TIDMTPG
RNS Number : 8171Q
TP Group PLC
01 November 2021
This announcement contains inside information
TP Group plc
("TPG", "TP Group" or "the Company")
Business and Board Update
Following the investment by Science Group plc ("Science Group")
and the recent changes to the Board of TP Group plc, the following
update sets out the current position of the Company and the future
direction.
Board Composition
Following the recent Board changes and the adoption of a new
strategy for the business, detailed below, David Lindsay, Chief
Executive Officer, has given notice of his intention to resign his
position. Mr Lindsay has a 12 months' notice period, which will
expire in October 2022. He will continue to support the Board,
focusing on the continuing restructuring and realignment of the
Group to provide a solid platform for the future. It is anticipated
that he will leave the Company upon completion of that process,
anticipated to be in March next year.
Martyn Ratcliffe has been appointed Executive Chairman of TP
Group plc with immediate effect. Until a new CEO is appointed, if
the Board consider that such appointment is necessary, he will take
over the direction of the core business operations. Mr Ratcliffe's
services will be charged to the Company by Science Group on the
basis of 25 days per Quarter, which will reduce if/when a new CEO
is appointed.
Derren Stroud continues in his role as Chief Financial Officer,
with the full support of the new Board. Peter Bertram will chair
the Audit Committee and until a new appointment is made will also
chair the Remuneration Committee. Claire MacPherson will continue
in her role as Company Secretary.
The Board will now commence a search for two independent
non-executive directors, including a Senior Independent Director
and at least one female director.
TP Group Strategy
The strategy for TP Group will be to focus on the UK-based
Defence and Aerospace operations, comprising TPG Maritime, UK
Consultancy and Osprey. These businesses constitute approximately
70% of the TP Group revenue and a greater proportion of the profit
contribution. The organisation will be structured to improve
operational corporate governance with checks and balances
appropriate for a public company.
The Board will be reviewing the strategy of Sapienza, Westek and
the Northstar operations. David Lindsay will lead these activities,
together with the restructuring and cost reduction programme that
he has already initiated.
In due course, opportunities for cooperation and collaboration
between TP Group and Science Group, TP Group's largest shareholder,
will be explored.
Current Trading
The Group's trading has been satisfactory during the third
quarter ended 30 September 2021 and the forecast from the operating
businesses for the full financial year remains broadly in line with
market expectations and in compliance with banking covenants.
Certain payments, including deferred consideration related to the
Osprey acquisition, advisor fees and the payment to the former CEO,
have been phased and deferred to assist cash flow through to Q1
2022.
To the end of September, TP Group has incurred exceptional costs
totalling GBP2.1 million, including GBP0.5 million related to the
termination of the former CEO in June 2021; GBP0.5 million in
relation to the corporate defence in August/September 2021; and
GBP0.8m associated with the Osprey deferred consideration. In view
of the changes set out above, it is anticipated that further
exceptional costs will be incurred in the current year. It is also
anticipated that impairment of goodwill and intangibles may be
required.
In conjunction with the CFO and the finance team, the newly
appointed Chairman of the Audit Committee will conduct a thorough
review of the Group's balance sheet along with accounting policies,
including revenue recognition and R&D capitalisation. The Board
is aware of a number of legacy contracts which are proving
challenging and provisions may be required in order to address
these matters and position TP Group on a solid foundation for the
future.
Management and Employee Incentive Schemes
The Remuneration Committee of the Board will be reviewing
incentive/reward scheme(s) for management and staff. From 2022, it
is anticipated that such schemes will be based on the financial
performance of the Group to align management and employee rewards
with shareholder interests.
The TP Group share option scheme has expired. It is proposed
that a new scheme, or alternative incentive arrangement, be
introduced. Approval from shareholders will be sought at the next
Annual General Meeting of the Company in relation to any new scheme
proposed.
Warrant Agreement
On 30 September 2021, in lieu of advisory fees in relation to
the possible offer by Science Group, an agreement was signed
between TP Group and Cenkos granting warrants to Cenkos over
23,375,361 new ordinary shares in the Company, equivalent to
approx. 3% of the Company's issued share capital. The warrants are
exercisable at 5.8 pence and the exercise period is five years.
Summary
The future direction of TP Group has now been resolved.
Following recent events, the Board can now focus on implementing
the strategy associated with the investment by Science Group. The
opportunities for collaboration and cooperation between the two
organisations will be explored in due course.
In the short term, the Board will be focused on completing the
restructuring of the Group and addressing legacy issues to enable
the Company to establish a solid platform for the future. This will
require streamlining some operations to enable investment in the
core, profitable UK-based businesses. Completing this realignment
of the Group will be the priority.
For further information, please contact:
TP Group plc Tel: 01753 285 810
Martyn Ratcliffe, Executive Chairman
David Lindsay, Chief Executive Officer
Derren Stroud, Chief Financial Officer
www.tpgroup.uk.com
Cenkos Securities plc Tel: 020 7397 8980
Stephen Keys / Mark Connelly / Callum
Davidson
www.cenkos.com
Notes to Editors
TP Group delivers complex equipment, software and services for
mission-, business- and safety-critical applications in defence,
space, intelligence & security and energy sectors. With more
than 400 people in 6 European countries, it serves global customers
through long-term contracts. The Company's shares have been traded
on AIM since July 2001.
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END
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November 01, 2021 03:00 ET (07:00 GMT)
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