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These are the unaudited interim results for the period ending 30 June 2019.

H1 2019 Highlights

• H1 revenue £2.5 million with an additional £1.6 million of new forward sales
• Revenue £0.4 million lower than H1 2018 - due to restructuring of Geoscience Services
• New forward sales £0.2 million higher than H1 2018 - delivering 49% order book growth (£3.0 million at 30 June 2019) and a 57% expansion in Annualised Recurring Revenue (£2.3 million at 30 June 2019)
• Total cost base reduced by a further 10%, to £3.2m, the net impact of lower costs and revenue being that Group Gross Profit increased to £1.3 million (H1 2018: £1.1 million)
• Loss Before Tax in line with the same period last year (H1 2019: £598k; H1 2018: £592k)
• Capital discipline, and the settlement of receivables, increased cash to £3.0m (30 June 2018: £1.9m)
• Our customers continue to carefully manage the release of their investment budgets
• In H2 2019 our focus is to keep our tangible and growing sales pipeline in step with their business requirements, whilst also using our transferable skills and technologies to diversify into new markets

Getech (AIM; GTC) provides geoscience and geospatial products and services to companies and governments who use them to de-risk exploration programmes and improve their management of 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 Group operates to a product-led strategy focused on growth from high margin, recurring revenue opportunities. This has been achieved through a programme of commercial, operational and cultural change that began in 2017. The engine of this strategy is a commitment to customer collaboration and continuous product and service enhancement. With a low level of variable costs, Getech's cash profitability is highly leveraged to revenue growth. The Group works to deliver this growth from its core markets of oil & gas and mining, as well as new sectors where Getech's skills and technologies can unlock material value.

H1 2019 overview

In H1 2019 we expanded our investment in our staff, we used customer feedback to evolve our products and we reshaped our service profitability. We also maintained our focus on high quality project delivery and through capital discipline we reduced our total cost base by a further 10%.

This was rewarded by an expansion in new forward sales and multi-year contracts, which grew our orderbook by 49%, to £3.0 million, and expand our foundation of recurring revenue by 57%, to £2.3 million.

In parallel, we took steps to relocate and reset the profitability of our Geoscience Services business line, which was loss making in 2018. Resizing this team largely accounted for a £0.4 million year-on-year reduction in Group H1 revenue (H1 2019: £2.5 million). Group profitability however increased, Gross Profit rising to £1.3 million (H1 2018: £1.1 million). Cash at 30 June 2019 increased to £3 million (30 June 2018: £1.9 million).

By maximising Getech's profitability and growing the percentage of the Group's cost base that is covered by recurring revenue, we have enhanced the quality of our earnings. This helps us plan our forward product investment, helps us fund innovation and lays a foundation from which can explore new sectors. In H1 2019, as well as working for our core oil and gas and mining customers, contracts were undertaken in the pipeline and utilities sectors.

H2 2019 outlook

Global economic uncertainty and geopolitical tensions continue to drive crude price volatility, and Getech's oil and gas customers remain careful in the release of their investment budgets. We therefore take pride in the fact that against what remains a challenging commercial backdrop, we have grown the Group's baseline of recurring revenue, broadened our customer base and expanded our geographic reach.

Our H2 2019 sales and marketing campaigns for products are well underway, with active trials taking place for Globe and Software in SE Asia, Europe and North America. In the Middle East, we were recently awarded a contract for the delivery of geospatial strategy services and completed on a 3-year commitment to geospatial support services. In data, a number of high-value opportunities are maturing as our customers present the business case to extend their gravity and magnetic data library and also to invest in Getech's new generation of satellite-derived gravity data.

Our focus remains on delivering a strong sales performance to 31 December 2019. This means working closely with our customers to ensure that investment in Getech products and services is prioritised above other investment opportunities. To this end, as we work to align our offerings with planned exploration activities, H2 is busy with face-to-face customer meetings in many regions of the world.

Operational Review

In H1 2019, whilst maintaining capital discipline, we have continued to evolve our products based on customer feedback and reshape our Services profitability, all the while maintaining focus on high quality project delivery.

• G&M data and services - continued demand underlines our market-leading position
• Globe - released on time and to budget, multi-year contracts secured with majority of customers
• Software - all products now upgraded to ArcGIS Pro, securing their longevity
• GIS services - major support contracts ongoing, projects continue to deliver diversification
• Geoscience services - further progress towards profitability

Gravity & Magnetic Solutions

At the heart of our product suite is our portfolio of market-leading Gravity & Magnetic (G&M) data. These data are used by our oil & gas and mining customers to model variations in the Earth's crust, which in turn helps them to visualise the Earth's structures and understand the evolution of natural resources.

G&M data sales are typically high-value, high-margin and lumpy, and demand for G&M data in H1 2019 has continued despite oil price uncertainty. Being point sales, the revenue these data deliver is unpredictable, but we continue to mitigate this by growing our sources of recurring revenue elsewhere in the business.

Alongside G&M data sales we successfully completed a pilot R&D project investigating the enhancement of our market-leading Multi-Sat Gravity product using new satellite-derived data inputs. The results of the project were compelling and the associated uplift in processing quality will enable us to significantly enhance our Multi-Sat data product in the future.

With our G&M Service line also delivering good staff utilisation and strong profitability in the period, we believe that this continues to underline our market-leading position in the G&M domain.

Information Products

Globe is a large geospatial information product that its customers, a broad group of super-majors and large independent oil & gas companies, use to model the Earth's geological evolution and predict the location of oil & gas.

Globe continues to be structured around an annual release-cycle, which allows us to be agile with respect to the product's roadmap and respond to feedback relating to the changing needs of Globe's customers. Globe 2019 is our second annual release and was completed on time/within budget in H1 2019 and delivered to customers in July 2019. The product's content and functionality has been expanded to include innovative new thermal mapping and palaeo-surface geology modules, and a variety of interactive analytic capabilities have been added. These upgrades draw on geoscience, G&M and software development expertise from across the Group. Our customers have responded positively to Globe's repositioning - the majority having signed-up to multi-year contracts, which in-turn contributes to the order book and annualised recurring revenue.

Software

Our software enables our oil & gas customers to easily integrate data from sub-surface interpretation applications, run play-based exploration projects and manage unconventionals developments such as shale oil.

In H1 2019 we enhanced our software products to include a range of new customer-requested functionality and upgraded them to include support for Esri's latest 10.7.1 release of ArcMap. In addition, we completed the upgrade of all our software products to Esri's latest desktop GIS application, ArcGIS Pro.

Upgrading our entire product suite to ArcGIS Pro is important as it secures the longevity of these software products as Esri start to retire the ArcMap software product. As well as support for ArcGIS Pro, the new version of Unconventionals Analyst contains significant enhancements to its well modelling and planning algorithms, used by its customers in planning shale oil/gas operations.

Geospatial Services

We provide Geospatial Services to oil & gas companies that range from small independents to super-majors. In H1 2019 we renewed a high-value multi-year support contract from a large multi-national joint venture. The transferable nature of our geospatial skills enables us to diversify revenues and in H1 2019 we undertook contracts in the pipeline and utilities sectors.

Geoscience Services

We continue to reposition our Geoscience Services around the delivery of projects that integrate complex geoscience interpretation with Getech data and information. This effort was rewarded In H1 2019 with significantly increased utilisation and a return towards profitability.

Building on our long history of assisting governments we continue to promote Sierra Leone's Fourth Licensing Round. With investors requiring more time to complete their review and application processes, the Government of Sierra Leone has moved its deadline to 28 February 2020. This Round enables us to broker a high value portfolio of seismic and well data to prospective investors.

Financial Review

• H1 revenue £2.5 million with an additional £1.6 million of new forward sales
• Revenue £0.4 million lower due to restructuring of Geoscience Services, new forward sales £0.2 million higher - delivering 49% growth in the order book and a 57% expansion in Annualised Recurring Revenue
• Gross profit £1.3 million (H1 2018: £1.1 million) - lower revenue offset by 10% reduction in costs
• EBITDA^[†] £0.1 million loss (H1 2018: £0.2 million loss)
• Cash balance £3.0 million (H1 2018: £1.9 million)

Stuart Paton

Chairman

For further information, please contact:

Getech Group plc	Tel:  0113 322 2200
Jonathan Copus, Chief Executive
WH Ireland Limited	Tel:  0161 832 2174
Katy Mitchell

 

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