a safe and
inclusive workplace. The Group's Equality, Inclusion and Diversity Policy sets
out the expectations of all employees and Board to create this environment. We
actively support diversity and inclusion and ensure that all employees are
valued with dignity and respect.
The employment practices and procedures as part of quality management system
demonstrate fairness and transparency in all areas of the employment
lifecycle, including recruitment. Internal equal pay audits are conducted
where possible across teams and skill sets.
We encourage openness and engagement and provide staff with a fair voice
through various face to face and digital channels such as the intranet,
regular meetings, workshops and performance appraisals. Keeping staff
motivated and properly remunerated is key to the success of Getech's business.
Investing in people's professional development and training
The Company encourages and supports the career development of our staff. We do
this through training, to enhance the delivery of day-to-day employment, as
well as to prepare for new roles and activities. Performance appraisals are
conducted annually and a Personal Development Plan is generated for each
member of staff, which includes objectives for additional training, and career
development.
Trusted corporate partner
Getech has a Charity Committee and participates in various fundraising events
throughout the year - in support of the wider community. During 2021,
financial support was provided to Freedom4Girls, a charity fighting against
period poverty. The fundraiser helped to provide safe period products and
menstrual health education to thousands of women and girls across Leeds, Kenya
and Uganda - enabling them to attend school and work without the stigma and
gender inequalities associated with period poverty. Getech also provided
support to Save the Children and Red Nose Day.
In light of the current conflict in Ukraine, which has had devastating
life-changing consequences for civilians, we provided financial assistance to
the Disasters Emergency Committee's Ukraine humanitarian appeal. The aim of
the appeal is to provide food, water, shelter, healthcare and protection to
families affected by the conflict.
Since 2016, our staff have also volunteered for MapAction - providing
assistance with mapping, data and training. The charity is currently involved
with supporting humanitarian efforts in relation to the Ukraine conflict,
providing life-saving geospatial data, visualisation, and mapping. We are
seeking ways to increase our role in supporting MapAction charity, including
donation
(https://www.facebook.com/mapaction/photos/a.308643218184/10160058792798185/?type=3)
s and training.
Financial review
Getech is focused on growing and diversifying its product and service offering
to both foundation petroleum customers, and new customer markets in the low
carbon economy - where we target the geothermal energy, green hydrogen,
storage, and critical minerals sectors.
Supporting the delivery of this diversification and growth programme, Getech
raised £6.25 million of equity finance in April 2021, which is being used to
build new products and content. Getech has also invested in sales, marketing
and business development capabilities. Following success from these steps, and
progress from our programme of investment, the Board is pleased to report
positive revenue growth by 20% to £4.3 million, together with 25% growth in
the orderbook to £3.3 million. 46 new customers were added during the year,
taking the total to 94 - this includes customers across geothermal, critical
minerals, carbon capture and storage and energy sectors.
The Group's robust revenue generation and our strong balance sheet, with net
cash of £5.1 million, provide a solid platform to deliver on our set plans
and future growth and expansion.
Table 1 - Financial summary 2021 2020
Reported Adjusted ((1)) (unaudited) Reported Adjusted ((1)) (unaudited)
(audited)
£'000 (audited)
£'000
£'000
£'000
Revenue 4,280 4,280 3,563 3,563
Cost base (see table 2) 6,455 6,455 5,154 5,154
Gross margin 46% 46% 53% 53%
Loss after tax (1,949) (1,649) (1,644) (1,529)
Earnings per share (3.27)p (2.77)p (4.38)p (4.07)p
Net cash outflow from operating activities (799) (799) (185) (185)
Development costs (847) (847) (902) (902)
Net (decrease)/increase in cash 3,655 3,655 (1,311) (1,311)
Cash and cash equivalents 5,864 2,192
Net cash 5,095 1,357
Orderbook 3,333 2,665
Annualised recurring revenue 2,094 2,082
(1) Exceptional items
During the year, Getech incurred a one-off amortisation charge related to the
acquisition of H2 Green Limited. In 2020, Getech incurred costs in relation to
restructuring the business.
These exceptional items totalled £300,000 (2020: £115,000).
Operating results
Revenue
2021 revenue totalled £4.3m, an increase of 20% from £3.6m in 2020. This
growth was largely driven by increased product sales, which in 2021 accounted
for 82% of the revenue mix.
Toward the end of 2021, we also saw a significant increase in services sales
activity and multi-year product licence renewals. Whilst this had little
impact on 2021 revenue, it drove a 25% expansion in our sales orderbook - from
£2.7m at the end of 2020 to £3.3m by 31 December 2021. We expect a
significant proportion of this orderbook to unwind to revenue during 2022.
In the period, we continued to work closely with our customers through a broad
programme of engagement, and this was rewarded by a high renewal rate on our
subscription revenues. Annualised recurring revenue totalled £2.1m at 31
December 2021 (31 December 2020: £2.1m).
Gross margin
In 2021, Getech embarked upon multiple diversification projects and rapidly
expanded our hydrogen technical team through the acquisition of H2 Green. As a
result, cost of sales increased by 37% from £1.7m in 2020 to £2.3m in 2021.
This reduced Group gross profit margins from 53% in 2020, to 46% in 2021.
Administrative costs
Administrative expenses include £1.5m (2020: £1.2m) of depreciation and
amortisation charges. Excluding these charges and exceptional items,
administrative expenses totalled £3.5m, (2020: £2.4m). The additional
expenditure reflects progress across a broad front of equity-funded growth
investment. We have absorbed additional expenditure relating to the
acquisition of H2 Green - the costs of which in 2021 we fully expensed, as
well as expanding our Business Development team, and strengthening our
marketing capabilities. In H2 2021, staff returned to full pay, having
previously agreed to salary reductions in May 2020 as part of our Covid cost
saving measures implemented at that time.
Through this period of investment, Getech has also kept focus on prudent
capital management; in February 2021 Getech sub-let the London office and has
made rates savings on the Leeds office throughout the year.
Cost base analysis
Getech's cost base has increased to £6.5m from £5.2m, this includes research
and development costs totalling £1.6m (2020: £0.5m). The table below
reconciles our cost base to the financial statements.
Table 2 - Cost base reconciliation % variance 2021 2020
£'000
£'000
Cost of sales 2,315 1,681
Development costs capitalised 847 902
Administrative costs (excluding exceptional items) 4,733 3,551
Payment of lease liabilities* - 136
Depreciation and amortisation charges (excluding exceptional items) (1,225) (1,174)
Movement in provisions (88) -
RDEC adjustments* (127) 52
Exchange adjustments - 6
Cost base, excluding exceptional items 25% 6,455 5,154
Cost base is measured as: cost of sales, administrative costs, development
costs capitalised and payment of lease liabilities, less depreciation and
amortisation, movement in provisions, and non-cash foreign exchange
adjustments.
* Lease liabilities have been excluded from the 2021 cost base reconciliation
due to the London office now being sub-let. RDEC adjustments have been
excluded from the cost base to help give a better like for like comparison of
in-year costs.
Income tax
To help our customers understand and resolve their geoenergy and green
hydrogen exploration and operational challenges requires Getech to undertake
pioneering research and development. Against the cost of this work, we
obtained corporation tax relief, and subsequently realised a tax credit
relating to the 2021 tax year of £873,000 (2020: £241,000 credit).
Getech reported an adjusted loss after tax of £1.6m (2020: £1.5m loss).
Operating cash flows
Due to Getech's investment in diversification strategy, and the acquisition of
H2 Green cash outflow from operations increased to £0.8m (2020: £0.2m
outflow).
Financing
In April 2020, to protect the Group from the uncertainties arising from Covid
and a low oil price, Getech took a 12-month capital repayment holiday on the
loan secured against Kitson House. Getech recommenced capital repayments in
April 2021. Repayments against the loan facility amounted to £66,000 (2020:
£20,000).
Payment of lease liabilities totalled £199,000 (2020: £136,000) and relate
to the London and Houston office leases. In February 2021, Getech sub-leased
the London office as part of the continued capital efficiency measures, rental
payments received are included in other operating income.
In April 2021, Getech successfully completed an equity raise, with net
proceeds, totalling £5.7m.
Business combinations
In March, Getech purchased 100% of the ordinary share capital of H2 Green, a
company developing green hydrogen networks of production, storage, and
distribution facilities. This acquisition has been accounted for as a business
combination in the 2021 financial year, this includes a £335,000 addition to
Goodwill.
Liquidity and Going Concern
At the end of 2021, Getech held £5.9m in cash and cash equivalents (2020:
£2.2m). Net of debt, Getech's cash balance was £5.1m (2020: £1.4m)
Getech's business activities and the factors likely to affect our future
development, performance and position are set out in the Chairman's and Chief
Executive's Review. The financial position of the Group, our cash flows and
liquidity position are described in the financial statements.
In making the going concern assessment, the Board of Directors has considered
Group budgets and detailed cash flow forecasts to 30 June 2023. The Board has
considered the sensitivity of these forecasts with regards to different
assumptions about future income and costs.
These cash flow projections, when considered in conjunction with Getech's
existing cash balances, and continued careful cash management, demonstrate
that the Group has sufficient working capital for the foreseeable future.
Consequently, the Directors are fully satisfied that Getech is a going
concern.
Andrew Darbyshire
Chief Financial Officer
Consolidated Statement of Comprehensive Income
for the year ended 31 December 2021
2021 2020
£'000
£'000
Sales revenue 4,280 3,563
Cost of sales (2,315) (1,681)
Gross profit 1,965 1,882
Other operating income 176 -
Administrative expenses (4,733) (3,551)
Operating loss before exceptional items (2,592) (1,669)
Exceptional items (300) (115)
Operating loss (2,892) (1,784)
Finance revenue - 1
Finance costs (55) (45)
Other gains and losses 60 10
Loss before taxation (2,887) (1,818)
Income tax income 938 174
Loss for the year (1,949) (1,644)
Other comprehensive income:
Currency translation differences 24 (57)
Total comprehensive income for the year attributable to owners of the Parent (1,925) (1,701)
Company
Earnings per ordinary share (EPS)
Basic EPS (3.27)p (4.38)p
Diluted EPS (3.27)p (4.38)p
All activities relate to continuing operations.
Consolidated Statement of Financial Position
as at 31 December 2021
2021 2020
£'000
£'000
Non-current assets
Goodwill 631 296
Intangible assets 3,431 3,509
Property, plant and equipment 2,355 2,716
Investment property 174 -
Deferred tax asset 214 364
6,805 6,885
Current assets
Trade and other receivables 1,591 1,353
Current tax recoverable 793 278
Cash and cash equivalents 5,864 2,192
8,248 3,823
Total assets 15,053 10,708
Current liabilities
Trade and other payables 2,127 1,366
Borrowings 110 85
2,237 1,451
Net current assets 6,011 2,372
Non-current liabilities
Borrowings 659 750
Trade and other payables 102 282
Deferred tax liabilities - 176
Long-term provisions 25 -
786 1,208
Net assets 12,030 8,049
Called up share capital 167 94
Share premium account 8,685 3,053
Merger reserve 2,601 2,407
Share-based payment (SBP) reserve 258 251
Currency translation reserve (2) (26)
Retained earnings 321 2,270
Total equity 12,030 8,049
The financial statements of Getech Group plc (company number: 02891368) were
approved by the Board of Directors and authorised for issue on 18 May 2022.
Andrew Darbyshire
Chief Financial Officer
Consolidated Statement of Changes in Equity
for the year ended 31 December 2021
Share capital Share premium account Merger reserve SBP reserve Currency translation reserve Retained earnings Total equity
£'000
£'000
£'000
£'000
£'000
£'000
£'000
1 January 2020 94 3,053 2,407 242 31 3,892 9,719
Loss for the year − − − − − (1,644) (1,644)
Other comprehensive income − − − − (57) − (57)
Total comprehensive income − − − − (57) (1,644) (1,701)
Transactions with owners:
Share-based payment charge − − − 31 − − 31
Transfer of reserves − − − (22) − 22 −
31 December 2020 94 3,053 2,407 251 26 2,270 8,049
Loss for the year − − − − − (1,949) (1,949)
Currency translation differences − − − − 24 − 24
Total comprehensive income − − − − 24 (1,949) (1,925)
Transactions with owners:
Issue of share capital 73 6,179 194 − − − 6,446
Share-based payment charge − − − 7 − − 7
Cost of share issue deducted from share premium − (547) − − − − (547)
31 December 2021 167 8,685 2,601 258 (2) 321 12,030
Consolidated Statement of Cash Flows
for the year ended 31 December 2021
2021 2020
£'000
£'000
Operating activities
Loss before tax (2,887) (1,818)
Adjusted for non-cash items:
Fair value gains and losses (60) (10)
Depreciation charge 299 214
Amortisation of intangible assets 1,226 960
Expected credit loss provisions on loans and loan commitments - 70
Share-based payment expense 7 31
Finance income - (1)
Finance costs 55 45
RDEC adjustments within administrative expenses (127) -
Foreign exchange adjustments - (6)
(1,487) (515)
(Increase)/decrease in trade and other receivables (245) 600
Increase/(decrease) in trade and other payables 710 (352)
Cash generated from operations (1,022) (268)
Income tax refunded 223 83
Net cash outflow from operating activities (799) (185)
Investing activities
Business combinations (net of cash received) (54) -
Development costs capitalised (847) (902)
Purchase of property, plant and equipment (29) (24)
Interest received - 1
Net cash used in investing activities (930) (925)
Financing activities
Proceeds from issue of shares 6,250 -
Share issue costs (547) -
Repayment of bank loans (66) (20)
Payment of lease liabilities (199) (136)
Interest paid (44) (45)
Net cash generated from/(used in) financing activities 5,394 (201)
Increase/(decrease) in net cash and cash equivalents 3,665 (1,311)
Cash and cash equivalents at the beginning of the year 2,192 3,554
Effect of exchange rates 7 (51)
Cash and cash equivalents at the end of the year 5,864 2,192
Notes to the Consolidated Financial Statements
for the year ended 31 December 2020
Basis of preparation
The financial statements set out in this preliminary announcement do not
constitute statutory accounts as defined by section 434 of the Companies Act
2006. It has been prepared in accordance with International Accounting
Standards in conformity with the requirements of the Companies Act 2006. The
principal accounting policies of the Group have remained unchanged from those
set out in the Group's 2020 annual report as delivered to the Registrar of
Companies. The financial statements have been prepared under the historical
cost convention and are presented in sterling.
Statutory accounts for the years ended 31 December 2021 and 31 December 2020
have been reported on by the Independent Auditor. The Independent Auditor's
Reports on the Annual Report and Financial Statements for the periods ended 31
December 2021 and 31 December 2020 were unqualified, did not draw attention to
any matters by way of emphasis, and did not contain a statement under 498(2)
or 498(3) of the Companies Act 2006.
The statutory accounts for the year ended 31 December 2021 were approved by
the board on 18 May 2022 and the information included in this preliminary
announcement was extracted therefrom.
The Board of Directors has considered Group budgets and detailed cash flow
forecasts to 30 June 2023. The Board has considered the sensitivity of these
forecasts with regards to different assumptions about future income and costs.
The detailed forecasting models are built from Board approved budgets. From
these budgets, revenue forecasting is regularly updated to take into
consideration new contractually committed revenues, market sentiment, our
current sales pipeline, and any other influencing factors. The Directors then
further apply sensitivity testing to the revenue profiles based on the
achievement of various levels of revenue from noncontractually committed
sources.
These cash flow projections and sensitivities, when considered in conjunction
with Getech's existing cash balances, the net proceeds of the equity raise
totalling £5.7m and resulting year end cash balance of £5.9m, demonstrate
that the Group has sufficient working capital for the foreseeable future.
Consequently, the Directors are fully satisfied that Getech is a going
concern.
Earnings per share (EPS)
2021 2020
Number
Number
Number of shares
Weighted average number of ordinary shares for basic EPS 59,612,590 37,564,000
2021 2020
£'000
£'000
Earnings (all attributable to equity shareholders of the company)
Loss for the period from continued operations (1,949) (1,644)
Basic and diluted EPS
From continuing operations (pence/share) (3.27) (4.38)
Basic EPS is calculated by dividing the profit attributable to equity holders
of the parent by the weighted average number of ordinary shares outstanding
during the year.
Diluted EPS is calculated by dividing the profit attributable to equity
holders of the parent by the weighted average number of ordinary shares
outstanding plus the weighted average number of shares that would be issued on
conversion of all the dilutive share options into ordinary shares. In the
current and comparative year, the Group has incurred losses and as such has
not presented any dilution of earnings per share in accordance with IAS 33
'Earnings per share'. However, these dilutive shares would dilute the earnings
per share should the Group become profitable.
Adjusted Earnings per share
The Directors use "Adjusted Earnings" as a Key Performance Measure, which is
defined as earnings before exceptional items. In the current year this
includes a material component of non-recurring amortisation which has only
arisen because of the business combination with H2 Green Limited. Adjusted
Earnings is considered to represent and measure the ongoing profitability and
performance more faithfully.
The calculated Adjusted Earnings for the current period is as follows:
2021 2020
£'000
£'000
Loss for the period from continued operations (1,949) (1,644)
Adjusted for:
Exceptional items 300 115
(1,649) (1,529)
Basic adjusted earnings per share (pence/share) (2.77) (4.07)
Notice of Annual General Meeting
The Annual Report and Accounts and notice convening the Annual General Meeting
of the Company will be posted to shareholders on 31 May 2022 and will be
available from the Company's website www.getech.com (http://www.getech.com)
from that date. The Annual General Meeting of Getech Group plc will be held on
23 June 2022 at 12 noon.
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