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Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
---|---|---|---|---|---|
Tp Group Plc | LSE:TPG | London | Ordinary Share | GB0030591514 | ORD 1P |
Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|---|---|
0.00 | 0.00% | 2.20 | 0.00 | 01:00:00 |
Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
---|---|---|---|---|---|
0 | 0 | N/A | 0 |
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
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