28 June 2022

This announcement contains inside information

TP Group plc

("TP Group" or the "Group")

2021 Financial update

Further to the announcement on 20 June, in which it was notified that the release of the Group's audited results for the year ended 31 December 2021 have been delayed, the unaudited information below provides an update on the Board's current expectations for 2021, including the anticipated restatement of the 2020 results. The audited results for the year ended 31 December 2021 will be released as soon as practicable subject to completion of final audit activities.

The revenue, adjusted operating loss, operating loss, loss before tax and loss after tax numbers presented below, for both 2021 and 2020, are from continuing operations and exclude Sapienza, Westek and Northstar which were classified as assets held for sale at the 31 December 2021 balance sheet date. The figures represent the Board's current expectations, subject to completion of audit activities.

2021 revenue increased to £44.4m (2020: restated £39.1m).

2021 gross profit reduced to £7.5m (2020: restated £8.5m)

2021 operating loss increased to £6.9m (2020 loss: restated £3.3m). This includes:

The anticipated results set out above reflect a detailed review of TPG Maritime contracts as part of the year end close process. (As previously stated, this contract review work is the major piece of outstanding audit work.) In summary, the forecast cost-to-complete estimates have materially increased and onerous contract provisions have had to be recognised for the period ended 31 December 2021 for a number of legacy contracts. The impact of these adjustments to the Group has resulted in £5.2m less revenue and £4.8m less profit being recognised in 2021 than was originally expected. The Board has also revisited the contracts at the period ended 31 December 2020 and, for three of these contracts, adjustments have been made in respect of the prior period. The impact of the prior period adjustment has been to reduce 2020 revenue by £1.8m and increase cost of sales by £1.0m, resulting in a reduction of adjusted operating profit in 2020 of £2.8m, from £3.7m to £0.9m. In aggregate, the adjustments/provisions in relation to the onerous contracts in TPG Maritime are anticipated to total £7.6m, of which the majority relates to a single contract with a UK prime contractor.

The 2021 loss before tax is anticipated to be £7.4m (2020: restated £3.6m). One-off loan arrangement fees increased the finance costs by £0.2m to £0.5m year on year. Taxation was a credit in 2021 to the income statement of £0.1m (2020: nil) reducing the loss after tax to £7.3m (2020: restated £3.6m).

The loss from discontinued operations in 2021 is anticipated to be £11.0m (2020: £9.2m). This relates to Sapienza, Westek and Northstar, and includes an impairment of the carrying value of goodwill, intangible assets and net assets of each of the three discontinued businesses to the actual or expected proceeds from the sale.

As a result, the 2021 loss after discontinued operations is anticipated to be £18.3m (2020: restated £12.8m).

Year-end Group cash of £5.4m was lower than the prior year end position of £7.4m. The year-end net debt, excluding the impact of IFRS 16, was £1.6m, a decline from a net cash position of £0.4m at the end of 2020. The HSBC Bank £7.0m facility was fully drawn at the end of both 2020 and 2021. The £5.0m Science Group standby facility, put in place in December 2021, was undrawn at 31 December 2021.  At 31 May 2022, cash was £2.4m, net debt was £4.6m and the Science Group facility was undrawn.

Outlook

In terms of the Group's performance in the first part of 2022, TPG Services (including Osprey) is operating in line with the Board expectations and ahead of the prior year. However, the impact of the challenges around the onerous legacy contracts means that TPG Maritime has had a slower start to 2022 with order intake, revenue and profit metrics below expectations for the year-to-date.

Notes

^{1 Adjusted operating profit 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, changes in fair value of contingent consideration, acquisition consideration accounted for as employment costs owing to on-going service conditions, any other acquisition-related and disposal-related charges, share based payment charges, and exceptional operating costs. Exceptional 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 acquisition and exceptional operating costs. This provides shareholders and other users of the financial statements with the most representative year-on-year comparison of underlying operating performance attributable to shareholders. This measure and the separate components remain consistent with 2020.}

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