Tekmar Group (LSE:TGP) — Final Results

0:00 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 can 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 then. 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 I'd now like to hand you over to Richard Turner, CEO. Good morning, sir.

0:31 Thank you. Hello, good morning, and welcome to this webinar. My name is Richard Turner. I'm chief chief executive of TEKMAR GROUP, and I've been with the business since September of last year. And I'm joined today again by Leanne Wilkinson, who is our CFO. In our last IMC presentation in January, I spent time introducing myself and talking about my background in the offshore energy industry, and we gave guidance on our FY twenty four numbers, and I also talked about our exciting plans for growth. We released our finalized 2024 accounts at the start of last week. So today, after a brief induction introduction, Leon will take you through our f y twenty four results explaining some of the great progress that we've made and what it means for us in the future. I'll then circle back on project Aurora and give you an update in our three to five year strategic plans, and we should have plenty of time at the end to hear from you, to listen to your feedback, and also, of course, to answer your questions.

1:37 So before I get into the numbers and in case some of you are not that familiar with TEKMAR, let me describe what we do. Today, there is already millions of miles of cables and pipes installed on the seabed. If you were to join them all together, they would be long enough to wrap around the world more than 75 times. And as the world transitions to more and more renewable energy, and in particular, offshore wind, that number will only increase. And all of these pipes and cables and other assets that are installed into the sea form the backbone of our energy system and 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 not be possible to keep offshore energy moving. It would not be possible to transition to a higher proportion of offshore renewables, and it would not be possible to keep the lights on. Our technology is absolutely mission critical.

2:33 The way in which we provide these mission critical products and services to the offshore energy industry is very comprehensive and more holistic than anybody else. We start right at the front end when our customers are evaluating the feasibility of a project and help them to understand the subsea landscape, soil conditions, currents, waves, and how that will impact the foundations and cable systems. We then help them to find the optimal design 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 they needed to protect and stabilize the system to make sure it perform reliably for twenty five years in a very harsh marine environment. And this comprehensive system solutions approach is very unique and unparalleled in the market today.

3:21 One of the things we're most proud of at TEKMAR and one thing that really positions us well when faced with growing offshore energy demand is our stellar track record. Whether it's the number of highly skilled and experienced engineers we have working on making today's impossible, tomorrow's deliverable, Over hundreds of thousands of subsea stabilization assets we deployed globally, which are protecting critical infrastructure of the world, and perhaps the most impressive statistic is our record record as a pioneer in offshore wind.

3:51 TEKMAR has supplied more than 12,000 protection systems to over a 120 offshore wind projects in 25 different countries, which equates to more than 40 gigawatts of renewable power, which is approximately two thirds of the installed capacity today. Nobody else can touch that. Our closest competitor has less than 20% of our track record, less than 20% of our experience, and less than 20% of our ability to support the needs of the offshore energy industry in the future. It's because of that pedigree, TEKMAR is years ahead of the competition today. We're we're very proud of this and the impact it has had on supporting the world's energy transition, and we plan to maintain, if not beat these statistics moving forward. Just to pick out some of the highlights before I hand over to Leon to take you through the detailed financials and what I hope you'll ascertain, from the presentation today.

4:43 So firstly, today, we have a very solid and stable base, and that stable base and our industry pedigree mean that we are positioned extremely well for future growth. Our external market conditions are very good and are improving rapidly, and we have an extremely strong team at TEKMAR. And we also have an extremely strong plan to deliver a step change in our performance, and I'll circle back on these points later in the presentation. Just hand over to Leon. Thanks, Richard. Okay. So the group delivered revenue of 33,000,000 in FY '24 with a strong gross margin performance of 32%, a significant increase versus the 23% delivered in the prior year.

5:34 This results in stabilized business and an adjusted EBITDA of 1,700,000, in line with market expectations and the highest reported since FY 2020. Net debt at the year end was 1,600,000, with 800,000 available headroom on the trade loan facility. The SCF loan note of 18,000,000 remains undrawn. Order intake for the year was 32,000,000 with a closing backlog of 16,400,000. This is not an untypical level versus prior years. Our focus now, however, is to build on f y twenty four results and bring scale to the business. Order book growth is therefore a key priority. We have a strong inquiry book balanced across our end markets to support that.

6:21 In terms of our income statement and EBITDA improvement, the revenue delivered is just under 33,000,000, split largely across our key regions, Europe, Middle East, and APAC. It's also fairly well divided across renewables, which was 52% of revenue and 48% across the offshore energy markets. Although a low revenue base versus prior year, gross margin performance was significantly improved across both divisions. The key drivers being, we've now worked through the remaining low margin backlog projects in the offshore energy division. Our bid margins have been maintained or exceeded through strong project execution and DO management.

7:02 We also implemented a strategic supply chain approach where we've previously been more transactional. Furthermore, our service revenues have increased, which are at high margins in the business. As a result, both divisions are now profitable and performing well, in turn resulting in the group being profitable and at an adjusted EBITDA level. To note the Moon, Civil's gross margin of 37% in FY '24 included several one off items, which may not be repeatable. And therefore, we would expect FY '25 gross margin for this division to be more in line with the FY twenty four group margin of around 32%. So while we're pleased with the continued improvement in adjusted EBITDA and the 1,700,000 that we delivered in FY '24, which certainly is stepping right direction.

7:52 However, this doesn't represent our ambition we have for the business or the opportunity for sustained profit improvement. Moving on to the balance sheet. Following the disposal of subsea innovation in May last year, we returned the property valued at 2,800,000. The deal also concluded with a deferred consideration of 1,700,000, which falls into our f y 25. The final 500,000 of the 1,700,000 is due to be received in early May twenty five, which will be the twelve month anniversary of the transaction. A 5,800,000 provision has been made on the balance sheet in relation to warranty matters with an offsetting 5,200,000 insurance receipt relating to a commercial insurance settlement, and this is now received.

8:40 We went closely and actively with two key clients to close out these matters soonest. To recap our bank facilities in place by our relationship with Bank Barclays, we have a £4,000,000 trade loan facility for Project Working Capital. This is 80% supported by UKEF with their guarantee in place until April 29. And we also have a £3,000,000 COVID business interruption loan. Again, the balance sheet excludes the 18,000,000 loan note instrument, which is currently undrawn. In terms of FY '25, we've guided that EBITDA is expected to be consistent with FY '24 and also h two weighted. Our efforts during f y twenty five are focused on order book expansion and backlog build, maintaining quality of contracts.

9:32 We've recently announced some key words to the market, including a 5,000,000 offshore wind contract, which is for revenue delivery in calendar year 2025, and a three year framework agreement for our engineering consulting business with Nexon as a cable manufacturer. In the last year, we've increased our asset base in our offshore energy services, which drives attractive near term returns. And also to note, we have quite a capital light business model with a run rate CapEx below 1,000,000 per annum. Key intention in the coming months is to align our banking facilities with our strategic growth plan. And in addition, we are actively working on m and a opportunities and intend to move forward sensible acquisitions supported by robust diligence. I'll hand you back now to Richard to talk you through Project Aurora.

10:22 Thanks, Leanne. So with this very solid and stable base and with a fantastic track record and pedigree in the industry with differentiated technology and a positive market outlook, We've sat down and carefully planned out the next few years and built a strategic plan to capitalize on this. In this next chapter where we take TEKMAR into a different league and realize our true potential is what we call project Aurora. And as I mentioned last time, there's three pillars to this plan. First of all, to bring scale scale to the business. Our market conditions are very good. Our technology stands out in the markets, and our organic growth potential is huge. And given this doubling revenue in the next three to five years is not just an aspiration, it's a realistic game, and we've got multiple routes to success.

11:11 We haven't assumed market growth as rapid as is likely. We haven't assumed a huge increase in market share, but in reality, we are very well positioned to outperform the market in the coming years. The second pillar of Project Aurora is operational gearing, what I refer to as the two squared effect. So as we stand today, we are underutilized. We can significantly increase our output by three or more times without having to invest in any significant expansionary CapEx. So when we double our turnover, our EBITDA will not double. It will more like quadruple. And given the likely demand that we are faced with, it's likely we'll benefit directly from this effect. And that's not accounting for the additional benefits we will get from continuing to deploy our continuous improvement lean business system, which will make us even more efficient in the future.

12:00 So safe to say, the organic potential of this business is huge, and we will realize this potential. In addition, we have a third pillar in Project Aurora through which we will add further scale, further profitability, and further financial resilience via strategic m and a.

12:17 So these three things combined present a very exciting story for our business in the coming years where we deliver true scale and financial strength and resilience, which we believe the market will receive very well.

12:32 So let me talk about the market assumptions that underpin these plans. In our last presentation, I talked about the challenges the offshore wind industry had faced in recent years, namely extremely low strike prices, escalating material costs and interest rates, and higher OpEx costs due to reliability issues. But then more importantly, I talked about how the majority of these challenges had been overcome by the industry and how the offshore wind market is looking very strong indeed for the coming years. And that is definitely still the case and can be demonstrated in a number of ways. So first of all, in offshore wind in 2023, there was a record number of projects received FID. In 2024, that record was beaten. The projects are coming. And similarly in oil and gas, there's high levels of investment are forecasted, and high level of investments is forecasted to be sustained.

13:24 Another leading indicator and one very close to home for TEKMAR is the backlog and performance of cable companies. And the big three listed cable companies, Brisbane, NEXONS, and NKT have transformed their order book in recent years, taking them from relatively short term visibility to being fully sold out for multiple years, meaning their profits are increasing and they're trading multiples with it. This shows that doubling the backlog for TEKMAR is a realistic game, and we as we feed directly off this demand, we're just a bit further down the food chain. The demand is coming. So wind will grow significantly in the rest of the twenty twenties and will continue to grow in even greater rate in the twenty thirties. Demand will be centered in Europe, but will become increasingly geographically diversified. Oil and gas is also very busy, having had a difficult time, but has really found a crucial role now in energy transition.

14:17 Net zero by 2050 is completely impossible without continued investment in oil and, in particular, in gas. The world's thirst for energy is huge and increasing, and even to maintain production at today's rates will require significant investment, not to mention regions in particular in The Middle East and The Americas where there's forecast for significant growth. So what does this mean? Well, both oil and gas and offshore customers draw from largely the same supply chain, so demand is set to increase and will increase quite a bit in the next few years.

14:52 So given this market backdrop, the key focus this year is to build a growing and healthy backlog to enable us to deliver an order of magnitude change in our revenue in future years. The indicators on the external market are extremely positive, so let me bring that into the context of TEKMAR's order intake pipeline. I spoke recently about having visibility of more than 300,000,000 worth of projects, all at different stages and due for award and execution at varying time, but a lot of work that we have visibility of. And I stated that I expected this level would increase in the coming years.

15:27 That expected increase in level of inquiries is already happening. And as we stand today, we already have visibility of more than 400,000,000 pounds of orders in our project pipeline. So even if we stand still on market share, we expect our organic growth to be significant. Moreover, given that our technology is far superior and given that we continuously develop our technology, it's reasonable to expect our market share to grow. Again, we're not forecasting the benefit of this.

15:55 We really do have multiple ways to win and are not overly reliant on project timing and have not made aggressive assumptions in terms of market share. So our our growth forecast is ambitious, yet in in many ways, simultaneously modest. We're in a really great position where we can outperform the market, and we're already seeing the fruits of this. And you've seen our announcement in January for a major CPS award in The UK wind farm, which is a great start to the calendar year. So market conditions support significant top line growth for TEKMAR. Revenue is one thing, but it's also important to grow and develop new revenue streams and to make sure they're compatible with our strategic aims. So TEKMAR is already the most holistic provider of subsea protection technology, and our portfolio of products and services is more comprehensive than anyone else.

16:46 Our aim through Project Aurora and the execution of it is not just maintain that edge, but to increase it by adding further tools to our toolbox to enable

16:55 us to become a complete subsea system solution provider. And in doing so, we aim to increase the proportion of our revenues that come from services, whether it's engineering consultancy, equipment rental, or other offshore services. Today, our revenue is 10% attributed to these services, and we intend to grow this to 25% of revenue in the future. The rationale for this is to increase high quality recurring revenue streams that will deliver smoother revenue, enhance our overall blended margins, and also improve our cash flow. So what could that mean for investors? Well, different people look at different metrics, but I think cash and cash flow is the best one. And we've modeled the effect of this organic growth in our cash generation.

17:47 And as we increase our backlog and deliver proportionally higher levels of revenue, we become incrementally more profitable, and we don't need any significant CapEx to support that growth. Therefore, our EBITDA goes up significantly. And once we get above normally £2,000,000 worth of EBITDA, we become cash generative. And that cash generation accretes into high levels of cash in the near term that can be redeployed into the business fueling further growth. And this view is supported by the Cavendish research note that highlights significantly improving free cash flow yield within the forecasted period.

18:27 Also, just to elaborate on our investment plans through m and a. I can't share too many details for obvious reasons, but we're still dedicating a lot of time to this. After completing a full scanning activity in back end of last calendar year, we are now in live discussions with a number of key targets, trying to meet the criteria for investment, which is to bring an affordable scale to the group to consolidate our market positions and to diversify revenue streams, in particular, to support our growth of service revenues towards 25%. And finally, also interested in focusing on new and innovative, disruptive, and digital technologies that can accelerate our product development and market growth. So this criteria as a basis, we're pushing on with this plan and hope still hope to be able to progress with some creative investments in the near term.

19:21 So just to summarize, so after a challenging period for TEKMAR and our wider industry, we've emerged with much improved results in 2024, but in reality, not where we need to be ultimately, but certainly a major step in the right direction. And that gives us a good, solid, and stable base from which to grow and strengthen the business.

19:43 We've got the focus in the right areas and in particular, in 2025 on order book development. And growing and strengthening the business is exactly what we will do because the outlook in our core markets is so positive. And also our positioning to capitalize on these growing markets is excellent, not just because our track record and our technology is so good, but also because of our refreshed management team and board, which is huge industry experience and industry cachet. And finally, TEKMAR team has a plan to deliver project Aurora, which will allow us to unlock the true organic potential of our group as well as delivering further scale, resilience, and diversity through our m and a plan. Our future looks very bright. We have what it takes to bring TEKMAR into a different league and to deliver true shareholder value.

20:33 And also just before we move on to questions, couple of other items I wanted to highlight. So first of all, Cavendish's research note is is available and accessible, and there's a link on the page here. And and finally, coming up in March later this month, we have our AGM. And following up on feedback from the last IMC presentation, we're also organizing a site visit into in conjunction with the with the AGM. So we'd like to invite everybody to come to see our factory, to meet our people, to talk in more detail about our plans as a business. So please register to attend the tour and if you're a shareholder to attend the AGM as well. Thank you. So that concludes the, formal part of the presentation, and we're now gonna be moving over to questions.

21:26 Richard, Leanne, 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 recording of this presentation along with a copy of the slides and the published q and a can be accessed by our investor dashboard. As you can see, we have received a number of questions throughout today's presentation. And if I may dive straight into it, the first question we have here reads as follows. You focus on cash and free cash flow in the presentation. When can the business generate free cash? So in 2024, we're at 1,700,000 of of EBITDA. And at that level of EBITDA, we're on the cusp of being cash generative. So really north of that and towards 2,000,000 plus of EBITDA is where we become cash generative.

22:16 As I mentioned also, we're very CapEx light in the organic side of the business so we can grow significantly and benefit from the increased demands of the market without having to use significant amounts of cash to to fuel that growth. So plus 2,000,000 of EBITDA equals significant cash generation. So our plan is to get above that. We've been, I would say, fairly measured about the guidance we've given for FY '25 because it takes time in reality to fill the order pipeline in the hopper with these high quality projects, which are coming through. And then we aim to end 2025 with a significantly larger backlog than we entered the year, and that will be that will facilitate much higher levels of revenue and therefore EBITDA levels, which will increase above that level in 2026 and beyond.

23:03 Thank you. The next question we have here reads, strong inquiry book. How long does it take to convert to orders? It's a good question. The the honest and true answer is it depends. Different parts of the business have different different sort of lead times and lead ins to projects. On the cable protection side, which is largely offshore wind projects, they have a longer run into a project. We typically take six to twelve months from booking it to converting it and delivering it and delivering revenue, sometimes longer and also sometimes fast track. As a as a guide, six to twelve months is is typical. On the concrete stabilization side of the business, it's significantly faster turnaround. So from weeks to a couple of months from an order coming into delivery can be fairly typical, but also, you know, some long longer projects do take longer in the execution phase, but have milestone payments and also milestones of of revenue throughout the course of the project.

24:01 And on the engineering consultancy side as well, that can be quite fast moving and generally shorter visibility, but in and out, quite fast track orders. So we've got a good blend of longer, more predictable baseload projects through the CPS side and then faster turnaround projects through the concrete stabilization and engineering services side, which give us quite a nice blend of of different revenue streams. Thank you. The next question we have here reads, what size of the order book do you have the physical and management capacity to take on and manage? And, well, as I mentioned earlier, as we stand today, FY '25, you know, significantly improved results, but in reality, we did that whilst running at about 30% capacity.

24:46 So we can more than treble our output in terms of the physical capacity of the business and the size of the factory, the equipment, the tooling that we've got, the space that we've got in order to execute larger quantities so we can more than treble our output without any significant investment. And it's really just a function of shift patterns and resourcing, which we're in, you know, in a good position to be able to do. So significant opportunity to ramp up production levels, production output, and revenue and profitability with it, without too many capacity constraints and certainly none that we can't remove relatively easily. Thank you. The next question we have here reads, why do you lose bids? We don't often, so we're very, very competitive.

25:34 And one thing I would say that when we get assessed by our customers on bids, we almost always come out top in terms of the technical criteria. So we're rated best in terms of our technical capabilities, our engineering, our analysis, in particular, sets us apart. Sometimes if we do lose a bid, it could be on the commercial contractual side. You know, we're very strict and disciplined about the level of risk we're willing to take on today and for the future. We're not so much focused on revenue just in you know, as a vanity project. We want return on sales as well. We want revenue that can make profits. So we've got a strict approach with regards to the commercial contractual side, and sometimes that may be a reason. And depending on the geographical area, different competitors, and and different pricing pressures. But, you know, we're a very competitive business with a very compelling offer offering and far superior in terms of the technical assessment, and and we certainly don't lose bids on that basis.

26:29 Thank you. The next question we have here reads, what are the easier levers to pull on growth? Is there a trade off between near term wins and more sustainable actions? I think we're doing both. So I I talked last time in the IMC about sort of sort of the sort of tactical operational plan where we'd make significant improvements in, in in cash management where we'd reorganized the business to to be better positioned for success in the future whilst in parallel building the three to five year plan. So I think at the moment, we've got a a nice plan between, you know, taking care of business and running the business well on a day to day, week by week basis to make sure that, you know, we're delivering in the near term. But also given the market conditions, you know, we've got a look further out, cast the net three to five years at least into the future and and understand what that means in terms of our ability to deliver significantly higher levels. So so I don't think there's a trade off, actually. I think we're having to you know, we're very busy.

27:29 We're managing the business in the past, the present, and the future, to be honest. But I don't think there's a trade off. The short term actions are improving the health and stability of the business in the near term, and and that supports the delivery of the long term plan, which is really all about significant growth both organically, but also through investment and through m and a. Thank you. What criteria do you use to assess potential acquisitions, and how do you assess the trade off between utilizing the loan facility for acquisitions versus maintaining a strong balance sheet? So first of all, in terms of what good looks like in terms of the potential investment, as I mentioned, we want to bring more scale into the group, and we'll do that organically. But if we can accelerate that journey, then that's really good. But it needs to be affordable scale. I we're not gonna pay crazy price and and really high multiple for any business. So affordable scale is really important criteria.

28:26 And then there's the ability to consolidate our existing market position in the in the markets we are in and with the products and services that we already offer. So consolidation play is definitely of interest. But probably even more interest is the opportunity to diversify revenue streams, not miles away from what we do today, still protecting, stabilizing, engineering, subsea systems. But if we can add further tools to our toolbox in that regard, then I think it gives us greater breadth and also depth as an organization. As I mentioned, we've got a clear target to grow the level of our revenue that is currently 10% of sales attributable to services, whether it's consultancy, equipment rental, or offshore grouting, and we want that 10% to grow to 25% of an increasing top line number. So so acquisition targets in that space are are particularly attractive.

29:21 Now in terms of our ability to fund said acquisition acquisitions, well, in some ways, it depends because there's a number of different size and shape organizations that we're looking at and therefore a different amount of capital required in order to invest in them. But we've got great optionality and great flexibility. So we have the loan note facility through SCF. We've also got widespread support from other investors, but also other opportunities to to finance through upfront money potentially backed by asset based lending and also deferred consideration in in some of the models that we're running. So we're looking at different methods and cocktails of of funding. But what we will do when we make a move, when we make investment, make sure it's good for all shareholders and will be accretive for the business.

30:06 And at the point of time when we're ready to move ahead, then we'll be going and speaking to all of our existing shareholders to get their views on on the best way to structure the financing of it. Thank you. Just turning to the next question here. The accounts included a provisional for legacy warranty claims, and you also have insurance proceeds which relate to this. What's the latest with this? Has this affected your commercial relationships with the two parties involved? How comfortable are you that there is no significant residual exposure to TEKMAR? So I'll let Leanne cover the ban cover the balance sheet aspect, then I'll I'll respond on the customer's note. Yeah. Okay. So in in regards to the legacy warranty matters, which is with with two clients, we've, you know, kinda utilized insurance available in in parallel with working with those clients, and, you know, it's been quite a collaborative process to do that. So that receipt has now landed the 5,200,000, and we're just working through those negotiations for, you know, that kind of back to back commercial settlement with the with those clients, which we you know, our aim and plan is to close that out as soon as possible.

31:19 And in terms of the dialogue and the relationships, it it's not these aren't fractious discussions. The relationship is good. It's proactive. We're in many respects, we're just a conduit for this money coming from insurers to to customers, and we're supporting them to to make sure that they get the right result. In parallel, we're having forward looking proactive, productive, and collaborative engagements on how we can work together today, tomorrow, and and in the future. And so in no way is it impairing our ability to work with these businesses and these customers in the future. In some ways, quite the opposite because we know we've learned a lot together in recent years and understands that the industry as a whole needs to take a different approach in terms of full system design, which it's now doing, and, you know, we're front and center of that. So from a customer relationship point of view, I think it's really good. We're continuing to invest a lot of time in working with customers, not just in in individual bids, but out with bids in terms of how we can develop our technology to meet their needs. So the dialogue, the relationship, and the forward looking prospects, I would say, are really, really good.

32:26 Thank you. How are you looking at the refinancing of your facilities later this year? K. So, our annual renewal, appointment with Barclays, our relationship bank, is is is in June this year. So, you know, we expect that to, to to go, to plan. We we've worked on kind of these twelve month rolling facilities for for a few years now. We've got a really constructive relationship with Barclays. And as you can see, the results of the the best have been since FY '20, so we don't envision any issue with that. It's also 80% backed by UKEF as well, which their guarantees in place till 2029. So we're comfortable in terms of the that's the trade loan renewal in in in in in June this year. But, obviously, we are looking wider and long term, you know, around our lending facilities just to align with our plans.

33:24 There's also wider financing that we're looking at around asset financing for to continue to increase our growth in assets. But the main priority is those longer term facilities. What I would say also relevant to the CBILs, which is up for renewal at the sorry. It's in place till the end of October this year, is that we do have some flexibility in the balance sheet with the investment property from the disposal that we did last year. That's a similar value actually to the to the COVID loan. So that gives us some flexibility there, which the key priority for us and, you know, working with with our with other parties to to look at what what's right for the business going forward. Thank you. Just turning to the next question.

34:12 Will the research note be made available to retail investors as well? Yes. And, yes, it is. I think you just need to register, and then then you can get access to that information. Yes. It is available. Thank you. You mentioned attractive returns in offshore energy services. What are offshore energy services? What are you investing in, and what do you mean by attractive returns? Okay. So in terms of what we mean by offshore energy services, well, it's really broad. So if you look at a typical wind farm project, for example, where you've got the, what we call, a dev x, the front end spend where they're doing the site investigation and designing the wind farm. Then you've got the CapEx phase where they install and commission the wind farm, and then you've got the o and m OpEx phase.

34:59 And in offshore wind today, it's it's about 75 gigawatts of installed capacity. But even by 2028, more than 80% of that installed capacity will still be in the first half of its design life. So there's huge opportunity to provide services to maintain, to monitor, to upgrade assets once they're in service. So our intention is to we already do offshore service in terms of the grouting solutions that we provide. So we aim to grow that business because it's been a hugely successful investment for us. But then other services in and around that both in the installation phase, you know, equipment rental, people on vessels. We looked at all sorts of different types of service that can be provided in and around that installation phase, but then also really attractive and massively growing. It'd be, you know, significant billion pound per year market in the future is is operations and maintenance within offshore wind and oil and gas.

35:58 In those sorts of markets, you know, it's attractive recurring revenue, typically high margin, you know, very positive cash flow type of business. And when you blend that back in with our growing product technology business, you know, it has a really nice enhancing effect in the overall blended margin and the cash flows for the business. Thank you. The share price isn't reacting to the progress the business is making. What's holding back the share price? Is it general market inertia, or is it company specific? I would say there's a general issue with markets. You know, it's been a difficult place to be in in on public markets, but in particular in The UK recently. Think that's just, you know, a matter of fact. In terms of TEKMAR on the market, I think we've done a lot of good.

36:45 Speaking honestly, I think it took us longer than it could have and should have to get to where we are today, but where we are today is stable, but we still need to deliver. We've got a plan to deliver. We've got a market in which will allow us to deliver, but we need to deliver on our commitments. But I think as we stand today, I I do think we're significantly undervalued by the market. That's that's true. What that means is, you know, given where we are, the pipeline of opportunities we've got, the people that we've got, the plan that we've got, I think we make a very attractive investment proposition to enter the business at a very attractive price. Thank you. Just turning to the next question. Given all ingredients there are for growth as you've mentioned some months ago and your leasing position in the field, why has growth been so hard to come by and forecast for revenue in f y twenty five and apparent broker forecast for f y twenty six flat?

37:33 Further on m and a and in terms of deals across your table, is this convertible loan note enough to be meaningful, and do you have even a rough timeline you can give? Can you elaborate on the loan note details, and how will this work in practice? Okay. So number of aspects to that questions. Thank you for that. So first of all, in terms of our ability to, you know, significantly increase revenues, best one in the world, it takes time in particular for the large scale offshore wind projects to go through the bid phases and then to go into backlog, do the engineering, and then for that to translate in revenue through delivered systems. And that's one of the key areas of growth, and that's why really, the key focus and the key thing that we think we and I should be measured by in FY '25 is the order book development.

38:22 Because, you know, in particular, in the second half of this financial year, the vast majority of what we win, in particular on the cable protection side, will be, you know, 2026 revenues. That's why it's difficult. The level of inquiries is massively increasing. We're positioned well. We've got great discussions and dialogue and high expectations in terms of order intake, but that won't all have an impact on f y twenty five. In terms of the f y twenty six numbers and the Cavendish research, obviously, that's, you know, an independent piece of work. But when I look at the Cavendish forecast and projections, you know, I hope that we cannot just meet those numbers. I I hope that we can beat them. So I think there's a degree of conservatism in the in the forecast that you can see in that in that research that research forecast. Yeah. I would also add that, you know, the plan isn't to be flat again for in f y twenty six.

39:17 So we, you know, we will see that growth coming through, but, you know, kind of this financial year to end of September is about building building that backlog. Thank you. The next question we have here is, if the outlook is so good, why is the share price so low? I think we we covered that previously. It's just time for the market to react. I think we're a very attractive business. We've had difficult times with, you know, really good at house in order, solid, stable platform, best results since 2020, but in some respects, still a lot to deliver on in terms of our commitment. And maybe, you know, there's a bit of hesitation because, you know, the company has, you know, made bold forecasts in the past. But what I can say is I didn't come to TEKMAR for it to stand still. I didn't come to TEKMAR to continue to run a 33,000,000 business doing £1,700,000.

40:05 What I've done in my past, my extensive career in the last fifteen plus years in offshore energy is step change growth and improvement in both revenue and profitability, and that is what we're deliver. And, you know, I think the market is receiving that information when we've had excellent discussions with both existing and potential future investors in recent times, and I think we're a very attractive proposition at the moment and and undervalued by the market. And I think if we build it, you know, the results, I think the rest will follow. Thank you. And I think the last question we have here reads, what are the main risks you see even in terms of client concentration and revenue visibility, and our old legacy issues and costs resolved, and what future work appropriately insured? So as as Leon mentioned previously, so we've got the insurance settlement amount already, which effectively were a conduit to distribute to the customers on those projects.

41:02 Now that takes care once it's resolved and fully paid out, which we hope to do in the near term. That takes care of, you know, a significant amount of our what we refer to as our historical legacy issues. In reality, you know, the vast majority of these issues, despite how they were presented to the market when, you know, non TEKMAR issue, it was an industry wide issue, and the industry wide issue was not taking a fully comprehensive approach to system design and also procuring for cost very often at the expense of reliability. The way in which products and projects are run, procured, designed, engineered, and delivered today by our customers and in conjunction with us, you know, heavily supporting all of that is really significantly different to how it was five years ago. There's been major steps forward on that, which leads us to be extremely confident in terms of us not having issues in the future.

42:00 As I said before, we may you know, managing the business in the past, the present, and the future, and the past needs to be closed out, which we're very close to doing. But moving forward, our technology, our understanding, the level of analysis that we do on projects, you know, we're very, very confident in what we do. It's third party verified, and and the customers are taking a very holistic approach now to how they're designing and installing these products and stabilizing them afterwards. So this will not be a recurring event. We need to take care of it, draw a line under it, and then move forward as we are with full expectation and confidence that we'll continue to be successful and and not have to deal with, you know, ongoing issues from legacy on an ongoing basis. Richard, 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.

42:50 Just before redirecting investors to provide you with their feedback, which I know is particularly important to the company, Richard, could I please just ask you for a few closing comments? Yes. No problem. So, thank you very much for, everybody's time today. It's really interesting questions, which has been a lot of engagement. I really enjoyed it. Just to reiterate, we've got a stable base. We've done great job in 2024. We're making progress, but we're far from done in terms of unlocking the true potential of the business. Market conditions are excellent, and we have the plan to be able to deliver it. So we look forward to communicating and engaging with investors, both existing and future on that front and to demonstrate that we're delivering on on our commitments through our f y '25 and further in the future. Great opportunity to continue that dialogue is for the site visit, which is coming up at end of March in conjunction with our AGM.

43:39 And we really, really want to engage. And for people to come, there'll be opportunity to see our facilities to talk to not just me and Leon, but also in particular Mark Bell, who's our chief operating officer. So please register and please attend. We'd love to see and continue these discussions. Richard, Leanne, 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 of TEKMAR GROUP PLC, we'd like to thank you for attending today's presentation, and good morning to you all. Thanks very much.