Trading Statement and the Impact of Corona Virus

RNS Number : 2699D

Tekmar Group PLC

18 February 2020

 

18 February 2020

The information communicated within this announcement is deemed to constitute inside information as stipulated under the Market Abuse Regulations (EU) No. 596/2014. Upon the publication of this announcement, this inside information is now considered to be in the public domain.

TEKMAR GROUP PLC

("Tekmar Group" or the "Group")

TRADING UPDATE AND THE IMPACT OF CORONAVIRUS

Tekmar Group (AIM: TGP), a leading technology provider of subsea protection systems for the global offshore energy markets, announces a trading update, which reflects the foreseeable impact of the outbreak of the coronavirus on the Group's performance in the year ending 31 March 2020 ("FY20").

The Board stated, in the Half Year Results announced on 3 December 2019 (RNS Number 4083V), that seasonal weighting in the Group's performance was in line with our expectations and that the Group was firmly on track to meet market expectations for FY20. These expectations included identified sales into China in Q4. In addition to this, some of the Group's estimated cost of sales was based on pricing for components sourced from China.

China's necessary and prudent response to the outbreak of the coronavirus, including the restriction of travel in the country, is affecting the Group's performance materially in a number of ways.  The Board now expects that the Group's earnings in FY20 will be broadly in line with those achieved in FY19, as a result of the following factors:

·   all of the Group's projects scheduled for shipment to China have been delayed and there is little visibility as to when travel restrictions will be lifted;

·   the supply of components from China has ceased pending further notice. The Group has the ability to source replacement components from Europe and any resulting delay will not affect contractual delivery schedules for clients, but does affect the timing of revenue recognition and margins on affected projects; and

·   the Group's office in Shanghai, which services the whole of APAC, has been placed on official shutdown, as have many of our clients' and suppliers' offices in the region.

China accounted for circa 10% of our revenue forecast in FY20 and represented 20% of our outstanding supply-chain commitments.   

Tekmar fully supports the efforts that are being taken to contain the virus and is working in close conjunction with local authorities and partners in this regard.

Increased costs relating to one project within Subsea Innovation, which have arisen since December, are also affecting the Group's performance in FY20 to a lesser extent. Mitigating measures are being implemented to minimise the impact of these additional costs.   

Alasdair MacDonald, Chairman of Tekmar Group, said: "The disruption caused by the outbreak of the coronavirus on the Group's activities and performance has been unpredictable and rapid, impacting the Group materially in our crucial, heavily weighted Q4 period. With the situation in China and the surrounding APAC countries evolving, we are not yet able to evaluate the full impact of the virus on FY21 and will provide further updates as necessary."

Enquiries:

Tekmar Group plc James Ritchie-Bland, Chief Executive Officer Sue Hurst, Chief Financial Officer	[phone]
Grant Thornton UK LLP (Nominated Adviser) Philip Secrett / Samantha Harrison	[phone]
Berenberg (Broker) Chris Bowman / Ben Wright / Richard Salmond	[phone]
Belvedere Communications (Financial PR) Cat Valentine ([e-mail]) Keeley Clarke ([e-mail])	[phone] [phone] [phone]

About Tekmar Group plc - https://investors.tekmar.co.uk/

Tekmar's vision is to be the partner of choice for the supply and installation support of subsea protection equipment to the global offshore energy markets. The Group has five primary operating companies; these are Tekmar Energy Limited, Subsea Innovation Limited, AgileTek Engineering Limited, Ryder Geotechnical Limited and Pipeshield International limited.

Tekmar Energy is a global market leader in protection systems for subsea cable, umbilical and flexible pipe. Tekmar has been trusted to protect billions of Euros worth of assets in the offshore wind, oil and gas, wave, tidal and interconnector markets since 1985: https://www.tekmar.co.uk/

Subsea Innovation is a global leader in the design, manufacture and supply of complex engineered equipment and technology used in the offshore energy market. Its products include large equipment handling systems which operate on the back of pipelay installation vessels; emergency pipeline repair clamps (EPRC) which protect major oil and gas pipelines, and bespoke equipment for use in the construction of offshore energy projects: https://www.subsea.co.uk/

AgileTek Engineering is an award-winning subsea engineering consultancy for offshore energy projects. AgileTek helps its clients de-risk projects through advanced computer simulation and analysis. https://agiletek.co.uk/.  AgileDat, a division of AgileTek, provides software development, cloud architecture and data analytics services. https://agiledat.co.uk/

Ryder Geotechnical provides expert geotechnical design and consulting services to the offshore wind and subsea oil and gas sectors. Services include offshore structure foundation design, geohazard assessment and subsea cable routing and burial assessment.  https://www.rydergeotechnical.com/

Pipeshield International is a market leading provider of specialised subsea protection solutions, in the form of concrete mattresses.  These mattresses are used for the stabilisation and impact protection of subsea equipment, in areas where they cannot be buried, and to limit the development of scour (seabed erosion), particularly local to that of a foundation, pipeline or in marine ports. http://www.pipeshield.com/.

The Group and Tekmar Energy are headquartered in Newton Aycliffe; AgileTek and Ryder operate from offices in London and Newcastle; Subsea Innovation has its head office and manufacturing centre in Darlington.  Pipeshield's headquarters are in Lowestoft with manufacturing in Blyth, Northumberland. Tekmar also has representation in South Korea, USA, China and across the Middle East. 

 

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