Tekmar Group (LSE:TGP) — FY26 Interim Results

0:03 Good afternoon, and welcome to the TEKMAR GROUP PLC investor presentation. Throughout this recorded presentation, investors will be in listen only mode. Questions are encouraged and could be submitted at any time via the q and a tab situated on the right hand corner of your screen. Simply type in your questions and press send. The company may not be in a position to answer every question it receives during the meeting itself. However, the company can review all questions submitted today and publish responses where it's appropriate to do so. Before we begin, I'd like to submit the following poll. I'd now like to hand you over to Richard Turner, CEO. Good afternoon, sir. Hi. Good afternoon, and hello, and welcome to our Investor Meets Company presentation. Thank you for joining the call. We're delighted to be with you today and to update investors on a strong first half performance, the continued momentum with Project Aurora, and how we're positioned for FY '26 and beyond.

0:55 Today, I'm joined by Phil Lanikan, our CFO, who joined the business in September 2025, and I'm Richard Turner, and I joined the business as CEO in September 2024. In terms of the presentation, we'll start with a quick introduction to TEKMAR for those of you who are not familiar with the business, and will also give an overview of the headlines of our first half results. Phil will review the financial performance of the business, and then I'll update on the progress we'll be making on project Aurora. We'll wrap up, and then we'll take questions at the end. TEKMAR has decades of experience providing technology to protect subsea infrastructure such as cables and foundations. We are the leading experts in offshore energy protection.

1:44 We work across offshore wind, oil and gas, and marine infrastructure markets, and we serve those markets globally. Our technologies and expertise enhance subsea asset integrity, reduce risk, and optimize performance in the world's most challenging offshore environments. This is delivered through two specialist divisions, asset protection technology and offshore energy services. Already today, we have the most comprehensive and holistic offering ranging from front end engineering services during development and consenting stages to protection solutions for cables, pipes and also structures to support and stabilize cables as they're deployed, installed and protected in service. We also offer offshore energy services such as granting and equipment rental in the growing energy services market.

2:39 Our track record and industry pedigree really sets us apart in the market. Whichever part of the business you look at, whether it's the number of engineers we have working on projects, number of engineering hours we've expended doing design work or analysis on offshore projects, we've got extensive history and experience in oil and gas and have tens of thousands of concrete structures deployed in active service globally, but perhaps the most impressive statistic I think about our business is our track record in offshore wind. As we stand today, there's approximately 85 gigawatts of offshore wind commissioned and installed in the world, and of that 85 gigawatts, 50 gigawatts is protected by TEKMAR technology. We supply those projects all around the world over more than a 120 different projects in the past, and that experience, that track record, and that pedigree puts us in a really strong position for future growth.

3:37 In terms of the key messages that we'd like to highlight from these first half results, Overall, it was a period of positive trading momentum and the execution of our strategic plan Project Aurora. Revenue increased by 31% to CHF16.2 million and increased volume and higher utilization supported a move into positive EBITDA profitability. The business generated a record order book of 31,700,000, which is two and a half times higher than twelve months prior. We've seen some disruption to projects and supply chain in The Middle East, but the effects have been well managed and the key risks have been largely mitigated. Despite this ongoing uncertainty, the 50 plus million of new orders that we've secured in the last twelve months sets us up for strong financial performance in the second half and provides improving visibility into FY '27.

4:34 We are building a more resilient business, and this includes the refinancing of our banking facilities and disposal of Innovation House. This enhances the group's flexibility to support growth, and we continue to look also at accretive m and a, which will accelerate the value creation plan. Thank you, Richard. The KPIs laid out in front of you highlight significant improved financial performance compared to twelve months ago. The 1,400,000 improvement in EBITDA reflects the benefits of Project Aurora with its refocused sales function and streamlined organizational structure, helping driving higher volumes, high utilization, and when combined with improved commercial and operational performance, has helped to deliver higher margins across the business.

5:29 This, combined with a record order book, is very encouraging and provides a stronger platform for growth and free cash generation going forward. Net debt is higher than at this stage last year, but that's a reflection of temporary cash impacts in The Middle East, and our expectation is of that to unwind in the second half of the year. Revenue was up 31% in h one with the Proger Aurora objective of cross selling products across markets and geographies being delivered. There was higher volume of PU products sold into the oil and gas customers in The Middle East, and that was the first time we've had such volumes going through.

6:23 Despite the increased oil and gas revenues, which are traditionally lower margin than offshore wind, we've managed to deliver higher margins than twelve months ago. This reflects a better upfront sales effort, improving operational effectiveness in complete including supply chain localization, higher revenues, improved margins and control over cost base have helped deliver a positive EBITDA in H1 and a material reduction in the loss in the period. The group sold Innovation House, a property occupied by a former subsidiary and a nontrading asset in February of this year for 2,840,000.

7:14 This cash has been retained in the business to support our growth aspirations. March working capital was impacted by the disruption in The Middle East. Receipts expected from customers in March were deferred. They've now substantially been received. Projects experienced logistical challenges getting both raw materials and finished product into the GCC states, which pushed back delivery dates. Given where we are up to on those projects, our expectations is that this will all be unwound by the end of the financial year. We now have greater certainty over our funding position.

8:00 The CBILLS loan due for repayment in full in October 2025 was made. We've replaced it with a 2,000,000 term loan, which is repayable over three years, giving us greater certainty and we've converted the nonoperational asset and the investment property into cash to give us the funding flexibility for going forward. In respect of cash flows in the six months, we generated a small surplus on our operations. It's a positive, and that contrasts with our position twelve months ago. We expected to experience an outflow on working capital in h one given the orders that we received in 2025 and the mix of the work.

8:52 However, the quantum was larger than we expected, and that was due to this disruption in The Middle East. We continue to control CapEx, and our investment of £400,000 in the first half was on maintenance CapEx to support ongoing operations. Our financing cash outflows includes 1,200,000 of debt repayments. Thank you, Phil. Okay. So in late twenty twenty four, we launched project Aurora, which is our plan to transform our business and to unlock our true potential over the next three to five years. Within Project Aurora, there are three pillars.

9:38 The first is scaling the business through business development and sales growth, including geographical diversification and some iterative product development. Our aim is to sustainably more than double our order book organically, which is absolutely supported by the market without reliance on significant market share expansion. The second pillar is operational excellence through bringing additional volume to the business and executing well through the supply chain and utilizing assets which we've already invested in without having to spend any significant expansionary CapEx, the operational gearing effect is really compelling and therefore in doubling sales, we don't double EBITDA, it more like quadruples.

10:24 And the third pillar is our strategic investment strategy to accelerate our scale and strengthen our offering through a logical broadening of the portfolio by by our expansionary CapEx and through m and a. Today, I'll highlight some of the progress we've made through some of the key Aurora work streams that make up the three project pillars. Project Aurora starts with our people. Our team is our greatest asset and brings unrivaled experience and expertise to provide innovative, high quality solutions that support the success of our clients' complex projects. They demonstrate this excellence consistently, and this underpins the group's reputation for technology leadership.

11:12 Their commitment to doing business the right way also is reflected in our safety record. We launched All Safe safety program just over a year ago and have enjoyed fantastic employee engagement in the program and this also reflects in our safety performance. We operate at world class health safety and environmental levels. This not only protects our people, it supports our operational effectiveness and excellence in customer service. It's also our license to operate an important representation of our organizational culture. All safe is the foundation of Project Aurora and also the foundation of our ongoing success. With regards to the first pillar of Project Aurora scaling the business, I'll provide a brief update on how we see the market and also how workstream initiatives are also already delivering results.

12:10 TEKMAR has an established position in in substantial end markets supported by long term structural growth drivers with significant levels of activity available for us to target and to capture value. Offshore wind projects continue to advance and market momentum will continue to build between now and 2030 and beyond. Demand is also expanding globally within Europe remaining the key anchor market and also in particular in The UK with the recent success of AR7 at the start of 2026, which supports investment confidence, improved supply chain, visibility and market growth. Broader offshore wind supply chain also continues to report robust demand with, for example, major cable manufacturers maintaining record order backlogs whilst developers, governments and industry bodies are continuing to advance in large scale development targets across Europe and Asia Pacific.

13:09 Global oil and gas markets continue to benefit from sustained levels of investment in both OpEx and also CapEx and industry forecasts continue to indicate resilient and increasing spending levels particular in subsea developments, brownfield optimization and asset life extension. The marine infrastructure end market is a growing opportunity for TEKMAR, especially around ports and harbor development and also increasingly in both security and defense. The aggregated demand from TEKMAR's primary markets provides a significant growth opportunity. In the last year, that opportunity has started to be realized with the Project Aurora growth plans starting to translate into encouraging results.

13:54 We've gained significant order book traction over the last twelve months with over £50,000,000 of new orders booked and critically with significant gains in key markets targeted through Project Aurora. The scaling up of the order book is also providing multi year visibility. The business is now benefiting from record level of activity, increased capacity utilization and improved revenue visibility supporting sustainable long term revenue growth, a trend we aim to build upon. Running concurrently with the sales growth initiative in the scaling the business pillar of project Aurora, we have the financing growth work stream. As the market is building, growing and improving, we've worked hard to progress in strengthening the balance sheet in order to make it an enabler for project Aurora rather than a limitation.

14:49 When we last presented on this platform in December, we explained we were looking to sell our investment property innovation house within 2026. As Charles mentioned, we sold the property at book value in February, creating cash to support growth. This was a major step forward in simplifying and strengthening our balance sheet further augmented by the refinancing of our banking facility. Alongside the points Phil spoken about on managing costs and managing cash very effectively, the sounder balance sheet and growing backlog enhances the group's funding flexibility and opportunity for realizing our growth plans. Our success on scaling the business really feeds through to the second pillar of Project Aurora, which is operational excellence, where we aim to execute our order book effectively and through doing so, utilizing our assets, capability and resources that we've already got in order to boost the return on sales.

15:50 There have been a number of elements to our operational excellence plan this year. This slide captures the progress we've made in our organizational structure, ensuring we leverage our full capabilities in all of our end markets. Over the course of the last year, we've reorganized and refocused our business from operating as three separate entities to working as one cohesive business with two main verticals. Asset protection technology, which we have a front end engineering, polymer protection solutions, and also concrete protection stabilization solutions, and offshore energy services where we're providing grouting solutions as well as also renting equipment for deployment to offshore contractors. This organization is much more effective and efficient and is already supporting us capitalizing on the growing market opportunity that we see ahead of us.

16:42 As we stand today, the vast majority of our revenues are generated from asset protection technology within our strategic plan, we're aiming also aiming to increase revenue streams and the proportion of revenue attributed to offshore energy services. We have the stated aim to make that in excess of 25%. We've streamlined the business with these two verticals operating as a fully integrated business and as one TEKMAR. As part of the integration focus, we have in the last week also undertaken an important step of removing the three legacy brands and rebranding the group fully as TEKMAR. I've spoken previously about our Newton Acliffe facility in recent years being underutilized and running at about 30% and therefore an opportunity for us to focus and to be able to more than treble our throughput and our output without needing to invest in additional assets.

17:41 Over the course of the last twelve months or so, the the success that we've had in front end through the order book that we've grown, that facility has become increasingly busy and we currently have more than a 100 live projects in the business. A high number of projects really significantly improves utilization of both people and assets. Alongside this, there's a contracting discipline, stronger project execution, and strategic supply chain initiatives are supporting further gross margin improvement alongside revenue growth. Our supply chain management strategy, for example, highlights the opportunity that scale brings. Under Aurora, the supply chain action plan is delivering savings whilst improving quality and on time delivery, all of which boost margins. We developed our supply chain management approach and have nurtured an agile, flexible, and responsive supply chain that can meet our future needs.

18:35 As part of our geographical expansion plans, we've also developed further regional production partners ensuring we're able to more be more responsive to customer needs whilst preserving our in house capability for higher complexity and value add projects. Today, we are better utilized than we were a year ago and we are managing the supply chain more efficiently and more effectively and the benefits of which continue to throttle up as we add further scale. We've talked previously about our strategic investment strategy to accelerate value creation. This remains a key pillar of our plan, augmenting the organic growth target to NEMI to transform our scale and strengthen our offering through a logical broadening of our portfolio of technology by expansionary CapEx and also M and A.

19:23 TEKMAR remains ambitious on the M and A front and has an active acquisition pipeline in place. We have a clear approach to assessing M and A opportunities. It has to be the right deal and consistent with our criteria. We are focused only on investing wisely and not investing quickly. In some respects, the business wasn't fully ready to execute on m and a twelve months ago, but now with the progress the business has made under Aurora, we're in a better position to originate, execute, and deliver value for the benefit of all shells. So just to summarize before we move on to q and a, our half one performance has been really encouraging. We've continued to build on the momentum of the second half of last year.

20:11 We are seeing the benefits of the deployment of Aurora in our KPIs and the businesses operating with a record level of order book, increased utilization, improved visibility, and importantly, the market support this demand being sustained. It's not been a perfect situation, and we're managing the effects of the ongoing situation in The Middle East, and this has been disruptive. However, we as we've navigated these challenges, it really demonstrates the improved resilience and agility of the business we have today. Despite having had a number of challenges, we anticipate stronger revenue and profitable delivery in the second half of the year and this momentum together with the healthy pipeline we see ahead of us supports our confidence in building improved revenue visibility into 2027 and continued solid progress in delivering our objectives through Project Aurora.

21:03 Thank you very much. That concludes the presentation. We'd now like to open up the call for q and a. That's great. Thank you very much for your presentation. Ladies and gentlemen, please do continue to submit your questions just by using the q and a tab situated on the top right hand corner of your screen. Just while the company take a few moments to review those questions submitted today, I'd like to remind you that a recording of this presentation along with a copy of the slides and the published q and a can be accessed via investor dashboard. As you can see, we have received number of questions throughout today's presentation. And if I may just start off with the first question here, which reads as follows. The business has made good progress in the last twelve months. All seems to be moving in the right direction. What are the risks to the momentum not being maintained? Is it TEKMAR related slash market related?

21:49 Okay. Thanks. I'll start off. I think, yes, we have we have made significant progress in in the last twelve months, and and we're pleased with where we are at this stage in 2026. Now in terms of our ability to maintain, if not increase that momentum moving forward, there are multiple factors and also true to say multiple risks. With regards to the market, we always said when we launched Projector and the associated growth targets with that, we've got multiple routes to success. So we took a very conservative view on, for example, the build out of offshore wind. We took a fairly conservative view on investment in in oil and gas. So we baked contingency into that plan. And also with regards to the the core markets, we've added an, you know, increased focus in marine infrastructure to give us another string to our bow in terms of primary markets.

22:44 So I'm very confident in the market position and our view on it to enable us to continue that momentum. We also didn't make significant assumptions in terms of market share expansion, which already this year, we have made improvements in that area. So market conditions continue to be good, not perfect, but certainly in terms of supporting our growth aims, the market, I think, supports that. And if anything, our confidence in that has only increased throughout the course of this calendar and financial year. In terms of our ability to be able to capitalize on that market opportunity, well, we've got a fantastic organization. As we showed earlier in the presentation, our track record in our core markets is second to none.

23:31 We've got the best technology. We've really spent a lot of time engaging and developing and, you know, fostering even deeper relationships with customers for current and future projects. So I think we really are ideally positioned to be able to seize the market opportunity that we see ahead of us. However, you know, we can't be complacent, and who knows what the world is gonna throw at us. Obviously, we've had a difficult situation with The Middle East, which has created a lot of disruption and logistical challenges throughout the course of this year. But what that has really demonstrated is just how reactive, responsive, and agile a business we have got today and and how much we've done a really good job of managing our way through that situation. So I'm confident in the market, and I'm also confident in our ability to capitalize on that opportunity.

24:20 Perfect. Thank you. The next question we have have here reads, the year is expected to be second half weighted. What gives you confidence in delivery? So a couple of points. So first of all, the order book visibility that we've got, we've got good visibility. We've obviously increased really over the last twelve months, but in particular towards the back end of the calendar year 2025, really built a bigger board order book. Now in the first half of this year, we were starting to execute some of that. A lot of the larger European contracts were just in the front end engineering phase, and therefore not generating significant volumes of revenue. That order book in the second half really pivots back and is balanced more into the European contracts.

25:06 And therefore, you know, we fully expect the revenue to to increase in that volume to come through in the in the second half. Also, lot of the concrete side of our business is materially quicker in and out. A lot of opportunities, very, very active on that and offshore. Also, on the offshore energy services side, the ability to continue to win and deliver work in addition to the order books that we've got is is still very high. So we've got a high degree of confidence in the second half of this year being it's also to be honest, what's more important or just as important is continuing to build on that order book position running into FY twenty seven to start the year in a strong position from the order book point of view because, obviously, we'll be aiming higher for f y twenty seven again.

25:56 Perfect. What is your latest view on The Middle East? You said you saw the cash position normalizing in recent weeks, and your comments suggest the overall impact is manageable. Is that still your position? I'll I'll start by just talking about the the market. I'll let Phil talk about the cash position. So even before the peace deal, to be honest, most parts of that region come back to, you know, businesses as usual situation. During the beginning and the height of the conflict, there was a lot of disruption logistically, as you can imagine, which we've had to work our way through. But importantly, we continued. We continued to produce. We continued to deliver, and we continued to bid bid and to win work. Now were there some delays? Absolutely. Will will there still be? More than likely, but importantly, all of the projects are still going ahead, and there's been no cancellations at all.

26:49 Some the view is that it had already normalized and now that, you know, assuming that the peace deal continues, you know, we expect to, you know, to see an increase in orders in that region in the in the coming weeks. The one area that did more or less stop for a period of time was offshore services. So routing operations because vessels weren't moving had to be halted for a period of weeks. A lot of the work which we're doing in The Middle East with regards to energy services is remedial work and pipeline, free span correction, etcetera, and that has worked that absolutely needs to be done. So if anything, that's just created quite a significant amount of pent up demand, and we're seeing now with the mobilizations that are happening that there's a lot of demand coming through. So my view is that, you know, it's been a very difficult situation, which we've done an excellent job of navigating.

27:41 But now looking forward to the long term, it's it's gonna be continue to be a very important market for us. Yeah. So on the cash side, I receipts from The Middle East dried up in in March. Customers had challenges over there, it could be fair to say. They implemented work from home regimes, and money's flowing out from there. It did slow down. We're a project business. We have large invoices. We were expecting monies from a customer in early March, 7 figure sum. Should it be paid? Wasn't paid before the end of the the half year. Those monies we received in mid April.

28:26 So that in respect of our our cash position, we were expecting to be at least a million pounds higher at the end of March, but were was delayed by Middle East and issues. Customers are paying the game in The Middle East, and we're back to what might be termed normal business over there. So do we get paid exactly the term? No. Do we get it within two to three weeks of that day? Yes. Thank you. Just turning to the next question. Should I be concerned that in this half year, two thirds of revenue came from three clients? Are you worried? No. No. Something is the answer to that one. The customers are different each half year. Our larger customers, the very nature of our business is that we're a projects business.

29:17 Our revenues and the size of those revenues depend on the projects that we we undertake. So for example, in the second half of the year, there will be a customer that will that we will undertake more than 10% of our revenue with, but we haven't done much with them in the first half of the year. It's one of the large offshore wind farm projects we're starting. We've done the engineering analysis in the three months leading up to the end of March. Production procurement really kicks in in q four, and that's where we get the value. So our revenues by customer are more dependent upon by by project. The order book's healthy. It's quite nicely diversified across customer. So, no, I wouldn't have any concern that there's a degree of concentration in a six month figure.

30:08 And, also, I think it's a function of what we're trying to do, you know, to be more successful and to win larger scopes and by virtue of the fact that some of the size of the orders that we've won, then that does, you know, in statistically increase the concentration to a to a certain degree. And at any one time, you know, we've got three three primary groups to market either direct to the developer through the EPCI contract or or direct to the cable companies at any one time. There'll only be a handful of those placing and executing orders. So we're very comfortable with the level of customer concentration that we've got. And as Phil says, it, you know, does change quarter by quarter, half by half, and is already pivoting and changing. So and as projects get bigger, if you look at the wind market, for example, you know, typical size contract has really increased quite significantly in the last five years, and it's expected to increase again. So you when you win, for example, two €8,000,000 contracts in short space of time, that does have that effect. But, fundamentally, what we're aiming to do through Project Aurora is to bring in significantly higher volume of work from all across all of our customer bases in different geographies. And if anything, we're we're more diversified now than we were twelve months ago when you look at the geographical and the customer spread.

31:29 Perfect. Just moving on. You referred to expansionary CapEx. Are you currently at full capacity with three shifts seven days a week? Are you able to get skilled labor? No. We're not at full capacity far from it. In fact, I think I mentioned on on the previous slides. Historically, we'd quoted figures of about 30% utilization of the primary UK polyurethane products manufacturing facility in in Nacliffe. With the order book that we've won and that started flowing through to production in the in the last six months. That facility is significantly busier. When you walk around there, can really tell it's got a very positive buzz around in terms of busyness, but still has a lot of headroom in terms of capacity. So we're running 50, and it depend it changes month to month. But as a yardstick, say, you know, between half and two thirds of capacity, we don't have any issues at all recruiting additional labor in order to to ramp up further. And and so we've got another 40 or 50% to go before we need to spend any money in terms of expansionary CapEx.

32:30 So the only CapEx that we need is project related tooling, maintenance to the building and assets that we've got. So that side of the business is still very, very CapEx. Lighting will continue to be because we've got, you know, a very, very nice facility with with still surplus capacity, which we're aiming to win at even higher volume of orders for in the future to be able to run at a higher percentage of utilization, but there's no significant CapEx required. That's great. Any comment in the reduction of gross margin between h two f y twenty five and h one f y twenty six? Yes. I think in terms of looking at our results, if you look at the analysis of these revenue by market, now I think it's contained in in my report, you'll see that the first half of the the financial year that we had a shift in our revenues towards, one, oil and gas, and two, The Middle East.

33:35 Traditionally, oil and gas, for us is lower margin than offshore wind, and we did have lower offshore wind revenues in the first half of the year. So we expected a reduction in margin from second half of twenty twenty five, but we were above the performance twelve months ago in the six months to March 2025. The the the reasons for that on the two two different types of the market is in the offshore wind, There are a limited number of players. It's very technical, very sophisticated, and there is a high value recognized for that by the by the customer. What we produce for oil and gas, there's a less engineered content, and it's more more commoditized than offshore wind, so there's a lower margin attached to that. And that shift in revenue between those two is a significant factor why margins were were lower in the first half compared to the second half of twenty twenty five. And I think in addition to the mix, one of the and a really important metric for us is the margin that we deliver at versus the margin that we expect when we win a contract.

34:53 And, again, then it it talks to the point I made with regards to our supply chain management and the key elements of our operational excellence work streams through Project Aurora is, you know, we continue to deliver on a project by project basis, generally better margins in the execution phase than when we win them because regardless of what the margin is, you know, we buy well, we deliver well, we deliver on time, and therefore, that margin delivery versus the outsourced is very, very important metric. And, we're trending positively in that regard. Perfect. Just turning to the next question. Thank you for the presentation. Net debt is rising on last figures, and the company continues to be loss making. We have a not insignificant amount of contract assets and trade receivables more than 30 past due of both significant and rising.

35:42 Would you kindly give more color on this and if there is concern here? I appreciate you mentioned some deferred payments that are unwinding and further expected to unwind. I I touched upon in my answer earlier on on The Middle East. We were due a 7 figure sum, which would have reduced the trade receivables, and that was in the over thirty days category. It wasn't many days over thirty, but it was in the over thirty days overdue category. And I think that would have led we would have seen a reduction then compared to previous periods. In respect to the contract assets, yes, it is a high number. We were expecting a higher number at the end of March. We signed up for in, I think, September last year for $10,000,000 contract to supply polyurethane products into The Middle East, into the oil and gas market.

36:42 Big win for us. One of first few times, we sold large amounts of EU into The Middle East. That project was due for the first deliveries around mid March, at which point they would have converted from being a contract asset into trade debtors. Unfortunately, logistical challenges meant that we couldn't deliver in mid March. We had materials, raw components, finished goods, as I mentioned on the presentation. We have them in China. We have them in India. We have them in The UAE. We have them in The UK. Logistical challenge in getting them all together to then ship to the customer meant that we we obviously couldn't deliver in March.

37:33 As I said in the presentation, we expect that position to be fully unwound with cash received by the end of the financial year. What you don't see in the numbers, you see the contract income. What you don't see is where we've taken significant deposits from customers. We've negotiated advances. They're all within the trade and other payables. So our position on contract is fully exposed to everybody, but what you don't see in the half year is where we've had significant, customer advances, which helps fund our working capital. Perfect. Thank you. And just another question around m and a. What do you see as your financing options for CapEx and m and a?

38:19 I think to a large extent, slightly unhelpful answer, but it depends on what it is that we're investing in or who we're buying. One thing in terms of potential deal structure that we're regardless of the size of the business that we've been looking with regards to the m and a track is to have, you know, generally a structure of trying to minimize upfront and to always have deferred and cons and contingent consideration, therefore, reducing the requirement for cash upfront and to try try to make deals to be more self financing. It also depends on the type of business. So, for example, a smaller business with a strong balance sheet, there's an option for using asset by based lending to finance part of the deal.

39:10 So we're looking at it in a in a balanced way across different deal sizes. Obviously, for larger deals, then we'd be in in a different situation. But at the moment, we think that with a much stronger balance sheet, having another clean audit opinion last year in terms of going out and looking either on the debt market or elsewhere for financing options, we're in a much stronger position to be able to get good value. Thank you. Just turning to the next question. Revenue from increased order book will be recognized mainly across FY '26 and '27. However, this appears to cover only the early part of FY '27. Can you advise what further visibility you have going into h two twenty seven and f y twenty eight? Also, if margin is to remain circa 30%, we really need a big step up to hit EPS figures for the next couple of years. Can you speak to the next twenty four months revenue growth visibility and margins?

40:04 Do you want to pick that up? What shall I start? Go on. You start. In terms of our order book, our order book includes revenue all the way through 2027. And as you've seen from the interim announcement, it's significantly ahead of where we were twelve months ago. We have further opportunities in the pipeline, including offshore wind farms, which hopefully, we've mentioned, we hope to have significant announcements before the end of the the calendar year. We hope to do those will flow through and be able to deliver additional orders, which will flow through into revenue in 2027. Margins above 30%.

40:52 We've done that in the first half of the year when we've been heavily weighted towards oil and gas. So there's no reason why with increasing offshore wind flowing through over the next eighteen months, why margin shouldn't remain above 30%. I think a couple of other points just to build on that. The position we're in now and the visibility that we've got in the future is better than it's ever been. You know, having even earlier in this year had multiyear visibility that's, you know, fairly novel. And I would say probably a trend in the market with customers, you know, having to place orders earlier in order to secure capacities. We're already in a really good position in terms of visibility. Of course, looking to add to that between well, in particular, now and the end of the financial year, but also between now and Christmas time in order to be able to really push hard for half on revenue next year. But we're in a really, really strong position with the orders that we've won. As Phil said, that has already secured revenue right spread right the way across 2027.

41:55 With regards to margin, another area of, I I guess, I'll describe it conservatism in the project Aurora plan, which we launched eighteen months ago, we weren't really aggressive in terms of margin assumptions. We assumed incremental increase. But as I mentioned before, what we're seeing in particular in supply chains, to use that reference again, is that that higher volume gives you much greater buying power. So I do think that, you know, as we continue to grow, scale up the business, and therefore investing more in the supply chain, again, that gives us more potential for gross margin expansion, which will flow through to to EBITDA. So I think visibility is really good, and I think we've got really strong margin potential.

42:41 And all of the other aspects which we're doing under operational efficiency are really organized around, you know, delivering well, delivering efficiently, delivering effectively, and therefore, you know, maximizing profitability. Thank you. Just turning to the next question. You referred to a provision of £2,000,000 over the past projects. That is no surprise as previous management were not so diligent over many years. This is a big number, but will there be more? Will a write off be needed? So on the the subjective historic warranty and liabilities and and claims, that was one of the really key areas we made significant progress in last year having signed and settled with a number of customers at which we are in est, which really broke the back of that historic issue.

43:30 Also, keen to point out that in doing so, all we were was just all we're doing was distributing insurance money, which we claimed on behalf of the customer, and there was no admission of liability and no cash outflow from us other than the insurance when we had fundamentally TEKMAR had done nothing wrong. Now there is still the residual of those warranty claims, which are at a far more normal and manageable level than they had been historically. So really pleased with where we are now. And with regards to the existing provision, we are very, very comfortable. That's more than adequate to settle the outstanding claims that we've got, and therefore, that's why the provision remains as it is. So and to answer the question directly, yes. We believe that is sufficient to cover the liabilities, and we are optimistic that we'll get them closed out this year.

44:26 What operating margin should the business be at when at scale? We look to believe that the business should be delivering a double digit EBITDA margin when we're at scale. Perfect. Thank you. Can you speak a little more about m and a and the CLN and whether equity is complete contemplated by being raised at a relatively slow price. You mentioned the business may not have been ready previously. I'm not sure whether also you seem to be pushing out project Aurora timeline. Okay. So in terms I'll take the last point first. So the timeline of project Aurora now has always been the three to five year plan, and we're eighteen months into that.

45:13 So the time frame hasn't changed. The strategic investment pillar is one which I think for obvious reasons we haven't talked about extensively publicly because it's, you know, it's largely confidential information. But it is an area which is getting a lot of time, a lot of investment of management's time, and in particular myself to, you know, really work hard in finding good quality opportunities that are relevant to the business, but also bring affordable scale and are ultimately accretive deals. And as I said in my presentation earlier, the key focus is on buying well, not buying quickly. And when I said that I'm not sure the business was completely ready, you know, particularly if you look at the balance sheet now, we're not in a perfect situation now, but having pulled in a load of aged debts, having sold the investment property, kept the cash within the business, having given ourselves a bit more headroom, etcetera, and on the back of that, got a clean audit opinion, etcetera, we're in a much better position and a more credible position, I think, to have those conversations.

46:26 And they're still working very, very actively, and it is really, really a key part of the future story and the future strategy of this business. With regards to the CLN and the support of shareholders about CLN expired a month or so ago, but SCF is our largest shareholder, still extremely supportive of the business. And if anything, that CLN expiry is just another important step in us turning up the the balance sheet. So no change in terms of the level of support engagement we get from SCF, But the CLM expiring, I think, was actually a good thing for the business. Thank you. Just turning to the next question.

47:14 If I understood you right, and please confirm, you said that out of 85 in installed total wind power, 50 have been provided by TEKMAR. To what extent do you get concerned from your clients that so much of this mission critical systems is being provided by with due respect, a small UK based company with somewhat checkered financial performance in the last years? Obviously, our name and our brand, in particular, in offshore wind, that pedigree is well known around the world. And, yes, 50 of the 85 gigawatts installed globally have our technology protecting them. We've been there right from the start everywhere. You know, was it's always been Eurocentric, UK led industry, but it's becoming increasingly geographically diverse.

48:01 And everywhere, there's been expansion geographically. So we were the first to supply wind farms in China, Korea, USA, etcetera. We've always been first movers and really the go to people to supply that technology. In terms of the customer perception of that and of us, I think, obviously, the placing orders and the order size is increasing. So, therefore, obviously, they're still confident in us. And certainly, whenever we get assessed on bids, we're always absolutely strongest with regards to technical. With regards to the financial standing and strength of the business, I think, really, the work that we've done the last year, in particular on the balance sheet, really helps to improve that.

48:47 And any concerns that might have been, I think, on the back of last year's audit as, you know, we've seen significant increases in credit rating with customers, etcetera. And we continue the bids and to work and and to win projects and to win projects on scale. And in reality, you know, the customers, of course, have got choices in terms of our competition, but, you know, the most important for that thing for them is to get the best technology in what is becoming increasingly technically challenging. Sites haven't executed a number of the less technically challenging projects in the in the past. So we are mission critical, and and they continue to value that and to to place orders. So I don't see it as a significant hurdle. Perfect. Thank you. Can I assume you're not doing new Chinese business on the payment terms you did a few years back?

49:38 That's very easy to answer. Absolutely not to do in terms on those doing business on those terms. Never. And, also, the the the Chinese market, if you look at the forecasts, we all we very often carve out and look at market forecast x China because it has such a skew that rather than as the rest of world market is growing at a quite a significant pace even taking a conservative view on the forecast. So therefore, we don't need to operate in that market. If we did, we would do it on a very different model to what we had, having learned the lessons of of the past. But our technology is still relevant, and there's still a market, but it there's no assumption at all of us being particularly active in that country. Although APAC generally is a very strong market, and you would have seen from recent news flow that we've been incredibly successful in most countries in that region, in particular in Japan, where we're supporting a number of customers with engineering studies, but also supplying product to there as well. So the the region is important, but there's there's no danger of us operating on the basis that we were in the past.

50:53 Thank you. Just turning to the next question. It seems remarkable that company with this much history, range of product, market penetration, etcetera, is valued at circa £20,000,000. Is it the case that the market simply overlooks such small cap companies? And if so, we'll all turn heads. I agree. I think we're very undervalued, and we we hear that a lot. Obviously, the business has been through a journey. The industry has been through a journey, but I really do think we're starting to build momentum and really starting to create some real tangible shareholder value. We made a lot of progress in terms of both our share price and therefore market cap at the back end of the last calendar year, continue to make steady steps this year. And I think, you know, with the plan that we've got with the team that we've got in the market situation that we're in, then that can that that momentum should only continue.

51:45 And, hopefully, we'll that'll be recognized by the markets in the the future. It's true that it is also difficult, you know, when you're a certain size in the investment community. I think some institutions and funds have thresholds beneath which they won't invest, but our aim is to get up and to get above the all of those thresholds and really, you know, continue to have strong investor registers we have today and to continue to build on that. But, you know, we just done a roadshow with, obviously, doing IMC today. The level of interest and engagement that we're getting, I would say, I really feel like in a lot of regards, we're punching above our weight. Real interest, real appetite in us as a business and what we're doing, etcetera. So I think, yes, we are significantly undervalued today, but then for me, that's one of the real opportunities that we've got in unlocking that future value.

52:40 Thank you. What is eXpl insurance? It's our PI insurance insurers. They contributed money as part of the negotiation on the warranties. So it's a effectively, PI insurance and a PI insurance provider. He provided us some of the money to settle the potential warranty claims with no admission of liability. They generally value it as cheaper than paying lawyers. Thank you. The final question we have have here reads, alongside The Middle East, data and energy security is a big issue and therefore top of mind for investors. Can you please explain what TEKMAR is doing, can do on the cable protection data security side?

53:25 How big an opportunity is that for TEKMAR bearing in mind geopolitic politicial issues? So that is I would describe it as a rapidly emerging market opportunity. Now it's adjacent to what we do because, you know, generally, it's in relation to protecting cables and underwater infrastructure against damage, which is what we do, but it's against damage possibly coming from a a different sort of threat. So we're doing a lot in that space as you can imagine, and it's just such a big area. So there's already millions of miles of cables and pipes in the sea, and the way in which they've been designed, procured, and installed is largely around the lowest possible cost, and the lowest possible cost is rarely the most robust and most well protected.

54:20 And there's a lot of concern, as you can imagine, with, you know, either damage accidentally or not from, for example, trawlers, ships anchors, etcetera, and trying to understand how, what, and if they can be protected to prevent that. So we've been involved in some extensive studies. In fact, we've got one going on today whereby we work with the customer. We're also engaged with some government organizations to start with a desktop study initially whereby we create say, for example, it's a offshore wind farm. We create a digital twin of that wind farm, and therefore, we're able to simulate and go through what we describe as a war gaming scenario. Through doing that and through running different scenarios, you identify where the hotspots are in terms of risk.

55:10 When you've identified where the hotspots are of risk, might be a geographical area, it might be an area where they you've got low trenching. It might be an area where it's a particular type of soil conditions, which would make an intervention more easy. And once you've identified those key risk areas, then you deploy mitigation strategies, and that's where our products commence. We've got the existing fairly broad portfolio protection products, which are equally relevant in this context, but then also we're developing some others to protect, for example, from from anchors, etcetera. So there's a product opportunity there. And then I would say also the aspect that complements that is the monitoring of these assets. And, again, we've mentioned before in our technology road map, the digitalization plan have been able to monitor the condition of cables and foundations subsea real time so that you get an early alert as to anything that's moved or got damaged or is being damaged, and that's part of the package as well.

56:13 So that's our offering front to back from engineering studies to products, and then in the future also digital solutions for for monitoring and therefore giving early warning signs of of potential issues. So, again, in terms of the forecast assumptions that was baked into project Aurora, we didn't assume anything for this because it's been although we've already known there was risk, it's been somewhat emergent in certainly in the last twelve months as you've seen it on the on the headlines. So we haven't assumed any strong revenue streams for this, but already we're seeing appetite and engagement for obvious reasons from a number of different areas, and we and we do fully expect that'll start to generate a subsector of the submarine cables market. That's great. Thank you for answering those questions you can for investors. And, of course, the company can review all questions submitted today, and we'll publish those responses on the Investor Meet company platform.

57:06 Just before redirecting investors to provide you with their feedback, which you know is particularly important to the company, Richard, could I please just ask you for a few closing comments? Yeah. Sure. Thank you very much. I really appreciate the engagement. Thank you for listening, but also thank you very much for submitting. I'm very interested and detailed questions. Hopefully, you've answered them well. If there any more that come through, we'll submit them, respond to those online. Thank you for the time, and thank you for your engagement, and thank you for your support. That's great. Thank you for updating investors today. Now please ask investors not to close this session as you'll now be automatically redirected to provide your feedback in order that the management team can better understand your views and expectations. This will only take a few moments to complete, and I'm sure will be greatly valued by the company. On behalf of the management team, we'd like to thank you for attending today's presentation, and good afternoon to you all.