TIDMTPG
RNS Number : 0993L
TP Group PLC
17 April 2018
17 April 2018
TP Group plc
("TP Group" or the "Company" or the "Group")
Final results for year ended 31 December 2017
TP Group (AIM: TPG), the specialist services and engineering
group, announces its audited results for the year ended 31 December
2017.
2017 financial highlights
Revenue up 39% to GBP29.5m (2016: GBP21.2m)
-- Converted strong order intake into revenue
-- Added revenues from acquired companies
Adjusted EBITDA* up 142% to GBP2.6m (2016: GBP1.1m)
-- Operational focus on improving margins and delivery performance
Operating loss GBP0.5m (2016: GBP0.3m)
-- Includes business transformation costs of GBP0.7 million
-- One-time impairment charge of GBP0.5 million
Closing cash of GBP21.9m (2016: GBP9.2m)
-- GBP20.8m additional funding secured through equity raise
Order intake up 88% to GBP44.7m (2016: GBP23.8m)
-- Concluded negotiations on long-term defence contracts
Closing Group order book up 89% to GBP32.1m (2016: GBP17.0m)
-- Good visibility of future core business
2017 operational highlights
-- Continued implementation of growth strategy across the business
-- Strengthened management team
-- Raised GBP20.8m to fund ambitious growth plans
-- Invested in Advanced Manufacturing Centre (GBP1.3m)
-- Completed two acquisitions in accordance with stated strategy
Andrew McCree, Non-Executive Chairman, commented:
"These are excellent results and underline the potential of the
Group to work successfully within our established markets and
technologies. The Group has made a successful start to implementing
our ambitious growth plans. As we look forward, we see both organic
and acquisitive growth opportunities."
Phil Cartmell, Chief Executive of TP Group, commented:
"The Group has responded strongly to trends in our core markets,
with significant major orders in key programmes, growth in both
revenue and adjusted EBITDA and a pathway to new technical
propositions, new market areas and a wider international
presence.
"With all that the Group has achieved in the last few years, the
team and the platform we have built, and the range of opportunities
laid out before us, we look forward to an exciting year ahead with
confidence that we can continue to deliver on our plans."
* Adjusted EBITDA is defined as operating profit adjusted to add
back depreciation of property, plant and equipment, amortisation
and impairment of acquired tangible and intangible assets and any
other acquisition-related charges, share based payment charges and
non-operating items. Non-operating items are those items believed
to be exceptional in nature by virtue of their size and or
incidence. 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 non-operating 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 2016.
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 9701
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
"These are excellent results and underline the potential of the
Group to work successfully within our established markets and
technologies."
In last year's report I commented that we had created a strong
platform for growth that benefits from our reputation for
reliability and engineering excellence. Over the course of 2017 we
have made good progress and I am pleased to report that the
executive team has responded well to the challenges and
opportunities for the Group. Revenue grew by 39% to GBP29.5m (2016:
GBP21.2m), order intake almost doubled to GBP44.7m (2016: GBP23.1m)
and Adjusted EBITDA rose to GBP2.6m (2016: GBP1.1m).
These results are underpinned by a business transformation led
by the CEO, which has seen management strengthened, investment in
facilities and the successful acquisition and integration of new
businesses.
Fund-raising and acquisitions
The Group's strategy is to expand the business through a
combination of organic growth and acquisitions. In practice, we
will grow business with existing accounts while looking for
acquisitions which will strengthen our position and enhance
margins.
The process began with the acquisition of ALS Technologies
Limited ("ALS") and Flexible Software Solutions Limited ("FSS") in
February 2017.
In July 2017 we undertook an equity fundraising process that
raised approximately GBP20.8 million net of expenses, from existing
and new shareholders, to fund investment in acquisitions and
organic growth initiatives.
Since the fundraising, we have completed one further transaction
- the acquisition of Polaris Consulting Holdings Ltd. ("Polaris")
for a maximum consideration of GBP3.5m which we announced on 13
December 2017. Polaris satisfied our business, technical and
operational criteria and will further add to the Group's Services
business capability.
Management has, throughout the year, been introduced to many
acquisition opportunities from a number of sources. Market
conditions, particularly in the defence sector, have put pressure
on many SMEs that may have been potential acquisitions. The
directors work carefully through the opportunities and enter into
negotiations only where clear value and benefit is visible at a
price that is appropriate to the interests of the Group and our
investors.
The acquisition process continues, and shareholders will be
notified of significant events as they occur.
Board changes
Phil Holland and Jeremy Warner-Allen joined the board in
February 2017 as Non-Executive Directors. They bring a wealth of
M&A, industry and capital markets expertise as we seek to
capitalise on our acquisitions pipeline and execute our growth
strategy.
Post year-end, Simon Kings stepped down from the Board and left
the company. We wish him every success in his future
endeavours.
Outlook
The Group has made a successful start in executing our ambitious
plans for growth. As we look forward, we see both organic and
acquisitive growth opportunities.
-- Organic growth - with many long-term contracts already signed
and with the prospect of more to come from both our UK and
international customers, we have built our capabilities, and
invested in our teams and facilities to capitalise on these
exciting opportunities.
-- Acquisition growth - the Group continues to engage on several
acquisition opportunities. TPG has been selective in reviewing
these opportunities and will act quickly on transactions that
satisfy the directors' criteria to enhance the Group's offering and
build shareholder value.
On behalf of the board I would like to thank the entire Group,
including management and employees for their contribution to a
successful performance in 2017, and for their commitment to
delivering our goals over the next three years.
Chief Executive Officer's Strategic Review
"We have built a strong set of capabilities across the Group and
our plan now is to build on our success and accelerate growth where
it is available."
The Group has responded strongly to trends in our core markets,
having secured significant major orders in key programmes. This has
led to growth in both revenue and adjusted EBITDA and opened routes
to new technical propositions, new market areas and a wider
international presence.
The executive team has led and implemented a business
transformation over the last few years that has delivered these
financial results and set the business up for continued growth. Our
focus now is to pursue this path through the delivery of premium
services and engineering projects.
This means achieving organic growth through enhanced account
management - continuing to deliver excellence in existing
activities, doing more with our existing clients, building new
account relationships and working in new sectors where our skills
are transferrable.
We are also continuing to identify and evaluate suitable
companies for acquisition that will add business volume, further
capabilities, further customer relationships or any combination of
these benefits.
The placing and open offer in July raised GBP20.8 million and
was well supported by existing shareholders and also by new
shareholders. The proceeds of the fundraising have supported
internal investment programmes and an acquisition strategy that
yielded its first successful conclusion with the purchase of
Polaris in December 2017.
Positioning
The majority of our work is with selected high-end global prime
contractors and end-users. We are an active player in the markets
we serve, committed to understanding customer needs better than our
competitors, rising to their challenges and leading them forward
through innovation and excellent service.
We enjoy very good relationships with our global customer base
that includes equipment end-users and also major prime contractors
that deliver top-level contracts to the end-users. We consult
widely with our customer base and their feedback has triggered much
of our transformation around new leadership, and investment in
people and facilities.
End users or operators are increasingly looking to us for
long-term performance or management of their equipment. These are
the relationships that provide steady activity over long periods
and good revenue visibility to underpin the business through market
fluctuations.
With the prime contractors we act as specialist contributors to
their supply chain. This is an advantageous position because once
we qualify as a preferred supplier or partner, we benefit from
their outreach and continuing success. For example, European prime
contractors build submarines for defence forces all over the world,
they also work in other non-defence projects and it is our aim to
grow into these areas with them. This leverage is an important part
of our strategy to act on a global scale from our UK
facilities.
A winning team
As always, it is through our people coming together that we can
deliver excellent performance. As we focus our capabilities and
apply them more widely than in the past, we have tested the
creativity and enterprise of our teams. They have risen to this
challenge in all areas of the business.
We simplified the internal structure by aligning sites under a
common leadership within the Services and Engineering streams. This
has created clearer reporting lines and stimulated closer
co-operation between the teams under a common banner.
From this we have formalised an executive management team to be
responsible for the hands-on running of the business and to provide
greater opportunity to cross-sell the wider Group offerings. This
in turn creates more capacity for the directors to work on
acquisition and other strategic developments.
Acquisitions
Our acquisition strategy is to engage with technology and
services businesses that operate in markets we know and understand.
They should be additive to our existing offerings and help us to
improve scale and margins. This approach delivered its first
success early in the year with the purchase of ALS and FSS,
followed in December by the acquisition of Polaris.
ALS, based in Wincanton, Somerset, provides systems engineering
and assurance capability for mission support, flight control,
combat systems and tactical information systems in the aerospace
and defence markets. FSS, also based in Wincanton, develops
safety-critical software for the defence and commercial sectors.
Polaris, with bases in Fareham and Bristol, delivers technical
consultancy including operational analysis, project controls and
cost engineering services across the defence and security sectors,
with additional activity in energy and transportation.
These acquisitions added scale to the Group's Services business
and added significant new aviation activity.
As discussed in more detail below, we continue to review and
assess acquisition opportunities that will both complement and/or
add to the Group offering and enhance value. Shareholders will be
informed of any significant developments in this regard.
Cross-Group integration
As the newly acquired businesses were brought into the Services
team, we began to see the positive effects of combining front and
back-office business capabilities and processes. This provides a
template for future acquisitions.
Similarly, in TPG Engineering, Portsmouth and Manchester now
share manufacturing capacity, quality processes and project
management resources. Synergies are beginning to be realised, with
fabrication tasks that the Portsmouth site would previously have
bought from their supply chain being increasingly delivered by the
Manchester facility.
We have also linked our business development resources across
delivery centres. The combined propositions of the Group are now
being offered to customers who previously may have known us for a
single product or service offering.
A platform for success
During the first half of the year, we confirmed two large
defence contracts, one to supply multiple atmosphere management
systems and the other a framework contract for spares and support,
which provides long-term revenue visibility. The breadth of these
contracts demonstrates how our services extend beyond simple build
and supply projects so that we also lock in future activities and
revenue possibilities over the long-term use and performance of the
equipment we work with.
The Group has also invested in manufacturing and inspection
equipment to launch the Advanced Manufacturing Centre in
Manchester. The AMC was set up initially to support the Group's
contract with GE Oil & Gas (now Baker Hughes, a GE company)
secured in December 2016. It is equipped with high precision, high
capacity machining centres, metrology and manufacturing systems
that will serve a wide range of opportunities in energy, defence
and other high-integrity applications.
Our markets
We continue to see strong demand for our core products and
services in the UK and overseas.
In the UK, we are active on certain critical protected
programmes that are identified through the Government's ongoing
refresh of the UK's Strategic Defence & Security Review of
2015. These programmes such as the new submarine replacement have
been protected whilst other areas of the defence establishment are
under increasing pressure with budgets severely cut.
We are also witnessing some modest recovery in the downstream
oil and gas market and an ever-present focus on secure information
and communications systems in both defence and civil government
departments.
Delivering the strategy
In last year's annual report we committed to a growth strategy
and have progressed this plan by pursuing further acquisitions to
complement the organic growth opportunities that were visible
within the existing business units. The typical profile of
attractive companies is privately owned, successful yet constrained
in some way and where the owners are seeking to realise value.
We have continued to pursue several acquisition opportunities in
our target sectors of security, energy and aerospace. We have also
expanded our search parameters as the traditional small defence
contractors we have examined have either been struggling for
performance, or, if successful, have carried very high valuations.
Our strategy remains clear to make best use of the funds we have
available and does not include pursuing recovery plays at this
time.
The acquisition team has explored a wide range of engineering
and services businesses in the UK, Europe and the United States.
These businesses have spanned a number of sectors including space,
aviation, complex control systems, transportation and cyber
security. This activity will continue to identify suitable
companies that will contribute to our growth plans.
Our next steps
As we look toward the year ahead we see a wide range of
opportunities and increased market interest in what we are doing.
Our goal is to capitalise fully on this buoyant position and so a
number of actions have been planned:
-- Pursue innovation in services and propositions to work
creatively with our customers and realise the true value of our
capability
-- Communicate the breadth of our capabilities to demonstrate
the potential value of working with TPG. This is important for
business development, attracting talent though our recruitment and
talking clearly to our investors
-- Fully integrate the Polaris team to mobilise their skills to our wider customer base and add complementary resources to their activities
-- Widen our geographic reach through agents in various
territories opening their horizons to the greater range of
capabilities across the Group and supporting them fully to carry
these to large clients all around the world
-- Acquire and integrate suitable businesses to the Group -
there are interesting opportunities, but they must be carefully
assessed to find suitable technical or operational alignment
alongside leadership that shares our views and approaches, and of
course at a sensible price
With all that the Group has achieved in the last few years, the
team and the platform we have built, and the range of opportunities
laid out before us, we look forward to an exciting year ahead with
confidence that we can continue to deliver on our plans.
CFO's Financial and Business Review
2017 2016 Change
Group Key Performance GBPM GBPM GBPM
Indicators (KPIs)
------------------------ ------------------ ------------------- -------
Revenue 29.5 21.2 8.3
Adjusted EBITDA 2.6 1.1 1.5
Operating loss (0.5) (0.3) (0.2)
Cash and bank balances 21.9 9.2 12.7
Closing order book 32.1 17.0 15.1
Order Intake 44.7 23.8 20.9
2017 2016 Change
Revenue GBPM GBPM GBPM
----------------- ----- ----- -------
TPG Engineering 23.7 19.0 4.7
TPG Services 5.8 2.2 3.6
Group revenue 29.5 21.2 8.3
----------------- ----- ----- -------
2017 2016 Change
Adjusted EBITDA GBPM GBPM GBPM
----------------- ------ ------------------ -----------
TPG Engineering 4.5 3.2 1.3
TPG Services (0.8) (1.0) 0.2
Central costs (1.1) (1.1) 0.0
-----------------
Adjusted EBITDA 2.6 1.1 1.5
----------------- ------ ------------------ -----------
"I am pleased to report that TP Group has continued to deliver
growth and built an order book to secure future business volume.
The Group made a profit on an Adjusted EBITDA basis of GBP2.6
million, more than double the 2016 result."
Following the refinement of the Group's strategy, the business
has been managed through the year along two distinct business
units, Consulting and Programme Services ("Services") and
Engineering and Technology ("Engineering").
The principal activities of these business units comprise:
-- Services - the provision of know-how and experience to add
value in large and complex enterprises. Services include technical
project management, systems engineering, design, software
development and assurance. This segment, for 2017 revenue and
Adjusted EBITDA, is a combination of the prior segments TPG Design
& Technology, TPG Managed Solutions and the acquired businesses
of ALS Technologies Ltd and Flexible Software Solutions Ltd., and
will include Polaris in future periods.
-- Engineering - activities include the design, manufacture,
installation and support of complex equipment. These include air
purification equipment for submarines including oxygen/hydrogen
generation and purification, air handling and distribution systems,
heat exchange equipment used in the heating and cooling of large
scale industrial processes, and other fabricated structures. This
segment is a combination of the prior segments TPG Maritime and TPG
Engineering.
Operating Results
Group KPIs
2017 delivered significant improvement in all our KPIs, which
reflects a balanced approach to strategic development alongside
operational focus on the business fundamentals. The leadership has
concentrated on generating demand for our resources, efficient
execution of contracts, tight control of costs and continuous
improvement throughout the business.
Revenue
Revenue increased by 39% to GBP29.5 million (2016: GBP21.2m),
with growth in all parts of the business. Organic growth
contributed more than half of this increase (GBP4.7m), the balance
coming from acquisitions.
Engineering realised growth of 24% in revenues, driven by
increased activity at both our Portsmouth and Manchester locations.
We have benefitted from our role in protected long-term programmes
for submarine build in the UK and our embedded position with
international prime contractors delivering submarine programmes
around the world. These relationships delivered major long-term
contract wins that are converting to revenue at the intended
rate.
Modest improvement in conditions in the downstream oil & gas
and chemical processing sectors delivered additional orders and
revenue to the Manchester facility.
Services revenues grew strongly through a combination of new
contracts in the legacy defence consulting activity, new work
outside defence in the Department of Transport and the addition of
the acquired ALS and FSS businesses.
Adjusted EBITDA
Group Adjusted EBITDA increased by GBP1.5 million to GBP2.6
million, an increase of 142% on the 2016 result of GBP1.1 million.
Organic growth contributed GBP1.4m of this increase, the balance
coming from acquisitions.
In the Engineering business unit, revenue growth, executed at a
consistent gross margin, delivered an improved Adjusted EBITDA
position of GBP4.5 million (2016: GBP3.2 million).
Strong performance in our UK and overseas defence sector
projects has been tempered slightly by weaker results from our
activity in the oil & gas sector. Whilst volumes in this sector
are improving, it remains very price competitive in our traditional
areas of activity. This has caused gross margins to suffer and
supports our decision to develop into premium market areas where
competition becomes more capability and quality driven than purely
price. This was demonstrated by the Group winning its first
multi-unit long term contract in nuclear power generation at the
end of 2016, and the subsequent investment in the AMC during 2017
to drive the business in this direction.
The Services business is a key part of our growth strategy.
Having launched the proposition in 2016, the Group has continued to
invest in people, processes and systems to support long-term
business growth. New contracts and relationships have started to
yield benefits in 2017 and so we have seen an improvement in
business volume and some flow through to the gross margin level.
This does not, however, fully translate to Adjusted EBITDA because
there is a lag of up to a year from investment in the business
infrastructure and people to the delivery of both top-line growth
and operating margins.
We anticipate that these benefits will be seen from 2018
onwards. As a result, Adjusted EBITDA improved by GBP0.2 million in
2017 to a loss of GBP0.8 million (2016: loss GBP1.0m).
Group Operating Loss
Group operating loss increased by GBP0.2 million to GBP0.5
million. This was driven by year-on-year incremental non-operating
expenses in relation to business transformation of GBP0.5 million,
a one-time non-cash impairment charge of GBP0.5 million relating to
the tangible and intangible assets of our low-end fabrication
activity, based in Oldham, Lancashire and an increased non-cash
share-based payments charge of GBP0.4 million arising from the
replacement and issue of management share options in 2017.
Cash and bank balances
Year-end Group cash of GBP21.9 million (2016: GBP9.2m), was
primarily due to receipts from the equity placement received at the
end of July 2017. This was marginally below expectations due to the
timing of a major customer payment (GBP2.6m) which was received in
early January 2018.
Order book
During 2017, the Group's closing order book increased by 89% to
GBP32.1 million (2016: GBP17.0 million) as a result of the
successful capture of strategic long-term contracts. Investment in
business development resources has driven enhanced account
management methods and conversion of sales campaigns in the
Services business.
Equity raise
On 28 July, TP Group plc issued 336,101,128 new ordinary shares
at an issue price of 6.5 pence per share. This raised a total of
GBP21.85 million before expenses, which provided the Group with
GBP20.8 million, net of expenses, to be used primarily to help fund
the Group's acquisition programme and other internal
investments.
Following the fundraising, the Group now has 758,565,854
ordinary shares in issue, and admitted to trading on AIM.
Acquisitions, investments and disposals
The Company announced the acquisition of ALS and FSS in February
2017. The purchase was completed for a combined initial
consideration of GBP1.25 million on a debt-free, cash-free,
normalised working capital basis, funded from the Group's cash
resources. Further consideration of up to GBP1.5 million may fall
due on achieving profit related earn-out targets over the first 20
months from completion. The maximum consideration payable for ALS
and FSS, assuming all earn-out targets are met, is GBP2.75
million.
Both companies operate from Wincanton, Somerset, and between
them provide systems engineering and assurance capability
safety-critical software for the defence, aerospace and commercial
sectors.
We announced the acquisition of Polaris in December 2017 for an
initial consideration of GBP1.5 million on a debt-free, cash-free,
normalised working capital basis, with a maximum additional GBP2.0
million payable also contingent on profit related earn-out targets
over the first 21 months from completion.
Polaris operates from offices in Fareham and Bristol and
delivers technical consultancy including operational analysis,
project controls and cost engineering services across the defence
and security sectors, with additional activity in energy and
transportation.
The Group incurred GBP0.2 million of acquisition-related costs
(2016: GBP0.0m) predominantly relating to the transactions noted
above. These were charged to the Statement of Comprehensive Income
in the year.
The Group has committed to invest in the facilities and staff
already in the business to build capability and develop our
propositions. Across the Group, GBP2.0 million was invested on
capital equipment and new systems and facilities improvements in
2017.
The major investment was the commissioning of the Advanced
Manufacturing Centre in Manchester, totalling GBP1.3 million. The
AMC has the latest precision engineering equipment including
high-precision machine tools and metrology, which better positions
TP Group to deliver complex engineering solutions in high value
sectors. A local government grant of GBP0.2million was secured
toward the financing of this investment.
Other significant investments were made in IT systems and
business transformation activities across the Group.
Post year-end, the directors have reached an agreement with the
local management to dispose of the trade and assets of our low-end
fabrication activity, based in Oldham, Lancashire, under a
management buy-out. These assets, following their impairment, are
valued at less than GBP0.1 million as at 31 December 2017 and will
be disposed of for a total consideration of GBP0.3 million payable
over the next 3 years. These activities achieved break even at an
operating profit level in 2017.
These transactions all contribute to the Group's transformation
and growth strategy that focuses on high technology services and
engineering businesses in sectors that the Group knows and
understands.
Non-operating items
During the year, the Group incurred one-off non-operating costs
of GBP0.7 million (2016: GBP0.2m). These relate to the business
transformation actions required by the strategic plan, and include
staff and contract termination costs, and facility liabilities
relating to the closure of the legacy TPG Design & Technology
office.
Finance costs
Finance costs of GBP0.1 million were incurred, predominantly
relating to the fair valuation of a forward currency exchange
contract.
Taxation
The Group expects to incur cash tax payments of GBP0.1m for the
2017 financial year (2016: GBPnil).
Results and dividends
The directors do not recommend the payment of a dividend (2016:
GBPnil).
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 at least twelve months
from the date of the approval of these financial statements.
The forecasts take into account the Group's existing cash
resources which, as a result of the equity raise of GBP20.8 million
in July 2017, provides sufficient insulation against any reasonable
downside scenarios and risks.
Consolidated Statement of Comprehensive Income
For the year ended 31 December 2017
Group
====================
2017 2016
Note
GBP'000 GBP'000
Revenue 3
Continuing operations 25,900 21,226
Acquisitions 3,560 -
---------------------------- ------ --------- ---------
29,460 21,226
Cost of sales (21,232) (14,748)
============================ ====== ========= =========
Gross profit 8,228 6,478
============================ ====== ========= =========
Distribution costs (67) (361)
Administrative expenses (8,693) (6,381)
============================ ====== ========= =========
Operating loss
Continuing operations (665) (264)
Acquisitions 133 -
---------------------------- ------ --------- ---------
4 (532) (264)
Adjusted EBITDA 3 2,582 1,066
Depreciation, amortisation
and impairment (1,842) (1,051)
Acquisition-related costs (242) (44)
Non-operating costs (655) (231)
Share based payments (375) (4)
Operating loss (532) (264)
---------------------------- ------ --------- ---------
Net finance cost (65) (69)
============================ ====== ========= =========
Loss before income tax (597) (333)
Income tax (charge)/credit (122) 134
============================ ====== ========= =========
Total comprehensive loss
for the year attributable
to shareholders (719) (199)
============================ ====== ========= =========
Loss per share expressed
in pence per share
Basic and diluted loss per
share (0.12) (0.05)
============================ ====== ========= =========
Consolidated and Parent Company Statement of Financial
Position
At 31 December 2017
Group Parent Company
2017 2016 2017 2016
Note GBP'000 GBP'000 GBP'000 GBP'000
========================== ===== ============= ============= ======== ========
ASSETS
Non-current assets
Goodwill 4,170 3,918 - -
Other intangible
assets 11,759 8,775 180 177
Property, plant
and equipment 2,126 667 33 13
Deferred taxation - 130 - -
Investments - - 15,435 11,681
Amounts owed by
EBT - - 96 104
-------------------------- ----- ------------- ------------- -------- --------
18,055 13,490 15,744 11,975
========================== ===== ============= ============= ======== ========
Current assets
Inventories 230 116 - -
Trade and other
receivables 13,798 7,161 3,130 2,984
Taxation recoverable 10 71 - -
Cash and bank balances 6 21,931 9,160 17,617 714
========================== ===== ============= ============= ======== ========
35,969 16,508 20,747 3,698
========================== ===== ============= ============= ======== ========
Total assets 54,024 29,998 36,491 15,673
========================== ===== ============= ============= ======== ========
LIABILITIES
Current liabilities
Trade and other
payables (10,962) (8,391) (5,833) (3,040)
Obligations under
hire purchase contracts (211) (7) - -
========================== ===== ============= ============= ======== ========
(11,173) (8,398) (5,833) (3,040)
========================== ===== ============= ============= ======== ========
Non-current liabilities
Deferred taxation (1,425) (823) - -
Obligations under
hire purchase contracts (747) (13) - -
Provisions (561) (1,101) (10) (10)
(2,733) (1,937) (10) (10)
Total liabilities (13,906) (10,335) (5,843) (3,050)
========================== ===== ============= ============= ======== ========
Net assets 40,118 19,663 30,648 12,623
========================== ===== ============= ============= ======== ========
EQUITY
Share capital 7,586 4,225 7,586 4,225
Share premium 17,438 - 17,438 -
Own shares held
by the EBT (561) (561) - -
Share-based payments
reserve 1,553 1,178 1,459 1,084
Retained earnings 14,102 14,821 4,165 7,314
========================== ===== ============= ============= ======== ========
Total equity 40,118 19,663 30,648 12,623
========================== ===== ============= ============= ======== ========
Consolidated Statement of Changes in Equity
For the year ended 31 December 2017
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
1 January
2016 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
Share issue 3,361 17,438 - - - - 20,799
IFRS 2 share
option charge - - - - 375 - 375
===================== ========= ========= =========== ======== ============ ========= ========
Total comprehensive
loss - - - - - (719) (719)
===================== ========= ========= =========== ======== ============ ========= ========
Balance at
31 December
2017 7,586 17,438 - (561) 1,553 14,102 40,118
Parent Company Statement of Changes in Equity
For the year ended 31 December 2017
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 2016 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
Share issue 3,361 17,438 - - - 20,799
IFRS 2 share
option charge - - - 375 - 375
===================== ========= ========= =========== ============ ========= ========
Total comprehensive
loss - - - - (3,149) (3,149)
===================== ========= ========= =========== ============ ========= ========
Balance at
31 December
2017 7,586 17,438 - 1,459 4,165 30,648
Consolidated and Parent Company Statement of Cash Flows
For the year ended 31 December 2017
Group Parent Company
================== ==================
2017 2016 2017 2016
Note GBP'000 GBP'000 GBP'000 GBP'000
================================ ===== ======== ======== ======== ========
Operating activities
Loss before income
tax (597) (333) (3,149) (4,875)
Adjustments for:
Depreciation 217 98 15 9
Amortisation 1,132 953 44 37
Impairment losses on 493 - - -
tangible and intangible
assets
Finance cost/(income) 65 69 (14) (1)
Share-based payment
expense 375 4 375 4
Increase in impairment
on loan to the EBT - - 8 (60)
Provision against long
term inter-company
loan - - 1,055 3,998
Decrease in inventories 66 53 - -
Increase in trade and
other receivables (5,277) (836) (146) 72
(Decrease)/increase
in trade and other
payables (264) 2,563 1,370 730
(Decrease)/increase
in provisions (540) 5 - 10
-------------------------------- ----- -------- -------- -------- --------
(4,330) 2,576 (442) (76)
Income tax received (87) - - -
================================ ===== ======== ======== ======== ========
Net cash (used)/generated
in operating activities (4,417) 2,576 (442) (76)
================================ ===== ======== ======== ======== ========
Investing activities
Acquisition of subsidiary,
net of cash acquired 7 (2,564) - (3,071) -
Interest received 14 1 14 1
Purchase of property,
plant and equipment (908) (313) (35) -
Purchase of computer
software (47) (106) (47) (106)
Long term loan to subsidiary - - (315) (652)
================================ ===== ======== ======== ======== ========
Net cash used in investing
activities (3,505) (418) (3,454) (757)
================================ ===== ======== ======== ======== ========
Financing activities
Proceeds from issue
of ordinary share capital 20,799 - 20,799 -
Interest payable (26) - - -
Repayment of hire purchase
liabilities (80) (3) - -
================================ ===== ======== ======== ======== ========
Net cash from/(used
in) financing activities 20,693 (3) 20,799 -
================================ ===== ======== ======== ======== ========
Net increase/(decrease)
in cash and cash equivalents 12,771 2,155 16,903 (833)
Cash and cash equivalents
at beginning of year 9,160 7,005 714 1,547
Cash and cash equivalents
at end of year 21,931 9,160 17,617 714
================================ ===== ======== ======== ======== ========
Notes to the Preliminary Announcement
1. Basis of preparation
The financial information set out in this announcement does not
constitute the Company's statutory accounts for the years ended 31
December 2016 or 31 December 2017, but is derived from those
accounts. Statutory accounts for 2016, which were prepared under
accounting standards adopted by the EU, have been delivered to the
registrar of companies and those for 2017 will be delivered
following the Company's Annual General Meeting. The Auditor has
reported on these accounts; its report was (i) unqualified, (ii)
did not include any references to any matters to which the auditors
drew attention by way of emphasis of matter without qualifying and
(iii) did not contain statements under sections 498 (2) or (3) of
the Companies Act 2006.
While the financial information included in this preliminary
announcement has been prepared in accordance with the recognition
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 May
2018.
Changes in accounting policies
a) New standards, interpretations and amendments effective from
1 January 2017
There were no new standards or interpretations effective for the
first time for periods beginning on or after 1 January 2017 that
had a significant effect on the Group's financial statements.
b) New standards, interpretations and amendments not yet
effective
There are a number of standards and interpretations which have
been issued by the International Accounting Standards Board that
are effective in future accounting periods that the Group has
decided not to adopt early. The most significant of these are:
-- IFRS 9 Financial Instruments and IFRS 15 Revenue from
Contracts with Customers (both mandatorily effective for periods
beginning on or after 1 January 2018); and
-- IFRS 16 Leases (mandatorily effective for periods beginning on or after 1 January 2019).
The Group has progressed its projects dealing with the
implementation of these three key new accounting standards since
reporting its interim annual results for the 6 months ended 30 June
2017 and is able to provide the following information regarding
their likely impact:
IFRS 9 Financial Instruments
The Group has identified that the adoption of IFRS 9, which
replaces IAS 39 Financial Instruments Recognition and Measurement
from 1 January 2018, will have no material impact to its
consolidated financial statements.
IFRS 15 Revenue from Contracts with Customers
The Group's operations generate revenues through both the
provision of services and the production of high-integrity
equipment. Due to the nature of its business the Group recognises
revenue on contracts both at point in time, and as the order
progresses.
The Group has reviewed its open contracts in line with the
requirements of IFRS 15 and in the case of TPG Services concluded
that the adoption of IFRS 15 has no material impact. However, in
the case of TPG Engineering, a number of contracts have been
identified where either the terms do not permit recoverability of
profit when the contract allows termination for convenience or
costs incurred through the Group's supply chain cannot be taken as
incurred until receipt of the good or service that will need to be
accounted for differently.
The board has decided that it will apply IFRS 15
retrospectively, making use of any practical expedient available.
The Group is still gathering data to finalise the impact on its
2017 result had IFRS 15 been applied this year, but estimates that
revenue would have been approximately GBP1,300,000 lower than
reported in these financial statements, with operating loss and
Adjusted EBITDA approximately GBP400,000 lower in the current
financial year. The recognition of this revenue and associated
operating profit and Adjusted EBITDA following the Group's revised
revenue recognition policy in accordance with IFRS 15 is deferred
to subsequent financial periods. There is no impact on the cash
position of the Group from these adjustments.
IFRS 16 Leases
Adoption of IFRS 16 will result in the Group recognising right
of use assets and lease liabilities for all contracts that are, or
contain, a lease. For leases currently classified as operating
leases, under current accounting requirements the Group does not
recognise related assets or liabilities, and instead spreads the
lease payments on a straight-line basis over the lease term,
disclosing in its annual financial statements the total
commitment.
The board has decided it will apply the modified retrospective
in IFRS 16, and will adopt the standard one year early on 1 January
2018. In addition, it has decided to measure right-of-use assets by
reference to the measurement of the lease liability on that date.
This will ensure there is no immediate impact to the net assets on
this date. At 31 December 2017 operating lease commitments amounted
to GBP4,847,000 before the application of any discount rate to
these future cash flows. However, further work needs to be carried
out to determine whether and when extension and termination options
are likely to be exercised, which may result in the actual
liability recognised being higher than this.
Instead of recognising an operating expense for the operating
lease payments, the Group will instead recognise interest on its
lease liabilities and amortisation on its right-of-use assets. This
will increase reported Adjusted EBITDA and reduce operating loss by
the current operating lease cost, which for the year ended 31
December 2017 was approximately GBP579,000.
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 at least twelve months
from the date of the approval of these financial statements.
The forecasts take into account the Group's existing cash
resources which, as a result of the equity raise of GBP20.8 million
in July 2017, provides sufficient insulation against any reasonable
downside scenarios and risks.
3. Segmental information
Following the refinement of the Group's strategy, the business
has been managed throughout the year along two distinct business
units, Consulting and Programme Services ("TPG Services") and
Engineering and Technology ("TPG Engineering"). Segmental
information is presented in a consistent format with management
information considered by the Chief Operating Decision Maker.
The principal activities of these business units comprise:
-- TPG Services - the provision of know-how and experience to
add value in large and complex enterprises. Services include
technical project management, systems engineering, design, software
development and assurance. This segment is a combination of the
prior segments TPG Design & Technology, TPG Managed Solutions
and the acquired businesses of ALS Technologies Limited and
Flexible Software Solutions Limited, and will include Polaris
Consulting (Holdings) Limited in future periods.
-- TPG Engineering - activities include the design, manufacture,
installation and support of complex equipment. These include air
purification equipment for submarines including oxygen/hydrogen
generation and purification, air handling and distribution systems,
heat exchange equipment used in the heating and cooling of large
scale industrial processes, and other fabricated structures. This
segment is a combination of the prior segments TPG Maritime and TPG
Engineering.
The directors of the Parent Company had previously chosen to
organise the Group around four interconnected business units. The
presentation of the segmental results for the year ended 31
December 2016 have been reclassified to be consistent with the
current year presentation in line with the Group's refined
strategy. The overall reported loss for the period has not
changed.
Segment revenues and results
The following is an analysis of the Group's revenue and results
from the continuing operations by reportable segment.
2017 2016
GBP'000 GBP'000
============================ ======== ========
Revenue
TPG Engineering 23,694 19,080
TPG Services(1) 5,766 2,146
============================ ======== ==========
Group revenue 29,460 21,226
Segment operating result
TPG Engineering 2,734 2,168
TPG Services (1,223) (1,008)
Central unallocated costs (2,043) (1,424)
============================ ======== ==========
Group loss from operations (532) (264)
Finance cost (65) (69)
============================ ======== ==========
Loss before income tax (597) (333)
Income tax (charge)/credit (122) 134
============================ ======== ==========
Loss after tax (719) (199)
============================ ======== ==========
(1) Included with TPG Services segmental results are the results
of the acquisitions of ALS Technologies Limited (renamed TPG
Services Limited) and Flexible Software Solutions Limited.
Segment revenue reported above represents revenue generated from
external customers.
The accounting policies of the reportable segments are the same
as the Group. Segment profit or loss represents the profit before
tax earned by each segment without allocation of central
administration costs and directors' salaries, other gains and
losses, as well as finance costs.
TPG TPG Central
Engineering Services unallocated Group
costs
GBP'000 GBP'000 GBP'000 GBP'000
===================== ============= ========== ============= ========
2017
Segment operating
result 2,734 (1,223) (2,043) (532)
Depreciation,
amortisation
and impairment 1,602 10 230 1,842
Acquisition-related
costs - - 242 242
Non-operating
costs 124 420 111 655
Share based
payments - - 375 375
===================== ============= ========== ============= ========
Adjusted
EBITDA(1) 4,460 (793) (1,085) 2,582
===================== ============= ========== ============= ========
2016
Segment operating
result 2,168 (1,008) (1,424) (264)
Depreciation,
amortisation
and impairment 1,032 19 - 1,051
Acquisition-related
costs - - 44 44
Non-operating
costs - - 231 231
Share based
payments - - 4 4
===================== ======== ========== ========== ========
Adjusted
EBITDA(1) 3,200 (989) (1,145) 1,066
===================== ======== ========== ========== ========
1 Adjusted EBITDA is defined as operating profit adjusted to add
back depreciation of property, plant and equipment, amortisation
and impairment of acquired tangible and intangible assets and any
other acquisition-related charges, share based payment charges and
non-operating costs. Non-operating costs are those items believed
to be exceptional in nature by virtue of their size and or
incidence.. 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 non-operating costs. 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 2016.
The following is an analysis of the Group's revenue and results
from the continuing operations as reportable segment, presented
under the format disclosed in the financial statements for the year
ended 31 December 2016.
2017 2016
GBP'000 GBP'000
============================ ======== ========
Revenue
TPG Maritime 16,119 12,229
TPG Engineering 7,575 6,851
TPG Design and Technology 381 757
TPG Managed Solutions(1) 5,385 1,389
============================ ======== ==========
Group revenue 29,460 21,226
Segment operating result
TPG Maritime 4,818 3,335
TPG Engineering (2,084) (1,167)
TPG Design and Technology (800) (975)
TPG Managed Solutions(1) (423) (33)
Central unallocated costs (2,043) (1,424)
============================ ======== ==========
Group loss from operations (532) (264)
Finance cost (65) (69)
============================ ======== ==========
Loss before income tax (597) (333)
Income tax (charge)/credit (122) 134
============================ ======== ==========
Loss after tax (719) (199)
============================ ======== ==========
(1) Included with TPG Managed Solutions segmental results are
the results of the acquisitions of ALS Technologies Limited
(renamed TPG Services Limited) and Flexible Software Solutions
Limited.
Segment revenue reported above represents revenue generated from
external customers.
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
===================== ========== ============= ======== ======== ============= ========
2017
Segment
operating
result 4,818 (2,084) (800) (423) (2,043) (532)
Depreciation,
amortisation
and impairment 853 749 2 8 230 1,842
Acquisition-related
costs - - - - 242 242
Non-operating
costs - 124 420 - 111 655
Share based
payments - - - - 375 375
===================== ========== ============= ======== ======== ============= ==========
Adjusted
EBITDA(1) 5,671 (1,211) (378) (415) (1,085) 2,582
===================== ========== ============= ======== ======== ============= ==========
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
Non-operating
costs - - - - 231 231
Share based
payments - - - - 4 4
===================== ====== ========== ======== ======= ========== ========
Adjusted
EBITDA(1) 4,194 (994) (95) (30) (1,145) 1,066
===================== ====== ========== ======== ======= ========== ========
1 Adjusted EBITDA is defined as operating profit adjusted to add
back depreciation of property, plant and equipment, amortisation
and impairment of acquired tangible and intangible assets and any
other acquisition-related charges, share based payment charges and
non-operating costs. Non-operating costs are those items believed
to be exceptional in nature by virtue of their size and or
incidence.. 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 non-operating costs. 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 2016.
Geographical segments
The following is an analysis of the Group's revenue from
continuing operations from its products and services:
2017 2016
GBP'000 GBP'000
================================= ======== ========
Geographical analysis - revenue
United Kingdom 24,860 16,588
Rest of the European Union 2,073 2,156
North America - 6
Asia 2,034 2,092
Middle East 341 136
Rest of the World 152 248
================================= ======== ========
Total revenue 29,460 21,226
================================= ======== ========
Revenue from continuing operations from external customers and
non-current assets are all generated from operations in the UK. All
segment assets are located in the UK.
Information about major customers
Revenue includes sales from customers who contributed 10% or
more to the Group's revenue:
2017 2016
GBP'000 GBP'000
=============== ======== ========
Engineering
Customer 1 6,794 4,715
Customer 2 4,747 3,883
--------------- -------- --------
Total revenue 11,541 8,598
=============== ======== ========
4. Operating profit/(loss)
The Group operating loss for the year is stated after charging
the following:
2017 2016
Group GBP'000 GBP'000
=================================== ==================== ===================
Staff costs
Wages and salaries 8,835 7,521
Social security costs 1,016 810
Other pension costs 595 430
Share based payment 375 4
=================================== ==================== ===================
10,821 8,765
=================================== ==================== ===================
Amortisation of intangible assets 1,132 953
Impairment of intangible assets 192 -
Depreciation of property, plant
and equipment 220 98
Impairment of property, plant 301 -
and equipment
Operating lease expense - rent 579 778
=================================== ==================== ===================
Share-based payment expense of GBP375,000 (2016 - expense
GBP4,000) 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:
2017 2016
Group Number Number
====================== ======== =======
Engineering 140 111
Business development 17 12
Administration 44 40
====================== ======== =======
201 163
====================== ======== =======
Retirement benefits
The Group operates a defined contribution retirement benefit
plans for all qualifying employees of the Group. The assets of
these plans are held separately from those of the Group in
separately administered funds.
The total expense recognised in profit or loss of GBP595,000
(2016 - GBP430,000) represents contributions payable to these plans
by the Group at rates specified in the rules of the plans. As at 31
December 2017, contributions of GBP88,000 (2016 - GBP112,000) due
in respect of the 2017 (2016 - GBPnil) reporting remained
outstanding. The amounts were paid subsequent to the end of the
reporting period.
5. Earnings per Share
The calculation of basic earnings per share for the year ended
31 December 2017 is based upon a loss after tax of GBP719,000 (2016
- loss after tax of GBP199,000) and a weighted average number of
shares of 588,908,520 (2016 - 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 bank balances
The funds were placed on floating interest rate deposit as
follows:
Group Parent Company
================== =============== ========
2017 2016 2017 2016
GBP'000 GBP'000 GBP'000 GBP'000
=============== ======== ======== =============== ========
Cash and bank
balances 21,931 9,160 17,617 714
=============== ======== ======== =============== ========
Group Parent Company
===================== ==================
2017 2016 2017 2016
GBP'000 GBP'000 GBP'000 GBP'000
=============== ========== ========= ======== ========
Cash and cash
equivalents 22,462(1) 9,316(1) 17,617 714
=============== ========== ========= ======== ========
(1) Restricted cash of GBP531,000 (2016 - 156,000) is included
in Prepayments and Other Debtors
7. Business combinations
ALS Technologies Limited (renamed TPG Services Limited) and
Flexible Software Solutions Limited
On 6 February 2017 the Group, through its Parent Company,
acquired 100% of the issued share capital of ALS Technologies
Limited ("ALS") and Flexible Solutions Software Limited ("FSS") for
a combined initial consideration of GBP1,571,000 and a maximum
further deferred contingent consideration of GBP1,500,000 based on
the combined performance of both businesses. The initial
consideration, paid in cash from the Group's existing cash
resources, reflects a normalised working capital position and
includes cash retained in the business of GBP440,000. The companies
specialise in providing consulting services to the public and
private sectors.
The principal reason for this acquisition is to support the
Group's evolution as a diversified services and 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.
Details of the fair value of identifiable assets and liabilities
acquired, purchase consideration and goodwill are as follows:
ALS Technologies Book value Adjustment Fair value
Limited
GBP'000 GBP'000 GBP'000
=============================== ==== =========== =========== ===========
Property, plant
& equipment 21 - 21
Identifiable intangible
assets - 1,850 1,850
Cash and bank balances 425 - 425
Trade and other
receivables 663 - 663
Trade and other
payables (547) - (547)
Deferred taxation - (314) (314)
=============================== ==== =========== =========== ===========
Total net assets 562 1,536 2,098
=============================== ==== =========== =========== ===========
Flexible Software Book value Adjustment Fair value
Solutions Limited
GBP'000 GBP'000 GBP'000
=============================== ==== =========== =========== ========================
Property, plant
& equipment 1 - 1
Identifiable intangible
assets - 21 21
Cash and bank balances 15 - 15
Trade and other
receivables 35 - 35
Trade and other
payables (13) - (13)
Deferred taxation - (4) (4)
=============================== ==== =========== =========== ========================
Total net assets 38 17 55
=============================== ==== =========== =========== ========================
Fair value of consideration
GBP'000
================================ === =========== =========== ===========
Cash 1,571
Deferred contingent
consideration 582
Total consideration 2,153
================================================== =========== ===========
Goodwill -
================================================== =========== ===========
Acquisition costs of GBP89,000 in year arose as a result of the
transaction. These have been recognised as part of administrative
expenses in the Statement of Comprehensive Income.
Included in the operating loss for the year is GBP133,000 of
profit attributable to the additional business generated through
the acquisition. Revenue for the year includes GBP3,560,000 in
respect of ALS Technologies Limited and Flexible Software Solutions
Limited.
Polaris Consulting (Holdings) Limited
On 12 December 2017, the Group, through its Parent Company,
acquired 100% of the issued share capital of Polaris Consulting
(Holdings) Limited for an initial consideration of GBP1,499,000 and
a maximum deferred contingent consideration of GBP2,000,000 based
on the performance of the business. The initial consideration, paid
in cash using the Group's existing cash resources, has been
adjusted for net debt retained in the business.
The acquisition further extends the Group's services
capabilities in the defence and security markets. The acquisition
will enable the enlarged group to offer a wider range of services
and capabilities, further supporting the broader customer base,
alongside delivering greater levels of operational expertise to
existing customers.
Details of the fair value of identifiable assets and liabilities
acquired, purchase consideration and goodwill are as follows:
Book value Adjustment Fair value
GBP'000 GBP'000 GBP'000
================================ ==== =========== =========== ===========
Property, plant
& equipment 31 - 31
Identifiable intangible
assets - 2,390 2,390
Cash and bank balances 66 - 66
Trade and other
receivables 854 - 854
Trade and other
payables (775) - (775)
Borrowings (66) - (66)
Deferred taxation (6) (406) (412)
================================ ==== =========== =========== ===========
Total net assets 104 1,984 2,088
================================ ==== =========== =========== ===========
Fair value of consideration
GBP'000
================================= === =========== =========== ===========
Cash 1,499
Deferred contingent
consideration 841
Total consideration 2,340
=================================================== =========== ===========
Goodwill 252
=================================================== =========== ===========
Goodwill of GBP252,000 is primarily applicable to the assembled
workforce acquired as part of the transaction. Acquisition costs of
GBP118,000 arose as a result of the transaction. These have been
recognised as part of administrative expenses in the Statement of
Comprehensive Income.
The initial accounting for the acquisition of Polaris Consulting
(Holdings) Limited has only been provisionally determined at the
end of the reporting period. At the date of finalisation of these
consolidated financial statements, the necessary market valuations
and other calculations had not been finalised and they have
therefore only been provisionally determined based on the
directors' best estimate of the likely values.
Had ALS, FSS and Polaris Consulting (Holdings) Limited been
effected from 1 January 2017, the revenue for the Group would have
been approximately GBP33,500,000, and the operating loss for the
year would have been approximately GBP67,000. The directors
consider these values to represent an approximate measure of the
performance of the combined Group on an annualised basis and to
provide a reference point for future periods.
8. Subsequent events
Post-period, the directors have reached an agreement with the
local management to dispose of the tangible and intangible assets
of our low-end fabrication activity, based in Oldham, Lancashire,
under a management buy-out. The disposal will be completed for a
total consideration of GBP0.3m, payable over the next 3 years.
9. Notice of Annual General Meeting
The Annual General Meeting of TP Group Plc will be held at 10.30
a.m. on 7 June 2018 at the offices of Deloitte LLP, Abbots House,
Abbey St, Reading, West Berkshire RG1 3BD.
END
FR UNAARWVASAUR
(END) Dow Jones Newswires
April 17, 2018 02:00 ET (06:00 GMT)
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