TEKMAR GROUP PLC

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

 

UNAUDITED INTERIM RESULTS

For the 6-month period ended 31 March 2025

​

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 ended 31 March 2025 ("HY25" or the "Period").

 

Headlines for the Period

·      Revenue of £12.3m (HY24: £16.2m) at 29% gross margin and adjusted EBITDA of £(0.7)m (HY24: £1.8m)

·      Trading for the Period reflects the anticipated lower activity levels in H1. As previously guided, profit delivery is expected to be weighted towards the second half of FY25

·      Order intake during the Period of £10m (HY24: £21m) at a blended gross margin of 32%. Whilst awards were slower than anticipated, effective cost control helped offset the impact of lower revenue

·      The visible pipeline remains strong with in excess of £50m of projects scheduled for award in the second half of this calendar year

·      Net debt of £1.8m as at 31 March 2025 (£3.6m as at 31 March 2024). Ongoing disciplined cashflow management including agreed payment plan to reduce aged debt in China with £0.6m received during June 2025

 

 

Solid progress made on key initiatives within Project Aurora - our strategic plan to deliver true scale

·      Organisational restructure and focus on costs have achieved over £1m of annualised cost savings, representing an overhead reduction of 11%, providing a leaner cost base for FY26 and opportunities to invest in growth

·      Recent simplification of business and now reorganised across two verticals: Asset Protection Technology and Offshore Energy Services 

·      Significant progress made in closing out legacy warranty claims in relation to alleged CPS defects

·      New talent acquired to support the front end of the business in capturing growing market opportunities

·      Annual review process of banking facilities concluded including the renewal of the £4m trade loan facility. In addition, the Group has taken out a 3-year £2m Growth Guarantee Scheme term loan, supported by the British Business Bank

·      Together with the trade loan facility, the Group will utilise these facilities to support ongoing working capital and repay the CBILs loan which is due for repayment on 31 October 2025

·      The Board continues to actively assess and progress accretive M&A opportunities

 

 

HY25 financials

	6M ending Mar-25 Unaudited £m	6M ending Mar-24 Unaudited5 £m	12M ending Sep-24 Audited5 £m
Revenue	12.3	16.2	32.8
Gross Margin	29%	33%	32%
Adjusted EBITDA1	(0.7)	1.8	1.7
Net Cash / (Debt) 2	(1.8)	(3.6)	(1.6)

 

Sales KPIs

	6M ending Mar-25 Unaudited £m	6M ending Mar-24 Unaudited £m	12M ending Sep-24 Unaudited £m
Order Book3	12.6	21.9	16.4
Order Intake4	10.0	21.1	32.4

 

 

 

 

 

 

Richard Turner, CEO, commented: "We remain confident in the strength of our bidding pipeline and expect H2 order intake to be strong, however the build of order book has been slower than we anticipated. Whilst this impacted H1 activity levels it strengthens our visible pipeline for the remainder of the calendar year.

 

We have performed very well operationally in the first half of this year with excellent QHSE performance and On Time Delivery. We have also made solid progress on our strategic plan - strengthening the business and building the platform for sustained growth for 2026 and beyond - alongside maintaining a tight control of cash and cost. However, we still have significant free capacity, and our results reflect this underutilisation.

 

Our priorities for the second half of the year are to drive the business to meet our financial commitments for FY25 and win good quality orders that lead to a strong starting backlog for FY26. We continue to engage with potential acquisition targets and will remain disciplined in our approach as we execute on our strategy to deliver true scale and diversification for Tekmar and value for shareholders."

 

 

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)	Figures for FY24 and HY24 exclude Subsea Innovation Limited due to divestment in May 2024. These figures are treated as discontinued operation.

 

Enquiries:

Tekmar Group plc Richard Turner, CEO Leanne Wilkinson, CFO	c/o +44 (0)20 4582 3500
Cavendish (Nominated Adviser and Broker) Peter Lynch / Neil McDonald / Pearl Kellie	+44 (0)131 220 9771
Gracechurch PR (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.

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 2025

 

First half performance and full year outlook

The first half trading performance reflects our expectation for a stronger weighting of profit delivery in the second half of FY25. In terms of our two end markets, £8m of revenue was within the offshore wind market and £4m in other offshore markets, in particular Oil & Gas. Revenues for the offshore wind market in particular were lower than the prior year period, reflective of timing of project awards as the sector recovers from its well-publicised challenges. Offshore energy markets have now hit an inflection point and demand is starting to increase as expected in the second half of 2025 and is expected to continue to increase into 2026. During the period we remained disciplined in our commercial approach and maintained tight controls on overhead costs and cash as we position the business to capture the growing momentum in our markets.

 

Looking ahead to the rest of the financial year, the addressable order volume and value across our markets is significant with a visible pipeline of over £400m, of which in excess of £50m of projects are scheduled for award in the second half of this calendar year. We have a number of significant tender opportunities across all revenue lines as well as a material volume of "in and out" work. Whilst the timing of these awards can be subject to change, the shape of the pipeline supports our dual objective of delivering on our financial commitments for the current financial year whilst building a strong backlog for FY26.  Accordingly, subject to these anticipated awards, the Board expects EBITDA generation to be improved in the second half such that a reasonable expectation is for adjusted EBITDA for FY25 to be broadly consistent with FY24.

 

Order Intake

We have secured a number of important contract wins since the start of the calendar year which highlight the differentiated technology we offer to the market:

 

•     A high profile UK offshore wind contract award with a total value in the region of £5 million for a UK-based offshore wind farm project.

•     A contract to provide grouting services for the Inch Cape Offshore Wind Farm, located off the east coast of Scotland, reinforcing our strategic focus on expanding our presence in this critical service area.

•     A three-year framework agreement with Nexans S.A. to provide a wide scope of critical engineering support to Nexans' offshore wind projects worldwide, including cable burial risk assessments, installation analysis and specialist subsea engineering consultancy.

 

Being able to deliver this breadth of protection technology and complementary services sets us apart in the market and puts us ahead of the competition in being able to support the full lifecycle of offshore energy projects.

 

Update on Project Aurora - our strategic plan to deliver true scale

In December 2024, we communicated to the market a summary of our 3-5 year strategic plan - "Project Aurora". The plan is rooted in driving significant organic growth across the Group's existing portfolio of products and services, along with complementary M&A. This addresses the importance of Tekmar achieving greater scale and in doing so benefiting from significant profitability gains through operational gearing.

 

Since our last results update to the market, we have made progress in a number of areas that help to strengthen our growth platform:

 

(i)            Implemented a simplified business structure and reorganisation aligned with Project Aurora

Reflecting the core capabilities of the Tekmar Group today we are refocusing the business across two scalable value streams:

 

Asset Protection Technology: this includes our end-to-end engineering and analysis capability, from feasibility, through to installation, commissioning and operations, augmented with our advanced technology in polyurethane and concrete protection systems. These capabilities have been the primary profit generators for Tekmar historically and we expect this revenue stream to continue to grow as we deliver the organic growth potential of the Group under Project Aurora. 

 

Offshore Energy Services: this includes our grouting and equipment rental services, where we have an established fleet of assets which delivered revenue of £1.5m in FY24. Demand for these services is strong, and we have increased our asset base, which is ultimately expected to support circa £6m annual run rate revenue going forward. Our intention is to continue to invest in further capability and to broaden our range of services which will enhance the Group's blended margin and strengthen cash flow.

 

We will increasingly align our resources with these revenue streams to drive order intake and deliver revenue. Our M&A roadmap is also aligned and complementary to this structure.

 

We are embedding this structure organisationally to drive growth across these revenue streams and in this respect we are reviewing our basis of segmental reporting with a plan to align for FY25 results.

 

(ii)           Strengthening the platform - growth financing

Post the period-end we have renewed the £4m trade loan facility with Barclays and put in place a new £2m 3-year term loan with the British Business Bank.  Together with the trade loan facility, the Group will utilise these facilities to support ongoing working capital and repay the CBILs loan which is due for repayment on 31 October 2025. We are in discussions to establish our first asset backed lending facility with the proceeds to be used in acquiring additional grouting equipment with an attractive payback period of less than 2 years on investment. This builds on our recent growth in this area and the increased asset base will be used to drive growth across both offshore wind and oil and gas markets and supports our planned expansion into other regions, particularly Europe. This investment in our grouting asset base supports our strategic objective to increase services revenues and strengthen Group margins.

 

(iii)          Good progress in relation to warranty claims regarding alleged CPS defects

Tekmar has continued its commitment in working with relevant installers and operators to investigate further, the root cause of ongoing legacy defect notifications relating to the industry-wide issue regarding abrasion of legacy cable protection systems installed at offshore windfarms. This has been undertaken without prejudice and on the basis that Tekmar has consistently denied any responsibility for these issues. The Root Cause Analysis (RCA) investigations have not concluded that Tekmar products are defective.

 

As covered in our FY24 Annual Report, Tekmar has been working in collaboration with the two relevant customers, to explore the insurance available for such matters notwithstanding Tekmar's position regarding responsibility and liability. The Group has negotiated a commercial settlement with its Extended Product Liability (EXPL) insurance provider of £5.2m in relation to the relevant claims. These insurance proceeds are available for use at the discretion of the Group in settlement of the relevant claims, with any unused cash repayable to the insurer. 

 

In March 2025, we announced we had reached a commercial settlement with one of the customers relating to one of the ongoing legacy defect notifications. The balance of the settlement agreement was fully covered by the insurance monies already received by the Company with nil cash impact on the Company. The settlement does not impact the Company's ongoing commercial relationships in the industry. Commercial discussions are ongoing regarding resolution of the remaining disputes related to the legacy defect notifications.

 

(iv)          M&A - engagement with selected targets is ongoing

The organic growth plan is complemented by the Group's M&A strategy to deliver additional scale and diversification. This plan is supported by the £18m of funding available, subject to conditions including SCF Investment Committee approval, through the SCF convertible loan note instrument and the relevant experience and relationships across the Board and the broader business.

 

Accelerating the level of EBITDA and cash generation of the Group is key in our assessment of opportunities as we look to build scale, strengthen the technology and services we offer customers, and expand our reach in targeted geographies. A robust acquisition pipeline has been developed, and the Board is actively engaged with accretive acquisition targets. We continue to adopt a disciplined approach to assessing value in order to bring affordable scale to the group.

 

(v)           A continued focus on costs and cash

Cash collection continues to be a key priority and good progress has been made with regards to £2.1m of overdue debt in China, where a payment plan has recently been formally agreed.  Approximately £0.6m has been received in June 2025 with the remainder anticipated over the remaining calendar year.

 

Additionally, during the financial year, we have managed costs prudently and delivered over £1m of annualised cost savings. This has been achieved primarily through the management of headcount and other areas such as IT and equates to an 11% reduction in overhead. These savings provide a leaner cost base to go into FY26 and some headroom to offset general inflationary increases and for targeted investment in our sales capability.

 

We continue to maintain tight controls on managing the cash requirements of the business to support growth and working capital, including disciplined capex and targeted investment in products and services that represent the greatest opportunity for near-term growth. Capex for the current financial year is expected to be in the region of £0.5m, excluding any additional asset financed grouting investment.

 

Increasingly Favourable Markets Support Sustained Demand for Tekmar's Technology⁽¹⁾

The key indicators across offshore energy markets are consistent with an improving market environment.

 

In offshore wind, there is now a higher volume of projects being sanctioned than ever before as the market moves into recovery and builds momentum after the challenges of recent years. The lead indicators support this improving trajectory - 2023 and 2024 combined saw a record-high Final Investment Decision ("FID") of 19.4GW, reversing the pause in 2022 when 0.8GW of offshore wind capacity was consented⁽¹⁾. Linked to this, industry analysts forecast 1,000 turbines per year will be installed through 2028, increasing to 2,000 by 2030⁽²⁾. Demand is expanding globally, with Europe remaining the anchor growth market, particularly the UK ⁽³⁾. In addition, turbine OEMs are reporting improved financial performance ⁽⁴⁾ and cable manufacturers are reporting stronger backlogs ⁽⁵⁾. Activity levels across the oil and gas industry highlight the continued high and sustained levels of CAPEX and OPEX, with this investment increasingly recognised as essential to support energy transition ⁽⁵⁾. These factors in turn indicate supply chain capacity will be stretched and supports sustained demand for Tekmar's technology and engineering services.

 

Richard Turner

Chief Executive Officer

26 June 2025

 

 

Sources:

(1) 4C Offshore, Offshore Wind Farms Project Opportunity Pipeline Database, Version Q1 2025

(2) GWEC, "Strong 2023 offshore wind growth as industry sets course for record-breaking decade" Article

(3) Julius Baer, "Offshore wind: growth outlook across different parts of the world" Article

(4) offshoreWIND.biz: Vestas: "We Returned to Profitability"

(5) Offshore-Mag, "Shortage of submarine power cables poses threat to offshore wind market" Article

 

Group financial performance

 

Overview

The Group reported revenue of £12.3 million for the 6-month period ended March 2025, representing a decrease of £3.9 million compared to the £16.2 million reported for the 6-month period to 31 March 2024. This was due to lower demand within offshore wind and aggressive pricing pressure in one region relating to the supply of concrete products.  £8.1 million of revenue was generated within the offshore wind market and £4.2million in other offshore markets, in particular Oil & Gas.  Gross margin on the revenue delivered in the half year was 29%. Whilst revenues are down on the prior year comparators, demand is starting to increase in line with the improving environment across offshore energy markets.

 

 

 

	6M ending Mar-25 Unaudited £m	6M ending Mar-24 Unaudited £m	12M ending Sep-24 Audited £m
Revenue	12.3	16.2	32.8
Gross Profit	3.5	5.4	10.5
Adjusted EBITDA(1)	(0.7)	1.8	1.7
(LBT) from continuing operations	(2.7)	(0.4)	(4.5)
EPS from continuing operations	(1.93p)	(0.26p)	0.23
Adjusted EPS(2)(3) from continuing operations	(1.50p)	(3.74p)	(1.00p)

 

Subsea Innovation Limited was divested in May-24 and therefore figures for FY24 and HY24 exclude Subsea Innovation Limited. The figures are treated as treated as 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.

(3) Earnings for EPS calculation are adjusted for exceptional items as shown in note 5 below.

 

Asset Protection Technology

Demand for our cable protection technology and engineering services has been lower the last year in both Offshore Wind and Oil & Gas. In wind this slowdown is symptomatic of the challenges created by increased interest rates and material price inflation in parallel with lower strike prices that stretched project economics and significantly delayed approvals. These macro-economic effects have progressively been overcome, and the industry is regaining momentum. This is demonstrated by record levels of Final Investment Decisions (FIDs) in 2023/24, a robust indication of sustainably increasing demand moving towards us and the wider supply chain. This anticipated resurgence is further reflected by our inquiry pipeline that has increased considerably over the last year with some significant awards expected this summer for deliver in 2026 and beyond.

 

Our concrete stabilisation and protection technology is used globally in all segments of offshore energy. Our primary geographical market within Oil & Gas is the Middle East. Pricing has been particularly aggressive in this region and we elected not to take on some large contracts with unfavourable cash flows. As part of our operational excellence programme under the Project Aurora strategic framework, we have identified opportunities for greater supply chain efficiencies which will ensure we can compete effectively in the Middle East market. We have also strengthened our sales resource effectiveness through replacement hires and re-organisation, and the identified broader opportunities to focus our concrete products on more value-add projects. Furthermore, market dynamics are now shifting towards a surplus of aggregated demand from Oil & Gas and Marine Civils port infrastructure.

 

Offshore Energy Services

Since our initial investment into offshore grouting assets in 2022, we have been successful in both winning and executing projects and have established a strong track record supported by excellent customer feedback. In FY24 we delivered £1.5m of revenue from grouting services. These assets have a proven strong return on investment and a positive growth outlook supported by industry demand across all of our end markets.  Towards the end of FY24 we added two further units to the fleet giving us a capability to ultimately generate revenue of c.£6m per year. During FY25 to date we have secured revenue of £1.8m and have an active pipeline of opportunities of c.£5m for grouting projects that will be executed in the remainder of FY25 and into FY26. Similarly, our equipment rental services have been in high demand, in particular our bespoke lifting and deployment frames. In HY25 these assets delivered a gross margin in excess of 90%.

 

Results are analysed below by market, and it is planned that FY25 segmental reporting will align to our key revenue streams and growth plan as detailed above.

 

Revenue

Revenue by market
£m	6M Mar25	6M Mar24	12M Sep24
Offshore Wind	8.1	11.3	17.1
Other Offshore	4.2	4.9	15.7
Total	12.3	16.2	32.8

 

Blended gross profit margin for the Group was 29% for the 6-month period.

 

Gross profit margin in Offshore Wind was 25% in HY25. This was impacted by a remaining lower margin legacy project which were completed in the period, therefore gross profit margin for this division for the full year is expected to progressively improve.  Projects within the Other Offshore market, including Oil & Gas and Marine Civils infrastructure, delivered a strong gross profit margin of 35%, reflecting solid commercial performance during the period.

 

Gross Margin

Gross Profit by market
£m	6M Mar25		6M Mar24	12M Sep24
Offshore Wind		2.0	2.9	5.5
Other Offshore		1.5	3.7	6.0
Unallocated costs		-	(1.2)	(1.0)
Total		3.5	5.4	10.5

Unallocated costs in the 6-months to Mar 24 and 12-months to Sep 24 related to manufacturing facility production costs which are absorbed within each market segment gross margin for the 6-months to Mar 25.

 

Operating expenses

The cost base continues to be carefully managed and cost-saving measures have been implemented during the year to date which will take effect in the second half of the year. This provides an annualised benefit of over £1m for FY26 and provides some flexibility for headcount investment and general inflationary pressures. 

 

Adjusted EBITDA

Adjusted EBITDA is a primary measure used by management to monitor and provide a consistent measure of trading performance from one period to the next.  The adjustments to EBITDA remove material items of a one-off nature or of such significance that they are considered relevant to the user of the financial statements as it represents a useful measure that is reflective of the comparable performance of the business.  The Board reviews all exceptional items to ensure resulting Adjusted EBITDA achieves this.

 

The £(0.7)m Adjusted EBITDA loss for the 6 months ended 31 March 2025 (HY24: £1.8m) reflects a decrease of £2.5m as a result of the trading performance described above.

 

The below table shows the adjustments that have been made to calculate Adjusted EBITDA.

 

EBITDA Reconciliation (£m)	6 months Mar-25	6 months Mar-24	12 months Sep-24
Reported operating loss	(2.3)	(0.0)	(3.8)
Amortisation of acquired intangible assets	0.0	0.1	0.1
Amortisation of other intangible assets	0.1	0.3	0.3
Depreciation on tangible assets	0.6	0.4	0.9
Depreciation on ROU assets	0.2	0.2	0.4
EBITDA	(1.4)	1.0	(2.1)
Adjusted items:
Share Based Payments	0.1	-	0.2
Impairment of goodwill	-	-	1.5
Implementation of accounting system	-	-	0.2
Warranty legal costs	0.1	-	0.6
Expected credit loss	-	-	0.5
Foreign exchange losses & gains	-	0.8	0.6
Restructuring costs	0.5	-	0.2
Adjusted EBITDA	(0.7)	1.8	1.7

Subsea Innovation Limited was divested in May-24 and therefore figures for FY24 and HY24 exclude Subsea Innovation Limited. The figures are treated as treated as discontinued operation.

 

Profit

This figure includes £0.7m of one-off exceptional items, comprising £0.5m in restructuring costs related to executive management changes, £0.1m exceptional share-based payment charge and £0.1m in warranty costs.

 

On a statutory basis, the Group's loss before tax for the Period was £2.7m, reflecting the trading performance outlined above. 

 

Balance Sheet

£m		Mar25	Mar24	Sep24
Fixed Assets		4.1	6.7	4.5
Intangible assets Investment Property		16.6 -	18.9 -	16.8 2.8
Inventory		1.7	3.2	1.9
Trade & other receivables		14.2	15.1	20.3
Assets held for sale		2.8	5.0	-
Cash		3.9	2.7	4.6
Current Liabilities		(16.6)	(13.5)	(20.9)
Liabilities held for sale		-	(2.8)	-
Non-current liabilities		(1.7)	(1.4)	(1.8)
Equity		(25.1)	(33.9)	(28.2)

 

Fixed Assets

During the 6-month period to March 2025, we were disciplined in our approach to capital expenditure and focused on investments which support near term growth and returns. As a result, additions were £0.3m in the half-year to March 2025, which mainly related to grouting silos and production moulds.

 

Intangible assets

Intangible assets include goodwill which was £15.8m at the balance sheet date versus £15.8m at the end of FY24.  The goodwill relates to the original management buy-out of subsidiaries since 2011.

 

Inventory

Inventory on the balance sheet was £1.7m, a similar level to FY24.  The £1.5m reduction versus HY24 related to work-in-progress on two large Middle Eastern projects.

 

Trade and other receivables

Trade and other receivables of £14.2m includes a trade receivables balance of £5.7m and contract assets of £6.2m.  Also, £1.2m cash was received to March 2025 followed by a further £0.5m in May 2025, relating to deferred consideration on the disposal of Subsea Innovation Ltd in May 2024.

 

Collections are well managed with particular focus around Middle East and China debtors.  Of the £2.1m aged debt with China, £0.6m has since been received in June 2025.  In addition, a £0.5m credit loss provision remains, which was held against this debt at FY24 due to the duration of the debt.  The billed amounts are not in dispute and a further payment plan is in place which would see the debt largely recovered in the calendar year.

 

Contract assets of £6.2m were £2.6m higher versus £3.6m at HY24. This relates to accrued income on two large contracts scheduled to move to billed debt in the following quarter.

 

Asset held for sale

The Group holds an investment property valued at £2.8m, which was retained following the divestment of Subsea Innovation Ltd in May 2024.  The property is marketed for sale and therefore reported as an asset held for sale at HY25.

 

Assets and liabilities held for sale in HY24 relate to the divestment of Subsea Innovation Limited, which completed in May 2024.

 

Cash

Cash balance at the period end to 31 March 2025 was £3.9m. This was offset by bank borrowings of £5.8m resulting in net debt of £1.8m.  The cash balance included the residual £3.8m of insurance proceeds from the £5.2m received in October 2024 relating to legacy defect notifications, following the £1.4m commercial settlement reached with a particular customer in March 2025.  Bank borrowings of £5.8m included the £3.0m CBILs loan and £2.8m of the £4.0m trade loan drawn.

 

Current liabilities

Current liabilities increased by £3.1m to £16.6m (HY24: £13.5m).  Within the £3.1m, £3.8m related to anticipated commercial settlement regarding legacy warranty matters, as detailed in the FY24 annual accounts, offset by a £0.6m reduction in trade loan borrowings which stood at £2.8m. 

 

Bank Facilities

During the month of June 2025, banking facilities were renewed with Barclays Bank.  This comprises a renewal of the £4m 80% UK Export Finance backed trade loan which remains a flexible facility available for ongoing working capital.

 

In addition, the Group has taken out a £2.0m Growth Guarantee Scheme loan, supported by the British Business Bank.  The loan is a 3-year term loan which will come into effect later this year prior to the repayment of the CBILs loan, due for repayment by 31 Oct 2025.

 

Consistent with FY24 and as noted in the basis of preparation below in the notes to the financial statements, due to the required annual renewal of our banking facilities and the uncertain timing of contract awards, the Group has disclosed a material uncertainty in relation to going concern.  Management remains confident that the relationship with Barclays, coupled with support from UK Export Finance and the growth outlook for the Group's core revenue markets, will ensure sufficient liquidity for the Group.

 

Other Non-current liabilities

Other Non-current liabilities of £1.7m (HY24: £1.4m) relate to lease liabilities in relation to IFRS16, warranty provision and deferred tax liability.

 

In summary, while we are not in control of the timing of contract awards, we see evidence of a significant improvement in our end markets, which we expect will benefit our order intake in the second half of the year and into FY26. This, in turn, should lead to positive operational gearing effects for the business.

 

We remain focused on managing the balance sheet to support our working capital requirements and growth opportunities, and our facilities will continue to be reviewed to ensure they are appropriately aligned with the business plan.

 

Leanne Wilkinson

Chief Financial Officer

26 June 2025

 

Consolidated statement of comprehensive income

for the 6M period ended 31 March 2025

	Note	6M ended  31 Mar 2025 Unaudited	6M ended  31 Mar 2024 Unaudited	12M  ended 30 Sep 2024 Audited
		£000	£000	£000
Revenue	4	12,344	16,211	32,808
Cost of sales		(8,802)	(10,819)	(22,291)
Gross profit		3,542	5,392	10,517
Administrative expenses		(5,914)	(5,413)	(13,195)
Expected credit loss		-	-	(520)
Warranty provision		-	-	(656)
Total administrative expenses		(5,914)	(5,413)	(14,371)
Other operating income		35	7	22
Group operating loss		(2,337)	(14)	(3,832)
Analysed as:
Adjusted EBITDA[1]		(675)	1,776	1,715
Depreciation		(765)	(653)	(1,277)
Amortisation		(137)	(336)	(366)
Exceptional share based payments charges		(83)	-	(160)
Impairment of goodwill		-	-	(1,546)
Exceptional IT costs		(43)	-	(169)
Financing		(13)	-	-
Foreign exchange (losses)/gains		-	(801)	(623)
Warranty provision		(154)	-	(656)
Expected credit loss		-	-	(520)
Restructuring costs		(467)	-	(230)
Group operating loss		(2,337)	(14)	(3,832)
Finance costs		(328)	(351)	(727)
Finance income		15	7	19
Net finance costs		(313)	(344)	(708)
Loss before taxation from continuing operations		(2,650)	(358)	(4,540)
Taxation		-	-	(557)
Loss for the period from continuing operations		(2,650)	(358)	(5,097)
Discontinued operations		-	(386)	(1,316)
Loss for the period		(2,650)	(744)	(6,413)
Items which will not be classified subsequently to profit or loss
Revaluation of property		-	71	75
Items which will be classified subsequently to profit or loss
Retranslation of overseas subsidiaries		(553)	(99)	(333)
Total comprehensive income for the period		(3,203)	(772)	(6,671)
Loss attributable to owners of the parent		(2,650)	(744)	(6,413)
Total Comprehensive income attributable to owners of the parent		(3,203)	(772)	(6,671)
Loss per share (pence) from continuing operations
Basic	5	(1.93)	(0.26)	(3.74)
Diluted	5	(1.93)	(0.26)	(3.74)
Loss per share (pence) from discontinuing operations
Basic	5	-	(0.28)	(0.97)
Diluted	5	-	(0.28)	(0.97)

 

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 2025

	Note	31 Mar 2025 Unaudited	31 Mar 2024 Unaudited	30 Sep 2024 Audited
		£000	£000	£000
Non-current assets
Property, plant and equipment		4,081	6,670	4,514
Goodwill and other intangibles	6	16,586	18,923	16,708
Investment property		-	-	2,842
Total non-current assets		20,667	25,593	24,064
Current assets
Inventory		1,657	3,202	1,878
Trade and other receivables	7	14,200	15,134	20,336
Cash and cash equivalents		3,902	2,662	4,630
		19,759	20,998	26,844
Assets held for sale		2,842	4,990	-
Total current assets		22,601	25,988	26,844
Total assets		43,268	51,581	50,908
Equity and liabilities
Share capital		1,373	1,360	1,373
Share premium		72,202	72,202	72,202
Merger relief reserve		744	1,738	744
Merger reserve		(12,685)	(12,685)	(12,685)
Foreign currency translation reserve		(994)	(207)	(441)
Retained losses		(35,589)	(28,527)	(33,029)
Total equity		25,051	33,881	28,164
Non-current liabilities
Other interest-bearing loans and borrowings	8	760	719	924
Trade and other payables		-	-	-
Deferred tax liability		235	686	234
Provisions		656	-	656
Total non-current liabilities		1,651	1,405	1,814
Current liabilities
Other interest-bearing loans and borrowings	8	6,198	6,616	6,554
Trade and other payables		5,914	6,661	8,503
Corporation tax payable		668	29	647
Provisions	9	3,786	210	5,226
		16,566	13,516	20,930
Liabilities held for sale		-	2,779	-
Total current liabilities		16,566	16,295	20,930
Total liabilities		18,217	17,700	22,744
Total equity and liabilities		43,268	51,581	50,908

 

 

Consolidated statement of changes in equity

for the 6M period ended 31 March 2025

	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 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
(Loss) for the Period	-	-	-	-	-	(5,699)	(5,699)	(5,699)
Revaluation of property	-	-	-	-	-	4	4	4
Exchange difference on translation of overseas subsidiary	-	-	-	-	(234)	-	(234)	(234)
Total comprehensive income for the year	-	-	-	-	(234)	(5,665)	(5,899)	(5,899)
Issue of shares	13	-	-	-	-	-	13	13
Share based payments	-	-	-	-	-	169	169	169
Total transactions with owners, recognised directly in equity	13	-	-	-	-	169	182	182
Transfer following sale of subsidiary	-	-	(994)	-	-	994	-	-
Balance at 30 September 2024	1,373	72,202	744	(12,685)	(441)	(33,029)	28,164	28,164
(Loss) for the Period	-	-	-	-	-	(2,650)	(2,650)	(2,650)
Exchange difference on translation of overseas subsidiary	-	-	-	-	(553)	-	(553)	(553)
Total comprehensive income for the year	-	-	-	-	(553)	(2,650)	(3,203)	(3,203)
Share based payments	-	-	-	-	-	90	90	90
Total transactions with owners, recognised directly in equity	-	-	-	-	-	90	90	90
Balance at 31 March 2025	1,373	72,202	744	(12,685)	(994)	(35,589)	25,051	25,051

 

Consolidated cash flow statement

for the 6M period ended 31 March 2025

		6M ended  31 March 2025 Unaudited	6M ended  31 March 2024 Unaudited	12M ended 30 Sep 2024 Audited
		£000	£000	£000
Cash flows from operating activities
Loss before taxation		(2,650)	(744)	(5,856)
Adjustments for:
Depreciation		765	653	1,365
Amortisation of intangible assets		137	336	483
Profit on disposal of fixed assets		-	-	41
Loss on disposal of subsidiary		-	-	1,316
Share based payments charge		90	-	193
Impairment of goodwill		-	-	1,546
Unrealised foreign losses / (gains)		148	-	(276)
Finance costs		328	351	727
Finance income		(15)	(7)	(19)
		(1,197)	589	(480)
Changes in working capital:
(Increase) / decrease in inventories		221	(1,075)	82
Decrease / (increase) in trade and other receivables		4,788	277	(2,533)
(Decrease) / increase in trade and other payables		(2,589)	(313)	790
(Decrease) / increase in provisions		(1,440)	(255)	5,439
Cash (used) / generated from operations		(217)	(777)	3,298
Tax paid		-	(208)	-
Net cash (outflow) / inflow from operating activities		(217)	(985)	3,298
Cash flows from investing activities
Purchase of property, plant and equipment		(269)	(426)	(1,697)
Purchase of intangible assets		(13)	(62)	(235)
Proceeds from sale of property, plant and equipment		-	-	71
Proceeds / (outflows) for sale of subsidiary		1,200	-	(112)
Acquisition of subsidiary minority interest		-	(150)	-
Interest received		15	7	19
Net cash inflow / (outflow) from investing activities		933	(631)	(1,954)
Cash flows from financing activities
Facility drawdown		5,806	6,016	11,413
Facility repayment		(6,238)	(6,278)	(11,805)
Repayment of borrowings under lease obligations		(144)	(265)	(436)
Shares issued		-	-	13
Interest paid		(328)	(315)	(795)
Net cash inflow outflow from financing activities		(904)	(842)	(1,610)
Net (decrease) in cash and cash equivalents		(188)	(2,458)	(266)
Cash and cash equivalents at beginning of year Effect of foreign exchange rate changes		4,630 (540)	5,219 (99)	5,219 (322)
Cash and cash equivalents at end of year		3,902	2,662	4,630

 

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 2024, 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 2024, as detailed on pages 125 to 135 of the Group's Annual Report and Financial Statements for the period ended 30 September 2024, 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 2024 has been extracted from the 2024 Financial Statements. 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 2024.

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 2024.

(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 2025. The recent annual banking facility renewal included the Group taking out a £2.0m Growth Guarantee scheme loan, backed by the British Business Bank, over a term of 3 years.  The funding from this loan will be timed alongside the repayment of the CBILs loan later in the year.  The Group continue to have the £4.0m trade loan facility available that can be drawn against supplier payments, currently available to at least June 2026.  The trade loan facility is provided with 80% support from UKEF due to the nature of the business activities both in renewable energies and in driving growth through export led opportunities. The Group held £3.9m of cash on 31 March 2025 including draw down of the £3.0m CBILS loan and a further £2.8m 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 2026.  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 consistent 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 trade loan facility is renewed and is available alongside the amortising GGS loan. Within the base case model management have modelled the outflow of cash of £3.8m in relation to note 9 Provisions within the going concern period which is offset against the corresponding insurance proceeds which were received in October 2024. 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 14% (£8m equivalent) for the 16 month period to 30 September 2026, to model the potential loss or delay of a certain level of contracts in the pipeline that form the base case forecast. In addition, the possibility of delays to further agreed planned receipts from China have been modelled. The base case and sensitised forecast also include 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 these interim financial statements. 

 

Regarding banking facilities, both the base case and severe but plausible scenario included the ongoing availability of the trade loan facility and repayment of the CBILS loan timed alongside the new GGS 3-year term loan by October 2025, in line with the facilities agreed with Barclays in June 2025.  The Directors are confident, based upon the communications with the team at Barclays, supported by the outlook for the business that the trade loan facility will be renewed in June 2026 and be available alongside the amortising GGS loan.

 

Contract Award and timings - In the severe but plausible scenario, management has adjusted the base case forecast to account for the potential downside impact of order intake not being converted within the expected timescales. This adjustment results in a 14% reduction in revenue over the going concern period. This sensitised model shows that there is sufficient cash headroom to continue to operate the business. 

 

The Group operates on a contract basis and during the normal course of business, contracts are expected to be executed within specific timeframes during the forecast period.  If the Group fails to secure a number of significant contracts, in line with its forecasted timeframes, during a period of lower cash reserves cash headroom would be breached. Management does not consider this to be a likely outcome based on current backlog levels being representative of prior periods coupled with a strong pipeline visibility, opportunities at preferred supplier status and further anticipated contracts awards within the required timescales. Such contract awards would provide sufficient cash resources for the going concern period.

Both the required renewal of the trade loan facility and contract award timing represent events or conditions which would indicate a material uncertainty that may cast significant doubt on the Group's and the 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 remain in place, 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 statements and for this reason they continue to adopt the going concern basis in preparing the interim financial statements.

 

(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 arises from the supply of subsea protection solutions and associated equipment, principally through fixed fee contracts. There were 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 variation orders are considered on a case-by-case basis to determine whether they form a separate performance obligation in their own right or an addition to the original performance obligation. The same revenue recognition criteria discuss above is then applied to the variation order.

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 purchase orders 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.

Tekmar Group plc applies the IFRS 15 Practical expedient in respects of determining the financing component of contract consideration: An entity need not adjust the promised amount of consideration for the effects of a significant financing component if the entity expects, at contract inception, that the period between when the entity transfers a promised good or service to a customer and when the customer pays for that good or service will be one year or less.

Accounting for revenue is considered to be a key accounting judgement which is further explained in note 3.

(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.  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. CRITICAL ACCOUNTING JUDGEMENTS AND ESTIMATES

The preparation of the Group financial statements under IFRS requires the Directors to make estimates and assumptions that affect the reported amounts of assets and liabilities. Estimates and judgements are continually evaluated and are based on historical experience and other factors including expectations of future events that are believed to be reasonable under the circumstances. Actual results may differ from these estimates.

The Directors consider that the following estimates and judgements are likely to have the most significant effect on the amounts recognised in the Group financial statements.

(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). 

(b)   Critical accounting estimates

Revenue recognition - stage of completion when recognising revenue overtime

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 £103,000. Within 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 by £21,000. 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 accrued income 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. The Group have recognised a credit loss provision in relation to a specific historic aged trade receivable (See note 7).

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. Provision is made where the recoverable amount is less than the current carrying value of the asset. Further details as to the estimation uncertainty and the key assumptions are set out in note 6.

Provision for warranty costs and recognition of related insurance income

In accordance with IAS 37, the company recognises a provision when it has a present obligation as a result of past events, it is probable that an outflow of resources will be required to settle the obligation, and a reliable estimate can be made of the amount of the obligation. The estimation and calculation of the value of provisions involves significant judgement, particularly in determining the likelihood, cost and timing of warranty related issues.

Additionally, the company may receive insurance receipts to cover certain warranty claims. These receipts are recognised as an asset only when it is virtually certain that reimbursement will be received if the company settles the obligation. The timing and amount of such receipts can be uncertain, requiring careful assessment and judgement to ensure accurate financial reporting.

4.     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 6-month period ended 31 March 2025 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 (2024 6M: two customers). The revenues relating to these in the 6-month period to 31 March 2025 were £4,851,000 (2024 6M: £7,017,000). Included within this is revenue from multiple projects with different entities within each customer.

 

Analysis of revenue by region	6M ending 31 Mar 2025 Unaudited	6M ending 31 Mar 2024 Unaudited	12M ending 30 Sep 2024 Audited
	£000	£000	£000
UK & Ireland	2,287	2,018	5,836
Germany	1,264	82	439
Italy	12	101	101
Belgium	17	130	-
Netherlands	1,414	-	-
Other Europe	106	161	413
China	72	21	665
USA & Canada	3,013	203	555
Japan	11	43	102
South Korea	314	539	828
Qatar	116	1,923	5,222
Taiwan	244	4,806	7,696
Egypt	-	5	-
Malaysia	94	-	-
UAE	221	334	2,695
KSA	2,626	4,892	4,674
Abu Dhabi	54	-	225
Africa	-	-	2,129
India	126	-	543
Other Middle East	-	-	40
Australia	134	-	-
Guyana South America	106	-	-
Africa	69	658	-
Rest of the World	44	295	645
	12,344	16,211	32,808

 

Analysis of revenue by market	Mar-25 Unaudited	Mar-24 Unaudited	Sep-24 Audited
	£000	£000	£000
Offshore Wind	8,114	11,293	17,100
Other offshore	4,230	4,918	15,708
	12,344	16,211	32,808

 

 

Analysis of revenue by product category	Mar-25 Unaudited	Mar-24 Unaudited	Sep-24 Audited
	£000	£000	£000
Offshore Energy protection systems & equipment	7,120	9,284	17,916
Marine Civils	4,486	6,375	13,688
Engineering consultancy services	738	552	1,204
	12,344	16,211	32,808

 

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

 

	Offshore Energy Mar-25 Unaudited	Marine Civils Mar-25 Unaudited	Group/ Eliminations Unaudited	Total Mar-25 Unaudited
	£000	£000	£000	£000
Revenue	7,858	4,486	-	12,344
Gross profit	1,971	1,571	-	3,542
% Gross profit	25%	35%	-	29%
Administrative expenses	(2,695)	(1,471)	(1,748)	(5,914)
Other operating income	1	-	34	35
Operating (loss)/ profit	(723)	100	(1,714)	(2,337)
Analysed as: Adjusted EBITDA	(36)	433	(1,072)	(675)
Depreciation	(424)	(333)	(8)	(765)
Amortisation	(109)	-	(28)	(137)
Share based payments	-	-	(83)	(83)
Impairment of goodwill	-	-	-	-
Exceptional IT costs	-	-	(43)	(43)
Financing	-	-	(13)	(13)
Warranty costs	(154)			(154)
Restructuring costs	-	-	(467)	(467)
Operating (loss)/ profit	(723)	100	(1,714)	(2,337)
Finance income	15	-	-	15
Finance costs	(62)	(8)	(258)	(328)
Tax	-	-	-	-
(Loss) / profit after tax on continuing operations	(770)	92	(1,972)	(2,650)

 

 

	Offshore Energy Mar-25 Unaudited	Marine Civils Mar-25 Unaudited	Group/ Eliminations Unaudited	Total Mar-25 Unaudited
	£000	£000	£000	£000
Other information
Reportable segment assets	13,920	9,361	19,987	43,268
Reportable segment liabilities	(9,690)	(1,744)	(6,783)	(18,217)

 

 

	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%
Administrative expenses	(2,410)	(1,876)	(1,127)	(5,413)
Other operating income	-	1	6	7
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 Sep-24 Audited	Marine Civils Sep-24 Audited	Group/ Eliminations Audited	Total Sep-24 Audited
	£000	£000	£000	£000
Revenue	19,465	13,343	-	32,808
Gross profit	5,724	4,793	-	10,517
% Gross profit	29%	36%	-	32%
Administration expense	(6,962)	(3,078)	(3,155)	(13,195)
Warranty provision	(656)	-	-	(656)
Expected credit loss	(520)	-	-	(520)
Other operating income	1	9	12	22
Operating profit/(loss)	(2,413)	1,724	(3,143)	(3,832)
Analysed as: Adjusted EBITDA	1,702	2,582	(2,569)	1,715
Depreciation	(811)	(454)	(12)	(1,277)
Amortisation	(268)	-	(98)	(366)
Share based payments	(46)	(6)	(108)	(160)
Impairment of goodwill	(1,546)	-	-	(1,546)
Exceptional IT costs	(46)	-	(123)	(169)
Foreign exchange losses	(222)	(398)	(3)	(623)
Warranty provision	(656)	-	-	(656)
Expected credit loss	(520)	-	-	(520)
Restructuring costs	-	-	(230)	(230)
Operating profit/(loss)	(2,413)	1,724	(3,143)	(3,832)
Finance income	18	1	-	19
Finance costs	(74)	(6)	(647)	(727)
Tax	(496)	(334)	273	(557)
(Loss) / profit after tax on continuing operations	(2,965)	1,385	(3,517)	(5,097)

 

	Offshore Energy Sep-24 Audited	Marine Civils Sep-24 Audited	Group/ Eliminations Audited	Total Sep-24 Audited
	£000	£000	£000	£000
Other information
Reportable segment assets	17,119	11,405	22,384	50,908
Reportable segment liabilities	(12,022)	(3,673)	(7,249)	(22,944)

 

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:

	6M ending 31 March 2024 Unaudited	6M ending 31 March 2024 Unaudited	12M ending 30 Sep 2024 Audited
Earnings (£'000)
Earnings for the purposes of basic and diluted earnings per share being profit/(loss) for the year attributable to equity shareholders	(2,650)	(744)	(6,413)
Number of shares
Weighted average number of shares for the purposes of basic earnings per share	137,221,699	136,072,626	136,305,536
Weighted average dilutive effect of conditional share awards	3,975,795	7,720,039	8,281,261
Weighted average number of shares for the purposes of diluted earnings per share	141,197,494	143,792,665	144,586,797
Basic per ordinary share (pence)
From continuing operations	(1.93)	(0.26)	(3.74)
From discontinuing operations	-	(0.28)	(0.97)
Diluted profit per ordinary share (pence)
From continuing operations	(1.93)	(0.26)	(3.74)
From discontinuing operations	-	(0.28)	(0.97)

 

 

Adjusted earnings per ordinary share (pence)*
From continuing operations	(1.50)	0.23	(1.00)
From discontinuing operations	-	(0.29)	(0.97)
The calculation of adjusted earnings per share is based on the following data:
	Mar-24 Unaudited	Mar-24 Unaudited		Sep-24 Audited
	£000	£000		£000
(Loss) for the period attributable to equity shareholders	(2,650)	(744)		(6,413)
Add back:
Impairment of goodwill	-	-		1,546
Amortisation on acquired intangible assets	28	64		98
Exceptional share based payment	83	-		160
Staff restructuring	467	-		230
Exceptional IT costs	43	-		169
Financing	13	-
Warranty provision and legal fees	154	-		656
Foreign exchange losses	-	787		-
Expected credit loss	-	-		520
Tax effect on above	(190)	(197)		351
Adjusted earnings	(2,052)	(90)		(2,683)

 

*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.

6. GOODWILL AND OTHER INTANGIBLES

	Goodwill	Software	Product development	Trade name	Customer relationships	Total
	£000	£000	£000	£000	£000	£000
COST
As at 1 October 2023	26,292	294	3,503	1,289	1,870	33,248
Additions	150	-	41	-	-	191
Discontinued operations	-	-	(570)	-	-	(570)
As at 31 March 2024	26,442	294	2,974	1,289	1,870	32,869
Additions	-	-	45	-	-	45
Disposals	-	(272)	(845)	-	-	(1,117)
Discontinued operations	(234)	-	-	(738)	(445)	(1,417)
As at 30 September 2024	26,208	22	2,174	551	1,425	30,380
Additions	-	-	13	-	-	13
As at 31 March 2025	26,208	22	2,187	551	1,425	30,393
AMORTISATION AND IMPAIRMENT
As at 1 October 2023	8,854	294	2,590	584	1,870	14,192
Charge for the period	-	-	248	64	-	312
Discontinued operations	-	-	(558)	-	-	(558)
As at 31 March 2024	8,854	294	2,280	648	1,870	13,946
Amortisation charge for the period	-	-	137	34	-	171
Disposals	-	(272)	(844)	-	-	(1,116)
Impairment charge	1,546	-	-	-	-	1,546
Discontinued operations	-	-	(18)	(412)	(445)	(875)
As at 30 September 2024	10,400	22	1,555	270	1,425	13,672
Amortisation charge for the period	-	-	106	29	-	135
As at 31 March 2025	10,400	22	1,661	299	1,425	13,807
NET BOOK VALUE
As at 30 September 2032	17,438	-	913	705	-	19,056
As at 31 March 2024	17,588	-	693	642	-	18,923
As at 30 September 2024	15,808	-	619	281	-	16,708
As at 31 March 2025	15,808	-	526	252	-	16,586

The remaining amortisation periods for software and product development are 6 months to 48 months (2024: 6 months to 48 months).

Goodwill has been reviewed for impairment against the model used in the FY24 impairment review. There are no indicators which have identified a further impairment and key assumptions are still considered to still be valid.

The method, key assumptions and results of the FY24 impairment review are detailed below:

Goodwill is attributed to the Cash Generating Unit (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-25 £000	Mar-24 £000
Offshore Energy Division	13,218	14,998
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 value in use of the cash generating unit. The value in use has been calculated using budgeted cash flow projections for the next 5 years. The forecasts have been compiled at individual CGU level with the first year 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 years 2 to 5 are based on assumed Compound Annual Growth Rates (CAGR). The CAGR applied across the 5-year period were 15.1% for the Offshore Energy CGU and 10% for the Marine Civils CGU. Gross margin assumptions applied range from the overall group margin for FY24 to a level in line with the margin reported for the Marine Civils segment.  The value in use calculation models an increase in revenue for both CGU's of 2% into perpetuity after year 5.

The cashflow forecasts assume growth in revenue and a corresponding increase in gross margin levels across the Group to bring the overall group margin broadly in line with the margin reported for the Marine Civils segment. These growth rates are based on past experience and market conditions and 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:

·      A post tax discount rate of 14.3 % Weighted Average Cost of Capital (WACC) 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%

 

The discount rate used to test the cash generating units was the Group's post-tax WACC of 14.3%.  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.

 

Marine Civils

The value in use calculations performed for the impairment review, together with sensitivity analysis using reasonable assumptions, indicate sufficient headroom for the remaining goodwill carrying value in the Marine Civils CGU.

 

Offshore Energy

 

The value in use calculations performed for the impairment review, together with sensitivity analysis using reasonable assumptions, indicate sufficient headroom for the remaining goodwill carrying value in the Offshore Energy CGU.

 

7.     TRADE AND OTHER RECEIVABLES

	Mar-25 Unaudited	Mar-24 Unaudited	Sep-24 Audited
	£000	£000	£000
Amounts falling due within one year:
Trade receivables not past due	720	1,639	3,978
Trade receivables past due (1-30 days)	1,900	1,710	1,517
Trade receivables past due (over 30 days)	3,440	6,303	2,744
Trade receivables not yet due (retentions)	180	346	259
Expected credit loss	(520)	-	(520)
Trade receivables net	5,720	9,998	7,978
Contract assets	6,154	2,858	3,590
Other receivables	498	879	637
Warranty insurance debtor	-	-	5,165
Prepayments	1,158	1,010	977
Deferred consideration on sale of subsidiary	571	-	1,742
Derivative asset	99	-	247
Deferred tax asset	-	389	-
	14,200	15,134	20,336

 

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.

The Group assesses on a forward-looking basis the expected credit losses (ECL) associated with its financial assets. The Group has the following types of financial assets that are subject to the expected credit loss model:

·      Trade receivables arising from sale of goods and provision of consultancy services

·      Contract assets relating to the sale of goods and provision of consultancy services

 

The Group recognises a loss allowance for such losses at each reporting date. The measurement of ECL reflects:

 

1.     An unbiased and probability-weighted amount that is determined by evaluating a range of possible outcomes.

2.     The time value of money.

3.     Reasonable and supportable information that is available without undue cost or effort at the reporting date about past events, current conditions, and forecasts of future economic conditions.

Methodology
The Group applies the simplified approach permitted by IFRS 9, which requires expected lifetime losses to be recognised from initial recognition of the receivables. The Group uses a provision matrix to calculate ECLs for trade receivables. The provision rates are based on days past due for Groupings of various customer segments that have similar loss patterns by geographical region and product type. The expected loss rates are based on the payment profiles of sales over a period of 5 years before 31 March 2025.

To measure the expected credit losses, trade receivables and contract assets have been grouped based on shared credit risk characteristics and the days past due. The contract assets relate to unbilled work in progress and have substantially the same risk characteristics as the trade receivables for the same types of contract. The Group has therefore concluded that the expected loss rates for trade receivables are a reasonable approximation of the loss rates for the contract assets.

Key Assumptions
The key assumptions used in estimating ECL are as follows:

-       Historical credit loss experience.

-       Adjustments for forward-looking information such as economic forecasts and industry trends.

-       The impact of macroeconomic factors on the creditworthiness of customers.

On that basis, the loss allowance as at 31 March 2025 and 30 September 2024 was determined as follows for both trade receivables and contract assets:

 

31 Mar 25 - £'000	Not yet due	< 3 Months past due	3m - 12m past due	> 12m past due
Expected loss rate	0%	0%	0%	25%
Carrying amount - Trade receivables	900	3,257	-	2,083
Carrying amount - Contract assets	6,154	-	-	-
Loss Allowance	Nil	Nil	Nil	520

 

Historically the Group has recovered 100% of receivable balances and no credit losses have previously been accounted for. 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 31 March 2025 the value of these overdue trade receivables was £2.0m, of a total outstanding trade receivable balance for the entity of £2.1m. These amounts remain outstanding at the approval of the half year results announcement. The Group made an expected credit loss provision in relation to the outstanding balances due to its Subsidiary within China. The provision is calculated on the weighted probabilities of the potential range of outcomes in relation to the outstanding balance.

 

All other receivables are considered to be 100% recoverable on the basis that previous trading history sets a precedent that these balances will be received. 

 

Trade receivables and contract assets are written off where there is no reasonable expectation of recovery. Indicators that there is no reasonable expectation of recovery include, amongst others, the failure of a customer to engage in a repayment discussion with the Group.

 

Impairment losses on trade receivables and contract assets are presented as net impairment losses within operating profit. Subsequent recoveries of amounts previously written off are credited against the same line item.

Reconciliation of Loss Allowance

The movement in the allowance for credit losses during the year was as follows:

£'000	31 Mar 2025	30 Sep 2024
Opening balance	520	-
Increase in loss allowance	-	520
Closing Balance	520	520

8.     BORROWINGS

	Mar-25 Unaudited	Mar-24 Unaudited	Sep-24 Audited
	£000	£000	£000
Current
Trade Loan Facility Lease liability	2,751 447	3,313 303	3,183 371
CBILs Bank Loan	3,000	3,000	3,000
	6,198	6,616	6,554
Non-current
Lease liability	760	719	924
	760	719	924

 

	Mar-24 Unaudited	Mar-24 Unaudited	Sep-24 Audited
	£000	£000	£000
Amounts repayable
Within one year	6,197	6,616	6,554
In more than one year but less than two years	353	257	344
In more than two years but less than three years	300	256	351
In more than three years but less than four years	107	206	175
In more than four years but less than five years	1	-	54
	6,958	7,335	7,478

 

	Mar-25 Unaudited	Mar-24 Unaudited	Sep-24 Audited
	£000	£000	£000
Average interest rates at the balance sheet dates
Lease liability	6.62	5.60	5.92
Trade Loan Facility	7.50	7.50	7.19
CBILS Bank Loan	7.50	7.50	7.50

 

The CBILS Bank Loan is due for repayment by 31 October 2025, with an approved £2.0m Growth Guarantee Scheme Loan being taken out before this date. The trade Loan Facility is renewed to at least Jun 2026, as described in note 2b.

Lease liability

This represents the lease liability recognised under IFRS 16. The assets leased are shown as a right of use asset within Tangible Fixed Assets and relate to the buildings from which the Group operates, along with leased items of equipment and computer software.

The asset and liability have been calculated using a discount rate between 3.25% and 7.25% based on the inception date of the lease.

These leases are due to expire between June 2025 and June 2029.

 

9.     PROVISIONS AND CONTINGENT LIABILITIES

Provisions are split between current and non-current. The carrying amounts and the movements in the provision account are as follows:

		Onerous contracts £000	Warranty provision £000	Total £000
Carrying amount at 1 October 2023		-	-	-
Additional provision		465	-	465
Amounts utilised		-	-	-
Reversals		(255)		(255)
Carrying amount at 31 March 2024		210	-	210
Carrying amount at 1 April 2024		210	-	210
Additional provision		-	5,821	5,821
Amounts utilised		(149)	-	(149)
Reversals		-		-
Carrying amount at 30 September 2024		61	5,821	5,882
Carrying amount at 1 April 2024		61	5,821	5,882
Additional provision		-	-	-
Amounts utilised		(49)	(1,391)	(1,440)
Reversals		-		-
Carrying amount at 30 September 2024		12	4,430	4,442

 

£3.8m of the warranty provision has been included as current liability as outflow of economic resources is expected within one year. The remaining provision (£0.7m) is expected to be paid in a period of greater than one year and therefore is included in non-current liabilities.

Onerous Contracts

The provision unwound in the period ending 31 March 2025 is 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 one contract in the offshore energy division (2024: one contract) which is expected to be completed in the year ending September 2025.

Warranty Provisions

As noted by the Group in prior public announcements, there is a historic industry-wide issue regarding abrasion of legacy cable protection systems installed at off-shore windfarms. The precise cause of the issues in each instance is not always clear and could be as a result of a number of factors, such as the decision by windfarm developers to exclude a second layer of rock to stabilise the cables.

Since the emergence of the issue, Tekmar has been 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 has been undertaken without prejudice and on the basis that Tekmar has consistently denied any responsibility for these issues. Given the extensive uncertainties the, the RCA investigations have not concluded that the Tekmar products are defective.

During the reporting period, the Group entered commercial settlement discussions with 2 customers to resolve disputes related to the legacy defect notifications on 9 projects with alleged CPS failures. The aggregate of the expected outflows under the proposed settlement is £5.2m in full and final settlement of the 9 claims of which £1.4m has already been paid out. The provision has been estimated based on the proposed settlement value. In addition to the above a further provision of £0.7m has been made in respect of 1 legacy project with one of the above customers.

Working in collaboration with the relevant 2 customers, Tekmar have sought to explore insurance available for such matters not withstanding Tekmar's position regarding responsibility and liability. In this regard, the Group have negotiated a commercial settlement with its EXPL insurance provider of £5.2m in relation to the above claims. The insurance proceeds are available for use at the discretion of the Group in settlement of the above claims, with any unused cash repayable to the insurer. There is currently £3.8m remaining insurance funds.

Tekmar has received a further defect notification in relation to incorrect/out of specification coating application on 1 historic project. The nature of this defect notification is entirely separate to the legacy defect issues disclosed above.  There are a number of units which have been installed in relation to this legacy project and discussions with the customer are ongoing in regards to the solution. Management believe that the most likely solution would result in an outflow of economic benefits of c£0.2m to provide a resolution to the issue.

The expected outflow of economic resources from the warranty matters has been recognised as an expense on the face of the statement of profit and loss for the period ended 31 March 2025. This value is shown net of the insurance receivable in accordance with IAS 37.

Tekmar Group plc has taken exemption under IAS37, Paragraph 92 to not disclose information on the uncertainties in relation to timing and the assumptions used to calculate the provision 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 settlement discussions.

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 a historic industry-wide issue regarding abrasion of legacy cable protection systems installed at off-shore windfarms. The precise cause of the issues in each instance is not always clear and could be as a result of a number of factors, such as the decision by windfarm developers to exclude a second layer of rock to stabilise the cables.

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 in each case 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 2 legacy projects (in addition to those disclosed as provisions) 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 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.