REG - GETECH Group plc - Final Results
20/06/2024 07:00
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RNS Number : 1305T GETECH Group plc 20 June 2024
Getech Group plc
("Getech" or the "Company")
Final Results for the 12 months ended 31 December 2023
Getech (AIM: GTC), a world-leading locator of subsurface resources, is pleased
to announce its Final Results for the 12 months ended 31 December 2023.
Financial highlights
· Revenue £4.0 million (2022: £5.1 million)
· Orderbook £4.6 million (2022: £4.6 million)
· Annualised Recurring Revenue £2.8 million (2022: £2.4 million)
· Cash at bank £0.4 million (2022: £4.3 million)
· Kitson House sold for £0.65 million in January 2024, Nicholson
House remains an asset for sale valued at £0.85 million
Operational highlights
· New Globe and gravity & magnetics data customers added, plus
42% year-on-year increase in subscription licenses
· Globe 2023 released on plan, with new features applicable across
multiple energy sectors (oil & gas, mining, carbon capture and storage
(CCS) & geothermal)
· Added new capabilities to our minerals exploration capabilities,
including artificial intelligence & machine learning, as well as new
solutions for lithium, porphyry copper and clean gases (such as natural
hydrogen and helium)
· Joint exploration venture agreement signed with East Star
Resources to pursue copper exploration in Kazakhstan
· Strategic minerals exploration projects delivered for multiple
organisations, including East Star Resources, Asian Battery Metals and Western
Australia's Centre for Exploration Targeting
· Signed joint exploration agreement with a major
European-headquartered global industrial and energy company focussing on
natural hydrogen exploration
· Strategic collaboration with Cozairo to identify CCS
opportunities
· Strategic partnership with Eavor to jointly locate and appraise a
portfolio of geothermal projects in Latin America, with additional Geothermal
partnerships signed with Expro and RED Engineering Design
· Completed a geothermal screening project for the manufacturing
sites of a multinational FMCG company
FY 2024 Current Trading
· Unaudited revenues in the first 4 months 17% ahead of the same
period last year
· Benefit of the rationalisation actions in 2023 taking effect in
full for 2024
· New business wins in H1 with strong H2 pipeline
· Targeting EBITDA/Cash positive
Michael Covington, Chairman of Getech, said, "Getech is a different business
now compared to the start of 2023. We have taken important decisions to
lighten the cost base and refocus the business on its strengths which are to
help our clients locate sub-surface energy and mineral resources. Whether it
is more sustainable sources of hydrocarbons, critical minerals for the energy
transition such as copper or lithium, geothermal resources or extractable
geologic sources deposits of hydrogen, we are already supporting our clients.
We are particularly excited about using new AI tools and resources that have
the potential to accelerate key aspects of our unique geo data driven
approach."
Strategic Report
Chairman's Statement
Introduction
I am pleased to report on a year of significant progress against a challenging
market backdrop. This began with changes to the management team in February
2023 with the appointment of Richard Bennett as CEO having previously been
Non-executive Chairman and I moved from Non-Executive Director to become
Non-Executive Chairman in February 2024.
During this period, the Company has been significantly refocused and
restructured back onto a tight focus on its core competencies. We are now at
a point of inflection and our strategy will remain being absolutely focused on
sustainably growing underlying profitability whilst investing in enhancing our
advanced geoscience technological and product distribution capabilities.
In 2021, the Company acquired H2 Green, a developer of green hydrogen
transportation hubs. This early-stage company has required significant
investment to progress whilst being affected by significant delays in key
Government incentive policies. Operating both the core business and H2 Green
was overstretching our resources and so we took the decision either to seek
operational partners to help us develop or exit the H2 Green projects, while
at the same time significantly reducing the H2 Green headcount and cost-base.
This contributed to reducing the ongoing costs of the business by 25%, a
reduction of c. £2 million per annum, thereby resetting the financial base of
the business.
We have refocused on our core competence of data-led sub-surface exploration.
We continue to target diversification of our customer base beyond oil and gas,
with the ambition that at least 50% of our business should come from
exploration companies focused on finding the natural resources that are vital
for the energy transition such as critical minerals, geothermal and carbon
storage.
Our financial performance in 2023 reflected the transition we undertook. We
generated revenues of £4.0 million (2022: £5.1 million), held our order book
at £4.6 million and increased our Annualised Recurring Revenue (ARR) to £2.8
million (2022: £2.4 million). As previously reported, we recorded an adjusted
EBITDA loss of £2.7 million, reflecting the cost of investment in H2 Green,
and a period of reduced revenue from core customers and the early stages of
transitioning the business.
Cash resources have been depleted by the above commercial factors so we are
keeping a tight rein on discretionary expenditures and budgets generally and
pursuing a sale of Nicholson House. Working capital remains lower than in
the past and the Board naturally views rebuilding it as a priority in 2024.
Alongside the sale of Nicolson House, the Board is exploring other options to
enhance our working capital. A restoration of cash resources would facilitate
further investment into sales and business development, as well as advance our
AI and Machine Learning enhancements to make our products more relevant to our
key markets, and in particular critical minerals and natural hydrogen.
There are signs in 2024 that customers are returning to investing in
exploration activities. Unaudited revenues in the first 4 months of 2024
were ahead of the same period last year, and we continue to see good upside
potential in our principal markets.
Data-led sub-surface exploration
We are applying the Company's core geoscience data and skills to support
exploration of these vital energy resources. To achieve the energy transition,
a substantial number of new, very large discoveries are required. Whilst the
more easily identifiable discoveries have been made, the future depends on
finding deeper and less obvious resources, which is where Getech can deploy
its global geoscience data and proven expertise.
Getech has the largest commercially available database of potential fields
data (magnetic and gravity data) that is accessed through our Globe platform
usually as a "Software as a Service" (SaaS) type subscription which we provide
via our new cloud based Maptium(TM) platform. Moreover, when AI and Machine
Learning techniques are applied, these can rapidly search our data for the
indications of specific minerals and improve exploration success rates. Over
the last year, we have continued to develop our Globe platform, advance our
AI/ML technology and introduce new search capabilities for critical minerals
including copper and lithium, as well as well as the source rocks for natural
hydrogen (also called 'white' or 'geologic' hydrogen). We expect to continue
development throughout 2024 and add search capabilities for other high-demand
commodities to our platform.
Business model
We have continued to migrate Globe and our geoscience data products to a
subscription model which has significantly increased annual recurring revenue
(ARR), improving the Group's financial stability. A core focus is to grow ARR
to in-excess of the cost-base over time and we are confident of being able to
do so. Alongside this, we have also introduced to specific customers or
projects an equity participation model in return for lower initial fees. This
is creating a future share in assets with the potential to generate
substantially higher returns from our data than has been achieved
historically.
Outlook
Energy security remains a key concern, catalysing, in our opinion, increased
activity over the last 12 months in the traditional oil and gas exploration
sector. Meanwhile, the mining sector continues to report significant
anticipated supply gaps across multiple commodities that should all be
essential to delivering the Energy Transition.
Getech's corporate strategy is a response to these strong underlying trends
and focuses on monetising the Company's capabilities across the geo-energy
sector as well as seeking opportunities for transformational growth in
critical minerals and potentially geological hydrogen. We are working on
resolving our near-term liquidity concerns while at the same time evolving our
offerings and unique propositions; growing our order book; expanding our
pipeline; innovating our business models; and despite some near-term
uncertainty over the route through to working capital self-sufficiency, we see
exciting strategic prospects for the business.
Michael Covington
Chairman
Operational Review
The last year was a transitional period while making significant progress
towards an evolved strategy. New sales wins were more challenging to find than
in previous years, but the Company maintained high oil and gas customer
retention rates, added new software customers, increased annually recurring
revenue and continued to repurpose its offerings for the energy transition,
including making significant progress in enhancing its mineral exploration
capabilities with artificial intelligence and machine learning.
Business overview
Getech's strategy focuses on monetising its proprietary data and expertise
through subscription sales, solutions and selective asset participation. We
generate revenue by locating new energy and mineral resources using the
world's largest commercially available database of potential fields (gravity
and magnetics) data assembled over c. 30 years and our proprietary Earth
digital twin, called 'Globe'.
Developed over the last c. 14 years, Globe uniquely models Earth's evolution
over the past 400 million years, combining extensive data with a user-friendly
software interface. Its integrated geological, climatic and oceanographic data
offer valuable insights for locating natural resources in the subsurface,
including petroleum, carbon storage, geothermal, natural hydrogen and critical
mineral assets. Globe is an innovative product that collects geoscience and
earth observation data, and through proprietary computational modelling and
AI-led machine learning techniques, identifies favourable exploration
opportunities for our customers.
Getech's subsurface expertise is crucial for numerous net zero strategies,
positioning the Company to advance decarbonisation across multiple industries.
Oil and gas
In response to a renewed focus on energy security, Getech saw high customer
retention rates in its oil and gas activities in 2023.
This was underpinned by the continuing development of our flagship product
'Globe'. The latest release, Globe 2023, included new content and analytical
tools designed to aid in the exploration of oil and gas, including updated
palaeosurface geology layers that can also assist in identifying potential
carbon storage sites by better understanding the composition and quality of
reservoirs. During the year, new Globe customers were added, including a new
three-year subscription for an Asian oil and gas company.
In H2 2023, Getech signed a strategic collaboration agreement with US
headquartered Cozairo, a specialist in carbon capture and storage (CCS) and a
blue hydrogen project development company. Through this partnership agreement,
the two companies will work collaboratively to identify CCS opportunities,
providing a more complete market offering for CCS solutions to address the
challenge of climate change.
2023 saw a 42% year on year increase in the number of subscription licenses
for Getech's other software products: Data Assistant, Exploration Analyst and
Unconventionals Analyst. This was largely driven by strong growth in the US
onshore shale gas operations and investment banking sectors. This licence
expansion was underpinned by new releases of all three software products,
delivering enhanced functionality and performance across the product suite.
Our GIS Services team increased its revenues over the prior year and saw
renewals of key strategic contracts - including the Company's largest single
services contract with a major energy joint venture, which was renewed for
multiple years and so helps ensure strong future revenue visibility.
Unfortunately, in 2023, our Gravity and Magnetic Solutions team had a
challenging year. While data sales were increased compared to the prior year,
the team's customer project work was adversely affected by the delay of
several large contracts - due to factors outside of our control - leading to
below forecast performance for our expert G&M services. In 2024 to date,
we have seen stronger demand for these services and have a solid pipeline of
opportunities from which to win new services revenue.
Critical minerals
Crucial to electrification required for the energy transition, the copper
market has an expected supply gap of 6.5 million tonnes per year by 2031.
Getech's unique data and analytics are ideal for discovering new
sedimentary-hosted copper deposits in unexplored areas, which account for
about 20% of total copper production today. However, this source is more
widely distributed than others and can be processed with a lower carbon
footprint. Additionally, 80% of cobalt, a key component of batteries that also
plays a critical role in the energy transition, comes from sediment-hosted
copper mines.
In H2 2023, Getech successfully completed an exploration project for Asian
Battery Minerals, a participant in the 2023 BHP Xplor accelerator program,
targeting potential nickel deposits in Mongolia. Also in H2 2023, Getech
joined a consortium of academia and industry to speed up the understanding of
copper deposits required for the discovery of critical metal needed for
renewable technologies. The three-year Kupferschiefer project aims to create
maps of mineral prospective areas within the Central European Basin. The
project, led by the University of Western Australia's Centre for Exploration
Targeting (CET), has university funding as well as industry sponsors,
including the University of Warsaw, First Quantum Minerals, Teck Resources and
BHP.
In the first few months of 2024, Getech has built on these successes by
entering into a joint venture agreement with East Star Resources plc, a London
listed copper exploration company, to pursue copper exploration in Kazakhstan.
Using our proprietary data, enhanced by in-house Artificial Intelligence (AI)
capabilities, we are conducting a mineral systems analysis and structural
interpretation for sedimentary-hosted copper to pinpoint prospective areas in
mineral rich, yet underexplored, basins in Kazakhstan. East Star will lead the
application process for the tenements / licences and spearhead operational
activities. In return for our services, we will have a call option to obtain
shares at nil cost in the JV Company, equivalent to 5% of its issued capital,
once exploration licenses are secured within the project areas. Getech's 5%
share is protected against dilution until a decision to mine has been made at
one or more of the mining licenses.
This transaction is the first example of our equity participation strategy and
demonstrates a change from generating fee income from subsurface searches to
asset participation with the potential to generate substantially more value
from our unique data and expertise.
Lithium is forecast to experience a 40-fold demand increase by 2050, driven by
its essential role in renewable energy storage and electric vehicles. Finding
new resources of lithium is time critical as it takes five to ten years to
develop and commission a mine. According to the IEA's recent critical minerals
review, exploration spending for lithium increased by 90% in 2022, the highest
growth rate among all energy transition minerals.
In H2 2023, Getech launched a solution to identify global sedimentary lithium
deposits. Using its Globe earth model as key input data, Getech's novel
solution integrates additional structural interpretation, paleoclimate
modelling and advanced geospatial analysis to predict resource locations.
To assist with its continuing efforts in the sector, Globe 2023 introduced
numerous features aimed specifically at mineral exploration - such as a new
dynamic plate model, enhanced paleogeographies and extended palaeosurface
geology coverage. These improvements are designed to deepen understanding of
the ancient land surface and its composition, a crucial aspect in successful
resource exploration. The enhancements to the plate model in particular shed
light on how tectonic movement has influenced the location of resources in the
present day. In addition, Globe 2023 contains significant enhancements to its
stratigraphic lexicon. This updated data, combined with its paleogeographic
and palaeosurface geology reconstructions, offers exhaustive details about the
composition of sedimentary basins, which is instrumental in locating basin
ores such as sedimentary copper as well as lithium.
Geothermal and corporate decarbonisation
Getech's subsurface expertise combined with advanced analytics enables the
rapid and cost-effective identification of locations that are potentially
prospective for geothermal energy.
In January 2023 Getech and Eavor - a global geothermal technology company -
signed a strategic partnership to jointly locate and appraise a portfolio of
geothermal projects in Latin America. Eavor was already a customer of Getech's
data and services, and through this work Getech has generated revenue and
demonstrated its geothermal expertise. This has now translated to an
asset-based partnership that is broader, more strategic and more valuable for
both parties.
In H2 2023, Getech completed a geothermal study for Angus Energy,
demonstrating significant potential in a UK development. Angus Energy is
committed to leveraging its oil & gas drilling and engineering expertise
to develop geothermal energy projects. To achieve this, the company enlisted
Getech's subsurface expertise to locate and assess promising areas for
geothermal energy production in Southwest England. Getech identified
favourable locations for geothermal energy applications and delivered an
in-depth geoscientific interpretation that included structural mapping, depth
estimation and heat flow analysis. The assessment, which featured 2D modelling
and 3D inversions, enables Angus Energy to make informed and cost-effective
decisions regarding future development phases. Leveraging market-leading
geologic and geophysical data, advanced geoscientific techniques and
state-of-the-art technology, Getech is uniquely positioned to locate the
energy and mineral resources necessary for the energy transition.
In H1 2024, we have extended the capabilities that we can offer low carbon
geoenergy projects by partnering with Expro and RED Engineering Design. Expro
is a leading provider of energy services with expertise in well evaluation and
integrity. Initially, the primary focus of this partnership is to identify and
expedite opportunities within the emerging low carbon energy sector. The
partnership with RED Engineering Design, part of the ENGIE Group, focuses on
advancing the decarbonisation of energy sources through innovative geothermal
solutions.
Getech also offers tailored decarbonisation solutions that help non-explorer
customers replace high-emission energy sources with low-carbon alternatives,
such as geothermal, green hydrogen, CCS, wind and solar energy. These
solutions include global screening of manufacturing sites and logistics
operations, as well as location-specific feasibility studies. With expertise
in geospatial energy optimisation, Getech can determine the most efficient
approach to lower the emissions of assets.
In 2023, Getech completed a geothermal screening project for the manufacturing
sites of a multinational FMCG company. We rapidly ranked c.130 sites worldwide
based on their potential to replace current energy consumption with geothermal
energy for decarbonisation purposes. The ranking was determined through the
evaluation of numerous subsurface and above-ground factors. In addition to
assessing the geothermal potential of each site, Getech provided a comparison
against the relative potential for solar and wind energy.
We believe there are many industries that could benefit from our integrated
decarbonisation solution - from consumer goods and manufacturing to logistics
companies. Our proprietary data and unparalleled expertise in applying
geoscience and geospatial analytics to solve specific energy challenges make
Getech a perfect partner in the net zero transition.
Green hydrogen (electrolytic)
H2 Green Ltd, a Getech subsidiary, was established to develop green hydrogen
transportation hub projects in the UK, in order to profit from the continued
decarbonisation of transport and industrial processes.
During 2023, and following our change in CEO, we conducted a review of
strategic business priorities for the Group, which concluded that a) a
sufficient number of offtake partners had not materialised to progress our
green hydrogen projects in the short-term, and b) support for green hydrogen
from Government was not emerging quickly enough nor strongly enough to support
our portfolio of projects.
As a result, we took the decision to focus on seeking operational partners to
help us develop or exit the Inverness and Shoreham Port projects; while at the
same time significantly reducing the H2 Green head count and cost-base; and
made an accounting impairment against the goodwill recognised on the
acquisition of H2 Green.
Inverness project
In March 2023, the Inverness project was chosen to receive a UK Government
grant from the Net Zero Hydrogen Fund. However, our strategic review (which
began after we had submitted the grant funding application) concluded that as
the grant was awarded on a 'match funding' basis it would have required an
unsustainable level of up-front capital from Getech and so we withdrew our
application.
Since then, we have exited the Inverness project by transferring all the
rights, obligations and liabilities of our MOU with The Highland Council to a
confidential third-party in exchange for financial considerations that apply
if and as project development milestones are achieved over the coming years -
comprising two milestone related payments, totalling £615k.
Shoreham Port project
H2 Green had previously secured exclusive development rights for green
hydrogen, renewable energy and importing ammonia at Shoreham Port in West
Sussex to help establish a green energy hub.
We continue to maintain our project exclusivity and are working with Shoreham
Port to find a development partner to advance the project. We expect the
project to develop at a scale commensurate for the local demand of green
hydrogen within the vicinity of the Port.
Natural hydrogen (geologic)
Natural hydrogen (also called 'white' or 'geological' hydrogen) is emerging as
a potential game-changer in the energy transition, offering clean power with
only water as a byproduct, at expected 'finding costs' a fraction of that
currently being anticipated for green hydrogen.
In H2 2023, Getech commenced a natural hydrogen exploration project in Eastern
Europe for a prominent European energy company. The project leverages Getech's
extensive subsurface data and geoscience expertise to exploit the distinct
magnetic characteristics of ophiolites - igneous rock formations considered
sources of natural hydrogen. By mapping the extents and geometry of these
formations, Getech provides vital data to identify potential hydrogen sources.
As part of the project Getech undertakes 3D inversion modelling to distinguish
the magnetic properties of such ophiolites from other sources of magnetic
anomalies.
Also in H2 2023, Getech signed an agreement with LIAG (Leibniz Institute for
Applied Geophysics), a partner in the HyAfrica consortium, to accelerate the
exploration and development of natural hydrogen resources in Africa. The
project aims to discover viable natural hydrogen deposits in Morocco,
Mozambique, South Africa and Togo while assessing their economic and social
impact. These findings will shape strategic plans for harnessing hydrogen as a
sustainable energy source. Getech will contribute its best-in-class potential
fields data, machine learning capabilities and geoscience expertise to support
the consortium's research efforts, bolstering the project's ability to
identify promising hydrogen resources.
In 2024, Getech built on these efforts by signing a joint natural hydrogen
exploration agreement with a major European-headquartered global industrial
and energy company, which aims to locate and develop economic accumulations.
In addition to earning fees for its exploration services, Getech will also
earn 5% equity interest in any licenses obtained within the designated area
and will be 'carried' through the exploration phase, including field sampling,
exploration drilling and well-testing.
Outlook
Energy security remains a key concern, leading to increased activity over the
last 12 months in the traditional oil and gas exploration sector. Meanwhile,
the mining sector continues to report significant anticipated supply gaps
across multiple commodities that will be essential to deliver the energy
transition.
Getech's corporate strategy reflects these underlying trends and focuses on
monetising the Company's capabilities across the geoenergy sector as well as
seeking opportunities for transformational growth: we are investing to evolve
our offerings and unique propositions; growing our order book; expanding our
pipeline; and innovating our business models.
Richard
Bennett
Chris Jepps
Chief Executive
Officer
Chief Operating Officer
Sustainability
Getech remains committed to sustainability and ESG principles, which form the
backbone of our corporate strategy. Our focus on planet and people ensures
that we continuously strive for a sustainable future and create value for our
stakeholders.
Planet: Innovating for sustainability
Building on our pledge to become carbon neutral by 2030, Getech has made
progress in reducing scope 1 and 2 emissions. This year, we have implemented
further initiatives to minimise our environmental footprint:
· Enhanced energy efficiency through optimised workspace design
· Increased employee participation in our green commuting schemes
· Continued to use renewable electricity and green gas suppliers
In 2023, in line with our mission to unlock the world's subsurface geoenergy
potential and locate essential energy and mineral resources needed for
decarbonisation, we expanded our product portfolio by introducing innovative
solutions that contribute to a greener and more sustainable future. Our
research and development efforts have yielded the following advancements:
· A novel solution for locating natural hydrogen.
· Expanded critical minerals exploration services that now include
sedimentary-hosted lithium.
Natural hydrogen
Hydrogen is celebrated as a clean fuel: when burned, its only byproduct is
water. However, there's a challenge: the majority of hydrogen currently used
globally is grey hydrogen, produced by splitting methane with fossil fuels - a
process that emits significant greenhouse gases. Green hydrogen, though
environmentally friendly since it is produced using renewable energy sources,
remains costly to produce at scale.
Natural hydrogen - also known as white, gold or geological hydrogen - stands
out as a particularly promising source. It boasts not only low production
costs but also minimal environmental impact due to its lack of associated
greenhouse gas emissions. Recognising its potential, Getech has pioneered a
robust workflow through the application of Mineral Systems Analysis approach.
This innovative method predicts the locations of natural hydrogen deposits in
the subsurface, which appear similar to mineral or hydrocarbon deposits.
Our approach utilises the Globe geoscience platform, extensive geophysical
data and AI technologies to identify areas with the optimal geologic
conditions for natural hydrogen production. This strategy not only supports
sustainable energy development but also aligns with global efforts to
transition to cleaner energy sources.
If the underground natural hydrogen deposits are substantial and can be
extracted safely, they hold the potential to be transformative, offering a
significant leap forward in the energy transition. This could drastically
reduce reliance on fossil fuels and accelerate the adoption of hydrogen as a
mainstream energy source.
Beyond our commercial ventures, Getech is committed to advancing scientific
understanding and technological capabilities in this field. We actively engage
in research collaborations with leading universities, aiming to refine our
techniques and expand our impact on global energy solutions.
Sedimentary-hosted lithium
As the demand for renewable energy sources escalates, lithium has become
indispensable due to its pivotal role in battery technology, particularly for
electric vehicles and energy storage systems. Among the various sources of
lithium, sedimentary-hosted deposits offer a promising avenue due to their
significant advantages in terms of scalability, extraction efficiency and
environmental impact.
Sedimentary-hosted lithium, often found in clay or hectorite deposits within
sedimentary basins, represents a sustainable alternative to traditional hard
rock or brine sources. These deposits can potentially be developed with a
smaller environmental footprint, as they are typically located in regions with
lower biodiversity and less ecological sensitivity. Moreover, the extraction
and processing of sedimentary-hosted lithium generally consume less water and
energy compared to other lithium sources, aligning with global environmental
standards and reducing the overall carbon footprint of lithium production.
Getech is at the forefront of exploring sedimentary-hosted lithium, leveraging
our subsurface expertise and advanced technological capabilities to locate
these valuable resources.
People: Empowering our workforce and communities
Health, safety and wellbeing
At Getech, we are passionate about our people and truly value each individual
contribution to the wider success of the business. Employee satisfaction and
commitment are crucial for driving Getech's growth and fostering a thriving
work environment, resulting in the retention and happiness of our valued
employees. As such, our attractive benefits package, alongside our continued
efforts to make Getech a great place to work, aims to incentivise our current
talent to stay onboard, while attracting new, high calibre individuals to join
us.
Getech remains committed to providing a physically and psychologically safe
and supportive work environment, investing in the following initiatives:
• Regular health and safety training
• Mental health and well-being assistance programme
• Enhanced flexible working arrangements to promote work-life
balance
• Financial advice from experienced wealth management
• Life, private medical and business travel insurance
• Bereavement support
• Discounts on gym memberships and physiotherapy
Several initiatives benefit our employees while advancing energy transition
goals:
• Cycle to Work Scheme
• Electric Vehicle Salary Sacrifice Scheme
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 are 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 our Quality Management
System (QMS) exemplify fairness and transparency throughout the employment
lifecycle, including recruitment and promotion.
We have consistently provided equal pay raises based on experience and
performance. In 2023, a 4% pay rise was granted equally to all employees,
excluding those with less than six months of service.
Transparency in remuneration is also essential to our commitment. We include
salaries in job postings, basing them on the most recent salary for existing
roles or conducting benchmarking for new positions.
The robust appraisal system at Getech directly supports inclusion and
diversity by providing equal opportunities for growth and advancement to all
employees, regardless of their background. By engaging regularly with their
managers, employees from diverse backgrounds can openly discuss their career
aspirations and receive tailored guidance to achieve their goals.
This appraisal system emphasizes the recognition of individual skills and
achievements, ensuring that employees are evaluated based on merit, rather
than on factors unrelated to their performance. This merit-based approach
fosters an inclusive work environment where diverse perspectives and talents
are valued. These appraisals help employees understand their career
development path, which is vital in promoting diversity and inclusion. When
employees can see how their unique skills and experiences align with Getech's
vision, they feel more engaged and motivated to contribute to the company's
success. This alignment also encourages a sense of belonging, enabling
employees from diverse backgrounds to thrive in their roles.
Lastly, by identifying skills gaps or areas requiring further training, Getech
ensures that all employees have equal access to resources that enable them to
reach their full potential. This commitment to continuous learning and
development further supports an inclusive workplace culture where every
employee can succeed, irrespective of their background or identity.
Community engagement
Getech continues to give back to our communities through charity partnerships and volunteering efforts. During 2023, in response to the tragic earthquake and its aftermath in Turkey and Syria, Getech supported the DEC's Earthquake Appeal. Our Leeds office held a cake sale to raise funds. Getech staff donated a total of £335, with Getech contributing an additional £250. Employees across all offices were encouraged to donate directly to the DEC, with the added benefit of being able to Gift Aid their contributions.
Since 2016, our staff have also volunteered for MapAction - providing
assistance with mapping, data and training. During 2023, Getech staff provided
remote support to the charity in the aftermath of the Turkey-Syria earthquake,
providing life-saving geospatial data, visualisation and mapping. We are
seeking ways to increase our role in supporting MapAction including donations
and training.
Financial Review
2023 was a year of transition for Getech, refocussing the business on core
activities, taking action to reduce the cost base for 2024, and setting a
course to return the business to profitability.
Revenue
In 2023, Getech's group revenue fell from £5.1 million to £4.0 million, a
reduction of 21%. The fall in revenue was as a result of a reduction in expert
services and spot sales of gravity and magnetic data. A significant
contributing factor to these reductions were delays to customer projects and
the lack of availability of funding for customer projects, which had a
knock-on affect to our own revenue and sales.
As Getech continues to evolve its subscription model, despite the overall fall
in revenue, revenue from recurring subscriptions increased by 7.5% from £2.2
million to £2.4 million. On an annualised basis, recurring revenues increased
from £2.4 million at 31 December 2022 to £2.8 million at 31 December 2023.
Revenue by segment 2023 2022 Variance
£'000
£'000
%
Recurring subscriptions 2,409 2,242 7.5
Expert services 532 1,027 (48.2)
Spot sales 1,083 1,702 (36.4)
Asset development ― 100 (100.0)
Total revenue/profit before exceptional items 4,023 5,070 (20.7)
Getech also maintained the value of its order book at £4.6 million from 31
December 2022, through to 31 December 2023.
Cost base
During H2 2023, Getech took steps to significantly reduce its cost base,
removing c.£2 million of costs from the business on an annualised basis.
Whilst it takes time for the cost benefit of these actions to be realised in
2024, during 2023 the Group's cost base was reduced to £7.6 million from
£7.9 million in 2022.
Cost base reconciliation below shows how our cost base aligns with the
financial statements.
%variance 2023 2022
Number
Number
Cost of sales 3,034 3,681
Development costs capitalised 881 785
Administrative costs 4,714 4,779
Depreciation and amortisation charges (939) (1,137)
Movement in provisions - (104)
RDEC adjustments - (22)
Share-based payments (84) (67)
Total cost base excluding exceptional items -4% 7,606 7,915
Cost base is measured as, cost of sales, administrative costs and development
costs, less depreciation, amortisation and movement in provisions.
Operating cash flows
Getech's cash outflow from operations, before working capital adjustments was
£3.2 million (2022: £2.0 million outflow), which includes costs of sales
totalling £0.7 million related to Getech's asset development business (2022:
£1.2 million).
Having taken actions to remove c.£2 million of costs from the business, from
which the group will benefit in 2024, Getech expects to be cash flow
break-even from operations in 2024.
Liquidity and going concern
At the end of 2023, Getech held £0.4 million in cash and cash equivalents
(2022: £4.3 million). In June 2024, Getech re-financed Nicholson House to
secure a £0.5 million working capital facility, repayable in June 2025 or on
the sale of the property.
Getech's business activities and the factors likely to affect our future
development, performance and position are set out in the Operational 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 2025. 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. Included in these forecasts is the
re-financing and/or sale of the freehold property, Nicholson House. The
Directors then further apply sensitivity testing to the revenue profiles based
on the achievement of various levels of revenue from noncontractually
committed sources.
However, there remains a material uncertainty around the timing and sale value
of Nicholson House and the level of non-contractually committed revenue, both
of which could impact going concern. While the Directors have plans in place
to manage any reasonably foreseeable circumstances, they forecast that there
may be a need to secure additional funding in the short-term.
Despite the uncertainties as described above, the Directors have a reasonable
expectation that the Group has, or will be able to secure, adequate resources
to continue in operational existence for the forecast period. For these
reasons, they continue to adopt the going concern basis of accounting in
preparing this financial information on behalf of the Board.
Andrew Darbyshire
Chief Financial Officer
For further information, please contact:
Getech Group plc
Richard Bennett, CEO Tel: 0113 322 2200
Cavendish Capital Markets Limited
Neil McDonald / Pete Lynch (Corporate Finance) Tel: 0207 397 8900
Michael Johnson / Dale Bellis (Sales)
Novella Communications Tel: 0203 151 7008
Tim Robertson / Safia Colebrook
getech@novella-comms.com
Notes to editors:
About Getech
Getech is a leading locator of the energy and mineral resources essential
for the world's energy transition. Getech's unique data encompassing the most
recent 400 million years of Earth's evolution, coupled with its geoscience
expertise, AI-driven analytics and extensive GIS capabilities, enables the
company to provide valuable and actionable insights to support resource
discovery and development.
The company's client portfolio is wide-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.
Founded in 1994 Getech is listed on the Alternative Investment Market of the
London Stock Exchange ("AIM"), with ticker symbol GTC.
For further information, please visit www.getech.com (http://www.getech.com/)
.
Group statement of Comprehensive Income
for the year ended 31 December 2023
2023 2022
£'000
£'000
Revenue 4,023 5,070
Cost of sales (3,034) (3,681)
Gross profit 989 1,389
Other operating income 65 205
Administrative expenses (4,716) (4,779)
Operating loss before exceptional items (3,662) (3,185)
Exceptional items (1,526) -
Operating loss (5,188) (3,185)
Finance income 17 8
Finance costs (55) (45)
Other gains and losses 125 125
Loss before taxation (5,101) (3,097)
Tax income (48) 269
Loss for the year (5,149) (2,828)
Other comprehensive income
Currency translation differences 78 110
Total comprehensive loss (5,072) (2,718)
Loss for the financial year is attributable to the owners of the Parent
Company. Total comprehensive loss for the year is all attributable to the
owners of the Parent Company.
Earnings per ordinary share (EPS)
Basic EPS (7.64)p (4.21)p
Diluted EPS (7.64)p (4.21)p
All activities are continuing operations.
Group Statement of Financial Position
as at 31 December 2023
2023 2022
£'000
£'000
Non-current assets
Goodwill 296 631
Intangible assets 3,606 3,413
Property, plant and equipment 83 2,282
Investment property - 69
Deferred tax asset 109 200
4,093 6,595
Current assets
Trade and other receivables 1,351 1,202
Current tax recoverable 74 318
Cash and cash equivalents 385 4,322
Assets classified as held for sale 1,475 -
3,285 5,842
Total assets 7,378 12,437
Current liabilities
Trade and other payables 2,395 2,304
Current tax liabilities - 9
Borrowings 589 110
2,984 2,423
Net current assets 301 3,419
Non-current liabilities
Borrowings - 570
Trade and other payables - 39
Long-term provisions - 25
- 634
Net assets 4,394 9,380
Equity
Called up share capital 169 168
Share premium account 8,685 8,685
Merger reserve 2,601 2,601
Share-based payment (SBP) reserve 158 196
Currency translation reserve 186 108
Retained earnings (7,405) (2,378)
Total equity 4,394 9,380
The financial statements were approved by the Board of Directors and
authorised for issue on 19 June 2024 and are signed in its behalf by:
Andrew Darbyshire
Director
Group statement of Changes in Equity
for the year ended 31 December 2023
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 2022 167 8,685 2,601 258 (2) 321 12,030
Loss for the year - - - - - (2,828) (2,828)
Currency translation differences - - - - 110 ― 110
Total comprehensive income for the year - - - - 110 (2,828) (2,718)
Transactions with owners:
Issue of share capital 1 - - - - - 1
Share-based payment charge - - - 67 - - 67
Transfer of reserves - - - (129) - 129 -
31 December 2022 168 8,685 2,601 196 108 (2,378) 9,380
Loss for the year - - - - - (5,149) (5,328)
Currency translation differences - - - - 78 ― 78
Total comprehensive income for the year - - - - 78 (5,149) (5,250)
Transactions with owners:
Issued share capital 1 - - - - - 1
Share-based payment charge - - - 84 - - 84
Transfer of reserves - - - (122) - 122 -
31 December 2023 169 8,685 2,601 158 186 (7,405) 4,394
Group Statement of Cash Flows
for the year ended 31 December 2023
2023 2022
£'000
£'000
Operating activities
Loss before tax (5,102) (3,097)
Adjusted for non-cash items:
Other gains and losses (125) (125)
Depreciation charge 186 329
Amortisation of intangible assets 745 808
Impairment of property, plant and equipment 626 -
Impairment of intangible assets 335 -
Loss on disposal of assets 8 -
Movement in provisions 25 -
Share based payment charge 84 67
Finance income (17) (8)
Finance charges 55 45
Gains and losses on exchange rate (1) -
RDEC adjustments - (22)
(3,180) (2,003)
(Increase)/decrease in trade and other receivables (149) 390
Increase/(decrease) in trade and other payables 212 357
Cash generated from operations (3,116) (1,256)
Income tax refunded 278 788
Net cash outflow from operating activities (2,837) (468)
Investing activities
Development costs capitalised (881) (785)
Purchase of property, plant and equipment (27) (73)
Interest received 17 14
Net cash used in investing activities (892) (850)
Financing activities
Proceeds from issue of shares 1 1
Repayment of loan (91) (89)
Repayment of lease liabilities (160) (199)
Interest paid (55) (40)
Net cash used in financing activities (305) (327)
Net decrease cash and cash equivalents (4,034) (1,645)
Cash and cash equivalents at the beginning of the year 4,322 5,864
Foreign exchange adjustments to cash and cash equivalents 97 103
Cash and cash equivalents at end of year 385 4,322
Notes to the Group Financial Statements
for the year ended 31 December 2023
Basis of preparation
The financial information set out in this preliminary announcement does not
constitute statutory accounts as defined by section 434 of the Companies Act
2006. The financial information above has been extracted from the Group's 2023
statutory financial statements, which have been prepared in accordance with
UK-adopted International Accounting Standards and 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 2022 annual report as
delivered to the Registrar of Companies.
The financial statements are prepared in sterling, which is the functional
currency of the Group. Monetary amounts in these financial statements are
rounded to the nearest £'000.
The financial statements have been prepared under the historical cost
convention, except for the revaluation of investment property and financial
instruments.
Statutory accounts for the years ended 31 December 2023 and 31 December 2022
have been reported on by the Independent Auditor. The Independent Auditor's
Reports on the Annual Report and Financial Statements (Auditor's Reports) for
the periods ended 31 December 2023 and 31 December 2022 were unqualified and
did not contain a statement under 498(2) or 498(3) of the Companies Act 2006.
The Auditor's Report for the period ended 31 December 2023 draws attention to
a material uncertainty related to going concern as set out in the note below.
The Auditor's report for the period ended 31 December 2022 did not draw
attention to any matters by way of emphasis.
The statutory accounts for the year ended 31 December 2023 were approved by
the board on 19 June 2023 but have not yet been delivered to the Registrar of
Companies. The statutory accounts for the year ended 31 December 2022 have
been delivered to the Registrar of Companies.
Going concern
In making the going concern assessment, the Board of Directors has considered
Group budgets and detailed cash flow forecasts to 30 June 2025. 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. Included in these forecasts is the sale of
the freehold property, Nicholson House. In June 2024, Getech re-financed
Nicholson House to secure a £0.5 million working capital facility, repayable
in June 2025 or on the sale of the property. The Directors then further apply
sensitivity testing to the revenue profiles based on the achievement of
various levels of revenue from noncontractually committed sources.
However, there remains a material uncertainty around the timing and sale value
of Nicholson House and the level of non-contractually committed revenue, both
of which could impact going concern. While the Directors have plans in place
to manage any reasonably foreseeable circumstances, they forecast that there
may be a need to secure additional funding in the short-term.
Despite the uncertainties as described above, the Directors have a reasonable
expectation that the Group has, or will be able to secure, adequate resources
to continue in operational existence for the forecast period. For these
reasons, they continue to adopt the going concern basis of accounting in
preparing this financial information on behalf of the Board.
Earnings per share
2023 2022
Number
Number
Number of shares
Weighted average number of ordinary shares for basic earnings per share 67,381,385 67,251,505
2023 2022
£'000
£'000
Earnings (all attributed to equity shareholders of the Company)
Loss for the period from continuing operations (5,421) (2,828)
2023 2022
pence/share
pence/share
Basic and diluted earnings per share
From continuing operations (8.05) (4.21)
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. The calculated Adjusted Earnings
for the current period is as follows:
2023 2022
£'000
£'000
Loss for the period from continuing operations (5,421) (2,828)
Adjusted for:
Exceptional items 1,526 -
Adjusted earnings (3,895) (2,828)
Basic adjusted earnings per share (pence/share) (5.78) (4.21)
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