Subsea technology specialists Modus Subsea Intervention suffered a £1.5m operating loss in its last financial year due to a curtailed contract and delays in a key build project.
The Darlington-based firm, which supplies predominantly to the North Sea offshore industries, reported a slide from operating profit of £1.2m to a loss of £1.53m, in the year to the end of March 2014.
Against a challenging North Sea oil industry landscape, Modus said it was confident of underlying performance having adjusted for a number of factors which impacted profitability.
In a report filed at Companies House, Modus finance director Peter Short explained the swing from profitability had been caused by the firm’s decision to avoid speculative vessel charter due to oversupply in the North Sea; delays in the delivery of the firm’s new Construction Support ROV; and the early curtailment of a trenching contract which Modus estimated had cost £1.4m in lost revenue.
The termination of the project was caused by a dispute between the main contractor and their client – not related to Modus’ work – and came too late in the year for the firm to secure replacement work.
Modus specialise in providing unmanned underwater vehicle systems to subsea oil and gas and offshore wind developers. The vehicles are used from site survey stage through the construction phase to long-term maintenance and management as well as decommissioning.
Modus’ range includes vehicles capable of surveying, trenching, drilling support, inspection and repair. A team of project engineers and technicians accompany the technology.
Elaborating on the results Mr Short said utilisation of the firm’s vehicles remained above target level.
He added: “Despite the headline financial performance, underlying utilisation remained strong (2% above target utilisation on core remotely operated vehicles and trenching assets).
“The company was able to enter the new market of autonomous underwater vehicle (AUV) provision. The strength of the company’s provision has been further demonstrated by the contract wins in 2014/15 with all four construction support ROVs deployed on medium to long term projects and three trenching contracts secured for the summer period of 2014.
“The company’s services remained in demand in all key operating sectors during the year. Geographic operations focussed primarily upon the European market.”
In a footnote to the accounts Modus said it was “committed” to extending its geographic reach through market entry points in the Middle East, Asia Pacific and Aberdeen.
In June the firm secured a £2.45m finance package from HSBC which it indicated it would use in this quest and in expanding its fleet of vehicles.
During the year the firm grew its workforce from 38 to 52.