Tekmar sells Subsea Innovation in £1.9m deal

Tekmar Group announced the sale of Subsea Innovation (SIL) to Unique Group on Friday, through its subsidiary Unique System UK, for a total cash consideration of £1.9m.

The AIM-traded firm completed the transaction on 2 May.

It said SIL offers engineering consultancy and subsea products to the energy industry, primarily focusing on the oil and gas sector.

With the transaction, 38 employees would transfer to the purchaser.

Innovation House, SIL's premises in Darlington, would be retained by Tekmar.

The property was valued at £2.8m as of the latest audited financial statements to 30 September 2023.

Following completion, Tekmar said it had agreed to allow the purchaser to use the property on a rent-free basis for 12 months, with an option for both parties to enter into a lease agreement afterward.

The consideration consisted of an initial cash payment of £27,000, a cash payment of £1.4m relating to a trade debtor payable post-completion, and a further cash payment of £0.55m payable 12 months after completion.

Proceeds from the sale would be used to support Tekmar’s disciplined investment programme to drive near-term growth and for general working capital purposes.

For the 2023 financial yer, SIL reported an adjusted EBITDA loss of £1.4m and net assets of £1.4m.

The impact of the disposal on the ongoing group was expected to be broadly EBITDA neutral for the 2024 financial year.

“The disposal of SIL reflects our strategic focus on strengthening Tekmar's performance and financial position through efficient resource allocation and portfolio management,” said chief executive officer Alasdair MacDonald.

“SIL has an established reputation in the energy industry and we are particularly pleased for SIL's employees and customers that they can look forward to realising its full potential under the ownership of Unique.”

MacDonald explained that Tekmar was continuing to execute its strategy to drive profitable growth organically across its portfolio, and to complement that growth through targeted mergers and acquisitions to strengthen and broaden its core offering.

“The disposal supports this objective.

“We also reiterate our expectations for 2024 to be a year of profit improvement for the business with the group having delivered adjusted EBITDA profit in the first half in line with management's expectations.”

At 1100 BST, shares in Tekmar Group were up 3.24% at 9.55p.

Reporting by Josh White for Sharecast.com.