Getech Group (LSE:GTC) — Interim Results

0:01 Good morning, ladies and gentlemen, and welcome to the GETECH GROUP PLC interim results investor presentation. Throughout this recorded presentation, investors will be in listen only mode. Questions are encouraged. They can be submitted at any time via the q and a tab that's situated on the right hand corner of your screen. Please just simply type in your questions and press send. The company may not be in a position to answer every question it receives during the meeting itself. However, the company can review all questions submitted today, and we'll publish those responses where it's appropriate to do so. And before we begin, as usual, we would just like

0:32 to submit the following poll. And if you could give that your kind attention, I'm sure the company would be most grateful. And I would now like to hand you over to CEO, Richard Bennett. Richard, good morning, sir. Good morning, and and thank you. I'm Richard Bennett. I'm the the CEO of GETECH GTC, PLC. And today, we'd like to present our interim results for h one twenty twenty four. The the agenda is I was gonna take you know, many of you spoke to many people over August, so we're gonna take a quick counter through the the the quick where we are as a group at the moment and then focus more on the interim results, the business outlook, and leave plenty of time for the question and answers. But for those for that are new to to GETECH, GETECH is a is a company. We're we're accelerating the clean energy future by locating the subsurface resources that are vital to the energy transition.

1:22 And it's our point of view that we believe that the clean energy future needs more discoveries. And the the history to GETECH is we've worked for a long time helping oil and gas companies find sort of sort of petroleum resources around the planet. And today, we've been very much diversifying the business into to into subjects that are much more closer to the energy transition. So that's very specifically natural hydrogen, critical minerals such as copper and lithium, geothermal, and and and carbon storage. Now we deliver our products through a platform called Globe, which is a SaaS platform, and that allows us to deliver our data and our analytics and our workflows to to the to the to to the exploration community.

2:11 And key to part of our platform is is GETECH is the it has the largest repository of commercially available sort of fields data in terms of magnetic and gravity data and and certain amounts of earth observation data. We've we have over the last sort of history of the company, we've done a lot of work to kind of harmonize all of that data into the GLOBE platform and bring a number of plate analytics such as, climate modeling and plate modeling and so on. It is an essential part of the exploration process. And that was the legacy that we inherited. And then more recently, we've been adding a lot of machine learning techniques to be able to sort of sort of materially go through that data at a lot faster speed. And we have a number of workflows and expert workflows to really help translate that data for our exploration based clients.

3:00 But more focusing as to today is is actually to focus on the h one interim results. First of all, I'm sort of pleased to say from a governance point of view, we completed the recruitment of Alison Levitt to the board as an independent NED and chairman of the audit committee. So we're very confident that we're back up to full strength and sort of maintaining strong corporate covenants within the within the company. We've had a number of it's been quite a good year. 2023 was a really tough year for for GETECH as we we went through the restructuring and closed down the the sort of h two green business and really got the company onto a new cost base for what we've been able to do. And doing that now, we've been able to really sort of help focus and, you know, so on the new cost base, diversify and start selling sort of making us a diversification into the energy transition.

3:52 And more than sort of 30% of our revenues are now coming from non oil and gas based customers. We've really been focusing on sales. We have a very strong sales pipeline of around 9,600,000, which we which we reported when we went to do the fundraising earlier on in in the summer. And we've been expanding our revenues, really trying to turn the platform into from a a contractual based service into a SaaS based place SaaS based service, software as a service, and looking to focus the business on AAR recurring revenues rather than contractual revenues. We introduced an equity partition participation sort of revenue generation program during the season, which has been very much focused on the nascent natural hydrogen industry.

4:40 We've been really working from an r and d perspective on our AI machine learning techniques, again, really to zoom in and help support the the new industries for exploration such as natural hydrogen and the helium industry. A little bit of housework, managed to sell of our corporate property with comprised of two units. We sold kits and house and that's released them sort of paid off a lot of the debt and the mortgage and we still got for sale Nicholson House, which we hope to complete in in the near future to sell that business and release the money back into the business and move back from sort of in into the center of leads and more kind of a tech based environment for the for for the company. Sales have been going in the right direction.

5:25 We've secured 53 contracts during the period and 2,200,000 of revenues, which we which we'll come on to. And post period, we've raised 1,700,000 in in a placing and oversubscribed retail offer for for the business.

5:40 So very specifically zooming into the h one results, 2,200,000 was the the revenue for the first half of the year, and that's up 16% on the same period last year. So it's a very much moving back in the right direction for for for where the company is. The cost of the business was was 2,800,000, which was down nearly 30% and mostly attributed to closing down of the the h two green business. There's a few more costs lurking in there but overall we're expecting the cost base of the business to be around 5,500,000 for the for the twelve month period. The the loss is substantially reduced down to 3 point 300,000 on an EBITDA level.

6:27 Again, and I think as widely in in in various notes, I think, from Cavendish and so on, we're expecting our main internal target this year is to make sure that we're breaking even at an EBITDA level within the within the business. Our contractual order book again is up. That's now up at 4,700,000, and this is revenue that we've sort of contracted revenue that's in our, order book, that will unwind into the into the cash flow and into the p and l over the next eighteen to twenty four twenty four months. Cash was very low light at the end of the period at $200,000,200,000. That was sort of really drove the need we think for the placing. It was our intention to sell Nicholson House but would you believe it just as we put Nicholson House on the market, there was an election called and and and all bets seemed to be off and that kind of less left us in quite some quite a tight position. So we went out and did a retail placing and retail offer which which netted 1,700,000 to the business and cash now on the business is is just around the the 2,000,000 marks. So we have plenty to to of of room to for working capital and for for for growth.

7:40 And very importantly, the AAR which is our real metric now within the business where what everybody's focused around is up nearly 10% to 2,900,000 and again it's another key objective of the business to get the AAR above the cusp base and and make sure that we really have a sustainable business as we actually move forward into the into the future. For those that saw the fundraising presentation, you know, we have a very strong pipeline of opportunities. We we've been really focusing the tail tail end of 2023 and and the first part of 2024 on on developing the sales pipeline, which now stands at 9,600,000 across both the GLOBE platform, which would be AAR, as well as geoscience services and and and data. We're also working on a number of joint venture exploration agreements for for those that followed what we did with eStar earlier on in the year that there's been quite a success, I think, for for for the business and proving a bit of a template for doing new transactions, particularly in the the nascent hydrogen sector, and we're working on a number of different JVA opportunities that we hope to be talking about later on this year or early into 2025.

8:52 And throughout this I think what we're quickly to do is demonstrate some of the work we've been doing outside of the petroleum sector. So might just hand over to Chris Jeps just to briefly talk through some of the projects that we've been been running. Sure. Thanks, Richard. So, yeah, just a few examples on the screen here of how we've been applying the techniques we've developed and have been using very successfully in the petroleum business for the last sort of twenty, twenty five years into these emerging energy transition sectors. Now we just cherry picked a few examples to sort of show the breadth of markets where those techniques can be applied. So for example, on the left, natural hydrogen has been a real focus for us over the last sort of twelve to eighteen months. Turns out on our gravity and magnetic dataset, it's incredibly useful at predicting locations of the source rocks from natural hydrogen as they're often igneous rocks that that are very heavy and have a certain magnetic signature.

9:51 So we've been working with a number of organizations, one particular project focusing on North America, but we are looking at other places around the world. And you can see from the image here, our data's in the kind of the blue and yellow and green sort of image in the background there. We might make out some hatched areas. And those hatched areas are actually the map locations of the natural hydrogen source rocks. And you may be able see some little red dots, and those red dots are actually where natural hydrogen has been measured or observed at the surface. And you can see those areas really are really picked out by our underlying data. The area to the the swoop to to the north is actually offshore, so there's been onshore work done. So hatching red dots there.

10:40 But you can see how how well our data is able to show those kind of birds. Moving on into the middle, our geologic data is incredibly useful in helping us predict a large number of minerals resources such as copper. In this case, this was sedimentary copper, which is a particular type of way that that that that copper can be formed. There are others, which is why you may look at the map and see some hot spots that aren't being highlighted, but this is for sedimentary copper at a particular stratigraphic level. And what we do is we compile our GLOBE data and and break down the genetic system for the solventric copper, and we map the elements of that genetic system into layers within our GLOBE data. We've got, like, 40,000 layers within our GLOBE product,

11:33 and we look for colocation of those phenomena, and we also use machine learning to help us predict where we might be able to find copper. So this was a kind of global analysis. We're able to run that analysis globally, regionally, or or more locally as well. And then finally, on the right hand side, we are using our geologic data, in this case, for carbon storage. So carbon storage, we're actually looking for unlike the other natural resources, you're actually looking for pore space within rocks rather than something sitting within the rock itself so you can hold the rocks. And we can actually use our geologic data to predict where there might be, for example, sandstones that have a particular characteristic, which would lead them to have very good permeability and porosity, I. E, space to pass carbon through and then ultimately to store it in. We actually worked with the MSTA, which is the lead seed transition authority on this project ahead of launching the first carbon storage license we went for The UK utility shelf, which ended up closing very successfully with a number of companies bidding for acreage and indeed being on the acreage while essentially by the UK government.

12:49 So, yeah, just a few examples there of how we're using our data in these emerging segments. Thanks, Chris. I think come let's focus. I think really what I'd like to do is sort of focus a little bit on the the business outlook. We spoke a lot about this within the the the fundraising sort of presentation. But one of our North Stars really for for the company is is how data led exploration is really disrupting the the the mining sector. One of the interesting things that we found over the last eight months, you've seen sort of nearly sort of 8 sort of sort of 500,000,000 being invested from tech money going into the sort of data led exploration sort of area. Most of this has ended up with people like COBOLD and and COLOMA who are collectively or individually sort of COBOLD is is using data led exploration to look for copper and battery metals and and COLOMA backed by Bill Gates and Breakthrough Ventures is looking for for natural hydrogen.

13:43 And then there's another number of emerging people like Zanska applying AI to geothermal and and Terra AI looking looking for minerals in that. What we're seeing is sort of tech really going into the disruption of the subsurface exploration market. And when we sit and look at GETECH, we sort of sort of look at what we've got. We, you know, we've more data than any of these companies. We've been ahead of in terms of analytics. We, you know, we've been using supercomputer modeling for for decades and now bringing in machine learning into that. So part of what we really try and do is definitely diversify the revenue streams, but also kind of make sure that we kind of sort of don't lose our sort of position within the race within this data led exploration sort of sector. And that will then sort of translates into very much why we went out and decided to to do the placing over the summer period.

14:34 Clearly, was light, so so we raised money for for working capital purposes. We have a very much a h two weighted cash flow, and that provides the the the the working capital to make sure we sort of we we get to that that point. But the extra money is really there for us to use to go for business development to add sales and business development people to to help directly work through the the pipeline that that we have and start looking at how to implement some of these joint venture, joint exploration agreements that we have in in place and to also bring in more data science potential to to help with the algorithmic side of things and make sure that we kind of at least maintain sort of pace with with the other kind of data led exploration companies that are actually out there now in in the marketplace.

15:26 But that has to translate into into money and the way we do that, the traditional base for for GETECH has always been the the global explorers, predominantly the oil companies. We're trying to advance on two vectors on that one. First of all is is typically the AR with each of these clients is about 200 k per year. And what we're really trying to do now is grow that AAR with more features and functions and and services on the GLOBE platform to increase that as well as add new logos and and new customers to to that to that platform. And the company's obviously booked with everyone, the oil and gas companies, it's now trying to look at sort of the the the global mining companies and others akin to that to bring onto the onto the platform. But our other innovation during the period is really to try and bring on board the the regional explorers and and the junior explorers.

16:16 And for that, you know, you know, this we have a lot of value to to what they're doing, but they're kind of much more constrained on budgets, which is where we brought in our revenue sharing model. So so, you know, for example, we we just working one with one Spanish client at the moment to do a a global search or search in North America for natural hydrogen, and we're getting a good royalty and we're getting fees for that business. We're also then taking a 5% royalty of anything we find with them on that basis. And then at the junior end of the market, we've been working, you know, trying to come up with similar kind of creative pricing models. One example of that is our work that's in the public domain with Eastar whereby we you know, again, there are fees for actually the work we're doing with them. We also have like an an equity carried interest on anything that we find, any license areas that we develop with with with them on that process.

17:07 So key to what we're trying to do is making sure that we're bringing in revenue and making money to to meet the the short term targets, but also kind of trying to build sort of value into the midterm sort of growth rate for for the for the business. So as I said, 2023 was a very tough year when we took all the bad decisions, and and we're going into 2024. And this is for us, it's much more confident outlook. You you know, we've the lower cost base now. We're ahead already 16% up on on revenues. The AR is going in the right direction, and we've got a very strong sales pipeline for for for what we can actually bring into the in into the business. And we're focused, you know, so from a business perspective, you know, that we're sort of sort of mobilizing the teams as a management team around increasing the AAR, getting more joint exploration agreements to together.

18:01 And really, the the target as per the Cabinetsh numbers is to be EBITDA positive by the by the end of this year. And also make sure that we keep pace with the r and d and and as I say, looking at the the the machine learning techniques to to stay pace with the rest of the industry peer group. And again this was a quick counter through this morning as many of you heard the story over the summer and and really wanted to bring time to question and answers. Perfect Richard, Andrew, Chris if I may just jump back in there thank you very much indeed for your presentation this morning Ladies and gentlemen, please do continue to submit your questions just by using the q and a tab that's situated on the right hand corner of your screen. But just while the company take a few moments to review those questions that were submitted already, I'd just like to remind you that a recording of this presentation along with a copy of the slides and the published q and a can all be accessed via your investor dashboard.

18:50 Guys, as you can see there, we have received a number of questions throughout your presentation this morning. And thank you to all of those on the call for taking the time to submit their questions. But, guys, at this point, if I may just hand back to you just to read out those questions and give your responses where it's appropriate. And if I pick up from you at the end, that would be great. Thank you.

19:08 Great. Thank you very much. So just quickly reading through some of the questions here. I think the first one, what percentage of the opportunity pipeline are you realistically expecting budgeting to to win? I'm not gonna answer that question directly. I think we're very confident with the the the market numbers that Cavendish have in in place for us. And I think what we've recognized as we've gone through h one is there's there's plenty in our pipeline and we need more salespeople to do that. So our our plan at the moment is recruiting new sales and business development people. We we hope to have three to four on board before the end of the year. And the answer was to to convert as much as possible and and to keep on keep on growing. Who do you see as your main competitors?

19:55 It's kind of a tricky one really because I think we we there's lots of adjacent competitors, you know, the the the exploration space is a very large sort of sort of crowd of people that that sort of operate in that. We don't believe we don't have any sort of direct competitors, I don't think, in terms of the amount of data that we have. That's been acquired over a thirty year period and it's kind of like the real legacy that we have the opportunity to to build on. You know, the the people as have been driving the data led exploration kind of market of people like Kobalt and and Coloma out there and they're not really competitors in in a sense because what they've realized is is probably their data is more valuable to be used to go and find assets rather than actually go and sell the data and services to to the wider wider community.

20:46 So so we're kind of all part of the same sort of peer group, but we're approaching the the business model from from a different way. We then have other people in the marketplace like CGI and and things like that, the traditional providers of data, and again they're adjacent to us so they're not really so direct sort of competitors. I think I think GETECH is unique in what its offering is, but there's probably different ways of approaching there's many ways of approaching subsurface exploration markets. So, you know, you could, you know, sort of you're competing with other type of services. Next question. Geothermal and carbon storage were were mentioned as areas of diversification. What proportion of current and future revenues do you anticipate will come from these these segments?

21:32 The what we sort of did sort of embarked on about two years ago was a real exercise to say where where can we actually use our data and skills and and where can we have impact? And we found natural hydrogen, certain critical minerals such as copper, geothermal, and carbon storages were areas that were really showing up well in our data and where we we we can provide a strong technology proposition to to those marketplaces. I think what we found, I suppose it's no surprise, is they're all moving ahead but the fastest ones that are moving ahead is is is is the the battery metals, you know, the the world needs 10 x more copper discoveries than have actually taken place so far in order to meet the energy transition. So it's there's a lot of money flowing into that and consequently that's probably an easier win.

22:23 Natural hydrogen has been very big for us in in you know, it's a nascent industry. Nobody knows how to do that. You know, we've got very interesting techniques to find it, so we're getting a lot of interest from that. So that's probably the second hottest area for us internally. And we're making progress with both geothermal. We recently started a project to do a global I'm sorry. A a country wide screening for for a whole Asian country at the moment where we're kind of sort of trying to help the a regional explorer kind of sort of identify areas of interest to to go and acquire geothermal licensing. It's geothermal as a technology, you know, is number of technologies coming to to bear from people like EVORE and so on that kind of will change the way geothermal works. We're moving forward, just it's just not moving as quick as the other sectors.

23:17 And same as carbon storage. We're we're working on a a project at the moment in in the Southern part of The United States Of America, USA looking for that. It is moving forward. We're getting revenues for carbon storage. It's it's just not moving as quickly as the the crude the battery metals and the natural hydrogen. That's all moving forward. Are you forecasting free being free cash flow positive by end in 2025? I I think I'm gonna refer you to the the camp company should got a good report out on that where where they're expecting that to be. I'm gonna refer that question to the the report that's available from from James McCormick over at over at Cavendish. But, you know, from a the key goal, I think, we from from the business is to to be EBITDA level of where we wanna be this year and get the AR above the cost base. Those are the two things that we're really drivers and management team to to to deliver at this point.

24:17 And how does GETECH technology generate data compared with the two very well funded competitors? That's really gonna be our challenge is is is how to actually sort of catch up with and and with with companies like that. We're we're different in the sense that both Cobalt and Coloma are using their data in a proprietary format to go and peg their own licenses. We're we're we're actually kind of acting as an outsourced geological department for other country other companies. So it's not quite a fair comparison yet. But at the moment, we're focused on getting the platform right, getting new customers on board, and just moving in that direction, and we'll see what happens. We we look forward to updating everybody more on that. GETECH claims to have the world's largest commercially available collection of magnetic and gravity data. Has this been independently verified?

25:07 Yes. This was verified by the, the lawyers that verified the, document for the recent fundraising? And how much better is GETECH's data than other commercial providers? It's hard to to to answer that. I think that we the GETECH data has been collected over thirty years. It's been moved. What, you know, what has been the secret to to the success of the business is to really harmonize that data into the GLOBE platform. And what really is the, you know, that is the legacy to the business and the future success will be determined by how well we can write the algorithms to to interpret that and bring in new layers of data that that the people are looking for to to make decisions about exploration.

25:56 When do you expect AR to be above the cost base? Difficult one question to answer but that, you know, that is an absolute key target of the business and we're just driving that as as hard as we as we can. I'm not gonna commit to that, but that that's very much work in progress. If you had to recruit specialist expertise in the new targeted areas such as natural hydrogen, Or have you had to recruit specialist expertise? The the answer is not really. The the the the the existing team of geoscientists are very adept. In natural hydrogen space. You're looking for a different source rock compared to oil and gas. You're looking for the the ultramafic rocks, which is slightly different but very much within the existing skill set. And then how the hydrogen flow flows through the ground and sort of the the traps and seals and things that people are looking for is very much a a GETECH core core core skill.

26:59 So so it's we've been very much able to repurpose what we're doing for that and we'll be looking to recruit in that space. But it's we we have an incredibly talented team there in place, and, you know, we're we're able to we're looking forward to growing on that. Where would GETECH data sit globally if the commercial qualification wasn't applied? What is stopping noncommercial entities from making their data available commercially? It's a trick. I think the answer to that one is the, you know, it it it it's quite it's quite hard to answer that question. But what stops the data being other companies releasing their data? I think a lot of people, you know, sort of the the large oil companies consider that to be sort of proprietary to them and and part of their secret source. So so I don't see them releasing that.

27:57 And and most companies are doing this on a kind of local scale and regional scale. So so they don't have access to to to global dataset. I think it's just a virtue of just the way GETECH really went about the first twenty to thirty years of its lifestyle lifespan of really accumulating all of that data. And it's given us a real legacy to to it's a real legacy for us to to build on. And and now with, you know, with with advanced analytics and and computer sort of algorithm algorithmic support, we look forward to building that and sort of giving that data new life and bringing in new data layers to to make it more meaningful and and useful to to the exploration community. And with that, I think I've answered all of the questions. Hopefully, that wasn't too quick for everybody. The team, myself, Andrew, and Chris are all available on email and and and calls if anybody has any private questions or wants us to take that further.

28:54 And with that, thank you very much for attending our presentation this morning. Perfect. Richard, that's great. And thank you very much indeed for being so generous of your time and addressing all of those questions that came in from investors this morning. And, of course, if there are any further questions that do come through, we'll make these available to you immediately after the presentation has ended just for you to review to then add any additional responses, of course, where it's appropriate to do so. And we'll publish all those responses out on the platform. But, Richard, perhaps before really just looking to redirect those on the call to provide you with their feedback, which I know is particularly important to yourself and the company, if I could please just ask you for a few closing comments to wrap up with, that'd be great. Thank you. And I really appreciate the opportunity to to speak to everybody. I think, you know, 2023 was a really tough year for us as we as we sort of closed down the h two green business and reset the cost base, you know, that was a reduction of nearly 30% headcount within the business and got everybody refocused.

29:50 But we're now kind of, I think, we're very excited really because we're we're reaping the rewards of that now. We're operating on the lower cost base. We've got a very sort of focused sales team. We're adding new sales and business development people. And really, you know, focused on on revenue generation and sort of maintaining, you know, heading in that direction of of a company going into that that data exploration space. So we're looking forward to the end of the year and and hopefully updating people with a positive end of year story. Thank you. Perfect, Richard. That's great. And thank you once again for updating investors this morning. Could I please ask investors not to close this session as you'll now be automatically redirected for the opportunity to provide your feedback in order that the management team can really better understand your views and expectations. This will only take a few moments to complete, but I'm sure it'll be greatly valued by the company.

30:36 On behalf of the management team of GETECH GROUP PLC, we would like to thank you for attending today's presentation. That now concludes today's session. So good afternoon to you all.