REG - GETECH Group plc - Half-year Report
23/09/2024 07:00
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RNS Number : 1242F GETECH Group plc 23 September 2024
23 September 2024
Getech Group plc
("Getech" or "the Company")
Interim Results
Getech (AIM:GTC), a world leading locator of subsurface resources, announces
its unaudited interim results and report for the six months to 30 June 2024
("H1 2024" or "the Period").
Operational Highlights
· Implemented the significant restructuring of the business to
deliver:
· Successful diversification into energy transition market has
grown sales pipeline to £9.6 million.
· Expanded annual recurring revenues base with introduction of
subscription model.
· Introduced equity participation structure with a focus on natural
hydrogen.
· AI and Machine Learning added to the capabilities of the Globe
platform.
· Kitson House sold for £0.65 million in January 2024.
· Nicholson House remains an asset held for sale.
Financial Highlights
· H1 2024 revenues of £2.2 million (H1 2023: £1.9 million), a
year-on-year increase of 16%.
· Strong contractually committed orderbook value of £4.7 million
(31 December 2023: £4.6 million) with £1.7 million of the orderbook expected
to convert to revenue in H2 2024, and a further £1.5 million due in FY 2025.
· Cost base for the period reduced by 28% to £2.8 million (H1
2023: £3.9 million).
· Cash balance of £0.2 million on 30 June 2024 (31 December 2023:
£0.4 million).
· Debt of £0.1 million (31 December 2023: £0.6 million).
· Net cash flow break-even from operations (H1 2023: £1.6 million
outflow).
· £0.3 million EBITDA loss before exceptional items (H1 2023:
£1.6 million).
Post H1 & Outlook
· Raised gross proceeds of £1.7 million in a Placing and Retail
Offer in August 2024.
New capital has both bolstered the balance sheet and provides growth capital
to expand sales and business development teams.
Michael Covington, Getech Chairman commented:
"The business is evolving in the right direction. Last year we reset the
structure and focus of the Company while also substantially reducing our
overheads. This year, following our recent fundraise, the business is well
placed to increase its customer base of exploration companies seeking new
discoveries of assets needed for the energy transition. To that end, we have
an expanding pipeline of potential projects, and we are focused on converting
them."
Investor Meet Company presentation
The company will hold an investor call on 23 September 2024 at 10.30am to
discuss the interim results. Investors can sign up to Investor Meet Company
for free and add to meet Getech via:
https://www.investormeetcompany.com/companies/getech-group-plc
For further information, please contact:
Getech Group plc Tel: 0113 322 2200
Richard Bennett, CEO
Cavendish Capital Markets Limited Tel: 0207 397 8900
Neil McDonald / Pete Lynch (Corporate Finance)
Michael Johnson / Dale Bellis (Sales)
Novella Tel: 020 3151 7008
Tim Robertson/Safia Colebrook
Notes to editors:
Getech Group plc (AIM: GTC) applies its world-leading geoscience data and
unique geospatial software products to accelerate the Energy Transition by
locating geoenergy projects and critical minerals.
For further information, please visit www.getech.com (http://www.getech.com) .
CEO statement
Introduction
I am pleased to present Getech's half-year results for the six months to 30
June 2024. We have delivered an uplift in profitability, grown our orderbook
and significantly increased our sales pipeline to £9.6 million, and post the
period end we have successfully raised gross proceeds of £1.7 million through
a Placing and Retail Offer, which also added a number of key shareholders to
the Company's register. As a result, the Group is financially stable, more
focused and better positioned to pursue its expanded pipeline of new business
opportunities.
Following a strategic review, the Group was refocused on to its core strength
of data-led subsurface exploration. As part of this process, the loss-making
green hydrogen business H2 Green was closed, enabling a 28% reduction in the
Group's cost base. Alongside these actions, the Group continued its migration
to a recurring income Software-as-a-Service (SaaS) model with supporting
consulting services aimed at delivering sustainable annual recurring revenues.
Subsurface exploration activity has increased substantially in parallel with
the global move to deliver a low carbon environment, known as the Energy
Transition. As the owner of the largest database of potential fields data,
coupled with the Company's extensive geoscience expertise, Getech is well
placed to apply its subsurface data and expertise to help exploration
companies find these vital energy resources.
Financial Results
In the six months under review, the Group generated revenues of £2.2 million
(H1 2023: £1.9 million) an increase of 16%. The contractually committed
orderbook grew to £4.7 million (31 December 2023: £4.6 million) with £1.7
million of the orderbook expected to convert to revenue in H2 2024, and a
further £1.5 million due in FY 2025. Annualised recurring revenue increased
to £2.9 million (31 December 2023: £2.8 million). With a reduced cost base
of £2.8 million (H1 2023: £3.9 million) this led in H1 2024 to a £0.3
million EBITDA loss before exceptional items (H1 2023: £1.6 million EBITDA
loss).
On 30 June 2024 the Group had cash balances of £0.2 million (31 December
2023: £0.4 million) and net debt of £0.1 million (31 December 2023: £0.6
million).
In January 2024 we completed the sale of Kitson House for £0.65 million. The
remaining section of our Leeds head office, Nicholson House, is currently on
the market.
Post the period end, in August 2024 the Group successfully raised gross proceeds of £1.7 million through a Placing and Retail Offer. The net proceeds are being used to fund sustainable growth, strengthen the balance sheet and invest a modest sum on business development and targeted research and development activities.
Operational Review
We have been successful in diversifying our customer base beyond oil and gas
toward exploration companies focused on locating essential natural resources
for the energy transition such as critical minerals, geothermal and carbon
storage. It remains the Company's ambition to generate at least half of the
Company's revenue from exploration companies focused on locating natural
resource discoveries needed to deliver the energy transition -currently they
represent 33% of Group revenues with the balance coming from transitional
petroleum.
In the period under review, the Company secured 53 contract wins totalling
£2.2m, including seven new annual software subscription customers and the
renewal of eighteen annual licences.
Getech's substantial subsurface database is accessed via its Globe platform
with a focus on delivering a SaaS revenue model. The capabilities of the Globe
platform have been significantly expanded with the support of artificial
intelligence (AI) and machine learning techniques in addition to new search
capabilities. Alongside this, customers have been successfully encouraged to
move to a subscription basis to access the platform. This has supported the
aim of increasing annual recurring revenues, which grew to £2.9 million.
Getech's success in refocusing the business and diversifying its revenue base
across the wider energy transition is reflected in the growth of the pipeline
of sales prospects to £9.6 million which is split across the three prime
strengths of the business:
· Globe Platform & Software - £4.9 million
· Geoscience Data - £1.9 million
· Geoscience Services - £2.8 million
This pipeline has increased significantly and represents an excellent
opportunity to grow and diversify the business.
Further to the sales pipeline, additional upside potential has been introduced
through a new equity participation scheme, enabling the Company to earn a
future share in assets with the potential to generate substantially higher
returns from the data than has been achieved historically. In February 2024,
Getech entered an equity participation scheme Joint Venture with East Star
Resources to locate sedimentary copper deposits in Kazakhstan. The project is
backed by the BHP Xplor 2024 accelerator programme and led to further contract
wins with East Star in April 2024 when, for the first time, Getech's Globe
geoscience platform
(https://getech.com/getech-explore/products/technology/globe/) was used to
locate porphyry copper. A pipeline of similar equity participation
transactions is maturing, particularly within the natural hydrogen space where
significant capital and commercial interest is currently being directed.
Outlook
I feel the business is in a much better position. The restructuring has
created a more focused, streamlined business operation and the recent
fundraising ensures we can pursue our commercial ambitions. To that end, we
have already recruited one senior business development executive who will be
part of a wider team focused on monetising the £9.6 million pipeline of
opportunities that have been developed. Alongside this, the Company will
continue to pursue the equity participation transactions, particularly in the
natural hydrogen space.
Richard Bennett, CEO
Financial Review
Revenue and Sales
H1 2024 revenue totalled £2.2 million (H1 2023: £1.9 million), representing
a 16% increase. During the period Getech won contracts amounting to £2.6m,
including new business and subscription renewals, resulting in an increase in
orderbook value to £4.7 million (31 December 2023: £4.6 million).
Annualised Recurring Revenue ("ARR") has increased to £2.9 million (31
December 2023: £2.8 million).
Cost Management
Getech completed its strategic review in H2 2023 and implemented a substantial
cost reduction programme. As a result, the cost base was reduced by 28%
compared to H1 2023, excluding exceptional items.
Variance from prior period 6 months ended 30 June 2024 6 months ended 30 June 2023 12 months ended 31 December 2023
(unaudited)
(unaudited)
(audited)
£'000
£'000
£'000
Cost of sales 776 1,058 3,034
Development costs capitalised 397 485 881
Administrative expenses 2,095 2,968 4,716
Depreciation charges (67) (114) (186)
Amortisation charges (355) (417) (745)
Share-based payments (11) (69) (84)
Movement in provisions - - (25)
Total cost base excluding exceptional items -28% 2,835 3,911 7,591
Profitability
Getech's increased revenue, combined with its cost reduction programme have
resulted in a significant reduction in the losses incurred during the prior
period. Getech reports an EBITDA loss, before exceptional items, of £0.3
million (H1 2023: £1.6 million), and is on track to being EBITDA positive by
the end of 2024.
Post-tax loss, after exceptional items, was £0.7 million (H1 2023: £2.7
million loss).
Operating Cash Flow
Getech was net cash flow break even from operations (H1 2023: £1.6 million
outflow). This included £0.1 million of exceptional costs relating to the
closing of H2 Green operations (H1 2023: £0.4 million of exceptional costs
included).
Liquidity
During H1 2024 there was an overall net cash outflow of £0.2 million (H1
2023: £2.3 million outflow). This included proceeds from the sale of Kitson
House (£0.65 million inflow), which were used in repayment of a £0.6 million
loan secured on the property sold, and £0.15 million drawdown from a new
working capital facility secured against the remaining Nicholson House, which
Getech intends to sell before the end of the year. The cash balance at the
period end was £0.2 million (30 June 2023: £2.0 million).
Subsequent to the period end, Getech completed a placing totalling £1.4
million net of costs for working capital purposes and to fund future growth.
Group Statement of Comprehensive Income
for the six months ended 30 June 2024
6 months ended 30 June 2024 6 months ended 30 June 2023 12 months ended 31 December 2023
(unaudited)
(unaudited)
(audited)
£'000
£'000
£'000
Revenue 2,158 1,851 4,023
Cost of sales (776) (1,058) (3,034)
Gross profit 1,382 793 989
Other operating income - - 65
Administrative expenses (2,095) (2,968) (4,716)
Operating loss before exceptional items (713) (2,175) (3,662)
Restructure costs (89) (397) (565)
Impairments - (335) (961)
Operating loss (801) (2,907) (5,188)
Finance income 2 12 17
Finance costs (22) (25) (55)
Other gains and losses - - 125
Loss before tax (821) (2,920) (5,101)
Tax income 75 161 (48)
Loss for the period (746) (2,759) (5,149)
Other comprehensive income
Currency translation differences (7) 47 78
Total comprehensive loss (753) (2,712) (5,072)
Group Statement of Financial Position
as at 30 June 2024
30 June 2024 30 June 2023 31 December 2023
(unaudited)
(unaudited)
(audited)
£'000
£'000
£'000
Non-current assets
Goodwill 296 296 296
Intangible assets 3,648 3,481 3,606
Property, plant and equipment 38 2,254 83
Investment property - 17 -
Deferred tax asset 110 226 109
4,092 6,274 4,093
Current assets
Trade and other receivables 1,002 1,238 1,351
Current tax recoverable 136 440 74
Cash and cash equivalents 154 1,981 385
Assets classified as held for sale 825 - 1,475
2,117 3,659 3,285
Total assets 6,209 9,933 7,378
Current liabilities
Trade and other payables 2,409 2,559 2,395
Borrowings 148 110 589
2,557 2,669 2,984
Net current assets (439) 990 301
Non-current liabilities
Borrowings - 527 -
- 527 -
Net assets 3,652 6,737 4,394
Equity
Called up share capital 169 169 169
Share premium account 8,685 8,685 8,685
Merger reserve 2,601 2,601 2,601
Share-based payment (SBP) reserve 56 176 158
Currency translation reserve 179 155 169
Retained earnings (8,038) (5,048) (7,405)
Total equity 3,652 6,737 4,394
Group Statement of Changes in Equity
for the six months ended 30 June 2024
Share capital Share premium Merger reserve SBP reserve Currency translation reserve Retained earnings Total equity
£'000
£'000
£'000
£'000
£'000
£'000
£'000
1 January 2024 169 8,685 2,601 158 186 (7,405) 4,394
Loss for the year - - - - - (746) (746)
Other comprehensive income - - - - (7) - (7)
Total comprehensive income - - - - (7) (746) (753)
Transactions with owners of the company:
SBP charge - - - 11 - - 11
Transfer of reserves - - - (113) - 113 -
30 June 2024 (unaudited) 169 8,685 2,601 56 179 (8,038) 3,652
for the six months ended 30 June 2023
Share capital Share premium Merger reserve SBP reserve Currency translation reserve Retained earnings Total equity
£'000
£'000
£'000
£'000
£'000
£'000
£'000
1 January 2023 169 8,685 2,601 196 108 (2,378) 9,380
Loss for the year - - - - - (2,759) (2,759)
Other comprehensive income - - - - 47 - 47
Total comprehensive income - - - - 47 (2,759) (2,712)
Transactions with owners of the company:
SBP charge - - - 69 - - 69
Transfer of reserves - - - (89) - 89 -
30 June 2023 (unaudited) 169 8,685 2,601 176 155 (5,048) 6,737
for the year ended 31 December 2023
Share capital Share premium Merger reserve SBP reserve Currency translation reserve Retained earnings Total equity
£'000
£'000
£'000
£'000
£'000
£'000
£'000
1 January 2023 168 8,685 2,601 196 108 (2,378) 9,380
Loss for the year - - - - - (5,149) (5,149)
Other comprehensive income - - - - 78 - 78
Total comprehensive income - - - - 78 (5,149) (5,071)
Transactions with owners of the company:
Issued share capital 1 - - - - - 1
SBP charge - - - 84 - - 84
Transfer of reserves - - - (122) - 122 -
31 December 2023 (audited) 169 8,685 2,601 158 186 (7,405) 4,394
Group Statement of Cash Flows
for the six months ended 30 June 2024
6 months ended 30 June 2024 6 months ended 30 June 2023 12 months ended 31 December 2023
(unaudited)
(unaudited)
(audited)
£'000
£'000
£'000
Operating activities
Loss before tax (823) (2,920) (5,102)
Adjusted for non-cash items:
Other gains and losses - (125) (125)
Depreciation charges 67 114 186
Amortisation charges 355 417 745
Impairment of property, plant and equipment - - 626
Impairment of intangible assets - 335 335
Loss on disposal of assets - - 8
Movement in provisions - - 25
SBP charge 11 69 84
Finance income (2) (12) (17)
Finance charges 22 25 55
Gains and losses on exchange rate (5) 65 (1)
Operating cash flow before working capital movement (375) (2,032) (3,180)
(Increase)/decrease in trade and other receivables 348 (35) (149)
Increase/(decrease) in trade and other payables 23 434 212
Income tax refunded 12 5 278
Net cash from operating activities 8 (1,628) (2,837)
Investing activities
Development costs capitalised (397) (485) (459)
Purchase of property, plant and equipment (22) (33) (115)
Proceeds from sale of property, plant and equipment 650
Interest received 2 12 1
Net cash from investing activities 233 (506) (573)
Financing activities
Proceeds from issue of shares - 1
Proceeds from borrowings 148 - -
Repayment of borrowings (589) (46) (91)
Payment of lease liabilities (9) (117) (160)
Interest paid (22) (25) (55)
Net cash from financing activities (472) (188) (305)
Net decrease in cash and cash equivalents (231) (2,322) (4,034)
Cash and cash equivalents at the beginning of the period 385 4,322 4,322
Effect of foreign exchange rates - 97 (19)
Cash and cash equivalents at the end of the period 154 385 1,981
Notes to the Interim Report
for the six months ended 30 June 2024
Corporate Information
Getech Group plc ("the Company" and ultimate Parent of "the Group") is a
public limited company domiciled and incorporated in England and Wales. The
Company's registered office and principal place of business is Nicholson
House, Elmete Lane, Leeds LS8 2LJ.
The principal activity of the Group is locating energy and minerals essential
for the world's energy transition. Getech generates revenue by locating new
energy and mineral resources using its extensive data, geoscience expertise,
AI-driven analytics and extensive GIS capabilities. The Group's client
portfolio is wade-ranging, from governments, municipalities, natural resources
and energy companies to consumer goods and computing services companies, all
striving to become energy and minerals self-sufficient and drive towards net
zero.
Basis of Preparation
The interim results are for the six months ended 30 June 2024. They have been
prepared using the recognition and measurement principals of international
accounting standards in conformity with the requirements of the Companies Act
2006. As permitted, this interim report has been prepared in accordance with
the AIM rules and not in accordance with IAS 34 'interim financial reporting'
and therefore the interim information is not in full compliance with
international accounting standards.
This interim report does not constitute full statutory financial statements
within the meaning of section 434(5) of the Companies Act 2006 and the
financial statements are unaudited. The unaudited interim financial statements
were approved for issue by the board on 20 September 2024.
The financial statements are prepared on a going concern basis under the
historical cost convention, with the exception of certain items measured at
fair value, and are presented to the nearest thousand pounds (£'000), except
as otherwise stated. They have been prepared in accordance with the accounting
policies adopted in the last annual financial statements for the year ended 31
December 2023. A copy of the audited financial statements for the period ended
31 December 2023 has been delivered to the Registrar of Companies. The
Auditor's opinion on those financial statements was unqualified, however
included an emphasis of matter disclosure in relation to going concern, and it
contained no statement under section 498(2) or section 498(3) of the Companies
Act 2006.
In making the going concern assessment, the Board of Directors has considered
Group budgets and detailed cash flow forecasts for the next 12 months. 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 the Group's existing cash balances and its ability to adjust costs in
accordance with forecast levels of revenue, demonstrate that the Group has
sufficient working capital for the forecast period. Consequently, the
Directors are fully satisfied that it is appropriate to prepare the accounts
on a going concern basis.
Earnings per Share (EPS)
6 months ended 30 June 2024 6 months ended 30 June 2023 12 months ended 31 December 2023
(unaudited)
(unaudited)
(audited)
Loss attributable to the equity holder of the Group (£'000) (746) (2,759) (5,149)
Weighted average number of Ordinary shares in issue 67,474,375 67,296,225 67,381,385
Basic and diluted loss (pence per share) (1.11) (4.10) (8.05)
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 period.
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 period, 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.
Directors, Officers and Advisors
Directors and officers
Michael Covington Chairman
Richard Bennett Chief Executive
Officer
Andrew Darbyshire Chief Financial Officer
Chris Jepps Chief Operating Officer
Emma Parker Non-executive Director
Alyson Levett Non-executive Director
Company number
Registered in England and Wales, company number 02891368
Registered office
Nicholson House
Elmete Lane
Leeds LS8 2LJ
Nominated advisor and broker
Cavendish Capital Markets Limited
1 Bartholomew Cl, London EC1A 7BL
Financial PR and IR
Novella Communications Ltd
South Wing, Somerset House
London WC2R 1LA
Auditor
Grant Thornton UK LLP
No 1 Whitehall Riverside
Leeds LS1 4BN
Solicitors
Womble Bond Dickinson LLP
No 1 Whitehall Riverside
Leeds LS1 4BN
Principal bankers
National Westminster Bank plc
PO box 183, 8 Park Row
Leeds LS1 5HD
Registrars
Link Asset Services Limited
Central Square
29 Wellington Street
Leeds LS1 4DL
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