Tekmar Group (LSE:TGP) — Interim Results 2024

0:00 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. And then I'd like to hand you over to Alison McDonald, CEO. Good afternoon, sir.

0:33 Thank you, Lily, and good afternoon, everybody. We're delighted to be presenting TEKMAR GROUP's investor update to you today. And if we can move on to slide three, which is a presentation on the agenda. With you from TEKMAR are myself, Ali MacDonald. I was chairman from 2013 and more recently, CEO since October 2020. I'm joined today by Leanne Wilkinson, CFO, who has been with TEKMAR in senior finance roles since she joined TEKMAR in 2020 and the board as CFO since June 2023. Our aim today is to give you an update for TEKMAR GROUP PLC business after a transition period where we are focused on positioning the group for consistent EBITDA growth.

1:25 We are seeing the market in a period of an evolving energy landscape and why we are confident and optimistic about the group's prospects in the near term and beyond.

1:39 Moving on to where TEKMAR is today. We are very much in a stronger position than we were two to three years ago. We have successfully stabilized the business and returned TEKMAR to profitable growth. Last week, we were pleased to report results with our highest level of adjusted EBITDA for four years with a gross margin of 33%. We have a balanced portfolio of businesses across offshore wind and energy transition with our near term growth prospects well aligned with the positive fundamentals in both of these markets. We benefit from a relationship with SCF Partners, our strategic partner and shareholder.

2:26 SCF have helped to drive our growth ambitions, stabilize our balance sheet, and provide additional power to support our shared m and a ambitions to drive transformational growth. Our medium to long term outlook is supported by exponential forecast growth in offshore wind, which we will cover in this presentation. As we build out our first class offshore wind services platform over time, we will benefit from the structural tailwinds.

3:00 Now reflecting on our key milestones in in building the business we have today. We have always been pioneers in the offshore wind markets, TEKMAR was founded in 1985, representing a near forty year track record. The IPO in 2018 gave us the opportunity to diversify our portfolio, acquiring Pipeshare later that year, which been a has been a consistent profit generator for the group and a great acquisition. We have also built out our consultancy capability, allowing us to benefit from early engagement on key projects, and we have continued to invest in our leading offshore wind protection capability. In 2019, we were one of the first companies to be awarded the London Stock Exchange's green economic mark, highlighting our sustainability credentials.

3:57 I stepped in as CEO in 2020 and look to fundamentally strengthen the business, making TEKMAR more consistent with stronger and more robust air engineering and commercial management discipline. We did this during a challenging period through COVID and its aftermath with market wide challenges around global supply chain, cost escalation, funding issues, and uncertainty over energy infrastructure project economics. As a business, we were delighted to welcome as a strategic partner in 2,023, who share our ambition to build a leading global offshore wind services business over time. The partnership with SCF is a major catalyst for TEKMAR to accelerate growth, and their track record in building successful energy services and technology companies is a major advantage for us.

4:57 Most recently in h one to March 24, we delivered significant adjusted EBITDA improvement and completed the disposal of our subsea innovation business, which allows us to build a stronger platform for TEKMAR for more consistent profit growth in line with our strategic plan.

5:19 Moving on to our integrated platform. This slide illustrates the compelling shape of our engineering technology and services capability today, spanning the offshore energy project cycle. Our consultancy services gives us valuable early visibility on projects and early engagement with customers on key projects. TEKMAR Energy and Pipe Shield are the primary profit generators of the group, with TEKMAR Energy returning to a positive adjusted EBITDA contribution in the first half of the current financial year. This continued improvement is fundamental to the group group delivering sustained EBITDA growth, complemented with ongoing consistent and growing earnings from our Pipe Shield business.

6:11 We have shared customers across our portfolio with a complementary diversified offering across the energy markets.

6:21 Moving on to customers. This slide gives us an overview of the quality and breadth of our customer base, and we benefit from very strong relation relationships with energy companies, tier one contractors, as well as manufacturers. With the increasing volume in the market and the greater engineering complexity of offshore wind projects, we are now seeing more reliance on technical know how and strategic partnerships in order to support the delivery of global projects. From TEKMAR's perspective, with our integrated model, our complementary technologies and track record, we help to derisk, optimize, and improve project economics for customers in a damn dynamic and technically challenging offshore environment.

7:14 In this regard, we are trusted partner on leading global major energy infrastructure projects, including, for example, Dogger Bank, wind farm with with Demi Offshore and SSC, where we're actively supporting the delivery of the world's largest offshore wind project at 3.6 gigawatts. Last year, we supported a successful delivery of the Yin Vineyard wind project, one of the first major projects in The US. In addition, we have a strong track record in the developing Asia Pacific market outside China, where we have engaged with customers a number of wind farms, which are the first major projects in their respective countries, including Japan, Taiwan, and South Korea.

8:04 We see European technologies and know how remaining the vanguard to enable delivery of these projects in these regions. We see we see Asia Pacific as a particularly exciting region for us.

8:19 We are also benefiting from a maturing alignment with customers, partners, and developed developers in order to deliver the significant market ambition and growth, which we'll outline in the next section.

8:35 Moving on to the market. The offshore wind market continues to strengthen as energy markets are aligned to the commitment of the United Nations Global Coalition for net zero emissions by 2050. Despite recent headwinds, strong growth in offshore renewables is expected through 2030 and beyond at 261 gigawatts and 758 gigawatts respectively from the current 70 gigawatts installed base. We are seeing political support strengthening in support of this significant ambition. Moving on to the outlook for 2030. Global capacity, as I said, is forecast to reach 261 gigawatts being installed or underway by 2030.

9:29 From a commission capacity of 70 gigawatts today, we we have previously mentioned. Looking more specifically at some of our key markets, Europe is set to increase capacity from 33 gig gigawatts currently to a 124 gigawatts, representing a 3.8 times increase. Asia Pacific outside China is set to increase capacity from a low base of three gigawatts to 32.5 gigawatts, a 10 times increase, with Americas increasing capacity from a very low base of point two gigawatts to 27 gigawatts. This represents significant growth demonstrating a global two to four times increase by 2030 in half the time it has taken the market to deliver 70 gigawatts.

10:26 We now have visibility of over 300 projects. And with a strong track record of securing projects in these regions, we are well positioned to benefit from this future growth.

10:41 Moving on to the near term market environment. Instability and cert uncertainty in the offshore wind market has been a feature in the last couple of years. We are now in a phase of market improvement with a record year for final investment decision approvals in 2023, with this continuing into 2024 in line with the market projections. This positive trend needs to be carried out in the near term as we are still seeing uncertainty with timing and pacing of project awards as the supply chain aligns to growing market demand. Alongside this recovery and the projected demand for offshore wind over the long term, we are positive on the outlook for growth in our offshore wind business.

11:33 Moving on to the globally global energy transition. The need for a balanced energy transition is resulting in significant investment across all energy sectors. The offshore energy transition market expected to grow by 21% through 2023 to 2028 2028. You can see we are in a sustained period of higher CapEx in the energy transition market. This is particularly important for our pipe shield business, which benefits from growth in this market. Overall, therefore, we see a very favorable outlook for all key end markets. Let's now look at what we are doing to position TEKMAR to achieve sustained earnings growth against this backdrop.

12:25 As you will have seen from a recent market update, we reported good results with a gross margin of 33%, up from 28% in h 120% in h two twenty twenty three, demonstrating improvement as a result of our transition action plan and improved commercial discipline. Leanne will now comment with further detail. Thanks, Sally. The company performed well in the first half of twenty twenty four, achieving adjusted EBITDA of £1,800,000. This marks a major milestone for TEKMAR GROUP as our highest level of trading profitability for four years and represents a substantial £1,800,000 increase from the prior six month period.

13:12 One of the key drivers behind this achievement is the margin improvement we've made, attaining a gross profit margin of 33% and a return to double digit EBITDA margins. Also, fundamental to these results is the return to profitability of our offshore energy division, which is largely offshore wind and generated £1,400,000 in EBITDA during this period. Restoring our offshore wind business to improve profitability and growth is fundamental to driving sustained EBITDA growth for the group. Combined with the consistent profit generation of our Marine Civils division, which is effectively our Pipe Shield business, which delivered £1,500,000, we now have a stronger and balanced platform for growth.

14:01 Another significant aspect of our performance is the high quality of our order book and order intake. Our order intake at the half year totaled £24,000,000, which was achieved at a commendable blended gross margin of 31%. This reflects our success in securing high quality projects with improved terms and milestone payments. Ultimately, this comes down to better management of projects and a more robust commercial approach generally. As we continue to build better quality and derisked order book, this supports our objective of returning the business to sustain profitability.

14:43 Cash flow liquidity has been a major focus for the business over the last three years. The strategic investment in partnership with SCF Partners was a fundamental step in stabilizing the business, and we also appreciated the support more generally of our investors with the fundraise we completed last year. We remain focused on a disciplined approach to cash, debtor collections, working capital management, and improved cash generation. We reported a significant improvement in operating cash flow for the interim period, which was around £3,000,000 better than the previous period.

15:22 We're currently in discussions with our relationship bank relating to the renewal of our existing trade and Sables facilities, with these discussions progressing in line with planned time frames for renewal in 2024. An important mark of our rigorous approach to managing the portfolio was the disposal of subsea innovation, which we completed earlier this month from an aggregate cash consideration of 1,900,000, with TEKMAR GROUP also retaining the freehold for the property. The cash proceeds will be available to support the group's near term growth priorities and for general working capital purposes. Subsea Innovation has struggled to deliver consistent profitability, and the divestment sees 38 employees, transfer to unique group, and in turn strengthens TEKMAR's core business and improves revenue visibility and earnings consistency.

16:24 We're also adopting a measured approach to CapEx and investment in the core business, aligning our resources to opportunities which provide greatest near term benefits. We expect CapEx for the current financial year to be in the region of £2,000,000, with approximately half of that covered by investment in strategic initiatives, including product development of our CARTEC link cable protection system and investment in granting services and marine civils in support of near term revenue growth for Pipe Shield.

16:56 Our our granting investment helps us build on our strong capability in The Middle East, where we secured fifty millions fifty million pounds of order intake for FY '23 and £10,000,000 to date in FY '24. We have identified a number of other strategic investment opportunities with funding of these initiatives subject to facing as cash flow bills to support the required investment.

17:26 If we move on to m and a. With the path to profitability established and the core platform streamlined for the disposal of Subsea Innovation, we are pursuing m and a opportunities to complement our organic growth. This includes opportunities to build scale, quality of earnings, and stronger free cash flow through strengthening the technology and services we offer to our customers. The ambition is to build a leading global offshore wind services company over time. Consistent with this, we are alert to the potential value in acquiring capability that can transition to servicing the needs of the offshore wind industry as it matures and evolves. Building a stronger platform should in turn create a business which the stock market can value more highly.

18:14 Furthermore, we benefit significantly in this m and a context from having SCF as a strategic partner, where we can leverage their complementary industry knowledge and investment expertise to help source and execute value enhancing acquisitions. We also benefit from SCF's committed £80,000,000 funding through the convertible loan note instrument, which remains available and is targeted to be deployed primarily for value enhancing m and a and strategic growth.

18:48 Moving on to key performance indicators. Our KPIs highlight that the objective of stabilizing the business has been achieved. We delivered £1,800,000 of adjusted EBITDA on £16,000,000 of revenue. This is £1,200,000. This was a £1,200,000 EBITDA improvement on the comparative period despite flat revenues. The gross margin of 33% is also a key marker of improvement as was the return to profitability of our offshore wind business. We've talked a lot over the last two to three years about transition and turnaround. Now the business is ready for growth. I'll now hand over to Ali for some concluding comments.

19:40 Thank you, Leanne. And to conclude, I would like to summarize our view on current trading and outlook. H one twenty twenty four represented a very satisfactory set of numbers for TEKMAR, and we expect another period of positive EBITDA in the second half, with full year '24 overall representing a significant improvement in trading profit over the prior year period. Looking further ahead, we're confident is is supported by the strong structural growth in our end markets and the opportunity we have to grow volume at at acceptable economics. Having positioned the business for growth, we are also looking at m and a to accelerate this growth, working with SCF as their strategic partner to deliver on significant opportunity to build a business of real scale and global capability with compelling fundamentals for investors.

20:39 Finally, we would like to thank you for your time today, and we will be delighted to take your questions. Alastair, Leanne, thank you very much for your presentation this afternoon. Ladies and gentlemen, please do continue to submit your questions just by using the Q and A tab situated on the right hand corner of your screen. We received a number of questions today, both presubmitted and throughout the presentation, and I wanted to start off the q and a session with these. The first one reads as follows. How do you see demand in The US for offshore wind energy? Does it have bipartisan support?

21:12 I think let me take that one, Leon. So I think The US market, I think we've all seen the headlines that it's been a bit of a start to say the least. We see significant volume developing in that market. It's it's very compartmentalized. I think that's where I would say there's probably a bit of a pause in the short term. We're really focused on the established European market, the Asia Pacific market, which largely will benefit from known technology that we've been active in for the you know, since the time we're involved in offshore wind, you know, so we've got a very strong foothold and a lot of experience in this space. So I think it's adoption and expansion of the technology.

21:57 I think The US market will probably be on a bit of a hold for the next couple of years as we see the supply chain developing over there. We've our ambition is still to have presence in The US market to continue to support developers similar to what we've done in Vineyard Wind. So we see The US market growing probably more in the next three to four years. I passed the first year one to year two as a three to four year timeline. So that's really why we're kind of in the short term or focused on the European and Asia market. The US market will come, but there's a lot of learning and developing and maturing that we we still need to see first, including developing of the supply chain capacity, vessels, cable manufacturing, etcetera. So that's our our our outlook at The US market.

22:54 It's more of a midterm play for us rather than a short term play. Thank you. The next question here reads, can you please help us understand the competitive landscape and TEKMAR's unique offering? Is your latest cable protection system price competitive with Chinese alternatives? Yeah. So the competitive landscape I see is maturing, I think, as you've probably seen from the presentation and the market news. I think there's so much an accelerated maturing in this market. The technology evolution, I think, was oversimplified. I think there's been a lot of learning which we benefit from supporting our customers in delivery of improved technical solutions for more complex offshore projects.

23:46 So I think from a competitive landscape, we see it stabilizing out in amongst some key suppliers who have invested very strongly in the technology offering. So it's kinda moved up from a technology know how. These environments are very complicated. And, you know, one of the benefits we see within the TEKMAR GROUP is that we have complementary technologies, which is unique to TEKMAR GROUP. The competitive landscape is largely more fragmented, I would say. And our strategic direction is to align more of these technologies to to support the growth we see in the market. So we see it as a very balanced competitive landscape supported by increased volume.

24:37 I think one of the benefits we've seen over the last year is we've been more selective in our tendering process, looking for a more equitable risk reward balance where we can see delivery of returns, and I think the market supports that. In terms of the Chinese landscape, we'd we have a presence in China, which we've benefited from, but largely, the China market is at the very top end of the market where there is a pricing differentiator for more complex technology. We see the kind of commodity end of the market in China is very largely isolated to the internal supply chain in China.

25:23 We don't see the China market supplying outside of China as a result of that simplified, more commodity play. So that's where we're talk about the the Asia Pac market excluding China. It's a very selective strategy for us in the China market. And largely, outside China, the competitive landscape is from businesses that have got a quite significant investment and understanding of the technology need for these kind of complex solutions that we work on. Thank you. The next question here reads, it's clearly encouraging and necessary to see the return to profitability of the TEKMAR energy offshore wind business. What's your confidence this can be sustained?

26:13 Yeah. And as we've alluded to in the presentation, you know, the last two to three years has been very focused on operational efficiency. We've been supported by some partners that have helped us to introduce best practice, to deliver the returns and effectively deliver what we say we're gonna deliver. So, yes, it it's comforting to see that that work has paid off, and we've got the offshore wind business now contributing at an to the performance in the business, which complements the continuing good earnings we've seen from the Pipe Shield business. We still see opportunity to add volume to that business and having having addressed the kind of underlying performance of the business. You know, there is a lot more efficiency we can introduce into that business with increased volume.

27:03 And as we've demonstrated with the growth in the market, it's pleasing to see that we're now seeing that market opportunity converted into the highest inquiry we could ever had. So I think it's supported by a number of areas. Bottom up, efficiency, operational excellence, top down market maturity, transferring into inquiries, and also seeing better contracting terms and and a more equitable restore balance that allows us to generate cash and reinvestment for the technology of the future as we move into even more complex projects like such as floating wind, which is on the horizon. Thank you. The next question here reads, these are good results. Your guidance for the second half seems pretty cautious as an improving market.

27:53 What is your guidance for the second half of the year, and why is it more cautious than the first half? Yeah. I think on on the guidance, you know, as I said, we the market is very promising. I still think think we see a bit of timing uncertainty, partly driven by our own, demand to have better commercial risk terms, commercial terms, payment terms, etcetera, etcetera. So we are taking longer to negotiate these contracts, and that's what gives us a bit of uncertainty in the short term. And, you know, we've improved, obviously, what we're in control of, which is the operational efficiency. What we're not in control of is the timing of these projects. So that's the only real issue why we've put a bit more cautious cautiousness into the market.

28:45 We're still very optimistic in terms of the second half being positive and the overall full year being positive, but we're still just a bit cautious on timing. We really didn't want people to kinda take the h one numbers and just double them. You know, there's still a bit of uncertainty around the market, and therefore, we we just didn't want to be overcommitting at this stage. So we're really kinda taking a a cautious view in the near term. I think, also, I need to add in h one, there were a couple of factors around variation orders on large projects, which was really timing that we don't may not be repeatable to the same extent in h two depending on, you know, the the projects. So, you know, that also added to our that was being cautious on on h two.

29:36 Thank you. The next question here reads, the challenges of the offshore wind industry have been much trailed in the media. What's changed in the market to support your confidence given interest rates remain high and they may be higher for longer? Is it government support? And if so, what are they doing, and what are the risks to that? Yeah. I think government support is a big factor. You know, I think, as we talked about the you know, we're starting to talk about beyond 2030. Know, whilst we see a lot of ambition in terms of 261 gigawatts by the end of the decade, which, you know, effectively you know, if you take a conservative view, it's doubling from the current capacity of 70 gigawatts. You know, if you take the optimistic, four times scale by the end of the decade. And even beyond that, we're now seeing, you know, 760 odd gigawatts. So in terms of the ambition to meet this, global commitment, you know, like, there is a lot of ambition from the government. We're also seeing a strike price, which has really been holding back this market that the pricing level for return in the supply chain has just been, has been too aggressive.

30:44 We see adjustment in this the strike price, the guaranteed price in The UK. We're seeing the same in The US market. So I think that bodes well, to support investment and for the supply chain to develop. So I think all of the above is coming together to kinda give us this level of confidence that certainly the market has improved. There's still a bit of improvement to go. As we say, we're trying to get better terms to give us more control of the outturn. We've moved the dial in that direction, but there's still a bit to go. But, definitely, we're seeing this offshore wind market moving in the right direction. Thank you. The next question here reads, you came to the market with a dominant market share in cable protection.

31:30 You mentioned a few years ago that competition was increasing. What's happening to your market share and to pricing? How competitive is the market? Yeah. So I think for the longer term investors, you've, you've seen this business talking, a lot about market share. Since Leanne and I have come onboard, we've kinda moved away from talking about market share, really to focus more on earnings and cash generation and being more in control of this kind of restore balance that I talk about. But to answer the question directly, our market share is holding up, but we're not really driven by market share. We're more driven by taking on business that we we could control, and therefore, we get better earnings.

32:19 I think that's also supported by the increasing volume as when I came on board as CEO, I did talk a bit about competition is normal in a growing market. And what I'm pleased to see is that the competition in the market has a level of discipline also that is supporting, this kind of confidence that it is a maturing market and a market to play in. So, like, I'm I'm I'm still very encouraged that the opportunity and the scale we're seeing in the market is is gonna support the growth of the business going forward from an organic point of view and supporting us to invest in complementary m and a technologies.

33:07 Thank you. The next question here reads, what's driven the improvement in gross margin for h one? What should we think of as normalized margin for the business given Pipe Shield and TEKMAR Energy are different types of businesses? Maybe I'll let you take that one, Lia. Yep. Thanks, Sally. So we talked in in particularly in our f y twenty three year end results about, you know, last year, we we continue to have a couple of lower margin backlog projects run through. The impact of those is diminishing. There's one that runs on into early twenty twenty five. And whereas we add additional volume and improved margins, you know, the impact of that diminishes. We also in in h one this year, we've put a lot of effort as as well as the the wider business improvements, which we've talked a lot about. We've put a lot of effort into supply chain initiatives. So that that's gave us a benefit in h one. And as I just alluded to a little earlier, we we did have some some variation opportunities on on a couple of large contracts that completed.

34:07 Going forward, we believe late late twenties is sustainable. You know, the late 20% is sustainable, and that's certainly what we'll be we'll be aiming for. And, you know, just to circle back on an earlier question to link to that, we we have confidence in our delivery now. You know, we've we've executed projects over recent months, and we delivered the margins that we expected. And that's why, you know, we have the ongoing confidence in the the the margin that we have on the the the recent order intake. Thank you. The next question here reads, what's happening with the data book, and does that cause you any concerns? I'll take that one if you if you like, Ali. So our data book overall is quite tidy.

34:54 We have there's a couple of regions and limited to a small number of customers where we see extended terms. We work closely with those those clients and have kind of a clear clear visibility of those payment plans. So we we don't have any overall concerns, but, you know, we just put our effort into recovering those debtors in those areas and with those clients, you know, as as in a as soon as we can, really. But, overall, we we you know, there's been a that's another area over the last few years where we've put a lot of effort, and we've seen a lot of improvement. Thank you. The next question here reads, the the adjusted EBITDA figures in the interim suggest Marine Civils is a more stable business than offshore energy. Is that what it has been over the last five years?

35:46 Yes. So just to take Marine Civil, which is is our pipe shield business. So that joined the group in 2019 and and has has been a really successful acquisition for us, growing and consistently delivering on on its its projects and on on kind of the the bottom line, the adjusted EBITDA. So we're we're very pleased with that acquisition and, you know, how that business has developed. TEKMAR Energy within the the offshore wind area, That has had a a more difficult and challenging few years, but there was a slide in our in our presentation that kinda takes you back to, I think it was March 20, which shows the the the performance of the business pre kind of COVID. So certainly, that that of that side of the business, the offshore wind side has had a difficult few years mainly by the market.

36:38 We are we saw we've also took some, you know, the opportunity to significantly improve our business processes and commercial side of that business. So now we have that back to where it should be performing and with the wider context of the business improvement processes and the the volume coming back in the market, you know, we believe that that business is back turned around and, you know, sustainable margins going forward. Thank you. The next question here reads, given the lengthy delay in collecting receivables in China and the constraints you have on your working capital position, are you bidding for more business in China? Yeah. Do you want me to add on then? Yeah. Go for it. Yeah. So as we all know, China's a key market, but it is a it is a difficult market to make returns from. So we've taken a view that we will still participate in the China market on a very selective and targeted basis, primarily focusing at the top end of the market where there is a price differentiation on technology know how.

37:51 So going forward, it'll be more selective. And, you know, getting cash out to China remains a challenge, and we feel there are more lucrative markets to go as we see this, volume, maturing in the market where we can be more assured of generating cash returns. So in summary, yes, but on a very selective and targeted basis, in the China market. Thank you. The next question here reads, I know you see CapEx this year at 2,000,000 compared to the 1,200,000 and under 1,000,000 in each of the last two years. Can you give us some context for this? Yeah. I mean, that's purely just been, you know, due to affordability and and cash flows. So, obviously, as the business returns to profit, we we obviously look to step that up.

38:45 We, you know, we have plans there around our you know, where the business can go through some, I would say, quite moderate investment, but we're just taking quite a cautious approach. Our aim is to step that up this year, but, like I said, quite a cautious approach and phased approach with, you know, with with our cash flows available to us currently. Thank you. The next question here reads, when do you anticipate getting the SIL 1,400,000 trade receivable? We would we would expect that probably in the next quarter. Thank you. The next question here reads, thanks for the presentation. You indicate a current order book of 24,000,000. Given the number of projects you indicate you have visibility on and the structural growth in the end market, are there key opportunities in the pipeline that could inflect that order book, and what are the timelines on those opportunities?

39:41 Yep. So yes is the answer. A number of significant contracts coming to the market. So we do see, you know, upside in terms of that volume of order book and backlog. What we're not so sure about is the current timing of these large contracts, hence supporting our cautiousness that we've we've reflected upon for h two or commented on for h two. What I would say though is that to address this volume in the market, the whole industry needs to have a much quicker cycle. You know, we're still going through a lot of learning in terms of the technology need, tuning of the market as I call it.

40:37 I think the timing of that negotiation is taking a long time. But we are seeing a need in the market to progress and develop partnerships so we can cycle contracts. So the reality is these two and the 60 gigawatts we got by the end of the decade will not work unless we align better as an industry. What I'm pleased to see is that we are seeing more partnerships, early engagement developing. You know, for example, what's up in the Asia market, which we're very active in projects that are well ahead of us in the pipeline in order to understand the technology fit sooner rather than later rather than negotiating back of the life tender process or live on projects.

41:24 So the cycle needs to accelerate and mature, and the industry is starting to move in that direction. So we see partnerships as being key as we go forward. And I think that bodes well in terms of our current offering, our aspirations regarding bolt on m and a technologies. I think that would help the market start to deliver quicker turnaround projects. So a bit of an answer there short and midterm in terms of projection, but we are seeing much larger contracts coming through the pipeline now, which is encouraging. Thank you. The next question here reads, can you please also talk about the price aspiration of those you are seriously considering within your m and a pipeline?

42:11 As you indicate, you will use that accelerate company growth. What are what are what are our hurdles will you use to make those inorganic investments? Yeah. I think I mean, I'm not gonna comment on pricing, yeah, in the m and a mark for obvious reasons. But, really, it is it what we're really getting is focusing on profitability. We are looking at, you know, opportunity to scale up the business. It's really around quality of earnings and really surround that enhanced technology complementary fit in order that we have an even wider one fit solution for these projects. So that's principally our our m and e rationale and strategy, but I'm not gonna comment on the detail pricing if that was I think that that that was a comment in the question there.

43:08 Thank you. And the last question we've got here reads, Lianne, a question on the organic business. With the current revenue annualizing at approximately 35,000,000, you should be able to generate 4,000,000 of EBITDA from the same. Will that allow the business to be cash generative in the core business? Yeah. Well, first, I would I would say, I think we we, you know, kind of highlighted that we it's not necessarily for h two, you know, to this this year to kinda double h one. So we we're cautious on that. But taking those broad numbers, yes, the you know, get getting back into an annualized and, you you know, and and consistent margin and and EBITDA across the year. We you know, that that just starts to put the business into a cash generative position.

43:56 Alice and Leanne, thank you for answering all those questions you can from investors. And, of course, the company can review all questions submitted today, and we'll publish those responses on the Investor Meet company platform. Just before redirecting investors to provide you with their feedback, which I know is particularly important to the company, Alastair, could I please just ask you for a few closing comments? Yeah. No. So just thank you everybody for, your time today. Hopefully, this has given you a good update in terms of where the business is and a direction going forward. And, particularly, thank you for the questions. Some very good questions in there, but I hope that gives you a bit more clarity. And we look forward to updating you in the near future. Thank you. Thank you. Leanne. Thank you for updating investors today. Can I 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?

44:50 This may only take a few moments to complete, and I'm sure will be greatly valued by the company. On behalf of the management team of TEKMAR GROUP PLC, we'd like to thank you for attending today's presentation, and good afternoon to you all.