Tp Share Discussion Threads

[bullster] 23/1/2018 11:47

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Polaris Consulting, a technical consultancy with offices in Hampshire and Bristol, has been acquired by specialist services and engineering business TP Group.

The AIM-listed company has purchased Polaris Consulting Holdings for an initial £1.5m, with a further £2m payable subject to profit related earn-out targets over the next 21 months.

Polaris, which operates from offices in Fareham, Hampshire and Bristol, provides 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 business reported revenues of £3.5m and pre-tax profits of £400,000 for the financial year ended 31 August 2017.

Directors Carl Dalton and David Bangert will remain with the business and continue to lead activities and operations.

In July, TP Group raised about £20.8m primarily to fund acquisitions in the defence, aerospace and industrial sectors. The Polaris deal marks the first such acquisition.

Phil Cartmell, chief executive of TP Group, said: "We are delighted to welcome the Polaris team into the group, which further extends our reach in the defence and security markets. The acquisition will enable the enlarged group to offer a wider range of services and capabilities, further supporting our broader customer base, alongside delivering greater levels of operational expertise to our existing customers.

"We are also pleased that the existing directors, Carl and David, will stay with the business post-acquisition to work closely with us in capitalising upon a number of existing growth initiatives currently being pursued by the group."

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[pavey ark] 18/1/2018 20:34

Hmmmmm !? A bout of quite substantial and fairly late buying today.

Almost 700k in buys in the just three lots when the total trades up to 3.00 pm totalled less than 40k.

This buying is greater than the amount bought on the announcement of the £6.9m contract !!

[cerrito] 15/1/2018 21:36

Yes PA, After doing some digging my understanding of the FY 2017 market expectations referred to in the RNS are the Cenkos figures of Revenue £28.9m; Ebitda £2.5m and adjusted PBT £1.2m
I am quite relaxed about using Ebitda with TPG as there are no interest or tax payments; I see that depreciation, amortization and impairment is running at £400/£600k per six months.
I guess the adjustments for the PBT relate to share based payments(which historically have not been great) and acquisitions.

[cerrito] 15/1/2018 21:36

Yes PA, After doing some digging my understanding of the FY 2017 market expectations referred to in the RNS are the Cenkos figures of Revenue £28.9m; Ebitda £2.5m and adjusted PBT £1.2m
I am quite relaxed about using Ebitda with TPG as there are no interest or tax payments; I see that depreciation, amortization and impairment is running at £400/£600k per six months.
I guess the adjustments for the PBT relate to share based payments(which historically have not been great) and acquisitions.

[catch007] 15/1/2018 15:25

Cerrito, we should also note that the company will seek to employ legal tax mitigation tools in its finals to include for example increased amortisation (last year £1m). Good housekeeping on corporation tax liabilities and use of other accounting practices will be helpful but may slightly temper the net profit number. We should expect this to move from negative to positive territory on the actuals announcement.

I stated some time ago there is a carefully co-ordinated news flow of announcements, today's early update timing is very interesting. I wonder if the timeline is deliberate to allow an acquisition announcement? pure speculation on my part of course but we shall see.

[pavey ark] 15/1/2018 13:50

Cerrito, two brokers cover TPG and the average EBITDA prediction for 2017 is £2.6m with a T/O of £29m.(both very close to each other)
A company will usually describe their performance in terms of "market expectations" etc which is usually the house brokers most recent note,in this case Cenkos in September,after the H1 results.

[pavey ark] 15/1/2018 13:42

Just spent some time looking at current net cash and have come up with a minimum of £21m.
Paid off both acquisitions completely and balanced up cash in payables/receivables, looked at possible cash generated in H2 and a bit for reorganising expenses (cheated here as house broker has said this could be £200k in H2)and a few bob to complete the new advanced engineering unit.

The actual end of year results in April will show considerably more than £21m but I've looked at all liabilities and expenses and believe that £21m is close to the actual free cash available.
This sum is the minimum available for acquisitions as TPG is certainly now profitable and will generate a goodly amount of cash in 2018.

It would be good if others ran their calculator over the company figures just to see if we come up with similar amounts.

Edit: I've just had a look at the house broker's figures(Cenkos from 12th sept 2017) and using the same payables/receivables,cash total they get £26m as year end cash.
If we then subtract £3.5m for Polaris and fully pay off the ALS acquisition we are very close to my £21m.

If anyone is valuing TPG then I think this figure is a very reasonable estimate for free/ disposable cash at the end of 2017.

[cerrito] 15/1/2018 13:34

Too bad that they did not specify what market indications are: Digital Look has nothing and Barclays say profit of £0.76m which of course would be an improvement of last year’s pre tax loss of £0.3m. What is everyone’s understanding?
Nothing new for me so understand the lack of share price reaction.

[catch007] 15/1/2018 13:27

We now have an excellent trading statement from the company. The forward looking statements for 2018 give confidence and will underpin and hopefully galvanise the share price Looking forward to seeing the actual numbers on release in due course. Still evaluating acquisition's so we must await further news on this front. Very positive progressive update for the market and shareholders.

[azalea] 15/1/2018 11:52

Given the expectation for 2018, the share price is undervalued and represents a potential bid target.

[pomp circumstance] 15/1/2018 10:06

ONE BRITISH POUND this time next year! :)

[pavey ark] 15/1/2018 09:20

The timing of this update caught me by surprise as it usually comes much later in the month.
I suspect that the news flow is being carefully managed so it is possible that this announcement has been moved forward to clear as space for further news.
Just a hunch.

[timojelly] 15/1/2018 08:55

We should most definitely be in double figures as we speak.

[fernandesb] 15/1/2018 08:13

Thanks for your udate Pavey Ark

[fernandesb] 15/1/2018 08:08

Pavey Ark where are you when most needed?

[pavey ark] 15/1/2018 08:04

There is little doubt in my mind that the fund raising and subsequent additional shares issued is distorting the picture here.

For my own personal calculations I am ignoring the cash raised and additional shares as the two recent acquisitions could have been funded from existing cash.
As the company is certainly generating free cash flow we could have ended the year with a healthy cash balance without the fund raising.

The EBITDA for 2017 will be c.£2.6m and this should rise to well over £4m in 2018,from existing business.

Ignoring the negative effect of the cash raised and shares issued I would suggest that the share price would/should be close to 10p at this point or in the very near future.

The revenue should be close to £30m so with Polaris to be added and the substantial recent surge in orders the revenue for next year is certainly heading to £40m

The above figures and the very large, secure and growing order book are all an indication that we should be very confident about 2018.

[fernandesb] 15/1/2018 07:23

Hi Pavey Ark,
There is an announcement re TPG about publication of results at the end 31/12/2017 it says that results will be made public in April 2018,it states that it will have a positive bearing on EBITA etc

[molatovkid] 15/1/2018 07:22

Excellent update....all going to plan !

'The Company demonstrated ongoing progress with substantial growth in revenues, EBITDA, and order intake during the period. These successes have been achieved through a combination of contract wins in the UK and internationally, earnings accretive acquisitions and continual improvement in operational efficiencies.'

[pavey ark] 13/1/2018 09:55

Thanks chaps, methinks it's time to move on and get ready for the trading update.

The trading update last January wasn't that full but we did have an update in the previous month (Dec 2016)

Such a lot happening last month that perhaps the comment "in addition to continuing the positive trading momentum currently being experienced across the Group."( 14/12/2017)was considered to be almost a trading update.

Hopefully we will get a bit more detail this month and we should get some info regarding the acquisition programme.

There are wobbles in the defence sector and at first glance investing further cash in it could be risky but on the other hand the companies that TPG are looking at must feel the cold winds so it could be a good time to strike a bargain.
"he who dare wins" as Del Boy liked to say ( on second thoughts not the best role model ??!!)

[mciw] 13/1/2018 00:53

PA, I do not echo any comments related to ineptitude, in relation to shocks, unfortunately I've been here since the Corac days and still bear the scars, even supposed stars like iqe are not immune to unexpected news like the recent US tax payment inaccuracies! As I said, I do appreciate your analysis and am hopeful that we achieve the estimates, just rise above the criticism as it's wasted energy.

[smokey 1o3] 13/1/2018 00:21

Pavey Ark
Your comments are well researched, understandable and believable.
What they are not is inept.
Catch 007 Poor choice of words old chap!!
LOL

[dansdad] 12/1/2018 23:36

Pavey Ark your comments are much appreciated thankyou

[pavey ark] 12/1/2018 22:48

"inept response"?
"a little thin skinned" well I might just have to go along with that but "inept" I don't think so.
All of this nonsense started when I gave a very detailed explanation as to why I THOUGHT that the turnover MIGHT reach £40m this year from existing business.
My back went up when this detailed projection was dismissed with absolutely no figures or rational as to why I might be over optimistic.

My figure was clearly given as a simple possibility but was detailed enough to deserve a serious reply.

If we are looking for truly inept response we need look no further than the attempt to use possible start up costs and expenses involved in recent acquisitions when my comment was entirely based on turnover.

For the benefit of all, the current brokers predictions are for a tad over £29m this year (2017) and obviously more in 2018 but that was before Polaris or the recent order surge.
Polaris should add at least £3.5m and the very recent and very large increase in orders can only increase turnover further.
Anyone who can suggest that you would need to be the company FD to make use or project from these figure is simply a fool or just a complete idiot trying to defend a position that they find themselves in.
If there are any shocks in store here I would suggest that the company has sailed very close to the wind but that being said there is no reason to suppose there will be shocks.

Given the evidence before me there is no reason to expect a miss this year and I like to think my figures are based on reasoned analysis of the figures and information that are certainly in the public domain.
I also like to think I look at the balance of probability.
From a previous post:
"I am neither dogmatic in my assertion that £40m is possible this year ,from existing businesses, nor am I blinded by my attempts to justify what was a simple reasoned and reasonable prediction based on a number of hard facts."

[catch007] 12/1/2018 19:49

mciw Thank you for reiterating my point. In the land of the blind the one eyed man is king and it appears pavey wishes to be the FD of TPG without actual knowledge,,,, bit sad in a way as we all take on board his views in a constructive manner but I am disappointed by his inept responses.