Final Results

RNS Number : 8780S

Tekmar Group PLC

14 March 2023

 

This announcement contains inside information for the purposes of Article 7 of the Market Abuse Regulation (EU) 596/2014 as it forms part of UK domestic law by virtue of the European Union (Withdrawal) Act 2018 ("MAR"), and is disclosed in accordance with the Company's obligations under Article 17 of MAR.

TEKMAR GROUP PLC

("Tekmar Group", the "Group" or the "Company")

FINAL RESULTS

For the year ending 30 September 2022

Tekmar Group (AIM: TGP), a leading provider of technology and services for the global offshore energy markets, announces its audited final results for the year ending 30 September 2022 ("FY22" or the "Period"). FY21 is an 18-month period reflecting the extended financial year to 30 September 2021 as previously announced in October 2020.

Highlights

· Revenue of £30.2m (18M to 30 September 2021: £47m, 12M to September 2021: £31.8m) and Adjusted EBITDA loss of £2.1m for the year (18M to 30 September 2021: loss of £2.1m, 12M to 30 September 2021: loss of £2.9m).

· Revenue of £17.2m for H2 22 (6M to 31 March 2022: £13.0m) and Adjusted EBITDA loss of £0.3m (6M to 31 March 2022: loss of £1.8m) highlights an improved second-half performance.

· Gross margin of 23% represents a 330 basis points improvement on prior year (FY21: 20%) and shows business transition continues.

· Secured and delivered the Group's largest project to date in excess of £10m for pipeline protection systems in the Middle East.

· Selected for Dogger Bank C Offshore Wind Farm (in continuation of the previously announced Dogger Bank A & B contracts), when delivered will be the largest global offshore wind project.

· The above contract awards support growth in our order book to £22.9m as at the end of December 2022, which is the largest reported since the Company's admission to AIM.

· On a statutory basis Group loss before tax was £5.2m (18M to 30 September 2021: £5.8m loss)

· The Group held £8.5m of cash as at 30 September 2022, including the drawdown of bank facilities from the £3.0m CBILS loan and £4.0m trade loan facility. Both these facilities were renewed post year end to 2023.

· The formal sale process and strategic review process continues and the Board anticipates drawing this process to a successful conclusion for the benefit of stakeholders.

Key financials

	Audited 12M ended Sep-22   £m	Unaudited 12M ended Sep-21 £m	Audited 18M ended Sep-21   £m
Revenue	30.2	31.8	47.0
Adjusted EBITDA1	(2.1)	(2.9)	(2.1)

Sales KPIs

	12M ended Sep-22   £m	12M ended Sep-21 £m	18M ended Sep-21   £m
Order Book2	15.6	9.7	9.7
Order Intake3	36.1	31.8	46.9
Enquiry Book4	370	327	327
Book to Bill5	1.2	0.98	0.99

Alasdair MacDonald, CEO of Tekmar Group, said:     

"FY22 represents a transitional year for the Group. Our second half performance highlights the operational improvements we are making are working as we stabilise the business. There is still work to do to complete the transition and our order book provides good visibility as the transition continues in 2023. We continue to prioritise the stability of the business through a focus on cash, a disciplined commercial approach and seeking to strengthen the Group's balance sheet. Our differentiated offering resonates with the industry and this puts us in a lead position as the market accelerates its investment in offshore wind through 2030.

In terms of outlook, we are encouraged that we continue to secure landmark contract awards at improved project margins and at lower execution risk. We remain cautious, however, in the near-term on the likely lead times for project awards and starts in the offshore wind market and we expect this is likely to suppress the volume required to restore profitability for the current financial year. We also recognise that it will take some time for improved contractual and commercial discipline to impact financial results, as the impact of existing legacy contracts diminishes over time. Taking these factors into account, and anticipated business mix for the current financial year, the Board's expectation is for the business to break even at an Adjusted EBITDA level for the current financial year. This is based on expected revenue for the current financial year to be in the region of £40m, of which approximately 70% is already secured. The Board expects the business to generate positive Adjusted EBITDA in FY24."

Notes:

(1)	Adjusted EBITDA defined as profit before finance costs, tax, depreciation, amortisation, share based payments charge, and exceptional items is a non-GAAP metric used by management and is not an IFRS disclosure.
(2)	Order Book is defined as signed contracts with clients.
(3)	Order Intake is the value of contracts awarded in the Period, regardless of revenue timing.
(4)	Enquiry Book is defined as all active lines of enquiry within the Tekmar Group. Expected revenue recognition within 3 years.
(5)	Book to Bill is the ratio of Order Intake to revenue.

Enquiries:

Tekmar Group plc Alasdair MacDonald, CEO Leanne Wilkinson, Interim CFO	[phone]
Singer Capital Markets (Nominated Adviser and Joint Broker) Rick Thompson / George Tzimas / Alex Emslie	[phone]
Berenberg (Joint Broker) Chris Bowman / Ben Wright / Ciaran Walsh	[phone]
Bamburgh Capital Limited (Financial PR & Investor Relations) Murdo Montgomery	[phone]

 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, bespoke equipment design and build, 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 Darlington, 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 .

Chairman's Statement

In my introduction to last year's Annual Report, I highlighted how the business was navigating a business transition during a period when market conditions have been difficult. I am pleased to start this year's report by acknowledging the good progress that has been made by the business in delivering improved results over the last financial year, despite ongoing market challenges.  Whilst we recognise the business has not yet returned to profitability, the recovery in sales and reduction in the Group's EBITDA losses during the second half of the year and the improvement in gross profit delivered in FY22 are important markers of business improvement.  It is a clear positive to see the hard work of the team being reflected in this improved performance, with further improvement anticipated as the market recovers and grows.

This performance is particularly encouraging in the context of a market environment that continues to present challenges in a maturing industry. We are starting to see the anticipated recovery in the planned investment required to deliver the offshore wind capacity required to support energy transition, as envisaged by global initiatives such as Net Zero by 2050. The scale of the opportunity ahead that this investment presents for Tekmar is highlighted by the over 200GW increase in offshore capacity expected to be installed by 2030. This increase is from a current installed base globally of 55GW, which highlights the expected growth and opportunity we have in a market in which we have a critical role to play in supporting the required offshore infrastructure.

The industry is moving from a recovery phase to an accelerated growth phase to achieve the above commitments and aspirations for offshore wind continue to grow globally, with increased activity seen in Asian markets and the Americas as well as emerging opportunities across the project life-cycle. Tekmar has the market leadership and superior engineering and technology-based offering to develop our footprint in these new markets, which complements the significant growth opportunity that lies ahead in our more established markets. We will maintain our close relationships with the developers and tier 1 contractors as we continue to lead the way as a trusted partner across these important, sizeable and growing markets.

As we focus on our strategy of restoring sustainable profitable growth for the business, we are encouraged by the strength of our enquiry book, which is consistent with a recovering market, and are seeing signs of improving supply chain pricing to acceptable margin levels. Consistent with our margin improvement focus, we are leveraging our commercial discipline and technology leadership to capture more favourable project economics as we convert the enquiry book into firm orders.

Whilst we are on the right path and can clearly see the improvement in the underlying business, we remain very focused on managing the business prudently and on balance sheet stability. We have taken a number of steps over the last 12-18 months to improve the financial stability of the business.  The Board has also remained focused on assessing additional measures and opportunities to strengthen the balance sheet and support its opportunities for growth.

Consistent with this approach, on 13 June 2022, we announced we would be conducting a formal sale process and strategic review process to identify a partner to support the Company's opportunities for growth and provide additional balance sheet strength. We anticipate drawing this process to a successful conclusion for the benefit of all stakeholders.

During the financial year, we announced the appointment of David Wilkinson as a new independent non-executive Director, with David replacing Chris Gill who had been on the Board since the IPO. Post the financial year-end, we announced that Derek Bulmer had resigned from his position as Group CFO, with Leanne Wilkinson, who was Group FD, becoming interim CFO. We would like to reiterate our thanks to Chris and Derek for their considerable contribution in strengthening Tekmar. 

On behalf of the Board, I would like to thank all our staff for their resolute commitment and tenacity in focusing on improving the Group's performance. I am pleased they can see the fruits of their hard work coming through as the business recovers and continues to strengthen. 

Julian Brown

Non-Executive Chairman

Chief Executive Officer's Review

In our interim results announced in June 2022, we highlighted that we see 2022 and 2023 as transition years as we stabilise the business to navigate short term industry headwinds ahead of benefiting from the attractive structural growth drivers offered across our core offshore wind and broader energy markets.

The results we are announcing today for the year to 30 September 2022 should be seen in the context of this business transition. Today's results report a £2.1m Adjusted EBITDA loss for FY22, with an improved financial performance during the second half of the year where increased revenue supported a £0.3m loss at the Adjusted EBITDA level. This highlights the operating leverage we have in our business and that our business improvement initiatives are impacting key metrics. We recognise there is continued work ahead on the path to securing a sustained level of profitability and related cash generation for the business.  We are confident the business will deliver on this objective, and that the positive industry outlook supports this. The level of our enquiry book, being at a record high, is a positive indicator of supportive market trends but it is taking time to see these enquiries convert to contract awards.

As we manage the business through this transition period, we continue to focus on managing cashflows and improving profitability through our business improvement programmes and securing and delivering high quality contracts with commercial discipline. 

We are developing a more integrated, engineering-led offering to meet the maturing requirements of the offshore wind industry

The strategy we are executing is anchored on Tekmar maintaining and strengthening our market leadership position, particularly in the offshore wind industry - an industry which is forecast to grow from the current 55GW of global offshore wind capacity to over 250W by 2030.

We are developing our customer value proposition in line with evolving market requirements as the industry matures, with these requirements including more complex installations and an emerging and growing opex requirement. We are doing this by offering differentiated and integrated engineering-led solutions that add value to our customers. The success of this approach is highlighted by a number of recently awarded significant contract wins. These contract awards highlight Tekmar's continued position as a trusted partner alongside strengthening the business through diversification and regional expansion.

Recent contract awards of particular note include:

- the extension of our partnership with DEME Offshore, announced in December 2022, to design, manufacture and supply CPS for the Dogger Bank C offshore wind farm in the UK to be delivered in FY24 and FY25. The Dogger Bank wind farm is set to become the world's largest offshore wind farm by capacity. This builds on the initial contract award to provide CPS for the Dogger Bank A and B projects announced in December 2021;

- the £8m combined contract awards, announced in January 2023, to provide pipeline support and protection materials for major subsea construction projects in the Middle East. This builds on Tekmar's success in securing larger, profitable pipeline activity in the region, which represent some of Tekmar's largest contracts awarded to date;

- the award, announced in July 2022, to provide CPS for an offshore wind farm project in Japan. This contract represents an important strategic milestone as we extend our geographical reach into the Japanese offshore wind market and is expected to be delivered in 2023; and

- the award of a design and build launch and recovery (LAR) system, further extending our capabilities as a leader within this specialist market (announced in January 2023)

These recent contract wins underpin the current order book of £22.9m (as of December 22), supported by a record enquiry book of £370m. We see these as important indicators of an improving market outlook for new projects, as the industry emerges from the lag in offshore wind capacity investment we have highlighted with previous results announcements. Industry analysts highlight visibility on over 300 projects for construction by 2030 as the industry invests US$520bn⁽¹⁾ to build over 200GW⁽²⁾ of new offshore wind capacity by 2030. Additionally, the offshore wind market is a maturing industry with installations and ongoing maintenance becoming more technically complex and challenging. We believe this is positive for Tekmar as we are using our engineering expertise to provide the industry leading solutions in our field, complementing our wider group strategy and offering.  It can, however, also lead to extended timelines for securing contracts as clients assess the impact of technology transition and the changing value proposition from a product-led approach to a more holistic integrated solutions and services led approach. This continues to be a feature of the current market environment, with extended contract negotiation timeframes remaining a feature of our commercial discussions.

We are currently 18 months into a programme of business wide improvement initiatives in areas such as engineering discipline, project risk management, contract negotiations and sales effectiveness, disciplined cash management, supply chain strategy and operational excellence. These initiatives are all in support of our defined wider group strategy including to strengthen our integrated, engineering-led offering and gross margin stabilisation and improvement. In support of the business improvement programme, Tekmar is one of a select group of offshore wind supply chain companies currently being supported by the Offshore Wind Growth Partnership (OWGP) via their Sharing in Growth (SiG) business transformation programme.  The SiG programme is aimed at promoting growth and profitability within the UK Offshore Wind Supply Chain through business excellence across a range of disciplines.  As part of the business improvement strategy, we have strengthened the leadership team in line with our focus on establishing a stronger engineering culture across the business.  The industry investments in our core markets provides significant forward opportunity for us and we will continue to look to strengthen the team to deliver on the strategic plan and on these exciting opportunities ahead.

We continue to work with industry partners to assess and address the issues relating to legacy cable installations installed at offshore wind farms. As we have previously highlighted, the precise cause of the issues are 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. Tekmar remains committed to working with relevant installers and operators, including directly with customers who have highlighted this issue, to investigate the root cause and assist with identifying potential remedial solutions. Whilst this consumes company resource and senior management attention, it is consistent with our responsible approach to supporting the industry to resolve these legacy issues.

In addition, we are embedding the industry learnings to support our superior technical offering for new installations alongside using our expertise and capability to support clients across the wider lifecycle of offshore wind projects, supporting our aim to diversify into the opex market. 

We continue to focus on strengthening the balance sheet

As we manage the business through the transition period, a key priority for the Board remains balance sheet stability and cash. We completed the equity fundraise in March 2022 and, in addition, have implemented a number of internal steps to improve cash management. We updated shareholders in October 2022 on cash collection in the second half of FY22, with a net improvement in cash of over £2.0m compared to 31 March 2022. Post the period-end, the Group extended the maturity dates of its banking facilities, which includes a CBILs loan of £3.0m, currently available to 31 October 2023, and a trade loan facility of up to £4.0m that can be drawn against supplier payments. This facility is currently available to July 2023, aligning with the annual review date of the banking facilities. 

Whilst the Group meets its day-to-day working capital requirements through the availability of these banking facilities, the Board recognises the material uncertainty which exists around the renewal of banking facilities and continues to consider that the Group would benefit from investment to provide additional balance sheet strength as well as supporting its opportunities for growth. Whilst discussions relating to the formal sale process and strategic review process remain ongoing, we continue with business as usual, prioritising the stability of the business through a focus on cash and a disciplined commercial approach, and offering our clients a superior and engineering led integrated offering.

Market overview

The global market for offshore wind, the Group's core 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 268GW (installed or underway) by 2030, from a commissioned capacity of 55.4GW today, with current visibility of over 300 projects in development.^{(1), (2)}

· Considering growing energy security concerns triggered by Russia's invasion of Ukraine, the market's mid-term outlook could be revised upwards again.

· Over 45% of projects entering construction by 2032 is expected to be in the UK, US and China, markets where Tekmar is already active and well-positioned to benefit from future growth.⁽¹⁾

· The global operation and maintenance (O&M) market continues to scale up and is now expected to reach £11.8bn per year by 2030, offering significant growth potential for the Group. ⁽¹⁾

· In the last six months, market expectations for the emerging floating wind market have grown to 14.1GW, installed or underway by 2030, and 63GW by 2035, driven by a requirement to cut carbon emissions and reduce dependency on Russian energy.⁽¹⁾

Adjacent offshore energy markets are strengthening, reflecting a stronger oil price.

Summary

FY22 represents a transitional year for the Group. Our second half performance highlights the operational improvements we are making are working as we stabilise the business. There is still work to do to complete the transition and our order book provides good visibility as the transition continues in 2023. We continue to prioritise the stability of the business through a focus on cash, a disciplined commercial approach and seeking to strengthen the Group's balance sheet. Our differentiated offering resonates with the industry and this puts us in a lead position as the market accelerates its investment in offshore wind through 2030.

In terms of outlook, we are encouraged that we continue to secure landmark contract awards at improved project margins and at lower execution risk. We remain cautious, however, in the near-term on the likely lead times for project awards and starts in the offshore wind market and we expect this is likely to suppress the volume required to restore profitability for the current financial year. We also recognise that it will take some time for improved contractual and commercial discipline to impact financial results, as the impact of existing legacy contracts diminishes over time. Taking these factors into account, and anticipated business mix for the current financial year, the Board's expectation is for the business to break even at an Adjusted EBITDA level for the current financial year. This is based on expected revenue for the current financial year to be in the region of £40m, of which approximately 70% is already secured. The Board expects the business to generate positive Adjusted EBITDA in FY24.

Alasdair MacDonald

CEO

(1) 4C Offshore, Offshore Wind Farms Project Opportunity Pipeline Database, Version Q4 2022

(2) 4C Offshore - Offshore Wind Farm Database (06-Apr-2021 to 12-Sep-2022)

Chief Financial Officer's Review

Having joined Tekmar in June 2020, and having been appointed Interim CFO on 1 December 2022, it is my pleasure to present the Financial Review for the Group for the year ended 30 September 2022.  I start by thanking Derek Bulmer, as my predecessor CFO, for his contribution in strengthening the business in support of our growth strategy.

A summary of the Group's financial performance is as follows: 

	Audited 12M ended Sep-22   £m	Unaudited 12M ended Sep-21   £m	Audited 18M ended Sep-21   £m
Revenue	30.2	31.8	47.0
Adjusted EBITDA(1)	(2.1)	(2.9)	(2.1)
PBT	(5.2)	(5.5)	(5.8)
Adjusted EPS(2)	(7.4p)	(10.8p)	(9.1p)

(1)  Adjusted EBITDA is a key metric used by the Directors.

Earnings before interest, tax, depreciation and amortisation are adjusted for certain non-cash and exceptional items. Details of the adjustments can be found in the adjusted EBITDA section below.

(2)  Adjusted EPS is a key metric used by the Directors and measures earnings after adjusting for non-recurring items.  Earnings for EPS calculation are adjusted for share-based payments, £nil FY22 (£364k FY21) and amortisation on acquired intangibles £605k (£1,128k FY21).

On a statutory basis, the Group loss before tax was £5.2m (FY21: £5.8m loss).

Overview

The Group reported revenue of £30.2m for the 12-month reporting period, with an encouraging increase to £17.2m in revenue delivered in the second half from the £13.0m reported for the first half.  The business has continued to be impacted by cost pressures driven by lower volumes along with supply chain and logistics impacts from wider geopolitical events, in particular the Russia and Ukraine conflict.  We have managed the impact of these pressures on our business with discipline and we continue to work hard as a team to drive margin improvement through our business improvement plans, including through our focus on improved contracting process, building a stronger team and enhanced contract execution and reporting.

The improved financial performance of the Group in the second half of FY22 is also reflected by the business reporting a £0.3m Adjusted EBITDA loss for H2 22, an improvement from the Adjusted EBITDA loss of £1.8m as reported for H1 22. In effect an increase in revenue over the 6 months of £4.2m saw an Adjusted EBITDA improvement of £1.5m, showing the benefit of operational gearing through scale and the work on margin improvement noted above. Nonetheless, we recognise that the industry continues to experience headwinds, so we remain cautious and alert to the challenges and opportunities ahead.

Revenue

	Revenue by Division							Revenue by market
£m			Audited 12M FY22	Unaudited LTM(1) FY21	Audited 18M FY21		£m		Audited 12M FY22	Unaudited LTM(1) FY21	Audited 18M FY21
Offshore Energy			17.4	21.9	33.8		Offshore wind		14.7	16.8	26.9
Marine Civils			12.8	9.9	13.2		Subsea		15.5	15.0	20.1
Total			30.2	31.8	47.0		Total		30.2	31.8	47.0

(1)  LTM - Last 12 months

Offshore Energy, incorporating Tekmar Energy, Subsea Innovation, AgileTek and Ryder Geotechnical, all of which operate largely as a single unit, continued to be impacted by the lower volume of large-scale offshore wind projects in construction phase as this market continues to recover. Despite the lower revenue of £17.4m, compared to revenue of £21.9m for the last twelve months of FY21, this division saw an improved H2 22 revenue of £9.6m (H1 22: £7.8m) which was underpinned by revenues from Dogger Bank, which is set to become the world's largest offshore wind farm once fully operational. In addition, Vineyard Wind, a strategically important US wind farm project awarded during the year, has commenced through early stages and further revenues from China highlight the importance of our continued and growing international presence.

Marine Civils, comprising Pipeshield, saw revenue growth for the 12-month period at £12.8m compared with revenue of £9.9m for the previous 12-month period. The underlying growth in FY22 was driven by a contract of in excess of £10m, for the provision of pipeline support and protection materials for a major construction project in the Middle East, which was largely delivered in the financial year.

Gross profit

	Gross profit by Division						Gross profit by market
£m		Audited 12M FY22	Unaudited LTM(1) FY21	Audited 18M FY21		m		Audited 12M FY22		Unaudited LTM(1) FY21	Audited 18M FY21
Offshore Energy		4.4	4.4	8.2		Offshore wind			4.2	4.8	8.9
Marine Civils		2.6	2.1	3.0		Subsea			4.4	3.3	5.0
						Unallocated costs			(1.6)	(1.6)	(2.7)
Total		7.0	6.5	11.2		Total			7.0	6.5	11.2

(1)  LTM - Last 12 months

Despite the revenue for FY22 being £1.6m lower than the prior 12 months, the gross profit of £7.0m was an increase of £0.5m versus the prior 12 month period.  As a result, the gross profit percentage of 23% achieved in FY22 was an improvement on the 20% achieved in the prior 12 month period.

Whilst this level of gross profit is lower than the pre-pandemic historical run rate, gross profit margin improvement has been and continues to be a key focus for the management team, across the project lifecycle from negotiation of initial contracting terms to improved project execution and stronger commercial management throughout the life of the projects.  Coupled with volume returning to the Offshore Wind sector, this underpins our gross profit improvement plans which we continue to progress.

Within Offshore Energy, the gross profit margin increased to 25% (FY21 LTM: 20%). Offshore Energy continued to be particularly impacted due to lower volumes of sales as it carries fixed manufacturing costs of an annual equivalent of £2m. The gross profit margin within Marine Civils remained consistent with the prior 12 month period at 20%.

Operating expenses

Operating expenses for the 12-month period to 30 September 2022 were £11.6m compared to £11.9m for the equivalent 12-month period ending 30 September 2021. The reduction of £0.3m is due to cost cutting initiatives undertaken in FY22 which have a cost saving impact of £0.5m, which has been offset by one off costs of £0.2m in the year.

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 statements as it represents a useful milestone that is reflective of the performance of the business resulting from movements in revenue, gross margin and the cash costs of the business.  No adjustments have been made to calculate Adjusted EBITDA in the year ended 30 September 2022. For the 18-month period ended 30 September 2021, the adjustment included the removal of share-based payment charges relating to the IPO options and SIP schemes launched at IPO.

The £2.1m EBITDA loss for the 12 months ended 30 September 2022 was an improvement of £0.8m when compared to the £2.9m EBITDA loss for the 12 months to September 2021 and is a result of the increased gross profit as above. 

H2 22 reported an increase in revenue of £4.2m versus the prior 6-month period and as a consequence of the resulting benefits of higher operational gearing and gross profit improvement achieved, a break-even EBITDA position was reached, an improvement of £1.76 when compared to the results of the previous two 6 month periods.

		Adjusted EBITDA by 6 month period (Unaudited)
£m		6m Sep-22	6m Mar-22	6m Sep-21	6m Mar-21	6m Sep-20
Revenue		17.2	13.0	17.9	13.9	15.2
EBITDA		(0.3)	(1.8)	(1.8)	(1.1)	0.8

As we await the volume to return in the offshore wind sector, the cost base and opportunities for increased efficiency across the Group will continue to be reviewed accordingly. However, management remain mindful this needs to be balanced with retaining capacity and key capability within the business to support the future growth in a recovering market.

	Adjusted EBITDA by division £m						Adjusted items
£m			12M FY22	LTM(1) FY21	18M FY21		£000		12M FY22	LTM(1) FY21	18M FY21
Offshore Energy			(1.8)	(2.7)	(1.9)		Share based payment charge		-	(805)	(364)
Marine Civils			1.0	0.9	1.2
Group costs			(1.3)	(1.1)	(1.4)				-	(805)	(364)
Total			(2.1)	(2.9)	(2.1)

(1)  LTM - Last 12 months

Profit

The result after tax is a loss of £5.2m (FY21: Loss of £5.4m). The impacts of movements reported within EBITDA have been discussed above and account for £0.1m of the movement in the loss for the year. The remaining £0.1m relates to the net movements in amortisation, depreciation, and interest charges. 

Foreign currency

The Group has continued to see growth in international markets and, as a result, this growth increases the Group's exposure to fluctuations in foreign currency rates. During the year the Group benefitted from gains in foreign exchange of £0.2m. These gains have been accounted for within operating expenses. The Group mitigates exposure to fluctuations in foreign exchange rates through placing forward currency contracts. At the year end the Group held forward currency contracts to mitigate the risk of receivables balances for both Euros and Dollars. The Group predominately trades in pounds sterling with approximately 17% of revenue denominated in Euros and 23% denominated in US dollars. On certain overseas projects the Group is able to create a natural hedge by matching the currency of the supply chain to the contracting currency, this helps to mitigate the Group's exposure to foreign currency fluctuations.

Balance Sheet

Balance Sheet
£m		FY22	FY21
Fixed Assets		5.9	5.7
Other non-current assets		24.6	25.3
Inventory		4.6	4.0
Trade & other receivables		13.4	18.0
Cash		8.5	3.5
Current liabilities		(16.9)	(12.5)
Other non-current liabilities		(0.8)	(3.7)
Equity		39.2	40.2

Fixed Assets

Fixed asset investments were largely in line with depreciation levels with an overall modest increase of £0.2m. There was no major capital expenditure project or disposal in the year.

Other non-current assets

Goodwill of £22.2m includes the goodwill arising on the original management buy-out of Tekmar Energy Limited in 2011 of £19.6m. The remaining balance relates to the acquisitions of Subsea Innovation during FY19 and Pipeshield during FY20. The reduction in other non-current assets in FY22 relates to the amortisation of intangible assets.

Trade and other receivables

Trade and other receivables fell to £13.4m (FY21: £18.0m) reflecting improvements in our contracting process and strengthening of the credit control function.  Revenue in FY22 has been more evenly spread throughout the year with more favourable invoicing terms including upfront milestones on contracts leading to lower levels of trade receivables at the year end.  Further to this, the Group has enhanced its cash collection controls and processes where I am pleased to see a lower level of aged debt of £2.2m in FY22 in comparison to £3.3m past due in FY21.

Cash

The gross cash balance at 30 September 2022 was £8.5m with net cash being £1.5m. The Group has extended its CBILs facility of £3.0m for a further 12 months to October 2023 and the trade loan facility of £4.0m, which is available until at least July 2023, aligning with the annual review date of the banking facilities. These facilities will continue to support the working capital requirements of the Group in delivering the type of contracts that it undertakes in this industry. 

Significant focus has remained to stabilise the Group's balance sheet including a Firm Placing and Open Offer of new ordinary shares which completed in March 2022 which raised cash proceeds of £3.7m, net of expenses. 

Cash continues to be a major focus for the Group as we monitor and manage the working capital lifecycle across projects. We have strengthened much of the business systems surrounding contracting, project management and accounts receivable to drive greater transparency and integration amongst functions and established a dedicated credit control function. 

The short to medium term business pipeline includes sizable Oil and Gas related projects, however, the availability of working capital funding and performance guarantee facility for fossil fuel related activity continues to be challenging.  Therefore, the business may need to look to alternative sources of support whilst the wider transition to renewable energy sources takes place.

Current liabilities

Current liabilities rose by £4.6m to £17.1m (FY21:  £12.5m).  Within the FY22 balance of £16.9m, £4.0m relates to a Trade Loan Facility with Barclays Bank which is drawn against supplier payments and is repayable within 90 days of drawdown. The FY21 comparative is £3.0m. Current liabilities also includes the CBILS loan of £3.0m which was renewed post year end to October 2023. In FY21 the CBILs was classified as non-current. 

Additionally, the balance at 30 September 2022 included £3.1m of deferred income against a comparative of £1.2m. The increase in deferred income is due to our improved contracting terms with customers. The above movements are offset by the decrease in trade payables of £1.7m from £5.8m in September 2021 to £4.1m in September 2022. This is driven primarily by the timing of project receipts at the year end. 

Non-current liabilities

Other non-current liabilities of £0.8m at 30 September 2022 shows a reduction from 30 September 2021 balance of £3.7m. The main reason being 30 September 2021 included CBILs of £3m, which was due for renewal in October 2022 and therefore is included in current liabilities in the current financial year.

Summary

The results for FY22 present a financial performance which is in line with the planned transition period for the business, which will continue into FY23.  These results have been delivered against the volatility in the global energy supply chain which has caused significant inflationary cost pressures against which the business has worked hard to mitigate.

The positive improvements underway in the business and the new regions and customers we are reaching reflects the commitment, capability and knowledge of our employees.  I am proud of the progress made by the team in strengthening the business and building the foundations for growth underpinned by our strong culture and shared values.  I very much look forward to the next phase and taking the Group back into profitability and sustained growth.

Leanne Wilkinson

Interim Chief Financial Officer

Consolidated statement of comprehensive income

for the year ended 30 September 2022

	Note	12M ended  30 Sep 2022	18M ended  30 Sep 2021
		£000	£000
Revenue	4	30,191	47,034
Cost of sales		(23,153)	(35,794)
Gross profit		7,038	11,240
Administrative expenses		(11,623)	(16,721)
Other operating income		24	48
Group operating (loss)		(4,561)	(5,433)
Analysed as:
Adjusted EBITDA[1]		(2,079)	(2,115)
Depreciation		(1,370)	(2,031)
Amortisation		(1,112)	(1,651)
Exceptional Share based payments charges		-	364
Exceptional items		-	-
Group operating (Loss)		(4,561)	(5,433)
Finance costs		(685)	(402)
Finance income		18	5
Net finance costs		(667)	(397)
(Loss) before taxation		(5,228)	(5,830)
Taxation		99	394
(Loss)for the period		(5,129)	(5,436)
Equity-settle share-based payments		(97)	(164)
Revaluation of property		238	-
Retranslation of overseas subsidiaries		326	(153)
Total comprehensive income for the period		(4,662)	(5,753)
Loss attributable to owners of the parent		(5,129)	(5,436)
Total Comprehensive income attributable to owners of the parent		(4,662)	(5,753)
(Loss) per share (pence)
Basic	5	(9.04)	(10.60)
Diluted	5	(9.04)	(10.60)

All results derive from continuing operations.

1: Adjusted EBITDA, which is defined as profit before net finance costs, tax, depreciation, amortisation, share based payments charge, and exceptional items is a non-GAAP metric used by management and is not an IFRS disclosure.

Consolidated balance sheet

as at 30 September 2022

	Note	30 Sep 2022	30 Sep 2021
		£000	£000
Non-current assets
Property, plant and equipment		5,883	5,696
Goodwill and other intangibles		24,564	25,307
Total non-current assets		30,447	31,003
Current assets
Inventory		4,623	3,966
Trade and other receivables	6	13,375	17,971
Cash and cash equivalents		8,496	3,482
Total current assets		24,494	25,419
Total assets		56,941	56,422
Equity and liabilities
Share capital		609	516
Share premium		67,653	64,097
Merger relief reserve		1,738	1,738
Merger reserve		(12,685)	(12,685)
Foreign currency translation reserve		173	(153)
Retained losses		(18,278)	(13,290)
Total equity		39,210	40,223
Non-current liabilities
Other interest-bearing loans and borrowings	7	194	3,183
Trade and other payables		331	343
Deferred tax liability		313	125
Total non-current liabilities		838	3,651
Current liabilities
Other interest-bearing loans and borrowings	7	7,198	3,160
Trade and other payables		9,669	9,121
Corporation tax payable		26	267
Total current liabilities		16,893	12,548
Total liabilities		17,731	16,199
Total equity and liabilities		56,941	56,422

Consolidated statement of changes in equity

for the year ended 30 September 2022

	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 31 March 2020	513	64,100	1,738	(12,685)	-	(7,690)	45,976	45,976
Loss for the year	-	-	-	-	-	(5,436)	(5,436)	(5,436)
Share based payments	-	-	-	-	-	(164)	(164)	(164)
Exchange difference on translation of overseas subsidiary	-	-	-	-	(153)	-	(153)	(153)
Total comprehensive income for the year	-	-	-	-	(153)	(5,600)	(5,753)	(5,753)
Issue of shares	3	(3)	-	-	-	-	-	-
Total transactions with owners, recognised directly in equity	3	(3)	-	-	-	-	-	-
Balance at 30 September 2021	516	64,097	1,738	(12,685)	(153)	(13,290)	40,223	(40,223)
(Loss) for the Period	-	-	-	-	-	(5,129)	(5,129)	(5,129)
Share based payments	-	-	-	-	-	(97)	(97)	(97)
Revaluation of fixed assets	-	-	-	-	-	238	238	238
Exchange difference on translation of overseas subsidiary	-	-	-	-	326	-	326	326
Total comprehensive income for the year	-	-	-	-	326	(4,988)	(4,662)	(4,662)
Issue of shares	93	3,556	-	-	-	-	3,649	3,649
Total transactions with owners, recognised directly in equity	93	3,556	-	-	-	-	3,649	3,649
Balance at 30 September 2022	609	67,653	1,738	(12,685)	173	(18,278)	39,210	39,210

Consolidated cash flow statement

for the year ended 30 September 2022

		12M ended  30 Sep 2022	18M ended  30 Sep 2021
		£000	£000
Cash flows from operating activities
Loss / profit before taxation		(5,228)	(5,830)
Adjustments for:
Depreciation		1,370	2,031
Amortisation of intangible assets		1,112	1,651
Share based payments charge		(103)	(135)
Finance costs		685	402
Finance income		(18)	(5)
		(2,182)	(1,886)
Changes in working capital:
(Increase) in inventories		(658)	(1,429)
Decrease / (increase) in trade and other receivables		4,561	8,847
(Decrease) / increase in trade and other payables		178	(6,954)
Cash (used in) / generated from operations		1,899	(1,422)
Tax recovered		-	240
Net cash (outflow) / inflow from operating activities		1,899	(1,182)
Cash flows from investing activities
Purchase of property, plant and equipment		(1,274)	(1,840)
Purchase of intangible assets		(369)	(664)
Proceeds on sale of property, plant and equipment		-	5
Interest received		18	5
Net cash (outflow) from investing activities		(1,625)	(2,494)
Cash flows from financing activities
Facility drawdown Lease Obligation borrowings Repayment of borrowings under Lease obligations		991 656 (537)	6,052 247 (770)
Shares issued		3,649	-
Interest paid		(345)	(348)
Net cash inflow / (outflow) from financing activities		4,414	5,181
Net increase /(decrease) in cash and cash equivalents		4,688	1,505
Cash and cash equivalents at beginning of year Effect of foreign exchange rate changes		3,482 326	2,130 (153)
Cash and cash equivalents at end of year		8,496	3,483

Notes to the Group financial statements

for the 18 month period ended 30 September 2022

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.

Statement of compliance

The financial information set out in this preliminary announcement does not constitute the Group's statutory financial statements for the period ended 30 September 2022 or 30 September 2021 as defined in section 435 of the Companies act 2006 (CA 2006) but is derived from those audited financial statements. Statutory financial statements for 2021 have been delivered to the Registrar of Companies and those for 2022 will be delivered in due course. The auditors reported on those accounts; their reports were unqualified and did not contain a statement under either Section 498(2) or Section 498(3) of the Companies Act 2006. For the year ended 30 September 2022 and period to 30 September 2021 their report contains a material uncertainty in respect of going concern without modifying 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.

Forward looking statements

Certain statements in this Annual 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 years 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 group consolidated financial statements for the year ended 30 September 2022 have been prepared in accordance with UK adopted international accounting standards ("IFRS). The financial statements have been prepared on the going concern basis and on the historical cost convention modified for the revaluation of certain financial instruments.

Tekmar Group plc ("the Company") has adopted all IFRS in issue and effective for the year.

(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 2023 and a trade loan facility of up to £4.0m that can be drawn against supplier payments, currently available to 31 July 2023.  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 £8.5m of cash at 30 September 2022 including full draw down of the £3.0m CBILS loan and a further £4.0m 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 2024.  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 20 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 2024, 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.  The base case and sensitised forecast also includes discretionary spend on capital outlay. In addition, 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 these financial statements.  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 revenue by 20% and increasing overheads by 15% against the base case.  The inputs applied to the reverse stress are not considered plausible.

(c)  New standards, amendments and interpretations

The new standards, amendments or interpretations issued in the year, with which the Group has to comply with, have not had a significant effect impact on the group.  There are no standards endorsed but not yet effective that will have a significant impact going forward.

(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)  Revenue

Revenue (in both the subsea energy  and the marine civils markets) arises from the supply of subsea protection solutions and associated equipment, principally through fixed fee contracts. There are also technical consultancy services delivered through subsea energy.

To determine how to recognise revenue in line with IFRS 15, the Group follows a 5-step process as follows:

1.  Identifying the contract with a customer

2.  Identifying the performance obligations

3.  Determining the transaction price

4.  Allocating the transaction price to the performance obligations

5.  Recognising revenue when / as performance obligation(s) are satisfied

Revenue is measured at transaction price, stated net of VAT and other sales related taxes.

Revenue is recognised either at a point in time, or over-time as the Group satisfies performance obligations by transferring the promised services to its customers as described below.

i)  Fixed-fee contracted supply of subsea protection solutions

For the majority of revenue transactions, the Group enters individual contracts for the supply of subsea protection solutions, generally for a specific project in a particular geographic location. Each contract generally has one performance obligation, to supply subsea protection solutions. When the contracts meet one or more of the criteria within step 5, including the right to payment for the work completed, including profit should the customer terminate, then revenue is recognised over time. If the criteria for recognising revenue over time is not met, revenue is recognised at a point in time, normally on the transfer of ownership of the goods to the  customer.

For contracts where revenue is recognised over time, an assessment is made as to the most accurate method to estimate stage of completion. This assessment is performed on a contract by contract basis to ensure that revenue most accurately represents the efforts incurred on a project.  For the majority of contracts  this is on an inputs basis (costs incurred as a % of total forecast costs). 

There are also contracts which include the manufacture of a number of separately identifiable products.  In such circumstances, as the deliverables are distinct, each deliverable is deemed to meet the definition of a performance obligation in its own right and do not meet the definition under IFRS of a series of distinct goods

or services given how substantially different each item is.  Revenue for each item is stipulated in the contract and revenue is recognised over time as one or more of the criteria for over time recognition within IFRS 15 are met.  Generally for these items, an output method of estimating stage of completion is used as this gives the most accurate estimate of stage of completion.  On certain contracts variation orders are received as the scope of contract changes, these are review on a case-by-case basis to ensure the revenue for these obligations is appropriately recognised.

In all cases, any advance billings are deferred and recognised as the service is delivered.

ii)  Manufacture and distribution of ancillary products, equipment.

The group also receives a proportion of its revenue streams through the sale of ancillary products and equipment. These individual sales are formed of individual PO's for which goods are ordered or made using inventory items. These items are recognised on a point in time basis, being the delivery of the goods to the end customer.

iii)  Provision of consultancy services

The entities within the offshore energy division also provide consultancy based services whereby engineering support is provided to customers. These contracts meet one or more of the criteria within step 5, including the right to payment for the work completed, including profit should the customer terminate.  Revenue is recognised over time on these contracts using the inputs method.

The Group has a number of revenue transactions which are generally contracted with customers using purchase orders. There is generally one performance obligation for each order and the transaction price is specified in the order. Revenue is recognised at a point in time as the customer gains control of the products, which tends to be on delivery.

(f)  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. Exceptional items and share based payment charges are excluded from EBITDA to calculate Adjusted EBITDA.

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.

(g)  Exceptional costs

The Group presents as exceptional costs on the face of the income statement, those significant items of expense, which, because of their size, nature and infrequency of the events giving rise to them, merit separate presentation to allow shareholders to understand better the underlying financial performance in the period, so as to facilitate comparison with prior years and assess trends in financial performance more readily.

3. CRITICAL ACCOUNTING JUDGEMENTS AND ESTIMATES

(a)  Critical judgements in applying the entity's accounting policies

Revenue recognition

Judgement is applied in determining the most appropriate method to apply in respect of recognising revenue over-time as the service is performed using either the input or output method. Further details on how the policy is applied can be found in note 2(e). 

Product development capitalisation

As described in note 2, Group expenditure on development activities is capitalised if it meets the criteria as per IAS 38. Management have exercised and applied judgement when determining whether the criteria of IAS 38 is satisfied in relation to development costs. As part of this judgement process, management establish the future Total Addressable Market relating to the product or process, evaluate the operational plans to complete the product or process and establish where the development is positioned on the Group's technology road map and asses the costs against IAS 38 criteria. This process involves input from the Group's Chief Technical Officer plus the operational, financial and commercial functions and is based upon detailed project cost analysis of both time and materials.

(b)  Critical accounting estimates

Revenue recognition - stage of completion when using input method

Revenue on contracts is recognised based on the stage of completion of a project, which, when using the input method, is measured as a proportion of costs incurred out of total forecast costs. Forecast costs to complete each project are therefore a key estimate in the financial statements and can be inherently uncertain due to changes in market conditions.  For the partially complete projects in Tekmar Energy at year end if the percentage completion was 1% different to management's estimate the revenue impact would be £106,590. Within Subsea Innovation and Pipeshield International there were a number of projects in progress over the year end and a 1% movement in the estimate of completion would impact revenue in each by £5,720 and £39,100 respectively. However, the likelihood of errors in estimation is small, as the businesses have a history of reliable estimation of costs to complete and given the nature of production, costs to complete estimate are relatively simple.

Recoverability of contract assets and receivables

Management judges the recoverability at the balance sheet date and makes a provision for impairment where appropriate. The resultant provision for impairment represents management's best estimate of losses incurred in the portfolio at the balance sheet date, assessed on the customer risk scoring and commercial discussions. Further, management estimate the recoverability of any AROC balances relating to customer contracts. This estimate includes an assessment of the probability of receipt, exposure to credit loss and the value of any potential recovery. Management base this estimate using the most recent and reliable information that can be reasonably obtained at any point of review. Given the groups historic recoverability of 100% of receivable balances, no provision for bad debts or credit losses have been accounted for.  A material change in the facts and circumstances could lead to a reversal of impairment proportional to the expected cash inflows supported by this information.

Impairment of Non-Current assets

Management conducts annual impairment reviews of the Group's non-current assets on the consolidated statement of financial position. This includes goodwill annually, development costs where IAS 36 requires it, and other assets as the appropriate standards prescribe. Any impairment review is conducted using the Group's future growth targets regarding its key markets of offshore energy and marine civils. Sensitivities are applied to the growth assumptions to consider any potential long-term impact of current economic conditions, such as the impact caused by the market uncertainties. Provision is made where the recoverable amount is less than the current carrying value of the asset.

4 .   SEGMENTAL REPORTING

Management has determined the operating segments based upon the information provided to the executive Directors which is considered the chief operation decision maker. The Group is managed and reports internally by business division and market for the year ended 30 September 2022.

Major customers

In the period ended 30 September 2022 there was one major customer within the marine civils segment that individually accounted for at least 10% of total revenues (2021: one customer). The revenues relating to these in the period to 30 September 2022 were £7,243,000 (2021: £7,123,000). Included within this is revenue from multiple projects with different entities within the group.

Analysis of revenue by region	12M ending 30 Sep 2022	18M ending 30 Sep 2021
	£000	£000
UK & Ireland	8,028	21,492
Germany	1,230	538
Turkey	499	-
Greece	409	-
Denmark	757	418
France	-	2,874
Other Europe	2,721	2,684
China	3,847	6,942
USA & Canada	674	4,375
Japan	561	1,580
Philippines	534	-
Qatar	8,716	-
KSA	509	3,245
Other Middle East	468	-
Rest of the World	1,238	2,886
	30,191	47,034

Analysis of revenue by market	12M ending 30 Sep 2022	18M ending 30 Sep 2021
	£000	£000
Offshore Wind	14,705	26,899
Other offshore	15,486	20,135
	30,191	47,034

Analysis of revenue by product category	12M ending 30 Sep 2022	18M ending 30 Sep 2021
	£000	£000
Offshore Energy protection systems & equipment	15,497	30,584
Marine Civils	12,734	13,196
Engineering consultancy services	1,960	3,254
	30,191	47,034

Analysis of revenue by recognition point	12M ending 30 Sep 2022	18M ending 30 Sep 2021
	£000	£000
Point in Time	10,048	6,791
Over Time	20,143	40,243
	30,191	47,034

At 30 September 2022, the group had a total transaction price £15,488k (2021: £9,724k) allocated to performance obligations on contracts which were unsatisfied or partially unsatisfied at the end of the reporting period. The amount of revenue recognised in the reporting period to 30 September 22 which was previously recorded in contract liabilities was £1,168k (2021: £991k)

Profit and cash are measured by division and the Board reviews this on the following basis.

	Offshore Energy 2022	Marine Civils 2022	Group/ Eliminations	Total 2022
	£000	£000	£000	£000
Revenue	17,455	12,734	-	30,191
Gross profit	4,442	2,596	-	7,038
% Gross profit	25%	20%	-	23%
Operating (loss)/ profit	(3,405)	789	(1,945)	(4,561)
Analysed as: Adjusted EBITDA	(1,800)	1,060	(1,339)	(2,079)
Depreciation	(1,099)	(271)	-	(1,370)
Amortisation	(506)	-	(606)	(1,112)
Operating (loss)/ profit	(3,405)	789	(1,945)	(4,561)
Interest & similar expenses	(318)	(185)	(164)	(667)
Tax	(237)	175	161	99
(Loss) / profit after tax	(3,960)	779	(1,948)	(5,129)

	Offshore Energy 2022	Marine Civils 2022	Group/ Eliminations	Total 2022
	£000	£000	£000	£000
Other information
Reportable segment assets	19,029	10,832	28,196	58,057
Reportable segment liabilities	(5,530)	(4,700)	(7,631)	(17,861)

	Offshore Energy 2021	Marine Civils 2021	Group/ Eliminations	Total 2021
	£000	£000	£000	£000
Revenue	33,837	13,197	-	47,034
Gross profit	8,208	3,032	-	11,240
% Gross profit	24%	23%	-	24%
Operating (loss)/ profit	(4,266)	969	(2,136)	(5,433)
Analysed as: Adjusted EBITDA	(1,881)	1,195	(1,429)	(2,115)
Depreciation	(1,805)	(226)	-	(2,031)
Amortisation	(523)	-	(1,128)	(1,651)
Share based payments	(57)	-	421	364
Exceptional	-	-	-	-
Operating (loss)/ profit	(4,266)	969	(2,136)	(5,433)
Interest & similar expenses	(285)	(8)	(104)	(397)
Tax	235	(230)	389	394
(Loss) / profit after tax	(4,316)	731	(1,851)	(5,436)

	Offshore Energy 2021	Marine Civils 2021	Group/ Eliminations	Total 2021
	£000	£000	£000	£000
Other information
Reportable segment assets	25,048	6,793	25,542	57,383
Reportable segment liabilities	(6,755)	(2,832)	(7,072)	(16,659)

5.  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:

	12M ending 30 Sep 2022	18M ending 30 Sep 2021
Earnings (£'000)
Earnings for the purposes of basic and diluted earnings per share being profit/(loss) for the year attributable to equity shareholders	(5,219)	(5,436)
Number of shares
Weighted average number of shares for the purposes of basic earnings per share	56,719,539	51,284,412
Weighted average dilutive effect of conditional share awards	968,399	1,545,392
Weighted average number of shares for the purposes of diluted earnings per share	57,687,938	52,829,804
Profit per ordinary share (pence)
Basic profit per ordinary share	(9.04)	(10.60)
Diluted profit per ordinary share	(9.04)	(10.60)

Adjusted earnings per ordinary share (pence)*	(7.44)	(9.11)
The calculation of adjusted earnings per share is based on the following data:
	2022	2021
	£000	£000
(Loss) / Profit for the period attributable to equity shareholders	(5,129)	(5,436)
Add back:
Amortisation on acquired intangible assets	605	1,128
Share based payment on IPO and SIP at Admission	-	(364)
Tax effect on above	(12)	2
Adjusted earnings	(4,536)	(4,670)

*Adjusted earnings per share is calculated as profit for the period adjusted for amortisation as a result of business combinations, exceptional items, share based payments 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.

6.  TRADE AND OTHER RECEIVABLES

	30 Sep 2022	30 Sep 2021
	£000	£000
Amounts falling due within one year:
Trade receivables not past due	2,698	4,861
Trade receivables past due (1-30 days)	1,948	3,192
Trade receivables past due (over 30 days)	3,279	3,344
Trade receivables not yet due (retentions)	1,620	-
Trade receivables net	9,545	11,397
Contract assets	3,194	5,432
Other receivables	203	563
Prepayments and accrued income	433	542
Derivative financial assets	-	37
	13,375	17,971

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. The derivative financial asset relates to forward foreign currency contracts.

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.

7.   BORROWINGS

	30 Sep 2022	30 Sep 2021
	£000	£000
Current
Trade Loan Facility Lease liability	3,990 208	2,999 161
CBILS Bank Loan	3,000	-
	7,198	3,160
Non-current
CBILS Bank Loan Lease liability	- 194	3,053 130
	194	3,183

The CBILS Bank Loan was renewed in October 2022 and is due for maturity on 31 October 2023, the trade Loan Facility has been renewed post year end and is due for Maturity on 31 July 2023.

8.  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 are 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 8 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 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 financial statements.

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. 

 

END

 

 

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