Trading Update

RNS Number : 2618X

GETECH Group plc

27 August 2020

 

Getech Group plc

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

Trading Update: 6 months to 30 June 2020

Getech (AIM; GTC) provides geoscience and geospatial products and services to companies and governments who use them to locate and improve their management of energy and natural resources. The Group's activities focus on a suite of data, knowledge and analytical products, the value of which are enhanced through services that leverage Getech's products and technical skills.

The Company releases this update ahead of the publication of its interim results for the six months to 30 June 2020, which are expected on or around 30 September 2020.

Operational update

The Covid pandemic has had a deep impact on energy prices and the Group's oil and gas customers have cut their 2020 budgets by c35%. In line with guidance, Getech staff began home working early in March. Since then, projects have continued to be delivered on time and to cost - including the release of Globe 2020; new versions of the Group's Exploration Analyst and Data Assistant software products; and an interim release of the innovative MultiSat 2020 product.

With the duration of the Covid pandemic unknown, Getech took steps in April to reduce costs. Monthly costs were lowered by c26% with effect from 1 May, but Getech has been careful to maintain the Group's capacity to deliver its orderbook and to progress a full programme of new business activities.

These activities are focused on strengthening Getech's core business, whilst also using its skills, technologies and network to pivot Getech's offering into new portions of the energy value chain. To this end, the Group is currently exploring a number of exciting energy transition opportunities.

Revenue and forward sales

Getech began 2020 with a strong orderbook (which grew by 48% across 2019). In H1 2020 this has continued to unwind to revenue, with no negative revisions to date. This has provided some downside protection to Getech and, in challenging markets, H1 2020 revenue is expected to total c£2.1 million (H1 2019: £2.5 million). In addition, new forward sales totalled £1.4 million (H1 2019: £1.6 million).

These new forward sales almost completely replenish Getech's orderbook which, net of revenue delivered in H1 2020, still totalled £2.9 million at 30 June 2020 (31 December 2019: £3.1 million).

Getech's Annually Recurring Revenue at 30 June 2020 equalled £2.2 million (31 December 2019: £2.3 million), and c£1.5 million of the orderbook is expected to be released to revenue in H2 2020.

Costs, EBITDA and Getech cash cycle

The H1 cost base¹, inclusive of two months of cost saving measures, totalled c£2.6 million (H1 2019: £3.2 million). Accordingly, Getech expects to report a modest EBITDA profit in H1 2020 (H1 2019: £0.1 million loss).

The Group's usual H2 revenue weighting, and the working capital cycle of Globe and software licence payments, means that Getech typically reports a cash outflow in the first half of most years.

H1 2020 was no exception, with cash at 30 June totalling £2.8 million (H1 2019: £3.0 million). Getech however, raised a substantial value of invoices in June and July, and the Group's current cash balance is c £3.4 million, with a further c£0.5 million of receivables due.

Outlook

The H2 2020 business environment remains challenging for almost all businesses globally, and despite a significant, but partial, recovery in oil prices, customer confidence remains fragile.

Getech has responded to this environment by expanding the Group's digital marketing campaigns and redoubling the focus on its customers' most pressing needs. This has been rewarded with both annual and multi-year product licence renewals, as well as the addition of new Globe and software customers in both H1 and already in H2 2020. Balancing this, some existing licence discussions have become more drawn out, and Getech is focused on concluding these before year-end. The Group's data assets continue to sell but customer budgets during the period have been pared back to essential needs.

In parallel with the above, Getech's busy programme of business development activity has continued into H2 2020, with core areas of focus including the geothermal and hydrogen markets.

Jonathan Copus, Getech CEO, commented:

"In H1 2020 the world faced business challenges of an unprecedented scale. The disruption that resulted has continued into H2 2020 and the timeline to its resolution is unclear. Faced with this, Getech has acted decisively: lowering costs, protecting capital, delivering our orderbook and exploring new business opportunities. Through these steps we expect to have delivered an EBITDA profit, replenished our orderbook and maintained our balance sheet strength. In addition, we have added new customers and advanced a range of conversations that have the potential to drive both growth and diversification. We consider these to be significant achievements. Our focus remains to ensure that the Group exits the Covid environment stronger and more diverse than when it entered."

The information contained within this announcement is deemed by the Company to constitute inside information stipulated under the Market Abuse Regulation (EU) No. 596/2014. Upon the publication of this announcement via the Regulatory Information Service, this inside information is now considered to be in the public domain.

Getech Group plc Jonathan Copus, Chief Executive	Tel:  [phone]
Cenkos Securities plc Neil McDonald / Pete Lynch / Pearl Kellie (Corporate Finance) Michael Johnson / Julian Morse (Sales)	Tel:  [phone]

Notes to Editors:

The Getech Group provides the expertise, support and knowledge that companies and governments need to better discover, develop and manage natural resources. Our data-rich products, GIS solutions and government advisory services help our customers to achieve their business goals of cost control, operational excellence, regulatory compliance and environmental responsibility.

For more information, please visit our website at www.getech.com

[1] 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 foreign exchange and non-cash provisions.

 

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