Global Expansion...FY20 Presentation (LON:TGP) August 2020 Page 8 Vision Our vision is to be the...

(LON:TGP) August 2020

Global Expansion

Full Year Results Presentation March 2020

FY20 Presentation Page 1

(LON:TGP) August 2020FY20 Presentation Page 2

Disclaimer

This presentation contains certain forward-looking statements, including but not limited to, the statements and expectations contained in the presentation.Statements herein, other than statements of historical fact, regarding our future results of operations, financial condition, cash flows, business strategy, plans andfuture objectives are forward-looking statements. Words such as “targets”, “believe”, “expect”, “aim”, “intend”, “plan”, “seek”, “will”, “may”, “should” ”anticipate”,“continue”, “predict” or variations of these words, as well as other statements regarding matters that are not historical fact or regarding future events or prospects,constitute forward-looking statements.

Tekmar has based these forward-looking statements on its current views with respect to future events and financial performance. These views involve a number ofrisks and uncertainties, which could cause actual results to differ materially from those predicted in the forward-looking statements and from the past performanceof Tekmar. Although, Tekmar believes that the estimates and projections reflected in the forward looking statements are reasonable, they may prove materiallyincorrect and actual results may materially differ due to a variety of factors. As a result you should not rely on these forward-looking statements.

Unless required by law, Tekmar is under no duty and undertakes no obligation to update or revise any forward-looking statement after the distribution of thispresentation, whether as a result of new information, future events or otherwise.

Unless stated all the numbers are as of 31.03.2020

Auditor I Nominated Advisor l Broker l Financial PR


Presentation Team

James Ritchie Chief Executive Officer

Joined Tekmar in 2008.

Over 12 years as an executive director and passionate entrepreneur supported by a strong heritage within offshore wind.

Led the management buy-out of Tekmar Energy in September 2011 with Elysian Capital and consequently became CEO.

Chairman of Energi Coast and committee member of Subsea North East.

Sue HurstChief Financial Officer


Over 30 years’ experience in large companies covering sectors from Oil & Gas and Transportation through to IT and Outsourcing.

Strong background in manufacturing and process driven industry with a focus on continuous improvement and cost control.

Extensive experience of finance & commercial team management as well as Board level experience.

Alasdair MacDonaldNon-Executive Chairman


Over 30 years’ experience in the Oil and Gas industry holding senior executive positions including CEO and COO with Wellstream International Limited and Wellstream Holdings plc, a FTSE 250 company, and Seanamic Group.

Spent 19 years with Technip UK, acting as Managing Director of Technip Umbilicals Limited between 2005 and 2008.

Contents

FY20 Highlights 9

KPI’s and Comparisons 10Financial Highlights 11Revenue Analysis 12Revenue Diversification 13

Group Overview 14

Our People 15Our Organisation 17Global Reach 18FY20 Group News 19Group Companies Overview 20Project Case Study 21

Markets 22

Benefits of Offshore Wind 23Marketing Review 24

Growth Strategy 25

Strategy in Action from IPO 27

FY20 Financials 28

Profit & Loss 29Consolidated Balance Sheet 30Consolidated Cash Flow 31FY20 Acquisition 32

Risk Management 33

Outlook 36


Innovative Marine Technology

Working together to provide leading technology and services to the global offshore energy markets.

(LON:TGP) August 2020August 2020FY20 Presentation Page 8

Vision

Our vision is to be the leading provider of technology and services to the global offshore energy markets.

Key Enablers

1. Our core values2. Growing global demand >15% CAGR3. Strong brand and outstanding reputation 4. Balance sheet 5. Our core strategy

Key Objectives

1. Sustainable Growth 2. Focus on value added technology for

subsea and offshore (Niche IP). 3. Develop ways to get into projects early

and stay in for longer (Full life cycle).4. Leverage group support between

companies (Synergies).

Values

SafetyHeritageInnovationCollaborationPeople


FY20 Highlights

• Strong revenue growth across all divisions and results in line with management expectations. – up 46% YOY to £40.9m and £4.7m EBITDA

• Order Book of £10.0m – up 39% YOY.

• Enquiry Book increased significantly YOY – up to £224m.

• Tekmar Energy revenues up by 14% YOY, representing 67% of Group revenue:

• strong market growth continues.

• Overseas expansion progressing, with international markets (non-EU) now comprising >25% of Group revenue.

• Acquisition of Pipeshield International in October 2019:

• contributed 8% of revenue in FY20 since acquisition in October 2019.

• integrated well with other Group businesses, supplying multiple projects together.

• many ongoing tendering opportunities.

• Record year for Subsea Innovations, representing 20% of Group revenue.

• Agiletek increased sales by over 200% and now represents 5% of group revenue.

• Sales into operation and maintenance now represent 6% of Group sales.

• Healthy balance sheet – with positive cash balances of £2.1m.

• CBILS loan secured post Period end – £3m drawdown in April 2020.

• Positive market outlook within offshore wind and early signs of recovery within oil and gas.


KPI’s and Comparisons


Financial Highlights

Key Points

Revenue up 46% with growth in all businesses and markets.

H2 weighting lower than last year due to COVID-19 impact in Q4.

Gross profit reflects a different product mix and the impact of COVID-19.

EBITDA in line with latest guidance at £4.7m.

(LON:TGP) August 2020 Page 12

Revenue Analysis

FY20 Presentation


68%

32%

40%

60%

84%

12%4%

40%

60%

25%

75%

63%

37%

43%

57%

67%

20%

5%8%

60%

40%

35%

65%

65%

20%

5%10%

84%

16%

61%

39%

99%

Page 13

Revenue Diversification

FY18 Actual FY19 Actual FY20 Outlook FY20 Actual

Company:

Product:

Sector:

Weighting:

TELSILAELPIL

Key

TekLink CPSOther Subsea

Offshore WindSubsea

FY20 Presentation

H1H2


Group Overview


Our People

James RitchieCEO

Ally MacDonaldChairman

Sue Hurst CFO

Julian BrownNon Exec

Chris GillNon Exec

Group HR ManagerPamela Lamming

Group Legal CounselSarah Lenegan

Group Marketing ManagerTom Howard

TEL Managing Director Russell Edmondson

TEL Sales DirectorJack Simpson

RYD Managing DirectorFraser Gibson

AEL Managing Director Steven Rossiter

PIL Managing DirectorSteven Howlett

General Manager David Blake

SIL Managing DirectorDave Thompson

Group Financial ControllerChris Simpson

General Manager Tekmar ChinaAngela Lock

TEL Total Employees105

AEL Total Employees15

RYD Total Employees7

SIL Total Employees45

PIL Total Employees23


Our People continued…

People are the foundation on which the business operates through their integrity, intelligence, empowerment and ongoing investment in their development.


Our Organisation

Tekmar Group plc

(TGP)

Established May 2018

IPO June 2018

AgileTek Engineering Limited

(AEL)

Established 2014

Joined TGP June 2018

Ryder Geotechnical Limited

(RYD)

Established 2016

Tekmar Energy Limited

(TEL)

Established 2008

Joined TGP June 2018

Tekmar Marine Technology

Company Limited

Established 2019

Tekmar GmbH

(Non-trading)

Subsea Innovation Limited

(SIL)

Established 1985

Joined TGP August 2018

Pipeshield International Limited

(PIL)

Established 1999

Joined TGP October 2019

Tekmar Polyurethane Limited

(Non-trading)

TEL 67%

SIL 20%

PIL 8%

AEL & RYD 5%

Revenue Split


Global Reach


FY20 Group News


Key Clients Boskalis, Ørsted, JDR Global Offshore, Operators, Tekmar Energy Subsea 7, IHC, Saipem NPCC, Allseas, Van Oord

Focus Technology Cable Protection Systems (CPS) Subsea Analysis Bespoke Back-Deck Equipment Subsea Mattresses

Typical Application Subsea Power Cables Vessels Subsea Pipelines Seabed

Primary Market Offshore Wind Offshore Wind Subsea Marine

Material Specialty Polymers Data Metals Concrete

Core Competency Technology Manufacturing Engineering First Principle Design Technology Manufacturing

Emerging Geography APAC US EU ME

Main Competitors Trelleborg, Balmoral BPP, JEE Houlder, Stats SPS, ULO

Locations Newton Aycliffe UK, Shanghai China London, Newcastle UK Darlington UK Lowestoft UK, EU, Middle East, Africa, Asia

Products 15 16 16 13

Staff 105 22 43 23

Revenue £27.5m £3m (Before intercompany elimination) £8.8m (Before intercompany elimination) £7.2m (Full year not within TGP accounts)

FY20 Strategic Highlights

• 14 % growth.

• TEKLINK® CPS saw sales increase 57%.

• Delivered to worlds largest offshore wind farms.

• Increased sales into APAC of over £5m.

• Delivered over £1m into floating offshore wind.

• 200% growth.

• Ryder contributed £500k to sales.

• Expanded teams and office locations.

• Developing new packages for cloud digitalisation and data management.

• 147% Growth.

• Delivered the group’s largest contract to-date.

• Large increases in OWF enquires.

• Focus on subsea cable repair solutions within O&M.

• Added to TGP in October 2019.

• Delivered its first USA offshore wind project delivered alongside other group companies.

• Large increases in Middle East and OWF enquires.


Group Companies Overview


Our complimentary technologies and services working together in the US wind sector.


Project Case Study

• Project visibility through early engagement.

• Working together to increase value proposition to client.

• Complimentary capability offering solutions for multiple stages of project

life cycle.

Company Ryder, AgileTek, Tekmar Energy, Pipeshield

Sector Offshore Wind

Client Ørsted and Subsea 7

Project 12MW Coastal Virginia Offshore Wind Farm, US East Coast

Scope RYD: Cable Burial Risk Assessment (Early Engagement)TEL: TekLink CPS, TekDuct Crossing Protection, Associated Installation EquipmentAEL: Product Design Verification Analysis (on behalf of Tekmar Energy)PIL: Bespoke Concrete Mattresses, Associated Lifting Equipment

Delivered 2020

Markets


Benefits of Offshore Wind

• Sustainable clean renewable energy

• A domestic energy source

• Proximity to densely populated coastal areas

• Scale

• Speed

• Low Cost

• Reliability

• Local economic prosperity

• Inspiration for future generations


Market Highlights


Market Review - Offshore Wind

> 15% CAGR for new generating capacity within offshore over next decade.

GWEC predicts 40GW of new capacity to be installed globally over the next five years.

UK latest CFD cost reduced further to £39/MWh or 30% lower than two-year prior at £57.50/MWh making offshore wind even more compelling

Live project planning shows visibility on over 168 GW project reaching construction within next 9 years.

Source information: 4C Offshore Wind Farm Global Market Overview Q2 2020 / BEIS


Growth Strategy


Increased revenue per project by combined product offering


Growth Strategy in Action

Organic Growth

Markets growing.OWF growing at >15% CAGR.

Successes in the year:

1. Grew revenues by 46%2. Market visibility at record £66m or 30% growth3. Enquiry book grew by 15% to record £224m4. Tekmar Energy, Subsea Innovation and AgileTek all

grew revenue organically5. Zero lost time incidents.

Related Risk Factors: General Economic Environment, Project timings, Technology, Key Staff Members.

Accelerated Growth

Investment in new technology, operational efficiency, expansion overseas.


1. 25% (£10m) of revenue delivered outside of EU2. Increased technology from 47 to 60 products3. First floating offshore wind project supported by three

Group companies4. All Group companies support USA offshore wind

delivery 5. All Group companies actively involved in O&M

opportunities now delivering 6% of Group turnover.

Related Risk Factors: Technology and competition, Risk of claims.

Acquisition Strategy

M&A targets; Shared visionTechnology and sector focus Leverage group support, Share customers,Project Life cycle.


1. Three acquisitions successfully completed since IPO, Ryder Geotechnical Limited, Subsea Innovation Limited and this year Pipeshield International

2. The acquisitions are adding value, generating more full life cycle revenues and a stronger customer proposition within Group.

Related Risk Factors: Systems and Processes, Availability of capital.


We have invested to grow the business for the long term


Strategy in Action from IPO

KPI IPO Now Change % Change

Revenue £21.9m £40.9m + £19m 87%

Products 16 60 + 44 275%

Companies 2 6 + 4 200%

People 106 206 + 100 94%

Sites 3 9 + 6 200%

Sales Enquiry £127m £224m + £97m 76%

Market Outlook 95 GW 216 GW + 121 GW 127%

Balance Sheet £34m £63.7m +£29.7m 83%

Notes: IPO was in June 2018, Now is as of 31.03.2020 FY20,.


FY20 Financials


FY20 Profit & Loss

Commentary

• Strong revenue growth across all businesses, increasing 46% YOY – including 8% from the acquisition of Pipeshield International.

• Additional operating expenses due to COVID-19, project mix and the acquisition of PIL.

• Adjusted EBITDA is a primary KPI across the business.

• Depreciation increase relates to investment in manufacturing equipment last year in TEL, along with that relating to the acquisitions.

• Amortisation includes charge relating to acquisition of intangible assets on purchase of SIL & PIL.

• Elimination of interest cost on equity debt as a result of the IPO reduced the FY charge by £0.9m.

Note 1: Adjusted EBITDA is profit before finance costs, tax, depreciation, amortisation, share based payments charge and exceptional items.

£000 (year ended 31 March)2018

Audited2019

Audited2020

Audited

Revenue 21,891 28,082 40,943

Revenue growth % 12.9% 28.3% 45.8%

Cost of sales (12,962) (18,190) (28,671)

Gross profit 8,929 9,892 12,272

Net operating expenses (5,121) (6,987) (10,227)

Group operating profit 3,808 2,905 2,045

Analysed as:

Adjusted EBITDA (1) 4,947 4,833 4,695

Depreciation (563) (808) (1,253)

Amortisation (453) (476) (834)

Exceptional Items (123) (226) (109)

Share based payments charge - (418) (454)

Group operating profit 3,808 2,905 2,045

Net finance costs (4,188) (919) (86)

(Loss)/Profit before taxation (380) 1,986 1,959

Taxation 270 407 3

(Loss)/Profit for the year (110) 2,393 1,962


FY20 Consolidated Balance Sheet

• Balance Sheet continues to strengthen with additional £10m Net Assets.

• Goodwill & other intangibles include acquired intangible assets and goodwill for PIL (£4.6m) and product development within SIL (£0.4m).

• Trade receivables £9.9m and contract assets £15m, with significant balances in TEL relating to offshore wind projects which have back end loaded milestones.

• Non-current liabilities relate to lease liabilities (under IFRS16) and deferred grant in SIL.

• Trade and other payables includes £2.75m deferred consideration due under the PIL acquisition agreement.

• The Group also has bank bonding facility of £6.0m off balance sheet.

£000 (year ended 31 March)2018

Audited2019

Audited2020

Audited

Fixed assets 1,401 5,501 5,892Goodwill & other intangibles 20,005 21,837 26,294Deferred tax asset 177 - -

Non Current Assets 21,583 27,338 32,186

Inventory 1,842 1,914 2,536Trade and other receivables 8,756 19,996 26,819Cash 2,617 4,190 2,130

Current Assets 13,215 26,100 31,485

Total Assets 34,798 53,438 63,671

Share Capital & Share Premium 3,020 65,600 65,600Consolidation reserve - (12,685) (12,685)Retained losses (12,704) (10,098) (7,690)Non-controlling interest (134) - -

Total equity / (deficit) (9,818) 42,817 45,976

Long Term borrowings 32,521 487 310Trade and other payables 5,430 358 355Deferred tax liability - 3 469

Non Current Liabilities 37,951 848 1,134

Short Term Borrowings - 378 504Trade and other payables 6,665 9,395 16,010Corporation tax payable - - 47

Current Liabilities 6,665 9,773 16,561

Total Liabilities 44,616 10,621 17,695

Total Equity and Liabilities 34,798 53,438 63,671

Commentary


FY20 Consolidated Cash Flow Statement

• Movement in debtors reflects increased in revenue across the Group.

• Investments include tooling within Tekmar Energy along with product development in SIL, along with the assets acquired in PIL.

• Closing the year with a healthy cash balance following investment in new businesses and growth.

Commentary £000 (year ended 31 March)2018

Audited2019

Audited2020

Audited

Adj. EBITDA 4,947 4,833 4,695

Exceptional items (123) (226) (109)

Others (54) (168) 34

Movement in inventories (605) 176 (512)

Movement in debtors (40) (10,493) (4,393)

Movement in creditors 2,318 2,876 2,357

Movement in provisions (300) (131) -

Tax recovered (paid) (250) 180 209

Net cash from operating activities 5,893 (2,953) 2,281

Purchase of property, plant & equipment (248) (996) (1,703)

Purchase of intangible assets (124) (865) (729)

Acquisition of subsidiary net of cash acquired

- (168) (1,638)

Other investing activity 5 150 84

Net cash from investing activities (367) (1,879) (3,987)

Net payment of borrowings (2,250) (35,053) (355)

Proceeds from issue of shares - 49,429 -

Expenses of the IPO - (400) -

Interest paid (2,194) (7,571) -

Net cash from financing activities (4,444) 6,405 (355)

Net increase / (decrease) in cash 1,082 1,573 (2,060)

Cash & Cash equivalent 2,617 4,190 2,130


FY20 Acquisition

One acquisition completed in the year:

Tekmar Group acquired 100% of the share capital of Pipeshield International Limited on 9 October 2019.

Pipeshield International Limited are experts in subsea asset protection providing specialised equipment to support, protect and stabilise all kinds of

subsea installations world-wide.

initial cash payment of £3m, non-cash consideration of £0.7m, shares in the Group of £0.75m and deferred consideration of £2.75m.

Non-cash consideration is for assets in Pipeshield that were immediately sold to the vendor for an equivalent non-cash sum post acquisition.

The net effect of this transaction leaves an receivables balance in Pipeshield which eliminates on consolidation .

Pipeshield contributed £3.1m of revenue and £0.3m of PBT in the six months since acquisition.


Risk Management


Risk Management


Risk Management Continued…

Outlook

Chairman Outlook Statement

Whilst the level of profitability in FY20 was inevitably affected by COVID-19 and the shutdown in China, our overall confidence in the prospects for the business should not be understated. I now see a Group which has truly been transformed and has;

• A much wider portfolio of complementary technologies. • A truly international base and a unique customer-value proposition. • A robust balance sheet. • A positive market outlook.• Strong and experienced management team • The Group is well positioned with a solid platform for growth over the

next decade.

Alasdair MacDonald, Non-Executive Chairman

D-014-TGP-11 (xxx) Page 37August 2020(LON:TGP)


Glossary


Glossary

Adjusted EBITDA earnings before interest, tax, depreciation and amortisation, and non-recurring and exceptional items.

Admission the admission of the Enlarged Share Capital to trading on AIM becoming effective in accordance with Rule 6 of the AIM Rules for Companies.

AEL AgileTek Engineering Limited.

AgileTek AgileTek Engineering Limited.

AIM the AIM market of the London Stock Exchange.

API American Petroleum Institute.

Berenberg Joh. Berenberg, Gossler & Co. KG, London Branch, broker to the Company and sole global coordinator.

Board the board of Directors of the Company.

Brent Crude a trading classification of sweet light crude oil that serves as a benchmark price for purchases of oil worldwide.

CAGR compounded annual growth rate.

CPS cable protection system.

EEA the European Economic Area.

Enquiry Book comprises all active lines of enquiry within the Tekmar Group. Expected revenue recognition within three years.

EU the European Union.

Executive Directors the executive Directors of the Company as at the date of this document, namely James Ritchie-Bland and Susan Hurst.

FCA or Financial Conduct Authority the Financial Conduct Authority of the United Kingdom.

Flowline a flexible pipe laid on the seabed linking subsea structures for the transportation of crude oil or natural gas.

Group as from Admission means the Company and its subsidiaries.

GW gigawatt, a unit of power.

HSQE health, safety, quality and environmental.

IAC Inter Array Cables.

J-Tube a hollow steel tube that has the shape of a letter “J” attached to the outside of a monopile or wind turbine platform to act as a conduit for the power cable that runs from the wind turbine to the seabed.

Monopile a large-diameter, fixed single column foundation structure to support the above-surface wind turbine typically used in shallow water.

MWh megawatt hour, a unit for measuring power.

Non-Executive Directors the non-executive Directors of the Company (including the Chairman) as at the date of this document, namely Alasdair MacDonald, Christopher Gill and Julian Brown.

Preferred bidder is defined as out of competitive tender process, selected as sole bidder in active contract negotiations. Expected revenue recognition within 12 months.

QCA the Quoted Companies Alliance.

QCA Code the QCA Corporate Governance Code published in 2018.

OWF Offshore Wind.

RYD Ryder Geotechnical Limited.

Sales Conversion measures value won versus value bid as a percentage.

SIL Subsea Innovation Limited.

Subsea division the division of the Group’s business focused on the oil and gas industry.

SURF Subsea Umbilicals, Risers and Flowlines.

TEL Tekmar Energy Limited.

TRL Number of technology and products within the Group.

Umbilical subsea umbilical system providing vital supply (such as electric power, hydraulic power) and control link from platforms or topside vessels to subsea oil and gas equipment.

Tekmar Group plcPark 2000Newton AycliffeDL5 6AR

t. +44(0) 1325 379520e. [email protected] tekmargroup.com

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