Final Results

GETECH Group plc

05 June 2023

 

5 June 2023

Getech Group plc

("Getech" or the "Company")

Final Results for the 12 months ended 31 December 2022

Getech (AIM: GTC), the geoenergy company and owner of hydrogen developer, H2 Green, is pleased to announce its Final Results for the 12 months ended 31 December 2022.

Financial Highlights

·      Double-digit revenue growth, ahead of market expectations: £5.1 million (FY2021: £4.3 million) with a 66%/23% split between transitional petroleum and critical minerals

·      Record orderbook: £4.6 million, a 39% increase (31 December 2021: £3.3 million)

·      Annualised recurring revenue: up 14% to £2.4 million (FY2021: £2.1 million)

·      Strong cash position: £4.3 million at 31 December 2022, with cash held flat across H2 2022 by sales momentum and careful capital management (31 December 2021: £5.9 million)

Operational Highlights

·      42% YoY increase in the number of software subscriptions sold

·      New solutions developed to locate copper, gold, cobalt and helium

·      $900k largest-to-date critical minerals contract, with a multi-mineral global mining company

·      Strategic partnership with global geothermal technology company Eavor to jointly locate and appraise a portfolio of geothermal projects in Latin America (post-period end)

·      First contract for integrated decarbonisation solution for a global FMCG company (post-period end)

·      Wholly owned subsidiary, hydrogen developer H2 Green progress:

o Dr Graham Cooley appointed as H2 Green's Chair. As the former CEO of ITM Power, Graham played a key role in transforming ITM Power into a hydrogen market leader (post-period end)

o Inverness Green Hydrogen Project has been selected for a UK Government grant from its Net Zero Hydrogen Fund (post-period end)

o At Shoreham Port, H2 Green increased phase 1 capacity from 0.8 tonne/day to 2.5 tonne/day due to bigger local demand and extended its commercial exclusivity to 2027

Outlook

·      Strong balance sheet, sales pipeline growth, plus good customer and partner momentum

·      Work to sell Kitson House is progressing

·      The macro environment outlook remains strong for Getech with its clear focus on the energy transition

Richard Bennett, Getech Executive Chairman, commented:

"As we transition to clean energy, the importance of geoscience in solving the energy "trilemma", the quest for affordable, clean and secure energy source, is undisputed. Getech has spent the last 30 years collecting and analysing data primarily for use within the petroleum sector, but we are now making a strategic shift to evolve our solutions and our client base to encompass a much wider range of corporates looking to reduce their carbon footprint.

Strong revenue performance and a record order book in 2022 reflects a robust environment for petroleum market activities alongside new corporate demand to use our data to identify critical minerals, geothermal and hydrogen locations, as well as CCS projects.  We have a very promising pipeline of opportunities and are excited about the potential for developing our portfolio in 2023."

Richard Bennett will provide a live investor presentation relating to the financial results via the Investor Meet Company (IMC) platform on Thursday, 8 June 2023 at 10.00am UK time.

Investors can sign up to Investor Meet Company for free and add to meet Getech via:

https://www.investormeetcompany.com/getech-group-plc/register-investor

Chairman's Statement

This is my first statement as Executive Chairman of the Company since my appointment in February following the resignation of Dr Jonathan Copus. The Board and I would like to thank Jonathan for his seven years of service. Two years ago, Getech made the strategic shift to also sell its subsurface global knowledge to industries outside of the oil and gas sector. The success of this shift in focus is reflected in our excellent financial performance with revenues up 19% to £5.1 million, together with a record order book up by 39% to £4.6 million alongside maintaining a strong cash position of £4.3 million.

Historically, Getech generated 90+% of income from the oil & gas sector, whereas this proportion now stands at 66% as new demand for our services across a much broader corporate landscape increases. This demand for our services is being driven by the energy transition to clean energy, as companies need to locate new materials and find new sources of energy. They also need our data to know where to look for them underground.

It is clear that there is a valuable commercial opportunity in front of Getech involving different markets and companies with very different capabilities compared to our historic client base. Getech therefore needs to adapt its commercial model to support those companies and to participate fully in the upside of the global energy transition.

Strategic Shift 

In 2021, we devised a strategy to align our core competencies with the energy transition. It was a logical step, with subsurface knowledge being instrumental in most decarbonisation paths - from finding critical minerals to locating sources of geothermal energy. Today, we can confidently state that it was the right decision and well executed by Getech's team.

In 2022, 23% of sales came from critical minerals solutions. The phrase 'metals are the new oil' is now commonly used, as low carbon technologies require significantly more metals than fossil fuel-based ones. The production of metals must increase four-fold in the next 20 years, potentially rivalling crude oil production. To achieve this, substantial investment is required but also a radically new approach to mineral exploration. There is therefore a clear opportunity and need for Getech's extensive data on 400 million years of Earth's evolution, in helping to locate critical minerals in previously unexplored territories.

In 2023, we are selling our data and expertise to an even wider range of customers, from consumer goods to computing services companies, all looking to become energy self-sufficient. With the war in Ukraine and the energy and climate crisis, large corporates are investing in taking control of their energy needs, exploring ways to power their operations with geothermal, hydrogen, wind or solar energy sources in proximity to their sites.

Positioned to Support New Market Entrants

According to a non-profit net zero tracker, 91% of the global economy is now covered by net zero pledges by corporates. Government commitments globally have further boosted the market led by the US Inflation Reduction Act and EU Green Deal Industrial Plan, reinforcing the ever-growing demand for subsurface expertise.

There is no line of business that will remain unaffected by climate or energy challenges and Getech is well-positioned to assist, providing expertise through 4 operational hubs:

Critical Minerals	Metals and Mining companies need to locate significant volumes of critical minerals and battery metals, such as Lithium, Cobalt, Copper & Gold
Geothermal (includes Corporate decarbonisation)	Assessing and locating sites that are highly prospective for low-carbon geothermal energy for geothermal companies and any company looking to generate power from land they own to meet net zero targets
H2 Green	Wholly owned hydrogen project developer and operator of two projects in Inverness and Shoreham Port
Transitional Petroleum	Locating oil & gas and carbon capture and storage opportunities for global energy companies who are decarbonising their products

Having concluded the year with a record order book, we have an even more promising pipeline of opportunities. Specifically, the Company is seeking to support the expanding customer base on a long-term basis working on each project with, using a flexible revenue model that could range from encompass selling data on a subscription basis toto working on a longer -term basis on selective projects using on an asset participation basis. A portfolio appraisal, based on future asset participation and/or royalty revenue streams, is expected in time to become a central part of Getech's value.

The Getech advantage

Given the size and substantial value of the energy transition market, there is increasing competition. However, Getech has natural advantages having spent the last 30 years meticulously collecting data, refining analytics, testing hypotheses and building relationships. We use AI and machine learning in our work, but our core strengths lie in our unique data and exceptional team with the knowledge and vision to use that data to address specific energy challenges. Entering our market without a similar depth of experience is challenging.

Relationships are key and the team is proud to count most blue-chip energy companies among its long-standing clients. In these partnerships, we contribute our extensive exploration expertise and deep understanding of subsurface challenges, while our partners bring their cutting-edge operational capabilities and innovative technologies. As a result, we are not only seen as a trusted partner, but we have also cultivated a vast network of complementary skills and expertise.

Among the new partners we've signed after the reporting period is the global geothermal technology company Eavor.

H2 Green

H2 Green has an exciting portfolio of hydrogen and renewable energy projects and to maximise its potential as a 'pure play' UK project developer, one of my first actions as Executive Chairman was to appoint Dr Graham Cooley as H2 Green's Chair. As the former CEO of ITM Power, Graham played a crucial role in transforming the company into a hydrogen market leader. That Graham accepted the role, reflects well on H2 Green and its future potential. With experience in the sector and working with the UK government, Graham brings invaluable expertise to support H2 Green's expansion and development.

Corporate governance

I would like to emphasise that at Getech, we place great importance on corporate governance, aiming to maintain a high level of transparency and accountability. We believe that effective governance is crucial for the long-term success and sustainability of our business. We value open communication and robust engagement with our shareholders, understanding that their support is fundamental to our success. To that end, we are committed to fostering a constructive dialogue with our investors, ensuring they receive timely and accurate information about our business, performance, and prospects.

Outlook

I am very optimistic with regard to Getech's future as I believe the business is naturally well placed to seize opportunities within the rapidly evolving energy and climate tech landscape.

In the upcoming year, we will continue to focus on growing and diversifying our revenue streams. While remaining financially prudent, we will also continue to invest in research and development to ensure that our products and services remain at the forefront of the industry, allowing us to provide the best solutions for our clients as they navigate the energy transition.

In conclusion, I would like to express gratitude to our shareholders, partners and employees for their unwavering support and dedication and that with your continued support we will continue to achieve great success in our pursuit of a sustainable and prosperous future.

Richard Bennett

Executive Chairman

Operational Review

Getech has had a successful year, showcasing significant progress in all operational areas. The company maintained high petroleum customer retention rates while repurposing its data, software and analytics to identify critical minerals and ideal locations for geothermal, hydrogen and carbon capture and storage (CCS) projects. In 2022, customers purchased Getech's latest energy transition solutions to locate copper, gold, cobalt and helium; manage carbon storage licensing rounds; and explore for geothermal energy.

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 our proprietary Earth digital twin, called "Globe". Developed over nearly 13 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. These solutions are provided in an accessible digital map format using energy industry standard geographic information system technology.

Getech's subsurface expertise is crucial for numerous net zero strategies, positioning the company to advance decarbonisation across multiple industries.

Transitional Petroleum and CCS

In response to a renewed focus on energy security, Getech saw a strong recovery in its petroleum market activities in 2022, accompanied by an expansion into the emerging CCS sector. CCS is crucial for achieving net-zero targets by capturing carbon dioxide emissions from industrial processes and storing them safely underground. Integrating CCS into our portfolio allows us to expand our engagement with our key oil and gas customers while working to reduce the carbon footprint of industrial sectors as part of the energy transition. Getech's solutions were employed by the North Sea Transition Authority to support the UK's first carbon storage licensing round and we also gained new software customers in the carbon storage sector.

Getech's work in exploration, development optimisation and operational spatial management has resulted in Getech adding two new Globe customers - including a global supermajor energy company - and a 42% YoY increase in software subscriptions. In addition to new software sales in the petroleum exploration market, Getech expanded its customer base in the US onshore shale gas operations and investment banking sectors. A key strategic contract with a major energy company joint venture was renewed for multiple years, ensuring strong future revenue visibility.

Critical Minerals

Crucial to electrification required for the energy transition, the copper market has an expected supply gap of 7.8 million tonnes by 2030. Getech's unique data and analytics are ideal for discovering new sedimentary-hosted copper deposits in unexplored areas, which account for only 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 2022, Getech sold its sediment-hosted copper solution to three critical minerals companies, producing high-confidence targeting maps for unexplored areas in Australia, North America and Canada. Based on this work, some of these companies have licensed significant land positions for mineral exploration, demonstrating the value-add of Getech's unique offering. These companies have also become repeat customers.

Furthermore, Getech secured its largest-ever critical minerals contract, a $900,000 data and software deal with a multi-mineral global mining company. Getech has also expanded its copper solutions into iron oxide-copper-gold and epithermal gold deposits. Getech delivered data and analytics to Helium One - a native helium explorer - and advanced R&D work on solutions to predict the location of lithium and natural ("white") hydrogen resources. Getech anticipates bringing these new solutions to market in 2023.

H2 Green

H2 Green Ltd, a Getech subsidiary, designs and develops green hydrogen hubs in the UK. Utilising renewable power, these hubs produce hydrogen for decarbonising transport and industry. Post year end, Dr Graham Cooley has been appointed as H2 Green's Chair. As the former CEO of ITM Power, Graham played a key role in transforming the company into a hydrogen market leader. With experience in the cleantech sector and ties to the UK government, Graham brings valuable expertise to H2 Green's expansion and development.

Inverness Project

H2 Green is currently developing a major green hydrogen hub in central Inverness. The project encompasses green hydrogen production, storage, dispensing and on-site renewable energy generation. Initially, the hub will supply green hydrogen to key Scottish rail, bus and HGV transport customers, supporting their decarbonisation efforts. This marks the first phase of H2 Green's green energy Highlands network, which will also distribute surplus hydrogen from the Inverness hub to a broader region.

The hydrogen facility will scale from a 6 MW alkaline electrolyser capacity (equivalent to generating up to 2.5 tonnes of green hydrogen per day) to more than 10 tonnes per day (equivalent to 24 MW) over time. The facility will utilise wind and/or solar PV renewable energy generation assets and be backed by a grid-connected renewable energy supply.

In 2022, H2 Green's partner, SGN, completed the deconstruction of Inverness's former gas holder, paving the way for converting the site into a green hydrogen storage and distribution facility. After the reporting period, the project was chosen to receive a UK Government grant from the Net Zero Hydrogen Fund - Strand 1 Development Expenditure.

Shoreham Port Project

Expanding into the port and maritime energy sector, H2 Green secured exclusive development rights for hydrogen, renewable energy and importing ammonia at Shoreham Port in West Sussex to establish a green energy hub.

In 2022, after completing engineering and commercial feasibility work, Shoreham Port extended H2 Green's exclusivity on all hydrogen, ammonia and renewable energy activities until August 2027. Due to faster-than-anticipated growth in hydrogen demand - supported by offtake pledges, letters of intent and MoUs - H2 Green increased the Phase 1 design capacity from 0.8 tonnes/day to 2.5 tonnes/day and started planning Pre-FEED (Front End Engineering Design) studies.

The macro environment continues to be supportive for hydrogen development, with the UK hydrogen strategy targeting 10GW of low carbon hydrogen production capacity by 2030.

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 2022, Getech successfully completed projects for clients on multiple continents and expects continued expansion of its geothermal offering, given the projected double-digit annual growth rate towards 2030 in geothermal energy investments.

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.

Eavor has attracted venture capital funding from BP, Chevron and BHP (all customers of Getech petroleum and/or mineral exploration solutions) and recently secured development financing, totalling up to €1bn, for the development of at least five geothermal projects in North America and Europe.

Getech also offers tailored decarbonisation solutions that help 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. Our new integrated decarbonisation solution is valuable for many industries and will help us to grow and diversify our revenue streams.

Post-period end, 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, manufacturing, to logistics companies. Our proprietary data and unparalleled expertise in applying geoscience and geospatial analytics to solve specific energy challenges makes Getech a perfect partner in the net zero transition.

Outlook

Goldman Sachs has forecast that resolving the dual challenge of energy affordability and security, across both clean energy and hydrocarbons, will require a $1 trillion per year increase in energy investment. At the same time, the incremental cost of achieving net zero carbon continues to improve, making it more financially attractive. The US Inflation Reduction Act is potentially the most transformational policy in clean tech, making green hydrogen, carbon capture and geothermal energy some of the more cost-effective paths for energy transition in the US. Meanwhile, the European Union has launched its Green Deal Industrial Plan, aiming to become the world's first climate-neutral continent by 2050 and reduce emissions by at least 55% by 2030.  The UK Government has updated its net-zero strategy, allocating a £20 billion budget for capturing and storing CO2 beneath the North Sea, as well as investing in hydrogen, offshore wind and expanding the electric vehicle charging network.

Getech's corporate strategy reflects this underlying trend and focuses on monetising the company's core capabilities in the most efficient and valuable ways. We are investing to evolve our offerings and unique propositions, growing our order book, expanding our pipeline and are confident in the outlook for the business.

Chris Jepps

Chief Operating Officer

Financial Review

In 2022, Getech remained committed to growth and diversification by strategically investing in sales, business development, and marketing initiatives. This focus has yielded a significant revenue growth of 19%, building on the 20% growth achieved in 2021. Our efforts have culminated in a record order book of £4.6m, reflecting a substantial 39% growth. Additionally, our Annual Recurring Revenue (ARR) has increased by 14% to £2.4m, thanks to the addition of new Globe and other software customers, further strengthening our financial position and setting the stage for continued success.

Table 1 - Financial summary	2022	2021
	Reported (audited) £'000	Reported (audited) £'000	Adjusted (1) (unaudited) £'000
Revenue	5,070	4,280	4,280
Cost base (see table 3)	7,915	6,455	6,455
Loss after tax	(2,828)	(1,949)	(1,649)
Earnings per share	(4.21)p	(3.27)p	(2.77)p
Net cash outflow from operating activities	(468)	(799)	(799)
Development costs	(785)	(847)	(847)
Net (decrease)/increase in cash	(1,645)	3,665	3,665
Cash and cash equivalents	4,322	5,864
Net cash	3,642	5,095
Orderbook	4,591	3,333
Annualised recurring revenue	2,409	2,094

(1) Exceptional items

In 2021 Getech incurred a one-off amortisation charge of £300,000 related to the acquisition of H2 Green Limited.

Revenue

In 2022, Getech signed over 100 new contracts with a total value of £6.5 million, driving a 19% increase in revenue to £5.1 million (2021: £4.3 million). This marks the second consecutive year of double-digit revenue growth since Getech completed its £6.25 million equity raise in 2021. Transitional petroleum accounted for 66% of revenue, while critical minerals contributed 23%. The Company aims to further diversify its revenue streams. 

A significant portion of this growth has been license-based and recurring in nature. In 2022, the number of software licences sold rose by 42% and Getech secured two new customers for Globe.

Consequently, Getech's order book expanded by 39% to a record year-end position of £4.6 million (31 December 2021: £3.3 million). Annualised recurring revenue also increased by 14% to £2.4 million (31 December 2021: £2.1 million).

Gross margin

Cost of sales included costs associated with the asset development business of £1.2m (2021: £0.4m), which impacts Group profit margin. However, underlying profit margins for both products and services were healthy, summarised in the table below:

Table 2 - Segmental analysis	2022			2021
	Revenue £'000	Profit/(loss) £'000	Gross margin %	Revenue £'000	Profit £'000	Gross margin %
Products	3,684	2,012	55%	3,509	2,267	65%
Services	1,286	480	37%	771	145	19%
Asset development	100	(1,103)	-	-	(447)	-
Group total	5,070	1,389	27%	4,280	1,965	46%

The new reporting segment "asset development" includes the activities of Getech's subsidiary H2 Green, a green hydrogen developer.

Cost base

Getech's cost base has increased to £7.9m from £6.5m. Table 3 - Cost base reconciliation shows how our cost base aligns with the financial statements.

In addition to expanding its asset development capabilities through H2 Green, Getech has invested in its Business Development, Marketing and Sales capabilities to drive revenue growth in 2023.

Table 3 - Cost base reconciliation	% variance	2022 £'000	2021 £'000
Cost of sales		3,681	2,315
Development costs capitalised		785	847
Administrative costs (excluding exceptional items)		4,779	4,733
Depreciation and amortisation charges (excluding exceptional items)		(1,137)	(1,225)
Movement in provisions		(104)	(88)
RDEC adjustments		(22)	(127)
Share based payments		(67)	-
Cost base, excluding exceptional items	23%	7,915	6,455

Cost base is measured as: cost of sales, administrative costs and development costs capitalised, less depreciation and amortisation, movement in provisions.

Getech reported an adjusted loss after tax of £2.8m (2021: £1.6m loss).

Operating cash flows

Getech's cash outflow from operations was £0.5m (2021: £0.8m outflow), which includes costs of sales totalling £1.2m related to Getech's asset development business (2021: £0.4m).

Liquidity and going concern

At the end of 2022, Getech held £4.3m in cash and cash equivalents (2021: £5.9m). Net of debt, Getech's cash balance was £3.6m (2020: £5.1m).

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 2024. 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.

Getech's bank loan includes a balloon payment of £0.5m that falls due in October 2024. The Group intends to either repay this amount early on successful sale of Kitson House, or re-financing the balance to achieve a similar repayment profile to that currently being paid.

These cash flow projections and sensitivities, when considered in conjunction with Getech'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.

Andrew Darbyshire

Chief Financial 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

•     Switching to renewable electricity and green gas suppliers

In 2023, we have outlined the following objectives to further our sustainability efforts:

•     Assess and quantify our Scope 1 and 2 emissions

•     Establish ESG metrics grounded in a materiality assessment

•     Begin developing an auditable roadmap to fulfil Getech's commitment to achieving net-zero emissions by 2030

In 2022, 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 identifying future facing minerals, including sedimentary hosted copper deposits

•     An enhanced geothermal screening solution that locates and high-grades geothermal opportunities

•     A comprehensive approach to industrial decarbonisation

•     An improved methodology for locating and monitoring subsurface sites for carbon storage

Sedimentary Hosted Copper

With the looming copper deficit, sedimentary hosted copper deposits offer a promising and sustainable alternative for meeting the increasing global demand for this energy transition critical mineral. These deposits account only for 20% of the world's total copper production today and offer several advantages compared to non-sedimentary deposits such as porphyry deposits found in igneous settings, including:

•     Sedimentary-hosted copper deposits, being more widely distributed, often present fewer ESG issues, minimising environmental problems, promoting equitable economic distribution and reducing transport emissions.

•     These deposits typically require less energy-intensive processing methods.

Another critical aspect of sedimentary hosted copper deposits is their significant cobalt content. Approximately 80% of the world's cobalt, a key component in batteries, comes from these deposits. This positions Getech at the forefront of supporting the growing demand for essential minerals in the clean energy and electric vehicle industries.

Geothermal Screening

Geothermal energy is a reliable and renewable energy source that utilises the Earth's natural heat to generate electricity and provide heating solutions with minimal environmental impact. By tapping into this vast resource, we can significantly reduce our reliance on fossil fuels and contribute to global efforts in mitigating climate change.

Our advanced geothermal screening technology enables the efficient evaluation of subsurface conditions, allowing us to pinpoint areas with high potential for geothermal development. Furthermore, our expertise allows us to tailor our screening approach to the specific requirements of different geothermal technologies, such as closed-loop and open-loop systems. Closed-loop systems involve circulating a heat transfer fluid through a sealed underground network of pipes, while open-loop systems extract geothermal fluid directly from the ground, utilising its heat before returning it to the subsurface.

By identifying optimal locations for these various technologies, we can minimise exploration risks and reduce the overall costs associated with geothermal projects, making them more accessible and attractive to investors and energy producers. Our tailored approach also ensures that the most suitable and efficient geothermal technology is employed for each specific site, maximising the potential benefits and minimising the environmental impact.

Our expertise in geothermal screening not only benefits our customers by providing them with valuable insights into promising geothermal resources and tailored solutions, but also makes this energy source more affordable and competitive when compared to fossil fuels.

Integrated Decarbonisation for Industry

At Getech, we recognise the critical role that industries play in the global effort to reduce greenhouse gas emissions and transition to a low-carbon future. To support this transition, we offer tailored, integrated decarbonisation solutions that help our customers replace high-emission energy sources with sustainable, low-carbon alternatives, such as geothermal, green hydrogen, carbon capture and storage (CCS), wind and solar energy.

Our comprehensive approach to decarbonisation involves global screening of manufacturing sites and logistics operations, combined with location-specific feasibility studies. With our expertise in geospatial optimisation and advanced analytics, we can determine the most efficient and cost-effective strategies to lower emissions across various assets and operations.

By providing industries with customised, data-driven insights, we enable them to make informed decisions about their energy mix and emission reduction initiatives. This empowers companies to not only meet their sustainability goals but also improve their overall environmental performance and long-term competitiveness in a rapidly changing global landscape.

Carbon Capture and Storage

As the urgency to address greenhouse gas emissions and combat climate change grows, carbon capture and storage (CCS) technologies have become an indispensable component in the pursuit of a sustainable and comprehensive solution to mitigate the detrimental effects of carbon dioxide emissions. CCS involves the capture of CO2 generated by industrial activities, power generation, and other sources, followed by the transportation and secure storage of the CO2 in underground geological formations, thus preventing its release into the atmosphere.

Getech is at the forefront of this critical initiative - identifying potential storage sites, modelling subsurface structures and monitoring operations. The selection of an appropriate site is of utmost importance, with three primary factors to consider: storage capacity, injectivity and containment. Identifying the ideal geological formation entails finding rocks with ample storage potential, characterised by high porosity and permeability, an effective caprock and a stable environment to ensure long-term secure storage of CO2. Through this rigorous screening process, we can confidently ensure that captured CO2 remains contained within designated geological formations, minimising the risk of leakage and maximising the overall effectiveness of CCS solutions.

Moreover, our dedication to collaboration enables us to forge partnerships with a diverse range of stakeholders - such as government authorities, industry leaders and research institutions - in order to advance CCS technology and promote its global adoption. By joining forces, we can expedite the transition towards a sustainable, low-carbon economy.

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. Our retention rate for 2022 was 92% (2021: 95%).

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.

To strengthen our commitment to equality, we have initiated pay gap analysis reports this year to ensure equal pay across gender, race, and ethnicity. Although we have not yet completed pay gap checks, 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.

Investing in People

At Getech, we are committed to fostering the professional development of our employees. We achieve this by offering targeted training programs that not only enhance team day-to-day performance but also prepare them for new roles and responsibilities.

Following the reporting period, we implemented an improved appraisal process that emphasises values and behaviours, ensuring improved development and training opportunities while maintaining adaptability in a dynamic environment. To facilitate continuous growth and open communication, appraisals will be conducted multiple times per year, providing ample opportunities for two-way feedback.

Community Engagement

Getech continues to give back to our communities through charity partnerships and volunteering efforts. During 2022, 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.

In December 2022, Getech staff raised £300 for a local community foodbank to provide Christmas dinner and additional food supplies to their service users in Harehills, one of the most financially deprived areas of Leeds.

After the reporting period, 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. 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 donations and training.

For further information, please contact:

Getech Group plc Irina Logutenkova, Head of Investor Relations	Tel:  [phone]
Cenkos Securities plc Neil McDonald / Pete Lynch (Corporate Finance) Michael Johnson / Dale Bellis (Sales)	Tel:  [phone]
Novella Communications	Tel: [phone]
Tim Robertson / Claire de Groot / Safia Colebrook
[e-mail]

Notes to editors:

Getech Group plc (AIM: GTC) generates revenue by locating new energy and mineral resources using its proprietary Earth digital twin. The Group works for governments and companies who seek to decarbonise their operations. Getech has expanded the use of data and technologies built for the petroleum industry to critical minerals, geothermal, hydrogen, and carbon storage.

For further information, please visit www.getech.com.

H2 Green Limited, a wholly owned subsidiary, that is a designer and developer of Green Hydrogen Hubs in the UK. Each hub utilises renewable power to produce large volumes of hydrogen that is uses to decarbonise transport and industrial applications.

Group Statement of Comprehensive Income

For the year ended 31 December 2022

		2022 £'000	2021 £'000
Revenue		5,070	4,280
Cost of sales		(3,681)	(2,315)
Gross profit		1,389	1,965
Other operating income		205	176
Administrative expenses		(4,779)	(4,733)
Operating loss before exceptional items		(3,185)	(2,592)
Exceptional items		-	(300)
Operating loss		(3,185)	(2,892)
Finance income		8	-
Finance costs		(45)	(55)
Other gains and losses		125	60
Loss before taxation		(3,097)	(2,887)
Income tax income		269	938
Loss for the year		(2,828)	(1,949)
Other comprehensive income:
Items that may be reclassified to profit or loss
Currency translation differences		110	24
Total items that may be reclassified to profit or loss		110	24
Total other comprehensive income for the year		110	24
Total comprehensive income for the year attributable to owners of the Parent Company		(2,718)	(1,925)
Earnings per ordinary share (EPS)
Basic EPS		(4.21)p	(3.27)p
Diluted EPS		(4.21)p	(3.27)p

All activities relate to continuing operations.

Group Statement of Financial Position

as at 31 December 2022

		2022 £'000	2021 £'000
Non-current assets
Goodwill		631	631
Intangible assets		3,413	3,431
Property, plant and equipment		2,282	2,355
Investment property		69	174
Deferred tax asset		200	214
		6,595	6,805
Current assets
Trade and other receivables		1,202	1,591
Current tax recoverable		318	793
Cash and cash equivalents		4,322	5,864
		5,842	8,248
Total assets		12,437	15,053
Current liabilities
Trade and other payables		2,304	2,127
Current tax liabilities		9	-
Borrowings		110	110
		2,423	2,237
Net current assets		3,419	6,011
Non-current liabilities
Borrowings		570	659
Trade and other payables		39	102
Long-term provisions		25	25
		634	786
Net assets		9,380	12,030
Called up share capital		168	167
Share premium account		8,685	8,685
Merger reserve		2,601	2,601
Share-based payment (SBP) reserve		196	258
Currency translation reserve		108	(2)
Retained earnings		(2,378)	321
Total equity		9,380	12,030

The financial statements were approved by the Board of Directors and authorised for issue on 2 June 2023 and are signed on its behalf by:

Mr A L Darbyshire

Director

Group Statement of Changes in Equity

For the year ended 31 December 2022

	Share capital £'000	Share premium account £'000	Merger reserve £'000	SBP reserve £'000	Currency translation reserve £'000	Retained earnings £'000	Total equity £'000
1 January 2021	94	3,053	2,407	251	(26)	2,270	8,049
Loss for the year	−	−	−	−	−	(1,949)	(1,949)
Other comprehensive income	−	−	−	−	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
Costs of share issue deducted from share premium	−	(547)	−	−	−	−	(547)
31 December 2021	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	−	−	−	−	110	(2,828)	(2,718)
Transactions with owners:
Issue of share capital	1	−	−	−	−	−	1
Share-based payment charge	−	−	−	67	−	−	67
Transfer of exercised and lapsed share-based payment charges	−	−	−	(129)	−	129	−
31 December 2022	168	8,685	2,601	196	108	(2,378)	9,380

Group Statement of Cash Flow

For the year ended 31 December 2022

		2022 £'000	2021 £'000
Operating activities
Loss before tax		(3,097)	(2,887)
Adjusted for non-cash items:
Fair value gains and losses		(125)	(60)
Depreciation charge		329	299
Amortisation of intangible assets		808	1,226
Share-based payment expense		67	7
Finance income		(8)	-
Finance costs		45	55
RDEC adjustments within administrative expenses		(22)	(127)
		(2,003)	(1,487)
(Increase)/decrease in trade and other receivables		390	(245)
Increase/(decrease) in trade and other payables		357	710
Cash generated from operations		(1,256)	(1,022)
Income tax refunded		788	223
Net cash outflow from operating activities		(468)	(799)
Investing activities
Business combinations (net of cash received)		-	(54)
Development costs capitalised		(785)	(847)
Purchase of property, plant and equipment		(73)	(29)
Interest received		8	-
Net cash used in investing activities		(850)	(930)
Financing activities
Proceeds from issue of shares		1	6,250
Share issue costs		-	(547)
Repayment of bank loans		(89)	(66)
Payment of lease liabilities		(199)	(199)
Interest paid		(40)	(44)
Net cash generated from/(used in) financing activities		(327)	5,394
Increase/(decrease) in net cash and cash equivalents		(1,645)	3,665
Cash and cash equivalents at the beginning of the year		5,864	2,192
Effect of exchange rates		103	7
Cash and cash equivalents at the end of the year		4,322	5,864

Notes to the Group Financial Statements

for the year ended 31 December 2022

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 2022 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 2021 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 2022 and 31 December 2022 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 2022 and 31 December 2021 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 2022 were approved by the board on 2 June 2023 but have not yet been delivered to the Registrar of Companies. The statutory accounts for the year ended 31 December 2021 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 2024. 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.

Getech's bank loan includes a balloon payment of £0.5m that falls due in October 2024. The Group intends to either repay this amount early on successful sale of Kitson House, or re-finance the balance to achieve a similar repayment profile to that currently being paid.

These cash flow projections and sensitivities, when considered in conjunction with Getech'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

	2022 Number	2021 Number
Number of shares
Weighted average number of ordinary shares for basic EPS	67,251,505	59,612,590

	2022 £'000	2021 £'000
Earnings (all attributable to equity shareholders of the company)
Loss for the period from continued operations	(2,828)	(1,949)

Basic and diluted EPS
From continuing operations (pence/share)	(4.21)	(3.27)

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:

	2022 £'000	2021 £'000
Loss for the period from continued operations	(2,828)	(1,949)
Adjusted for:
Exceptional items	-	300
	(2,828)	(1,649)
Basic adjusted earnings per share (pence/share)	(4.21)	(2.77)

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 8 June 2023 and will be available from the Company's website www.getech.com from that date. The Annual General Meeting of Getech Group plc will be held on 29 June 2023 at 12.00 noon.

 

END