Tp Share Discussion Threads

[pavey ark] 17/4/2018 22:27

Back home and spent some time with the results and I can safely say that "cash burn" is certainly not an issue.
By my calculations the current liabilities - current assets for 2017 gives a figure of £4m less than 2016 (I've removed the £20.8m cash raised).

So have they blown £4m?.... well no,they spent £2.5m on acquisition and £1m on new machinery (AMC).

A sizeable amount of cash then went on setting up the Services unit (new staff) and the old engineering unit is being given a make over.

As far as an EBITDA at 8% of revenue the old engineering unit and new Services units did put a serious dent in the EBITDA while adding to total revenue.
The maritime unit had an EBITDA of £5.6m (before share of central costs)

Once agin here is my forecast for 2018:

Maritime must rise to £6m (modest target)
Engineering losses MUST come down ( £500k).....New combined unit EBITDA £5.5m

Services will rise and with new and further contracts and Polaris,I'm looking for £1m EBITDA

Central costs £1.2m

EBITDA £5.3m

NB:This with no new acquisitions

[swiss paul] 17/4/2018 20:56

EBITDA - its a scam.
EBITDA is much better for bonuses and the never-ending awards of free shares to the usual people of course.

[cumftablie num] 17/4/2018 19:43

Wow! Phew! What a day i dont know what to do with the paper profit made on the share price rise following this mornings blow out results announcement, maybe a second week in skeg vegas this summer!
Anyway this company can still be known as TP Group formally Corac the loss making engineering group.
By the way if anyone fancies giving me 20.9mill I'm sure even if i put it into premium bonds i would be hard pushed to make a 0.5 million pound loss
Oh well it's been said on here before but "this time next year Rodney we'll be millionaires"
GLA

[septblues] 17/4/2018 16:19

what do people think of EBITDA at 8% of revenue?

[kiwihope] 17/4/2018 13:58

Like you Catch I need to look at accounts more fully tonight, but I think you are wrong in classing the drop in cash as a 'high spend'. To me it simply looks like more customers owed them money at end 2017 than end 2016. We know one customer paid £2.6m after year-end in Jan or Feb 2018. To a smaller extent TPG owed its suppliers less, so it had used a bit more of its cash therefore had less in the bank.

Look at it another way. If TPG had the same trade debtors and creditors at end 2017 as end 2016 it would have had £9.1m more cash in the bank. Add to this the cash spent on the two acquisitions (which shows at about £2.5m) and the cash balance could be about £33m. This is a bit simplistically optimistic as if the cash hadn't been spent on acquisitions, these would not have generated any cash income. But I'm just illustrating how the snap-shot end-of-year cash can be heavily influenced by managing the trade debtors and creditors.

Normally companies manipulate it at year end by paying suppliers late and getting in all the cash they can from customers. TPG seems to have not bothered!

[catch007] 17/4/2018 13:51

PA. Not quite following your logic there at all. I stated final accounts cash last year £9.2m + the fund raising amount giving total circa £30m ...today final accounts cash is £21m ....net cash outflow £9m in period covering areas I stated. How is it high?

[pavey ark] 17/4/2018 13:41

catch007, heading out but from memory the year end 2017 cash was inflated by early payment (c. £2m from memory) this year there was a payment of £2.9m missed the year end (received in January)

Always best to look at current assets Vs current liabilities and the compare 2016 with 2017 for a better valuation of the situation.

Your £9m figure is certainly high.

The "long haul" has been going on for a long time thanks to the almost crippling effect of the old compressor business but I think we are closer to the end than most realise.

[richie32] 17/4/2018 13:41

Defence is in demand right now and I can see more funds going in at the next budget.

Also, rapid technology changes means that a company like TPG will always be needed. IMHO

[catch007] 17/4/2018 13:29

Always good to get differing points of view and ty Kiwi for your post. Last year cash was £9.2m on finals, cash was raised £20m+. we now see year end net cash at £21m so roughly £9m has been spent on acquisitions (Polaris) and implementation costs, building turnover on new projects, the advanced engineering unit and business reorganisation. To me that looks like a high cash spend on some areas I would have anticipated being paid out of normal cash flow. I haven't had time to go through a deep dive of the results however at a top line they simply confirm this will be a long haul recovery and patience required. GLA

[trentendboy] 17/4/2018 11:14

nice analysis kiwi - that is a key factor.

I think the original rise was justified - I suspect this will rise again once these numbers sink in which are pretty impressive on the whole.

Better than I expected and gives me confidence to buy even more. It is a booming area given political uncertainties at the moment

[kiwihope] 17/4/2018 09:31

Catch007,

I think our posts overlapped but cash burn is only really a problem if it is being used to fund operating losses, because eventually the cash will run out. I don't think that is the case here. It looks like the cash is being used to fund increased turnover - the company is operating at pretty much break-even. So providing they have robust credit control their customers should pay.

[catch007] 17/4/2018 09:27

Good momentum but overall not what I had hoped to see and particularly of concern is the cash burn and lack of a quality acquisition.

[kiwihope] 17/4/2018 09:26

OK, I feel a bit more relaxed about the reduction in cash. I still haven't looked at it thoroughly but a large part of the drop is due to worsening of trade debtors vs. trade creditors. In 2016 this was +£1.8M but worsened to -£5.6M in 2017, a reduction of £7.4M in cash. So in 2017 they owed less to creditors but were owed more by debtors than 2016. Most of it is on the debtors side (they admit £2.6m was received later than expected from one customer).

This is quite normal I think, when sales increase there is often an increase in invoices awaiting payment, stock and the like. As long as their credit control is working OK they should get paid and the cash will come in.

Will look in more detail later but so far pretty much in-line with my expectations.

[azalea] 17/4/2018 09:07

The likelyhood is that the company will produce a net profit this year. In which case both the City and the share price will sit up.

[larry laffer] 17/4/2018 09:03

absolutely shocking set of results.....

[kiwihope] 17/4/2018 08:55

Only surprise for me is the amount of cash spent. Subtracting the £20.8m raised and they would be down to £1.1m from £9.2m the year before. I haven't looked at the results in detail but I need to find where this went...

[timojelly] 17/4/2018 08:45

Yeah the sells surprise me too.

[tiltonboy] 17/4/2018 08:42

A couple of decent-sized buys, but surprisingly quite a number of sales going through!

Surely we didn't have people punting them for the figures.

[thompsonminor] 17/4/2018 08:27

The key messages for me, from these figures, are:
1) EBITDA has more than doubled and has a solid base for future improvement
2) The order book has grown by over 88% and they seem to be adding to it all the time
3) The cash pile is still there, waiting to be spent, and there's a very patient and considered approach to using it for appropriate acquisitions.
The future is very bright indeed.

[pavey ark] 17/4/2018 08:09

Now got coffee and calculator for a bit of serious number crunching but absolutely no surprises.

Initial thoughts : they had a MS unit but it was based almost entirely on a ten year MoD contract which came to an end.
The management have built up this new in-house unit and added the two acquisitions.
I would suggest that the in-house unit is at least equal to the acquisitions but the expense of starting it up has come from operating costs and not capital.
it looks a great deal to me but has dented the results.
Even with the dreaded compressor business in tow I expect the Services unit to produce a profit of c. £1m this year.

Maritime produced an EBITDA of £5.6m !!
Engineering is still racking up losses but things are being done and one would assume it will be brought under control.

All in all nothing we couldn't have reasonably expected and Current assets - Current liabilities paints a very nice picture.

As far as acquisitions are concerned I can fully understand the slow progress.
This is a small company with limited numbers of staff and they are at present reorganising their traditional engineering unit, building up a significant services (MS) unit and coping with a very large order intake at Maritime....not to mention bedding in the acquisition made !!

[itchycrack] 17/4/2018 08:06

A good set of results this morning!

[timojelly] 17/4/2018 07:20

Looking pretty good to me!

[septblues] 16/4/2018 17:26

with so many board changes over the years since PC came in, the only man standing is PC

[desflurane] 16/4/2018 16:40

Tomorrow NEEDS to be good.