A couple of weeks ago Getech Group (LON:GTC) raised £1.5m by way of a Placing and Subscription for 75m new shares at just 2p each.
Next Tuesday, 27th August, will see the company’s shareholders approving the funding issue at its General Meeting.
The new monies raised will go towards additional working capital and in helping to fund future growth.
The whole issue could prove to be an iconic moment in the group’s fortunes.
The Business
The company describes itself as a leading locator of the energy and mineral resources essential for the world’s energy transition.
Its unique data encompassing the most recent 400m years of Earth’s evolution, coupled with its geoscience expertise, AI-driven analytics and extensive geographic information systems, enables the company to provide valuable and actionable insights to support resource discovery and development.
The company’s client portfolio is wide-ranging, from governments, municipalities, natural resources and energy companies to consumer goods and computing services companies, all striving to become energy and minerals self-sufficient and drive towards net zero.
At the time of announcing the funding, CEO Richard Bennett, who was only appointed last year, stated that:
“In the last 12 months we have significantly reduced Group costs, refocused the business on our core expertise of selling sub-surface data and we have worked hard to develop an expanded sales pipeline worth £9.6m.
The proposed Placing will deliver financial stability, enable us to accelerate conversion of the sales pipeline and provide further R&D investment with the objective of the business becoming cash-flow positive on a sustainable basis this year.
We are also ensuring that the opportunity to be involved in the Placing is being made available to all our shareholders.”
The company is committed to targeting further diversification beyond its core oil and gas sector clients, with an ambition of delivering at least half of the company’s revenue from exploration companies focused on locating the natural resource discoveries needed to deliver the energy transition.
Getech’s substantial database of potential fields data, covering both magnetic and gravity data, is accessed via its Globe platform, with a focus on delivering a ‘software as a service’ revenue model.
The Globe platform continues to be developed with the introduction of advanced artificial intelligence and machine learning techniques in addition to new search capabilities.
The company has declared a sales pipeline of some £9.6m – split into Globe platform and software – £4.9m, Geoscience data – £1.9m, and Geoscience services £2.8m.
It is confident that it is in a position to convert the expanded sales pipeline and to capitalise on the positive growth drivers in the sector.
Analyst View
James McCormack at Cavendish Capital Markets has a Price Objective of 6.4p on the group’s shares.
He estimates that the current year to end-December will see revenues rise to £5.0m (£4.0m) while the adjusted pre-tax loss could come in significantly lower at just £0.6m (£3.6m loss).
But going into the 2025 year he looks for £6.0m revenues helping to push the group into profits of £0.2m, generating 0.2p per share in earnings.
Looking forward, for 2026 his estimates are for £7.2m sales, with an excellent £1.3m profit, worth 0.9p per share.
In My View
I just love companies targeting a strong build-up of annual recurring revenues (ARR), which is just where Richard Bennett and his team are aiming with Getech.
ARR currently stands at approximately £2.9m per annum.
McCormack has estimated that when revenues go above £6m, the company will generate some £1m in EBITDA for every £1.2m increase in revenue.
With its shares now trading at around 2.25p each, the group is capitalised at only £3.2m.
It is very much in its early growth stage, but on the 2026 estimates of 0.9p per share in earnings – just 2.25p per share could prove to be mere option money on big rewards to come.
In due course the Cavendish Capital Price Objective of 6.4p could well be left far behind.