TIDMTPG
RNS Number : 0575A
TP Group PLC
21 September 2022
The information contained within this announcement is deemed to
constitute inside information as stipulated under the Market Abuse
Regulation (EU) No. 596/2014. Upon the publication of this
announcement, this inside information is now considered to be in
the public domain.
21 September 2022
TP Group plc
("TP Group" or the "Company" or the "Group")
UNAUDITED INTERIM RESULTS FOR THE SIX MONTHSED 30 JUNE 2022
-- TPG Services division operating in line with management expectations
-- TPG Maritime division impacted by continuing renegotiation of legacy onerous contracts
-- Disposal of Sapienza and Northstar during the period
-- Discussions with a potential acquirer of Westek continue
-- H1 2022 closing net debt at 30 June 2022 was GBP4.3m (Dec 2021 net debt: GBP1.6m)
For further information, please contact:
Martyn Ratcliffe, Chairman Tel: 01753 285802
Derren Stroud, Chief Financial Officer
www.tpgroupglobal.com
Cenkos Securities plc Tel: 020 7397 8980
Stephen Keys / Mark Connelly / Callum
Davidson
www.cenkos.com
Business Review
TP Group is a consulting and engineering business operating
primarily in the UK defence and aerospace markets. The Group
comprises two operating divisions: TPG Services and TPG
Maritime.
Comparisons to H1 2021 are before the additional provisions and
charges that were accounted for in the 2021 full year results. In
view of the current priorities, the Board consider that analysis of
these 2021 adjustments and assessment of the exact timing of these
adjustments through the year would be costly and of little benefit
to shareholders. Therefore the 2021 comparisons are provided before
the adjustments recorded for the full year and readers are referred
to the Group's Annual Report for 2021. The H1 2021 results however,
have been restated to take into account the impacts of the 2020
prior period adjustments. These adjustments have a roll forward
impact on the H1 2021 results which the business has been able to
quantify and account for accordingly. As noted above, the readers
are referred to the Group's Annual Report for 2021 for details of
the 2020 prior year adjustments.
For the six months ended 30 June 2022 the Group reported revenue
from continuing operations of GBP24.3m (H1 2021 restated: GBP23.5m)
and adjusted operating profit of GBP1.3m (H1 2021 restated:
GBP0.9m). The operating loss from continuing operations was GBP0.3m
(2021 operating loss restated: GBP1.7m) and the statutory loss,
which includes discontinued operations, was GBP0.2m (H1 2021
statutory loss restated: GBP2.8m).
The Group's net debt position on 30 June 2022 was GBP4.3m (31
December 2021 net debt: GBP1.6m). The GBP5m Science Group facility
was undrawn at the date of this announcement. Whilst drawdowns have
occurred during the period, the funds have not been required and
have been repaid to Science Group. However, the Board are
forecasting utilising the Science Group facility in the coming
months. The HSBC loan facility was fully drawn on 30 June 2022 and
remained fully drawn at the date of this announcement. The HSBC
facility reduced from GBP7m to c.GBP6m on 12 July 2022, following
the repayment of c.GBP1m from the net disposal proceeds from the
sale of Sapienza. As noted in the full year results, the Board will
shortly be commencing a refinancing exercise including discussions
with its bank to extend or renew the facility. The Board are not
anticipating that the Science Group facility will be extended
beyond September 2023.
TPG Services
The TPG Services Division delivers technical expertise to
complex and critical major government sponsored programmes in the
defence and aerospace sectors. Osprey, the aviation safety
consulting business acquired in 2020, is now being integrated into
TPG Services existing consultancy business.
The TPG Services division has continued to enjoy success through
the first half of the year performing in-line with management's
expectations. For the six months ended 30 June 2022, TPG Services
delivered revenue of GBP14.3m (H1 2021: GBP12.8m), organic growth
of 12%. Adjusted operating profit increased to GBP1.5m (H1 2021:
GBP0.9m).
TPG Maritime
TPG Maritime designs, manufactures and supports life support
systems for submarine programmes including oxygen production and
the removal of toxic gases.
The division has had a slower start to 2022 due to the
previously reported challenges relating to onerous legacy contracts
and the resources required in renegotiating commercial terms. Order
intake, revenue and profit metrics are all below management's
expectations for the year-to-date. Resolving these legacy contracts
is the Board's key priority and a corporate imperative in light of
the refinancing requirement noted above. In the first half of 2022,
a new management team was installed within the division to effect
the necessary changes, including a general manager seconded from
Science Group and the recruitment of a finance manager, supported
by a strengthened operational management team.
For the six months ended 30 June 2022, the TPG Maritime Division
reported revenue of GBP10.0m (H1 2021 restated: GBP10.7m) and an
adjusted operating profit of GBP0.3m (H1 2021 restated: GBP0.8m).
The negative impact of the legacy contracts will continue to affect
the division's financial performance for at least the remainder of
the current year and the next.
Due to the materiality of the onerous legacy contracts, the
ability of TP Maritime Limited, the operating subsidiary, to
continue to operate as a going concern is dependent on the
continuing financial support of TP Group plc. The Board recognise
that this onerous legacy may impact the Group's refinancing
discussions referenced above.
Corporate
In the first half of 2022, the Board has executed the Group
strategy set out in November 2021 to focus on its UK-based defence
and aerospace operations. Accordingly, the Board disposed of two of
its non-core business activities: Northstar in March 2022 and
Sapienza in July 2022. Westek continues to operate profitably and
discussions with a potential acquirer continue. As noted above,
half of the disposal proceeds (cGBP1.0m) from the sale of Sapienza
have been used to reduce the HSBC debt facility to cGBP6.0m.
Summary and outlook
This period has continued to see mixed fortunes across TP
Group's divisions as TPG Services enjoys both growth and increasing
profitability while TPG Maritime's performance remains hampered by
the legacy contracts.
In summary, 2022 and 2023 will be a period of transition for TP
Group, critically dependent on the resolution of both the legacy
contracts in TPG Maritime and the Group's financing/capital
structure, matters which may be inter-related.
Condensed consolidated statement of comprehensive income
Six months Six months Year ended
ended ended 31 December
30 June 30 June 2021
2022 2021
(restated) (Audited)
(Unaudited)(1) (Unaudited)
(1)
GBP'000 GBP'000 GBP'000
Revenue from continuing operations 24,330 23,496 44,255
Cost of sales (19,113) (18,250) (37,350)
---------------------------------------------- ----------------- -------------- --------------
Gross profit from continuing operations 5,217 5,246 6,905
Administrative expenses (5,495) (6,985) (14,405)
---------------------------------------------- ----------------- -------------- --------------
Operating loss from continuing
operations (278) (1,739) (7,500)
Operating loss from continuing
operations (278) (1,739) (7,500)
Depreciation, amortisation and
impairment 988 1,284 3,129
Acquisition-related costs - 140 (40)
Exceptional operating costs 599 531 1,875
Gain on disposal of assets - - (23)
Share-based payments expense 6 34 164
Movement in expected earn-out payments - 631 830
---------------------------------------------- ----------------- -------------- --------------
Adjusted operating profit / (loss)
from continuing operations 1,315 881 (1,565)
---------------------------------------------- ----------------- -------------- --------------
Net finance costs (343) (129) (450)
---------------------------------------------- ----------------- -------------- --------------
Loss before taxation from continuing
operations (621) (1,868) (7,950)
Taxation credit 91 122 59
---------------------------------------------- ----------------- -------------- --------------
Loss for the period from continuing
operations (530) (1,746) (7,891)
Profit / (loss) for the period
from discontinued operations (attributable
to equity holders of the company) 311 (1,065) (11,138)
---------------------------------------------- ----------------- -------------- --------------
Loss for the period attributable
to equity holders of the parent
company (219) (2,811) (19,029)
---------------------------------------------- ----------------- -------------- --------------
Other comprehensive income/(expense)
for the period:
Loss for the period (219) (2,811) (19,029)
Foreign exchange (losses) / gains
on translation of foreign operations (36) 65 (481)
---------------------------------------------- ----------------- -------------- --------------
Total comprehensive expense for
the period attributable to equity
holders of the parent company (255) (2,746) (19,510)
============================================== ================= ============== ==============
Earnings per share:
Loss per share (pence per share)
Continuing operations:
Basic and diluted loss per share
(pence per share) (0.07) (0.22) (1.01)
Discontinued operations:
Basic and diluted profit / (loss)
per share (pence per share) 0.04 (0.14) (1.43)
Total:
Basic and diluted loss per share
(pence per share) (0.03) (0.36) (2.44)
============================================== ================= ============== ==============
(1) The six-month periods to June 2022 and June 2021 have been
presented to reflect continuing operations and exclude the results
of Northstar (disposed of in March 2022), Sapienza Consulting
Holdings BV (disposed of in July 2022) and Westek Technology
Limited (asset held for sale at the balance sheet date). The
results for Northstar, Sapienza and Westek are presented above as
'profit / (loss) for the period from discontinued operations'. The
six-month period to June 2021 has also been presented to reflect
the impact of the 2020 prior year adjustments as referred to in the
Group's Annual Report for 2021. Refer to note 7 for further
details.
(2) Adjusted operating profit / (loss) is defined as operating
result 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,
acquisition consideration accounted for as employment costs owing
to ongoing service conditions, any acquisition-related charges,
share-based payment charges and exceptional operating costs. The
directors believe this measure is more reflective of the underlying
performance of the Group than equivalent Generally Accepted
Accounting Practice ('GAAP') measures because it is excludes
non-recurring exceptional and acquisition costs, non-cash items and
is therefore a better proxy for underlying operating cash,
providing shareholders and other users of the financial statements
with the most representative year-on-year comparison of underlying
operational performance attributable to shareholders.
Condensed consolidated statement of financial position
30 June 30 June 31 December
2022 2021 2021
(restated)
(Unaudited) (Unaudited) (Audited)
GBP'000 GBP'000 GBP'000
Assets
Non-current assets
Goodwill 4,338 8,091 4,338
Other intangible assets 7,324 18,521 7,978
Property, plant and equipment 522 920 591
Right-of-use assets 2,270 3,471 2,485
Total non-current assets 14,454 31,003 15,392
------------------------------------ -------------- -------------- -------------
Current assets
Inventories 383 1,820 416
Trade and other receivables 3,494 10,469 4,512
Amounts due from contract
customers 6,428 8,649 5,599
Taxation recoverable 107 143 258
Cash and bank balances 2,653 3,480 5,376
------------------------------------ -------------- -------------- -------------
13,065 24,561 16,161
Assets held for sale(1) 7,740 - 8,170
------------------------------------ -------------- -------------- -------------
Total current assets 20,805 24,561 24,331
------------------------------------ -------------- -------------- -------------
Total assets 35,259 55,564 39,723
------------------------------------ -------------- -------------- -------------
Liabilities
Current liabilities
Trade and other payables (7,684) (14,408) (11,154)
Amounts due to contract
customers (4,594) (5,360) (5,173)
Lease liabilities (310) (619) (424)
------------------------------------ -------------- -------------- -------------
(12,588) (20,387) (16,751)
Liabilities held for sale(1) (6,642) - (6,326)
------------------------------------ -------------- -------------- -------------
Total current liabilities (19,230) (20,387) (23,077)
------------------------------------ -------------- -------------- -------------
Non-current liabilities
Deferred taxation (1,315) (2,766) (1,403)
Lease liabilities (2,518) (3,657) (2,752)
Borrowings (7,000) (7,000) (7,000)
Provisions (561) (235) (607)
------------------------------------ -------------- -------------- -------------
Total non-current liabilities (11,394) (13,658) (11,762)
------------------------------------ -------------- -------------- -------------
Total liabilities (30,624) (34,045) (34,839)
------------------------------------ -------------- -------------- -------------
Net assets 4,635 21,519 4,884
==================================== ============== ============== =============
Equity
Share capital 7,792 7,792 7,792
Share premium 18,529 18,529 18,529
Own shares held by EBT - (561) -
Translation of foreign operations (146) 475 (90)
Share-based payments reserve 285 720 553
Retained earnings (21,826) (5,437) (21,901)
------------------------------------ -------------- -------------- -------------
Total equity due to shareholders 4,634 21,518 4,883
Non-controlling interest 1 1 1
------------------------------------ -------------- -------------- -------------
Total equity 4,635 21,519 4,884
==================================== ============== ============== =============
(1) Includes the assets and liabilities for Northstar (disposed
of in March 2022), Sapienza Consulting Holdings BV (disposed of in
July 2022) and Westek Technology Limited (asset held for sale at
the balance sheet date).
Condensed consolidated statement of changes in equity
Own
shares Share-based
Share Share held payments Translation Retained Non-controlling
capital premium by EBT reserve reserve earnings interest Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Balance at 1
January
2021 7,792 18,529 (561) 685 415 131 1 26,992
Adjustment to
prior
period - - - - - (2,762) - (2,762)
------------------- --------- --------- -------- ------------ ----------- ---------- --------------- ---------
Balance at 1
January
2021 (restated) 7,792 18,529 (561) 685 415 (2,631) 1 24,230
Loss for the
period
(restated) - - - - - (2,811) - (2,811)
Other
comprehensive
gain - - - - 65 - - 65
------------------- --------- --------- -------- ------------ ----------- ---------- --------------- ---------
Total
comprehensive
gain / (loss) - - - - 65 (2,811) - (2,746)
Share-based
payments
charge - - - 35 - - - 35
Forex movement - - - - (5) 5 - -
------------------- --------- --------- -------- ------------ ----------- ---------- --------------- ---------
Balance at 30 June
2021 7,792 18,529 (561) 720 475 (5,437) 1 21,519
=================== ========= ========= ======== ============ =========== ========== =============== =========
Balance at 1 July
2021 7,792 18,529 (561) 720 475 (5,437) 1 21,519
Loss for the
period - - - - - (16,218) - (16,218)
Other
comprehensive
loss - - - - (546) - - (546)
------------------- --------- --------- -------- ------------ ----------- ---------- --------------- ---------
Total
comprehensive
loss - - - - (546) (16,218) - (16,764)
Share-based
payments
charge - - - 129 - - - 129
Share-based
payments
reserves transfer - - - (296) - 296 - -
Forex movement - - - - (19) 19 - -
Release in closure - -
of EBT - - 561 - - (561) - -
------------------- --------- --------- -------- ------------ ----------- ---------- --------------- ---------
Balance at 31
December
2021 7,792 18,529 - 553 (90) (21,901) 1 4,884
=================== ========= ========= ======== ============ =========== ========== =============== =========
Balance at 1
January
2022 7,792 18,529 - 553 (90) (21,901) 1 4,884
Loss for the
period - - - - - (219) - (219)
Other
comprehensive
loss - - - - (36) - - (36)
------------------- --------- --------- -------- ------------ ----------- ---------- --------------- ---------
Total
comprehensive
gain loss - - - - (36) (219) - (255)
Share-based
payments
charge - - - 6 - - - 6
Share-based
payments
reserves transfer - - - (274) - 274 - -
Forex movement - - - - (20) 20 - -
------------------- --------- --------- -------- ------------ ----------- ---------- --------------- ---------
Balance at 30 June
2022 7,792 18,529 - 285 (146) (21,826) 1 4,635
=================== ========= ========= ======== ============ =========== ========== =============== =========
Condensed consolidated statement of cash flows
Six months ended Six months Year ended
30 June ended 31 December
2022 30 June 2021
2021
(restated)
(Unaudited) (Audited)
(Unaudited)
GBP'000 GBP'000 GBP'000
------------------------------------ ------------------ -------------- --------------
Operating activities
Loss before income tax from
continuing operations (621) (1,869) (7,950)
Profit / (loss) before income
tax from discontinued operations 375 (1,186) (12,459)
------------------------------------ ------------------ -------------- --------------
Total loss before taxation (246) (3,055) (20,409)
Adjustments for:
Depreciation, amortisation
and impairment 1,288 2,260 4,918
Finance cost 377 146 512
Share-based payment expense 6 34 164
Impairment (release) / loss
on available-for-sale assets (620) - 10,572
Loss on disposal of subsidiary (46) - (129)
(Increase) / decrease in
inventories (94) (404) 698
Decrease / (increase) in
trade and other receivables 734 (1,456) 1,802
(Decrease) / increase in
trade and other payables (3,615) (98) 1,605
(Decrease) / increase in
provisions (68) (117) 421
------------------------------------ ------------------ -------------- --------------
(2,284) (2,690) 154
Taxation credit 225 103 77
------------------------------------ ------------------ -------------- --------------
Net cash (used in) / generated
from operating investing
activities
activities (2,059) (2,587) 231
------------------------------------ ------------------ -------------- --------------
Purchase of property, plant
and equipment (75) (143) (286)
Purchase of intangible fixed
assets (264) (529) (964)
Disposal of subsidiary, net
of cash disposed of 567 - 135
------------------------------------ ------------------ -------------- --------------
Net cash generated / (used
in) investing activities 228 (672) (1,115)
------------------------------------ ------------------ -------------- --------------
Financing activities
Interest payable (377) (146) (354)
Loan arrangement fee - - (150)
Repayment of lease liabilities (510) (493) (598)
------------------------------------ ------------------ -------------- --------------
Net cash used in financing
activities (887) (639) (1,102)
------------------------------------ ------------------ -------------- --------------
Effect of exchange rates
on cash and cash equivalents (5) 6 (10)
------------------------------------ ------------------ -------------- --------------
Net (decrease) / increase
in cash and cash equivalents (2,723) (3,892) (1,996)
Cash and cash equivalents
at the beginning of the period 5,376 7,372 7,372
------------------------------------ ------------------ -------------- --------------
Cash and cash equivalents
at the end of the period 2,653 3,480 5,376
==================================== ================== ============== ==============
Notes to the condensed set of unaudited interim financial
statements
1. General information
TP Group plc (the 'Group') together with its subsidiaries is a
consulting and engineering business operating primarily in the UK
defence and aerospace markets.
The Group is incorporated under the Companies Act and domiciled
in the United Kingdom. The address of the registered office of the
Parent Company is Cale House, Station Road, Wincanton, BA9 9FE. The
Company's shares are listed on the Alternative Investment Market of
the London Stock Exchange
2. Basis of preparation
The financial information for the six months ended 30 June 2022
presented in these unaudited condensed consolidated interim
financial statements (the 'interim report') has been measured and
presented in sterling which is the currency of the primary economic
environment in which the Group operates. They have been prepared
under the historical cost convention, except for, where applicable,
the revaluation of financial assets and liabilities at fair value
through profit or loss, financial assets at fair value through
other comprehensive income, or when an impairment is recognised on
non-current assets. Figures are presented to the nearest thousand
pounds, unless otherwise stated.
The consolidated financial statements have been prepared in
accordance with UK adopted international accounting standards and
interpretations issued by the International Financial Reporting
Standards Interpretations Committee applicable to companies
reporting under IFRS. The financial statements comply with
International Financial Reporting Standards as adopted by the UK
("IFRS").
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 2021, prepared under International
Financial Reporting Standards as adopted by the UK ("IFRS"), have
been delivered to the Registrar of Companies. The auditor's report
on the 2021 financial statements was unqualified, did not contain a
statement under Section 498(2) or Section 498(3) of the Companies
Act 2006 but did draw attention to a material uncertainty related
to going concern. The audit opinion was not modified in respect of
this matter.
These unaudited condensed consolidated interim financial
statements were approved for issue by the Board of Directors on 20
September 2022.
Going Concern
As part of the going concern assessment, the directors have
considered:
-- various scenarios for the business for the period through to
31 December 2023, including delivery of its base case budget
through 2022 and 2023, and downside sensitivities to this budget,
as noted below.
-- the Group's sources of committed external financing and related covenants.
The Group's debt facilities at the time of this announcement
are:
-- A GBP6m HSBC Bank loan facility which was fully drawn at the
time of signing these accounts.
-- A GBP5m loan facility secured from Science Group plc in
December 2021. The loan was undrawn at the balance sheet date and
the balance was nil at the time of this RNS.
Both facilities terminate in September 2023. The Board will
commence a process in the second half of 2022 to refinance the
Group and will consider both debt and equity options.
In addition to its debt facilities, the Company could raise
additional equity capital through its listing on the AIM, although
is mindful that the ongoing market environment could impact any
fundraising potential. The Company is currently able to raise up to
10% of its market capitalisation through an equity placing on a non
pre-emptive basis without the need for shareholder approval.
Accordingly, the directors believe that the Company would be able
to react with reasonable speed in the event it was required to
pursue this course of action, subject to market conditions.
The directors regularly review operating performance and cash
generation projections for the Group which are based on delivery of
the Group's order book, a reasonable expectation of success in
ongoing and future bids for further contracts and an expectation of
additional work from current and new customers. A base case budget
and cash flow projection has been prepared for 2022 and 2023,
covering at least the 12-month period following the signing of the
Group accounts. The base case budget provides sufficient liquidity
and bank covenant compliance throughout the period.
The business however continues to navigate through the
consequential effects of COVID-19, most notably the challenges in
supply chains and logistics, and the onerous legacy TPG Maritime
contracts. Furthermore, whilst the Group has no trade or activity
in Ukraine or Russia, it is mindful of the impact that the conflict
may have on global supply chains and the timing of new business
opportunities.
As such, the consequences of the above may further delay the
timely execution of both the Group's order book and new order wins
which could result in revenue, margins and resulting cash inflows,
that are less and/or later than modelled, putting pressure on the
Group's cash and covenant position at times. The directors have
therefore flexed and stress tested the base case budget to account
for various operating scenarios, the outcomes of which include:
-- a 20% reduction in revenue;
-- a reduction of 6% in the Group's gross margin percentage;
-- a deterioration in working capital cash conversion of GBP2.3m
in 2022 and GBP7.9m in 2023; and
-- a blend of the above.
These scenarios assume similar and/or greater levels of
disruption to the Group's business to those experienced to date
since the onset of the COVID-19 pandemic, despite conditions
improving and as a result of the onerous legacy TPG Maritime
contracts. All the scenarios take into account the cash and debt
facilities currently available to the Company.
The directors have reviewed the Group's overall position and
outlook in respect of the matters identified, including the
scenarios noted above, and are of the opinion that there are
reasonable grounds to believe that the operational and financial
projections are achievable, and that the base case budget provides
insulation to a plausible downside scenario. Accordingly, the
directors have a reasonable expectation that the Group will have
adequate resources to meet its obligations as and when they fall
due for the foreseeable future and are satisfied that it is
appropriate to prepare the financial statements for the Group on a
going concern basis.
However, considering all of the above factors, the directors
have concluded that if a more extreme but plausible down-side
scenario arises the Group could breach one or more of its covenants
in the 12-month period following approval of the financial
statements. In this scenario, the business would be reliant on
either securing a waiver from both HSBC Bank and Science Group or
securing additional funding/debt headroom. Both HSBC Bank and
Science Group have been supportive of the business through to this
point and, whilst the Board cannot guarantee a waiver will be
forthcoming, would consider it reasonable to conclude that
agreement could be reached with the parties. For the avoidance of
doubt, Martyn Ratcliffe and Peter Bertram would recuse themselves
from discussions with Science Group in relation to their loan
facility.
Furthermore, the Company could also look to raise additional
capital through either or both, a 10% direct equity placing, as
noted above or a wider equity placing that would require
shareholder approval. The latter option would take more time but
enable the Group to secure more funding than through a 10% direct
equity placing. These events and conditions therefore indicate that
a material uncertainty exists which may cast significant doubt on
the Group's and Parent Company's ability to continue as a going
concern and therefore their ability to realise their assets and
discharge their liabilities in the ordinary course of business.
These financial statements do not include the adjustments that
would be necessary should the Going Concern basis of preparation no
longer be appropriate.
This position is consistent with that disclosed in its 2021
Annual Report.
3. Segmental reporting
The Group's segmental reporting shows the performance of each
operating business separately from the central costs that remain
unallocated.
-- TPG Maritime designs, manufactures and supports life support
systems for submarine programmes
-- TPG Services delivers technical expertise to complex and
critical programmes in the defence and aerospace sectors
Financial information is provided to the chief operating
decision maker ('CODM') in line with this structure.
The segmental analysis is reviewed to operating profit. Other
resources are shared across the Group.
The following is an analysis of the Group's revenue and results
from the continuing operations by reportable segment.
TPG Maritime TPG Services Central
unallocated Group
costs
Continuing Operations: GBP'000 GBP'000 GBP'000 GBP'000
======================================= ========= ============== =============== =========
Six months to 30 June 2022
Revenue 10,021 14,309 - 24,330
Operating result (334) 1,123 (1,067) (278)
Depreciation, amortisation and
impairment 565 354 69 988
Exceptional operating costs 57 23 519 599
Share based payments - - 6 6
Adjusted operating profit /
(loss)(1) 288 1,500 (473) 1,315
======================================= ========= ============== =============== =========
TPG Maritime TPG Services
Central Group
unallocated
costs
Continuing Operations (restated)(2) GBP'000 GBP'000 GBP'000
: GBP'000
======================================= ========= ============== =============== =========
Six months to 30 June 2021
Revenue 10,700 12,796 - 23,496
Operating result 131 354 (2,224) (1,739)
Depreciation, amortisation and
impairment 632 517 135 1,284
Acquisition-related costs - - 140 140
Exceptional operating costs - - 531 531
Share based payments - - 34 34
Movement in expected earn-out
payments - - 631 631
Adjusted operating profit /
(loss)(1) 763 871 (753) 881
======================================= ========= ============== =============== =========
TPG Maritime TPG Services
Central Group
unallocated
costs
Continuing Operations: GBP'000 GBP'000 GBP'000 GBP'000
================================== ========= ============== =============== =========
Year ended 31 December 2021
Revenue 18,459 25,796 - 44,255
Operating result (4,393) 1,354 (4,461) (7,500)
Depreciation, amortisation and
impairment 1,840 1,008 281 3,129
Acquisition-related costs - - (40) (40)
Exceptional operating costs 86 - 1,789 1,875
Gain on disposal of assets - (23) - (23)
Share based payments - - 164 164
Movement in expected earn-out
payments - - 830 830
Adjusted operating profit /
(loss)(1) (2,467) 2,339 (1,437) (1,565)
================================== ========= ============== =============== =========
(1) Adjusted operating profit / (loss) is defined as operating
result 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,
acquisition consideration accounted for as employment costs owing
to ongoing service conditions, any acquisition-related charges,
share-based payment charges and exceptional operating costs. The
directors believe this measure is more reflective of the underlying
performance of the Group than equivalent Generally Accepted
Accounting Practice ('GAAP') measures because it is excludes
non-recurring exceptional and acquisition costs, non-cash items and
is therefore a better proxy for underlying operating cash,
providing shareholders and other users of the financial statements
with the most representative year-on-year comparison of underlying
operational performance attributable to shareholders.
(2) The comparative segment for the six months to 30 June 2021
has been restated to present the segments in line with the
financial statements to 31 December 2021
4. Income tax
The tax charge/(credit) for the period comprises
Six months Six months Year ended
ended ended 31st December
30th June 31st June
2022 2021 2021
(unaudited) (unaudited) (audited)
GBP'0000 GBP'0000 GBP'0000
Loss on ordinary activities including
discontinued operations (246) (3,054) (20,409)
----------------------------------------- ------------ ------------ --------------
Current tax credit for the year - - (25)
Adjustments in respect to prior
year (2) (10) (3)
Current tax (2) (10) (28)
Deferred tax arising on amortisation
of acquired intangibles (89) (112) (31)
----------------------------------------- ------------ ------------ --------------
Deferred tax (89) (112) (31)
========================================= ------------ ------------ --------------
Tax credit from continuing operations (91) (122) (59)
Tax charge / (credit) from discontinued
operations 64 (121) (1,321)
----------------------------------------- ------------ ------------ --------------
Tax credit from continuing and
discontinuing operations (27) (243) (1,380)
========================================= ============ ============ ==============
Effective tax rate 11.0% 8.0% 6.8%
========================================= ============ ============ ==============
5. 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:
Six months ended Six months Year ended
ended
30 June 2022 30 June 2021 31 December
2021
(Unaudited) (Unaudited) (Audited)
Number of shares Number of Number of
shares shares
Weighted average shares
in issue 779,178,719 779,178,719 779,178,719
========================== ================== =============== ==============
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.
6. Discontinued operations
Following review of the Group's strategy as noted in the market
release dated 1 November 2021. Westek Technology Limited
('Westek'), Sapienza Consulting Holdings BV, including its
subsidiaries ('Sapienza') and the Group's NorthStar operations have
been identified as assets held for sale in line with IFRS 5 Assets
Held for Sale and Discontinued Operations.
Westek makes up a significant percentage of the Engineering
business segment's revenue and operating result, and a material
percentage of Group's operating result and net assets. Furthermore,
the business represents the Group's entire ruggedised electronics
business and therefore represents a major line of business.
Discussions are ongoing with a potential buyer.
Sapienza made up a significant percentage of the Consulting
business segment's revenue, operating result and net assets and was
disposed of on 12 July 2022. Furthermore, the business
represented:
-- the Group's entire manpower activity in Europe
-- the Group's entire mainland European legal and people infrastructure
-- the Group's entire business for the document management software, Eclipse.
NorthStar was a significant part of the Group's software
operations in terms of revenue and adjusted operating profit/(loss)
and was disposed of on 31 March 2022. The balance of the software
operations is the Eclipse software suite of products sold by
Sapienza. Eclipse and NorthStar have now been disposed as noted
above, closing the Group's software business in its entirety.
The financial performance and cash flow information for these
discontinued operations, including the discontinued operations of
Northstar, disposed of on 31 March 2022 is as follows:
Six months Six months Year ended
ended ended
30 June 30 June 31 December
2022 2021 2021
(Unaudited)
(Unaudited) (Audited)
GBP'000 GBP'000 GBP'000
Revenue 8,200 8,696 18,674
Cost of sales (6,270) (7,125) (15,500)
------------------------------------ -------------- -------------- --------------
Gross profit 1,930 1,571 3,174
Administrative expenses (2,141) (2,741) (4,998)
Impairment 620 - (10,572)
------------------------------------ -------------- -------------- --------------
Operating loss 409 (1,170) (12,396)
Net finance costs (34) (16) (63)
------------------------------------ -------------- -------------- --------------
Profit / (loss) before taxation 375 (1,186) (12,459)
Taxation credit (64) 121 1,321
------------------------------------ -------------- -------------- --------------
Loss for the period attributable
to equity holders of the parent
company 311 (1,065) (11,138)
==================================== ============== ============== ==============
6. Discontinued operations (continued)
30 June 31 December
2022 2021
(Unaudited) (Audited)
GBP'000 GBP'000
Assets classified as held for
sale
Other intangible assets 1,445 1,482
Property, plant and equipment 110 137
Right-of-use assets 421 500
Inventory 431 303
Trade and other receivables 3,961 4,450
Amounts due to contract customers 1,372 1,298
------------------------------------- -------------- -------------
Total assets of disposal group
held for sale 7,740 8,170
===================================== ============== =============
Liabilities directly associated
with assets classified as held
for sale
Trade and other payables 1,753 1,707
Amounts due to contract customers 3,787 3,506
Taxation 5 15
Lease liabilities 585 663
Deferred tax liability 368 270
Provisions 144 165
------------------------------------- -------------- -------------
Total liabilities of disposal
group held for sale 6,642 6,326
===================================== ============== =============
Cashflows from / (used in) discontinued
operations:
Net cash flows from operating activities 752 (1,120)
Net cash flows from investing activities 290 (546)
Net cash flows from financing activities (145) (217)
Effects of exchange rates on cash and cash
equivalents (12) (10)
------------------------------------------------- ----- -------
Net decrease in cash generated by discontinued
operations company 885 (1,893)
================================================= ===== =======
7. Prior period adjustment
Following an intensive review of contracts within the TPG
Maritime business during the latter part of 2021 and early part of
2022, it was found that forecast costs to completion estimates were
understated and contractual transaction prices were overstated as
they did not include provision of late delivery penalties where
required under IFRS 15 at 31 December 2020. This resulted in a
prior year adjustment to the 2020 numbers, fully disclosed in the
2021 full year results. The aforementioned 2020 corrections
resulted in an overstatement of contract revenue-to-date at 30 June
2021. Management considers this to be a material error in line with
IAS 8 Accounting Policies, Changes in Accounting Estimates and
Errors (paragraphs 41-43) and corrected the prior period in line
with the requirements of the standard.
The principal accounting adjustment corrections at the 31
December 2020 that have impacted the 6-month period to 30 June 2021
are:
-- Increase in forecast costs to completion on contracts.
Revenue is recognised overtime in line with IFRS 15 Revenue
Recognition using the input cost method. The increase in costs to
completion has reduced revenue to be recognised for the six months
to 30 June 2021. The reduction in revenue reduces the amounts
recoverable from the customer at the reporting date.
-- Inclusion of late delivery penalties existing within
contractual terms. As above, revenue is recognised over time in
line with IFRS 15. The impact of late delivery penalties reduces
the amount of revenue to be recognised at the reporting date.
-- The increase in forecast costs to completion and late
delivery penalties has resulted in the requirement to recognise
onerous contract provisions. The impact of the onerous contract
provisions increases provisions at the reporting date.
The impact on figures originally reported in the financial
statements for the six months to 30 June 2021 is shown below.
Six months Adjustment Prior Six months
to in respect period to
30 June of discontinued adjustment 30 June
2021 operations 2021
as originally restated
stated
GBP'000 GBP'000 GBP'000 GBP'000
Income statement:
Revenue from continuing operations 33,772 (8,696) (1,580) 23,496
Cost of sales (25,702) 7,125 327 (18,250)
------------------------------------- ---------------- ------------------ ------------- ------------
Gross profit from continuing
operations 8,070 (1,571) (1,253) 5,246
Administrative expenses (9,976) 2,741 250 (6,985)
------------------------------------- ---------------- ------------------ ------------- ------------
Operating loss from continuing
operations (1,906) 1,170 (1,003) (1,739)
Net finance costs (145) 16 - (129)
Loss before taxation from
continuing operations (2,051) 1,186 (1,003) (1,868)
Taxation 243 (121) - 122
------------------------------------- ---------------- ------------------ ------------- ------------
Loss after tax from continuing
operations (1,808) 1,065 (1,003) (1,746)
===================================== ================ ================== ============= ============
7. Prior period adjustment (continued)
Six months Adjustment Prior Six months
to in respect period to
30 June of discontinued adjustment 30 June
2021 operations 2021
as originally restated
stated
GBP'000 GBP'000 GBP'000 GBP'000
Statement of financial position:
Amounts due from contract
customers 12,378 - (3,729) 8,649
------------------------------------ ---------------- ------------------ ------------- ------------
Total current assets 28,290 - (3,729) 24,561
------------------------------------ ---------------- ------------------ ------------- ------------
Total assets 59,293 - (3,729) 55,564
------------------------------------ ---------------- ------------------ ------------- ------------
Trade and other payables (14,434) - 26 (14,408)
Amounts due to contract customers (5,310) (50) (5,360)
------------------------------------ ---------------- ------------------ ------------- ------------
Total current liabilities (20,363) (24) (20,387)
Provisions (223) (12) (235)
Total non-current liabilities (13,646) (12) (13,658)
Total liabilities (34,009) (36) (34,045)
------------------------------------ ---------------- ------------------ ------------- ------------
Net assets 25,284 (3,765) 21,519
==================================== ================ ================== ============= ============
Retained earnings (1,672) (3,765) (5,437)
==================================== ================ ================== ============= ============
8. Related party transactions
Science Group plc is the largest shareholder in TP Group plc
with a shareholding of 27.97%.
On 16 December 2021 the Company entered into a standby credit
facility with its major shareholder Science Group plc. Martyn
Ratcliffe and Peter Bertram recused themselves from this process
due to a conflict of interest. The facility takes the form of a
Revolving Credit facility of a sum up to GBP5 million for a period
to 30 September 2023. The terms of the facility, which reflect the
unsecured standby revolving nature of the arrangement, include a
set-up fee of 3%, interest rate on drawn amounts of 1% per month
and a rate of 0.4% per month of any undrawn amount, both subject to
the Sterling Overnight Index Average remaining below 1%. The
facility can be cancelled or refinanced by TP Group at any time and
without penalty or early termination charges. The facility was
utilised for short periods to provide liquidity, however was
undrawn at 30 June 2022.
An interim management support service agreement was entered into
with Science Group plc on 14th February 2022. Costs for the
services provided are GBP50,000 per quarter.
9. Post balance sheet events
On 12 July 2022 the Group announced the disposal of the entire
issued share capital of Sapienza Consulting Holdings BV to Serco
Holdings Limited (a wholly owned subsidiary of Serco Group plc) for
a cash consideration of c.EUR3.2m. On completion c.GBP1m of the
c.GBP2m net proceeds was used to part repay the Group's GBP7m loan
facility with HSBC Bank Plc thereby reducing it to c.GBP6.0m.
10. Critical accounting estimates and judgements
In preparing these interim financial statements, management has
made judgements and estimates that affect the application of
accounting policies and the reported amounts of assets,
liabilities, income and expense. Actual results may differ from
these estimates. The significant judgements made by management in
applying the Group's accounting policies and the key sources of
estimation uncertainty were the same as those described in the last
annual financial statements.
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END
IR PPUBABUPPGMU
(END) Dow Jones Newswires
September 21, 2022 02:02 ET (06:02 GMT)
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