TIDMTPG
RNS Number : 3377A
TP Group PLC
11 September 2018
11 September 2018
TP Group plc
("TP Group" or the "Company" or the "Group")
Unaudited interim results for the six months ended 30 June
2018
Delivering the growth strategy
TP Group (AIM: TPG), the specialist services and engineering
group, today announces its unaudited interim results for the six
months ended 30 June 2018.
Financial highlights
-- Revenue up 52% to GBP16.0m (H1 2017: GBP10.5m)(1)
-- Operating loss reduced to GBP0.7m (H1 2017 operating loss: GBP1.0m)(1,3)
-- Adjusted operating profit grew to GBP0.9m (H1 2017: GBP0.1m)(1,2,3)
-- Order intake of GBP29.5m was 8% up on prior year (H1 2017: GBP27.4m)
-- Closing order book up 31% to GBP56.5m (31 December 2017: GBP43.0m)
-- Cash balance of GBP21.0m (31 December 2017: GBP21.9m)
Operational highlights
-- Converted GBP14.5m of orders from previously signed framework
agreements for atmosphere management systems
-- First contracts signed through the Enterprise Technical Alliance
-- Opened the Advanced Manufacturing Centre in Manchester and commenced deliveries of first precision-machined components to customers
-- Ongoing progress on strategic priorities:
o Technology & Engineering teams continuing to focus on
delivering complex packaged equipment
o Continuing to build presence in intelligence and secure
communications systems
o Developing Artificial Intelligence technologies - opening new
markets in intelligence processing and unmanned systems for
military and civil use
o Establishing American, Australian and European partners to
broaden our technology and service offerings
o Strengthened senior commercial management with appointments
from major prime contractors
o Ongoing commitment to add capability, capacity and customers
through acquisitions
Following a strong start to the year, the business is on track
to deliver full year performance in line with market
expectations.
Phil Cartmell, Chief Executive Officer of TP Group,
commented:
"We have had a very productive and successful period across the
business. The team has converted many new business opportunities,
cemented links with established and loyal customers, whilst also
reviewing several acquisition opportunities.
"Our focus and reputation in our core markets has led to our
largest ever order book which positions us well for the second half
of the year. The management layer that supports the Board is
performing well and the acquired companies are making positive
contributions to our success.
"I look forward to updating the market on further developments
as they materialise and remain confident in the Group's prospects
for the rest of 2018 and beyond."
Notes:
(1) Comparatives for the period to 30 June 2017 and financial
year ended 31 December 2017 have been restated in line with the
requirements of IFRS 15. For further disclosure, please see note 2
to these unaudited interim financial statements.
(2) Adjusted operating profit is defined as operating loss
adjusted to add back depreciation of property, plant and equipment
and right-of-use assets, amortisation of intangible assets and
impairment gains or losses on non-current assets, changes in fair
value of contingent consideration, any other acquisition-related
charges, share based payment charges and non-operating costs.
Non-operating costs are those items believed to be exceptional in
nature by virtue of their size and or incidence. The directors of
the Company believe this measure is more reflective of the
underlying performance of the Group than equivalent GAAP measures.
This is primarily due to the exclusion of non-cash items, such as
share-based payments, impairment, depreciation and amortisation, as
well as non-operating costs. This provides shareholders and other
users of the financial statements with the most representative
year-on-year comparison of operating performance. This measure and
the separate components remain consistent with 2017. Non-operating
costs to 30 June 2018 comprise restructuring costs at the
Manchester and Wincanton sites, and the Group's head office.
(3) The Group adopted IFRS 16 from 1 January 2018 and recognised
the cumulative effect at this date in accordance with IFRS16: C7 to
C13. For further details, please refer to note 2 of these unaudited
interim financial statements.
Enquiries:
TP Group plc Tel: 01753 285 810
Phil Cartmell, Chief Executive
Officer
Derren Stroud, Chief Financial
Officer
www.tpgroup.uk.com
Cenkos Securities plc Tel: 020 7397 8980
Mark Connelly / Callum Davidson
www.cenkos.com
Vigo Communications Tel: 020 7390 0230
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.
Business Review
The Group is pleased to report a strong set of results for the
first six months of 2018, delivering on our strategic growth
initiatives as communicated to investors in 2017.
We have continued to align the internal structure and reporting
lines to reflect our core business and capabilities, operating
across two complementary business streams:
-- Consulting and Programme Services ("CaPS") - the provision of
know-how and experience to add value in large and complex
enterprises. Previously reported as TPG Services.
-- Technology & Engineering ("T&E") - the design,
manufacture, installation and support of complex equipment.
Previously reported as TPG Engineering.
We started the year with an order book of GBP43.0 million, and
are pleased to report that our team has added GBP29.5 million in
new contracts in the period. Whilst revenue was up 52% on the same
period last year, we secured almost twice the revenue figure in new
orders, and so have ended the half-year with an order book
totalling GBP56.5 million, which supports the Board's confidence in
the business.
Group order intake grew by 8% to GBP29.5 million (H1 2017:
GBP27.4 million), with T&E capturing 67% of that at GBP19.8
million (H1 2017: GBP23.4 million) and CaPS signing GBP9.7 million
(H1 2017: GBP4.0 million). The CaPS share of order intake has grown
from 15% to 33% and illustrates how the Group is becoming a more
balanced business.
The order book increased to GBP56.5m, up 31% from the 31st
December 2017 position of GBP43.0m. This significant increase was
across both business streams, with T&E closing the period at
GBP48.7 million (31 December 2017: GBP39.9 million) and CaPS at
GBP7.8 million (31 December 2017: GBP3.1 million).
Revenue increased to GBP16.0 million (H1 2017: GBP10.5 million)
with growth achieved in both T&E and CaPS business streams.
T&E grew by 44% to GBP10.9 million and CaPS grew by 73% to
GBP5.1 million. Our business is typically weighted into the second
half of the year and so these results are even more noteworthy.
Central costs were stable in the first half at GBP0.5 million
(H1 2017: GBP0.6 million). All costs associated with supporting the
business units are fully allocated to them.
The Group's revenue growth, operational efficiency improvements
and management of operating costs has fed through to further
improvement in operating loss, which fell by GBP0.3 million to
GBP0.7 million and adjusted operating profit, which increased to
GBP0.9 million (H1 2017: GBP0.1 million)
The Group cash balance at 30 June 2018 was GBP21.0 million (31
December 2017: GBP21.9 million). Cash generated from operations of
GBP0.2 million was offset by investment in capital equipment of
GBP0.4 million, pay-down of finance leases of GBP0.4 million and
settlement of year-1 earn-outs in relation to the acquisition of
ALS Technologies Ltd amounting to GBP0.3 million.
Management views the underlying cash position to be positive and
expects to retain a healthy cash balance at the year end, in line
with market expectations.
Markets served
The Group focuses on four key verticals - defence, space,
intelligence and communications, and energy. These sectors have
consistent characteristics, complementary requirements and
significant crossover in the customer base that the whole Group can
contribute to.
Recent customer engagements have shown that national security
and energy supply are critical to a safe and prosperous
society.
To commit to this view, our declared mission is to "provide
services and equipment when critical systems are needed to assure
public and industry security and wellbeing."
Each market sector is served as follows:
-- Defence - TP Group provides and supports critical systems and
equipment for platforms across air, land, sea and subsea
domains.
-- Intelligence & Communications - TP Group delivers
critical systems and operational support to essential activities
that gather intelligence, share it securely and act on it
effectively.
-- Space - TP Group provides solutions and support for space
missions that are essential to our understanding of the world and
the communications links we need around it.
-- Energy - TP Group designs, builds and manages equipment
packages that are essential to the reliable, safe and effective
supply of energy resources world-wide.
The bulk of our business remains in our core defence market and
through our key relationships. This provides a stable platform
which is managed for maximum value and organic growth, whilst
expansion into new programmes, customer communities and markets is
achieved by a dedicated team with specialist methods and
know-how.
Technology and Engineering
The T&E team have been actively developing a common
proposition centred on complex packaged equipment. This gathers
together the design, build and operation of complete systems,
including elements of fabrication, electronics, controls and
infrastructure that were previously bought-in or supplied to the
customer by others. This specifically adds value to our proposition
in the energy market to position us for higher value integrated
systems in that sector.
In our core submarine activity, we were pleased to have
converted more of the UK framework contracts for submarine
equipment into firm orders worth GBP12.5 million for oxygen
generation systems, announced in May. This sits alongside our
overseas development in this area, which was recognised by a
framework agreement with Naval Group in France that has in turn led
to an initial firm order for GBP2 million of atmosphere management
equipment.
In Manchester, there was significant focus on working with our
key accounts such as PetroIneos and Ineos Chemicals. We have
enjoyed a long history with these customers and support them
through their maintenance and refurbishment cycles because in many
cases we supplied the original equipment. In the first half of this
year, we signed contracts for through-life support work worth 34%
of the Manchester order intake.
Similar to the Manchester approach, in addition to the
established new-build work on submarine programmes, we have
extended our propositions towards life extensions and refurbishment
of installed equipment. In January, we announced a GBP0.9 million
contract to overhaul an installed system, and we anticipate that
this will become an increasingly important part of our business.
Submarine service lives are being extended alongside the
introduction of new platforms by many national defence forces and
our through-life support proposition was founded to support this
trend. We believe we are well placed to benefit from this
opportunity.
As noted in the Annual Report and Financial Statements for the
year ended 31 December 2017, the directors completed the disposal
of the trade and assets of our low-end fabrication activity, based
in Oldham, Lancashire, under a management buy-out. The disposal
completed on 30 April 2018 for total consideration of GBP0.3
million payable over a term of three years.
Consulting and Programme Services
The CaPS business has built upon established positions in major
programmes and successfully captured new customers through a
flexible and growing range of systems engineering and project
assurance services.
This has produced good results with a 12 month extension of the
existing work with Army Headquarters on the LE TacCIS programme,
worth up to GBP1.2 million, with the potential to reach GBP2.3
million over 2 years.
The Group has also signed a three year agreement to deliver
information assurance services to a UK Government agency with a
value of c. GBP0.7 million in year one, and with options for two
further years that could take the total contract value to c. GBP2.0
million. This work is significant as it extends the Group's secure
communications capability and applies it in a consistent way into a
non-MoD department.
The CaPS team has also benefited from the acquisition of Polaris
Consulting ("Polaris") at the end of 2017. This has brought new
capabilities in operational analysis, project controls and
artificial intelligence systems, alongside complementary
relationships across the MoD and industrial prime contractors.
Acquisitions
Our acquisition process continues to be active as our senior
team review a pipeline of opportunities, whilst maintaining a level
of caution based upon the suitability and value of acquisition
targets. We have evaluated opportunities in terms of fit to our
existing business, alignment with our plans, scale, growth
potential, customer base, culture, and management valuation. At
present, we are in discussions with prospects involved in the
supply of ruggedised military systems, project software systems and
space mission support services.
Innovations
Technology development and diversification has been a key focus
in recent months. In March 2018 we announced a GBP0.8 million order
for next generation carbon dioxide management equipment. This is a
result of our internal technology development initiatives,
complemented by the partnership with American specialists
Micropore, announced in May.
Polaris is active in developing innovative Artificial
Intelligence ("AI") solutions. As a demonstration of the value
added through our acquisition strategy, the Polaris team has worked
with other Group resources to respond to emerging requirements for
the routing of unmanned vessels on hazardous missions. The result
is a multi-party proposition involving end-users and industrial
partners. This work opens up many opportunities across unmanned and
manned applications in the military and commercial sectors.
New commercial business models have also been introduced, with
contracts worth a combined GBP1.8 million won under the new
Enterprise Technical Alliance ("ETA"). This TP Group initiative
brings together a number of Small/Medium Enterprises to deliver
agile, responsive and independent contracting services. This
enables us to work collaboratively to deliver value for money
solutions across small and large-scale support requirements.
The initiative is gaining traction with the MoD as well as other
technical specialists wishing to join the team. We have since been
invited by the Government to discuss more widespread use of the
ETA, and tier-1 prime contractors are also seeking to use this
mechanism to strengthen their own propositions through the addition
of small technical specialists within their project teams.
We believe that the market in which our CaPS business operates
is driven by relationships and reputation, and this growth tells us
that we are becoming a strong player in this area. The ETA
framework provides a very effective route to market to build
further on this position.
Investment
Internal investment was focused on enhancing manufacturing
capability and in strengthening the sub-Board management layer to
achieve our growth targets. Modernising the Manchester factory has
led, amongst other things, to the opening of the Advanced
Manufacturing Centre in February. This is now fully utilised to
support the delivery of complex static equipment projects, and also
to bring in specialist component machining work to fill capacity
gaps. These are proving to be most valuable as they demonstrate our
capability and standards to new clients and open discussions about
larger projects in other sectors beyond our traditional base.
In addition to investment in restructuring the senior business
development team, the Group has committed new resources to quality
management and compliance management to ensure that we keep pace
with the stringent regulations in the markets we serve. This has
two effects; firstly, it eases the delivery load with a focus on
doing things well, once and in line with the customer's
expectations. Secondly, it acts as a competitive advantage as not
all of our peers can work to these standards.
International markets
Outreach to international markets, customers and programmes has
received increasing focus, with visits to Australia, South-East
Asia and the United States. Through these initiatives, our
executives are building a presence in those regions, generating
links to future equipment programmes and exploring partnership
opportunities with local businesses at a corporate level.
Our ambitions in the United States have been boosted through the
registration of a local branch company in Washington D.C. which
facilitates our engagement with a range of partners and programmes
there. Discussions have commenced with a number of strategic
partners on matters relating to intelligence services and
technology transfer opportunities, as demonstrated by the
partnership agreement with Micropore.
Management restructuring
In February, Simon Kings stepped down as an executive director
and left the Group. The Board has restructured and strengthened the
business development and key account management activities with two
appointments to the senior management team from large prime
contractors. James Norwood joined as Corporate Development Director
in May and brought experience from the tier-one contractor world
with access to several large-scale opportunities in the defence and
energy sectors. David Lomax has subsequently joined from BAE
Systems as Key Accounts Director to drive cross-Group support to
our primary relationships that have previously relied upon single
points of contact within the relevant delivery teams.
Outlook
Against this backdrop of a very active first half year, the
Board remains confident in its outlook and ability to deliver
against its strategy.
Phil Cartmell
10 September 2018
Condensed consolidated statement of comprehensive income
Unaudited(3) Unaudited(1) Audited(1)
Six months Six months Year ended
ended ended 31 December
30 June 30 June 2017
2018 2017
GBP'000 GBP'000 GBP'000
Revenue 15,976 10,488 27,915
Cost of sales (11,717) (7,466) (20,121)
-------------------------------- ------------- ------------- -------------
Gross profit 4,259 3,022 7,794
Distribution costs (92) (103) (67)
Administrative expenses (4,873) (3,876) (8,693)
-------------------------------- ------------- ------------- -------------
Operating loss (706) (957) (966)
-------------------------------- ------------- ------------- -------------
Adjusted operating profit(2) 929 75 2,148
Depreciation(5) , amortisation
and impairment (1,059) (615) (1,842)
Change in fair value of
contingent consideration 222 - -
Acquisition related costs(4) (164) (89) (242)
Non-operating costs(2) (597) (305) (655)
Share based payments (37) (23) (375)
-------------------------------- ------------- ------------- -------------
Operating loss (706) (957) (966)
Net finance costs (94) - (65)
-------------------------------- ------------- ------------- -------------
Loss before income tax (800) (957) (1,031)
Income tax credit/(charge) 85 (28) (122)
-------------------------------- ------------- ------------- -------------
Total comprehensive loss
for the period attributable
to shareholders (715) (985) (1,153)
================================ ============= ============= =============
Loss per share expressed
in pence per share Pence Pence Pence
Basic and diluted loss per
share (0.09) (0.23) (0.15)
================================ ============= ============= =============
All results relate to continuing activities.
(1) Comparatives for the period to 30 June 2017 and financial
year ended 31 December 2017 have been restated in line with the
requirements of IFRS 15. For further disclosure, please see note 2
to these unaudited interim financial statements.
(2) Adjusted operating profit is defined as operating loss
adjusted to add back depreciation of property, plant and equipment
and right-of-use assets, amortisation of intangible assets and
impairment gains or losses on non-current assets, changes in fair
value of contingent consideration, any other acquisition-related
charges, share based payment charges and non-operating costs.
Non-operating costs are those items believed to be exceptional in
nature by virtue of their size and or incidence. The directors of
the Company believe this measure is more reflective of the
underlying performance of the Group than equivalent GAAP measures.
This is primarily due to the exclusion of non-cash items, such as
share-based payments, impairment, depreciation and amortisation, as
well as non-operating costs. This provides shareholders and other
users of the financial statements with the most representative
year-on-year comparison of operating performance. This measure and
the separate components remain consistent with 2017.
Non-operating costs in the six months to 30 June 2018 comprise
restructuring costs at the Manchester and Wincanton sites, and the
Group head office.
(3) The Group adopted IFRS 16 from 1 January 2018 and recognised
the cumulative effect at this date in accordance with IFRS16: C7 to
C13. For further details, please refer to note 2 of these unaudited
interim financial statements.
(4) Acquisition related costs consist of GBP19,000 in relation
to acquisitions completed in 2017 and GBP145,000 related to ongoing
acquisition opportunities.
(5) Depreciation expense includes the depreciation of property,
plant and equipment and right-of-use assets.
Condensed consolidated statement of financial position
Unaudited(2) Unaudited(1) Audited(1)
30 June 30 June 31 December
2018 2017 2017
GBP'000 GBP'000 GBP'000
--------------------------------- ------------- ------------- -------------
ASSETS
Non-current assets
Goodwill 4,386 3,918 4,386
Other intangible assets 11,102 10,298 11,759
Property, plant and equipment 2,311 1,053 2,126
Right-of-use assets 4,078 - -
Deferred taxation - 129 -
--------------------------------- ------------- ------------- -------------
21,877 15,398 18,271
--------------------------------- ------------- ------------- -------------
Current assets
Inventories 5,865 7,171 6,542
Trade and other receivables 10,341 6,580 12,198
Taxation recoverable - - 10
Cash and bank balances 21,046 6,749 21,931
--------------------------------- ------------- ------------- -------------
37,252 20,500 40,681
--------------------------------- ------------- ------------- -------------
Total assets 59,129 35,898 58,952
--------------------------------- ------------- ------------- -------------
LIABILITIES
Current liabilities
Trade and other payables (16,077) (18,229) (19,110)
Obligations under hire purchase
and lease contracts (778) - (211)
--------------------------------- ------------- ------------- -------------
(16,855) (18,229) (19,321)
--------------------------------- ------------- ------------- -------------
Non-current liabilities
Deferred taxation (1,334) (1,081) (1,425)
Obligations under hire purchase
and lease contracts (4,783) - (747)
Provisions (534) (673) (561)
--------------------------------- ------------- ------------- -------------
(6,651) (1,754) (2,733)
--------------------------------- ------------- ------------- -------------
Total liabilities (23,506) (19,983) (22,054)
--------------------------------- ------------- ------------- -------------
Net assets 35,623 15,915 36,898
================================= ============= ============= =============
EQUITY
Share capital 7,586 4,225 7,586
Share premium 17,438 - 17,438
Own shares held by EBT (561) (561) (561)
Share-based payments reserve 1,590 1,201 1,553
Retained earnings 9,570 11,050 10,882
--------------------------------- ------------- ------------- -------------
Total equity 35,623 15,915 36,898
================================= ============= ============= =============
(1) Comparatives for the period to 30 June 2017 and financial
year ended 31 December 2017 have been restated in line with the
requirements of IFRS 15 and the re-measurement of the provisional
accounting on the acquisition of Polaris Consulting (Holdings)
Limited. For further disclosure, please see note 2 to these
unaudited interim financial statements.
(2) The Group adopted IFRS 16 from 1 January 2018 and recognised
the cumulative effect at this date in accordance with IFRS16: C7 to
C13. For further details, please refer to note 2 of these unaudited
interim financial statements.
Condensed consolidated statement of changes in equity
Own shares Share-based
Share Share held payments Retained
capital premium by EBT reserve earnings Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
------------------------ --------- --------- ----------- ------------ ---------- --------
Six months to 30 June 2018
----------------------------------- --------- ----------- ------------ ---------- --------
Balance at 1 January
2018 7,586 17,438 (561) 1,553 10,882 36,898
IFRS 16 cumulative
adjustment(1) - - - - (597) (597)
IFRS 2 share option
credit - - - 37 - 37
Total comprehensive
loss for the period - - - - (715) (715)
------------------------ --------- --------- ----------- ------------ ---------- --------
Balance at 30 June
2018 7,586 17,438 (561) 1,590 9,570 35,623
======================== ========= ========= =========== ============ ========== ========
Six months to 30 June 2017
----------------------------------- --------- ----------- ------------ ---------- --------
Balance at 1 January
2017 4,225 - (561) 1,178 14,821 19,663
IFRS 15 restatement(2) - - - - (2,786) (2,786)
Balance at 1 January
2017 restated 4,225 - (561) 1,178 12,035 16,877
IFRS 2 share option
credit - - - 23 - 23
Total comprehensive
loss for the period - - - - (985) (985)
------------------------ --------- --------- ----------- ------------ ---------- --------
Balance at 30 June
2017 4,225 - (561) 1,201 11,050 15,915
======================== ========= ========= =========== ============ ========== ========
Year to 31 December 2017
----------------------------------- --------- ----------- ------------ ---------- --------
Balance at 1 January
2017 4,225 - (561) 1,178 14,821 19,663
IFRS 15 restatement(2) - - - - (2,786) (2,786)
Balance at 1 January
2017 restated 4,225 - (561) 1,178 12,035 16,877
Share issue 3,361 17,438 - - - 20,799
IFRS 2 share option
credit - - - 375 - 375
Total comprehensive
loss for the year - - - - (1,153) (1,153)
------------------------ --------- --------- ----------- ------------ ---------- --------
Balance at 31 December
2017 7,586 17,438 (561) 1,553 10,882 36,898
======================== ========= ========= =========== ============ ========== ========
(1) The Group adopted IFRS 16 from 1 January 2018 and recognised
the cumulative effect at this date in accordance with IFRS16: C7 to
C13. For further details, please refer to note 2 of these unaudited
interim financial statements.
(2) Comparatives for the period to 30 June 2017 and financial
year ended 31 December 2017 have been restated in line with the
requirements of IFRS 15 and the re-measurement of the provisional
accounting on the acquisition of Polaris Consulting (Holdings)
Limited. For further disclosure, please see note 2 to these
unaudited interim financial statements.
Condensed consolidated statement of cash flows
Unaudited(2) Unaudited(1) Audited(1)
Six months Six months Year ended
ended ended 31 December
30 June 30 June 2017
2018 2017
GBP'000 GBP'000 GBP'000
----------------------------------- ------------- ------------- -------------
Operating activities
Loss before income tax (799) (957) (1,031)
Adjustments for:
Depreciation, amortisation
and impairment 1,059 615 1,842
Finance expense 93 - 65
Share-based payment expense 37 23 375
Increase in inventories 677 (2,785) (2,106)
Increase in trade and other
receivables 1,855 (145) (5,763)
Increase in trade and other
payables (2,462) 2,714 2,828
Decrease in provisions (27) (428) (540)
----------------------------------- ------------- ------------- -------------
433 (963) (4,330)
Income tax (paid) / received (200) 60 (87)
----------------------------------- ------------- ------------- -------------
Net cash generated from
/ (used in) operating activities 233 (903) (4,417)
----------------------------------- ------------- ------------- -------------
Investing activities
Interest received 33 - 14
Purchase of property, plant
and equipment (371) (450) (908)
Purchase of computer software (2) (18) (47)
Acquisition of subsidiary,
net of cash acquired - (1,037) (2,564)
Acquisition of subsidiary
- payment of earn-out (299) - -
----------------------------------- ------------- ------------- -------------
Net cash used in investing
activities (639) (1,505) (3,505)
----------------------------------- ------------- ------------- -------------
Financing activities
Proceeds from issue of
ordinary share capital - - 20,799
Interest payable (126) - (26)
Repayment of hire purchase
and lease liabilities (353) (3) (80)
----------------------------------- ------------- ------------- -------------
Net cash from financing
activities (479) (3) 20,693
----------------------------------- ------------- ------------- -------------
Net (decrease) / increase
in cash and cash equivalents (885) (2,411) 12,771
Cash and cash equivalents
at the beginning of the
period 21,931 9,160 9,160
----------------------------------- ------------- ------------- -------------
Cash and cash equivalents
at the end of the period 21,046 6,749 21,931
=================================== ============= ============= =============
(1) Comparatives for the period to 30 June 2017 and financial
year ended 31 December have been restated in line with the
requirements of IFRS 15 and the re-measurement of the provisional
accounting on the acquisition of Polaris Consulting (Holdings)
Limited. For further disclosure, please see note 2 to these
unaudited interim financial statements.
(2) The Group adopted IFRS 16 from 1 January 2018 and recognised
the cumulative effect at this date in accordance with IFRS16: C7 to
C13. For further details, please refer to note 2 of these unaudited
interim financial statements.
Notes to the condensed set of unaudited interim financial
statements
1. Nature of operations
The Group is a professional services and technology partner to
global prime contractors that are active in defence, intelligence
and communications, space and energy programmes. The Group advises
on management and technology solutions and deliver with advanced
manufacturing skills and expertise.
The Group's team links world-class skills in complex
technologies with modern design and manufacturing facilities to
provide a fully balanced and agile support network to our customers
and partners wherever they may be.
The Group consists of two interlinked business streams:
-- Consulting and Programme Services ("CaPS") - the provision of
know-how and experience to add value in large and complex
enterprises. Previously reported as TPG Services.
-- Technology & Engineering ("T&E") - the design,
manufacture, installation and support of complex equipment.
Previously reported as TPG Engineering.
TP Group plc (the "Parent Company") is the Group's ultimate
parent company, which is incorporated under the Companies Act and
domiciled in the United Kingdom. The address of the registered
office of the Parent 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.
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 condensed consolidated unaudited 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 2017, prepared under IFRS as adopted by
the EU, have been delivered to the Registrar of Companies. The
auditor's report on the 2017 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 unaudited interim financial
statements were approved for issue by the Board of Directors on
10(th) September 2018.
2. Basis of preparation
These condensed consolidated unaudited interim financial
statements are for the six months ended 30 June 2018.
These condensed consolidated unaudited 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.
Excluding the adoption in year of IFRS 15, IFRS 16 and IFRS 9 the
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 of the Company 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 of the Company have considered forecasts that cover a
period of at least twelve months from the date of the approval of
these unaudited interim financial statements and mitigating actions
available to them, including the ability of management to make
certain reductions to the Group's discretionary expenditure if
required.
Changes in accounting policies
The Group has adopted IFRS 15 retrospectively and prior period
financial statements have been restated accordingly. The financial
impact to comparative periods on adoption of these standards is
described below.
The adoption of IFRS 9 has no material impact to the current or
prior period financial statements.
The Group adopted IFRS 16 early. Rather than apply IFRS 16
retrospectively in accordance with IAS 8, the Group is permitted to
apply IFRS 16:c5(b) under which comparative information is not
restated. The Group has recognised the cumulative effect of
initially applying IFRS 16 as an adjustment to the opening balance
of retained earnings at 1 January 2018, the date of initial
application. A right-of-use asset valued at GBP4.1m was recognised
at 1 January 2018, with an opening lease liability of GBP4.7m and a
cumulative loss of GBP0.6m. A depreciation expense of GBP0.2m and
an interest expense of GBP0.1m for the six months to 30(th) June
2018 has been recognised, replacing the operating expense in
respect of rental payments of GBP0.3m. The net impact is a GBP0.1m
reduction in operating loss and a GBP0.3 improvement in adjusted
operating profit for the six months to 30(th) June 2018.
In the current financial year the Group has adopted IFRS 15
Revenue from Contracts with Customers. The Group has elected to
restate comparative information from prior periods upon adoption of
IFRS 15 and has applied the practical expedient under which
contracts which began and ended in 2017 or that were completed
prior to 1(st) January 2017 are not restated.
Notes to the condensed set of unaudited interim financial
statements
2. Basis of preparation (continued)
Re-measurement of accounting for acquisition of Polaris
Consulting (Holdings) Limited
In 2018 the Group finalised its accounting for the acquisition
of Polaris Consulting (Holdings) Limited and since finalising the
consolidated financial statements for the year ended 31 December
2017 further information has arisen requiring a revision to the
provision accounting disclosed.
The tables below show the effect of IFRS 15 and re-measurement
of the acquisition accounting for Polaris Consulting (Holdings)
Limited on the balance sheet as at 30(th) June 2017 and 31(st)
December 2017, and the effect on the income statement for the six
month period ended 30(th) June 2017 and the year ended 31(st)
December 2017.
Consolidated statement of financial position (extract)
At 31 December 2017
Fair value
revision
of identified
assets and
As previously liabilities
reported IFRS 15 reclassifications acquired Restated
GBP'000 GBP'000 GBP'000 GBP'000
----------------------------- ------------- ------------------------- -------------- --------
Non-current assets
Goodwill 4,170 - 216 4,386
Current assets
Inventories 230 6,312 - 6,542
Trade and other receivables 13,798 (1,600) - 12,198
----------------------------- ------------- ------------------------- -------------- --------
Total assets 54,024 4,712 216 58,952
----------------------------- ------------- ------------------------- -------------- --------
Current liabilities
Trade and other payables (10,962) (7,932) (216) (19,110)
----------------------------- ------------- ------------------------- -------------- --------
Total liabilities (13,906) (7,932) (216) (22,054)
----------------------------- ------------- ------------------------- -------------- --------
Net assets 40,118 (3,220) - 36,898
============================= ============= ========================= ============== ========
Equity
Retained earnings 14,102 (3,220) - 10,882
----------------------------- ------------- ------------------------- -------------- --------
Total equity 40,118 (3,220) - 36,898
============================= ============= ========================= ============== ========
Consolidated statement of financial position (extract)
At 30 June 2017
Fair value
revision
of identified
assets and
As previously liabilities
reported IFRS 15 reclassifications acquired Restated
GBP'000 GBP'000 GBP'000 GBP'000
----------------------------- ------------- ------------------------- -------------- --------
Current assets
Inventories 540 6,631 - 7,171
Trade and other receivables 7,715 (1,135) - 6,580
----------------------------- ------------- ------------------------- -------------- --------
Total assets 30,402 5,496 - 35,898
----------------------------- ------------- ------------------------- -------------- --------
Current liabilities
Trade and other payables (9,263) (8,966) - (18,229)
----------------------------- ------------- ------------------------- -------------- --------
Total liabilities (11,017) (8,966) - (19,983)
----------------------------- ------------- ------------------------- -------------- --------
Net assets 19,385 (3,470) - 15,915
============================= ============= ========================= ============== ========
Equity
Retained earnings 14,520 (3,470) - 11,050
----------------------------- ------------- ------------------------- -------------- --------
Total equity 19,385 (3,470) - 15,915
============================= ============= ========================= ============== ========
Notes to the condensed set of unaudited interim financial
statements
2. Basis of preparation (continued)
Consolidated income statement (extract)
Year ended 31 December 2017
Fair value
revision
of identified
assets and
As previously liabilities
reported IFRS 15 reclassifications acquired Restated
GBP'000 GBP'000 GBP'000 GBP'000
---------------------------- ------------- ------------------------- -------------- --------
Revenue 29,460 (1,545) - 27,915
Cost of sales (21,232) 1,111 - (20,121)
---------------------------- ------------- ------------------------- -------------- --------
Gross profit 8,228 (434) - 7,794
---------------------------- ------------- ------------------------- -------------- --------
Operating loss (532) (434) - (966)
---------------------------- ------------- ------------------------- -------------- --------
Adjusted operating profit 2,582 (434) - 2,148
---------------------------- ------------- ------------------------- -------------- --------
Loss before income tax (597) (434) - (1,031)
---------------------------- ------------- ------------------------- -------------- --------
Total comprehensive loss
for the year attributable
to shareholders (719) (434) - (1,153)
============================ ============= ========================= ============== ========
Basic and diluted loss
per share (0.09) (0.06) - (0.15)
============================ ============= ========================= ============== ========
Consolidated income statement (extract)
Six months to 30 June 2017
Fair value
revision
of identified
assets and
As previously liabilities
reported IFRS 15 reclassifications acquired Restated
GBP'000 GBP'000 GBP'000 GBP'000
------------------------------ ------------- ------------------------- -------------- --------
Revenue 13,640 (3,152) - 10,488
Cost of sales (9,933) 2,467 - (7,466)
------------------------------ ------------- ------------------------- -------------- --------
Gross profit 3,707 (685) - 3,022
------------------------------ ------------- ------------------------- -------------- --------
Operating loss (272) (685) - (957)
------------------------------ ------------- ------------------------- -------------- --------
Adjusted operating profit 760 (685) - 75
------------------------------ ------------- ------------------------- -------------- --------
Loss before income tax (272) (685) - (957)
------------------------------ ------------- ------------------------- -------------- --------
Total comprehensive loss
for the period attributable
to shareholders (300) (685) - (985)
============================== ============= ========================= ============== ========
Basic and diluted loss
per share (0.07) (0.16) - (0.23)
============================== ============= ========================= ============== ========
Notes to the condensed set of unaudited interim financial
statements
3. Segmental reporting
The following is an analysis of the Group's revenue and results
from the continuing operations by reportable segment.
Central
unallocated
T&E(2) CaPS(2) costs Group
GBP'000 GBP'000 GBP'000 GBP'000
Six months ended 30 June 2018
Revenue 10,911 5,065 - 15,976
---------------------------- ------- -------- ------------- --------
Operating profit / (loss) 471 (605) (572) (706)
Depreciation, amortisation
and impairment 752 256 51 1,059
Change in fair value of
contingent consideration - - (222) (222)
Acquisition related cost - - 164 164
Non-operating costs 476 107 14 597
Share based payments - - 37 37
---------------------------- ------- -------- ------------- --------
Adjusted operating profit
/ (loss)(1) 1,699 (242) (528) 929
============================ ======= ======== ============= ========
Six months ended 30 June 2017
Revenue 7,563 2,925 - 10,488
---------------------------- ------- -------- ------------- --------
Operating profit / (loss) 370 (535) (792) (957)
Depreciation, amortisation
and impairment 514 3 98 615
Acquisition related cost - - 89 89
Non-operating costs - 305 - 305
Share based payments - - 23 23
---------------------------- ------- -------- ------------- --------
Adjusted operating profit
/ (loss)(1) 884 (227) (582) 75
============================ ======= ======== ============= ========
Year ended 31 December 2017
Revenue 22,149 5,766 - 27,915
---------------------------- ------- -------- ------------- --------
Operating profit / (loss) 2,300 (1,223) (2,043) (966)
Depreciation, amortisation
and impairment 1,602 10 230 1,842
Acquisition related cost - - 242 242
Non-operating costs 124 420 111 655
Share based payments - - 375 375
---------------------------- ------- -------- ------------- --------
Adjusted operating profit
/ (loss)(1) 4,026 (793) (1,085) 2,148
============================ ======= ======== ============= ========
(1) Adjusted operating profit is defined as operating loss
adjusted to add back depreciation of property, plant and equipment
and right-of-use assets, amortisation of intangible assets and
impairment gains or losses on non-current assets, changes in fair
value of contingent consideration, any other acquisition-related
charges, share based payment charges and non-operating costs.
Non-operating costs are those items believed to be exceptional in
nature by virtue of their size and or incidence. The directors of
the Company believe this measure is more reflective of the
underlying performance of the Group than equivalent GAAP measures.
This is primarily due to the exclusion of non-cash items, such as
share-based payments, impairment, depreciation and amortisation, as
well as non-operating costs. This provides shareholders and other
users of the financial statements with the most representative
year-on-year comparison of operating performance. This measure and
the separate components remain consistent with 2017.
Non-operating costs in the six months to 30 June 2018 comprise
restructuring costs at the Manchester and Wincanton sites, and the
Group head office.
(2) Following the refinement of the Group's strategy to manage
the business along two distinct business units in 2017, the Group
has subsequently renamed the business segments. "TPG Engineering"
is now named "Technology and Engineering" ("T&E") and "TPG
Services" named "Consulting and Programme Services" ("CaPS").
Notes to the condensed set of unaudited interim financial
statements
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 Year ended
ended ended 31 December
30 June 2018 30 June 2017 2017
number number number
Weighted average shares
in issue 756,959,084 420,857,956 756,959,084
========================= ============== ============== =============
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 2017 and year ended 31 December 2017: 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 news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
IR GGUGABUPRGBU
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