Tekmar Group (LSE:TGP) — Trading Update - Investor presentation

0:02 Good morning, and welcome to the TEKMAR GROUP PLC investor presentation. Throughout this recorded presentation, investors will be in listen only mode. Questions are encouraged, and they can be submitted at any time using the q and a tab situated on the top right 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 your questions submitted today and publish responses where it is appropriate to do so. Before we begin, I would like to submit the following poll. And I would now like to hand you over to CEO, Richard Turner. Good morning to you. Hello. Good morning, and welcome to our Investor Meets company presentation. We are partway between the end of our 2025 financial year and reporting our audited results, but we thought it was worth giving investors and the market an update of how we're performing and how things are looking for 2026 and beyond.

0:52 We're holding this meeting on the back of a trading update that we released last week where we announced another significant contract win in offshore wind and a record backlog for the business of 29,000,000. So I'd like to put that into context and describe how this will fuel our future growth. Finally, I'm also keen to introduce Phil Lanigan, who's been with TEKMAR now for four months as chief financial officer. I'm really delighted that Phil's joined us. He brings with him a wealth of experience as both a public and a private market CFO and has experience in business transformation integration, organic growth, and m and a. And Phil will expand on his background when he introduces himself later. The structure of our presentation will be as shown here. We are conscious that there may be some people on the call who are not familiar with our business, so we'll start with an overview of TEKMAR, where we are today, which I hope will serve as a useful introduction.

1:46 Phil will then give you an update on the headlines from our trading update and our financial year 2025 performance and the platform that that gives us moving into 2026. I'll give you an update on our strategic plan project Aurora, and then we'll wrap up at the end, and we'll be happy to answer any questions that you may have. Over the course of the last year, we spent time reframing how we describe our business to closer align it with how we're actually running the business, and that is in terms of two verticals. Firstly, asset protection technology, where we have all of our engineering services well as our polyurethane and concrete protection and stabilization technology. The second side of our business is offshore energy services.

2:34 And in that area, we currently provide offshore routing services and also rent equipment to offshore contractors during the installation phase of projects. As we stand today, the majority of our revenues are generated from asset protection technology. And in our strategic plan, we're aiming to increase all revenue streams, but to shift the proportion of revenue attributed to offshore energy services from around 10% today to an excessive 25% over a three to five year time horizon. That's why it's important for us to focus on this today. Within those two verticals, we are serving three primary markets, and they are offshore wind, offshore oil and gas, and also the ports and harbors marine civils markets. We've got an extensive track record of serving these markets globally from our UK bases and international offices.

3:28 Today, there is already millions of miles of cables and pipes installed on the seabed. If you were to join them all together, it would be long enough to wrap around the world 75 times. As the world transitions to more and more renewable energy, in particular offshore wind, that number will only increase. And all of the pipes and all of the cables and other assets that are installed in the sea form the backbone of our energy system, and they need to be carefully engineered, designed, installed, protected, and stabilized. And that's what TEKMAR does. We may only be a small part of the cost of this, but without TEKMAR's technology, it would be impossible to keep offshore energy moving. It would be impossible to transition to a higher proportion of offshore renewables. It would be impossible to keep the lights on. Our technology is absolutely mission critical.

4:18 The way in which we provide these mission critical products and services to the offshore energy industry is more comprehensive and in a more holistic way than anybody else. We start right at the front end when customers are evaluating the feasibility of a project, helping them to understand the subsea landscape, the soil conditions, the currents, the waves, how that will impact their foundations and cable systems. We help them to find the optimal design and to ensure a project is cost effective but also reliable, resilient, and robust. We then go on to design and supply products and services that are needed to protect and stabilize the system and to make sure they perform reliably for twenty five years in a very harsh marine environment. This comprehensive system solutions approach is very unique and unparalleled in the market today.

5:11 One of the things that we are most proud of at TEKMAR and the thing that really positions us well when faced with growing market demand is our stellar track record. Whether it's the number of highly skilled and experienced engineers we have working on today making today's impossible, tomorrow's deliverable, or the 100 plus thousand stabilization assets we have deployed globally protecting the critical infrastructure of the world. But perhaps the most impressive statistic is our record as a pioneer in offshore wind. TEKMAR has supplied more than 12,000 protection systems to more than a 120 offshore wind projects in 25 different countries, which equates to more than 50 gigawatts of renewable power, meaning that two thirds of the installed offshore wind capacity globally today is protected by TEKMAR technology.

5:59 Nobody can touch that. Our closest competitor has less than 20% of his track record, less than 20% of his experience, and less than 20% of our ability to support the needs of the offshore energy customers in the future. And it's because of that pedigree that TEKMAR is years ahead of its competition. We are proud of this and the impact it has on supporting energy transition to date, and we plan to maintain, if not beat, this statistic moving forward. So Phil will talk in a minute about some of the highlights for FY 2025, but just to set the scene in terms of where we are and the progress that we're making over the last year or so. At the start of 2025, we launched Project Aurora.

6:46 That is our three to five year strategic plan through which we will unlock our true potential and grow the business significantly both organically and through strategic investments. I'll expand on this in more detail later. We were very pleased with what has been delivered so far, and that is now translating into results. We now have a record order book in the second half of f y twenty five moving into 2026. We see much improved financial performance as we begin to execute this order book leveraging our excellent operational capabilities. A reality in any organization is having to manage the business in the past, the present, and the future. That has been the case for us at TEKMAR, dealing with historical industry wide system design and specification issues. In the last twelve months, we've made really significant progress in resolving those legacy issues and concluding that is constructively with customers whilst forging stronger and more collaborative relationships moving forward.

7:47 An area I'll talk about later is what we do with regards to m and a and growing the business in that regard with a view to adding further strength and diversification. And then finally, another key initiative over the last twelve months has been organizational design. Within this work stream, we've made significant headway over the last year in integrating our business units to create a leaner, more responsive, and better organized business that is aligned with market needs and therefore well positioned for success. As part of this organization, Phil joined us as CFO in the summer. And now Phil I'll hand over to Phil, and he'll give you an overview of our financial performance. Good morning. I'm Phil Lanigan, and I joined TEKMAR four months ago. I'm a serial CFO with several years' experience as a CFO for engineering businesses supporting the energy transition.

8:40 I've also around ten years experience as a CFO for small cap companies on public markets. If we have a look at our performance as we've gone through 2025, we're building some real momentum in our order book. We've taken £29,000,000 worth of new orders since the first of July, and that will translate into revenue as we go through 2025 and into 2026. Whilst winning the work, we've maintained the discipline on the margins when we're taking on that work and driving the margin discipline as we execute that work. That flows through into the second half of twenty twenty five. Market expectations for the financial year ending September 30 were for TEKMAR to breakeven for the full year, and that implies a second half recovery from the £700,000 of adjusted EBITDA losses incurred in that first half.

9:42 The additional volume that comes with the orders that we've won feeds through to profitability and the benefits of that additional work mean that our factory in Newton Acliffe increases its utilization and efficiency. And that will improve margins, which in the first half of the year were down 29. We've not only been winning work, we've been controlling costs. We've reviewed our cost base, taking out cost that will impact on our profitability in the second half of twenty twenty five and more importantly, into 2026. We've been strengthening our balance sheet over the past twelve months.

10:27 We've collected 1,100,000 of cash from a very old debt in China over the past six months. We own an investment property, which is not used in the business. It has a book value of £2,800,000. This is being actively marketed at present, and we'd be disappointed if we don't sell it within the next twelve months. The improving balance sheet provides TEKMAR with a platform to support growth. Thanks, Phil. So let me talk now in more detail about Project Aurora and how the delivery of it is going so far. In Aurora, there are three pillars. The first is to bring true scale to the business through sales growth, which requires only incremental product development and which is absolutely supported by the market.

11:21 The second pillar is operational excellence. So through bringing additional volume into the business, we are utilizing assets that we've already invested in without having to spend significant amounts on expansionary CapEx. We therefore benefit from operational gearing, and in doubling sales, we won't double EBITDA. It will more like quadruple. And the third pillar is to invest in other complementary businesses through m and a. The most critical parts of the first phase of project Aurora is to build stronger, more diversified backlog aiming to sustain and bring in a higher volume of quality orders into the business to make sure we can continue to set higher and progressively more ambitious financial targets, not just for 2026, but for 2027 and beyond.

12:09 We've been really successful in this regard, having already reached record record backlog levels at this stage in f y twenty six. But not only that, an order book that is good quality and an order book that's more diverse than ever before both in terms of end market, but also geographical spread. This larger order book is allowing us to benefit from operational gearing as we steadily increase asset utilization and can fill our order book without the need for investment. We've also increased our order book in offshore energy services and expect this revenues stream to continue to grow in 2026. This all flows through to our p and l. And as we progress through the second half of twenty twenty five, we've seen steadily improving financial performance, which has given us momentum moving into 2026.

12:59 The key thing that underpins Project Aurora is the external market conditions. We talked a year ago about steadily improving outlook for offshore winds and an expectation of increased numbers of gigawatts of projects being sanctioned. We talked about continued and sustained investment in oil and gas projects. We talked about some key leading indicators in the market that give us confidence that we've got multiple routes to success in delivering more than two times growth in our sales pipeline. So first of all, in terms of the number of gigawatts of projects in offshore wind, we've seen continuous growth, and in particular, between 2023 and 2025 to date, significantly more gigawatts of projects having received financial sanctioning than in prior years. And that's all projects that will flow through to demand in the supply chain and which we can expect to be built over the next five years.

13:50 Also, on the oil and gas side, we've seen continued investments. We've been increasingly successful in the sector, in particular in The Middle East, which is a rapidly growing part of this market. Growth in these sectors is really well evidenced. For example, if you look at performance of the order books of cable companies, obviously, a lot of our technology is deployed to protect cables, so this is a really good comparator for us. If you look at the big three cable companies, Brisbane, Nexens, and NKT, we've seen significant expansion in their order books and visibility in recent years with their revenue profiles, their profitability, and also their share price really improving. Finally, important harbors, there is billions of dollars of spend needed globally to maintain, to develop, and to add new capacity in this critical marine infrastructure.

14:41 This investment is needed to support the growing offshore energy markets, but is also key to supporting international freight and logistics and also leisure investments. Our engineering services, structural concrete, and scour protection technology are directly applicable in this sector, and we have a growing pipeline of opportunities starting to move into the order book. So the aggregated demand between these three markets is really significant and gives us a number of routes to more than doubling our revenues in the next three to five years. I spoke last time about the increasing level of order visibility. The volume of inquiries in our pipeline grew significantly throughout the course of 2025, And I talked about that being more than £50,000,000 with the projects that are expected to be placed in the second half of calendar year 2025.

15:36 And we've worked really hard on these projects. We've worked really closely with these customers. I'm glad to say as we stand today, we've already signed a significant proportion of these orders, giving us a very strong order book that acts as a platform for growth, allowing us to continue to aim for higher revenue targets quarter on quarter, year on year. And whilst growing this order book, we've maintained a healthy mix between our end markets. As I mentioned, we expect the ports and harbor segment to continue to grow. As you can see from this chart, the order book that we've got at the moment is at a record level for the group, and we've been very successful in a number of key strategic areas. Throughout the second half of twenty twenty five, the momentum has really increased and continued into 2026.

16:26 So to pick out a couple of highlights, at the start of 2025, we picked up some high profile routing contracts and a large CPS contract for a UK wind farm. We're also pleased to enter into a frame agreement with Nexans to support engineering services. Second half of the financial year, the momentum really picked up. We were awarded a fast track concrete order in July. Then in September, we announced a $10,000,000 cable protection system order in The Middle East. That momentum continued with follow on orders from other EPCI contractors in the same region in q one of our 2026 financial year, so really demonstrating our ability to get traction and to maintain traction within that key growing market. And this quarter, we've also won significant ports and harvest projects in The UAE. We signed a frame agreement to supply cable protection systems in Europe. And then last week, we were also pleased to sign a large European wind farm contract in excess of €8,000,000 worth of work for us.

17:25 This is taking our order book into a different league. So sitting here today at 29,000,000 is the highest it's been. We expect to continue to build on that throughout the course of this calendar year and throughout 2026 as well. This order book is giving us much better long term visibility as well as we already have order book coverage running into 2027. And now this order book really feeds through to the second pillar of project Aurora and allowing us to better utilize the great assets and the great capability that we already have. This slide shows a picture of our facility in New Canakleft taken a week or so ago. As you can see, that facility is now very busy. I spoke previously about a factory that was utilized at around 30%, and therefore, an opportunity for us to more than treble our throughputs, our outputs, and therefore, our revenue without needing to invest in additional assets.

18:21 Over the course of 2025, through the success we've had at the front end, through the backlog that we've grown, this facility has become increasingly busy to the point now where it's really buzzing an extremely good visibility for financial year 2026 and our longer term visibility into 2027 as well, which is a really good position to be in. At the moment, we've got more than a 100 projects going through our business. With that high number of project, it significantly improves our utilization, and that really flows through to our p and l, giving us that strong gearing effect as we progress through these projects. And then finally, the third pillar of project Aurora is m and a. Last year, we set out our key investment criteria, which is to bring further profitability scale to our group, but to do it in an affordable way. We aim to both consolidate our current market position and also to diversify revenue streams, in particular, in offshore energy services, and also to invest in next generation and digital technology.

19:25 Our plan is to make a number of accretive investments that meet this criteria, and we're working hard on progressing m and a opportunities. We're looking forward to adding to our business in the future. But as always, our focus is on being disciplined when looking at any potential investment rather than being rushed. So just to summarize before we open the call to answer any questions that you may have, The markets that we operate in are building and growing and improving steadily. It's not a perfect situation. There are many challenges in our markets. But behind any of the negative headlines is something unstoppable, which is the world's ever growing thirst for energy and ever growing need to invest to satisfy it. Therefore, we remain very confident that the aggregated demand between our primary markets is more than enough to support the gross growth aspirations of Project Aurora.

20:22 The work that we completed last year, in particular in the second half, has really enabled us to improve our financial performance and to start this financial year in a much stronger position. The backlog that we now have has improved dramatically compared to the comparable period twelve months ago and is expected to continue to grow and to develop as we progress through FY 2026. Importantly, with this increased order book that we've got, we've we've got the capacity to deliver this without significant investment. And also, we're in a position now with the work that we've done on the balance sheet and the points that Phil made with regards to what we're able to do in the future. The balance sheet is being continually developed and supports the delivery of the project Aurora objectives. We still have a lot of hard work ahead, but I believe we're on the right course to deliver significant future shareholder value.

21:14 Thank you. Richard, Phil, thank you very much indeed for your presentation. Ladies and gentlemen, please do continue to submit your questions using the Q and A tab situated on the top right corner of your screen. While the company take a few moments to review those questions submitted today, I would 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. And Richard, feel as you can see, we have received a number of questions. So if I may just read the first one here. What do you mean when you speak of backlog of work? As often you mention having spare capacity. Phil, do you want to take that one? Yes. So our backlog of work is contracted orders we receive from customers. So it's the work we've got to execute which will generate revenue over the next year or two years depending on the length of that contract.

22:08 We talked about spare capacity. Richard mentioned the use of the photograph of our facility at Newton Acrecliffe. As Richard has mentioned in previous presentations over the last twelve months, that has been operating well below its capability and capacity and hence we have spare capacity. Even now as we get busier, we still have capacity to do more work. So we have the potential to do significantly higher revenues without having to invest in additional CapEx. That facility can deliver a lot more revenue than it's currently delivering. Thank you very much, Phil. And the next question we've got here is what is your visibility for the business over the next eighteen to twenty four months? And what is the approximate percentage of your business derived from recurring revenue or long term maintenance contracts as opposed to single project based work?

23:07 Okay. So obviously, we're just in the first quarter of our 2026 financial year. But already, because of the backlog that we've built and and what we've spoken about through the course of this presentation, know, we're developing pretty good visibility for this financial year and certainly better than the visibility that we had twelve months prior when we were looking ahead into f y 2025. Also, one of the really interesting things, which is, I think, a a function of the developing market is that we've already, at this stage in 2026, got visibility in projects and in backlog that will be executed in 2027. So that's really important for us in terms of the long term visibility. One of the other interesting parts of our business is the different mix of technology and products and services that we offer.

23:55 And for example, on the structural concrete product side, that work tends to be quicker turnaround. So we've got the nice blend of the the longer, more predictable, polyurethane cable protection system type project, but also the concrete work, which is very often quite quick in and out. So that mix is really useful in terms of us planning from a sales and operational planning point if you're getting good utilization. So visibility is improving. It's better than it has been in the past because of that backlog. Now in terms of recurring revenue, the o and m market, the aftermarket in both oil and gas and offshore wind is very interesting, large amount of spend in that area. And where we started to penetrate that market is in the offshore grouting and within our offshore energy services division.

24:44 I do a lot of O and M work with regards to to grouting, And that's why we're so interested in increasing from 10% of sales attributed energy services to more than 25% of revenue because that is generally more recurring revenue. So that will really enhance the mix of our project when we get to that 25%. But at the moment, offshore energy services was sub 5% and is probably gonna be about 10% more recently. But to try and build on that year on year and get that to a higher proportion gives us an even healthier mix than we have currently. Understood. Thank you, Richard. Next question here is, a shareholder, can I clarify the potential use of the convertible note for M and A? Could you provide any reassurances that any M and A deal utilizing the note will be accretive and positively impact current shareholders?

25:39 Additionally, on the topic of M and A execution, did you anticipate the process would take this long to complete a deal? Okay. So first of with regards to the loan note in SCF's investment in TEKMAR, that loan note was put in place more than two years ago with a view to creating a means, a lever for growing the business and to do that in an accretive way. And because SCF are, you know, 30 plus percent shareholder in TEKMAR, then their goals, needs, their drivers are absolutely aligned with all shareholders. And we're spending a lot of time working on m and a, looking at opportunities, and I can speak personally as a shareholder myself. Everything that we look at, all of the ways that we're measuring and assessing these deals is for the view to meeting the needs and the desires and the benefit of all shareholders, not just one shareholders, but I I really do think that they are aligned. So I think no cause concern on on that front. And any deals that we do go ahead with will be accretive and add value to the business.

26:46 Absolutely. Now with regards to time scales, you know, I've been with the business for just over a year, so to be honest, I can't really speak for the past. But over the course of the last twelve months, we have dedicated a lot of time looking at opportunities, and we continue to spend a lot of time looking at opportunities. I think the key thing is to do the right deal rather than a fast deal. We've also, I think, reframed and refocused on the very compelling organic growth story with our business in addition to the opportunity to do m and a. So, you know, we've progressed really well on that side, but we're not gonna do something quick. We're gonna do the right deals and make sure that we bring in profitability and scale into our business, but to do it in a complementary and in an affordable way.

27:36 Great. Thank you, Richard, for clarifying. And moving on to the next question. Can you please explain how the cable protection actually works, and particularly the security side, bearing in mind geopolitical issues? So put simply, the the cable protection system there is to enable the cable to operate, to be installed, and to operate, and to continue to operate reliably for its design life, which is typically twenty five years. And, obviously, that's an extremely harsh marine environment where you've got waves, currents, a lot of things moving, very dynamic situation. So what the cable protection system does is wraps around that cable, protects it, gives it that integrity, and ensures that it it can perform reliably for that duration.

28:23 Now the other aspect of that and a very topical point at the moment is this energy security and certainty of supply and the potential rather than just the marine environment for there to be other intervention, whether that is deliberate or accidental. And certainly, there has been a lot of instances in the last, you know, twenty five years of offshore wind where cables have been damaged, for example, by fishing boats or trawlers. So there's an interesting emerging part of the market for additional protection systems, additional structures to protect cables, in particular export lines, and we're involved in the front end of that at the moment, you know, looking at design concepts. Because as I said before, you know, millions of miles of both pipes and cables in the world, and there is a certain degree of vulnerability.

29:10 And if you look at the sort of government policies around the world, The UK being example, the departments being combined. So now in The UK, we have DESNES, Department for Energy Security, the Net Zero. So it's net zero carbon neutral, but also maintaining security and certainty of supply. So we haven't baked any of that, you know, interesting, exciting potential part of the market into our forecast, but it's certainly something we're starting to spend a lot of time on. So there could be additional protection requirements, and in particular, for hybrid and and concrete structures in the future, we believe. Thank you, Richard. And the next question here is, how do you see the business today from when you started circa fifteen months ago? And given that we are a reasonable amount of time into Project Aurora's execution, could you share any key targets for certain indicators such as scale of revenues, operating margins, existing client expansion and new client segments?

30:06 Furthermore, as the order book grows or large projects are contracted, how does the company intend to deal with working capital requirements? Quite a few questions there. Okay. It's really good questions. So I'll tackle the first part of that, and I'll I'll defer to Phil with regards to working capital. So as you quite rightly pointed out, I've been with the business now for more than a year, but I've been in this industry for, you know, a couple of decades. So I'm very experienced in this industry. Project Aurora, we launched to the market almost exactly a year ago. So it's it's twelve months old now and laid out those three pillars and with our detailed action and deployment plans for our business in order to deliver those objectives and for that to flow through into performance.

30:53 The key thing, as I said more than a year ago, is the volume of work, the size of the order book, which flows through to the utilization of the great facilities, the great assets that we've already got. And as we've mentioned earlier in the presentation, we've been really, really successful in growing and diversifying our order book at the same time as maintaining discipline on, you know, contractual risk and and margins, etcetera. So I'm really pleased with the progress that we've made on that front, and we certainly saw in the second half of f y twenty five that's starting to translate into results. If I'm completely honest, though, you know, that point of inflection that we saw did take a little bit longer than I would have hoped, but that point of reflection absolutely came, and that momentum that we built the second half of last year is is is very much there. So so I think overall, although I'm quite an impatient person, I would have liked to have hit that point of inflection and sort of perform better quicker.

31:55 Looking back now over the course of f y twenty five, I think we can be pretty pleased with what the team have delivered through throughout that year in terms of the changes in the order book, what we've done with regards to the organization, repositioning of the business and how that is now really filling up our facilities and utilizing our assets and and producing that gearing effect. Also, on the m and a side, we've already covered that, but, know, we've dedicated a lot of time to that and are, you know, continuing to do so. So am I pleased with where we're at today? I think, know, we've made a lot of progress, and we've got line of sight of, you know, the right strategy and direction and for potential future investments, and that'll flow through and continue into f y twenty six as so I think all in all, I'm very pleased with the progress that we've made, and and that is really starting to make a difference.

32:46 And, Phil, I'll defer to yourself with regards to working cap. Yeah. How do we manage working capital requirements going forward? Well, the first first part of that is we mentioned in the presentation about being disciplined on the contracts that we sign up for, and part of that is negotiating the milestone payments, ensuring that those milestones are fair and equitable between us and our customer, and ensure that as far as possible, the milestones are factual and we can they are effectively under our control as we deliver. We operate in a couple of different markets. So oil and gas and in The Middle East tend to have a longer working capital cycle, but that's balanced with our offshore wind, where in Europe, it's a much quicker cycle for working capital.

33:39 We also negotiate with our supply chain partners, so they work in tandem with us, and we try and align our milestone payments with MARSO payments to our supply chain. So we look to manage working capital that way. But as Richard and I mentioned in the presentation, we also have a surplus property, and we're looking to sell that within the next twelve months as a book value of 2,800,000, and our target is to realize that within the next twelve months. And that will provide the business with additional working capital to support the growth going forward. That's great. Thank you, and Phil for that comprehensive answer. The next question asks, could you provide some detail into what TEKMAR technology slash IP offers that is market leading?

34:33 Sure. So with regards to technology and IP, the different sides of our business, obviously, different levels, but starting with offshore wind, as I mentioned on the the slide where I talked about our track record, you know, we've been designing, developing, delivering protection systems for longer than anybody else. And two there's 85 gigawatts roughly of installed capacity in offshore wind in the world at the moment, and two thirds of that is protected by TEKMAR technology. And every time we've done a project, we feed that know how, that experience, that into our technology cycle, and therefore, as we are today, you know, tenth generation of cable protection system, we've baked all of that knowledge, know how, and experience into our design, and nobody else has had that level of experience and track record, which is why we really believe that we're differentiated.

35:24 And because of all our engineering is in house, we have all of that capability internally, and that's fed also into our engineering analysis. So the the engineering piece of the front end is really important where we assess the cable route. We support the design installation, routine, how it should be buried, and then ultimately how the cable should be installed, stabilized, and protected. That's there's a huge amount of proprietary analysis involved in that, and that's knowledge and know how that we've built into our systems and engineering databases over the last twenty plus years. So that really sets us apart from the market. Also, the con the structural concrete side, lot of IP in these sorts of product with regards to installing something which, of course, goes in on day one but stays still or even technology that actively buries itself to support stabilization.

36:17 So there's lot of technology across our business, we really are, you know, significantly ahead of the market with regards to that. But not being complacent, you know, we do wanna stand still because that would effectively mean that we we go backwards. We do continue to invest modestly in incremental product development, and we're also working on some other r and d initiatives, which we'll be able to talk about in in future presentations to make sure that we maintain that edge in the market that we that we have today. Thank you. Next question. We've seen periods when TEKMAR has secured significant orders in the past, but it's not been able to sustain this. What gives you the confidence it's going to be different this time? I think that's a really good question, I think I can answer that on a number of fronts. So we have seen cycles before where order intake and therefore order book has increased, but it's also fair to say that then that's then declined and created that sort of cycle within the the business.

37:18 So the first thing I would say is that, you know, I've only been here for a year, so I can't necessarily speak for all of the past. But I've been in the industry for, as I said before, a couple of decades, and I've seen the market in different positions and different situations. But I would definitely say, at the moment, I've never seen the markets in terms of oil and gas, offshore wind, the ports and harbors market lined up in the way that they are now. And that's not assuming that all of the political predictions for offshore wind are met. That's not assuming that, you know, the billions of dollars of oil and gas investment in that. It's taking a very modest view through all of that and still coming up with a situation in this scenario where the aggregate demand is just significantly more than we need to to double the size of our business. So the market conditions really support our ongoing success in not just getting to the level that we're at now, but also, you know, maintaining it.

38:10 And, yes, we have seen significant orders in the past, but the backlog that we've got at the moment is a record. So we've never seen it as high as we are now, and our job now is to, you know, to maintain, if not build on that position. We're much better organized as well in terms of taking our fair share of the market, the work that we've done at the front end, the work that we're doing with the customers, the work that we're doing with regards to engineering services. And the and the going back to the IP, well, it's not just the things that we've got and the things that we offer. It's the way that they're stitched together in a more comprehensive, in a more holistic way than anybody else can provide, which, again, you know, in in project Aurora, as I said, when we launched it, we did not assume really anything in terms of market share expansion.

38:55 But, actually, it's no reasonable to assume that we'll continue to be as successful as we have been. So I really believe that as we move from this quarter, so q one twenty twenty six, into quarter two, we'll continue to build on that success and continue to invest in the areas that require development in order to maintain that level of momentum that we that we have built. Thank you very much. A question on input prices and costs. What is happening to them generally? Well, like any business, you know, we're exposed to the macroeconomic environment prices of energy and and and raw materials. I also think it's fair to say that in the past, that's hurt us as a business because we didn't have contractual coverage for that. But, absolutely, the the especially the longer term contracts we're entering into now, that, you know, that does have adequate contract contractual coverage, so that's manageable.

39:59 And then with regards to what we're doing in the supply chain, I'm pretty best deferring to to fill. Yeah. The the increasing order book is attractive to to supply chain. In particular, when we've got orders that flow out into 2027, that's good for us, but it's also good for supply chain. So with the additional orders, creates additional volume, and hence we get economies of scale and supply chain like volume like us. So that helps us with pricing with our key supply chain partners. So additional orders for us is good for us, it's good for our supply chain, but it's also good for our competitive position with our supply chain.

40:45 Fantastic. Thank you. How does the high order book feed through the earnings and cash? Well, we've talked about previously about the factory facility at Newton, Acliffe, and its underutilization. If our facility is operating with a higher capacity, greater throughput, those costs are spread over a higher revenue and we get an operational leverage impact. So that feeds through to our margins, and it feeds through to profitability, and it also feeds ultimately through to cash. Thank you, Phil. And maybe another one for you. A question on real estate disposal. You mentioned 2,800,000 in book value. Is there upside to market appraisal value? The 2,800,000 is the book value. It's also the market value every year for our annual accounts.

41:38 We have to have that property valued as it's a property, an investment property. So it's so the auditors require us to have that independently valued. That independent market valuation is 2,800,000. Thank you, Phil. And perhaps one last question here. Markets are getting better. Can you comment on whether competition for contracts are intensifying? Are you able to sign new work at reasonable margin? So the the the competitive environment is is really interesting, really dynamic. Do we have to compete? Yes. Do we have to compete hard? Absolutely. But are we able to compete and to win and to win good quality contracts? Then yes also. Why is that? It was because we're we're differentiated in terms of our technologies. I think we've already covered, but also because there's just an increase in demand. We've seen that flowing through the level of inquiries. We've seen that now coming into the order book. So that increased demand means that, you know, the capacity in the market is is is stretched more than it it was before.

42:42 One of the other things that we really gives us an advantage other than our technology is our capacity. So having underutilization is not a good thing for the past or the present, but an opportunity in the future to be able to react and respond to the market needs when they arise. So that's definitely playing to our strengths at the moment being able to, know, deliver. Having the capacity to deliver is really important to support the lead time of of some of these projects. So, yes, it is absolutely competitive environment, but, we absolutely can be successful. I I would also again make reference to the analogy that I made before with regards to the cable companies. There's lots of other cable companies, but the big three listed companies that I mentioned, Brisbane, Nexans, and and NKT.

43:27 If you look, they're competitors of each other, but the aggregated demand from the cable markets has increased such that they've all been able to enjoy larger order books. They've all been able to enjoy better visibility, better financial performance, and then their share price has really benefited as a result of that. And so that's not a perfect comparison, but given how linked we are to their markets and their industry, I I do feel that they're a very good comparator for us in our part of the market and the people that we're competing with. Fantastic. Richard, Phil, thank you for covering all those questions from investors today. And, of course, the company can review your questions submitted today, and we'll publish those responses on the investment company platform. But, Richard, before we direct investors to provide you with their feedback, which is particularly important to the company, could I please ask you for a few closing comments?

44:18 Yes. Certainly. Thank you very much. Yeah. So just to say thank you very much for attending. Thank you for your ongoing engagement. Thank you for your ongoing support. And both Phil and I would like to wish you all the best, for the festive season, and we look to continue to engage with you in 2026. That's great, Richard, Phil. Thank you once again for updating investors today. Could I please ask investors not to close this session as we'll now be automatically redirected to provide your feedback in order that the 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 of TEKMAR GROUP PLC, we'd like to thank you for attending today's presentation, and good morning to you all. Thank you. Thank you.