25th Jun 2019 11:08
(Alliance News) - Tekmar Group PLC on Tuesday said it swung to a profit in its most recent financial year as its Subsea Innovation Ltd acquisition helped drive a significant increase in revenue.
Shares in Tekmar, which provides protection systems for subsea cables and offshore engineering services, were up 12% at 145.00 pence in morning trade.
Tekmar posted GBP2.0 million pretax profit for its year ended March 31. This represents a strong improvement over its GBP380,000 loss in its prior financial year.
Leading this improvement was a 28% rise in revenue to GBP28.1 million from GBP21.9 million. Half of this rise was the result of Tekmar's Subsea Innovation buy, announced in August 2018 and the other half was due to Tekmar's effort to mitigate offshore wind project delays.
"This delivered a different product mix, with more emphasis on lower margin non-offshore wind markets," said Tekmar.
Given this, the firm's adjusted earnings before interest, depreciation, taxation, and amortisation was roughly maintained at GBP4.8 million from GBP4.9 rather than growing as forecast.
Net finance costs also dropped to GBP919,000 from GBP4.2 million, which helped improve profit.
Market visibility, which Tekmar considers to be its primary outlook measure, was up 44% at GBP50.2 million at the end of its year and its order book stood at GBP7.2 million, up 33% year-on-year. Tekmar defines market visibility as revenue plus order book plus preferred bidder.
Pending contracts on which Tekmar has preferred bidding status rose 97% to GBP15 million at year end, and its enquiry book was up 35% at GBP195 million.
"The market outlook for offshore wind and oil and gas are both strong, with offshore wind [compound annual growth rate] forecasts above 20% between 2018-2028 and demand for products for the oil and gas market at a three-year high," said Non-Executive Chair Alasdair MacDonald.
"The group remains focused on its strategy as stated at [initial public offering] to deliver long-term growth through the expansion of new products, organic growth and by selective and complementary acquisitions. On behalf of all the directors, I am pleased to report that the new financial year has started well and, with current order visibility levels, believe that the group is making good progress to deliver results in line with market expectations in FY20," MacDonald added.
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