Getech Group (LSE:GTC) — Interim Results

0:00 Good afternoon, and welcome to the GETECH GROUP PLC Interim Results Investor Presentation. Today's recorded meeting, investors will be in listen only mode. Questions are encouraged and can be submitted at any time by the Q and A tab situated in the right hand corner of your screen. Just click Q and A, type in your question, press send. Company may not be in a position to answer every question received during the meeting itself. However, the company can review all questions submitted today and publish responses where it's appropriate to do so. Before we begin, I'd like to submit the following poll.

0:26 And I'd like to hand you over to Chris Jebbs, CEO. Good afternoon, sir. Thank you, and welcome everybody, to the GETECH interim results and business outlook, company presentation. I'm joined today by my colleague, Simon Brown, who's our CFO. He makes up part of our executive team here at GETECH, alongside my colleague, Max Brow, who's our chief business development officer who who's not joining us today. We've been in place since January this year. We've really set out to be much more efficient and organized with the company. The three of us have been with the company a while. We have a a very good understanding of the business, GETECH's team and our customer base and markets, wide industry experience, and we like to think a reasonably successful track record in each of our various areas.

1:23 And in January, you know, we set out a new, sustainable business strategy, which we've been working on all this year, and I'll be giving an update on, later today.

1:37 So jump into the highlights for the half year of 2025, in terms of the finances. So revenues were broadly flat on last year, 2,100,000 versus last year's 2,200,000. Obviously, there's a bit of rounding in here, and, we also had, you know, a few things kind of outside of our control, which we weren't expecting, such as, adverse movements in foreign exchange and and and those kind of things, which sort of meant we were a bit lower than we would have hoped to have been. As I say, broadly flat on last year. Our order book was a bit down. You know, we've we've discussed this before. Order book comes and goes depending on how far through our various multiyear contracts, we are.

2:23 And, obviously, order book unwinds over to revenue through the year. So order book was down at 3.8, but has subsequently increased up to 4.2, as at the end of August as shown on the slide. So the first half of the year, we, set about addressing the GETECH cost base. We're on track to reduce our costs, for this year by 12%. That's 2,500,000 versus last year's 2.8. But on an annualized cost base, that would be about a 20% reduction for a for a full year of that lower cost base. Obviously, implementing cost reductions can cost money, so, we have a cash balance of about 400 k 400,000, at the end of the period.

3:11 And, obviously, that was after some exceptionals related to the the cost reduction program. We completed the sale and leaseback of our final office building, Nicholson House, earlier in the year, February, and that left the group now debt free, as that property was being used as security against some, loans.

3:37 So moving on to what we've done over the half year. Our key focus, as always, is with our with our GLOBE platform, and we've delivered a number of, contract renewals with our, customer cohort, largely of super major energy clients. We've actually, given that cohort of customers two releases so far this year, and those releases contained enhanced geologic and geophysical content, as well as new analytic tools leveraging the latest technologies such as AI and machine learning. You can see a sample of our customers there for the GLOBE platform. You know, we're very proud of our customer base for GLOBE, and actually come on to, show a bit more of that later.

4:23 A second key focus for us this year was our unconventionals, product. This is a software tool that's focused at essentially the shale oil and gas plays or areas in the world, most of which are currently in North America. And it's an interesting product in that it has a kind of a twin market, both of operators and financial institutions. So the operators are using the tool to better manage and plan their unconventionals developments, and the financial institutions are using the tools to, allow them to value deals and, work through various m and a, activities and targets. And, you know, that market has seen a lot of m and a this year. So we've we've added several new clients, into that market this year. We have also seen a few clients sort sort of disappear through m and a, so it's a bit of a bit of customer churn in there, and a bit of a mixed, picture, but we have also seen several new contracts added post half year end as well.

5:25 So that's been a good push for us this year. Something else we've made good progress on is our natural hydrogen project portfolio. We announced earlier this year, a joint venture agreement, with Sound Energy, and this is exclusively, looking for hydrogen and helium, in Morocco. Sound Energy are a company focused on various energy resources across Morocco. We've completed a successful geologic screening process for likely sources of hydrogen and helium, in the country. And following that project, we set up the company, Haimer Rock, which will be fifty fifty joint venture between, ourselves and sound, and that is focused on securing licenses and maturing hydrogen and helium, projects within Morocco.

6:24 And we're hopeful to get more news on this one soon. And, yeah, there is a slide coming on with a bit more information on that. We've also set up a strategic partnership with an onshore seismic, technology company called Stride, And this this enables us to provide a kind of greater level of service around the kind of work we do with our Explorer customers, allowing us to get closer to the decisions for where to, shoot and acquire seismic, for example. And, I have a a more detailed slide on this coming up. And, of course, the other thing we do is we continue to, work on innovation projects and build up our IP. And, you know, GETECH has built IP up over many decades while it's been in existence, and our focus continues to be on GLOBE and our Earth Systems Model product, which is our paleoclimate dataset, which is very unique to GETECH, but also our gravity and magnetics database. We have the the world's largest commercially available database of gravity and magnetic data. We have data for every country in the world, which allows us to do the kind of projects that we've we've done in Morocco, for example.

7:36 And we've continued to innovate, on our natural hydrogen, location workflow and, of course, our unconventionals, tool, as I previously mentioned.

7:48 So the markets we work in, this year, we set out to, try and focus a bit more. So the three on the left are are have kind of been our main focus for the year, and the two on the right, we sort of turned the dial down a little bit. Carbon storage has sort of been making slow progress more generally, and we see probably it's gonna be a sector that's more covered by the existing super majors, in the first instance at least. Geothermal is also sort of struggling to attract, serious amounts of investment, although it has done a little bit better this year. We have won work in that sector. But in general, our focus is on, oil and gas, mining and minerals, and natural hydrogen. Certainly, we see oil and gas has an an important role to play in the global energy market for several decades to come, and there are lots of studies that that back that up. And I'll come on to some some recent, announcements by various, energy bodies, saying that we still need to be doing more around oil and gas, a little bit later.

8:56 But it's been a bit of a mixed picture this year with the new US administration sort of signifying that there was gonna be a lot of deregulation, but also trying to drive oil prices down. So it's been a bit of a complex picture, on that front. Demand for critical minerals continues across the board in the drive for electrification and the push towards net zero. Although, again, we've seen, you know, the pendulum swing perhaps a little bit away from, low carbon in the last twelve months or so, and, you know, since the Russian invasion of of of Ukraine. However, there remains a a good market for GETECH and one that, is well positioned to use GETECH's products and services. And natural hydrogen, it turns out that our, global holdings of gravity and magnetic data and our team's expertise is actually really well suited to natural hydrogen.

9:52 We've continued to make, strides within that within that sector.

10:00 Most of the work we do is focused on our GLOBE product. GLOBE is a digital twin of Earth's history. It goes back about 400,000,000 years, and it includes a huge database of geoscience data. It's also underpinned by gravity and magnetics holdings, and also complemented by our software products and, of course, our expert services. And we're constantly innovating around globe in order to enhance the product for its customers and also to bring in new new clients as well. So this is key IP for GETECH. Certainly has a real strategic value for us. And you can see on the screen there are a number of areas where we're continuing to innovate. Obviously, there's lots of buzz around AI machine learning at the moment. We've certainly been looking at that over the past few years.

10:48 But, you know, we don't forget our kind of core geoscience innovations as well, such as around paleoclimate, which is past climate essentially. Plate tectonics, you know, the way the plates have moved over time, and affected what's been formed where and when, and also new types of processing our gravity and magnetic data based on new satellite information that's that's received from new satellites. So, for example, our our MultiSat product from a few years ago.

11:23 So I mentioned our clients earlier. You know, we we help those clients. We kinda call them big energy. Excuse me. We help those clients reduce their exploration risk and uncertainty. That's essentially what we do as a company across the board. We have a whole cohort of sort of household name super major, customers, which many have been with us, you know, a very long time, sort of fifteen years plus on on the GLOBE platform and on others of our, other parts of our technology stack. And I can tell you that two of the, companies shown in their logos there have renewed their GLOBE contracts with us this year. Another one is ongoing and about to renew. You know, and these are generally multiyear deals, and, you know, these are really important deals for for for GETECH to keep renewing. And, of course, each time we renew, we, you know, we try and push our ARR a bit if we can.

12:21 And, also, it keeps us engaged with those clients in order to offer them, different products and services as well. And Globe really sits in the middle of a a kind of workflow, if you like, where where you take sort of fundamental data like gravity, magnetic, seismic, and wells, satellite imagery perhaps. You process it all up. Obviously, we've spent years building GLOBE, which we have there, and then you can push that data into various analytics,

12:48 ask experts to process it in particular ways, and ultimately come up with an answer. And that answer is all really about helping our clients make better decisions in order to reduce their risk, and better understand their uncertainties in their in their projects. So, really, GLOBE helps these clients accelerate their subsurface exploration projects. Helps them do a lot of modeling upfront before they do things like drilling expensive wells or shooting expensive seismic surveys.

13:20 Within GETECH, we see we have a number of, strategic value drivers. We we talk about our ARR. I mentioned it at the start of the session. And really one of our key key strategies for the year is to to really push our ARR as much as we can, and increase our number of subscriptions. Obviously, we've had a bit of a mixed picture this year, so far, but the year's not done. And, really, we'd like to get our ARR up really up to our cost base ultimately so that on the January 1 every year, you know, our cost base is covered. And how do we do that? We do that by selling Globe and by selling software. In general, our data and our projects, and our expert services that those things are kind of one off sales, but it's our Globe and our software that drives our ARR.

14:11 So selling Globe to new clients is is a key ambition, and we have a number of sales opportunities for that both in the super major, but also in smaller and in sort of national company settings. And we feel there's a good market to go after for new GLOBE clients. We can also upsell existing clients with our, other products that helps drive ARR. And then, of course, with software, it's about driving new logos and also kind of making sure that our existing clients maybe are aware of our other software products, and and that they license those too if they're, suitable for them. So that's how we intend to push our ARR and our subscriptions up.

14:58 You know, these things are typically, I would say, a kind of six to eighteen month sales cycle for a new for a new client. So it's not, it's not something that you can sell many of every month. So it's about doing the marketing, doing the good work, getting the conversations going, building the relationships, and then, ultimately landing, you know, the sale down the line. Another part of our strategic value is our unique capabilities in locating geologic hydrogen or natural hydrogen. And, you know, we call this our natural hydrogen project origination. So natural hydrogen, as we've seen in previous updates, is very new and nascent market. It's it's sort of unproven, but, you know, hydrogen could be an incredible transformational clean energy source for the future.

15:51 And there's there's a lot of hydrogen about if you know where to find it. So there's huge upside potential here for GETECH to really tap into this new market. And what we do with natural hydrogen is is we offer services to customers and clients looking to locate hydrogen and and also helium. We often find helium colocated with hydrogen. Helium has a bit more of a proven market, and and it could potentially be a resource that, you know, makes some of these hydrogen, projects ultimately commercial as well that, you know, the two of them in tandem. So, yeah, we can sell our services and our data to those companies, but we could also explore for these resources ourselves. And this plays into our sort of project origination, portfolio where we, are building up a small portfolio of, natural hydrogen projects with a number of options to monetize in the future, which I'll come on to. And then, you know, another key part of our strategic value, which we don't feel is fairly reflected in our share price frankly, is our unique IP and innovation. You know, GETECH has over thirty years of data collection history behind it, global datasets, the life of which you can't find elsewhere, next generation products such as our multisap product, Globe, you know, our Earth Digital Twin, as well as our software and all the other things we do around machine learning as

17:21 well. So there's a huge amount of value there, which we work hard every day to, you know, sell to our various customer bases. So here's a bit more information on our Stride, relationship, which we started this year. So Stride is, as I say, it's an onshore seismic acquisition company. They they sell and they make and, use and then sell the data of, these little, revolutionary sort of, sensors that help, companies image what's under the ground, through through seismic energy, seismic waves.

18:07 So the company is essentially allows you to acquire high definition onshore seismic data. So this could be useful for things like hydrogen projects, onshore oil and gas, potentially mining, and also geothermal. And our partnership with them allows us to leverage their sales channels, and also for them to leverage our sales channels where we can offer a more end to end workflow where we start with our kind of regional screening and goes right down the line into seismic planning or, you know, highlighting a kind of prospective area, planning a survey, shooting the survey, interpreting the data. So it's a bit more of an end to end service solution than, you know, the customer coming to us for the screening and then thinking, oh, what do we have to do next? So we can kind of guide them through the whole process.

18:57 And we've already deployed, deployed this successfully on a on a few projects, and it's really enabled our clients to optimize their

19:08 new seismic surveys and also help them identify new prospects and and and and manage their subsurface resources. Quick update on our Moroccan joint venture. As I say, this is with Sound Energy. Earlier this year, we established, the joint venture company called High Moroc, which you can jump on the website for there. So as I said earlier, this is focused on locating hydrogen and helium, in Morocco. We are having done a a regional study. As I said earlier, we're currently looking at where we might be able to secure acreage, or, licenses, which would then be further worked up for drilling, down the line. And as I mentioned earlier, we've got a number of options, to monetize this position, you know, before any material capital would be required from GETECH, which is certainly our our strategy.

20:20 So just coming to our final slide here. So the outlook for the business, you know, we've made solid progression in 2025 towards our 2025 turnaround plan. Post period of the interims, we finalized the board positions for Simon and Max, and I was brought in initially in January as interim CEO. So I've subsequently been made permanent CEO. So post period, we feel that we've really strengthened the board, and really tightened up on our governance. You know, we feel like there's a bit of a swing in the pendulum back to oil and gas. As I said earlier, The US initiatives to kind of push down regulation would have been well received by the sector, but, obviously, there's been sort of global uncertainty with trade tariffs and, you know, the push to kind of get lower oil prices, in some parts of the market.

21:23 However, you know, we think the fundamentals of the sector remains strong. Various reports from, the IEA, IEF, and S and P Global have suggested that, you know, an awful lot of investment in upstream oil and gas is gonna be required even over the next five years in order to meet demand for oil and gas, but also to offset production declines, which a recent study have said are actually, even more notable than than previously estimated. And what this means is this could require the industry to start making annual discoveries of up to 10,000,000,000 barrels and a thousand BCM of natural gas globally each year just to maintain current supply levels in future years.

22:10 And that plays very well to the kind of work and the kind of products GETECH, has. So we're you know, we understand these markets. We feel, as a result, we're very well positioned to navigate them and identify the best opportunities. We have a really strong pipeline of, renewals and also new business opportunities for the second half of the year. We have this year onboarded a new sales director, and we've worked through a number of, big changes to the way our sales team is being managed and tracked. And, you know, we're we're seeing now that that's really, really starting to impact our pipeline, which I like to think has, improved both in size, but also in terms of quality as well, this year. As I say, again, with a sometimes sort of longish sales cycles of six months plus, you know, this take will take a little while to feed through our numbers, but I feel we're making good progress there.

23:10 And with that, you know, we're focusing on the targets we set out at the start of the year, which is to get to EBITDA positive, which this business hasn't done for five, six years, but also to deliver, some more you know, some revenue growth from just our our base business. And then on top of that, we have the added sort of value creation opportunity of our, project portfolio of natural hydrogen endeavors as I've described. So with that, I'm going to draw the meeting Fantastic. To a close. Fantastic. Chris, thank you very much indeed.

23:58 Ladies and gentlemen, do please continue to submit your questions just using the q and a tab just situated in the right hand corner of your screen. Just while the team take a few moments to review those questions submitted already today, just like to remind you, the recording of the presentation, along with a copy of the slides and the published Q and A, can be accessed via your investor dashboard. Chris Simon, as you can see, we've had a number of questions throughout today's presentation. Thank you to investors for submitting those. If I may, I just ask you just to click on that q and a tab where appropriate to do so. Just read out the question, give your response, I'll pick up from you at the end. Thanks. Perfect. Thanks. I'll just go through a few here that we've been sent in. What traction are you seeing in The US following the expansion of the team there? So, yeah, that's referring to our expansion of the sales team. We expanded our sales team in The US to focus purely on our software sales, and that's that's where we're seeing the traction. So we, you know, we have an office in Houston. If you've ever been to Houston, you'll see it's a very big market with a lot of companies, and we're starting to see now making sales, in and around the Houston area and nearby area, from oil and gas operators, but also from, financial institutions, primarily with our unconventional software.

25:22 You have multiple JVs in play. How are you managing the team's focus and resources to maximize these opportunities? Also, how are you managing the cost base and visibility or revenues and visibility of revenues, maybe? How should we look at the revenue profile of the business? Well, you have multiple JVs in play. How are you managing the team's focus? So we have a project office team internally within GETECH, and we're ISO 9,001, certified. So we're very organized the way we run our business. We we do obviously have multiple projects ongoing, and we're quite used to kind of, moving the team around and juggling them. The reality is on these JVs, once you've done the original, bit of technical work, it's kind of not an ongoing project. It almost becomes a sort of a BD project at that point where you're managing relationships and you're no longer really doing any technical work. So, we talked in January, I think, about sort of scaling back our ambition on the JV portfolio.

26:31 Previously, it had been mentioned maybe getting up to 10. We kinda feel like three or four is about the right level, and and we're quite comfortable managing our resources sort of on that ongoing basis. I don't quite understand the second part of the question, but how are you managing the cost base and visibility of revenues? I mean, these are a key focus for us. Our cost base is relatively flat, to be honest with you. It's mostly salaries, so that's quite easy to manage once you've got them to a content that you're kind of happy with. And, you know, revenues, we we have a team that is chasing clients for renewals and doing all that all that good stuff, you know, managing our cash flows. That's kind of business as usual for the company.

27:23 As a shareholder, there's lots to be positive about GETECH except the cash the cash balance. Are you expecting this to increase with the new contract wins, or will you need to raise money? So we set out this year absolutely not to need to raise money, especially at the current, share price. We kind of had a plan this year where we knew we'd we'd be into a bit of a negative, working capital cycle in the first part of the year, which is what we've seen. And we are entering our kind of traditionally stronger last four months of the year or last three months of the year now. So q four and q one tends to be when we when we top up our cash balance. So that's when we're expecting it to increase, and we also expect to see new contract wins during that period.

28:14 Just to be clear, your strategy is to build the SaaS revenue with significant upside in the JVs. How does that work, and what are you seeing from an a I r ARR versus cost based profile? How much r and d is needed? Yeah. The reality is our cost base is pretty fixed and flat. So if we can drive subscriptions, that pretty much becomes all, all margin or it go all goes down to the bottom line. So that's how that works. You know, we in order to drive SaaS revenue, we don't need to take on new staff. We have the staff to be able to do that. We just need to sell those products, and and bring those contract wins in. And, obviously, we have increased our sales team already this year to do that, so we're kind of comfortable with the level of investment that we have in our sales team.

29:06 How much r and d is needed? We don't again, we don't have, a requirement for huge amounts of r and d with a big team to come in and do something. You know, we have our software team, for example, is constantly working on on the software and is able to advance that software and, you know, keep the clients happy and add add new features that will bring in new clients, and the same with Globe and and the other things we we work on. We, you know, we we have a managed internal innovation program, and, you know, we're able to put people onto projects as and when we need them out of the standard cost base. And, again, it's not something we would add to, at this time. The number of new contracts suggests that each one is very small. Is there scope to upsell, or is the contract purely based on the size of each company, number of users, etcetera?

30:00 Yes. Some of our contracts can be quite small. Some of our software sells you know, we have an entry level software called Data Assistant, which is quite cheap. That's kind of a data management tool. It's more of a kind of commodity for these for the clients, but it's also a kind of gateway and an entrance to, our other products. So it's important to kind of have that that lower price point, we feel, because it helps us connect to the market. Not all our contracts are very small. Obviously, there's a there are a smaller number of very large ones. There's there's obviously a profile there. Is there scope to upsell? Absolutely. You know, if you come in on one of our smaller products, you know, we can certainly use that to promote and push some of our our other analytics?

30:51 And is the contract purely based on the size of each company number of users? Yeah. We have a customer segmentation pricing model, which I won't go into too much, but, you know, if you're let's pick a a specious company name out of thin air. If you're Shell, the price might be one thing. And if you're, you know, viewing oil much smaller, then the price would be, you know, lower. That that tends to be the way most most organizations work. So, yeah, hopefully, that answers that question. So I think that was actually the last question. Thank you. Yeah. That thanks very much indeed, Chris. That was indeed. And of course, any further questions that do come through, the team will have the ability to review those and we'll publish responses on the Investor Meet company platform.

31:39 Just before redirecting investors to provide you their feedback is no particular important to you and the team, Chris, could I just ask you for a few closing comments, please? Sure. Thanks. Yeah. Well, you know, first of all, thanks everyone for joining us today. We we you know, we've set out at the start of the year to turn this GETECH business around. It's, you know, it's it's, it's what we're still working on. It's been hard work through the year. I know there's, an appetite to get much more news, much more see much more news flow from from us. We will announce things as they come in, and, you know, we're hopeful that there'll be much, many more announcements between now and the end of the year and interesting things to announce, beyond that as well. So watch this space. And, you know, for us, it's all about focusing on, making our way through the rest of the year and, delivering on those targets that we set at the start of the year.

32:39 Fantastic, Chris. Thank you very much indeed. Could I please ask investors not to close the sessions now automatically be redirected to provide your feedback in order the team can better understand your views and expectations? This will only take a few minutes to complete, and I'm sure it'll be greatly valued by the company. On behalf of the management team of GETECH GROUP PLC, we'd like to thank you for attending today's presentation. That concludes today's session, and good afternoon to you all.