TIDMTPG
RNS Number : 6213J
TP Group PLC
13 September 2016
13 September 2016
TP Group plc
("TP Group" or the "Company" or the "Group")
Interim Report for the six months ended 30 June 2016
Strategy delivering improving profitability and clear growth
prospects
TP Group (AIM: TPG), the specialist technology, engineering and
managed solutions group, today announces its interim results for
the six months ended 30 June 2016.
Financial highlights
-- Revenue up 13% to GBP9.4m (H1 2015: GBP8.3m)
-- Group adjusted EBITDA(1) improved to breakeven (H1 2015: loss of GBP1.0m)
-- Net cash of GBP0.7m generated from operations (H1 2015: GBP2.0m consumed)
-- Improved cash balance of GBP7.5m (31 December 2015: GBP7.0m)
Operational highlights
-- Strategy to operate throughout the engineering life cycle
with four interlinked business units is delivering results and
growth opportunities
-- TPG Maritime revenue up 40% compared to H1 2015 with a
growing customer base and a wider offering to our current
partners
-- TPG Engineering is seeing accelerated order capture,
improving backlog and growing pipeline, driven by the business
unit's new management team
-- TPG Managed Solutions appointed to four Government service
framework agreements with resource under contract
-- TPG Design & Technology successfully repositioned as a
technical consulting and design services business
-- Continuing to achieve cost efficiencies in project delivery and administration
-- Appointment of Derren Stroud as Chief Financial Officer in March 2016
Outlook
-- Pipeline of future sales opportunities has grown to c.
GBP150m, including two significant single source contracts due to
begin negotiations with the Ministry of Defence (MoD) totalling c.
GBP50m.
-- Strong H1 order capture by TPG Engineering at 40% above that
achieved in H1 2015. This has created an order backlog of c. 4
months' activity (31 Dec 2015: c. 2 months) scheduled to be
delivered before year-end
-- Significant new opportunities in the UK, Europe, Far East and
Australia, all with long-term business prospects
-- Group performance provides confidence that the business will
trade in line with 2016 market expectations
Commenting on the results, Chief Executive Officer, Phil
Cartmell said:
"TP Group has delivered strong results in the first half of
2016. We have moved from loss making to breakeven with positive
cash generation. We believe that further progress will follow in
H2, and we expect to deliver significantly improved results in line
with market forecasts.
"Our business operates in growing markets and has developed a
strong reputation with our customers as a supplier of critical
end-to-end engineering services with a pipeline of opportunities of
c GBP150m.
"Operational management has been strengthened to align with our
services and markets leading to improved project and business
development performance.
"The Group, at last, is free of the obligations of legacy Oil
& Gas R&D ventures. Costs have been controlled and cash
collection enhanced providing a much more stable platform for
future growth.
"In line with our acquisition strategy to complement both our
services and market access, we are actively pursuing a number of
opportunities that are expected to be accretive to earnings.
"After a strong start to the second half of the year, the Board
is confident that the transformed business of TPG will deliver
profit at the adjusted EBITDA(1) level in line with market
expectations for 2016 and onward to sustainable profitability."
Notes
(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 period to 30 June 2016 comprise
termination costs of GBP231k (2015: Exceptional items in 2015
comprised restructuring costs of GBP976k, including impairment of
fixed assets GBP493k and termination costs of GBP146k).
For further information, please contact:
TP Group Plc
Phil Cartmell, Chief Executive Officer 01753 285 810
Derren Stroud, Chief Financial Officer
www.tpgroup.uk.com
Cenkos
Stephen Keys / Mark Connelly
www.cenkos.com 020 7397 8980
Vigo Communications
Jeremy Garcia / Fiona Henson 020 7830 9700
www.vigocomms.com
NOTES TO EDITORS
TP Group is a group of innovative UK based engineering
companies, supplying technologies and support to global markets. 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.
Chief Executive's Review
The Group strategy declared in past reports has now been
implemented with specific improvement initiatives that have
together delivered the positive results announced today. The Group
will continue on this path with a balanced business that:
-- continues to improve operational effectiveness leading to higher profitability;
-- focuses on major accounts to maximise value and expand
service offerings within established relationships;
-- links the business units to share capability most efficiently
and add value through cross-selling; and
-- enhances its product offering and market reach through acquisition
Financial Overview
The Group has delivered a move into profitability at an adjusted
EBITDA(1) level in the first half, whilst achieving growth in our
core markets.
Revenue grew to GBP9.4m (H1 2015: GBP8.3m). This is primarily
due to a strong performance by TPG Maritime with effective
conversion of a high value order backlog at the start of the year.
Order book values fluctuate in the defence sector due to the
infrequent timing of major contract awards. Recent announcements
include the intent by the UK MoD to enter into two single source
negotiations for supply and service contracts worth circa GBP50m
over eight years. These are expected to be entered into in the
second half or early in 2017, and build confidence in future
workload.
Revenues in TPG Engineering were slightly down due to issues in
the energy sector leading to a slow start to the year and weakness
in the opening order book. Management focus on business development
methods and personnel has returned a much improved performance.
TP Group's strong order intake in H1 2016 leaves the business in
much better shape for the second half of the year, in line with our
normal business profile which is typically weighted towards higher
revenues in the second half.
The Group's overall revenue improvement and continued focus on
cost control has resulted in this growth feeding directly into
adjusted EBITDA(1) . Group adjusted EBITDA(1) therefore improved by
GBP1.0m compared with the equivalent period last year to achieve
breakeven (2015: GBP1.0m loss) in line with our objective to report
profitability at an adjusted EBITDA(1) level in 2016.
The Group continues to develop new opportunities and has an
active sales pipeline of circa GBP150m.
Central costs remained flat in the first half at GBP0.6m after
exceptional items (H1 2015: GBP0.6m). All costs associated with
supporting the four business units are fully allocated to them.
The Group cash balance at 30 June 2016 was GBP7.5m (31 December
2015: GBP7.0m). Cash generated in the first half from operations
was GBP0.7m (H1 2015: GBP2.0m loss), reflecting our underlying
focus on generating improved operational cashflow. Management
expects to retain a healthy cash balance at the year end, in line
with market forecasts.
TPG Maritime
The Company has built on its long standing relationship with the
MoD with the award of an extension to the Submarine Air
Purification equipment support contract in March 2016. This
12-month extension to an existing ten-year agreement is valued at
an estimated GBP1.5 million over the period.
The business outlook is strengthened with the MoD's intention to
enter single source negotiations on two contracts announced in July
and August for submarine equipment supply and support, together
worth c. GBP50m. These negotiations demonstrate the long term value
of our approach to through-life support on major equipment
programmes. In addition, we have extended our global reach with new
and established customers in South East Asia and in Europe as
reported in recent contract announcements.
TPG Engineering
The Group took steps during the first half of the year to build
a new management team and to continue to support business
improvement initiatives. This included the appointment of Tony
Clowrey as Head of Engineering and Nick Pilditch as Sales Director.
Both Tony and Nick have a wealth of experience in the sector and
have brought this to bear very quickly, delivering rapid
improvement in order capture and overall business efficiency.
The Group has invested in the Dukinfield site, with the
installation of an advanced paint line facility. This allows the
business to bring previously subcontracted finishing work in-house
and to add high quality finishing to our extensive fabrication
offer. We can now offer high added-value services across a wide
range of markets and applications. Further investment in the
factory was made as part of our continuous improvement campaign to
improve product quality, working environment and reduce costs.
The business has also built upon its relationship with the
Nuclear Advanced Manufacturing Research Centre (NAMRC) to enhance
technical and manufacturing methods and develop new service
offerings into markets such as nuclear power. This work is already
generating additional enquiries and business development
activity.
TPG Design & Technology
The long standing relationship with Spirax-Sarco Engineering plc
remains strong and TPG has delivered the final assembly and testing
of a batch of pre-production units for end-user trials.
Work on the European Cryohub programme continues and the next
delivery of the American gas let-down expander project is expected
in the second half of this year.
The technical team has also been responding to numerous
enquiries for advanced turbomachines, with discussions in progress
for renewable energy, upstream production, distribution and power
applications in Europe and Australia.
TPG Managed Solutions
The Managed Solutions team has built upon its position within
the UK Government's Functional and Technical Services framework
(FATS5) to develop a significant pipeline of opportunities to place
specialist resources into technical programmes in defence and other
public programmes. This was rewarded with the first resource
contract being placed during H1 2016, and a number of other
contracts currently in negotiation. These contracts are significant
as they place TPG resources within the customer site operations and
provides a very effective link to future business
opportunities.
During the period, TPG has also been admitted to other
frameworks including:
-- Niteworks, the MoD-Industry technical partnership;
-- The G_Cloud procurement framework to connect government
bodies with support in cloud technology and other specialist
services for digital projects;
-- The R_Cloud framework for science and technology research; and
-- Bluelightworks, the community supporting procurement and
process improvement for the emergency services.
Strategy and Outlook
The Group is now in an extremely robust position with two major
defence contracts about to enter negotiation for which TPG is, we
understand, the sole supplier. Securing both contracts would lead
to even greater long term revenue visibility for TPG Maritime. In
addition, we are building momentum in resource provision to defence
customers through TPG Managed Solutions whilst pursuing equipment
service opportunities with both defence and commercial
customers.
TPG Engineering continues to develop its market position with
enhanced capability and competitive positioning leading to an
accelerated customer conversion rate. The appointment of a new
management team has resulted in further strategic progress with
qualification for large-scale projects and opportunities in nuclear
and conventional power facilities. In the energy markets, TPG
Design & Technology is working on a growing pipeline of
opportunities.
The pipeline of future business reflects our increasingly
productive collaboration with major partners to open new
opportunities in global, high value sectors. In addition, all
business units are increasing their exposure to new activities
through increased cross-selling and referrals across the Group,
enabling all four business units to take advantage of TPG's world
class customer base.
The overall result is a more capable, focused and coordinated
business that is demonstrating its ability to deliver growth and
move into profitability whilst attracting a sales pipeline of
future business opportunities, currently valued at approximately
GBP150m. The Board is confident that this momentum and strategic
focus will enable the Group to deliver on its objectives and
greatly enhance shareholder value.
Phil Cartmell
Chief Executive Officer
12 September 2016
Condensed Consolidated Statement of Comprehensive Income
Unaudited Unaudited Audited
Six months Six months Year ended
ended ended 31 December
30 June 30 June 2015
2016 2015
GBP'000 GBP'000 GBP'000
Revenue 9,363 8,340 20,446
Cost of sales (6,878) (6,161) (14,834)
=============================== ------------ ------------ -------------
Gross profit 2,485 2,179 5,612
=============================== ------------ ------------ -------------
Distribution costs(1) (188) (143)(2) (304)
Research and development
costs (12) (51) (76)
Administrative expenses (3,062) (4,601) (7,527)
=============================== ------------ ------------ -------------
Operating (loss) (777) (2,616) (2,295)
Adjusted EBITDA(2) 12 (965) 45
Depreciation, amortisation
and impairment (540) (686) (1,328)
Exceptional items (231) (943) (976)
Share based payments (18) (22) (36)
Operating loss (777) (2,616) (2,295)
------------------------------- ------------ ------------ -------------
Finance (cost)/income (69) 6 77
=============================== ------------ ------------ -------------
Loss before income
tax (846) (2,610) (2,218)
Income tax credit 70 70 311
=============================== ------------ ------------ -------------
Total comprehensive
loss for the period
attributable to shareholders (776) (2,540) (1,907)
=============================== ============ ============ =============
Loss per share expressed Pence Pence Pence
in pence per share
Basic and diluted
loss per share (0.13) (0.60) (0.45)
=============================== ============ ============ =============
All results relate to continuing activities.
(1) The presentation of the Distribution costs and
Administrative expenses for the six months to 30 June 2015 have
been reclassified to be consistent with the current year
presentation and that presented in audited financial statements of
the year to 31 December 2015. The overall reported loss for the
period has not changed.
(2) 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 period to 30 June 2016 comprise
termination costs of GBP231k (2015: Exceptional items in 2015
comprised restructuring costs of GBP976k, including impairment of
fixed assets GBP493k and termination costs of GBP146k).
Condensed Consolidated Statement of Financial Position
Unaudited Unaudited Audited
30 June 30 June 31 December
2016 2015 2015
GBP'000 GBP'000 GBP'000
============================== ========== ========== =============
ASSETS
Non-current assets
Goodwill 4,953 5,036 4,953
Other intangible assets 9,054 9,919 9,514
Property, plant and
equipment 693 554 560
============================== ========== ========== =============
14,700 15,509 15,027
============================== ========== ========== =============
Current assets
Inventories 136 143 169
Trade and other receivables 5,871 6,914 6,386
Derivative financial
assets - - 70
Taxation recoverable 79 149 66
Cash and cash equivalents 7,482 6,623 7,005
============================== ========== ========== =============
13,568 13,829 13,696
============================== ========== ========== =============
Total assets 28,268 29,338 28,723
============================== ========== ========== =============
LIABILITIES
Current liabilities
Trade and other payables (6,338) (6,553) (5,756)
(6,338) (6,553) (5,756)
============================== ========== ========== =============
Non-current liabilities
Deferred taxation (1,636) (1,985) (1,713)
Provisions (894) (1,289) (1,096)
============================== ========== ========== =============
(2,530) (3,274) (2,809)
============================== ========== ========== =============
Total liabilities (8,868) (9,827) (8,565)
============================== ========== ========== =============
Net assets 19,400 19,511 20,158
============================== ========== ========== =============
EQUITY
Share capital 42,246 42,246 42,246
Share premium 13,769 13,769 13,769
Capital redemption
reserve 575 575 575
Own shares held by
the Employee Benefit
Trust (561) (561) (561)
Share-based payments
reserve 1,192 1,160 1,174
Retained earnings (37,821) (37,678) (37,045)
============================== ========== ========== =============
Total equity 19,400 19,511 20,158
============================== ========== ========== =============
Condensed Consolidated Statement of Changes in Equity
Own
Capital shares Share-based
Share Share redemption held payments Retained
capital premium reserve by EBT reserve earnings Total
Six months GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
to 30 June
2016
--------------------- --------- --------- ------------ -------- ------------ ---------- ---------
Balance at
1 January
2016 42,246 13,769 575 (561) 1,174 (37,045) 20,158
IFRS 2 share
option charge - - - - 18 - 18
===================== ========= ========= ============ ======== ============ ========== =========
Total comprehensive
loss for
the period - - - - - (776) (776)
===================== ========= ========= ============ ======== ============ ========== =========
Balance at
30 June 2016 42,246 13,769 575 (561) 1,192 (37,821) 19,400
===================== ========= ========= ============ ======== ============ ========== =========
Six months
to 30 June
2015
===================== =================================================================================
Balance at
1 January
2015 42,246 13,769 575 (561) 1,138 (35,138) 22,029
IFRS 2 share
option charge - - - - 22 - 22
--------------------- --------- --------- ------------ -------- ------------ ---------- ---------
Total comprehensive
loss for
the period - - - - - (2,540) (2,540)
===================== ========= ========= ============ ======== ============ ========== =========
Balance at
30 June 2015 42,246 13,769 575 (561) 1,160 (37,678) 19,511
===================== ========= ========= ============ ======== ============ ========== =========
Year to 31
December
2015
===================== =================================================================================
Balance at
1 January
2015 42,246 13,769 575 (561) 1,138 (35,138) 22,029
IFRS 2 share
option charge - - - - 36 - 36
===================== ========= ========= ============ ======== ============ ========== =========
Total comprehensive
loss for
the year - - - - - (1,907) (1,,907)
Balance at
31 December
2015 42,246 13,769 575 (561) 1,174 (37,045) 20,158
===================== ========= ========= ============ ======== ============ ========== =========
Condensed Consolidated Statement of Cash Flows
Unaudited Unaudited
Six months Six months Audited
ended ended Year ended
30 June 30 June 31 December
2016 2015 2015
GBP'000 GBP'000 GBP'000
=============================== ============ ============ =============
Operating activities
Loss before income
tax (846) (2,610) (2,218)
Adjustments for:
Depreciation 81 265 421
Amortisation 459 421 907
Loss on disposal of
fixed assets - - 493
Finance cost/(income) 69 (6) (77)
Impairment of property,
plant and equipment - 557 -
Share-based payment
expense 18 22 36
(Increase)/decrease
in inventories 33 (60) (86)
Decrease/(increase)
in trade and other
receivables 496 687 1,098
(Decrease)/Increase
in trade and other
payables 582 (1,188) (1,876)
(Decrease) in provisions (202) (66) (259)
=============================== ============ ============ =============
690 (1,978) (1,561)
Income tax received/(paid) - (13) 64
=============================== ============ ============ =============
Net cash generated
from/(used in) operating
activities 690 (1,991) (1,497)
=============================== ============ ============ =============
Investing activities
Purchase of subsidiary,
net of cash acquired - (886) (886)
Interest received 1 6 8
Purchase of property,
plant and equipment (214) (65) (204)
Proceeds from sale
of property, plant
and equipment - - 40
=============================== ============ ============ =============
Net cash used in investing
activities (213) (945) (1,042)
=============================== ============ ============ =============
Financing activities
Repayment of hire purchase
liabilities - (10) (25)
Net cash from financing
activities - (10) (25)
=============================== ============ ============ =============
Net increase/(decrease)
in cash and cash equivalents 477 (2,946) (2,564)
Cash and cash equivalents
at beginning of period 7,005 9,569 9,569
============
Cash and cash equivalents
at end of period 7,482 6,623 7,005
=============================== ============ ============ =============
Notes to the Condensed Consolidated Interim Financial
Statements
1. Nature of operations and general information
The principal activities of TP Group plc and its subsidiaries
(the "Group") comprise:
TPG Maritime - activities include the provision of air
purification equipment for submarines including oxygen/hydrogen
generation and purification, air handling and distribution
systems.
TPG Design and Technology - specialises in the design and
development of high-speed turbomachinery. Innovative compressors
and expander generators use patented technologies.
TPG Engineering - activities include the manufacture of heat
exchange equipment used in the heating and cooling of large scale
industrial processes and other fabricated structures
TPG Managed Solutions - services to major organisations through
prime contracting and provision of specialist resources
TP Group plc (the "Parent Company") is the Group's ultimate
parent company which is incorporated and domiciled in the United
Kingdom. The address of the registered office of the Company is
Cody Technology Park, Old Ively Road, Farnborough, Hampshire, GU14
0LX. The Parent Company's shares are listed on the Alternative
Investment Market of the London Stock Exchange.
The condensed consolidated interim financial statements are
presented in pounds sterling, which is also the functional currency
of the Parent Company, and all values are rounded to the nearest
thousand pounds except when otherwise indicated.
The financial information set out in this interim report does
not constitute statutory accounts as defined in Section 434 of
the
Companies Act 2006. The Group's statutory financial statements
for the year ended 31 December 2015, prepared under IFRS as adopted
by the EU, have been delivered to the Registrar of Companies. The
auditor's report on the 2015 financial statements was unqualified,
did not draw attention to any matters by way of emphasis and did
not contain a statement under Section 498(2) or Section 498(3) of
the Companies Act 2006.
The condensed consolidated interim financial statements were
approved for issue by the Board of Directors on 12 September
2016.
2. Basis of preparation
These condensed consolidated interim financial statements are
for the six months ended 30 June 2016. They have been prepared
following the principal accounting policies and methods of
computation set out in the Group's Annual Report and Accounts for
the year ended 31 December 2015.
These condensed consolidated interim financial statements have
been prepared under the historical cost convention using accounting
policies consistent with International Financial Reporting
Standards (IFRS) as adopted by the European Union. The same
accounting policies, presentation and methods of computation are
followed in the condensed set of financial statements as applied in
the Group's latest annual audited financial statements. While the
financial figures included in this half-yearly report have been
computed in accordance with IFRS applicable to interim periods,
this half-yearly report does not contain sufficient information to
constitute an interim financial report as that term is defined in
IAS 34.
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.
Restatement of comparative segmental results for 2015
The presentation of the unaudited segmental results for the six
months to 30 June 2015 have been reclassified to be consistent with
the current year presentation and that presented in audited
financial statements of the year to 31 December 2015. The overall
reported loss for the period has not changed.
3. Segmental Reporting
The following table presents revenue and profit information for
each business segment.
TPG TPG TPG TPG Central Group
Maritime Engineering D&T MS unallocated
costs
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
========================= ========== ============= ======== ======== ============= ========
Six months ended
30 June 2016
Revenue 5,155 2,749 279 1,180 - 9,363
Operating profit/(loss) 1,300 (641) (752) 139 (823) (777)
Depreciation,
amortisation
and impairment 421 90 8 - 21 540
Exceptional items - - - - 231 231
Share based payments - - - - 18 18
========================= ========== ============= ======== ======== ============= ========
Adjusted EBITDA(2) 1,721 (551) (744) 139 (553) 12
========================= ========== ============= ======== ======== ============= ========
Six months ended
30 June 2015(2)
Revenue 3,696 3,708 435 501 - 8,340
Operating profit/(loss) 236 (199) (2,113) 19 (559) (2,616)
Depreciation,
amortisation
and impairment 406 76 203 - 1 686
Exceptional items - - 943 - - 943
Share based payments - - - - 22 22
========================= ========== ============= ======== ======== ============= ========
Adjusted EBITDA(1) 642 (123) (967) 19 (536) (965)
========================= ========== ============= ======== ======== ============= ========
Year ended
31 December
2015
Revenue 10,948 7,067 901 1,530 - 20,446
Operating profit/(loss) 1,933 (471) (2,843) 247 (1,161) (2,295)
Depreciation,
amortisation
and impairment 844 229 254 - 1 1,328
Exceptional items - - 976 - - 976
Share based payments - - - - 36 36
========================= ========== ============= ======== ======== ============= ========
Adjusted EBITDA(1) 2,777 (242) (1,613) 247 (1,124) 45
========================= ========== ============= ======== ======== ============= ========
(2) 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 period to 30 June 2016 comprise
termination costs of GBP231k (2015: Exceptional items in 2015
comprised restructuring costs of GBP976k, including impairment of
fixed assets GBP493k and termination costs of GBP146k).
(3) The presentation of the unaudited segmental results for the
six months to 30 June 2015 have been reclassified to be consistent
with the current year presentation and that presented in audited
financial statements of the year to 31 December 2015. The overall
reported loss for the period has not changed.
4. Loss per share
The calculation of the basic loss per share is based on the loss
after tax for the period divided by the weighted average number of
shares in issue during the period as follows:
Unaudited Unaudited Audited
Six months Six months
ended ended Year ended
30 June 30 June 31 December
2016 2015 2015
number number number
========================= ============ ============ ============
Weighted average shares
in issue 420,857,956 420,857,956 420,857,956
========================= ============ ============ ============
The weighted average number of shares in issue has been reduced
by deducting the weighted average number of shares held by the
Employee Benefit Trust of 1,606,770 shares (six months ended 30
June 2015 and year ended 31 December 2015: 1,606,770 shares).
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.
This information is provided by RNS
The company news service from the London Stock Exchange
END
IR LTMRTMBABBLF
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