Getech Group (LSE:GTC) — Preliminary Results

0:00 Good morning, and welcome to the GETECH GROUP PLC investor presentation. Throughout this recorded presentation, investors will be in listen only mode. Questions are encouraged and can be submitted at any time by the q and a tab situated on the right hand corner of your screen. Simply type in your questions and press send. The company may not be in a position to answer every question it received during the meeting itself. However, the company will review all questions submitted today and publish responses where it is appropriate to do so. Before we begin, I'd like to submit the following poll. I'd now like to hand you over to Richard Bennett, executive chairman. Good morning, sir.

0:32 Good morning, everybody, and, welcome to GETECH GROUP's annual results and and business outlook presentation. My name is Richard Bennett, and I'm the, executive chairman of, GETECH GROUP PLC. As many of you know, I took over the executive role just a few months ago. And since then, the team and I have been making some exciting changes, I believe, that will start to accelerate the growth at, at GETECH. So for today's presentation, I'd like to talk about some of these changes and particularly how we believe they're going to to benefit shareholders. Of these, we're gonna look very briefly at the the the management changes, how our strategy is evolving, the markets, the new market opportunities that we're pursuing, and then getting to the the the actual full results of the year and what I believe the business outlook for for the business is is going to be.

1:24 So the biggest change to the business, I think, is probably the departure of of Jonathan Copas. And since then, I've taken over an executive role within the business. So I started off as a a non executive chairman and so actually in the seat now as executive chairman. And I've done that as a I believe I don't believe GETECH was really operating at its true potential in in the marketplace. The company, you know, over the last few years, the company started some really good initiatives to start diversing diversifying its products and services. You know, it's that they were applying to the oil and gas industry and making them relevant to the energy transition. The energy gosh. Trigger of my words. Sorry. But the energy transition is an incredibly large industry, you know, and it's very much in its growth phase. And I don't really believe that we were quite there keeping pace with that or really exploiting that opportunity to its maximum potential.

2:18 So what's exciting for me is is to have the opportunity to hone the products and services of the sales and the marketing and help accelerate the growth of of the business. Very much to use my skills to try and scale up the business and help the company meet get into the energy transition space. So the exec team is very much remains the same. We have Andrew Derbyshire and Chris Jeps as the executive team. Both are online today for the the question and answer session. But what you will notice with with my style is very much to bring our business development, Max Powers, marketing, Chris Ford, and sales with with Sarah Jane O'Shea very much into the focus and start making us into much more sort of sales and marketing led organization. The other major change that we've had within the business is we've been very successful, very lucky, I think, to recruit doctor Graham Cooley as chairman of the h two green business to really help shape that business with the managing director there, Luke Johnson, and the team with Ian Spencer and and and Tom Morris, and really start to develop the the long term strategy for where we're going with with the h two green business.

3:27 So what is it that that GETECH does? What we're trying to talk about is going into the energy transition space, and this is a huge market. It's the transition really of a fossil fuel industry to a low low carbon and renewable energy industry. Today, you know, if you look on Bloomberg or anywhere else, this is more than a trillion dollar industry that is actually actually growing. And in the past, GETECH's role in this industry in the energy industry has really been helping sort of oil and gas companies find resources that they needed to exploit to deliver their products to market. Where we're going is now actually how do we help the new energy companies find the the the the resources that they want to develop to actually make the new future, the the new low carbon and renewable energy future.

4:13 And for us, what we are doing is finding the energy resources that are vital for the energy transition. So as I said, GETECH's role in the past has always been about finding helping companies find oil and gas deposits and how they work. Today, we move forward, these we're looking at the new industry. How do we help these companies in their energy transition find the carbon capture and storage projects? How do they actually sort of locate geothermal projects? And how do they start using our software to look for for critical minerals? I think the critical minerals one is is really particularly interesting area of of focus. You know, by the end of the decade, all new cars are going to be electric cars with within this country and most developed countries around the world. And it's estimated, I think, you know, for the energy transition to happen, we've got to find about $15,000,000,000,000 worth of new minerals and exploit those minerals to make that happen. We have to find the copper, the lithium, the cobalt, and all of these things that goes into the into these sort of batteries, into this electrification scenario.

5:15 And this is what GETECH does. We help these companies find these new assets. You know, the mining companies in my mind, the geothermal companies, these are the new energy companies of our future. And the green hydrogen company, we we've invested in the the company h two green, and we're sort of working to grow that business. And the reason for that, it is a lot of the energy that comes from the renewable energy industry is intermittent and using it needs some kind of battery storage or energy storage to do that. And hydrogen, green hydrogen, is very much one method of doing that. And it plays into long into GETECH strategy. Yeah. Hydrogen gets stored underground like natural gas does in salt cabins. GETECH can help people find these resources.

6:00 So working with h two green, we can help create that hydrogen, store that hydrogen, and make that on demand for people as they move as we move move forward. So how do we do that? What underpins sort of GETECH is is is a proprietary digital data platform that we call GLOBE. And over the last thirty years that GETECH has been in business, what we've been doing is gathering all sorts of sub geoscience data, be it gravity, magnetic, seismic, earth observation. And through various sort of sub supercomputer processes, we've stitched this together into our GLOBE product. And the supercomputer process, what that does is is work with various sort of AI and machine learning techniques. We've sort of looked at how that the Earth has developed over four hundred million year sort of period, how the climate affected the Earth, the development of these minerals over that time frame. And what we've been looking for is, like, some digital signatures of where oil, gas, or geothermal exists today.

7:01 We can look back at how those digital signatures formed and where else they might actually be sitting there on on the planet. And then we have a team of experts, geoscientists, geospatial geospatial engineers that can really work with us to then sort of take these signatures that that people are looking for and turn them to very much meaningful exploration prospects for for for for our clients. So how do we actually look at this? The biggest change we've made to the business is is this is to how we actually start perceiving perceiving our customers. And what I've done over the last few months is we've created to to try to segment our customers. So first of all, we've got our traditional customers that we serve labeled explorers. So this is the traditional petroleum companies, oil and gas companies that are looking for for oil deposits. We help them find them. Into our explorers category, we've also brought sort of critical minerals, helping mining companies find resources, geothermal companies, people like our partnership with EVO, helping them find geothermal opportunities around the world.

8:06 But what you'll find that's really new is what we've been working on, and we did a soft launch recently a couple of weeks ago at the Innovation Zero event, is what we're doing a new label, new a new category of customer called decarbonizers. And that's people. This is large industrial groups, municipalities, and people like that that have got to decarbonize. They're looking at how do they put you know, replace their fossil fuels in their processes, being furnaces or or industrial processes with renewable heat. How do they deal with their hard to abate emissions? Or how do they actually sort of look at their supply chain? How do they protect their supply chain going forward? You know, those that sort of sort of read about GETECH and read the press, you'll have seen people like Volkswagen and and Mercedes.

8:51 They're actually now actually buying mining companies. They have to sort of protect their supply chain of minerals like lithium and copper and cobalt. Otherwise, they're not gonna be in business in ten years. So we have a new type of customer that is emerging in the in the transition that we kind of label, like, so decarbonizes. And very much of our sales and marketing focus moving forward is how do we actually market to these people. So first of all, how do we actually make money, I think, is really important. So for our explorers, we're helping people identify, derisk, and optimize, you know, some geo energy projects. We sell subscriptions for our data and our software. We provide consulting services to to the super majors in the oil industry and in the mining industry. And new clients that we've won this in the last in the period, people like the North Sea Transition Authority that are looking for carbon capture and storage projects across the North Sea.

9:49 And what is our ambition? It is actually, you know, occasionally, particularly with the new energy industry, is how can we actually participate in some of these these assets? And that is part of our ambition as we move forward over the next few years. What is exciting for me, though, is actually how we're gonna start generating revenue from decarbonizes. You know? And what we're really trying our proposition to them is how do we unlock the subsurface potential to help them decarbonize at scale. And our first product that we're offering some is is a global screening. It is what geo energy resources are around their sites. You know, of the first three customers that we've won so far, I think the average order has been for a £100,000, and we've been helping them screen for geothermal, carbon capture and storage, you know, and critical minerals projects around their around their facilities.

10:40 And what we're aiming to do is take them on a bit of a journey. So we're then trying to take the these these identified assets and turn them into you know, assess the economic viability and the feasibility and take them on a journey to develop and implement the the these projects. And the type of customers we're looking at, you know, in The UK, you know, a third of the top UK companies, the BTs, the Diageos, they've all got scope one, scope two emission targets. They've all got renewable heat or hard to abate emissions that apply that we can apply these services to. Globally, it's even more it's probably even larger. You know, when you look through the the listed companies in The US, nearly two thirds of these companies have have now got sort of targets to reduce greenhouse gas emissions.

11:26 They've all got hard to abate emissions, and and this is where we're targeting the these products and services at. As an example for that, you know, of how we're doing that, this is a bit of a subset for for one of the clients that we that some the projects, assignments we've just completed. The the company had a 130 global manufacturing sites, and we did screen for geo energy potential around that. From that screening, we found 33 of their sites where where there was geothermal favorability. And now we're sort of embarking on a journey to actually help them run feasibility studies on 10 sites on how they could actually use geo energy to start decarbonizing those particular particular plants. And we see, you know, our ambitions then to take them on the journey all the way through to developing those projects.

12:16 And we see enormous scope for for all of these companies out there that are embarking on this decarbonizing journey. Thank you. So looking very much that's what we've been doing. This is looking very much at, now looking at our annual results, looking at the some of the highlights to the business of of first of all. From GETECH's point of view, over the 2022 and early twenty two through '23 period, we've been really trying to diversify from the oil and gas products and into the energy transition. We've developed our sort of products within the mining space that we can start helping mining companies to locate copper, cobalt, helium, and other critical minerals for the energy transition. We won our largest order to date with a mining company that was 900 k.

13:05 We've set up strategic partnerships in the geothermal sector with with some of the leading companies such as EVO, and we've won our first three contracts to help decarbonize within the decarbonizing sectors that we're now implementing in 2023. In h '2 green, we've been progressing our projects that we'd like to have announced at Shoreham and Venice and with the Highlands Council. And as I said earlier, we're very excited that we've appointed doctor Graham Cooley as chair of the business to really help us shape that strategy and help drive that business opportunity forward for us. So looking at the company in in numbers, very pleased to say that revenue is 5,100,000. That's up 19% on on the previous year. That's the second year of growth. That's up 20% again on the previous year.

13:57 The loss is is extended to, 3,200,000. I'm gonna come on and talk to that, about that in a minute. But one of the, real highlights for me is the order book. Our long term outlook is up 39%, and that's the second year our order book is up. That's up it was up 25% the the previous year. The trend for growth is very strong within the within the business. At the end of the year, we still have 4,300,000 of cash on the balance sheet to execute our business plan. And as many people that know in the business, we're we're actively trying to sell the the kitchen house in in Leeds, our our main office. And as part of that, that's an ongoing process. That has been more challenging due to the economic circumstances, and I think the carrying value of 2,100,000 is is probably on the the topping side of things, but we're actively working to to actually sell that out of the business and release that cash back into the in into the business. But what I wanted to take a look at with everybody is is to talk about the loss, you know, how that revenue stacks up against the operating expenditure and our investment into in into h two green.

15:16 So the revenue was 5,100,000, which was made up of 3,400,000 from our traditional business of oil and gas, 1,200,000 from the the critical minerals division, and 500,000 from the geothermal sales of geothermal in in 2022. The operating expenses for GETECH were 6,400,000. So so for me, the the operating loss of the the business was was 1,300,000. And with our current growth phase and with some sensible cost management, I think it's gonna be very easy to actually or very straightforward to sort of to to turn to make the core GETECH business back into a breakeven business. The other part of our loss was very much attributed to the the investment of 1,900,000 that went into in into the development of the h two green business.

16:07 And this is the second part of our plan is to really work with Graham Cooley and and Luke Johnson of the and the exec team within the h two green business to find funding solution for how we're gonna develop the the showroom, the Inverness Council, the Highlands Council, and the Inverness projects around that. And once we have that funding solution, I don't think we will be continuing to invest in h two green. So if you take those two points together, I'm very confident that over in the very near term, we'll get GETECH back into a a breakeven position as we move forward. I'm also very keen and and very excited to to really very happy to report the diversification of revenue. So so this year, we have got our revenue down from 93% in 2021 of our business was from the oil and gas gas industry.

16:58 This year, it was 66, and the remainder all came from the renewable energy energy industry. And one of the targets I've set the business is that it has to get to fifth more than 50% of its in sort of revenue needs to be coming from the renewable energy industry and set the ambition that we've got to get to the point where we can apply to the green economy mark for the London Stock Exchange. So what is the outlook for for the business? I'm very much focused on technology, the business growth, and and how we're going to sort of shape the business around that. So from a business perspective, the the the plans that we're sort of putting in place with with myself and Chris and Andrew is, first of all, some sensible cost control. We're gonna sell kits in house. That is very much on our agenda even though it's a challenging market.

17:45 We're investing money into the sales and marketing of the business. And out of that, out of in generating sales, I hope that's going to increase news flow. I know that's very much on the agenda for our retail investment community. The other thing from a business point of view, we're kind of, I think, sort of rather rather oddly classified on the stock market as an oil and gas company. We're moving to a more appropriate category over the next few months, and we'll be holding consultations on what category to put that into. From our technology team, they're very much focused on increasing data and making our products much more relevant to the energy transmission transmission transition, carbon capture and storage, critical minerals, geothermal. Our explorers team are really taking that technology and selling that as hard as we can.

18:33 We can start really driving the marketing initiatives. Again, carbon capture storage, critical minerals, geothermal. We're very excited about our launch of the decarbonizers product. That went out, as I said, at the Innovation Zero conference a few weeks ago. We're gonna take our soft launch and make that into a a much more harder launch, and you're gonna see we've got a very much targeted market of sustainability managers around the globe where we're going to be targeting that too.

19:02 And with h two green, as I've said, very much focused on the developments of the the business, the projects that we've got in place, and seeking a strategic investment solution. So so all of that investment is going into h two green. It's not coming directly from sort of GETECH's investors. I'm very actively working with Graham and Luke on those sort of those projects. So, hopefully, you'll have all picked up. I'm very excited about where GETECH is is going over the next, twelve months. We very much got the the cash available to execute our business plan. We we've got no intention of coming back to the market, you know, unless there's great opportunity for us to actually be be be focused on. We're focusing on developing our technology platform. We've got very clear identified markets of where we're going to be selling this, and we're getting a very much sales led and very much focused team on actually getting out there and and and selling our products.

19:56 And what I'd like to leave you with is and so demonstration of that is I'm going to sort of play a very short video of of what is going to be targeted at sustainability managers for our decarbonization product, and then we'll move into, question and answers. So if I may, I will hand over to control to play our video and then set us up to move to, question and answers. Thank you.

21:26 Brilliant. Thank you. I've got Chris and Andrew with me and very much look forward to questions that we have. Richard, thank you very much for your presentation. Ladies and gentlemen, please do continue to submit your questions just by using the q and a tab situated on the top right hand corner of your screen. Just while the company take a few moments to review those questions submitted today, I'd like to remind you that a recording of this presentation along with a copy of the slides and the published q and a can be accessed via your investor dashboard. Richard, as you can see, we have received a number of questions throughout today's presentation. Could I please ask you to read out the questions and give responses where appropriate to do so, and I'll pick up from you at the end. Brilliant. Thank you very much, everybody. I've got, Chris with me and Andrew with me. I'm so very happy to to answer sort of questions, about the the business.

22:13 From what we've seen, of the questions that have sort of popped up here, the first one, is Kitson House under offer? Yes. It is under offer. We have had an offer for for the business. I I think the challenge has been, with the fluctuating mortgage rates. The the the person that, has made an offer has been struggling to close out their mortgage. So whilst it's under offer, we are continuing to to remarket the, the house. It's been a point, I think, of much agonization from the board because we have, what is being sort of held for as a book value and the desire, I know, from shareholders to release that cash back into the business. And I think we're trying to make sure that we find strike the right balance of not letting it go in a fire sale in this current market and hold sort of not holding out for the highest value offer either, finding sensible offer to close that one out. It's very much an active part of the business, and we we will find a solution to that sort of very quickly.

23:11 The second question we've got here is is the cost pace has expanded substantially in 2022, twenty three percent, which has negatively impacted margins. Can the group provide some guidance on the road map to profitability and when we expect to to reach breakeven. But I think, hopefully, I've done that in the the presentation. So so just to add for clarity, the there's two elements of where the the cost basis is is has expanded. The the first part of it is is what in the GETECH core business where we've been investing into the sales and marketing of making the the historical oil and gas products very much relevant to the energy transition, how to make them apply to oil, you know, to carbon capture and storage, geothermal, critical minerals, and market those to the to to the customers.

24:00 To me, that has been an investment into the business, and what you're seeing now is tangible growth in there. This year, what was it, twenty percent. And I think on the core side of it, the growth that we got in the business and with some sensible cost control, the core business will get to breakeven very imminently with within what we're doing. The second part of that loss, I think, was attributed to our investment in to HD Green, which was around 1,900,000. As we work with doctor Graham Cooley and and Luke Johnson to to develop that business, I think we'll find a funding solution to to develop the projects, and how we develop the business, and that will require less cash investment from, sort of group, within GETECH GROUP.

24:46 And once those two actions have taken place, I I think the company will be very much on track to being breakeven and to, to to, getting back into a into a growth phase. I hesitate on saying profit because I think, you know, the the energy transition is a phenomenally large transition. You know, Trump market opportunity. We really want to be investing into that and and getting as much as as that as as possible, but very much very mindful that we need to be co controlling those costs as we move forward. So we have question, when will SHORAM generate net net cash inflow? That is going to be a difficult question for me to answer. I think we will add to the so so this I'm not going to go too much into H 2 Green today.

25:36 What we're doing on H 2 Green is this is is tentative. What we're trying to do is do a proper investor meet session specifically on H 2 Green. We've tentatively got it booked in the July 6 to do that. And for that session, we'll bring in doctor Graham Cooley. We will bring in Luke Johnson and the team, and we will go through all of the projects and the the ongoing funding strategy for for for the business. So forgive me. That is work in progress. I'm I'm not going to answer that one today. I'm not gonna avoid it either. We are gonna do a special session on on h two green. Can you give us more color on the cash burn currently and how that compares to the average monthly cash burn in in in 2022?

26:29 I think adding some color to that, I think the the cash burn in GETECH has been very much about adding sales and marketing efforts, increasing our visibility into, in exhibitions around the energy transition. It's been mostly an investment in in sales and marketing, and I think that is going to pay a dividend in in terms of revenue for twenty twenty twenty three and actually going forward. Next question. Great to see the order book increasing. Are there any notable new customers you can disclose? I would love to see. I I think the the most notable part of the business as we've gone into 2023 is is the business that we have won from the the decarbonizers.

27:17 It has been a condition of the sales that we can't name them, but I can say that one is a a global FMCG business, US based FMCG business that has manufacturing plants pretty well in every country around the world. Another one is a global data center business that is providing data centers. They you know, we talked about renewable heat there. It's slightly different scenario. They actually want a heat exchanger and to actually heat how to actually cool their data rooms and provide things like that. And third is actually a an energy company, global energy company, that's trying to decarbonize their their their processes. As we move forward, I hope we can name some of these customers, but it's just not there that we can do that at the moment. What I will try and do is aggregate them into a single r and s or r and s reach over the coming months when we got to a critical mass that meets kind of like the 10% rule for for for market disclosure.

28:21 And why is Graham Cooley not on the PLC board, and why is he not what is his remuneration. I think the when we started our conversations with Graham, and it would be for for Graham, we will bring Graham in on our next investor meet session, which will be about h two green. I think what we have found is that, h two green is a hydrogen business, and doctor Graham Cooley's skills are very much in the development of the hydrogen business. I think many of us would say he's mister hydrogen in in The UK. He he really has been responsible for for driving the adoption of hydrogen in this country and on European level.

29:08 That's where his expertise are, and seeing him focus those skills on h two green is is is is fantastic opportunity for for us and the and and the company. But the re remuneration issue, I I think, is we we will address that that that separately. I believe that's all of the questions that we have. Richard, thank you. And I think you've addressed all those questions you have from investors. And, of course, the company will review all questions submitted today, and we will publish those responses on the investor meet company platform. Before redirecting investors to provide you with their feedback, which I know is particularly important to yourself and the company, can I please just ask you for a few closing comments? Thank you. As we said, I think the so just to address the points on on H 2 Green, I still am very confident that H 2 Green is a very exciting opportunity for for the business with with the of of Graham and and Luke.

30:05 And we're going to do a separate session for for that where we'll bring everybody in, and we'll talk very much about the direction and growth plans for for H 2 Green as we move forward. But from my side, you know, sort of having Graham there to to help with h two green is fantastic. The other part of it is it really lets me focus on the the GETECH, the core GETECH business. And what you've seen, I hope, is is over the last sort of few months since joining, my my approach has been first, you know, very much of of of of first with the head and then with the heart. We we've very much gone through and really sat down with the teams. How can we hone our sales and marketing? How can we really get our message out? How can we get about growth? And for us now, it's really the next part of it is heart. How do we get this company marching, and and how do we start bringing those those sales? And, hopefully, I look forward to keeping you updated as we progress that. Thank you very much.

30:59 Richard, thanks for updating investors today. Can I please ask investors not to close this session as you'll now be automatically redirected to provide your feedback order that the management team can better understand your views and expectations? This will only take a few moments to complete, and I'm sure will 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. Good morning to you all.