TEKMAR GROUP
PLC
("Tekmar Group", the "Group"
or the "Company")
UNAUDITED INTERIM
RESULTS
For the 6-month period
ending 31 March 2024
Tekmar Group (AIM: TGP), a leading
provider of technology and services for the global offshore energy
markets, announces its interim results for the 6-month period
ending 31 March 2024 ("HY24" or the "Period").
Highlights
Group profitability for the Period is the highest in four
years driven by strong commercial management
· Revenue of £16.2m (HY23: £15.9m) excludes any contribution
from Subsea Innovation Limited ("SIL") sold post period end and
treated as a discontinued operation (Comparative figures have been
adjusted for comparability)
· Gross profit of £5.4m for the Period (HY23: £4.4m) reflects
an increase in the gross profit margin for the Period to 33% (HY23:
28%)
· Adjusted EBITDA of £1.8m reflects a £1.2m improvement on the
comparative 6 month period. (HY23: £0.6m)
· On a
GAAP basis Group loss before tax was £0.4m (HY23: £1.2m
loss)
Order book of £24.1m reflects the benefits of a balanced
portfolio across energy and subsea markets
· During the Period, Tekmar's offshore wind business and
Pipeshield ("PIL"), secured order intake of £13.7m and £10.0m
respectively
· These contract awards support order intake of £23.7m in the
financial year to date with a blended gross margin of
31%
The disposal of Subsea Innovation Limited strengthens the
core business
· Completed post-Period on 2 May 2024 for a total cash
consideration of £1.9m, with cash receipts predominantly phased
over the next 12 months
· The
Group retained ownership of the premises, with the property valued
at £2.8m as at 30 September 2023
Balance sheet supported by SCF Partner's £18.0m Convertible
Loan Note facility (the "CLN" facility)
· The
Group held £2.7m of cash as at 31 March 2024 with net debt of
£3.6m. Net debt included the drawdown of bank facilities from the
£3.0m Covid Business Interruption Loan Scheme ("CBILS") and £3.3m
of the available £4.0m trade loan facility, both expected to be
renewed in 2024.
· This
cash position excludes the £18.0m SCF Capital CLN facility
committed in 2023 which is available, with conditions, to drive
growth including acquisitions
HY24 financials
|
6M ending
Mar-24
Unaudited
£m
|
6M
ending Mar-23
Unaudited
£m
|
12M
ending
Sep-23
Unaudited
£m
|
Revenue
|
16.2
|
15.9
|
35.6
|
Gross Margin
|
33%
|
28%
|
23%
|
Adjusted
EBITDA1
|
1.8
|
0.6
|
0.6
|
Net Cash2
|
(3.6)
|
(3.2)
|
(2.9)
|
Sales KPIs
|
6M ending
Mar-24
Unaudited
£m
|
6M
ending Mar-23
Unaudited
£m
|
12M
ending
Sep-23
Unaudited
£m
|
Order Book3
|
24.1
|
23.7
|
19.9
|
Order Intake4
|
23.7
|
24.5
|
44.2
|
Current trading and outlook
The Board is encouraged by the
Group's first half performance with the business on track to
achieve its FY24 revenue and EBITDA expectations. Looking ahead to
the rest of the year, the market is still impacted by the phasing
and timing of major projects, however, we expect another period of
positive EBITDA in the second half albeit modestly lower than the
first half, with full year 2024 representing a clear improvement in
trading profit over the prior year.
The Company continues to maintain
tight cost controls and will continue its disciplined programme of
targeted capex and investment in product development that represent
the greatest opportunity for near-term growth. Capex for FY24 is
expected to be in the region of £2m.
Alasdair MacDonald, CEO,
commented: "We are pleased to
report our best results and highest level of adjusted EBITDA for
four years. The business performed well in the first half of 2024
as we continue to build a better-quality and de-risked order book,
returning the business to sustained profitability. We have
strengthened our platform for consistent growth by divesting the
SIL business, which also supports our focus on efficient capital
allocation. Our offshore wind business returned to making a
material contribution to Group profitability in the first half, and
we continue to benefit from the consistent profit generation of our
Pipeshield business. Overall, these results demonstrate we now have
a stronger platform to drive near-term growth and accelerate growth
through targeted and potentially transformational
M&A."
Notes:
(1)
|
Adjusted EBITDA is a key metric used
by the Directors. Earnings before interest, tax, depreciation and
amortisation are adjusted for material items of a one-off nature
and significant items which allow comparable business performance.
Details of the adjustments can be found in the adjusted EBITDA
section below. Adjusted EBITDA might not be comparable to other
companies.
|
(2)
|
Net cash is defined as total cash
held by the Group less bank borrowings
|
(3)
|
Order Book is defined as signed and
committed contracts with clients.
|
(4)
|
Order Intake is the value of
contracts awarded in the Period, regardless of revenue
timing.
|
(5)
|
Order Book and order Intake include
Subsea Innovation Limited for current year and comparative
periods.
Revenue, Gross Margin and Adjusted
EBITDA exclude Subsea Innovation Limited for HY24 as held as a
discontinued operation. Comparative figures exclude Subsea
Innovation Limited figures.
|
Enquiries:
Tekmar Group plc
Alasdair MacDonald, CEO
Leanne Wilkinson, CFO
|
Via
Gracechurch Group
|
Singer Capital
Markets (Nominated Adviser and Joint Broker)
Rick Thompson / Sam
Butcher
|
+44
(0)20 7496 3000
|
Berenberg (Joint
Broker)
Ben Wright / Ciaran
Walsh
|
+44
(0)20 3207 7800
|
Gracechurch Group (Financial
media & investor relations)
Murdo Montgomery / Heather
Armstrong
|
+44
(0)20 4582 3500
|
|
|
About Tekmar Group plc
Tekmar Group plc (AIM:TGP)
collaborates with its partners to deliver robust and sustainable
engineering led solutions that enable the world's energy
transition.
Through our Offshore Energy and
Marine Civils Divisions we provide a range of engineering services
and technologies to support and protect offshore wind farms and
other offshore energy assets and marine infrastructure. With near
40 years of experience, we optimise and de-risk projects, solve
customer's engineering challenges, improve safety and lower project
costs. Our capabilities include geotechnical design and analysis,
simulation and engineering analysis, subsea protection technology
and subsea stability technology.
We have a clear strategy focused
on strengthening Tekmar's value proposition as an engineering
solutions-led business which offers integrated and differentiated
technology, services and products to our global customer
base.
Headquartered in Newton Aycliffe,
UK, Tekmar Group has an extensive global reach with offices,
manufacturing facilities, strategic supply partnerships and
representation in 18 locations across Europe, Africa, the Middle
East, Asia Pacific and North America.
For more information visit:
www.tekmargroup.co.uk.
Subscribe to further news from
Tekmar Group at Group News.
INTERIM REPORT FOR THE 6 MONTHS TO 31 MARCH
2024
CEO overview
The business performed well in the
first half of the 2024 financial year, delivering encouraging
results in line with our plan. This reflects the hard work of the
Tekmar team as we continue to focus on our key priorities to
strengthen the core business and underpin significant future
growth.
Review of near-term priorities
(1) Return to Sustained EBITDA
Growth
Adjusted EBITDA of £1.8m
represents the highest level of trading profit for a six-month
period delivered by the Group in four years. The level of
profitability also reflects significant improvement with £5.4m of
gross profit reflecting an achieved gross margin of 33% for the
Period, the first time since 2019 that the Group has achieved this
level of gross margin. Adjusted EBITDA margin of 11% for the first
six months is an important marker in the Group restoring
sustainable mid-teen EBITDA margins, which is a key pillar of our
strategic plan. The delivery of that target requires greater volume
to be addressable in the market but there are encouraging signs
that the market environment is improving, albeit
steadily.
The table below shows the
profitability profile (at Adj. EBITDA level) of the Group over
recent interim periods. The 6 month periods ending Mar-24, Sep-23
and Mar-23 have been amended to exclude the results of Subsea
Innovation Limited as this is reported as a discontinued
operation:
|
6m
Mar-24
|
6m
Sep-23
|
6m
Mar-23
|
6m
Sep-22
|
6m
Mar-22
|
6m
Sep-21
|
6m
Mar-21
|
6m
Sep-20
|
6m
Mar-20
|
Revenue (£m)
|
16.2
|
19.7
|
15.9
|
17.2
|
13.0
|
17.9
|
13.9
|
15.2
|
23.8
|
Gross margin (%)
|
33%
|
20%
|
28%
|
24%
|
22%
|
16%
|
26%
|
31%
|
28%
|
Adj. EBITDA (£m)
|
1.8
|
0.0
|
0.6
|
(0.3)
|
(1.8)
|
(1.8)
|
(1.1)
|
0.8
|
2.7
|
Adj. EBITDA margin (%)
|
11.1%
|
0.0%
|
3.8%
|
(1.7%)
|
(13.8%)
|
(10.1%)
|
(7.9%)
|
5.3%
|
11.3%
|
We highlighted in our last set of
annual results announced in March 2024, the importance of
consistent profit generation across both our divisions - Marine
Civils and Offshore Energy. The performance of Offshore Energy has
lagged behind Marine Civils over recent periods. This Period has
seen a consistent contribution from both divisions, with Offshore
Energy and Marine Civils contributing £1.4m and £1.5m respectively
to the Group's Adjusted EBITDA.
We are encouraged by the improved
trading performance of the Group in the Period as highlighted by
the above table and by the return to profitability of the Offshore
Energy division. When we then overlay the consistent performance of
our Marine Civils division with the positive medium to long term
fundamentals of the offshore wind industry, we believe Tekmar is
well positioned to deliver sustainable EBITDA growth for
shareholders through the current industry cycle and
beyond.
(2) Building a better-quality pipeline and order
book
We are encouraged by the strength
of our enquiry book and continue to see improvement to the supply
chain pricing to more acceptable margin levels and larger volumes
of enquiries in the market converting into orders. We highlighted
in our March 2024 results announcement that we are seeing the
effects of legacy contracts on margin diminishing in the order book
and we continue to see our backlog replaced with higher margin,
lower risk projects. This is supported by order intake of £23.7m in
the financial year to date with a blended gross margin of 31%. We
caveat this positive outlook by highlighting that delays to project
commissioning and commencement continues to be a feature across the
industry and this constrains our ability to predict with confidence
the outturn for nearer-term financial periods. Overall though we
continue to characterise the current market environment as steady
with incremental improvement ahead of accelerated growth as the
industry positions itself to meet the anticipated global buildout
to meet 2030 net-zero commitments.
(3) Cash flow and liquidity
We remain focused on a disciplined
approach to cash, working capital management and improved cash
generation. Cash used in operations in the first half of £1.0m
reflects short-term working capital requirements which are expected
to unwind over the course of the year. As a management team we
maintain a major focus on debtor collections and on overall
liquidity and working capital support. We are currently in active
discussions with our relationship bank relating to the renewal of
our existing trade and CBILs facilities, with these discussions
progressing in line with planned timeframes for renewal in
2024.
(4) Strengthening the business
The Disposal of Subsea
Innovation Limited and targeted investment and
capex
On 2 May 2024 we announced the
disposal of SIL to Unique Group ("Unique") for an aggregate cash
consideration of £1.9m. This was a strategic acquisition of a
business servicing predominantly oil and gas customers with the
potential to transition to servicing offshore wind energy projects
over time. Under Tekmar's ownership, the business demonstrated this
potential, however the nature of projects undertaken highlighted a
lumpiness of revenue and relative lack of pipeline visibility. The
business had also struggled to deliver consistent profitability
with SIL reporting an Adjusted EBITDA loss of £1.4m for FY23, the
latest audited period prior to announcing the Transaction. We were
pleased to have reached agreement with Unique, which sees 38
employees transfer with SIL to new ownership which can invest in
the business to realise its potential.
In terms of the financial effects
of the Transaction on the Tekmar Group
· Innovation House, the premises in Darlington currently
occupied by SIL (the "Property"), is being retained by the Group on
Completion. The Property was valued at £2.8 million as at the
latest audited financial statements to 30 September 2023. The Group
has agreed for the Purchaser to use the Property on a rent-free
basis for a 12-month period following Completion, with the option
for both parties to enter into a lease agreement after the
rent-free period. Ownership of the property gives the Group
optionality for future Group refinancing.
· The
consideration value comprises an initial cash payment of £27,000, a
cash payment of £1.4 million relating to a trade receivable,
payable post-Completion, and a further cash payment of £549,000
payable 12 months post-Completion.
· These proceeds, net of costs, will be available to support
the Group's disciplined investment programme to drive near-term
growth and for general working capital purposes.
· The
effect of the disposal on the ongoing Group is expected to be
broadly EBITDA neutral for FY24.
· The
disposal also mitigates potential near-term cash requirements which
were being considered to support operational efficiency changes and
working capital requirements in the business.
We highlighted in our 2023 Full
Year results that we will continue to look for opportunities to
further strengthen the business through more efficient resource
allocation. The disposal of SIL is consistent with this approach,
with the Group now benefiting from a more streamlined portfolio of
products, services and technology that addresses the needs of the
offshore wind industry and broader energy markets. We will continue
to allocate capital to the ongoing Group in a disciplined way,
aligning our resources to opportunities which provide the greatest
near-term benefits and growth opportunities.
We expect capex for the current
financial year to be in the region of £2m, with approximately half
of that covered by investment in strategic initiatives including
product development for our core Teklink cable protection system
and investment in our grouting services in support of near-term
revenue growth with Pipeshield including in the Middle
East. We have identified a number of other strategic
investment opportunities, with funding of these initiatives subject
to phasing as cashflow builds to support the required
investment.
M&A to strengthen and
broaden the portfolio
With the path to profitability
established and the core platform streamlined with the disposal of
SIL, we are pursuing M&A opportunities to complement organic
growth, including opportunities to build scale and strengthen the
technology and services we offer to our customers. The ambition is
to build a leading global offshore wind services company over time,
and consistent with this, we are alert to the potential value in
acquiring capability that can transition to servicing the needs of
the offshore wind industry over time. Building a stronger platform
should, in turn, create a business which the stock market can value
more highly.
We benefit significantly in this
M&A context from having SCF as a strategic partner, where we
can leverage their complementary industry knowledge and investment
expertise to help source and execute value-enhancing acquisitions.
We also benefit from SCF's committed £18m funding through the
Convertible Loan Notes, which are targeted to be deployed primarily
for value-enhancing M&A and strategic growth. Having this
committed funding in place puts Tekmar at a distinct advantage,
particularly given the current financing environment for
M&A.
Market overview
The Offshore Wind market continues
to strengthen as energy markets are aligned to the commitment of
the United Nation's global coalition for net-zero emissions by
2050. Most notably:
· Global capacity is forecast to reach over 261GW (installed or
underway) by 2030, from a commissioned capacity of 70GW today, with
current visibility of over 300
projects. (1)
· A
peak in buildout is expected in Europe around 2030 as governments
ramp up expansion targets, which has been influenced by the fall
out of the invasion of Ukraine and energy crisis. Tekmar has a
strong track record in this region and is well-positioned to
benefit from future growth.
· Asia
Pacific to adopt proven European technology to meet ambitious
timeframes as they look to move from 2.8GW fully commissioned to
91GW by 2040. Tekmar already has a presence in Asia and has been
awarded multiple contracts for countries' first commercial wind
farms in the region, demonstrating a strong track
record.
· The
global operation and maintenance (O&M) market continues to
scale up and is now valued at nearly £26bn per year by 2035,
offering significant growth potential for the
Group. (1)
· The
emerging floating wind market outlook is now at 31GW installed or
underway by 2035, rising dramatically in the second half of the
2030s.
Adjacent offshore energy markets
are strengthening due to renewed investment in offshore energy
markets given the importance of energy security.
Alasdair MacDonald
CEO
15 May 2024
Sources:
(1) 4C Offshore, Offshore Wind
Farms Project Opportunity Pipeline Database, Version Q1
2024
CFO
Review
A summary of the Group's financial
performance is as follows:
|
6M ending
Mar-24
Unaudited
£m
|
6M
ending Mar-23
Unaudited
£m
|
12M
ending
Sep-23
Unaudited
£m
|
Revenue
|
16.2
|
15.9
|
35.6
|
Gross Profit
|
5.4
|
4.4
|
8.3
|
Adjusted
EBITDA(1)
|
1.8
|
0.6
|
0.6
|
(LBT)
|
(0.4)
|
(1.2)
|
(8.5)
|
EPS
|
(0.55p)
|
(2.87p)
|
(10.70p)
|
Adjusted
EPS(2)
|
(0.06p)
|
(1.74p)
|
(4.50p)
|
Figures for HY24 exclude Subsea Innovation Limited as treated
as discontinued operation. Comparative information has been
adjusted to treat Subsea innovation as a discontinued
operation.
(1) Adjusted EBITDA is a key
metric used by the Directors. Earnings before interest, tax,
depreciation and amortisation are adjusted for material items of a
one-off nature and significant items which allow comparable
business performance. Details of the adjustments can be found in
the adjusted EBITDA section below. Adjusted EBITDA might not be
comparable to other companies.
(2) Adjusted EPS is a key metric used by the Directors and
measures earnings after adjusting for material items of a one-off
nature and significant items which allow comparable business
performance. Earnings for EPS calculation are adjusted for share
based payments (£nil HY24, £nil HY23, £0.5m FY23), amortisation on
acquired intangibles (£0.1m HY24, £0.1m HY23, £0.1m
FY23).
On a statutory basis Group loss
before tax was £0.4m (HY23: £1.2m loss).
Overview
The results for the 6 months to 31
March 2024 reflect the results of the business turnaround which has
been in progress over recent years and the journey back to
sustained profitability. The Group reported revenue for the 6-month
period to March 2024 of £16.2m, broadly similar to the £15.9m
revenue reported for the 6 months to 31 March 2023. The continued
work to improve the business on a number of fronts including
commercial management, technical discipline, strong project
execution and supply chain management has resulted in a continued
gross profit margin per cent improvement from 28% for the 6-months
to 31 March 2023 to 33% for the 6-months to 31 March
2024.
An adjusted EBITDA profit of £1.8m
is reported for the 6-months to 31 March 2024, in comparison, the
period to the 6-months to 31 March 2023 reported an adjusted EBITDA
profit of £0.6m, providing a positive variance of £1.2m. The
adjusted EBITDA profit of £1.8m is enhanced by £0.2m due to
accounting for the Subsea Innovation disposal as a discontinued
operation, as this business unit incurred a £0.2m EBITDA loss for
HY24 (EBITDA loss £0.4m HY23).
Revenue
Revenue by Division
|
|
|
Revenue by market
|
|
£m
|
|
6M
Mar24
|
6M
Mar23
|
12M
Sep23
|
|
£m
|
6M
Mar24
|
6M
Mar23
|
12M
Sep23
|
Offshore Energy
|
|
9.8
|
8.9
|
17.3
|
|
Offshore Wind
|
11.3
|
7.8
|
17.7
|
Marine Civils
|
|
6.4
|
7.0
|
18.3
|
|
Other Offshore
|
4.9
|
8.1
|
17.9
|
Total
|
|
16.2
|
15.9
|
35.6
|
|
Total
|
16.2
|
15.9
|
35.6
|
Figures for HY 24 exclude Subsea Innovation Limited as
treated as discontinued operation. Comparative information has been
adjusted to treat Subsea innovation as a discontinued
operation.
Offshore Energy, incorporating
Tekmar Energy, AgileTek and Ryder Geotechnical, all of which
operate largely as a single unit, reported revenue of £9.8m in the
6-month period to 31 March 2024 compared with £8.9m for the 6-month
period to 31 March 2023. The revenue of £9.8m reported for HY24 has
been adjusted down by £3.3m relating to the disposal of Subsea
Innovation which is reported as a discontinued operation (HY23
adjusted down by £1.8m.
The Marine Civils division
delivered revenue of £6.4m for the 6-month period to 31 March 2024.
This is broadly similar to the £7.0m for the comparative 6-month
period to 31 March 2023 but materially lower than the £11.3m of
revenue delivered by this division in H2 23. We flagged in our FY23
results announcement in March that the H2 23 run-rate for this
division reflected a very strong period and may not be a reasonable
read-across for expectations for FY 24. The pipeline for this
division and our Pipeshield business remains strong and pending
timing of order book conversion there is opportunity to achieve
second half revenue materially ahead of the first half.
Gross profit
Gross profit by
Division
|
|
|
Gross Profit by market
|
|
£m
|
6M
Mar24
|
6M
Mar23
|
12M
Sep23
|
|
£m
|
6M
Mar24
|
6M
Mar23
|
12M
Sep23
|
Offshore Energy
|
2.9
|
2.0
|
3.0
|
|
Offshore Wind
|
|
2.9
|
2.5
|
4.8
|
Marine Civils
|
2.5
|
2.4
|
5.3
|
|
Other Offshore
|
|
3.7
|
2.7
|
5.1
|
Unallocated costs
|
-
|
-
|
-
|
|
Unallocated costs
|
|
(1.2)
|
(0.8)
|
(1.6)
|
Total
|
5.4
|
4.4
|
8.3
|
|
Total
|
|
5.4
|
4.4
|
8.3
|
Figures for HY 24 exclude Subsea Innovation Limited as
treated as discontinued operation. Comparative information has been
adjusted to treat Subsea Innovation as a discontinued
operation.
Gross profit margin for the Group
increased from 28% (HY23) to 33% (HY24) with margin improvement
across both divisions.
Marine Civils division gross
profit margin increased from 34% (HY23) to 39% (HY24) despite the
lower revenue in the 6-month period to 31 March 2024 compared to
the prior year 6-month period to 31 March 2023. This was achieved
by strong operational delivery particularly around variation orders
where project scope change has been encountered.
Within Offshore Energy, gross
profit margin also improved, increasing from 22% in HY23 to 30% in
HY24. A number of factors, as a result of our business improvement
plans, have played a key part in the turnaround of this division,
including robust commercial management, strong project execution
and supply chain initiatives. The Board is encouraged with the
performance improvement in this division which is a key element of
the Group's overall success in delivering sustained profit growth.
The lower margin backlog work has declined to a low level and the
performance improvement delivered year to date provides management
with confidence in the achievement of the anticipated backlog gross
margins.
Operating expenses
Operating expenses for the 6-month
period to 31 March 2024 were £5.4m (HY23: £5.5m). Operating
expenses are broadly in line with the 6-month period to 31 March
2023, through continued careful management of the cost base,
despite further wage cost inflation.
Adjusted EBITDA
Adjusted EBITDA is a primary
measure used across the business to provide a consistent measure of
trading performance. The adjustment to EBITDA removes certain
non-cash and exceptional items to provide a key metric to the users
of the financial information that is reflective of the performance
of the business resulting from movements in revenue, gross margin
and the cash costs of the business. The Board reviews all
exceptional items to ensure resulting Adjusted EBITDA achieves
this. For the 6-month period ended 31 March 2024 and the comparable
6-month period to 31 March 2023, the adjustment includes
depreciation, amortisation and foreign currency losses.
Improvements in EBITDA are as a
result of the improved gross margin in the period, as highlighted
above.
The below table shows the
adjustments that have been made to calculate Adjusted
EBITDA.
EBITDA Reconciliation
(£m)
|
6 Months
Mar-24
|
6 months
Mar-23
|
12 months
Sep-23
|
|
|
|
|
Reported operating
(loss)/profit
|
(0.0)
|
(1.1)
|
(7.9)
|
Amortisation of intangible
assets
|
0.1
|
0.1
|
0.1
|
Amortisation of other
intangible assets
|
0.2
|
0.3
|
0.5
|
Depreciation on tangible
assets
|
0.5
|
0.2
|
0.7
|
Depreciation on ROU
assets
|
0.2
|
0.3
|
0.5
|
EBITDA
|
1.0
|
(0.2)
|
(6.1)
|
Adjusted items:
|
|
|
|
Share Based
Payments
|
-
|
-
|
0.5
|
Impairment of
goodwill
|
-
|
-
|
4.7
|
Exceptional items -
Bonus
|
-
|
-
|
0.3
|
Foreign exchange losses
& gains
|
0.8
|
0.8
|
0.9
|
Restructuring
costs
|
-
|
-
|
0.3
|
|
|
|
|
Adjusted EBITDA
|
1.8
|
0.6
|
0.6
|
Figures for HY 24 exclude Subsea Innovation Limited as
treated as discontinued operation. Comparative information has been
adjusted to treat Subsea innovation as a discontinued
operation.
The £1.8m Adjusted EBITDA profit
for the 6 months ended 31 March 2024 was an improvement of £1.2m
when compared to the £0.6m Adjusted EBITDA profit for the 6 months
to March 2023 and is a result of the increased gross profit as
above. Both Offshore Energy and Marine Civils divisions contributed
£1.4m and £1.5m respectively to the Group's Adjusted EBITDA,
highlighting the benefits of Tekmar's balanced portfolio across
energy markets.
|
Adjusted EBITDA by 6-month
period
(Unaudited)
|
|
£m
|
|
6m
Mar-24
|
6m
Sep-23
|
6m
Mar-23
|
6m
Sep-22
|
6m
Mar-22
|
6m
Sep-21
|
6m
Mar-21
|
|
Revenue
|
|
16.2
|
19.7
|
15.9
|
17.2
|
13.0
|
17.9
|
13.9
|
|
Adjusted EBITDA
|
|
1.8
|
0.0
|
0.6
|
(0.3)
|
(1.8)
|
(1.8)
|
(1.1)
|
|
|
|
|
|
|
|
|
|
|
| |
Figures for HY 24 exclude Subsea Innovation Limited as
treated as discontinued operation. Comparative information for
Sep-23 and Mar-23 has been adjusted to treat Subsea innovation as a
discontinued operation.
Although HY24 reports a reduced
revenue of £3.5m versus the prior 6-month period, adjusted EBITDA
was £1.8m higher due to the gross margin improvements in HY24 and
noting H2 23 included two Offshore Energy backlog projects at lower
margins, as was highlighted in the Group's FY 23 results
announcement in March 2024.
Adjusted EBITDA by division
£m
|
|
|
£m
|
|
6M
Mar24
|
6M
Mar23
|
12M
Sep23
|
|
Offshore Energy
|
|
1.4
|
(0.3)
|
(1.2)
|
|
Marine Civils
|
|
1.5
|
1.5
|
3.6
|
|
Group costs
|
|
(1.1)
|
(0.6)
|
(1.8)
|
|
Total
|
|
1.8
|
0.6
|
0.6
|
|
Figures for HY 24 exclude Subsea Innovation Limited as
treated as discontinued operation. Comparative information for
Sep-23 and Mar-23 has been adjusted to treat Subsea innovation as a
discontinued operation.
Overall, the above table
highlights the positive impact on Group profitability with the
return to profitability of the Offshore Energy division. This has
contributed to the Group delivering an Adjusted EBITDA margin of
11% for the Period.
Profit
The result after tax is a loss of
£0.7m (HY23: Loss £1.8m, FY23: Loss £10.1m). The improvement versus
the 6-month comparator is due to the gross margin improvement as
set out above.
Balance Sheet
Balance Sheet
|
|
£m
|
|
Mar24
|
Mar23
|
Sep23
|
Fixed Assets
|
|
6.7
|
6.3
|
6.5
|
Intangible assets
|
|
18.9
|
23.9
|
18.9
|
Inventory
|
|
3.2
|
5.4
|
2.0
|
Trade & other
receivables
|
|
15.1
|
16.5
|
17.2
|
Assets held for sale
|
|
5.0
|
3.2
|
5.0
|
Cash
|
|
2.7
|
3.8
|
3.5
|
Current Liabilities
|
|
(13.5)
|
(18.4)
|
(15.6)
|
Liabilities held for
sale
|
|
(2.8)
|
(2.1)
|
(1.8)
|
Non-current liabilities
|
|
(1.4)
|
(1.4)
|
(1.1)
|
Equity
|
|
(33.9)
|
(37.2)
|
(34.6)
|
Fixed Assets
Fixed asset investments have
remained largely in line with depreciation levels. There were no
other major capital spends in the period.
Intangible assets
Goodwill of £17.6m (HY23 £22.2m)
includes goodwill arising on the original management buy-out of
subsidiaries since 2011. Of the balance £15.0m (HY23: £19.6m)
relates to the Offshore Energy division and £2.6m (HY23: £2.6m)
relates to the Marine Civils division. During HY24 the Group
purchased the minority interest in Ryder Geotechnical Limited for
£150,000.
In FY23 the annual impairment
review of the goodwill on the balance sheet has resulted in an
impairment charge of £4.6m which related to the offshore energy
division. As detailed in the P&L commentary of the annual
statutory accounts, this was predominantly due to a substantial
increase in the Group's weighted average cost of capital (WACC)
which has increased from 13.5% in FY22 to 15.5% in FY23 due to
changes in economic conditions and especially increases in interest
rates. No further impairment is considered necessary in
HY24.
Inventory
Inventory on the balance sheet is
£3.2m and has reduced by £2.2m to a more normalised level having
been higher at HY23 due to an increase in work-in-progress in
Pipeshield relating to the mobilisation of two large Middle East
contracts awarded in HY23.
Trade and other receivables
Trade and other receivables are
£15.1m after adjusting out for the Subsea Innovation disposal
(HY23: £15.6m).
Within the above, trade
receivables balance was £10.0m for the 6-months to 31 March 2024
(HY23 £10.8m). Collections are generally well managed, however,
delays in payments from the Middle East and China continue to
persist.
Contract assets has decreased to
£2.9m (HY23: £4.5m). The reduction is due to operating contracts in
HY23 with more favourable invoicing milestones than in previous
periods.
Cash
Cash balance at the period end to
31 March 2024 was £2.7m offset by bank borrowings of £6.3m
resulting in net debt of £3.6m.
Cash used in operations in the
first half of the year was £1.0m, much reduced from the £3.8m in
HY23. We continue to manage our debtor days carefully and have
payment plans in place for the more aged debt.
Current liabilities
Current liabilities, excluding
liabilities held for sale, reduced to £13.5m (HY23: £18.4m), with
£4.3m of this reduction relating to reduced deferred revenue due to
timing of customer milestones on projects.
Within the £13.5m in HY24 is £3.0m
of CBILs loan consistent with HY23 reporting. The trade loan
borrowings also included in current liabilities was £3.3m as at 31
March 2024 compared to £4.0m at 31 March 2023. The trade loan
remains a flexible facility of £4.0m available for ongoing working
capital.
The annual renewal of the banking
facilities is currently underway with our relationship
bank.
Other Non-current liabilities
Other Non-current liabilities of
£1.4m (HY23: £1.4m) relate to lease liabilities in relation to
IFRS16 and deferred tax liability.
Leanne Wilkinson
CFO
15
May 2024
Consolidated statement of comprehensive
income
for
the 6M period ended 31 March 2024
|
Note
|
6M
ended
31
Mar
2024
Unaudited
|
6M
ended
31
Mar
2023
Unaudited
|
12M
ended
30 Sep
2023
Unaudited
|
|
|
£000
|
£000
|
£000
|
|
|
|
|
|
Revenue
|
3
|
16,211
|
15,910
|
35,633
|
Cost of sales
|
|
(10,819)
|
(11,530)
|
(27,319)
|
Gross profit
|
|
5,392
|
4,380
|
8,314
|
|
|
|
|
|
Administrative expenses
|
|
(5,413)
|
(5,498)
|
(16,258)
|
Other operating income
|
|
7
|
17
|
18
|
Group operating (loss)
|
|
(14)
|
(1,101)
|
(7,926)
|
|
|
|
|
|
Analysed as:
|
|
|
|
|
Adjusted
EBITDA[1]
|
|
1,776
|
607
|
569
|
Depreciation
|
|
(653)
|
(603)
|
(1,172)
|
Amortisation
|
|
(336)
|
(322)
|
(586)
|
Exceptional share based payments
charges
|
|
-
|
-
|
(500)
|
Impairment of goodwill
|
|
-
|
-
|
(4,745)
|
Exceptional bonus
payments
|
|
-
|
-
|
(296)
|
Foreign exchange
(losses)/gains
|
|
(801)
|
(783)
|
(928)
|
Restructuring costs
|
|
-
|
-
|
(268)
|
Group operating (Loss)
|
|
(14)
|
(1,101)
|
(7,926)
|
|
|
|
|
|
Finance costs
|
|
(351)
|
(92)
|
(627)
|
Finance income
|
|
7
|
2
|
4
|
Net finance costs
|
|
(344)
|
(90)
|
(623)
|
|
|
|
|
|
(Loss) before taxation
|
|
(358)
|
(1,191)
|
(8,549)
|
Taxation
|
|
-
|
11
|
(201)
|
(Loss) for the period from continuing
operations
|
|
(358)
|
(1,180)
|
(8,750)
|
|
|
|
|
|
Loss for the year from
discontinued operations (including held for sale)
|
10
|
(386)
|
(572)
|
(1,374)
|
Loss for the year
|
|
(744)
|
(1,752)
|
(10,124)
|
|
|
|
|
|
Equity-settle share-based
payments
|
|
-
|
(5)
|
548
|
Revaluation of property
|
|
71
|
-
|
-
|
Retranslation of overseas
subsidiaries
|
|
(99)
|
(218)
|
(281)
|
|
|
|
|
|
Total comprehensive income for the period
|
|
(772)
|
(1,975)
|
(9,857)
|
|
|
|
|
|
|
|
|
|
|
Loss attributable to owners of the
parent
|
|
(744)
|
(1,752)
|
(10,124)
|
Total Comprehensive income
attributable to owners of the parent
|
|
(772)
|
(1,975)
|
(9,857)
|
|
|
|
|
|
(Loss) per share (pence)
|
|
|
|
|
Basic
|
4
|
(0.55)
|
(2.87)
|
(10.69)
|
Diluted
|
4
|
(0.55)
|
(2.87)
|
(10.69)
|
|
|
|
|
|
Basic loss per share (pence)
|
|
|
|
|
From continuing
operations
|
4
|
(0.26)
|
(1.94)
|
(9.24)
|
From discontinued
operations
|
4
|
(0.28)
|
(0.94)
|
(1.45)
|
1: Adjusted EBITDA, which is defined
as profit before net finance costs, tax, depreciation,
amortisation, share based payments charge in relation to one-off
awards, material items of a one-off nature and significant items
which allow comparable business performance is a non-GAAP metric
used by management and is not an IFRS disclosure.
Consolidated balance sheet
as at 31 March 2024
|
Note
|
31
Mar
2024
Unaudited
|
31
Mar
2023
Unaudited
|
30 Sep
2023
Unaudited
|
|
|
£000
|
£000
|
£000
|
|
|
|
|
|
Non-current assets
|
|
|
|
|
Property, plant and
equipment
|
|
6,670
|
6,263
|
6,510
|
Goodwill and other
intangibles
|
5
|
18,923
|
23,932
|
18,946
|
Total non-current
assets
|
|
25,593
|
30,195
|
25,456
|
|
|
|
|
|
Current assets
|
|
|
|
|
Inventory
|
|
3,202
|
5,374
|
2,042
|
Trade and other
receivables
|
6
|
15,134
|
16,552
|
17,182
|
Cash and cash
equivalents
|
|
2,662
|
3,829
|
5,028
|
|
|
20,998
|
25,755
|
24,252
|
Assets held for sale
|
10
|
4,990
|
3,176
|
3,547
|
Total current assets
|
|
25,988
|
28,931
|
27,799
|
|
|
|
|
|
Total assets
|
|
51,581
|
59,126
|
53,255
|
|
|
|
|
|
Equity and liabilities
|
|
|
|
|
Share capital
|
|
1,360
|
609
|
1,360
|
Share premium
|
|
72,202
|
67,653
|
72,202
|
Merger relief reserve
|
|
1,738
|
1,738
|
1,738
|
Merger reserve
|
|
(12,685)
|
(12,685)
|
(12,685)
|
Foreign currency translation
reserve
|
|
(207)
|
(45)
|
(108)
|
Retained losses
|
|
(28,527)
|
(20,035)
|
(27,854)
|
Total equity
|
|
33,881
|
37,235
|
34,653
|
|
|
|
|
|
Non-current liabilities
|
|
|
|
|
Other interest-bearing loans and
borrowings
|
7
|
719
|
911
|
795
|
Trade and other
payables
|
|
-
|
-
|
-
|
Deferred tax liability
|
|
686
|
482
|
300
|
Total non-current
liabilities
|
|
1,405
|
1,393
|
1,095
|
|
|
|
|
|
Current liabilities
|
|
|
|
|
Other interest-bearing loans and
borrowings
|
7
|
6,616
|
7,246
|
6,995
|
Trade and other
payables
|
|
6,661
|
11,084
|
8,191
|
Corporation tax payable
|
|
29
|
28
|
28
|
Provisions
|
8
|
210
|
-
|
356
|
|
|
13,516
|
18,358
|
15,570
|
Liabilities held for
sale
|
10
|
2,779
|
2,140
|
1,937
|
Total current
liabilities
|
|
16,295
|
20,498
|
17,507
|
|
|
|
|
|
Total liabilities
|
|
17,700
|
21,891
|
18,602
|
|
|
|
|
|
Total equity and liabilities
|
|
51,581
|
59,126
|
53,255
|
Consolidated statement of changes in equity
for the 6M period ended 31 March 2024
|
Share
capital
|
Share
premium
|
Merger
relief
reserve
|
Merger
reserve
|
Foreign
currency translation reserve
|
Retained
earnings
|
Total
equity attributable to owners of the parent
|
Total
equity
|
|
£000
|
£000
|
£000
|
£000
|
£000
|
£000
|
£000
|
£000
|
Balance at 1 October 2022
|
609
|
67,653
|
1,738
|
(12,685)
|
173
|
(18,278)
|
39,210
|
39,210
|
(Loss) for the Period
|
-
|
-
|
-
|
-
|
-
|
(1,752)
|
(1,752)
|
(1,752)
|
Share based payments
|
-
|
-
|
-
|
-
|
-
|
(5)
|
(5)
|
(5)
|
Exchange difference on translation
of overseas subsidiary
|
-
|
-
|
-
|
-
|
(218)
|
-
|
(218)
|
(218)
|
Total comprehensive income for the
year
|
-
|
-
|
-
|
-
|
(218)
|
(1,757)
|
(1,975)
|
(1,975)
|
Balance at 31 March 2023
|
609
|
67,653
|
1,738
|
(12,685)
|
(45)
|
(20,035)
|
37,235
|
37,235
|
(Loss) for the Period
|
-
|
-
|
-
|
-
|
-
|
(8,372)
|
(8,372)
|
(8,372)
|
Share based payments
|
-
|
-
|
-
|
-
|
-
|
553
|
553
|
553
|
Exchange difference on translation
of overseas subsidiary
|
-
|
-
|
-
|
-
|
(63)
|
-
|
(63)
|
(63)
|
Total comprehensive income for the
year
|
-
|
-
|
-
|
-
|
(63)
|
(7,819)
|
(7882)
|
(7882)
|
Issue of shares
|
751
|
4,549
|
-
|
-
|
-
|
-
|
5,300
|
5,300
|
Total transactions with owners, recognised
directly in equity
|
751
|
4,549
|
-
|
-
|
-
|
-
|
5,300
|
5,300
|
Balance at 30 September 2023
|
1,360
|
72,202
|
1,738
|
(12,685)
|
(108)
|
(27,854)
|
34,653
|
34,653
|
(Loss) for the Period
|
-
|
-
|
-
|
-
|
-
|
(744)
|
(744)
|
(744)
|
Revaluation of property
|
-
|
-
|
-
|
-
|
-
|
71
|
71
|
71
|
Exchange difference on translation
of overseas subsidiary
|
-
|
-
|
-
|
-
|
(99)
|
-
|
(99)
|
(99)
|
Total comprehensive income for the
year
|
-
|
-
|
-
|
-
|
(99)
|
(673)
|
(772)
|
(772)
|
Balance at 31 March 2024
|
1,360
|
72,202
|
1,738
|
(12,685)
|
(207)
|
(28,527)
|
33,881
|
33,881
|
Consolidated cash flow statement
for the 6M period ended 31 March 2023
|
|
6M
ended
31
March 2024
Unaudited
|
6M
ended
31
March 2023
Unaudited
|
12M
ended
30 Sep
2023
Unaudited
|
|
|
£000
|
£000
|
£000
|
Cash flows from operating activities
|
|
|
|
|
Loss before taxation
|
|
(744)
|
(1,763)
|
(9,923)
|
Adjustments for:
|
|
|
|
|
Depreciation
|
|
653
|
603
|
1,172
|
Amortisation of intangible
assets
|
|
336
|
322
|
586
|
Profit on disposal of fixed
assets
|
|
-
|
(99)
|
-
|
Share based payments
charge
|
|
-
|
-
|
537
|
Impairment of goodwill
|
|
-
|
-
|
4,745
|
Finance costs
|
|
351
|
99
|
552
|
Finance income
|
|
(7)
|
(2)
|
(4)
|
|
|
589
|
(840)
|
(2,335)
|
|
|
|
|
|
Changes in working
capital:
|
|
|
|
|
(Increase) / decrease in
inventories
|
|
(1,075)
|
(945)
|
2,496
|
Decrease / (increase) in trade and
other receivables
|
|
277
|
(5,322)
|
(6,028)
|
(Decrease) / increase in trade and
other payables
|
|
(313)
|
3,316
|
(272)
|
(Decrease) / increase in
provisions
|
|
(255)
|
-
|
465
|
Cash (used) from operations
|
|
(777)
|
(3,791)
|
(5,674)
|
|
|
|
|
|
Tax (paid) / recovered
|
|
(208)
|
11
|
-
|
Net cash (outflow) from operating
activities
|
|
(985)
|
(3,780)
|
(5,674)
|
|
|
|
|
|
Cash flows from investing activities
|
|
|
|
|
Purchase of property, plant and
equipment
|
|
(426)
|
(331)
|
(1,012)
|
Purchase of intangible
assets
|
|
(62)
|
(294)
|
(310)
|
Proceeds from sale of property,
plant and equipment
|
|
-
|
99
|
29
|
Acquisition of subsidiary minority
interest
|
|
(150)
|
-
|
-
|
Interest received
|
|
7
|
2
|
4
|
Net cash (outflow) from investing
activities
|
|
(631)
|
(524)
|
(1,289)
|
|
|
|
|
|
Cash flows from financing activities
|
|
|
|
|
Facility drawdown
|
|
6,016
|
5,500
|
11,526
|
Facility repayment
|
|
(6,278)
|
(5,490)
|
(11,941)
|
Repayment of borrowings under
lease obligations
|
|
(265)
|
(195)
|
(414)
|
Shares issued
|
|
-
|
-
|
5,300
|
Interest paid
|
|
(315)
|
(93)
|
(505)
|
Net cash inflow / (outflow) from financing
activities
|
|
(842)
|
(278)
|
3,966
|
|
|
|
|
|
Net (decrease) in cash and cash
equivalents
|
|
(2,458)
|
(4,582)
|
(2,997)
|
Cash and cash equivalents at
beginning of year
Effect of foreign exchange rate
changes
|
|
5,219
(99)
|
8,496
(218)
|
8,496
(280)
|
Cash and cash equivalents at end of year
|
|
2,662
|
3,696
|
5,219
|
Notes
1. GENERAL INFORMATION
Tekmar Group plc (the "Company")
is a public limited company incorporated and domiciled in England
and Wales. The registered office of the Company is Innovation
House, Centurion Way, Darlington, DL3 0UP. The registered company
number is 11383143.
The principal activity of the
Company and its subsidiaries (together the "Group") is that of
design, manufacture and supply of subsea stability and protection
technology, including associated subsea engineering services,
operating across the global offshore energy markets, predominantly
Offshore Wind.
Forward looking statements
Certain statements in this interim
report are forward looking. The terms "expect", "anticipate",
"should be", "will be" and similar expressions identify
forward-looking statements. Although the Board of Directors
believes that the expectations reflected in these forward-looking
statements are reasonable, such statements are subject to a number
of risks and uncertainties and events could differ materially from
those expressed or implied by these forward-looking
statements.
2. BASIS OF PREPARATION AND
ACCOUNTING POLICIES
The Group's principal accounting
policies have been applied consistently to all of the periods
presented, with the exception of the new standards applied for the
first time as set out in paragraph (c) below where
applicable.
(a) Basis of preparation
The unaudited consolidated interim
financial information has been prepared under the historical cost
convention and in accordance with the recognition and measurement
requirements of UK-adopted international accounting standards
("IFRS"). The condensed consolidated interim financial information
does not constitute financial statements within the meaning of
Section 434 of the Companies Act 2006 and does not include all of
the information and disclosures required for full annual financial
statements. It should therefore be read in conjunction with the
Group's Annual Report for the period ended 30 September 2023, which
has been prepared in accordance with IFRSs and is available on the
Group's investor website.
As permitted, this interim report
has been prepared in accordance with the AIM rules and not in
accordance with IAS 34 "Interim financial reporting".
The accounting policies used in
the financial information are consistent with those used in the
Group's consolidated financial statements as at and for the period
ended 30 September 2023, as detailed on pages 88 to 93 of the
Group's Annual Report and Financial Statements for the period ended
30 September 2023, a copy of which is available on the Group's
website, www.tekmargroup.com.
The comparative financial
information contained in the condensed consolidated financial
information in respect of the period ended 30 September 2023 has
been extracted from the 2023 Financial Statements, this information
has been restated to show the impact of discontinued operations.
Those financial statements have been reported on by Grant Thornton
UK LLP and delivered to the Registrar of Companies. The report was
unqualified and did not contain a statement under Section 498(2) or
498(3) of the Companies Act 2006. The report did include a
reference to a material uncertainty in relation to going concern
which the auditor drew attention to by way of emphasis without
qualifying their report.
Selected explanatory notes are
included to explain events and transactions that are significant to
an understanding of the changes in financial position and
performance of the Group since the last annual consolidated
financial statements as at the period ended 30 September
2023.
The preparation of the condensed
consolidated interim financial information requires management to
make judgements, estimates and assumptions that affect the
application of accounting policies and the reported amounts of
assets and liabilities, income and expenses. Estimates and
judgements are continually evaluated and are based on historical
experience and other factors, such as expectations of future events
and are believed to be reasonable under the circumstances. Actual
results may differ from these estimates. In preparing the condensed
consolidated interim financial information, the significant
judgements made by management in applying the Group's accounting
policies and the key sources of estimation uncertainty were the
same as those applied to the audited consolidated financial
statements for the period ended 30 September 2023.
(b) Going concern
The Group meets its day-to-day
working capital requirements through its available banking
facilities which includes a CBILs loan of £3.0m currently available
to 31 October 2024 and a trade loan facility of up to £4.0m that
can be drawn against supplier payments, currently available to 31
July 2024. The latter is provided with support from UKEF due
to the nature of the business activities both in renewable energies
and in driving growth through export lead opportunities. The Group
held £5.2m of cash at 30 September 2023 including draw down of the
£3.0m CBILS loan and a further £3.6m of the trade loan facility.
There are no financial covenants that the Group must adhere to in
either of the bank facilities.
The Directors have prepared cash
flow forecasts to 30 September 2025. The base case forecasts
include assumptions for annual revenue growth supported by current
order book, known tender pipeline, and by publicly available market
predictions for the sector. The forecasts also assume a
retention of the costs base of the business with increases of 5% on
salaries and a cautious recovery of gross margin on
contracts. These forecasts show that the Group is expected to
have a sufficient level of financial resources available to
continue to operate on the assumption that the two facilities
described are renewed. Within the base case model management have
not modelled anything in relation to the matter set out in note 9
Contingent Liabilities, as management have assessed there to be no
present obligation.
The Directors have sensitised
their base case forecasts for a severe but plausible downside
impact. This sensitivity includes reducing revenue by 15% for
the period to 30 September 2025, including the loss or delay of a
certain level of contracts in the pipeline that form the base case
forecast, and a 10% increase in costs across the Group as a whole
for the same period. In addition, the delays of specific cash
receipts have been modelled. The base case and sensitised forecast
also includes discretionary spend on capital outlay. The Directors
note there is further discretionary spend within their control
which could be cut, if necessary, although this has not been
modelled in the sensitised case given the headroom already
available. These sensitivities have been modelled to give the
Directors comfort in adopting the going concern basis of
preparation for this condensed consolidated interim financial
information. Further to this, a 'reverse stress test' was
performed to determine at what point there would be a break in the
model, the reverse stress test included reducing order intake by
22.5% and increasing overheads by 15% against the base case. In
addition, the delays of specific cash receipts have been
modelled. The inputs applied to the reverse stress are not
considered plausible.
Facilities - Within the base case,
severe but plausible case and reverse stress test, management have
assumed the renewal of both the CBILS loan and trade loan facility
in October 2024 and July 2024 respectively. In the unlikely case
that the facilities are not renewed, the Group would aim to take a
number of co-ordinated actions designed to avoid the cash deficit
that would arise.
The Directors are confident, based
upon the communications with the team at Barclays, the historical
strong relationship and recent bank facility renewal in November
2023, that these facilities will be renewed and will be available
for the foreseeable future. However, as the renewal of the two
facilities in October 2024 and July 2024 are yet to be formally
agreed and the Group's forecasts rely on their renewal, these
events or conditions indicate that a material uncertainty exists
that may cast significant doubt on the Group's and parent company's
ability to continue as a going concern.
The Directors are satisfied that,
taking account of reasonably foreseeable changes in trading
performance and on the basis that the bank facilities are renewed,
these forecasts and projections show that the Group is expected to
have a sufficient level of financial resources available through
current facilities to continue in operational existence and meet
its liabilities as they fall due for at least the next 12 months
from the date of approval of the interim financial information and
for this reason they continue to adopt the going concern basis in
preparing the interim financial information.
(c) New standards, amendments and
interpretations
There have been no new accounting
standards or changes to existing accounting standards applied for
the first time from 1 October 2023 which have a material effect on
these interim results. The Group has chosen not to early adopt any
new standards or amendments to existing standards or
interpretations.
(d) Basis of consolidation
Subsidiaries are all entities over
which the Group has control. The Group controls an entity when the
Group is exposed to, or has rights to, variable returns from its
involvement with the entity and has the ability to affect those
returns through its power over the entity. Subsidiaries are fully
consolidated from the date on which control is transferred to the
Group and are deconsolidated from the date control ceases.
Inter-company transactions, balances and unrealised gains and
losses on transactions between group companies are
eliminated.
(e) EBITDA and Adjusted EBITDA
Earnings before Interest,
Taxation, Depreciation and Amortisation ("EBITDA") and Adjusted
EBITDA are non-GAAP measures used by management to assess the
operating performance of the Group. EBITDA is defined as profit
before net finance costs, tax, depreciation and
amortisation. Material items of a one-off nature or of such
significance they are considered relevant to the user of the
financial statements and share based payment charge in relation to
one-off awards are excluded.
The Directors primarily use the
Adjusted EBITDA measure when making decisions about the Group's
activities. As these are non-GAAP measures, EBITDA and Adjusted
EBITDA measures used by other entities may not be calculated in the
same way and hence are not directly comparable.
3. REVENUE AND
SEGMENTAL
REPORTING
Management has determined the
operating segments based upon the information provided to the
executive Directors which is considered the chief operating
decision maker. The Group is managed and reports internally by
business division and markets.
Major customers
In the period ended 31 March 2024
there was one major customer within the Marine Civils segment, and
one major customer in the Offshore Energy segment that individually
accounted for at least 10% of total revenues (2023 6M: two
customers). The revenues relating to these in the period to 31
March 2024 were £7,017,000 (2023 6M: £7,253,000). Included within
this is revenue from multiple projects with different entities
within each customer.
Analysis of revenue by region
|
6M
ending
31 Mar
2024
Unaudited
|
6M
ending
31 Mar
2023
Unaudited
|
12M
ending
30 Sep
2023
Unaudited
|
|
£000
|
£000
|
£000
|
UK & Ireland
|
2,018
|
4,382
|
7,683
|
Germany
|
82
|
721
|
1,133
|
Italy
|
101
|
-
|
-
|
Belgium
|
130
|
-
|
-
|
Netherlands
|
-
|
57
|
-
|
Norway
|
-
|
25
|
-
|
Turkey
|
-
|
-
|
983
|
Other Europe
|
161
|
326
|
1,152
|
China
|
21
|
1,491
|
1,676
|
USA & Canada
|
203
|
1,129
|
3,006
|
Japan
|
43
|
1,034
|
1,083
|
South Korea
|
539
|
-
|
-
|
Philippines
|
-
|
134
|
1,157
|
Qatar
|
1,923
|
4,108
|
8,036
|
Taiwan
|
4,806
|
-
|
-
|
Egypt
|
5
|
-
|
-
|
UAE
|
334
|
-
|
-
|
KSA
|
4,892
|
1,665
|
6,888
|
Other Middle East
|
-
|
401
|
904
|
Trinidad & Tobago
|
|
274
|
-
|
Africa
|
658
|
-
|
-
|
Rest of the World
|
295
|
163
|
1,932
|
|
16,211
|
15,910
|
35,633
|
Analysis of revenue by market
|
Mar-24
Unaudited
|
Mar-23
Unaudited
|
Sep-23
Unaudited
|
|
£000
|
£000
|
£000
|
Offshore Wind
|
11,293
|
7,812
|
17,659
|
Other offshore
|
4,918
|
8,098
|
17,974
|
|
16,211
|
15,910
|
35,633
|
Analysis of revenue by product category
|
Mar-24
Unaudited
|
Mar-23
Unaudited
|
Sep-23
Unaudited
|
|
£000
|
£000
|
£000
|
Offshore Energy protection systems
& equipment
|
9,284
|
7,965
|
15,844
|
Marine Civils
|
6,375
|
7,064
|
18,320
|
Engineering consultancy
services
|
552
|
881
|
1,469
|
|
16,211
|
15,910
|
35,633
|
Profit and cash are measured by
division and the Board reviews this on the following
basis.
|
Offshore
Energy
Mar-24
Unaudited
|
Marine
Civils
Mar-24
Unaudited
|
Group/
Eliminations
Unaudited
|
Total
Mar-24
Unaudited
|
|
£000
|
£000
|
£000
|
£000
|
|
|
|
|
|
Revenue
|
9,836
|
6,375
|
-
|
16,211
|
Gross profit
|
2,889
|
2,503
|
-
|
5,392
|
% Gross profit
|
29%
|
39%
|
-
|
33%
|
Operating (loss)/ profit
|
479
|
628
|
(1,121)
|
(14)
|
|
|
|
|
|
Analysed as:
Adjusted EBITDA
|
1,358
|
1,467
|
(1,049)
|
1,776
|
Depreciation
|
(469)
|
(178)
|
(6)
|
(653)
|
Amortisation
|
(272)
|
-
|
(64)
|
(336)
|
Foreign exchange losses
|
(138)
|
(661)
|
(2)
|
(801)
|
Operating (loss)/ profit
|
479
|
628
|
(1,121)
|
(14)
|
|
|
|
|
|
Interest & similar
expenses
|
(25)
|
-
|
(319)
|
(344)
|
Tax
|
-
|
-
|
-
|
-
|
(Loss) / profit after tax on
continuing operations
|
454
|
628
|
(1,440)
|
(358)
|
|
Offshore
Energy
Mar-24
Unaudited
|
Marine
Civils
Mar-24
Unaudited
|
Group/
Eliminations
Unaudited
|
Total
Mar-24
Unaudited
|
|
£000
|
£000
|
£000
|
£000
|
|
|
|
|
|
Other information
|
|
|
|
Reportable segment assets
|
16,090
|
11,378
|
24,113
|
51,581
|
Reportable segment
liabilities
|
(6,498)
|
(3,524)
|
(7,678)
|
(17,700)
|
|
|
|
|
|
|
Offshore
Energy
Mar-23
Unaudited
|
Marine
Civils
Mar-23
Unaudited
|
Group/
Eliminations
Unaudited
|
Total
Mar-23
Unaudited
|
|
£000
|
£000
|
£000
|
£000
|
|
|
|
|
|
Revenue
|
8,846
|
7,064
|
-
|
15,910
|
Gross profit
|
2,021
|
2,359
|
-
|
4,380
|
% Gross profit
|
23%
|
33%
|
-
|
28%
|
Operating (loss)/ profit
|
(1,381)
|
982
|
(702)
|
(1,101)
|
|
|
|
|
|
Analysed as:
Adjusted EBITDA
|
(318)
|
1,517
|
(592)
|
607
|
Depreciation
|
(454)
|
(144)
|
(5)
|
(603)
|
Amortisation
|
(218)
|
-
|
(104)
|
(322)
|
Foreign exchange losses
|
(391)
|
(391)
|
(1)
|
(783)
|
Operating (loss)/ profit
|
(1,381)
|
982
|
(702)
|
(1,101)
|
|
|
|
|
|
Interest & similar
expenses
|
96
|
195
|
(381)
|
(90)
|
Tax
|
1
|
-
|
10
|
11
|
(Loss) / profit after tax on
continuing operations
|
(1,284)
|
1,177
|
(1,073)
|
(1,180)
|
|
|
|
|
|
|
Offshore
Energy
Mar-23
Unaudited
|
Marine
Civils
Mar-23
Unaudited
|
Group/
Eliminations
Unaudited
|
Total
Mar-23
Unaudited
|
|
£000
|
£000
|
£000
|
£000
|
|
|
|
|
|
Other information
|
|
|
|
Reportable segment assets
|
18,493
|
13,198
|
27,435
|
59,126
|
Reportable segment
liabilities
|
(6,923)
|
(6,885)
|
(8,083)
|
(21,891)
|
|
Offshore
Energy
Sep-23
Unaudited
|
Marine
Civils
Sep-23
Unaudited
|
Group/
Eliminations
Unaudited
|
Total
Sep-23
Unaudited
|
|
£000
|
£000
|
£000
|
£000
|
|
|
|
|
|
Revenue
|
17,313
|
18,320
|
-
|
35,633
|
Gross profit
|
2,988
|
5,326
|
-
|
8,314
|
% Gross profit
|
17%
|
29%
|
-
|
23%
|
Operating profit/(loss)
|
(8,191)
|
2,798
|
(2,533)
|
(7,926)
|
|
|
|
|
|
Analysed as:
Adjusted EBITDA
|
(1,195)
|
3,544
|
(1,780)
|
569
|
Depreciation
|
(862)
|
(298)
|
(12)
|
(1,172)
|
Amortisation
|
(418)
|
-
|
(168)
|
(586)
|
Share based payments
|
(55)
|
(82)
|
(363)
|
(500)
|
Impairment of goodwill
|
(4,745)
|
-
|
-
|
(4,745)
|
Exceptional bonus
payments
|
(180)
|
(34)
|
(82)
|
(296)
|
Foreign exchange losses
|
(675)
|
(255)
|
2
|
(928)
|
Restructuring costs
|
(61)
|
(77)
|
(130)
|
(268)
|
Operating profit/(loss)
|
(8,191)
|
2,798
|
(2,533)
|
(7,926)
|
|
|
|
|
|
Interest & similar
expenses
|
(44)
|
(10)
|
(569)
|
(623)
|
Tax
|
521
|
(789)
|
67
|
(201)
|
(Loss) / profit after tax on
continuing operations
|
(7,714)
|
1,999
|
(3,035)
|
(8,750)
|
|
|
|
|
|
|
Offshore
Energy
Sep-23
Audited
|
Marine
Civils
Sep-23
Audited
|
Group/
Eliminations
Audited
|
Total
Sep-23
Audited
|
|
£000
|
£000
|
£000
|
£000
|
|
|
|
|
|
Other information
|
|
|
|
Reportable segment assets
|
17,391
|
10,169
|
25,695
|
53,255
|
Reportable segment
liabilities
|
(8,175)
|
(3,208)
|
(7,218)
|
(18,601)
|
4.
EARNINGS PER SHARE
Basic earnings per share are
calculated by dividing the earnings attributable to equity
shareholders by the weighted average number of ordinary shares in
issue. Diluted earnings per share are calculated by including the
impact of all conditional share awards.
The calculation of basic and
diluted profit per share is based on the following data:
|
6M
ending
31 March
2024
Unaudited
|
6M
ending
31 March
2023
Unaudited
|
12M
ending
30 Sep
2023
Unaudited
|
Earnings (£'000)
|
|
|
|
Earnings for the purposes of basic
and diluted earnings per
share being profit/(loss) for the
year attributable to equity shareholders
|
(744)
|
(1,752)
|
(10,124)
|
Number of shares
|
|
|
|
Weighted average number of shares
for the purposes of basic earnings per share
|
136,072,626
|
60,960,484
|
94,694,962
|
Weighted average dilutive effect
of conditional share awards
|
7,720,039
|
562,832
|
4,346,203
|
Weighted average number of shares
for the purposes of diluted earnings per share
|
143,792,665
|
61,523,316
|
99,041,165
|
Profit per ordinary share (pence)
|
|
|
|
Basic profit per ordinary
share
|
(0.55)
|
(2.87)
|
(10.69)
|
Diluted profit per ordinary
share
|
(0.55)
|
(2.87)
|
(10.69)
|
|
|
|
|
Basic profit per ordinary share (pence)
|
|
|
|
From continuing
operations
|
(0.26)
|
(1.94)
|
(9.24)
|
From discontinuing
operations
|
(0.28)
|
(0.94)
|
(1.45)
|
Adjusted earnings per ordinary share
(pence)*
|
(0.06)
|
(1.74)
|
(4.49)
|
The calculation of adjusted
earnings per share is based on the following data:
|
|
|
Mar-24
Unaudited
|
Mar-23
Unaudited
|
Sep-23
Unaudited
|
|
£000
|
£000
|
£000
|
(Loss) for the period attributable
to equity shareholders
|
(744)
|
(1,752)
|
(10,124)
|
Add back:
|
|
|
|
Impairment of goodwill
|
-
|
-
|
4,745
|
Amortisation on acquired
intangible assets
|
64
|
104
|
168
|
Foreign exchange losses
|
801
|
784
|
926
|
Share based payment on IPO and SIP
at Admission
|
-
|
-
|
508
|
Exceptional bonus costs
|
-
|
-
|
430
|
Tax effect on above
|
(200)
|
(196)
|
22
|
Adjusted earnings
|
(79)
|
(1,060)
|
(3,325)
|
|
|
|
|
*Adjusted earnings per share is
calculated as profit for the period adjusted for amortisation as a
result of business combinations, exceptional items and the tax
effect of these at the effective rate of corporation tax, divided
by the closing number of shares in issue at the Balance Sheet date.
This is the measure most commonly used by analysts in evaluating
the business' performance and therefore the Directors have
concluded this is a meaningful adjusted EPS measure to
present.
5.
GOODWILL AND OTHER INTANGIBLES
|
Goodwill
|
Software
|
Product
development
|
Trade
name
|
Customer
relationships
|
Total
|
|
|
|
|
|
|
|
|
£000
|
£000
|
£000
|
£000
|
£000
|
£000
|
COST
|
|
|
|
|
|
|
As at 1 October 2022
|
26,292
|
294
|
3,503
|
1,289
|
1,870
|
33,248
|
Additions
|
-
|
138
|
286
|
-
|
-
|
424
|
Assets held for sale
|
-
|
(138)
|
(880)
|
-
|
-
|
(1,018)
|
As at 31 March 2023
|
26,292
|
294
|
2,909
|
1,289
|
1,870
|
32,654
|
Additions
|
-
|
-
|
24
|
-
|
-
|
24
|
Reclassify as tangible fixed
assets
|
-
|
(138)
|
-
|
-
|
-
|
(138)
|
Assets held for sale
|
-
|
138
|
-
|
-
|
-
|
138
|
As at 30 September 2023
|
26,292
|
294
|
2,933
|
1,289
|
1,870
|
32,678
|
Additions
|
150
|
-
|
41
|
-
|
-
|
191
|
As at 31 March 2024
|
26,442
|
294
|
2,974
|
1,289
|
1,870
|
32,869
|
|
|
|
|
|
|
|
AMORTISATION AND IMPAIRMENT
|
As at 1 October 2022
|
4,109
|
155
|
2,134
|
455
|
1,831
|
8,684
|
Charge for the period
|
-
|
101
|
220
|
64
|
39
|
424
|
Assets held for sale
|
-
|
(27)
|
(359)
|
-
|
-
|
(386)
|
As at 31 March 2023
|
4,109
|
229
|
1,995
|
519
|
1,870
|
8,722
|
Amortisation charge for the
period
|
-
|
71
|
238
|
64
|
-
|
373
|
Impairment charge
|
4,745
|
-
|
-
|
-
|
-
|
4,745
|
Reclassify as tangible fixed
assets
|
-
|
(33)
|
-
|
-
|
-
|
(33)
|
Assets held for sale
|
-
|
27
|
(102)
|
-
|
-
|
(75)
|
As at 30 September 2023
|
8,854
|
294
|
2,131
|
583
|
1,870
|
13,732
|
Amortisation charge for the
period
|
-
|
-
|
248
|
64
|
-
|
312
|
Assets held for sale
|
-
|
-
|
(98)
|
-
|
-
|
(98)
|
As at 31 March 2024
|
8,854
|
294
|
2,281
|
647
|
1,870
|
13,946
|
|
|
|
|
|
|
|
NET BOOK VALUE
|
|
|
|
|
|
|
As at 30 September 2022
|
22,183
|
139
|
1,369
|
834
|
39
|
24,564
|
As at 31 March 2023
|
22,183
|
65
|
914
|
770
|
-
|
23,932
|
As at 30 September 2023
|
17,438
|
-
|
802
|
706
|
-
|
18,946
|
As at 31 March 2024
|
17,588
|
-
|
693
|
642
|
-
|
18,923
|
The remaining amortisation periods
for software and product development are 6 months to 48 months
(2023: 6 months to 48 months).
Goodwill has been tested for
impairment. The method, key assumptions and results of the
impairment review are detailed below:
Goodwill is attributed to the CGU
being the division in which the goodwill has arisen. The Group has
2 CGUs and the goodwill related to each CGU as disclosed
below.
Goodwill
|
Mar-24
£000
|
Mar-23
£000
|
Offshore Energy Division
|
14,998
|
19,593
|
Marine Civils Division
|
2,590
|
2,590
|
Goodwill is allocated to two CGUs
being Offshore Energy and Marine Civils. Goodwill has been tested
for impairment by assessing the recoverable amount of each cash
generating unit. The recoverable amount is the higher of the fair
value less costs to sell (FVLCD) and the value in use. The value in
use has been calculated using budgeted cash flow projections for
the next 4 years. A terminal value based on a perpetuity
calculation using a 2% real growth rate was then added. The next 4
years forecasts have been compiled at individual CGU level with the
forecasts in the first 2 years modelled around the known contracts
which the entities have already secured or are in an advanced stage
of securing. A targeted revenue stream based on historic revenue
run rates has then been incorporated into the cashflows to model
contracts that are as yet unidentified that are likely be won and
completed in the year. The forecasts for year 3 and year 4 are
based on assumed growth rates for each individual entity, the total
growth rate for the Group (CAGR 13.5%) are in line with expected
market rate. The value in use calculation models an increase in
revenue for the offshore energy division of 16% across year 3 and
year 4 and then 2% into perpetuity. The growth rates for year 3 and
4 are comparable to the expected market CAGR. The Group has used
the fair value less costs to sell as the estimate of recoverable
amount for one subsidiary of the offshore energy division, as the
FVLCD was in excess of the value in use.
The cashflow forecasts assume
growth in revenue and profitability across the Group. These growth
rates are based on a combination of business units returning to
previously experienced results combined with externally generated
market information. The discount rates are consistent with external
information. The growth rates shown are the average applied to the
cash flows of the individual cash generating units and do not form
a basis for estimating the consolidated profits of the Group in the
future.
In addition to growth in revenue
and profitability, the key assumptions used in the impairment
testing were as follows:
Gross Margin % returning towards
FY20 levels for offshore energy division.
A post tax discount rate of 15.5 %
WACC (FY23 15.5%) estimated using a weighted average cost of
capital adjusted to reflect current market assessment of the time
value of money and the risks specific to the Group.
Terminal growth rate percentage of
2% (FY23: 2%)
The discount rate used to test the
cash generating units was the Group's post-tax WACC of 15.5%. The
goodwill impairment review has been tested against a reduction in
free cashflows. The Group considers free cashflows to be EBITDA
less any required capital expenditure and tax.
The value in use calculations
performed for the impairment review, together with sensitivity
analysis using reasonable assumptions, indicate sufficient headroom
for the goodwill carrying value in all of the identified
CGU's.
All amortisation charges have been
treated as an expense and charged to cost of sales and operating
costs in the income statement.
6. TRADE AND OTHER
RECEIVABLES
|
Mar-24
Unaudited
|
Mar-23
Unaudited
|
Sep-23
Unaudited
|
|
£000
|
£000
|
£000
|
Amounts falling due within one year:
|
|
|
|
Trade receivables not past
due
|
1,639
|
4,484
|
2,648
|
Trade receivables past due (1-30
days)
|
1,710
|
2,271
|
4,738
|
Trade receivables past due (over 30
days)
|
6,303
|
3,057
|
4,136
|
Trade receivables not yet due
(retentions)
|
346
|
876
|
650
|
Trade receivables net
|
9,998
|
10,688
|
12,172
|
|
|
|
|
Contract assets
|
2,858
|
4,475
|
4,079
|
Other receivables
|
879
|
598
|
135
|
Prepayments and accrued
income
Deferred Tax Asset
|
1,010
389
|
537
254
|
796
-
|
|
15,134
|
16,552
|
17,182
|
Trade and other receivables are
all current and any fair value difference is not
material. Trade receivables are assessed by management for
credit risk and are considered past due when a counterparty has
failed to make a payment when that payment was contractually
due. Management assesses trade receivables that are past the
contracted due date by up to 30 days and by over 30
days.
The carrying amounts of the
Group's trade and other receivables are all denominated in GBP,
USD, EUR and RMB.
There have been no provisions for
impairment against the trade and other receivables noted
above. The Group has calculated the expected credit losses to
be immaterial.
The Group continues to operate in
global markets where payment practices surrounding large contracts
can be different to those within Europe. The flow of funds on large
capital projects within China tend to move only when the windfarm
developer approves the completion of the project. The Group has a
number of trade receivable balances, within its subsidiary based in
China, which have been past due for more than 1 year. At
31st March 2024 the value of these overdue trade
receivables was £1.4m, of a total outstanding trade receivable
balance for the entity of £2.9m. These amounts remain outstanding
at the approval of the condensed consolidated interim financial
information. Management have not provided for the trade receivable
balance or made a credit loss provision on the basis that previous
trading history sets a precedent that these balances will be
received. Since 2020, the Group has traded in China generating
£10.1m of revenue, of which £7.2m has been fully received to date
which represents full cash receipt on older projects. The amounts
which remain outstanding are from more recent projects and none of
the values in trade receivables are in dispute with the
customer.
7. BORROWINGS
|
Mar-24
Unaudited
|
Mar-23
Unaudited
|
Sep-23
Unaudited
|
|
£000
|
£000
|
£000
|
Current
|
|
|
|
Trade Loan Facility
Lease liability
|
3,313
303
|
4,000
246
|
3,575
420
|
CBILs Bank Loan
|
3,000
|
3,000
|
3,000
|
|
6,616
|
7,246
|
6,995
|
Non-current
|
|
|
|
Lease liability
|
719
|
911
|
795
|
|
719
|
911
|
795
|
|
Mar-24
Unaudited
|
Mar-23
Unaudited
|
Sep-23
Unaudited
|
|
£000
|
£000
|
£000
|
Amounts repayable
|
|
|
|
Within one year
|
6,616
|
7,246
|
6,995
|
In more than one year but less than
two years
|
257
|
192
|
288
|
In more than two years but less than
three years
|
256
|
257
|
293
|
In more than three years but less
than four years
|
206
|
256
|
214
|
In more than four years but less
than five years
|
-
|
206
|
-
|
|
7,335
|
8,157
|
7,790
|
|
Mar-24
Unaudited
|
Mar-23
Unaudited
|
Sep-23
Unaudited
|
|
£000
|
£000
|
£000
|
Average interest rates at the balance sheet
dates
|
|
|
|
Lease liability
|
5.60
|
5.60
|
5.60
|
Trade Loan Facility
|
7.50
|
7.50
|
7.50
|
CBILS Bank Loan
|
7.50
|
7.50
|
7.50
|
|
|
The CBILS Bank Loan was renewed in
November 2023 and is due for maturity on 31 October 2024. The Trade
Loan Facility is due for Maturity on 31 July 2024, as described in
note 2b.
8. PROVISIONS
All provisions are considered
current. The carrying amounts and the movements in the provision
account are as follows:
|
Mar-24
Unaudited
|
Mar-23
Unaudited
|
Sep-23
Unaudited
|
|
£000
|
£000
|
£000
|
Carrying amount at period start
|
356
|
-
|
-
|
Additional provision
|
34
|
-
|
465
|
Amounts utilised
|
(146)
|
-
|
-
|
Transferred to liabilities held for
sale
|
(34)
|
-
|
(109)
|
|
210
|
-
|
356
|
The provision recognised in the
periods ending 31 March 2024 and 30 September 2023 are for onerous
contracts. The Group has assessed that the unavoidable costs of
fulfilling the contract obligations exceed the economic benefits
expected to be received from the contract. The provision relates to
two contracts in the offshore energy division which are expected to
be completed in the year ending September 2024.
9. CONTINGENT
LIABILITIES
Contingent liabilities are
disclosed in the financial statements when a possible obligation
exists, the existence will be confirmed by uncertain future events
that are not wholly within the control of the entity. Contingent
liabilities also include obligations that are not recognised
because their amount cannot be measured reliably or because
settlement is not probable.
As noted by the Group in prior
public announcements, there is an emerging industry-wide issue
regarding abrasion of legacy cable protection systems installed at
off-shore windfarms. The precise cause of the issues is not clear
and could be as a result of a number of factors, such as the
absence of a second layer of rock to stabilise the cables. The
decision not to apply this second layer of rock, which was standard
industry practice, was taken by the windfarm developers
independently of Tekmar. Tekmar is committed to working with
relevant installers and operators, including directly with
customers who have highlighted this issue, to investigate further
the root cause and assist with identifying potential remedial
solutions. This is being done without prejudice and on the basis
that Tekmar has consistently denied any responsibility for these
issues. However, given these extensive uncertainties and level of
variabilities at this early stage of investigations no conclusions
can yet be made.
Tekmar have been presented with
defect notifications for 10 legacy projects on which it has
supplied cable protection systems ("CPS"). These defect
notifications have only been received on projects where there was
an absence of the second layer of rock traditionally used to
stabilise the cables.
At this stage management do not
consider that there is a present obligation arising under IAS37 as
insufficient evidence is available to identify the overall root
cause of the damage to any of the CPS. Independent technical
experts have been engaged to determine the root cause of the damage
to the CPS, Tekmar have reviewed the assessments and concluded that
a present obligation does not exists.
Management acknowledges that there
are many complexities with regards to the alleged defects which
could lead to a range of possible outcomes. Given the range of
possible outcomes, management considers that a possible obligation
exists which will only be confirmed by further technical
investigation to identify the root cause of alleged CPS failures.
As such management has disclosed a contingent liability in the
condensed consolidated interim financial information.
Tekmar has received a further 2
defect notifications in relation to alleged defects with the
loosening of VBR fasteners. The precise cause of the issues is not
clear and could be as a result of a number of factors, such as the
incorrect placing of rock bag shielding and restraint. Tekmar is
committed to working with relevant customers, to investigate
further the root cause and assist with identifying potential
remedial solutions. This is being done without prejudice and on the
basis that Tekmar has denied any responsibility for these issues.
However, given these extensive uncertainties and level of
variabilities at this early stage of investigations no conclusions
can yet be made.
At this stage management do not
consider that there is a present obligation arising under IAS37 as
insufficient evidence is available to identify the overall root
cause of the damage to any of the CPS. Independent technical
experts have been engaged to determine the root cause of the damage
to the CPS and upon completion of these technical assessments,
Tekmar will review the assessment as to whether a present
obligation exists. Given the range of possible outcomes, management
considers that a possible obligation exists which will only be
confirmed by further technical investigation to identify the root
cause of alleged CPS failures. As such management has disclosed a
contingent liability in the interim financial
information.
Management acknowledges that there
are many complexities with regards to the alleged defects which
could lead to a range of possible outcomes. Given the range of
possible outcomes, management considers that determining whether a
possible obligation exists, can only be confirmed by further
technical investigation to identify the root cause of alleged CPS
failures. As such management has disclosed a contingent liability
in the interim financial information.
Tekmar has received a further
defect notification in relation to incorrect coating specification
on 1 historic project. This defect notification is in relation to
units which had not yet been installed and have been recoated post
year end at no cost to Tekmar. There are a number of units which
have been installed in relation to the same legacy project which
may have the incorrect coating specification. At this stage
management do not consider that there is a present obligation
arising under IAS37 as insufficient evidence is available to
identify whether any unresolved defects exist. Given the range of
possible outcomes, management considers that determining whether a
possible obligation exists, can only be confirmed by further
technical investigation to identify any further units which have
may not have been coated to the correct specification. As such
management has disclosed a contingent liability in the interim
financial information.
Tekmar Group plc has taken
exemption under IAS37, Paragraph 92 to not disclose information on
the range of financial outcomes, uncertainties in relation to
timing and any potential reimbursement as this could prejudice
seriously the position of the entity in a dispute with other
parties on the subject matter as a result of the early stage of
discussions.
10. DISCONTINUED OPERATIONS
The Group is currently in the
process of selling one of its subsidiaries, Subsea Innovation
Limited. Therefore, loss for the period has been classed as
discontinued operations, and assets and liabilities categorised as
held for sale.
Operating loss of Subsea
Innovation Limited until the 31 March 2024 is summarised
below:
|
|
6M
ended
31
Mar
2024
Unaudited
|
6M
ended
31 Mar
2023 Unaudited
|
12M
Ended
30
Sep
2023
Unaudited
|
|
|
£000
|
£000
|
£000
|
|
|
|
|
|
Revenue
|
|
3,327
|
1,805
|
4,275
|
Cost of sales
|
|
(2,580)
|
(1,290)
|
(3,289)
|
Gross profit
|
|
747
|
515
|
986
|
|
|
|
|
|
Administrative expenses
|
|
(1,135)
|
(1,080)
|
(2,358)
|
Other operating income
|
|
5
|
-
|
8
|
Operating (loss)
|
|
(383)
|
(565)
|
(1,364)
|
|
|
|
|
|
Analysed as:
|
|
|
|
|
Adjusted
EBITDA[1]
|
|
(223)
|
(411)
|
(892)
|
Depreciation
|
|
(51)
|
(55)
|
(155)
|
Amortisation
|
|
(123)
|
(99)
|
(177)
|
Share based payments
|
|
-
|
-
|
(8)
|
Exceptional items -
bonus
|
|
-
|
-
|
(134)
|
Foreign exchange gains
|
|
14
|
-
|
2
|
Operating (Loss)
|
|
(383)
|
(565)
|
(1,364)
|
|
|
|
|
|
Finance costs
|
|
(3)
|
(7)
|
(10)
|
Finance income
|
|
-
|
-
|
-
|
Net finance costs
|
|
(3)
|
(7)
|
(10)
|
|
|
|
|
|
(Loss) before taxation
|
|
(386)
|
(572)
|
(1,374)
|
Taxation
|
|
-
|
-
|
-
|
(Loss) for the period from discontinuing
operations
|
|
(386)
|
(572)
|
(1,374)
|
Most of the assets and all of the
liabilities will be disposed of in this transaction, however, the
Group continues to own the land and buildings. The carrying amount
of assets and liabilities to be disposed of are as
follows:
|
|
31
Mar
2024
Unaudited
|
31
Mar
2023
Unaudited
|
30
Sep
2023
Unaudited
|
|
|
£000
|
£000
|
£000
|
Non-current assets
|
|
|
|
|
Property, plant, and
equipment
|
|
246
|
199
|
298
|
Goodwill and other
intangibles
|
|
320
|
632
|
421
|
Total non-current
assets
|
|
566
|
831
|
719
|
|
|
|
|
|
Current assets
|
|
|
|
|
Inventory
|
|
167
|
194
|
85
|
Trade and other
receivables
|
|
3,914
|
2,283
|
2,552
|
Cash and cash
equivalents
|
|
343
|
(132)
|
191
|
Total current assets
|
|
4,424
|
2,345
|
2,828
|
|
|
|
|
|
Assets classified as held for sale
|
|
4,990
|
3,176
|
3,547
|
|
|
|
|
|
Non-current liabilities
|
|
|
|
|
Loans and other
borrowings
|
|
-
|
46
|
39
|
Trade and other
payables
|
|
341
|
331
|
328
|
Deferred tax liability
|
|
-
|
95
|
203
|
Total non-current
liabilities
|
|
341
|
472
|
570
|
|
|
|
|
|
Current liabilities
|
|
|
|
|
Loans and other
borrowings
|
|
-
|
45
|
51
|
Trade and other
payables
|
|
2,404
|
1,623
|
1,207
|
Provisions
|
|
34
|
-
|
109
|
Total current
liabilities
|
|
2,438
|
1,668
|
1,367
|
|
|
|
|
|
Liabilities classed as held for sale
|
|
2,779
|
2,140
|
1,937
|
Cash flows generated by Subsea
Innovation Limited for the reporting periods under review until the
period end are as follows:
|
|
31
Mar
2024
Unaudited
|
31
Mar
2023
Unaudited
|
30
Sep
2023
Unaudited
|
|
|
£000
|
£000
|
£000
|
Operating activities
|
|
(785)
|
(73)
|
(1,175)
|
Investing activities
|
|
-
|
(156)
|
(177)
|
Financing activities
|
|
937
|
78
|
1,524
|
Cash flows from discontinued operations
|
|
152
|
(151)
|
172
|