Last week saw Getech, the company focused on Geoscience and Geospatial Technology for the Energy and Mining sectors announcing its Interim results.
After a difficult period throughout 2020, the company, which is now very much focused on the emerging Hydrogen space delivered both an improved set of numbers and importantly, a positive forward looking picture.
On the back of the results, I have been fortunate enough to catch up with CEO Jonathan Copus once more, who at the time was visiting the Hydrogen focused team based in Edinburgh.
With much seemingly going on at present and his subsequent visit, the area of Hydrogen was an obvious starting point, particularly given that there appears to be a seriously major opportunity for the company emerging.
For some, the marriage between Getech’s core and historical technology with the Hydrogen spot doesn’t appear to be an obvious match, but as I had heard previously and learnt further through speaking with the CEO once more, it appears tailor made for scaling up.
As we speak, Copus clearly sounds upbeat on the wider group prospects moving forward, but was keen to reiterate that the company was now at an advanced stage of discussion relating to its first Hydrogen asset.
Impending news on that front is not only likely to be well received, but should serve further to underline both the belief and credibility of the business model across the field.
Expanding, Copus said, “when we first started talking about Hydrogen we were very focused on Scotland for instance, but in recent months we have now expanded that search across the UK and we are talking about hundreds of assets going into the top of the hopper.
The news flow focus though is what is coming out of the bottom, so on that front we have got five projects which are well defined and at an advanced stage of review”.
The CEO also adds that the most advanced of those is well forward on negotiations, which relates to the securing of a land asset.
“Once that is concluded it then sets us on a path towards development of the asset, which is then followed by moving into a feed process that includes engineering and design”.
From this stage Copus talks about funding of development and a twelve to eighteen month timeline to completion which then paves a way to the path of profits.
From an outsider’s point of view, it may well all seem blue sky and hot air with a lengthy timeframe, which may deter some would-be investors. But, Copus is deadly serious about the emerging prospects for Getech and confirms that there should be plenty of news and updates relating to the Hydrogen space along the way.
The company will be focused on investment at the asset stage which will then see other groups coming on board such as utilities, energy companies or infrastructure investors along with government too.
The CEO believes there is plenty of interest from these different parties and also refers to the more recent Government Hydrogen report which highlights the role Hydrogen will play in the UK’s decarbonization.
Within that and the Hydrogen expansion, Copus says that there is consideration of using contracts for difference which has been successfully applied to other areas of energy such as wind.
Additionally, there are also other market mechanisms being promoted or looked at in order to seriously promote and accelerate the Hydrogen space, which can prove an effective alternative to subsidies.
“There is generally a lot of excitement around the Hydrogen area and there has been for a while, but there is now really more tangibility about that and we are part of it”.
Going on, Copus says that as they announce news on their first hub it should demonstrate the other aspects across the space too and he says that the ambition isn’t to just own a hub, but rather a whole portfolio of assets, which as they come through, then the portfolio news flow will very much multiply.
Although the plan and roadmap is a lengthy one, investors should be treated to updates form hereon, moving into 2022 and beyond, which should provide for further flesh on the bones and a building picture.
Post the fund raise earlier in the year, the company looks well positioned and the CEO says that they are putting the capital to work which has included expanding the Hydrogen team in order to step up the momentum.
In order to further drive the business forward there have also been some significant new board appointments such as Richard Bennett who also serves on the board of MTI Wireless Edge and gained significant experience with General Electric.
Another more recent NED addition is Emma Parker who sits as principal in charge of business opportunities at Anglo American the multi-national, multi-commodity mining company.
And this morning, those appointments have now been followed up by the announcement that the company has appointed a Chief Business Development Officer in the form of Max Brouwers.
A geoscientist, Brouwers joins following a 25 year career at Shell and will be focused on driving Getech’s growth and expansion into both European and Global markets.
Copus says that the energy transition process will work on a more local level than has previously been the case with hydrocarbons and the serving of a demand landscape seeing Getech’s technology pinpointing just where best it is to locate a hub in order to meet demand.
Being very much on the seam of this transition process the CEO says that they are now talking to more and more people and that it is a really rich environment to be in. “We are looking to step up the momentum and there should be quite a few events coming up on Hydrogen alone, which will be quite useful to investors to see how and what we are doing and bringing more tangibility”.
Aside the announcements that have already been made regarding who the company is talking to Copus says that they are now very much engaged with others too and he sees Getech as being integral in unlocking the demand landscape across the Hydrogen area.
But, the company isn’t all about the emerging Hydrogen proposition as it has an existing and well established core business that has served some of the major energy players well over the years.
Although the business has endured a tough time of it as has been the case of the wider industry, the Interim results demonstrated both progress and optimism going forward.
Revenues for the six month period increased 16% year-year with an annualized recurring revenue base remaining unchanged at £2.2m which equates to some 52% of the 2021 revenue forecast.
Copus refers to this historic business as the foundation, as it effectively underpins everything the company is doing, as the people that they are talking to on hydrocarbons are the same people they are speaking with on Hydrogen and Geothermal.
Speaking of the current climate where its technology has traditionally served, Copus comments, “in that market, the oil price is strong with gas even stronger, but even so, those people are on a decarbonization journey. They are generating good profits and free cash flow, but that is now being used in part for the energy transition process”.
With those customers Copus sees the Getech role where they are already a trusted technology partner as supporting them in both existing and new areas of the energy journey.
Commenting on the half way performance for the year, he says, “last year during the depths of Covid, most project led work in this country stopped. Within that, one of our most important areas of revenue is data, which means if people aren’t undertaking projects, then they aren’t using our data”.
Understandably it was a difficult period, but thankfully this year the environment has been much more constructive for the company where it has put out a few RNS’s which have been data related that demonstrates the market has reopened.
The CEO adds that this is clearly good for Getech and although not as yet back to the pre-Covid levels, it is nevertheless encouraging.
Perhaps of more importance is an increasing opportunity to leverage its data and technology associated skills into new areas which we touched upon previously, those being mining and geothermal.
The company has been developing a cloud-based platform that closely mirrors the product offering to the oil and gas markets, but which has been tailor made for the mining and geothermal customers.
That will provide for a whole new route to market for Getech and Copus sounds upbeat on the prospects here, particularly in relation to copper.
The latter may sound surprising, but the CEO explains, “copper is hugely important for the energy transition, in fact, it is the most important metal in terms of total usage for clean technologies. It is incredibly difficult to substitute because of its physical conductive properties.
Most of the copper being produced across the world are from mature mines that are under ESG stress, but there is a need for more copper to deliver on the energy transition. As part of our new cloud offering one of the first products is a copper module, which will be released later this month”.
The product should prove popular where it will be able to assist customers to target and identify a certain area for a specific type of copper, which reduces the environmental impact and increases the yield.
With mining clearly playing a key role in relation to the energy transition regarding new and innovative technologies the opportunity there for Getech could prove to be another useful string to the bow.
At present, the shares standing just south of 24p sees the company valued at £16m which looks cheap given the prospects and a net cash position which at the year end is forecast to stand at close to £5m.
Additionally, there remains the Leeds freehold property which was acquired for circa £2.4m over 15 years back and which is now surplus to requirements. Copus confirms it remains on the market and he sees it as lazy capital that would be much better redeployed elsewhere to better serve shareholders.
With a core and premium technology product set that has in the past proven an ability to generate decent profits, the business and its prospects going forward clearly aren’t being valued at very much at all.
That could change though, as news in the coming months looks set to gather momentum, where anything considered to be of significance could reignite the share price and attract further interest in the company.
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