TIDMGTC
RNS Number : 9502A
GETECH Group plc
07 June 2021
Getech Group plc
("Getech" or "the Company" and with its subsidiaries "the
Group")
Final Results for the 12 months ended 31 December 2020
The Getech Group (AIM; GTC) announces its Final Results for the
12 months ended 31 December 2020.
Highlights
Accelerating progress to global net-zero by supporting customers
in the optimisation of existing, and delivery of new, energy assets
and strategic mineral resources.
Covid-19 and customer activity update
-- In 2020 Getech balanced risk management with business development in zero-carbon energy.
-- Covid-19 has created a challenging business environment, 2020
customer budgets reduced by c35%.
-- Getech's orderbook, annualised recurring revenue and customer
relationships remained robust, but revenue declined as customers
cut back project work, which also impacted data sales.
-- The move to home working was smooth; projects continue to be delivered on time and to cost.
-- Actions implemented from 1 May 2020 reduced monthly Group costs by c26%.
-- Getech retains further cost flexibility and has maintained
the capacity to deliver its orderbook and the resources needed to
maximise the impact of its sales conversations and new business
activities.
2020 financial highlights
-- Revenue GBP3.6 million (2019: GBP6.1 million)
-- Gross margin 53%, protected by cost management initiatives (2019: 58%, adjusted)
-- Orderbook remained strong GBP2.7 million at 31 December 2020
(31 December 2019: GBP3.1 million)
-- Annualised Recurring Revenue GBP2.1 million at 31 December
2020 (31 December 2019: GBP2.3 million)
-- Total cost base 20% below 2019 (2020: GBP5.1 million; 2019: GBP6.4 million)
-- Adjusted[*] EBITDA GBP0.5 million loss (2019: GBP0.9 million profit)
-- Net cash at 31 December 2020 GBP1.4 million (31 December 2019: GBP2.7 million)
Beyond 2020 - delivering diversified growth
-- Getech is using its earth science and geospatial expertise to
accelerate progress to global net-zero, by supporting its customers
in the optimisation of existing, and delivery of new, energy assets
and strategic mineral resources.
-- For existing customers this means helping identify the
highest value/lowest carbon-impact petroleum assets, whilst also
utilising Getech's skills and technologies to support their
net-zero asset investment.
-- This work connects Getech with a wider group of net zero
customers, with whom the Company is beginning to build a more
diversified baseline of product and service sales.
-- Getech's commitment to this path is underlined by the Company
joining the United Nations' Race to Zero campaign - Getech's pledge
is to be carbon-neutral by 2030.
-- Getech will deliver this through the application of its products and skills, and by direct decarbonisation steps - taking targeted equity exposures in emergent carbon neutral value chains.
-- In April 2021 Getech raised GBP6.25 million through a
Placing, Subscription and Open Offer of shares.
-- This will be used to grow and diversify Getech's activities
across the zero-carbon economy, with particular focus on the green
hydrogen, carbon capture, geothermal and strategic minerals
sectors.
-- Our focus is on activities that are essential, repeatable and strongly scalable.
-- We will measure success through our carbon-neutral goal, our
profit and the creation of asset value.
-- In March 2021 Getech completed its first project investment -
acquiring H2 Green, a data-led business that is using Getech's
location analytics to establish a national network of green
hydrogen hubs.
-- Getech is also aligning its Board to these areas of focus -
appointing a new Chairman and new NEDs. This brings expertise in
clean technologies, zero-carbon investment, ESG and business scale
up.
-- Getech's Board is excited by the opportunities ahead and
values the continued support of the Company's shareholders,
customers and business partners.
For further information, please contact:
Getech Group plc Tel: 0113 322 2200
====================================== ===================
Jonathan Copus, Chief Executive
Cenkos Securities plc Tel: 0207 297 8900
Neil McDonald / Pete Lynch (Corporate
Finance)
Michael Johnson / Julian Morse
(Sales)
Camarco Tel: 020 3781 8331
Georgia Edmonds / James Crothers
/ Ollie Head
====================================== ===================
Chairman and CEO statement
Getech provides data, knowledge, software and analytical
products and services to help governments and investors locate and
manage new energy and mineral resources and to optimise their
development. Our mission is to accelerate progress to global net
zero by supporting our customers in the optimisation of existing,
and the delivery of new, energy assets. We do this through the
application of our extensive earth science and geospatial skills to
the transitioning primary energy sector, in particular targeting
growth across green hydrogen, carbon capture, geothermal energy and
the mining of strategic minerals.
Our market
In the 15 years since joining AIM, Getech has continually
provided products and services to many international oil and gas
companies and governments. We have developed a reputation for
technical excellence, which is built on Getech's unique product
Intellectual Property. From this we have built a strong financial
and operational platform, underpinned by a robust orderbook and
annualised recurring revenues.
As the world is transitioning towards net zero, petroleum
exploration activity has declined and demand for alternative
sources of energy has increased. These trends have been accelerated
by the Covid-19 pandemic and provide numerous growth opportunities
for the Group.
Getech's role in the path to net zero
The transition to a net zero economy is an unprecedented
challenge. As the world seeks to decarbonise, this will require the
replacement of more than 50% of the world's energy infrastructure
and new supplies of rare earths and other metals. We see the global
energy mix of our future as being built with many different
renewable energy technologies, delivered through a distributed
architecture. This presents a huge opportunity for Getech and our
overarching goal is to build a portfolio of products, services and
assets under management that build value and provide long-term
sustainable cash flows.
Our commitment to this cause is demonstrated by our membership
of the United Nations' Race to Zero campaign - Getech's pledge
being to be carbon neutral by 2030.
Our existing energy customers
In the near-term, our business plan is to continue to service
our existing energy customers. We will do this by optimising the
value and sustainability of their petroleum portfolios, whilst also
supporting their diversification into zero carbon assets and
technologies.
While customer sentiment remains relatively subdued in
comparison with the pre-Covid-19 environment, it is encouraging to
see some momentum returning. In Q1 2021, this was evidenced by new
data sales and service work, both of which were largely absent in
H2 2020. Existing customers are also renewing their software
licences, all of which is helping to build the orderbook and
increase recurring revenues.
Through our current work, we also naturally engage with a wider
group of new zero carbon customers, from whom we are already
beginning to secure product sales, and winning service work.
Across all customers we deploy our skills in ways similar to how
our earth scientists and geospatial experts have traditionally
worked with oil and gas assets, namely:
-- Where in the world will we find the resources required for the energy transition?
-- Who can help us develop these resources?
-- How do we optimise development and production?
-- How do we operate these new projects?
Sector focus
We concentrate our business development work on activities that
we consider to be essential, repeatable and strongly scalable.
Sectorally, our knowledge and geospatial skills are best suited
identifying economically privileged and environmentally sustainable
locations for:
-- Geothermal assets - baseload energy that can be utilised to produce heat and power.
-- Strategic minerals - deposits of rare earth and battery metals such copper and lithium.
-- Carbon capture and storage - the conditions required to deliver safe long-term storage.
-- Green hydrogen - utilising excess renewable energy to create hydrogen hubs.
We are excited to have already won new business in geothermal
and have continued this momentum in announcing business
collaborations in geothermal and hydrogen.
Investing for growth
To progress these sector focus areas, in April 2021 Getech
successfully raised GBP6.25 million through a share Placing,
Subscription and Open Offer. Since the completion of this
fundraise, our priority has been to reorganise and focus our team
on these exciting developing sectors, as we resource and commence
our expanded program of investment.
Domain experts are being appointed to lead business development
and product and service delivery in these new sector groupings. We
are focused on identifying people who share our passion for a zero
carbon future, who are established experts in their fields, with
both a track record in business scale up and the delivery of
commercial success in the green economy.
We are also reshaping the Non-Executive skills of our Board.
Since the appointment of a new Board Chair, we have recruited a new
Audit Chair designate who brings in-depth knowledge of clean
technologies, renewable energy finance, strategic minerals, and
environmental, social and governance (ESG).
Our ongoing program of investment focuses on repurposing our
existing products and services to address further opportunities in
the energy transition. We are also building partnerships and
broadening our offering to include assistance in the technical and
financial development of zero carbon assets.
By providing our customers with an integrated technical and
commercial overview of their development portfolios and by
expanding our work into emergent energy value chains, Getech can
capture direct exposure to the value that our skills and
technologies create at the asset level. This asset exposure brings
our shareholders transformative potential, which can be delivered
at low incremental capital costs.
We took our first step on this path in March 2021, when we
exercised our option to purchase H2 Green Limited. H2 Green is a UK
developer of hydrogen hubs, which we intend to use as a foundation
to develop a portfolio of hydrogen projects. The Company is focused
on establishing its first cash producing hydrogen assets, and has
already entered into a notable agreement with UK gas distributor
SGN Commercial Services with the aim of developing hydrogen hubs
utilising their land portfolio. The company has also notably signed
a Letter of Intent with Element 2, a Hydrogen fuel retailer, to
supply green hydrogen to its refuelling stations.
As part of our ambitious, long-term growth strategy, we are
focussed on identifying further value-enhancing partnerships and
initiatives over the months and years ahead.
Our role in the energy transition
Getech's role in the Energy Transition is not to compete with
industry mega projects that are currently being announced. Instead,
we intend to use our earth science and geospatial expertise to
identify and help develop economic zero carbon projects that will
become part of a distributed energy system.
In addition, our strategy is not only to help our customers
identify and develop zero carbon energy assets, but also to
participate in the projects and become wherever possible co-owners,
managers and/or service providers. We believe that such a portfolio
of assets will increase the net asset value of the company and,
with the recurring profits that result, substantially increase
shareholder value. In aggregate, this could become a substantial
energy business.
Outlook
With clear strategic focus, strong balance sheet, and new team
members aligned with our vision, we are very excited about the
outlook and growth prospects for Getech. 2021 will be about
continuing to service our current petroleum customers whilst
building on our foundations for growth in the green hydrogen,
carbon capture, strategic minerals and geothermal sectors. Similar
to our early steps into the hydrogen sector, we also see the
potential for acquisitions within geothermal and strategic minerals
as a path to both accelerate the build-out of our offering and to
provide access to operating projects. We also expect to announce
further product developments as we expand our offering further into
these areas.
We look forward to keeping our shareholders abreast of
developments as we identify further growth opportunities within the
energy transition.
We would like to thank our employees and fellow board members
for their continued dedication to the Company, helping Getech
perform robustly in what has been a very challenging period.
Richard Bennett: "It is a pleasure to become chairman of Getech
at this inflection point in the development of the Group, as we
apply our core geoscience skills and geospatial services to the
energy transition and contribute to the decarbonisation of the
world's energy systems."
Richard Bennett Jonathan Copus
Chairman CEO
Operations review
Getech's core value proposition combines our Geoscience and
Geospatial expertise to provide unique insight for our 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 2020
we embraced these changes by continuing to evolve our solutions for
our core petroleum markets, whilst also accelerating our plans to
diversify into other energy and natural resource markets -
including Mining, Geothermal and Hydrogen.
One of the foundations of our Petroleum offerings is our market
leading Gravity and Magnetic (G&M) expertise. Through 2020,
sales of data and related services declined as our customers
reduced their levels of project-based work. Getech responded to
this by focusing our staff's time on enhancing and broadening our
offering. In 2020, we completed and released 'Multi-Sat 2020' - a
major new gravity data product that integrates information from the
latest satellites with innovative processing methods to create the
most accurate, reliable and coherent gravity data for all offshore
areas, providing resolution comparable to regional 2D shipborne
solutions.
We also further enhanced our flagship earth modelling product,
Globe, with the release of 'Globe 2020', which delivered new
information, analytic tools and additional usability features,
including an initial version for ArcGIS Pro, Esri's latest desktop
GIS application. Our work to re-position Globe for the evolving
petroleum market were further rewarded in 2020 when we secured a
new super-major customer and high renewal rates for existing
subscribers and those on multi-year licence agreements.
Elsewhere in petroleum, our GIS Software team completed releases
that delivered significant enhancements to our software's data
integration, exploration prospectivity analysis and onshore shale
gas/oil well pad & lateral planning capabilities. As with
Globe, software renewal rates through 2020 remained high and we
were able to add several new customers through the year.
In addition, we continued to successfully deliver on a wide
variety of oil and gas GIS services contracts, including the
completion of our first significant GIS implementation project in
the pipeline sector. That these products and services projects were
delivered to customers on time and within budget was a notable
achievement given the migration to home working caused by Covid-19
from March 2020.
Alongside our work in petroleum, through 2020 we focussed on
better understanding how our core products were being used in the
Mining sector. As a result of this, we were able to leverage both
our G&M expertise and Globe to help customers deliver Copper
and Lithium exploration projects - both essential strategic
minerals for the Energy Transition. As a result of these project
successes, we commenced planning additional workstreams for further
expansion into the Mining market, and work is now well underway in
2021.
Our innovation and market diversification work also identified
Geothermal as a potentially untapped market for Getech. Through a
combination of our G&M, geoscience and GIS expertise we
developed the concept of the 'Heat Seeker' solution - a tool for
locating potential geothermal resource sites within reach of
readily available customer markets for heat or power. As we planned
the work likely to be necessary for developing a Heat Seeker
prototype, we also built a network of contacts within the
Geothermal market and established strategic relationships to assist
our work - one result of which was Getech becoming a member of the
International Geothermal Association (IGA) in March 2021, an
organisation that we continue to work in partnership with through
2021.
In 2020 we drove further diversification by entering the
Hydrogen sector through our relationship with H2 Green, securing an
exclusive option to acquire the business in November 2020. Early in
our discussions with H2 Green we recognised that a key component of
our joint value proposition was Getech's expertise in GIS and
geospatial location analytics. These skills were key to enabling H2
Green to identify and rank multiple site locations across the UK as
it developed and optimised its portfolio of green hydrogen
opportunities. The success of this approach led to the acquisition
of H2 Green in 2021 and the delivery of additional phases of
location analysis in support of identifying further green hydrogen
site locations.
Finally, our group-wide Innovation team, established in 2019,
continued through 2020 with its remit to research and develop
cross-discipline opportunities for new markets, capabilities,
partnerships, products, and services. In 2020 our innovation work
focussed on assessing opportunities within the geothermal and
mining domains; applying machine learning to our 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.
Chris Jepps
Chief Operating Officer
Financial review
In 2020 the Covid-19 pandemic cast a shadow over the global
economy.
The impact of Covid-19 compounded macroeconomic and investment
themes that since 2014 have led to volatility and uncertainty in
both oil prices and the levels of petroleum exploration spending.
Brent averaged $42/bbl (2019: $64/bbl) and long-dated crude prices
traded around the mid-$40/bbl, down from mid-$50/bbl in 2019. The
impact of climate change has also continued to move up the social
agenda, placing the Energy Transition firmly on the strategic
roadmap of Getech and our customers.
To protect the Group against these dynamics, since 2016
management has focused on building Getech's foundation of recurring
revenue and orderbook. Between 2017 and 2019 this focus grew
Getech's annualised recurring revenue by 53% and orderbook by 197%.
In 2020, in the face of unparalleled business disruption, Getech's
orderbook, recurring revenue and customer relationships have all
proved to be robust. Annualised recurring revenue totalled GBP2.1m
at 31 December 2020 (31 December 2019: GBP2.3m) and order book
totalled GBP2.7m at 31 December 2020 (31 December 2019:
GBP3.1m).
Looking forward, Getech is also focused on the delivery of
diversified transformational growth, with particular focus on the
mining, hydrogen and geothermal sectors.
To aid in the analysis of Getech's underlying financial
performance, the table below sets out key reported figures from the
financial statements and the equivalent figure adjusted for
exceptional items, detailed in footnote 1.
Table 1 - Financial summary 2020 2019
======================================
Reported Adjusted (1) (unaudited) Reported Adjusted (1) (unaudited)
(audited) GBP'000 (audited) GBP'000
GBP'000 GBP'000
====================================== =========== ========================= =========== =========================
Revenue 3,563 3,563 6,058 6,058
Gross margin 53% 53% 64% 58%
EBITDA (601) (486) (1,935) 872
Operating loss (1,774) (1,659) (3,091) (284)
Loss after tax (1,644) (1,529) (3,088) (281)
Earnings per share (4.38)p (4.07)p (8.22)p (0.75)p
Cash (outflow)/inflow from operations
(before W/C adjustments) (516) (516) 934 934
Development costs (902) (902) (1,108) (1,108)
Net (decrease)/increase in cash (1,311) (1,311) 2,154 2,154
Cash and cash equivalents 2,192 3,554
Net cash 1,358 2,700
====================================== =========== ========================= =========== =========================
(1) Exceptional items
During the year, Getech incurred costs totalling GBP115,000 in
relation to restructuring the business. In 2019 there were
exceptional items relating to cost of sales and administrative
expenses.
Operating results
Revenue
Despite remote working throughout most of the year, Getech
remained close to its customers through a broad and innovative
program of online engagement.
This was rewarded by a high renewal rate on our subscription
revenues. Annualised recurring revenue totalled GBP2.1m at 31
December 2020 (31 December 2019: GBP2.3m). Getech's orderbook was
also robust, totalling GBP2.7m at 31 December 2020 (31 December
2019: GBP3.1m).
The Group did however see a drop in revenue, driven by our
customers' reducing their levels of short-term project work, which
also drove lower sales of off-the-shelf data. This resulted in an
overall reduction in revenue from GBP6.1m in 2019 to GBP3.6m in
2020. This can be seen in the analysis of revenue by timing of
recognition, where 'point in time' products revenue fell from
GBP2.41m in 2019 to GBP0.48m in 2020, whereas products revenue over
time (from subscriptions) increased from GBP1.96m in 2019 to
GBP2.13m in 2020.
Gross margin before exceptional items
A large proportion of Getech's cost of sales are invariable,
however Gross margin for the year was protected from the decrease
in revenue by cost saving measures that the Group announced in May
2020. Overall gross margin was 53% for 2020, compared to 58% in
2019, adjusted. The products margin remained strong at 72% compared
to 76% in 2019.
Getech's Services division returned to profit in 2019 and in
2020 the Group maintained a small gross profit, with a Services
gross margin of 2% (2019: 8% margin). Getech continues to target a
return to a 25% margin for the Services division in the
mid-term.
Table 2 - Gross margin by reporting segment 2020 2019
Products Services Products Services
GBP'000 GBP'000 GBP'000 GBP'000
Revenue 2,602 962 4,324 1,636
Cost of sales (740) (942) (1,025) (1,506)
============================================= ========= ========= ========= =========
Gross profit 1,862 20 3,299 130
============================================= ========= ========= ========= =========
Gross margin 72% 2% 76% 8%
============================================= ========= ========= ========= =========
Administrative costs
Administrative expenses include GBP1,173,000 of depreciation and
amortisation charges. Excluding these charges and exceptional items
and restructure costs, administrative expenses totalled
GBP2,378,000; a 12% decrease (2019: GBP2,685,000). This reflects
the net impact of cost saving measures that the group took in May
2020, the expression of which was partially diluted in the total
administrative cost figure by fixed overhead costs such as rental,
rates and subscription costs. In 2021 Getech has sub-let the London
office, reducing fixed overhead costs.
Cost base analysis
Getech took significant cost saving measures in May 2020 as a
result of the Covid pandemic and the impact of our Oil and Gas
customers cutting their capex budgets by c35%. These measures
included a small reduction in headcount, savings on travel and
conference costs, utilisation of the government Furlough scheme in
the UK and PPP scheme in the US. Staff also agreed to temporary
salary reductions, ranging from 20% for Getech's board to 8% for
most other staff.
As a result, the monthly Group cost base was reduced by 26%, and
the Group cost base for 2020 as a whole was 20% lower than the cost
base for 2019 (excluding restructuring costs and exceptional
items).
The table below reconciles our cost base to the financial
statements.
Table 3 - Cost base reconciliation % variance 2020 2019
GBP'000 GBP'000
Cost of sales 1,681 2,532
Development costs capitalised 902 1,108
Administrative costs 3,551 3,809
Payment of lease liabilities 136 71
Depreciation and amortisation charges (1,173) (1,156)
Exchange adjustments 6 (2)
Movement on provisions - -
======================================== =========== ========= =========
Cost base, excluding exceptional items (20)% 5,103 6,362
======================================== =========== ========= =========
Cost base is measured as: cost of sales, administrative costs,
development costs capitalised and payment of lease liabilities,
less depreciation and amortisation, and adjusted for movement in
work in progress, non-cash foreign exchange adjustments.
EBITDA
A lower cost base and continued investment in the drivers of
recurring revenue has limited the impact of lower revenue on
EBITDA. Adjusted EBITDA totalled a GBP496,000 loss (2019:
GBP872,000 profit).
Income tax
To help our customers understand and resolve their exploration
and operational challenges requires Getech undertaking pioneering
research and development. Against the cost of this work we obtained
corporation tax relief, and subsequently realised a tax credit
relating to the current year of GBP174,000 (2019: GBP53,000
credit).
Getech reported a loss after tax, adjusted for exceptional items
and restructuring costs of GBP1,529,000 (2019: GBP281,000
loss).
Operating cash flows
Before working capital adjustments Getech's cash outflow from
operations was GBP516,000 (2019: GBP934,000 inflow), this included
restructuring costs of GBP115,000 paid during 2020.
Changes in working capital
In 2020 there was an overall net positive working capital
movement of GBP248,000. As a result of Covid restrictions, Getech
experienced delays in receipt of payment from several customers; at
the year-end, receivables overdue by more than 3 months totalled
GBP184,000 (2019: GBPnil), and deferred subscription invoices
totalled GBP271,000. In early 2021, these positions were quickly
resolved, however they negatively impacted working capital movement
in the year and year-end cash balance by GBP455,000.
In 2019 there was net positive working capital movement of
GBP2,525,000, this was largely due to the timing of product sales
towards the end of 2018, for which cash was received in early
2019.
Investment and Capital Expenditure
In line with the Group's strategy to invest and enhance its
product offering, Getech broadly maintained its development
expenditure on Globe and Software in 2020, totalling GBP902,000
(2019: GBP1,108,000). Having successfully completed a GBP6.25m
equity raise in H1 2021, Getech expects to increase investment in
its products during 2021 as part of its strategy of diversified
growth.
Financing
In April 2020, due to the uncertainties arising from Covid and a
low Oil Price, Getech took a 12-month capital repayment holiday on
its loan. During the year Getech made repayments against the loan
facility of GBP20,000 (2019: GBP78,000). Getech recommenced capital
repayments in April 2021.
Repayment of lease liabilities totalled GBP136,000 (2019:
GBP71,000) and relate to the London office lease. After the
year-end, in February 2021 Getech sub-leased the London office as
part of its continued capital efficiency measures.
Post balance sheet events
In January 2021, Getech appointed Richard Bennett to the board
as non-executive Chairman designate and Peter Stephens retired from
his position as non-executive director. In April 2021, Richard
assumed the position of Chairman, whilst Dr Stuart Paton stepped
down from his Chairman position, Stuart remains on the board for a
period of knowledge transfer.
In February 2021, Getech completed an agreement to sub-lease its
London office.
On 30 March 2021, Getech shareholders approved a share placing
to raise GBP6.25m to fund Getech's programme of growth through
diversification. At the same time, the board approved the
acquisition of H2 Green. Getech has agreed to pay up to GBP1m for
H2 Green, payable in cash and shares. Milestone payments are linked
to the hydrogen business achieving a number of key operational and
commercial targets.
At the date of the report, H2 Green had met the first two of
these milestones, resulting in up-front consideration of
GBP250,000. Of this, GBP53,750 of the consideration was cash, the
balance paid in shares.
In May 2021, the Group appointed Michael Covington as
non-executive director. Michael is audit chair designate and will
take the position of audit chair on 1 July 2021, following a period
of hand-over with Dr Alison Fielding.
Liquidity and Going Concern
At the end of 2020, Getech held GBP2,192,000 in cash and cash
equivalents (2019: GBP3,554,000).
Cash balances post-year-end increased significantly, Getech
completing a GBP6.25m equity raise in April 2021, detailed
above.
Getech's business activities and the factors likely to affect
its future development, performance and position are set out in the
Chairman's and Chief Executive's Review. The financial position of
the Group, its cash flows and its liquidity position are described
in the financial statements.
In making the going concern assessment, the Board of Directors
has considered Group budgets and detailed cash flow forecasts to 30
June 2022. The Board has considered the sensitivity of these
forecasts with regards to different assumptions about future income
and costs, and various scenarios have been run on the potential
impact of Covid-19.
These cash flow projections, when considered in conjunction with
Getech's existing cash balances, and the cost saving measures
implemented, demonstrate that the Group has sufficient working
capital for the foreseeable future. Consequently, the Directors are
fully satisfied that Getech is a going concern.
Andrew Darbyshire
Chief Financial Officer
Consolidated Statement of Comprehensive Income
for the year ended 31 December 2020
2020 2019
GBP'000 GBP'000
Sales revenue 3,563 6,058
Cost of sales (1,681) (2,533)
Gross profit before exceptional items 1,882 3,525
Exceptional cost of sales - 325
======================================================================================= ========== =========
Gross profit 1,882 3,850
Administrative expenses (3,551) (3,809)
Fair value gains and losses 10 -
====================================================================================== ========== =========
Operating (loss)/profit before exceptional administrative costs (1,6 59 ) 41
Exceptional administrative expenses (115) (3,132)
======================================================================================= ========== =========
Operating loss (1,774) (3,091)
--------------------------------------------------------------------------------------- ---------- ---------
Finance revenue 1 14
Finance costs (45) (64)
======================================================================================= ========== =========
Loss before tax (1,818) (3,141)
Tax credit 174 53
======================================================================================= ========== =========
Loss for the year (1,644) (3,088)
Other comprehensive income
Currency translation differences on translation of foreign operations (57) 6
======================================================================================= ========== =========
Total comprehensive income for the year attributable to owners of the Parent Company (1,701) (3,082)
======================================================================================= ========== =========
Earnings per ordinary share (EPS)
Basic EPS (4.38)p (8.22)p
Diluted EPS (4.38)p (8.22)p
======================================================================================= ========== =========
All activities relate to continuing operations.
Consolidated Statement of Financial Position
as at 31 December 2020
2020 2019
GBP'000 GBP'000
Non-current assets
Goodwill 296 296
Intangible assets 3,509 3,568
Property, plant and equipment 2,716 2,906
Deferred tax asset 364 346
==================================== ========= =========
6,885 7,116
=================================== ========= =========
Current assets
Trade and other receivables 1,353 1,994
Tax receivable 278 136
Cash and cash equivalents 2,192 3,554
==================================== ========= =========
3,823 5,684
=================================== ========= =========
Total assets 10,708 12,800
==================================== ========= =========
Current liabilities
Short-term borrowings 85 78
Trade and other payables 1,366 1,697
==================================== ========= =========
1,451 1,775
=================================== ========= =========
Non-current liabilities
Long-term borrowings 750 776
Trade and other payables 282 421
Deferred tax liabilities 176 109
==================================== ========= =========
1,208 1,306
=================================== ========= =========
Total liabilities 2,659 3,081
==================================== ========= =========
Net assets 8,049 9,719
==================================== ========= =========
Share capital 94 94
Share premium 3,053 3,053
Merger reserve 2,407 2,407
Share-based payment (SBP) reserve 251 242
Currency translation reserve (26) 31
Retained earnings 2,270 3,892
==================================== ========= =========
Total equity 8,049 9,719
==================================== ========= =========
The financial statements of Getech Group plc (company number:
02891368) were approved by the Board of Directors and authorised
for issue on 4 June 2021.
Andrew Darbyshire
Chief Financial Officer
Consolidated Statement of Changes in Equity
for the year ended 31 December 2020
Currency
Share Share Merger translation Retained
capital premium reserve SBP reserve reserve earnings Total equity
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
1 January 2019 94 3,053 2,407 183 25 6,980 12,742
Loss for the
year - - - - - (3,088) (3,088)
Other
comprehensive
income - - - - 6 - 6
=============== ============= ============= ============= ============ ============ ============= =============
Total
comprehensive
income - - - - 6 (3,088) (3,082)
Transactions
with owners:
Share-based
payment
charge - - - 59 - - 59
=============== ============= ============= ============= ============ ============ ============= =============
31 December
2019 94 3,053 2,407 242 31 3,892 9,719
=============== ============= ============= ============= ============ ============ ============= =============
Loss for the
year - - - - - (1,644) (1,644)
Other
comprehensive
income - - - - (57) - (57)
=============== ============= ============= ============= ============ ============ ============= =============
Total
comprehensive
income - - - - (57) (1,644) (1,701)
Transactions
with owners:
Share-based
payment
charge - - - 31 - - 31
Transfer of
reserves - - - (22) - 22 -
=============== ============= ============= ============= ============ ============ ============= =============
31 December
2020 94 3,053 2,407 251 (26) 2,270 8,049
=============== ============= ============= ============= ============ ============ ============= =============
Consolidated Statement of Cash Flows
for the year ended 31 December 2020
2020 2019
GBP'000 GBP'000
Cash flows from operating activities
Loss before tax (1,818) (3,141)
Finance income (1) (14)
Finance costs 45 64
Fair value gains and losses (10) -
Depreciation charge 214 216
Amortisation of intangible assets 960 940
Impairment of goodwill - 3,132
Impairment of intangible assets - 621
Adjustment to direct cost accruals - (946)
Expected credit loss provisions on loans and loan commitments 70 -
Share-based payment charge 31 59
Foreign exchange adjustments (6) 3
================================================================ ========= =========
Cash (outflow)/inflow from operating activities (516) 934
Movements in working capital:
(Increase)/decrease in trade and other receivables 600 2,861
Increase/(decrease) in trade and other payables (352) (336)
================================================================ ========= =========
Cash generated from operations (268) 3,459
Tax (paid)/received 83 37
================================================================ ========= =========
Net cash (outflow)/inflow from operating activities (185) 3,496
================================================================ ========= =========
Cash flows from investing activities
Purchase of property, plant and equipment (24) (30)
Purchase of intangible assets - (5)
Development costs capitalised (902) (1,108)
Interest received 1 14
================================================================ ========= =========
Net cash outflow from investing activities (925) (1,129)
================================================================ ========= =========
Cash flows from financing activities
Repayment of loan (20) (78)
Repayment of lease liabilities (136) (71)
Interest paid (45) (64)
================================================================ ========= =========
Net cash outflow from financing activities (201) (213)
================================================================ ========= =========
(Decrease)/increase in net cash and cash equivalents (1,311) 2,154
Cash and cash equivalents at the beginning of the year 3,554 1,400
Foreign exchange adjustments to cash and cash equivalents (51) -
Cash and cash equivalents at the end of the year 2,192 3,554
================================================================ ========= =========
Notes to the Consolidated Financial Statements
for the year ended 31 December 2020
Basis of preparation
The financial statements set out in this preliminary
announcement do not constitute statutory accounts as defined by
section 434 of the Companies Act 2006. It has been prepared in
accordance with International Accounting Standards in conformity
with the requirements of the Companies Act 2006. The principal
accounting policies of the Group have remained unchanged from those
set out in the Group's 2019 annual report as delivered to the
Registrar of Companies. The financial statements have been prepared
under the historical cost convention and are presented in
sterling.
Statutory accounts for the years ended 31 December 2020 and 31
December 2019 have been reported on by the Independent Auditor. The
Independent Auditor's Reports on the Annual Report and Financial
Statements for the periods ended 31 December 2020 and 31 December
2019 were unqualified, did not draw attention to any matters by way
of emphasis, and did not contain a statement under 498(2) or 498(3)
of the Companies Act 2006.
The statutory accounts for the year ended 31 December 2020 were
approved by the board on 4 June 2021 and the information included
in this preliminary announcement was extracted therefrom.
The Directors have performed regular reviews of trading and cash
flow forecasts and have considered the sensitivity of these
forecasts with regards to different assumptions about future income
and costs. Various scenarios have been run on the potential impact
of covid-19. These include an assessment of the orderbook -
customer contractual commitments and Getech's ability to deliver
this work; the drivers of licence renewals; and the modelling of
extreme and hypothetical 'zero new revenue' downside scenarios,
these extending across multiple years. Additional cost actions have
also been modelled, including a bottom up restructuring of the
Group's overhead, offices, technical staff and commercial
activities.
In addition to the sensitivity models of future income and
costs, we have made various assumptions to model cash flow
forecasts: It has been assumed that the UK Government Job Retention
Scheme will continue to be available until the end of September
2021 and that current social distancing measures and travel
restrictions, which impact our ability to meet clients in person,
will also be in place throughout H1 2021. In H2 2021, we make the
assumption that these costs will return. We have also not relied on
the availability of additional sources of cash in our forecast
assumptions.
These cash flow projections, when considered in conjunction with
Getech's existing cash balances, the net proceeds of a post
year-end equity raise totalling GBP5.7m, and the cost saving
measures implemented, demonstrate that the Group has sufficient
working capital to at least 30 June 2022, being the Director's
period of assessment. Consequently, the Directors are fully
satisfied that Getech is a going concern for a period of at least
12 months from the date of signing the financial statements.
Earnings per share (EPS)
Basic EPS is calculated by dividing the profit attributable to
equity holders of the parent by the weighted average number of
ordinary shares outstanding during the year.
Diluted EPS is calculated by dividing the profit attributable to
equity holders of the parent by the weighted average number of
ordinary shares outstanding plus the weighted average number of
shares that would be issued on conversion of all the dilutive share
options into ordinary shares.
2020 2019
GBP'000 GBP'000
Loss attributable to equity holders of the parent (1,644) (3,088)
Loss attributable to equity holders of the parent adjusted for dilution (1,644) (3,088)
========================================================================= ========= =========
2020 2019
Thousands Thousands
Weighted average number of ordinary shares for basic EPS 37,564 37,564
Effects of dilution from share options 588 979
Weighted average number of ordinary shares adjusted for dilution 38,151 38,543
================================================================== =========== ===========
There has been no dilution of EPS during 2020 or 2019 due to
losses after tax.
2020 2019
pence pence
Basic EPS (4.38) (8.22)
Diluted EPS (4.38) (8.22)
============= ======= =======
After the year-end, the board granted a one-year extension to
the 900,000 share options with expiry date of 27 April 2021 by way
of issuing identical options to those above except for an exercise
period of one year.
On 30 March 2021, shareholders approved the issue of 29,303,065
ordinary shares at a premium of 22p. As at 1 April 2021, there were
66,866,680 shares in issue, called up and fully paid.
Notice of Annual General Meeting
The Annual Report and Accounts and notice convening the Annual
General Meeting of the Company will be posted to shareholders on 7
June 2021 and will be available from the Company's website
www.getech.com from that date. The Annual General Meeting of Getech
Group plc will be held on 30 June 2021 at 12 noon.
[*] Adjusted for exceptional items as detailed in the financial
review
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END
FR EAPKSEAAFEEA
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