TIDMTPG
RNS Number : 4534B
TP Group PLC
04 April 2017
4 April 2017
TP Group plc
("TP Group" or the "Company" or the "Group")
Final results for year ended 31 December 2016
TP Group (AIM: TPG), the specialist services and engineering
group, announces its audited results for the year ended 31 December
2016.
Revenue up 4% to GBP21.2m (2015: GBP20.4m)
-- Growth in defence equipment sales and strong second half performance across the Group
Operating losses reduced by GBP2.0m to GBP0.3m (2015:
GBP2.3m)
-- Ongoing improvements in manufacturing efficiency and better control of legacy contracts
Adjusted EBITDA* up to GBP1.1m (2015: GBP0.0m)
Net cash up 31% to GBP9.2m (2015: GBP7.0m)
-- Strong conversion of Adjusted EBITDA to cash
-- Close management of stage payments from major contracts
Group order book up 17% to GBP17.0m (2015: GBP14.5m)
-- Strong second half performance with continuing conversion of pipeline into 2017
Strategy and organisation
-- Ongoing investment in facilities and capabilities to enter
new markets and improve performance and margins
-- Focus on strategic acquisitions which complement our existing
activities; completed acquisition of ALS and FSS in February
2017
-- Reshaped Board of Directors to position the Group for growth
2016 Achievements
-- Won first major contract in the nuclear power sector
-- Built upon heritage to sign major design contract for submarine atmosphere equipment
-- Entered into sole-source negotiations for two large MoD
equipment contracts - one signed in Q1 2017
-- Won first resource contracts in the Managed Solutions area
Andrew McCree, Non-Executive Chairman commented:
"2016 was a year of significant progress for the Group. We
posted our first profitable year at the adjusted EBITDA level and
finished the year with a significantly strengthened cash position.
I am very excited about our prospects."
Phil Cartmell, Chief Executive of TP Group commented:
"We have established ourselves as a global services and
engineering business that is respected for technical excellence,
customer relationships and shareholder value. We will continue to
build on this platform through organic growth, partnerships and
acquisitions that support our strategic ambitions.
"The team has worked very hard throughout 2016 to build on past
progress and deliver a positive Adjusted EBITDA result. The future
bodes well for 2017 and beyond."
* Adjusted EBITDA is defined as operating profit adjusted to add
back depreciation of property, plant and equipment, amortisation
and impairment of acquired intangible assets and any other
acquisition-related charges, share based payment charges and
exceptional items. Exceptional items are those items believed to be
exceptional in nature by virtue of their size and or incidence. See
note 3. The directors believe this measure is more reflective of
the underlying performance of the Group than equivalent GAAP
measures. This is primarily due to the exclusion of non-cash items,
such as share-based payments, impairment, depreciation and
amortisation, as well as exceptional items. This provides
shareholders and other users of the financial statements with the
most representative year-on-year comparison. This measure and the
separate components remain consistent with 2015.
For further information, please contact:
TP Group plc Tel: 01753 285 810
Phil Cartmell, Chief
Executive Officer
Derren Stroud, Chief
Financial Officer
www.tpgroup.uk.com
Cenkos Tel: 020 7397 8980
Mark Connelly / Callum
Davidson
www.cenkos.com
Vigo Communications Tel: 020 7830 9700
Jeremy Garcia / Fiona
Henson
www.vigocomms.com
Notes to Editors
TP Group designs and develops advanced technologies, engineers
complex equipment and systems, and provides support throughout
their operational life. The Company's shares have been traded on
AIM since July 2001.
Chairman's statement
"2016 was a year of significant progress for the Group. We
posted our first profitable year at the adjusted EBITDA level and
generated a significantly strengthened cash position. I am very
excited about our prospects."
Board changes
During the year we reshaped the Board to equip the Group better
for the growth opportunities that lie ahead.
In January 2016, Mark Crawford stepped down as Chief Financial
Officer and left the Group, to be replaced by Derren Stroud. Derren
brings international finance experience, with specialist innovation
and engineering businesses, with both public and private equity
backing.
In June 2016, Martin Blomley stepped down from the Board, but
remained a key member of the management team, focussed on the
growth of the Services businesses. At the end of the year, Richard
King stood down as Non-Executive Chairman of the Board. I took over
his responsibilities and would like to thank Richard, Mark and
Martin for their contributions to the Group Board.
Subsequent to the year-end, Phil Holland and Jeremy Warner-Allen
joined the Board as non-Executive Directors, adding a wealth of
M&A, industry and capital markets expertise as we seek to
capitalise on our new business pipeline and execute our stated
growth strategy.
Capital re-structuring
In September, the Group created distributable reserves through a
court approved capital reduction to allow the Parent Company (TP
Group plc) the flexibility to pay dividends and make other returns
of capital to the Shareholders.
The Board's view was that, with the Group's operational
progress, it was an appropriate time to reduce the nominal value of
the Parent Company's ordinary shares to facilitate the issue of new
ordinary shares at a price below the previous nominal value of 10
pence per ordinary share. This will support acquisition and growth
activity and facilitates the implementation of appropriate
incentive schemes to attract, retain and reward high performing
individuals.
Outlook
2016 has been a pivotal year for the Group. We have made
significant operational progress, recruited key personnel, improved
margins and followed a highly focussed growth strategy.
During the year, we explored several M&A opportunities and
completed the acquisition of ALS Technologies and Flexible Software
Solutions in February 2017, which provide us with significant
additional services capability and immediate additional revenue and
profit contribution.
TP Group has built a strong reputation for reliability and
engineering excellence. Close customer relationships provide us
with a strong platform for growth in the exciting defence and
nuclear power markets. The Board looks forward with confidence to
the years ahead, and to generating significant value for our
shareholders.
Andrew McCree
Chairman
3 April 2017
Chief Executive Officer's Strategic Review
"We have established ourselves as a global services and
engineering business that is respected for technical excellence,
customer relationships and shareholder value. We will continue to
build on this platform through organic growth, partnerships and
acquisitions that support our strategic ambitions.
"The team has worked very hard throughout 2016 to build on past
progress and deliver a positive Adjusted EBITDA result."
Exciting market opportunities
The Group is active in three primary markets - Defence,
Government and Industrial.
The Defence market has continued to show strong support for
submarine programmes around the world. The UK government voted to
support the next generation submarine programme, Asian markets have
been active and the DCNS Group, the French shipbuilder with whom
TPG has a long-standing supply relationship, has been identified as
the preferred supplier of the new Australian submarine
programme.
We are seeing increasing activity in communications and
information systems to support intelligence and command and control
activities. Several government departments are taking action to
become more closely aligned with national security requirements and
working to the exacting standards of our traditional defence
customers. This emerging development within the public sector is
allowing us to expand our systems engineering services coverage
into civil departments.
In the industrial markets, we are seeing a recovery in the
downstream oil & gas markets both in the UK and abroad. Whilst
2015 and early 2016 were dominated by refurbishment of existing
heat exchangers, the trend is moving towards a more balanced
combination of new equipment and life extension of the installed
base. As this market remains fiercely competitive, we have also
noted signs of stress among some of our competitors and these
factors have combined to feed an expanding pipeline of new business
opportunities.
The acceleration of the UK nuclear power programme has also had
a significant positive effect on the Group. Several large
opportunities have emerged and the bidding and review processes
have prompted us to make additional investment with the aim to
become a leading part of this premium market. New skills,
equipment, business and manufacturing processes have helped the
Engineering business in Dukinfield to compete effectively for this
work. The reward was the first contract announced in December with
GE Oil & Gas.
Working for growth
TP Group is a specialist services and engineering company that
provides high-integrity solutions and through-life support for
critical applications in defence, industrial and government
sectors.
The business works across the lifecycle of major projects, so we
can act as consultants and designers at the beginning, or as
equipment manufacturers and maintainers later in the cycle. In some
cases, our teams combine to deliver a one-stop service solution
specifically tailored to the client's often complex
requirements.
We are able to do this because we understand the challenges
surrounding mission-critical and safety-critical systems and have
the skills, systems, people and equipment to support our customers
and partners and to meet these challenges. We also took the
opportunity in 2016 to invest in our future, with additional
resources focussed on facilities, staff and resources and at a time
when other market participants appeared to be struggling.
As oil prices fell and refining projects slowed, TP Group looked
at other markets with long term growth potential such as nuclear
power, aerospace and secure information systems and invested to
position the Group in those areas with a view to securing long term
and profitable business.
Building a great team
We made several key appointments during the year. These were
across the business including at executive Board level with Derren
Stroud joining the Board as Chief Financial Officer. New leadership
was installed at the Engineering business in Dukinfield and several
consultants joined the Managed Solutions team to deliver customer
contracts.
The Group continues to support staff development and was
accredited by the IMechE under their Mentoring Professional
Development Programme. In addition, the Group has an apprenticeship
programme with an engineering apprentice in Portsmouth and an
office apprentice in Dukinfield.
As ever, the commitment and support of our team, in all corners
and at all levels of the business, has been a vital contributor to
our success.
A business that customers can trust
The Group has great experience on safety and mission-critical
equipment in the defence sector and so is subject to closely
managed processes that require strict inspection and verification.
We have set out to harmonise quality management at the highest
common level possible to provide greater consistency across Group
operations and qualify us for work in the nuclear sector.
The Group has been accredited under a wide range of national,
international and prime contractor standards and is committed to
maintaining and extending this recognition to build our competitive
advantage.
In 2016, the Group achieved full certification under Cyber
Essentials, a government-backed, industry supported scheme to help
organisations protect themselves against cyber-attack.
Strategy starting to deliver
Last year we set out our plans to succeed as a Tier 2
engineering and services group. The goal was to deliver excellent
capability that has greater scale than smaller specialists yet is
more flexible and responsive than the major or prime (Tier 1)
contractors.
This strategy drove much of our operational and business
development during the year and continues to drive us forward with
emphasis on:
-- Building a balanced services and engineering business
-- Developing scalability of the services proposition
-- Reinforcing the high-quality aspects of the specialist engineering offer
-- Building critical mass presence in high value markets such as
nuclear, aerospace and secure communications & information
systems
The Group explored several acquisition opportunities during the
year. They were identified on the basis that they were:
-- Technically consistent with the Group's services or engineering propositions
-- Able to make positive contributions to Group performance in the near term
-- Economically efficient in terms of acquisition and ongoing management costs
One such opportunity closed shortly after the year end with the
acquisition of ALS Technologies and Flexible Software Solutions for
a maximum cash consideration of GBP2.75 million.
We believe that this acquisition will deliver significant
benefits to the Group, which include:
-- Extending TPG's existing services business activity in the
provision of specialist resources in systems engineering and
technical project support to defence and other sectors
-- The addition of software solutions that will enhance and
strengthen TPG's existing capabilities
-- Access to additional strategic customers and programmes
-- The ability to cross sell new capabilities to existing TPG customers
The Board continues to explore opportunities with suitable
engineering and service companies that support our stated strategy
for growth.
Our next steps
In the last year, TP Group has established a secure platform for
growth and success that will deliver value to our key stakeholders.
We believe there is strength across our core services and
engineering businesses and remain committed to evaluating strategic
acquisition opportunities within our markets.
We have an ambitious and experienced leadership team focused on
growth, with an entrepreneurial focus to pursue technical and
commercial opportunities as they arise.
Our business development activity has positioned us with a very
strong sales pipeline for projects that vary from a few weeks'
duration to multi-year partnerships.
Major negotiations are ongoing with the Ministry of Defence for
submarine systems and support and future business growth is visible
through:
-- Nuclear power in civil and defence applications
-- Communications and information systems engineering support to
defence and civil government departments
-- Asia Pacific - upstream energy and defence developments
-- Clean manufacturing cell for nuclear and other high spec requirements
-- Hydrogen fuel cell applications
-- Waste heat recovery technologies
-- Project management and outsourcing services
Positioned for accelerated growth
The Group has delivered a breakthrough performance in 2016 and
is well positioned to continue this trajectory to achieve
sustainable growth, profit and generate positive cash flows.
Business development was strong in the second half in 2016 and
this has continued into 2017. We have consolidated in our
traditional sectors and entered new areas with strong
propositions.
Internal efficiencies have delivered better margins and a
simpler leadership structure makes us better able to explore new
opportunities.
We have challenged ourselves technically and operationally and,
as an executive team, invested carefully to be the best we can be
to serve the premium markets in which we work.
We have made excellent progress during 2016, capturing several
new strategic orders and generally increasing margins across the
business. We have established a series of compelling offerings and
the positive momentum we saw in 2016 has continued into 2017.
Management will continue to look for acquisition opportunities and
we look forward to the future with much confidence.
Phil Cartmell
Chief Executive Officer
3 April 2017
CFO's Financial and Business Review
I am pleased to report that TP Group has continued its
transformation during the 2016 financial year. The Group made a
profit on an adjusted EBITDA basis of GBP1.1 million, up from a
breakeven position in 2015, primarily driven by a 15% improvement
in gross profit to GBP6.5 million (2015: GBP5.6 million).
2016 2015 Change
Group KPIs GBPM GBPM GBPM
----------------- ------------------ ---------------------------- -------
Revenue 21.2 20.4 0.8
Operating loss (0.3) (2.3) 2.0
Adjusted EBITDA 1.1 0.0 1.0
Net Cash 9.2 7.0 2.2
Closing order
book 17.0 14.5 2.5
Order Intake 23.8 17.4 6.4
2016 2015 Change
Revenue GBPM GBPM GBPM
------------------------ ----- ----- -------------
TP Engineering 6.8 7.1 (0.3)
TP Maritime 12.2 10.9 1.3
TP Managed Solutions 1.4 1.5 (0.1)
TP Design & Technology 0.8 0.9 (0.1)
Group Revenue 21.2 20.4 0.8
------------------------ ----- ----- -------------
2016 2015 Change
Adjusted EBITDA GBPM GBPM GBPM
------------------------ ------------------ ---------------------------- -----------
TP Engineering (1.0) (0.2) (0.8)
TP Maritime 4.2 2.7 1.5
TP Managed Solutions (0.0) 0.2 (0.2)
TP Design & Technology (1.0) (1.6) 0.6
Central costs (1.1) (1.1) 0.0
------------------------
Adjusted EBITDA
profit 1.1 0.0 1.1
------------------------ ------------------ ---------------------------- -----------
Operating Results
Group KPIs: This performance has been achieved through continued
focus on the efficient deployment of operational resources, tight
cost control and applying the principles of continuous
improvement.
Revenue: Revenue increased by 4% through strong growth in the
Maritime business, which offset challenges to the Engineering
business in the Oil & Gas sector during the early part of the
year. Although Engineering revenue was marginally lower than prior
year, the strong order intake through the second half of the year
saw revenues improve by c. 52% to GBP4.1 million in H2 from GBP2.7
million in H1.
Managed Solutions was down marginally as a result of a legacy
10-year contract concluding during the first half of the year. The
business qualified on several resourcing frameworks in Government
and Defence and the first resulting contracts were secured during
H2 with additional opportunities in progress for 2017. Design &
Technology was largely flat as the business completed its
transition out of loss making projects and repositioned itself to
deliver only chargeable services activity.
Group Operating Loss: reduced by GBP2.0m to GBP0.3m (2015:
GBP2.3m) primarily as a result of ongoing improvements in
manufacturing efficiency and control of legacy contracts.
Adjusted EBITDA: The Group has invested in both people and
capability at TPG Engineering, which has had a positive impact on
performance and profitability during the second half of the year.
This investment has improved order capture and enabled the business
to diversify into the more lucrative nuclear supply chain with the
capture of the GE contract. Other similar prospects in this sector
are currently in progress. These moves overcame challenges in the
first half year, where a low opening order book caused low factory
utilisation. The Oil & Gas market remains competitively tight
and, although we have seen improved order intake, margins continue
to be low.
The Maritime business delivered improved performance and double
digit growth for the third consecutive year from activities with UK
and international customers. This has been enabled by both
operational efficiencies and additional volume in major submarine
programmes.
The Group invested in Managed Solutions to set up new resource
propositions, which led to profitable contracts being secured and
the development of a sustainable sales pipeline.
Design and Technology benefited from the restructuring that
started in 2015, which has improved operational efficiency and
continued cost management during 2016. The business has completed
its exit from several legacy loss-making R&D engagements and is
beginning to see improving volumes of commercial service contracts
leading to increasing utilisation of resources.
Cash
Closing cash improved significantly to GBP9.2 million (2015:
GBP7.0 million), driven primarily by the timing of a small number
of major collections shortly before the year end. The business
invested GBP0.4 million of capital expenditure, mainly in
Engineering, both on new systems and facility improvements. Further
material investment is planned in 2017 to follow through on the
commissioning of the Advanced Manufacturing Cell which underpins
the improving competitive position of the Engineering business,
specifically in the nuclear market.
Order book
During 2016, the Group's order book increased by 17% to GBP17.0
million (2015: GBP14.5 million) as a result of investment in
business development resources and the successful conclusion of
some long-term sales campaigns.
Most notably, the Engineering business improved its order intake
in the second half of the year, to close at circa three times the
2015 closing order book value.
Investments
In line with our strategy the Group invested in key staff and
manufacturing equipment to drive us forward in our chosen
markets.
Key staff appointments were made in Manchester in leadership and
business development to strengthen in both operational and
commercial disciplines. The Group has invested in further
management and delivery staff in the Managed Solutions business to
support the strategic plan.
To compete in the nuclear supply chain, the Group is investing
in high-precision machine tools and metrology that positions us
well for future opportunities in this and other high value sectors.
The first contract was signed in December with GE Oil & Gas for
heat exchangers in the nuclear market.
Exceptional items
During the year the Group incurred a one off cost of GBP0.2
million in relation to Mark Crawford's Service contract
termination.
Taxation
The Group does not expect to incur any cash tax payments for the
2016 financial year.
Results and dividends
The directors do not recommend the payment of a dividend (2015:
GBPNil).
Capital re-structuring
In September, the Group completed an exercise to reduce the
Parent Company's share premium account to zero, and create
distributable reserves to allow the Company the flexibility to
issue new shares, pay dividends and make other returns of capital
to shareholders, should it be considered desirable to do so in the
future.
This was achieved through reduction of the Parent Company's
capital by way of:
-- the cancellation of 9 pence of paid-up capital
on each issued ordinary share of 10 pence
each in the Parent Company;
-- the cancellation of the amount standing
to the credit of the Parent Company's share
premium account; and
-- the cancellation of the amount standing
to the credit of the Parent Company's capital
redemption reserve.
This created distributable reserves to the value of
approximately GBP12.2 million immediately following the Reduction
of Capital becoming effective.
Following the implementation of the Reduction of Capital, there
was no change to the number of ordinary shares in issue.
The Board's view was that, with the Group's operational
progress, it was an appropriate time to reduce the nominal value of
the ordinary shares. This would allow the Parent Company the
flexibility to issue ordinary shares at a new lower price below the
nominal value of 10 pence per share in place prior to the capital
reorganisation. This would support acquisition and growth activity,
as well as allowing the Group to put in place appropriate incentive
schemes to attract, retain and reward high performing
individuals.
Going concern
The directors are satisfied that the Group has adequate
resources to continue in business for the foreseeable future and
accordingly continue to adopt the going concern basis in preparing
the accounts. In reaching this conclusion, the directors have
considered forecasts that cover a period of greater than twelve
months from the date of the approval of these financial
statements.
The forecasts take into account the Group's existing cash
resources, and include consideration of certain downside scenarios
and risks.
The directors have also considered the mitigating actions
available to them, including the ability of management to make
certain reductions to the Group's discretionary expenditure if
required.
Derren Stroud
Chief Financial Officer
3 April 2017
Corporate and Social Responsibility
It is the Group's responsibility to behave in a manner which is
both responsible and ethical. This applies to all stakeholders,
including shareholders, employees, customers, suppliers and the
communities that are affected by us or benefit from our
activities.
Health and Safety
TP Group companies have accredited management systems to control
health and safety risks to OHSAS 18001. As part of our health and
safety systems, each business monitors incidents and prepares
improvement plans on a monthly basis. The safety, health,
environmental and quality performance of the Group is reviewed on a
monthly basis both at subsidiary and Group level.
People
The Group is committed to preventing discrimination amongst our
workforce. Our objective is to create a working environment in
which there is no unlawful discrimination and all decisions are
based on merit. These principles are extended to include our
interactions with visitors, customers, suppliers and any others
coming into contact with our staff.
TPG has signed a pledge to the Armed Forces Corporate Covenant.
This pledge gives our commitment to honour the Armed Forces
Covenant and support the Armed Forces Community.
Communities
TP Group operates throughout the UK and aims to be a good
neighbour and supporter of the communities in which we operate. We
are often an important local employer and make a valuable
contribution to the local economy. Our businesses are proactive in
engaging with the local communities and sharing their ambitions for
the local area.
Environment
Group companies operate Environment Management Systems that are
accredited to BS EN ISO 14001 and pay very close attention to the
environmental aspects of our operations.
Within the workspace, for example, the Dukinfield factory has
upgraded its shop floor lighting system with highly efficient LED
lamps that provide much better lighting conditions for the
workforce whilst being more energy efficient.
Principal risks and uncertainties
In addition to the financial risk management that is detailed in
note 26 to the financial statements, there are a number of risks
and uncertainties that could have a material impact on the Group.
Risks are reviewed by the Board and appropriate processes and
controls have been implemented in respect of monitoring and
control.
Principal business risks are as follows:
-- Commercial contracts for customers may be large and long
term, with risks relating to contract delivery and performance,
including cost. Internal procedures are designed to ensure that
risks are managed on a contract-by-contract basis so that contracts
can be successfully delivered to customers on time, on budget and
to the highest quality specification. A failure to do so may have a
material adverse effect on the Group's business.
-- The Group has a niche position in the naval defence market
supplying specialist equipment to a relatively narrow customer base
and the main external market risks relate to political and
socio-economic factors. We have no direct management control over
these risks, however close working relationships with major
customers and suppliers provides insight into future trends and
issues that allow management actions to be taken at the earliest
opportunity.
-- General economic conditions and uncertainties on potential
partners' plans for capital expenditure may adversely affect both
the scale and timing of new contracts. Close working relationships
provide insight into the future plans of customers and partners to
allow management actions to be taken at the earliest
opportunity.
-- Technological change and the potential of competitors to
develop alternative solutions may threaten the business. The Group
is involved in a number of highly specialised activities, where
know-how has been built up over time and close relationships with
customers provide insight into trends in the requirement. This
retained knowledge, insight and shared development approach is a
barrier to entry for competitors and protects the Group in this
regard.
-- It is important to retain key employees in the development of
the Group's technologies and execution of its business plan. This
falls to two areas - leadership, where succession planning is a key
mitigation strategy; and technical, where the Group seeks to avoid
single points of failure or capacity constraints by managing
technical focus across teams. In general, the Group seeks to
mitigate these risks by seeking to retain staff and encourage their
long-term commitment by providing competitive remuneration and
benefits packages. Notwithstanding these actions, the risk that the
Group may suffer material loss through the loss of, for example,
key personnel, cannot be eliminated.
-- In certain market sectors there is a competitive risk that
fluctuates with the health of that sector and the suppliers to it.
TPG companies monitor their bid performance and competitive
position through win/loss reviews under the common bid process. The
Group strives to minimise exposure to price-led competition by
operating in markets with high technical and quality criteria which
creates significant barriers to entry and permits premium pricing
in many cases.
-- The Group will look to undertake selective acquisitions that
support its strategic ambitions and, in doing so, will incur some
level of risk. Whilst such risk cannot be eliminated, risk will be
mitigated through, amongst other things, due diligence on the best
available information, appropriate warranties from vendors,
integration plans developed and executed in a timely fashion and
trading activity tracked against targets presented at acquisition.
All acquisitions are approved, managed and monitored by the
Board.
-- Cybersecurity threats come in a number of forms, from a
variety of different sources, target a range of different systems,
making them difficult to mitigate. These threats pose a risk to
sensitive data held in the normal course of business, as well as
business interruption risk. In order to mitigate this risk, the
Group has implemented Cyber Essentials across its businesses and
continuously reviews the quality of its security shields and
protocols to mitigate the threat.
-- There are underlying risks associated with health safety and
environmental regulations which are managed by the Group's
accreditation under BS EN ISO 14001 (Environmental Management
System) and OHSAS 18001 (Occupational Health and Safety Management
System).
Consolidated Statement of Comprehensive Income
For the year ended 31 December 2016
Group
====================
2016 2015
Note
GBP'000 GBP'000
Revenue 3 21,226 20,446
Cost of sales (14,748) (14,834)
================================== ====== ========= =========
Gross profit 6,478 5,612
================================== ====== ========= =========
Distribution costs (361) (304)
Research and development
costs - (76)
Administrative expenses (6,381) (7,527)
================================== ====== ========= =========
Operating loss 4 (264) (2,295)
Adjusted EBITDA 3 1,066 45
Depreciation, amortisation
and impairment (1,051) (1,328)
Acquisition-related costs (44) -
Exceptional items (231) (976)
Share based payments (4) (36)
Operating loss (264) (2,295)
---------------------------------- ------ --------- ---------
Finance (cost)/income (69) 77
================================== ====== ========= =========
Loss before income tax (333) (2,218)
Income tax credit (2015 restated
- see note 8) 134 266
================================== ====== ========= =========
Total comprehensive loss
for the year attributable
to shareholders (199) (1,952)
================================== ====== ========= =========
Loss per share expressed
in pence per share
Basic and diluted loss per
share 5 (0.05) (0.45)
================================== ====== ========= =========
Consolidated Statement of Financial Position
At 31 December 2016
Group
==============================================
2016 2015 2014
Re-stated(1) Re-stated(1)
Note GBP'000 GBP'000 GBP'000
============================= ===== ============= ============== ===============
ASSETS
Non-current assets
Goodwill 3,918 3,918 3,918
Other intangible assets 8,775 9,622 9,923
Property, plant and
equipment 667 452 1,007
----------------------------- ----- ------------- -------------- ---------------
13,360 13,992 14,848
============================= ===== ============= ============== ===============
Current assets
Inventories 116 169 59
Trade and other receivables 7,291 6,386 7,215
Derivative financial - 70 -
assets
Taxation recoverable 71 66 249
Cash and cash equivalents 6 9,160 7,005 9,569
============================= ===== ============= ============== ===============
16,638 13,696 17,092
============================= ===== ============= ============== ===============
Total assets 29,998 27,688 31,940
============================= ===== ============= ============== ===============
LIABILITIES
Current liabilities
Trade and other payables (8,411) (5,756) (7,606)
============================= ===== ============= ============== ===============
(8,411) (5,756) (7,606)
============================= ===== ============= ============== ===============
Non-current liabilities
Deferred taxation (823) (978) (1,205)
Provisions (1,101) (1,096) (1,355)
============================= ===== ============= ============== ===============
(1,924) (2,074) (2,560)
Total liabilities (10,335) (7,830) (10,166)
============================= ===== ============= ============== ===============
Net assets 19,663 19,.858 21,774
============================= ===== ============= ============== ===============
EQUITY
Share capital 4,225 42,246 42,246
Share premium - 13,769 13,769
Capital redemption
reserve - 575 575
Own shares held by
the EBT (561) (561) (561)
Share-based payments
reserve 1,178 1,174 1,138
Retained earnings 14,821 (37,345) (35,393)
============================= ===== ============= ============== ===============
Total equity 19,663 19,858 21,774
============================= ===== ============= ============== ===============
(1) Refer to note 8 for details on restatement
Parent Company Statement of Financial Position
At 31 December 2016
Parent Company
====================================
2016 2015 2014
Note GBP'000 GBP'000 GBP'000
=============================== ===== ============ ========= ===========
ASSETS
Non-current assets
Other intangible assets 177 108 -
Property, plant and equipment 13 22 3
Investments 11,681 15,027 19,047
Amounts owed by EBT 104 44 74
=============================== ===== ============ ========= ===========
11,975 15,201 19,124
=============================== ===== ============ ========= ===========
Current assets
Trade and other receivables 2,984 3,056 1,959
Cash and cash equivalents 6 714 1,547 3,605
=============================== ===== ============ ========= ===========
3,698 4,603 5,564
=============================== ===== ============ ========= ===========
Total assets 15,673 19,804 24,688
=============================== ===== ============ ========= ===========
LIABILITIES
Current liabilities
Trade and other payables (3,040) (2,310) (345)
=============================== ===== ============ ========= ===========
(3,040) (2,310) (345)
=============================== ===== ============ ========= ===========
Non-current liabilities
Provisions (10) - -
=============================== ===== ============ ========= ===========
(10) - -
Total liabilities (3,050) (2,310) (345)
=============================== ===== ============ ========= ===========
Net assets 12,623 17,494 24,343
=============================== ===== ============ ========= ===========
EQUITY
Share capital 4,225 42,246 42,246
Share premium - 13,769 13,769
Capital redemption reserve - 575 575
Share-based payments reserve 1,084 1,080 1,044
Retained earnings 7,314 (40,176) (33,291)
=============================== ===== ============ ========= ===========
Total equity 12,623 17,494 24,343
=============================== ===== ============ ========= ===========
Consolidated Statement of Changes in Equity
For the year ended 31 December 2016
Group
-------------------------------------------------------------------------------
Own
Capital shares Share-based
held
Share Share redemption by payments Retained
capital premium reserve EBT reserve earnings Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
--------------------- --------- --------- ----------- -------- ------------ --------- ---------
Balance
at 42,246 13,769 575 (561) 1,138 (35,393) 21,774
1 January
2015
(Re-stated)(1)
IFRS 2 share
option charge - - - - 36 - 36
--------------------- --------- --------- ----------- -------- ------------ --------- ---------
Total comprehensive
loss - - - - - (1,952) (1,952)
--------------------- --------- --------- ----------- -------- ------------ --------- ---------
Balance
at
31 December
2015
(Re-stated)(1) 42,246 13,769 575 (561) 1,174 (37,345) 19,858
Capital
reduction (38,021) (13,769) (575) - - 52,365 -
IFRS 2 share
option charge - - - - 4 - 4
--------------------- --------- --------- ----------- -------- ------------ --------- ---------
Total comprehensive
loss - - - - - (199) (199)
--------------------- --------- --------- ----------- -------- ------------ --------- ---------
Balance
at
31 December
2016 4,225 - - (561) 1,178 14,821 19,663
--------------------- --------- --------- ----------- -------- ------------ --------- ---------
(1) Refer to note 8 for details on restatement
Parent Company Statement of Changes in Equity
For the year ended 31 December 2016
Parent Company
====================================================================
Capital Share-based
Share Share redemption payments Retained
capital premium reserve reserve earnings Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
===================== ========= ========= =========== ============ ========= ========
Balance at
1 January 2015 42,246 13,769 575 1,044 (33,291) 24,343
IFRS 2 share
option charge - - - 36 - 36
===================== ========= ========= =========== ============ ========= ========
Total comprehensive
loss - - - - (6,885) (6,885)
===================== ========= ========= =========== ============ ========= ========
Balance at
31 December
2015 42,246 13,769 575 1,080 (40,176) 17,494
Capital reduction (38,021) (13,769) (575) - 52,365 -
IFRS 2 share
option charge - - - 4 - 4
===================== ========= ========= =========== ============ ========= ========
Total comprehensive
loss - - - - (4,875) (4,875)
===================== ========= ========= =========== ============ ========= ========
Balance at
31 December
2016 4,225 - - 1,084 7,314 12,623
Consolidated and Parent Company Statement of Cash Flows
For the year ended 31 December 2016
Group Parent Company
================== ==================
2016 2015 2016 2015
Note GBP'000 GBP'000 GBP'000 GBP'000
================================ ====== ======== ======== ======== ========
Operating activities
Loss before income
tax (333) (2,218) (4,875) (7,049)
Adjustments for:
Depreciation 98 421 9 1
Amortisation 953 907 37 -
Loss on disposal of - 493 - -
fixed assets
Finance cost/(income) 69 (77) (1) (8)
Share-based payment
expense 4 36 4 36
(Decrease)/increase
in impairment on loan
to the EBT - - (60) 30
Provision against long
term inter-company
loan - - 3,998 5,872
Decrease/(increase)
in inventories 53 (86) - -
(Increase)/decrease
in trade and other
receivables (836) 1,098 72 (933)
Increase/(decrease)
in trade and other
payables 2,563 (1,876) 730 1,965
Increase/(decrease)
in provisions 5 (259) 10 -
================================ ====== ======== ======== ======== ========
2,576 (1,561) (76) (86)
Income tax received - 64 - -
================================ ====== ======== ======== ======== ========
Net cash generated
/(used) in operating
activities 2,576 (1,497) (76) (86)
================================ ====== ======== ======== ======== ========
Investing activities
Interest received 1 8 1 8
Purchase of property,
plant and equipment (313) (96) - (20)
Purchase of computer
software (106) (108) (106) (108)
Purchase of subsidiary, - (886) - -
net of cash acquired
Proceeds from sale - 40 - -
of property, plant
and equipment
Long term loan to subsidiary - - (652) (1,852)
================================ ====== ======== ======== ======== ========
Net cash used in investing
activities (418) (1,042) (757) (1,972)
================================ ====== ======== ======== ======== ========
Financing activities
Repayment of hire purchase
liabilities (3) (25) - -
================================ ====== ======== ======== ======== ========
Net cash used in financing
activities (3) (25) - -
================================ ====== ======== ======== ======== ========
Net increase/(decrease)
in cash and cash equivalents 2,155 (2,564) (833) (2,058)
Cash and cash equivalents
at beginning of year 7,005 9,569 1,547 3,605
Cash and cash equivalents
at end of year 9,160 7,005 714 1,547
================================ ====== ======== ======== ======== ========
Notes to the Preliminary Announcement
1. Basis of preparation
While the financial information included in this preliminary
announcement has been prepared in accordance with the recognized
and measurement criteria of International Financial Reporting
Standards (IFRSs), this announcement does not itself contain
sufficient information to comply with IFRSs. The Company expects to
publish full financial statements that comply with IFRSs in April
2017.
The financial information set out above does not constitute the
Company's statutory accounts for the year ended 31 December 2016,
or year ended 31 December 2015, but is derived from those accounts.
Statutory accounts for 2015 have been delivered to the Registrar of
Companies and those for 2016 will be delivered following the
Company's annual general meeting. The auditor has reported on those
accounts; their reports were unqualified, did not draw attention to
any matters by way of emphasis without qualifying their report and
did not contain statements under s498(2) or (3) Companies Act
2006.
2. Going concern
The directors are satisfied that the Group has adequate
resources to continue in business for the foreseeable future, and
accordingly continue to adopt the going concern basis in preparing
the accounts. In reaching this conclusion, the directors have
considered forecasts that cover a period of greater than twelve
months from the date of the approval of these financial statements.
The forecasts take into account the Group's existing cash
resources, and include consideration of certain downside scenarios,
in particular in relation to TPG D&T where there is inherently
greater uncertainty as to the future cash flows of that business.
The directors have also considered the mitigating actions available
to them, including the ability of management to make certain
reductions to the Group's discretionary expenditure if
required.
3. Segmental reporting
Business segments
For management purposes, the Group reports along four
interconnected business units.
Central unallocated costs are specific costs associated with the
Group's AIM listing and other Group operational costs that are not
charged out to the operating companies.
The following table presents Group revenue and profit
information for each business units.
2016 2015
GBP'000 GBP'000
============================ ======== ========
Revenue
TPG Maritime 12,229 10,948
TPG Engineering 6,851 7,067
TPG Design and Technology 757 901
TPG Managed Solutions 1,389 1,530
============================ ======== ========
Group revenue 21,226 20,446
Segment operating result
TPG Maritime 3,335 1,935
TPG Engineering (1,167) (473)
TPG Design and Technology (975) (2,843)
TPG Managed Solutions (33) 247
Central unallocated costs (1,424) (1,161)
============================ ======== ========
Group loss from operations (264) (2,295)
Finance (cost)/income (69) 77
============================ ======== ========
Loss before income tax (333) (2,218)
Income tax credit 134 266
============================ ======== ========
Loss after tax (199) (1,952)
============================ ======== ========
Geographical segments
The Group's operations are solely in the United Kingdom although
some of the Group's revenues are to customers outside the UK. All
segment assets are located in the UK. The Group's revenues from
external customers are analysed into the following geographical
areas:
2016 2015
GBP'000 GBP'000
================================= ======== ========
Geographical analysis - revenue
United Kingdom 16,588 15,591
Rest of the European Union 2,156 2,166
North America 6 292
Asia 2,092 2,122
Middle East 136 71
Rest of the World 248 204
================================= ======== ========
Total revenue 21,226 20,446
================================= ======== ========
Information about major customers
Revenue includes sales from customers who contributed 10% or
more to the Group's revenue:
2016 2015
GBP'000 GBP'000
=============== ======== ========
Maritime
Customer 1 4,715 6,013
Customer 2 3,883 2,191
--------------- -------- --------
Total revenue 8,598 8,204
=============== ======== ========
Results by Segment
TPG TPG TPG TPG Central
Maritime Engineering D&T MS unallocated Group
costs
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
===================== ========== ============= ======== ======== ============= ========
2016
Segment
operating
result 3,335 (1,167) (975) (33) (1,424) (264)
Depreciation,
amortisation
and impairment 859 173 16 3 - 1,051
Acquisition-related
costs - - - - 44 44
Exceptional
items - - - - 231 231
Share
based
payments - - - - 4 4
===================== ========== ============= ======== ======== ============= ========
Adjusted
EBITDA(1) 4,194 (994) (959) (30) (1,145) 1,066
===================== ========== ============= ======== ======== ============= ========
2015
Segment
operating
result 1,933 (471) (2,843) 247 (1,161) (2,295)
Depreciation,
amortisation
and impairment 844 229 254 - 1 1,328
Acquisition-related
costs - - - - - -
Exceptional
items - - 976 - - 976
Share
based
payments - - - - 36 36
===================== ====== ====== ======== ====== ======== ========
Adjusted
EBITDA(1) 2,777 (242) (1,613) 247 (1,124) 45
===================== ====== ====== ======== ====== ======== ========
(1) Adjusted EBITDA is defined as operating profit adjusted to
add back depreciation of property, plant and equipment,
amortisation and impairment of acquired intangible assets and any
other acquisition-related charges, share based payment charges and
exceptional items. Exceptional items are those items believed to be
exceptional in nature by virtue of their size and or incidence.
Exceptional items in the current year comprise termination costs of
GBP231,000 (2015 - exceptional items in 2015 comprised
restructuring costs of GBP976,000, including impairment of fixed
assets of GBP493,000 and termination costs of GBP146,000). The
directors believe this measure is more reflective of the underlying
performance of the Group than equivalent GAAP measures. This is
primarily due to the exclusion of non-cash items, such as
share-based payments, impairment, depreciation and amortisation, as
well as exceptional items. This provides shareholders and other
users of the financial statements with the most representative
year-on-year comparison. This measure and the separate components
remain consistent with 2015.
4. Operating Loss
The Group operating loss for the year is stated after charging
the following:
2016 2015
Group GBP'000 GBP'000
========================================= ==================== ================
Staff costs
Wages and salaries 7,521 7,669
Social security costs 810 815
Other pension costs 430 445
Share based payment 4 36
========================================= ==================== ================
8,765 8,965
========================================= ==================== ================
Amortisation of intangible assets 953 907
Depreciation of property, plant
and equipment 98 421
Loss on sale of fixed assets - 493
Research and Development - 76
Operating lease expense - rent 778 939
========================================= ==================== ================
Auditor's remuneration:
Audit fees
fees payable for the audit of
the Group and consolidated financial
statement 21 21
fees payable to the audit of
the subsidiary companies 45 45
========================================= ==================== ================
Total audit fees 66 66
Non-audit fees
Fees payable for statutory and
regulatory services 3 6
Tax advisory services 15 15
========================================= ==================== ================
Total auditor remuneration 84 87
========================================= ==================== ================
Share-based payment expenses of GBP4,000 (2015 - GBP36,000) all
arises from transactions accounted for as equity-settled
share-based payment transactions and are non-cash in nature.
Staff numbers
The average number of employees, including directors, employed
by the Group during the year was as follows:
2016 2015
Group Number Number
====================== ======== =======
Engineering 111 121
Business development 12 10
Administration 40 41
====================== ======== =======
163 172
====================== ======== =======
Pension costs
The Group operates a money purchase and a group stakeholder
pension scheme. The assets of these schemes are held separately
from those of the Group in separately administered funds. The
pension charge represents contributions payable by the Group to
these funds and amounted to GBP430,000 (2015 - GBP445,000). No
contributions were prepaid or overdue at 31 December 2016 (2015 -
GBPNil). The nature of the Group's scheme ensures no further
payment obligations exist relating to past services.
5. Loss per Share
The calculation of basic loss per share for the year ended 31
December 2016 is based upon a loss after tax of GBP199,000 (2015 -
GBP1,952,000) and a weighted average number of shares of
420,857,956 (2015 - 420,857,956). The weighted average number of
shares has been reduced by the weighted average number of shares
held by the Employee Benefit Trust.
The issue of additional shares on exercise of employee share
options would decrease the basic loss per share and there is
therefore no dilutive effect of employee share options.
6. Cash and Cash Equivalents
Group Parent Company
=================== ==================
2016 2015 2016 2015
GBP'000 GBP'000 GBP'000 GBP'000
=============== ========= ======== ======== ========
Cash and cash
equivalents 9,316(1) 7,005 714 1,547
=============== ========= ======== ======== ========
(1) Restricted cash of GBP156,000 is included in Other Debtors
and prepayments
The funds were placed on floating interest rate deposit as
follows:
Group Parent Company
================== ==================
2016 2015 2016 2015
GBP'000 GBP'000 GBP'000 GBP'000
============== ======== ======== ======== ========
Cash at bank
and in hand 9,160 7,005 714 1,547
============== ======== ======== ======== ========
7. Subsequent Events
The following events have taken place between the year end and
the signing of these accounts:
On 6 February 2017, the Group through its parent company TP
Group plc, acquired 100% of the issued share capital of ALS
Technologies Limited ("ALS") and Flexible Solutions Software
Limited ("FSS") on a cash free/debt free basis, for a combined
initial consideration of GBP1,250,000 and a maximum further
deferred consideration of GBP1,500,000 based on the combined
performance of both businesses. The acquisition costs will be paid
in cash from the Group's existing cash resources. The companies
specialise in providing consulting services to both the public and
private sectors. Payback of the investment is expected within four
years.
The principal reason for this acquisition is to support the
Group's evolution as a diversified engineering group providing not
only design and manufacture of bespoke engineering solutions but
also technical support and management to both the public and
private sectors. Both FSS and ALS will form part of the Managed
Solutions business unit segment.
Initial estimates of the fair value of identifiable assets and
liabilities acquired are as follows:
ALS Technologies Book Value Fair Value
Limited (Provisional) (Provisional)
GBP'000 GBP'000
========================= =============== ===============
Property, plant
& equipment 21 21
Identifiable intangible - -
assets (not yet
valued)
Financial assets 1,088 1,088
Financial liabilities (547) (547)
Deferred taxation - -
========================= =============== ===============
Total identifiable
net assets 562 562
========================== =============== ===============
Goodwill arising
on consolidation 1,612 1,612
========================== =============== ===============
Estimated consideration 2,174 2,174
========================== =============== ===============
FSS Limited Book Value Fair Value
(Provisional) (Provisional)
GBP'000 GBP'000
========================= =============== ===============
Property, plant
& equipment 1 1
Identifiable intangible - -
assets (not yet
valued)
Financial assets 51 51
Financial liabilities (13) (13)
Deferred taxation - -
========================= =============== ===============
Total identifiable
net assets 39 39
========================== =============== ===============
Goodwill arising
on consolidation 36 36
========================== =============== ===============
Estimated consideration 75 75
========================== =============== ===============
The Group has not recognised any difference between the book
values and fair values of the identifiable assets acquired in this
assessment due to the timing between acquisition and the signing of
these financial statements. We anticipate intangible assets
relating to Technical Know How and Customer Relationships when our
assessment is finalised. A fair valuation exercise will be
undertaken to value the identified intangible assets. The estimated
consideration payable includes the initial consideration of
GBP1,250,000 (GBP1,194,000 ALS and GBP56,000 FSS) and a fair value
estimate of the contingent consideration.
8. Prior Year Re-statement
In the current year, the Group identified that a deferred tax
liability previously recognised upon acquisition of TPG Maritime on
5 April 2012 and Shaw Sheet Metal Company on 30 January 2015, had
been incorrectly accounted for. This also affected the value of
goodwill identified as part of the business combination
accounting.
The business combination accounting treatment has, therefore
been re-stated in the prior years' financial statements.
The effects of the re-statement are as outlined below:
2015 2015 2014 2014
Re-stated Original Re-stated Original
GBP'000 GBP'000 GBP'000 GBP'000
======================== =========== ========== =========== ==========
Goodwill 3,918 4,953 3,918 4,953
Deferred tax liability (978) (1,713) (1,205) (1,985)
Tax credit /(charge) 266 311 (83) 172
Retained earnings (37,345) (37,045) (35,393) (35,138)
Total comprehensive
loss for the year
attributable to
shareholders (1,952) (1,907) (3,766) (3,721)
9. Notice of Annual General Meeting
The Annual General Meeting of TP Group Plc will be held at 10.30
a.m. on 25 May 2017 at the offices of Deloitte LLP, Abbots House,
Abbey St, Reading, West Berkshire RG1 3BD.
This information is provided by RNS
The company news service from the London Stock Exchange
END
FR FXLLBDZFFBBV
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April 04, 2017 02:00 ET (06:00 GMT)
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