GETECH Group plc Final Results (0246M)

TIDMGTC

RNS Number : 0246M

GETECH Group plc

19 May 2022

Getech Group plc

("Getech" or "the Company" and with its subsidiaries "the Group")

Final Results for the 12 months ended 31 December 2021

The Getech Group (AIM; GTC) announces its Final Results for the 12 months ended 31 December 2021.

Highlights

A transformational year, investing for future growth.

Key financial highlights

   --     FY2021 revenue rose c. 20% to GBP4.3m (2020: GBP3.6m); 
   --     Orderbook grew by 25% to GBP3.3m at 31 December 2021 (31 December 2020: GBP2.7m); 

-- Annualised recurring revenue * stable at GBP2.1m at 31 December 2021 (31 December 2020: GBP2.1m);

   --     Cost base increased to GBP6.5m, through equity funded low carbon investment (2020: GBP5.2m); 
   --     Loss for the year of GBP1.6m, adjusted for exceptional items ** (2020: GBP1.5m loss); 
   --     Reported loss for the year of GBP1.9m (2020: GBP1.6m loss); and 
   --     Strong net cash *** position of GBP5.1m at 31 December 2021 (31 December 2020: GBP1.4m). 

Key corporate and operational highlights

-- Repositioned strategy with new 'locate-develop-operate' business model designed to accelerate a secure and sustainable path to decarbonisation;

-- Expanded the application of geoscience data and software products into essential tools enabling the energy transition and enhancing the security of energy supply;

   --    Acquired a green hydrogen developer, and secured the first two development projects; 

-- Developed key strategic partnerships with Shoreham Port, SGN Commercial Services (SGN) , Eversholt Rail and the Highland Council; and

   --    Continued to invest in new talent and skills. 

Strong outlook

-- Focused on accelerating the global energy transition and ensuring a secure supply of energy; all whilst delivering transformative shareholder value through:

o expanding our robust pipeline of products and services for the energy transition;

o ambition to establish at least 500MW of new geoenergy and green hydrogen assets by 2030 by:

-- replicating and scaling up our green hydrogen asset development model, both in UK and internationally;

-- building strategic partnerships to secure and develop geothermal energy projects; and

-- pursuing energy co-location opportunities in the critical minerals sector.

Getech CEO, Dr Jonathan Copus commented:

"2021 was a transformational year for Getech, during which we invested to diversify the application of our world-leading petroleum products into new geoenergy and green hydrogen growth sectors. We also established a new 'locate-develop-operate' business model.

We delivered this against a turbulent macroeconomic backdrop that continues to highlight the urgent need for the world to significantly increase energy investment. To ensure energy security and the transition to a low carbon future, governments have materially increased their clean energy targets and are fast-tracking policies to accelerate the pace of energy system investment.

In this environment, demand for Getech's products increased - revenue grew 20% and our orderbook expanded by 25%. We also acquired a hydrogen development company, H2 Green, and signed a range of valuable strategic partnerships, securing exclusivity over our first two hydrogen development projects.

Building on this momentum, our ambition is to establish a portfolio of at least 500MW of new geoenergy and green hydrogen assets by 2030. These could save c.2 million tonnes of CO2 production annually, and would deliver transformational value to our shareholders.

Getech moved into 2022 with confidence and we look forward to building our position in a primary energy market that is undergoing unprecedented change and growth."

Letter from Chair and CEO

Getech - a geoenergy and green hydrogen company

FY2021 was a year of strategic advancement and robust delivery for Getech. With a diversification plan focused on green hydrogen, geothermal, critical minerals and energy/carbon storage, our shareholders supported us in a GBP6.25 million capital raise to position Getech at the vanguard of the energy transition.

Through this investment, we are repurposing our world-leading geoscience data and unique geospatial software products, and successfully extending their application to geoenergy sectors beyond petroleum, and green hydrogen. During the year, we have added new content, modules and workflows to our platforms, solutions and software and have grown our customer base in the energy transition sectors. Our mission is now firmly set on delivering an accelerated , secure and sustainable path to decarbonisation through the application of our products, technologies, and skills.

As we strengthen our status as a trusted partner in the energy transition, this in turn enables us to establish new revenue-generative relationships that we can expand into strategic partnerships and build our own portfolio of scalable repeatable low carbon projects. Our locate-develop-operate business model has been designed to maximise the value of our unique offering and to deliver transformational growth in shareholder value.

In FY2021, we purchased H2 Green, a company developing green hydrogen networks of production, storage, and distribution facilities. Since this acquisition, we have secured exclusive development rights on two green hydrogen hubs - at Shoreham Port and in Inverness.

We have also invested in new talent: adding senior executives with significant engineering, economics, project delivery and business development experience; and Board skills in business scale up, ESG and low carbon asset management. We have also enhanced our marketing and communication resources.

Through the recruitment of Max Brouwers - who joined Getech as Chief Business Development Officer, having previously led the Energy Transition at Shell Global Exploration - we have established a physical presence in Europe, which we are growing further in 2022.

Our progress during the year and into 2022 is notable, as evidenced by growth in revenue, an expanding orderbook, and new asset agreements. We anticipate further upward momentum as the pace to net zero accelerates.

Business environment

The need to substantially increase energy investment on a global scale has never been clearer or more urgent. Governments across the world are responding with new strategy statements, to deliver affordable, secure, and sustainable low carbon energy. War in Ukraine has heightened this, and in 2022 energy investment could total as much as 13% of global GDP - the highest level on record.

This action is underlain by governments' broader commitments to address climate change. The EU has pledged to be climate-neutral by 2050, with each member state required to develop a national long-term strategy on how they plan to achieve this.

Similar trends can be mapped around the world, with decision-makers defining the budgets, incentives and regulatory structures that are needed to enable the required investments to proceed within the aspired timetables to deliver on their energy security and decarbonisation goals. The energy transition presents governments, regional authorities, cities, and companies with a complex web of decision making, which Getech can help unlock using its data, knowledge and analytics.

There is a growing momentum behind the view that low-carbon hydrogen will play a significant role in the decarbonisation of the energy system, and as a result, global projections for growth in hydrogen capacity have been revised upwards in each of the last three years.

This momentum is backed by governments' policies, incentives and funding support. REPowerEU has quadrupled the EU's green hydrogen supply target to 75GW by 2030 - half of which will be supplied by imported hydrogen. The EU Commission has also pledged to fast-track market reforms to promote development of hydrogen projects and infrastructure such as storage.

In the UK, the government has announced various funding programmes and incentives for low-carbon hydrogen, including the GBP240 million Net Zero Hydrogen Fund, a GBP26 million Industrial Hydrogen Accelerator innovation programme, and the launch of the world's first national subsidy for clean hydrogen production. This is aimed at advancing the UK government's ambition to have up to 2GW of low-carbon hydrogen production capacity by 2025 and up to 10GW installed by 2030 - at least half of which is to be from green hydrogen.

By using our geospatial and economic analytics to identify optimal sites, Getech is ideally positioned to accelerate the adoption of green hydrogen, both in UK and internationally.

Our ambition is to establish at least 500MW of new geoenergy and green hydrogen assets by 2030.

Moving from pledge to action on our sustainability objectives

In 2021, Getech joined the United Nations' Race to Zero campaign, pledging to become carbon neutral by 2030. To support the delivery of this, we established an ESG committee and appointed an ESG expert to our non-executive directors' team.

As we build an ESG-centric business, we are establishing metrics and KPIs that set a clear and auditable roadmap to assess Getech's 2030 net zero delivery. We look forward to implementing this enhanced sustainability framework during FY2022 and reporting on progress in the next annual report.

Outlook

Getech is an established, cash-generative, and diversified growth-focused business that is well-funded to deliver on our strategy. In 2022, we plan to continue growing our share of the global energy transition market.

In our foundation products and services business, this means expanding the low carbon application of our geoscience data and geospatial software products, through new content, new geoenergy capabilities and delivering innovations around other key energy transition themes such as CCS.

In asset development, we are progressing our projects in Shoreham Port and across the Scottish Highlands. Together these projects represent c. 50 MW of full capacity - equivalent to 10% of our 500 MW ambition .

The tangible progress we are making in the decarbonisation of commercial transport places us firmly on the hydrogen map. This is widening our engagement to include larger volume off-takers - such as industrial players seeking clean hydrogen to decarbonise their operations and organisations outside of the UK looking to import green hydrogen. In the coming months, we will progress these discussions as we work to expand our hydrogen portfolio.

We are also evaluating asset participation opportunities in geothermal energy and energy co-location projects in the critical minerals sector. As further projects are secured, we will continue to report on our progress towards the 500MW ambition.

On behalf of the board, we would like to thank our shareholders for their support and our employees for their continued commitment during this exciting and transformative period for the Group.

Being at the heart of the high growth geoenergy and green hydrogen sectors, we have moved into 2022 with confidence and believe we are ideally positioned to deliver substantial growth and value to our shareholders in the coming years.

   Richard Bennett                                                        Jonathan Copus 
   Chairman                                                               CEO 

* Annualised Recurring Revenue is the annualised value of Getech's recurring contracts, typically this is Globe contracts, Software and Product subscriptions, and recurring support services.

** Adjusted for exceptional items.

*** Net cash is the balance of cash and cash equivalents after deducting borrowings.

 
 Getech Group plc                                    Tel: [phone] 
  Jonathan Copus, Chief Executive 
 
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  Neil McDonald / Pete Lynch (Corporate Finance) 
  Michael Johnson / Dale Bellis (Sales)                Tel: [phone] 
 
 
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   James Crothers / Toby Strong / Charles Dingwall 
 

Operations review - Locate. Develop. Operate.

During 2021, our operational activities have been focused on accelerating the energy transition by locating, developing and operating geoenergy and green hydrogen projects.

To achieve this, we began a programme of investment to reshape our unique petroleum products into essential tools for the energy transition, expanding their application to high-growth geoenergy sectors beyond petroleum - targeting geothermal, critical minerals, hydrogen and carbon storage. We have broadened our operations through a 'locate, develop, operate' business model, which has enabled us to strengthen our market share in the energy transition - as demonstrated by growth in revenue, expansion of the orderbook and securing of new asset agreements.

In 2021, sales of geophysical data and services to both deep and shallow geothermal operators, as well as new contract wins with leading mining companies, demonstrated the versatility and applicability of our products and solutions to locating and de-risking a diverse range of geoenergy resources across a global spread of geographies.

In turn, this helped with building strategic relationships, through which we can evaluate unique participation opportunities in decarbonisation projects. In the year, this led to our first low carbon development investment - the acquisition of H2 Green, a green hydrogen network developer.

With a number of new senior executive appointments completed in the UK, Europe and the US, we have strengthened Getech's geographical presence and extended our talent in engineering, economics, project delivery and business development to ensure success.

LOCATE

We apply our world-leading geoscience data and unique geospatial software to help locate, de-risk and optimise geoenergy and green hydrogen projects to deliver an accelerated energy transition.

Our product model is built on Getech's world-leading global geoscience data - the value of which we have enhanced through the development of intuitive geospatial delivery platforms and analytic software. The products are shaped around our customers' most pressing commercial needs, and new content and functionality is delivered through robust project management.

We deliver and manage energy and natural resources projects through the following proprietary platforms, software products and solutions:

Our platforms - Globe and Maptium:

Globe is Getech's flagship earth modelling platform. It provides customers with a powerful analytic application through which they can access valuable global geoscience data and knowledge.

Demand and sales for Globe are growing amongst customers in the critical minerals, geothermal and Carbon Capture and Storage (CCS) sectors. These customers use Globe to help them understand the physical conditions and processes that control subsurface energy extraction, energy and carbon storage, and critical minerals recovery. This resulted in significant new contract wins during 2021.

Globe's 2021 release was delivered on time and to cost, and further work on expanding the product's content and functionality is currently underway. Globe's 2022 release is scheduled for July 2022, and this will mark another a key stepping-stone in ensuring the platform remains in step with the changing landscape of the energy transition.

Maptium is a new Getech platform that leverages cutting-edge geospatial technology to provide cost-effective modular access to essential targeted data, workflows and analytics that previously were only available through our global petroleum solutions.

Via a secure web-based gateway, users of Maptium can better visualise and analyse energy and mineral resource information, which maximises their understanding and the value of their projects and operations.

The platform's first modules were released in 2021. These modules target data access and critical minerals workflows - with specific applications to sedimentary copper exploration, a metal that is key to almost every aspect of the energy transition. Maptium's content is now being expanded to enhance exploration for new critical minerals, and applications to the geothermal sector and carbon capture and storage.

Our software:

Getech's geospatial software empowers customers to streamline common workflows across a variety of geoenergy projects - improving customers decision making while increasing project efficiency and understanding of technical risk. The three software products are:

Exploration Analyst is a favourability mapping tool that helps companies quantitatively rank information essential to day-to-day business decisions. Applications include resource prospectivity assessment, license evaluation, and company/peer benchmarking. In 2021, we incorporated Exploration Analyst's analytics into our critical minerals, geothermal and carbon storage activities. This demonstrates the product's versatility across the energy transition, which has widened Energy Analyst's target markets and user base.

Unconventionals Analyst is a production operations optimisation tool used in unconventional resource projects, including shale gas and shale oil. Customers use the product to reduce capital spending by delivering more efficient well inventory planning and reserve evaluation.

Data Assistant enables easy data transfer between Esri's market-leading geographic information system technology and commonly used subsurface interpretation systems used in geoenergy operations, including CCS, petroleum and geothermal. It helps users eliminate human error from data integration workflows, and enhances operational data integration and analysis.

Solution delivery - leveraging our capabilities into the energy transition:

In 2021, we released Heat Seeker(TM) , which unifies our data, platforms, software and analytics to provide a proprietary geothermal project location solution. Heat Seeker's' value lies in our ability to identify potential geothermal resource sites that are within commercial reach of readily available customer markets for heat or power.

Heat Seeker achieves this by integrating advanced geospatial analysis and machine learning with geophysical, geological, commercial and social data, to create favourability maps of geothermal suitability.

By helping users rapidly identify and evaluate development locations, this saves them operational time/costs, increases profit-margins and reduces pay-back times for geothermal projects.

DEVELOP AND OPERATE

Our products and services enable us to establish revenue-generative relationships with both natural resource asset owners and energy consumers, which we can then expand into strategic alliances to build our own portfolio of low carbon assets.

Green Hydrogen

During 2021, we completed our first direct asset investment - purchasing H2 Green, a company working to develop green hydrogen networks of production, storage, and distribution facilities to decarbonise commercial transport.

Since the acquisition, we have strengthened and advanced H2 Green's activities by leveraging Getech's core geospatial analytical capabilities, and building streams of excellence in facility design, project management, economic modelling, and business development. Drawing on our collective experience in developing energy assets, we have deployed a rigorous project maturation process to identify the optimum investment opportunities with maximum capital efficiency and impact.

These steps resulted in us signing milestone strategic alliances with several industry and government partners - including SGN, Eversholt Rail, Shoreham Port and the Highland Council - and securing exclusivity across a wide portfolio of hub locations. We now hold a compelling position in the emergent green hydrogen project pipeline.

Regional green hydrogen network in the Highlands

Under the agreement with the Highland Council, we are working to establish a world-class regional green hydrogen network in the Scottish Highlands. At the core of this network is a hydrogen hub with SGN in Inverness, the capital of the Scottish Highlands.

The Inverness site will supply green hydrogen to large-volume commercial transport customers, such as trains, buses, trucks and heavy goods vehicles. In line with these goals, we secured agreements with Eversholt Rail to facilitate the wide-scale deployment of their hydrogen-powered trains on the Far North and West Highland Lines of Scotland.

Our activities, combined with the Highland Council decarbonisation initiatives, are set to establish the Scottish Highlands as a leading UK centre for decarbonisation and innovation - supporting job creation, energy security and providing a sustainable path for the region's net zero transition.

Groundworks began at the Inverness site in April 2022, with our strategic partner SGN undertaking demolition of the former gas holder, expected to be completed during 2H 2022.

Concurrently, we have continued to progress with finalising the Joint Venture Agreement with the Highland Council, ahead of the commencement of Front-End Engineering Design (FEED) for the Inverness hub later in 2022. During 2023-2024, we expect to apply for planning and regulatory approvals, make Final Investment Decision (FID), procure the equipment, and commence construction and installation of the production facilities. The first hydrogen production at the Inverness hub is currently anticipated in H1 2025.

Shoreham Port - Green Energy Hub

At the other end of the country, we have entered the port and maritime energy sector - securing exclusive development rights for hydrogen, renewable energy, and ammonia importation at Shoreham Port in West Sussex to create a Green Energy Hub.

We have been working with our strategic partner Shoreham Port on the phase 1 development plan for onsite hydrogen production, solar roof development and installation of 6 onshore wind turbines, and we expect to complete this by the end of June 2022. The phase 1 development is projected to supply green hydrogen to a significant proportion of over 800 heavy goods vehicles and over 50 forklift trucks that operate within the port daily.

In parallel, we have been working towards a final commercial structure with Shoreham Port with the intention of completing it in H2 2022, followed by the commencement of Front-End Engineering Design (FEED) and application for planning and regulatory approvals later in the year. During 2023-2024, we expect to make Final Investment Decision (FID), procure the equipment, and commence construction and installation of the hydrogen production facilities and rooftop solar. The first hydrogen production, together with installation of onshore wind is currently anticipated in 1H 2025.

We continue to identify further opportunities in the green hydrogen space including early production systems. Each opportunity is assessed for economic potential, so the optimum assets can be selected to progress to development. The resulting asset funnel passes through a rigorous project maturation process to quantify the highest value green hydrogen asset opportunities for our investment.

Geothermal

Combining subsurface understanding with an in-depth overview of above-ground commercial and operational factors allows us to identify the most prospective geothermal opportunities.

Since the launch of Heat Seeker, we have been successful in engaging with governments and private companies and have built a portfolio of business opportunities around the world, comprised of services and equity entry. We are currently involved in geothermal projects for clients across numerous continents, ranging from shallow ground source heat pumps to closed-loop systems in hot-dry rocks.

Operational focus for FY2022

In 2022, we look forward to advancing our work and alliances across each of our focus sectors by:

   --    Expanding product offering for the energy transition: 

o releasing new modules on Maptium;

o adding new geoenergy capabilities to Globe;

o increasing adoption of Heat Seeker; and

o delivering innovations around other key energy transition themes such as CCS.

-- Replicating, scaling up and diversifying our green hydrogen portfolio, both in the UK and internationally;

   --    Building strategic partnerships to secure and develop geothermal energy projects; and 
   --    Pursuing energy co-location opportunities within the critical minerals sector. 

Chris Jepps

Chief Operating Officer

Sustainability

In recognition of the commercial and societal importance of sustainability and ESG, Getech's focus is to both help our customers deliver their ESG commitments and to define and live by our own ESG principles.

These principles are key to promoting value and resilience for Getech. Our goal is to grow responsibly - delivering a company that cares about our people, communities, customers, and the environment.

Getech's support to create a cleaner, greener and sustainable future

The world requires a secure and sustainable path to decarbonisation to create a cleaner and greener future. In 2021, Getech joined the United Nations' Race to Zero campaign - pledging to become carbon neutral by 2030. In line with this commitment, we have a number of initiatives to reduce scope 1 and 2 emissions:

-- Reducing transportation footprint. We offer electric car and cycle to work schemes for employees, which provide a tax efficient path for staff to reduce their carbon footprint. We also encourage use of videoconferencing in place of travel, where practical.

-- Reducing energy consumption. Low energy LED lighting is used in our workspace, and waste is recycled.

-- Reducing emissions and carbon footprint . We switched to renewable electricity and green gas suppliers.

-- Developing our own portfolio of net zero assets. During the year, we made targeted direct investments in carbon neutral energy projects to accelerate decarbonision of our own operations.

We also support customers in reducing their emissions by applying our data, technologies and skills to:

   --    Optimise existing, and deliver new energy assets in the transitioning primary energy sector; 

-- Expand the range of low carbon energy sources: to produce heat and power through geothermal energy; to decarbonise transport and heat through the development of green hydrogen hubs;

-- Future proof energy systems through subsurface energy and carbon storage; and locate new deposits of metals critical to the energy transition; and

   --    Innovate technologies and reshape our unique foundation products for the energy transition. 

Moving from pledge to action - FY 2022 objectives

During 2021, Getech established an ESG committee. The committee is chaired by Emma Parker, who was appointed to the Board as non-executive independent director during the year. Emma brings more than 18 years' experience as an ESG and mining operations specialist, with a focus on leading innovative approaches to sustainability-led value creation, responsible sourcing, and ethical value chains.

The purpose of the ESG committee is to assist the Board of Directors in ensuring the business delivers on the commitments and responsibilities related to material ESG matters relevant to the activities of the Group. This may include climate change impacts, emissions, environmental and supply chain sustainability, human rights and diversity and inclusion objectives.

During FY2022, we plan to reshape our business to be ESG-centric through the following actions:

   --    Establishing a unified view of ESG; 
   --    Development and continuous appraisal of ESG strategy; 
   --    Establishing ESG metrics and KPIs; 
   --    Overseeing ESG; and 
   --    Defining a clear and auditable roadmap to deliver on Getech's 2030 net zero commitment. 

Getech aims to provide a caring, thriving and diverse work environment for its staff

Health, safety and wellbeing

Getech provides support for health, safety and wellbeing to its people and a thriving work environment through:

-- Employee Assistance Programmes to help staff deal with personal and professional problems that could be affecting their life;

   --    Comprehensive private medical insurance and an extensive medical cash plan; 
   --    24 / 7 bereavement support; and 
   --    Discounts on gym memberships. 

We also support a range of extracurricular activities including a workplace cricket league and a sports and social club, which provide team building opportunities for all staff.

Equality, inclusion and diversity

Equality, inclusion and diversity is vital to Getech to create a safe and inclusive workplace. The Group's Equality, Inclusion and Diversity Policy sets out the expectations of all employees and Board to create this environment . We actively support diversity and inclusion and ensure that all employees are valued with dignity and respect.

The employment practices and procedures as part of quality management system demonstrate fairness and transparency in all areas of the employment lifecycle, including recruitment. Internal equal pay audits are conducted where possible across teams and skill sets.

We encourage openness and engagement and provide staff with a fair voice through various face to face and digital channels such as the intranet, regular meetings, workshops and performance appraisals. Keeping staff motivated and properly remunerated is key to the success of Getech's business.

Investing in people's professional development and training

The Company encourages and supports the career development of our staff. We do this through training, to enhance the delivery of day-to-day employment, as well as to prepare for new roles and activities. Performance appraisals are conducted annually and a Personal Development Plan is generated for each member of staff, which includes objectives for additional training, and career development.

Trusted corporate partner

Getech has a Charity Committee and participates in various fundraising events throughout the year - in support of the wider community. During 2021, financial support was provided to Freedom4Girls, a charity fighting against period poverty. The fundraiser helped to provide safe period products and menstrual health education to thousands of women and girls across Leeds, Kenya and Uganda - enabling them to attend school and work without the stigma and gender inequalities associated with period poverty. Getech also provided support to Save the Children and Red Nose Day.

In light of the current conflict in Ukraine, which has had devastating life-changing consequences for civilians, we provided financial assistance to the Disasters Emergency Committee's Ukraine humanitarian appeal. The aim of the appeal is to provide food, water, shelter, healthcare and protection to families affected by the conflict.

Since 2016, our staff have also volunteered for MapAction - providing assistance with mapping, data and training. The charity is currently involved with supporting humanitarian efforts in relation to the Ukraine conflict, providing life-saving geospatial data, visualisation, and mapping. We are seeking ways to increase our role in supporting MapAction charity, including donation s and training.

Financial review

Getech is focused on growing and diversifying its product and service offering to both foundation petroleum customers, and new customer markets in the low carbon economy - where we target the geothermal energy, green hydrogen, storage, and critical minerals sectors.

Supporting the delivery of this diversification and growth programme, Getech raised GBP6.25 million of equity finance in April 2021, which is being used to build new products and content. Getech has also invested in sales, marketing and business development capabilities. Following success from these steps, and progress from our programme of investment, the Board is pleased to report positive revenue growth by 20% to GBP 4.3 million, together with 25% growth in the orderbook to GBP3.3 million. 46 new customers were added during the year, taking the total to 94 - this includes customers across geothermal, critical minerals, carbon capture and storage and energy sectors.

The Group's robust revenue generation and our strong balance sheet, with net cash of GBP5.1 million, provide a solid platform to deliver on our set plans and future growth and expansion.

 
 Table 1 - Financial summary                                              2021                                    2020 
====================================== 
                                           Reported   Adjusted (1) (unaudited)     Reported   Adjusted (1) (unaudited) 
                                          (audited)                    GBP'000    (audited)                    GBP'000 
                                            GBP'000                                 GBP'000 
======================================  ===========  =========================  ===========  ========================= 
 Revenue                                      4,280                      4,280        3,563                      3,563 
 Cost base (see table 2)                      6,455                      6,455        5,154                      5,154 
 Gross margin                                   46%                        46%          53%                        53% 
 Loss after tax                             (1,949)                    (1,649)      (1,644)                    (1,529) 
 Earnings per share                         (3.27)p                    (2.77)p      (4.38)p                    (4.07)p 
 
 Net cash outflow from operating 
  activities                                  (799)                      (799)        (185)                      (185) 
 Development costs                            (847)                      (847)        (902)                      (902) 
 Net (decrease)/increase in cash              3,655                      3,655      (1,311)                    (1,311) 
 
 Cash and cash equivalents                    5,864                                   2,192 
 Net cash                                     5,095                                   1,357 
 
 Orderbook                                    3,333                                   2,665 
 Annualised recurring revenue                 2,094                                   2,082 
======================================  ===========  =========================  ===========  ========================= 
 

(1) Exceptional items

During the year, Getech incurred a one-off amortisation charge related to the acquisition of H2 Green Limited. In 2020, Getech incurred costs in relation to restructuring the business.

These exceptional items totalled GBP300,000 (2020: GBP115,000).

Operating results

Revenue

2021 revenue totalled GBP4.3m, an increase of 20% from GBP3.6m in 2020. This growth was largely driven by increased product sales, which in 2021 accounted for 82% of the revenue mix.

Toward the end of 2021, we also saw a significant increase in services sales activity and multi-year product licence renewals. Whilst this had little impact on 2021 revenue, it drove a 25% expansion in our sales orderbook - from GBP2.7m at the end of 2020 to GBP3.3m by 31 December 2021. We expect a significant proportion of this orderbook to unwind to revenue during 2022.

In the period, we continued to work closely with our customers through a broad programme of engagement, and this was rewarded by a high renewal rate on our subscription revenues. Annualised recurring revenue totalled GBP2.1m at 31 December 2021 (31 December 2020: GBP2.1m).

Gross margin

In 2021, Getech embarked upon multiple diversification projects and rapidly expanded our hydrogen technical team through the acquisition of H2 Green. As a result, cost of sales increased by 37% from GBP1.7m in 2020 to GBP2.3m in 2021. This reduced Group gross profit margins from 53% in 2020, to 46% in 2021.

Administrative costs

Administrative expenses include GBP1.5m (2020: GBP1.2m) of depreciation and amortisation charges. Excluding these charges and exceptional items, administrative expenses totalled GBP3.5m, (2020: GBP2.4m). The additional expenditure reflects progress across a broad front of equity-funded growth investment. We have absorbed additional expenditure relating to the acquisition of H2 Green - the costs of which in 2021 we fully expensed, as well as expanding our Business Development team, and strengthening our marketing capabilities. In H2 2021, staff returned to full pay, having previously agreed to salary reductions in May 2020 as part of our Covid cost saving measures implemented at that time.

Through this period of investment, Getech has also kept focus on prudent capital management; in February 2021 Getech sub-let the London office and has made rates savings on the Leeds office throughout the year.

Cost base analysis

Getech's cost base has increased to GBP6.5m from GBP5.2m, this includes research and development costs totalling GBP1.6m (2020: GBP0.5m). The table below reconciles our cost base to the financial statements.

 
 Table 2 - Cost base reconciliation                          % variance       2021       2020 
                                                                           GBP'000    GBP'000 
=========================================================  ============  =========  ========= 
 Cost of sales                                                               2,315      1,681 
 Development costs capitalised                                                 847        902 
 Administrative costs (excluding exceptional items)                          4,733      3,551 
 Payment of lease liabilities*                                                   -        136 
 Depreciation and amortisation charges (excluding exceptional items)       (1,225)    (1,174) 
 Movement in provisions                                                       (88)          - 
 RDEC adjustments*                                                           (127)         52 
 Exchange adjustments                                                            -          6 
 Cost base, excluding exceptional items                             25%      6,455      5,154 
=========================================================  ============  =========  ========= 
 

Cost base is measured as: cost of sales, administrative costs, development costs capitalised and payment of lease liabilities, less depreciation and amortisation, movement in provisions, and non-cash foreign exchange adjustments.

* Lease liabilities have been excluded from the 2021 cost base reconciliation due to the London office now being sub-let. RDEC adjustments have been excluded from the cost base to help give a better like for like comparison of in-year costs.

Income tax

To help our customers understand and resolve their geoenergy and green hydrogen exploration and operational challenges requires Getech to undertake pioneering research and development. Against the cost of this work, we obtained corporation tax relief, and subsequently realised a tax credit relating to the 2021 tax year of GBP873,000 (2020: GBP241,000 credit).

Getech reported an adjusted loss after tax of GBP1.6m (2020: GBP1.5m loss).

Operating cash flows

Due to Getech's investment in diversification strategy, and the acquisition of H2 Green cash outflow from operations increased to GBP0.8m (2020: GBP0.2m outflow).

Financing

In April 2020, to protect the Group from the uncertainties arising from Covid and a low oil price, Getech took a 12-month capital repayment holiday on the loan secured against Kitson House. Getech recommenced capital repayments in April 2021. Repayments against the loan facility amounted to GBP66,000 (2020: GBP20,000).

Payment of lease liabilities totalled GBP199,000 (2020: GBP136,000) and relate to the London and Houston office leases. In February 2021, Getech sub-leased the London office as part of the continued capital efficiency measures, rental payments received are included in other operating income.

In April 2021, Getech successfully completed an equity raise, with net proceeds, totalling GBP5.7m.

Business combinations

In March, Getech purchased 100% of the ordinary share capital of H2 Green, a company developing green hydrogen networks of production, storage, and distribution facilities. This acquisition has been accounted for as a business combination in the 2021 financial year, this includes a GBP335,000 addition to Goodwill.

Liquidity and Going Concern

At the end of 2021, Getech held GBP5.9m in cash and cash equivalents (2020: GBP2.2m). Net of debt, Getech's cash balance was GBP5.1m (2020: GBP1.4m)

Getech's business activities and the factors likely to affect our future development, performance and position are set out in the Chairman's and Chief Executive's Review. The financial position of the Group, our cash flows and liquidity position are described in the financial statements.

In making the going concern assessment, the Board of Directors has considered Group budgets and detailed cash flow forecasts to 30 June 2023. The Board has considered the sensitivity of these forecasts with regards to different assumptions about future income and costs.

These cash flow projections, when considered in conjunction with Getech's existing cash balances, and continued careful cash management, demonstrate that the Group has sufficient working capital for the foreseeable future. Consequently, the Directors are fully satisfied that Getech is a going concern.

Andrew Darbyshire

Chief Financial Officer

Consolidated Statement of Comprehensive Income

for the year ended 31 December 2021

 
                                                                                              2021        2020 
                                                                                           GBP'000     GBP'000 
======================================================================================   =========  ========== 
 Sales revenue                                                                               4,280       3,563 
 Cost of sales                                                                             (2,315)     (1,681) 
 Gross profit                                                                                1,965       1,882 
 Other operating income                                                                        176           - 
 Administrative expenses                                                                   (4,733)     (3,551) 
 Operating loss before exceptional items                                                   (2,592)   (1,6 69 ) 
 Exceptional items                                                                           (300)       (115) 
=======================================================================================  =========  ========== 
 Operating loss                                                                            (2,892)     (1,784) 
---------------------------------------------------------------------------------------  ---------  ---------- 
 Finance revenue                                                                                 -           1 
 Finance costs                                                                                (55)        (45) 
 Other gains and losses                                                                         60          10 
=======================================================================================  =========  ========== 
 Loss before taxation                                                                      (2,887)     (1,818) 
 Income tax income                                                                             938         174 
=======================================================================================  =========  ========== 
 Loss for the year                                                                         (1,949)     (1,644) 
 
 Other comprehensive income: 
 Currency translation differences                                                               24        (57) 
=======================================================================================  =========  ========== 
 Total comprehensive income for the year attributable to owners of the Parent Company      (1,925)     (1,701) 
=======================================================================================  =========  ========== 
 
 Earnings per ordinary share (EPS) 
 Basic EPS                                                                                 (3.27)p     (4.38)p 
 Diluted EPS                                                                               (3.27)p     (4.38)p 
=======================================================================================  =========  ========== 
 

All activities relate to continuing operations.

Consolidated Statement of Financial Position

as at 31 December 2021

 
                                           2021       2020 
                                        GBP'000    GBP'000 
===================================   =========  ========= 
 Non-current assets 
 Goodwill                                   631        296 
 Intangible assets                        3,431      3,509 
 Property, plant and equipment            2,355      2,716 
 Investment property                        174          - 
 Deferred tax asset                         214        364 
====================================  =========  ========= 
                                          6,805      6,885 
 ===================================  =========  ========= 
 Current assets 
 Trade and other receivables              1,591      1,353 
 Current tax recoverable                    793        278 
 Cash and cash equivalents                5,864      2,192 
====================================  =========  ========= 
                                          8,248      3,823 
 ===================================  =========  ========= 
 Total assets                            15,053     10,708 
====================================  =========  ========= 
 Current liabilities 
 Trade and other payables                 2,127      1,366 
 Borrowings                                 110         85 
                                          2,237      1,451 
 ===================================  =========  ========= 
 Net current assets                       6,011      2,372 
 Non-current liabilities 
 Borrowings                                 659        750 
 Trade and other payables                   102        282 
 Deferred tax liabilities                     -        176 
 Long-term provisions                        25          - 
===================================   =========  ========= 
                                            786      1,208 
 ===================================  =========  ========= 
 Net assets                              12,030      8,049 
====================================  =========  ========= 
 
 Called up share capital                    167         94 
 Share premium account                    8,685      3,053 
 Merger reserve                           2,601      2,407 
 Share-based payment (SBP) reserve          258        251 
 Currency translation reserve               (2)       (26) 
 Retained earnings                          321      2,270 
====================================  =========  ========= 
 Total equity                            12,030      8,049 
====================================  =========  ========= 
 

The financial statements of Getech Group plc (company number: 02891368) were approved by the Board of Directors and authorised for issue on 18 May 2022.

Andrew Darbyshire

Chief Financial Officer

Consolidated Statement of Changes in Equity

for the year ended 31 December 2021

 
                                        Share                                   Currency 
                         Share        premium         Merger                 translation       Retained 
                       capital        account        reserve   SBP reserve       reserve       earnings   Total equity 
                       GBP'000        GBP'000        GBP'000       GBP'000       GBP'000        GBP'000        GBP'000 
===============  =============  =============  =============  ============  ============  =============  ============= 
 1 January 2020             94          3,053          2,407           242            31          3,892          9,719 
 Loss for the 
  year                       -              -              -             -             -        (1,644)        (1,644) 
 Other 
  comprehensive 
  income                     -              -              -             -          (57)              -           (57) 
===============  =============  =============  =============  ============  ============  =============  ============= 
 Total 
  comprehensive 
  income                     -              -              -             -          (57)        (1,644)        (1,701) 
 Transactions 
 with owners: 
 Share-based 
  payment 
  charge                     -              -              -            31             -              -             31 
 Transfer of 
  reserves                   -              -              -          (22)             -             22              - 
===============  =============  =============  =============  ============  ============  =============  ============= 
 31 December 
  2020                      94          3,053          2,407           251            26          2,270          8,049 
===============  =============  =============  =============  ============  ============  =============  ============= 
 Loss for the 

  year                       -              -              -             -             -        (1,949)        (1,949) 
 Currency 
  translation 
  differences                -              -              -             -            24              -             24 
===============  =============  =============  =============  ============  ============  =============  ============= 
 Total 
  comprehensive 
  income                     -              -              -             -            24        (1,949)        (1,925) 
 Transactions 
 with owners: 
 Issue of share 
  capital                   73          6,179            194             -             -              -          6,446 
 Share-based 
  payment 
  charge                     -              -              -             7             -              -              7 
 Cost of share 
  issue 
  deducted from 
  share premium              -          (547)              -             -             -              -          (547) 
===============  =============  =============  =============  ============  ============  =============  ============= 
 31 December 
  2021                     167          8,685          2,601           258           (2)            321         12,030 
===============  =============  =============  =============  ============  ============  =============  ============= 
 

Consolidated Statement of Cash Flows

for the year ended 31 December 2021

 
                                                                       2021       2020 
                                                                    GBP'000    GBP'000 
===============================================================   =========  ========= 
 Operating activities 
 Loss before tax                                                    (2,887)    (1,818) 
 Adjusted for non-cash items: 
 Fair value gains and losses                                           (60)       (10) 
 Depreciation charge                                                    299        214 
 Amortisation of intangible assets                                    1,226        960 
 Expected credit loss provisions on loans and loan commitments            -         70 
 Share-based payment expense                                              7         31 
 Finance income                                                           -        (1) 
 Finance costs                                                           55         45 
 RDEC adjustments within administrative expenses                      (127)          - 
 Foreign exchange adjustments                                             -        (6) 
================================================================  =========  ========= 
                                                                    (1,487)      (515) 
 (Increase)/decrease in trade and other receivables                   (245)        600 
 Increase/(decrease) in trade and other payables                        710      (352) 
================================================================  =========  ========= 
 Cash generated from operations                                     (1,022)      (268) 
 Income tax refunded                                                    223         83 
================================================================  =========  ========= 
 Net cash outflow from operating activities                           (799)      (185) 
================================================================  =========  ========= 
 Investing activities 
 Business combinations (net of cash received)                          (54)          - 
 Development costs capitalised                                        (847)      (902) 
 Purchase of property, plant and equipment                             (29)       (24) 
 Interest received                                                        -          1 
================================================================  =========  ========= 
 Net cash used in investing activities                                (930)      (925) 
================================================================  =========  ========= 
 Financing activities 
 Proceeds from issue of shares                                        6,250          - 
 Share issue costs                                                    (547)          - 
 Repayment of bank loans                                               (66)       (20) 
 Payment of lease liabilities                                         (199)      (136) 
 Interest paid                                                         (44)       (45) 
================================================================  =========  ========= 
 Net cash generated from/(used in) financing activities               5,394      (201) 
================================================================  =========  ========= 
 Increase/(decrease) in net cash and cash equivalents                 3,665    (1,311) 
 Cash and cash equivalents at the beginning of the year               2,192      3,554 
 Effect of exchange rates                                                 7       (51) 
 Cash and cash equivalents at the end of the year                     5,864      2,192 
================================================================  =========  ========= 
 

Notes to the Consolidated Financial Statements

for the year ended 31 December 2020

Basis of preparation

The financial statements set out in this preliminary announcement do not constitute statutory accounts as defined by section 434 of the Companies Act 2006. It has been prepared in accordance with International Accounting Standards in conformity with the requirements of the Companies Act 2006. The principal accounting policies of the Group have remained unchanged from those set out in the Group's 2020 annual report as delivered to the Registrar of Companies. The financial statements have been prepared under the historical cost convention and are presented in sterling.

Statutory accounts for the years ended 31 December 2021 and 31 December 2020 have been reported on by the Independent Auditor. The Independent Auditor's Reports on the Annual Report and Financial Statements for the periods ended 31 December 2021 and 31 December 2020 were unqualified, did not draw attention to any matters by way of emphasis, and did not contain a statement under 498(2) or 498(3) of the Companies Act 2006.

The statutory accounts for the year ended 31 December 2021 were approved by the board on 18 May 2022 and the information included in this preliminary announcement was extracted therefrom.

The Board of Directors has considered Group budgets and detailed cash flow forecasts to 30 June 2023. The Board has considered the sensitivity of these forecasts with regards to different assumptions about future income and costs.

The detailed forecasting models are built from Board approved budgets. From these budgets, revenue forecasting is regularly updated to take into consideration new contractually committed revenues, market sentiment, our current sales pipeline, and any other influencing factors. The Directors then further apply sensitivity testing to the revenue profiles based on the achievement of various levels of revenue from noncontractually committed sources.

These cash flow projections and sensitivities, when considered in conjunction with Getech's existing cash balances, the net proceeds of the equity raise totalling GBP5.7m and resulting year end cash balance of GBP5.9m, demonstrate that the Group has sufficient working capital for the foreseeable future. Consequently, the Directors are fully satisfied that Getech is a going concern.

Earnings per share (EPS)

 
                                                                   2021         2020 
                                                                 Number       Number 
 Number of shares 
 Weighted average number of ordinary shares for basic EPS    59,612,590   37,564,000 
==========================================================  ===========  =========== 
 
 
                                                                          2021       2020 
                                                                       GBP'000    GBP'000 
 Earnings (all attributable to equity shareholders of the company) 
 Loss for the period from continued operations                         (1,949)    (1,644) 
===================================================================  =========  ========= 
 
 
 Basic and diluted EPS 
 From continuing operations (pence/share)    (3.27)   (4.38) 
==========================================  =======  ======= 
 

Basic EPS is calculated by dividing the profit attributable to equity holders of the parent by the weighted average number of ordinary shares outstanding during the year.

Diluted EPS is calculated by dividing the profit attributable to equity holders of the parent by the weighted average number of ordinary shares outstanding plus the weighted average number of shares that would be issued on conversion of all the dilutive share options into ordinary shares. In the current and comparative year, the Group has incurred losses and as such has not presented any dilution of earnings per share in accordance with IAS 33 'Earnings per share'. However, these dilutive shares would dilute the earnings per share should the Group become profitable.

Adjusted Earnings per share

The Directors use "Adjusted Earnings" as a Key Performance Measure, which is defined as earnings before exceptional items. In the current year this includes a material component of non-recurring amortisation which has only arisen because of the business combination with H2 Green Limited. Adjusted Earnings is considered to represent and measure the ongoing profitability and performance more faithfully.

The calculated Adjusted Earnings for the current period is as follows:

 
                                                        2021       2020 
                                                     GBP'000    GBP'000 
 Loss for the period from continued operations       (1,949)    (1,644) 
 Adjusted for: 
 Exceptional items                                       300        115 
=================================================  =========  ========= 
                                                     (1,649)    (1,529) 
=================================================  =========  ========= 
 Basic adjusted earnings per share (pence/share)      (2.77)     (4.07) 
=================================================  =========  ========= 
 

Notice of Annual General Meeting

The Annual Report and Accounts and notice convening the Annual General Meeting of the Company will be posted to shareholders on 31 May 2022 and will be available from the Company's website www.getech.com from that date. The Annual General Meeting of Getech Group plc will be held on 23 June 2022 at 12 noon.

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(END) Dow Jones Newswires

May 19, 2022 02:01 ET (06:01 GMT)