30 September 2021

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

Interim report for the six months ending 30 June 2021

Getech (AIM: GTC), a provider of geoscience data, knowledge and software to the energy industry, is pleased to announce its unaudited results and report for the six months to 30 June 2021 ("H1 2021").

H1 2021 Highlights

Getech combines global geoscience expertise with local geospatial technology to accelerate progress to global NetZero. The Group does this by supporting the optimisation of existing, and delivery of new, energy assets and mineral resources, with core growth areas spanning hydrogen, geothermal, strategic minerals and carbon capture utilisation and storage.

·       Strong H1 trading. Revenue up 16% year-on-year, petroleum operations returning to cash profit. Group Orderbook fully replenished at end July 2021 (£2.7 million), annualised recurring revenue steady (£2.2 million). Cash at 30 June £6.8 million (31 Dec 2020: £2.2 million), plus £2.3 million of receivables (31 Dec 2020: £1.4 million).

·       Significant investment in new skills, technology and staff are reshaping Getech around the Energy Transition. This opens multiple transformational opportunities, funded by March 2021 fundraise (£5.7 million, net of costs).

·       Advanced discussions ongoing on securing first hydrogen asset, which is ideally positioned for access to high demand customers. This is part of an initial high-graded portfolio of 5 sites, with a combined peak capacity of 14,000 tonnes of H2 per year. The project funnel contains hundreds of sites in the UK, and this is now being expanded to Europe.

·       First phases of Geothermal and Strategic Minerals investment completed. New cloud-based products to be delivered from October through an innovative new Getech platform, designed to agglomerate energy transition data and knowledge. Customer engagement is positive, spanning licensed product subscriptions and service provision.

·       Trading conditions since 30 June 2021 continue on-trend with H1 2021, with a full tender pipeline and busy schedule of product releases.

·       Management looks forward to what it believes will be another transformational, busy and rewarding period for the Getech Group.

Dr Jonathan Copus, Getech CEO commented:

"H1 2021 has been a period of fundamental change and significant progress at Getech; gearing the Group for growth in multiple facets of the Energy Transition. Our work in hydrogen, geothermal, carbon capture utilisation and storage, and strategic minerals continues to identify further significant value drivers, which our recent fundraise enables us to translate into layers of product, service, and asset participation opportunity.

"Individually, each of these opportunities has transformational potential and underlying them is an energy heritage that continues to deliver a robust orderbook and annualised recurring revenue. The potential opening to us is growing exponentially as the pace and tangibility of the Energy Transition accelerates, and by combining our proprietary global geoscience data and earth system knowledge with local decision analytic expertise, we believe Getech has a unique role in unlocking the future of primary energy. As the pace of our work continues to build, we look forward to updating shareholders with a rich seam of news."

Getech, driving a data-led acceleration in the path to Global NetZero

Climate change is a complex global challenge that requires the successful deployment of a diverse range of innovative local solutions. By combining global geoscience data and earth systems knowledge with expertise in location and decision analytics, Getech is uniquely equipped to drive a data-led acceleration in the path to Global NetZero.

During the six months to 30 June 2021, Getech presented a diversified corporate growth plan, focused on hydrogen, geothermal and minerals that are essential to the energy transition. Having raised £6.25 million (£5.7 million net) of new equity finance in April 2021, Getech has begun a two year program of product investment and business development, which is positioned to optimize existing, and deliver new, energy assets and strategic mineral resources.

In H1 2021 Getech also joined the UN Race to Zero, pledging to be carbon neutral by 2030. Working with existing and new customers, the Group will deliver on this pledge through the deployment of its products and services, and by making investments in NetZero assets. These investments have the potential to bring significant value upside to shareholders.

How are our data, skills and technologies valuable to the future of primary energy?

Getech's geoscience products and services have been essential tools in the hydrocarbon industry for over a decade. They are even more useful today for the Energy Transition because energy systems of the future will still depend on factors such as subsurface fluid flow - whether for the extraction of heat, the storage of hydrogen, or the storage of CO₂.

Geologic processes that deposit critical electrification minerals, such as sediment-hosted copper, zinc and lithium, also follow similar principals to those that control hydrocarbon accumulations. This means they can be explored for in the same way.

Earth structure and reservoir presence, capacity, and quality therefore remain fundamental determinants of economic success, and Getech's products tell the Earth evolutionary story and provide the visualization and analytic framework that show companies, governments, and investors where to deploy capital.

As Getech applies these products, skills and technologies to hydrogen, geothermal and strategic minerals, the Group is also using its software development skills to build a scalable product delivery platform that is designed to agglomerate in-house and third-party energy transition data and knowledge to generate license-based annualised recurring revenue.

Our first deployments on this platform are now nearing completion and these include Phase 1 of Getech's Heat Seeker^TM geothermal solution and the Group's sedimentary copper module of its Strategic Metals product. The platform also provides a path by which Getech can convert gravity and magnetic data sales into an annual subscription product.

Pervasive throughout these activities are Getech's leading expertise in the provision of geospatial technology. In the context of the Energy Transition, geospatial skills take on a new and vital relevance - NetZero energy solutions requiring the identification of a local anchor heat and/or electricity customer to underpin development.

By utilizing workflows and location analytics from Getech's proprietary geospatial software products, the Group is growing its presence in data-driven, above-ground commercial decision making. Getech's edge in this valuable market is its ability to locate and value assets fast, which opens product, service and asset participation opportunities.

Hydrogen update

In January 2021, Getech announced a geospatial business partnership with H2 Green - a hydrogen hub development company, focused on the decarbonization of commercial transport.

By applying location analytics, Getech and H2 Green secured an exclusive Memorandum of Understanding ("MoU") to explore the establishment of green hydrogen production, storage and refuelling hubs across 21 sites, owned by SGN Commercial Services. In March 2021, Getech exercised a call option and purchased H2 Green.

Since April, Getech and H2 Green have signed a series of strategic MoUs - focused on rail decarbonization (Eversholt), engineering partnerships (TP Group), and refuelling technology (Element 2). Getech has also expanded the H2 Green team, adding an economist, a commercial manager, and a geospatial electricity network expert.

These new hires have accelerated the process of asset identification, and the team is generating a suite of development, asset appraisal, and decision analytic IP, which is cementing H2 Green's reputation as fast, insightful, and commercially creative locator and valuer of asset opportunities.

These steps are advancing commercial discussions across a broad range of opportunities.

·       Advanced discussions ongoing on securing H2 Green's first hydrogen asset.

·       This project can be developed as a major green hydrogen production, storage, and distribution hub.

·       Ideally positioned for access to demand customers.

·       First hydrogen production is expected 18 months after FEED and regulatory approval.

·       Getech is working a high-graded portfolio of 5 sites, with a peak capacity of 14,000 tonnes of hydrogen per year.

·       The project funnel contains hundreds of sites in the UK, and this is now being expanded to Europe.

H2 Green's vision is to build hydrogen hubs that are intelligently connect to the grid, maximising production from lost (or curtailed) renewable power capacity. Such hubs will act as both the generator of zero carbon fuel and a 'virtual powerplant' to respond to network supply and demand imbalances. By drawing on the wider software development resources of the Getech Group, the H2 Green team is working to productise this vision.

Board reshaped for Energy Transition growth

During H1 2021 Getech has also reshaped its Board - aligning Non-Executive skills to the Group's NetZero strategy. Year-to-date Getech has welcomed Richard Bennett (Chairman - bringing clean-tech and business scale up expertise), Michael Covington (Audit Committee Chair - bringing zero carbon asset portfolio management and financing expertise), and Emma Parker (ESG Subcommittee Chair - bringing expertise in mining, ESG and micro-finance).

After many years of excellent service, Getech thanks Peter Stephens, Allison Fielding and Chris Flavell, each of whom have retired this year from Getech's Board.

Outlook

H1 2021 trading was strong with revenue up 16% year-on-year and the Group maintaining EBITDA neutrality against an expanded program of investment. As Getech moves through a two-year program of investment, the Group will remain focused on core capital discipline, whilst working entrepreneurially to build diversified sources of revenue.

Management is focused on delivering a busy schedule of business development, product releases and customer engagement. The Group is committed to its NetZero pledge to achieve carbon neutrality by 2030 and Getech is proud to be invited by our partners to showcase our H2 Green hydrogen business at COP 26.

Trading since 30 June 2021 has remained on a positive trend and our outlook for H2 2021 is as strong as we have had at the Company, with multiple value generative events anticipated supported by our improving core business.

Operating review

Getech's core value proposition combines our Geoscience and Geospatial expertise to provide unique insight for the Group's energy sector customers.

In an energy market that is transitioning to deliver a decarbonised and decentralised primary energy system, the application of Getech's combination of skills and technologies opens a wide front of commercial opportunity to the Group. In H1 2021 equity funding has enabled Getech to accelerate plans to diversify into the Hydrogen, Geothermal and Strategic Minerals sectors, whilst continuing to develop solutions for Getech's petroleum markets.

Getech is a trusted technology partner to a wide range of global Petroleum companies. One of the foundations of the Group's offerings to these customers is its flagship earth modelling product, Globe. Globe is a comprehensive knowledge-base that documents Earth's geologic history over the last 400 million years and enables its customer base of super-major and large independent oil and gas companies to gain unique insight into the processes responsible for the distribution of resources today. By providing consistent reliable information, Globe cuts through nature's complexity to support rational economic decisions. In H1 2021 Getech completed the Globe 2021 release, which delivered its customers essential new content, analytic tools and usability features, against a back-drop of continuing high rates of customer re-subscription.

Furthermore, in H1 2021 Getech saw signs of a post-Covid rebound of sales of our market-leading Gravity & Magnetic (G&M) data and related services, as the Group's customers tentatively increased their levels of project-based work. In parallel, Getech began work evolving its G&M data delivery models to create new ways for customers to access the Company's market-leading global G&M data library. This includes a new web-based data delivery platform that provides a simplified customer experience and enables more efficient customer project delivery. By enabling more cost-effective access to Getech's G&M data holdings through a subscription model, the Company targets greater predictability to its data revenues, delivered from an expanded customer base in the Petroleum and Mining sectors, as well as in emerging sectors such as CCUS and Geothermal.

Elsewhere in Getech's petroleum business the GIS Software team completed releases that delivered significant enhancements to the software's data integration, exploration prospectivity analysis and onshore shale gas/oil well pad & lateral planning capabilities. These enhancements are being used to test the transferability of these products into Net Zero applications.

Recent enhancements to Getech's Unconventionals Analyst software have also enabled the Group to add new customers in the Investment Banking sector - where users are leveraging the software to rapidly evaluate multiple future development scenarios on behalf of their investor clients. Getech continued to successfully deliver a wide variety of petroleum GIS services contracts, including projects for new customers and securing new projects in adjacent/hydrogen-linked sectors such as Carbon Capture Utilisation and Storage.

In the Hydrogen sector Getech's subsidiary H2 Green has developed a deep pipeline of opportunities that are moving through the Company's asset development stage-gate process to provide Getech's Board with a robust suite of investment opportunities. The balanced approach of providing production hubs of scale to service the regional demand, whilst removing transportation costs by optimising site locations against fleet movements, stems from the advanced geospatial analytics within the Group companies. This data-led approach has driven more opportunities into H2 Green's portfolio, as local authorities and large customers approach us to develop their hydrogen economy.

Globe has been an essential tool in the hydrocarbon industry for over a decade, but it is even more useful for the Energy Transition. This is because documenting Earth's history is a vital component of any exploration, no matter what the resource. Alongside Getech's work in petroleum, through H1 2021 the Group began expanding its products and services to create new offerings for the Mining sector, leveraging both our G&M expertise and Globe to provide customers new solutions for de-risking Copper and Lithium exploration - both essential strategic minerals for the Energy Transition.

Much of Getech's geoscience data and associated interpretation by Getech experts has direct application to the Mining sector - enabling exploration geoscientists to locate potential mineral deposits more efficiently - and the Group anticipates that it will be able to open significant new data product revenue opportunities by integrating this data into Getech's new web-based data delivery platform.

For the Geothermal market Getech accelerated development of 'Heat Seeker' - a novel solution for locating geothermal resource sites within reach of readily available customer markets for heat or power. Heat Seeker is built on a foundation of outputs from Globe, Getech's G&M data holdings and the Group's geospatial analytics. In addition, during H1 2021 Getech delivered bespoke geoscience services projects for both deep and shallow market-leading geothermal operators.

Finally, Getech's group-wide Innovation team, continued with its remit to research and develop cross-discipline opportunities for new markets, capabilities, partnerships, products, and services. In H1 2021 the Company's innovation work focussed on assessing opportunities in the hydrogen, geothermal and mining domains; applying machine learning to Globe and G&M products to create new insight; further investigating the concepts of IoT and Digital Twins to feed geospatial projects; and developing solutions to enable organisations to analyse their CO₂ emission sources and assess alternative greener energy supply as part of their energy transition requirements.

Financial review

Revenue and sales

H1 2021 revenue totalled £2.4m (H1 2020: £2.1m), representing a 16% increase. A high renewal rate for Products and Services helped annualised recurring revenue to increase from £2.1m at 31 December 2020 to £2.2m at 30 June 2021.

Getech is still experiencing a more protracted contracts and procurement process with many customers. This was evidenced by some delays in contract award towards the end of H1, which resulted in a drop in order book value to £2.1m at the end of June. However, with a number of these opportunities being awarded in July, at 31 July 2021 Getech's orderbook was valued at £2.7m (31 December 2020: £2.7m).

Cost management

In April 2020 Getech took significant cost saving measures. There were some temporary cost saving measures, such as limited use of the UK Government Job Retention Scheme, which ends in September 2021, and temporary salary reductions that ranged from 20% for Getech's board to 8% for most other staff. These temporary cost savings continued through to June 2021.

The Group has also undertaken some permanent cost savings, which included restructuring of the core petroleum team in 2020 and more recently in February 2021, sub-letting of the London office. Management continue to be committed to carefully managing costs within the business, whilst simultaneously planning careful investment in the business for diversified growth.

During H1 2021 Getech acquired H2 Green. Since the acquisition, Getech has strengthened the capacity of the H2 Green team, adding an economist, a GIS analyst and commercial manager. During the initial phases of spending, these are expensed administrative costs.

H1 costs also include expenditure on diversification projects in the Geothermal and Strategic minerals sectors, where our technical teams are developing new products and services using our petroleum skills, products and data as a basis, see operating review for more information.

Profitability

Getech's H1 gross profit margin of 59% was largely flat against H1 2020 (60%).

Following an equity fundraise, Getech expanded and accelerated its program of investment in Geothermal, Strategic Minerals and Hydrogen. The Group also generated significant year-on-year revenue growth, which enabled Getech to deliver a neutral EBITDA[†] position; H1 2021 £0.0m vs H1 2020 £0.1m profit. Underlying the expanded multi-sector investments is a cash profitable Petroleum sector for H1.

A large proportion of these additional growth and diversification investment costs are included in administrative expenses. Getech's post tax loss was £0.5m (H1 2020: £0.4m loss).

Operating cash flow

Getech's operating cash flows reflect the Group's strategy of diversification and include expenditure relating to these activities. In H1 2021 the Group saw operating cash outflows of £0.1m, before working capital adjustments (H1 2020: £0.05m cash inflow).

Net working capital movement in the period resulted in out-flows of a £0.4m (H1 2020: £0.1m outflow) and relates to timing of trading activities during the period. The increased working capital movement in receivables and payables reflects increased trading activity around the period end in comparison to the prior year.

Investment and capital expenditure

Capitalised development costs are lower than in H1 2020 (£0.4m vs £0.55m) this reflects cost savings made in our petroleum business in H2 2020 that have carried through to H1 2021.

Acquisition costs of £0.05m are the cash consideration relating to the acquisition of H2 Green on 30 March 2021. Total consideration is expected to be £1m and will be paid in a combination of cash and shares subject to a series of milestones and earn-out targets.

Financing activities

On 31 March 2021, Getech shareholders approved a share placing to raise £6.25m to fund Getech's programme of diversified growth. Net of costs, total cash raised was £5.7m.

In April 2021 Getech ended its loan capital repayment holiday and continued to pay down its loan.

Liquidity

During H1 2021 there was overall net cash inflow of £4.6m (H1 2020: £0.7m outflow), the resulting period-end cash balance was £6.8m (31 December 2020: £2.2m).

Cash in-flow of £4.6m includes: £5.7m net inflow from equity raise, a £0.7m six-month investment program in diversification projects, £0.2m inflow relating to Petroleum sector operations (net of capitalised development costs), £0.4m outflow due to timing differences from working capital movement, £0.2m outflow including acquisition costs, taxation, loan capital repayment and interest.

Dividends

The Board, as part of the recent equity fundraise, has set a clear investment path that is focused on growth through NetZero diversification. Getech's Board has therefore decided that it was not appropriate to pay a dividend at this time.

For more information please contact: