TPG.L Regulatory News (TPG)

1 May 2019

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.

TP Group plc

("TP Group" or the "Company" or the "Group")

Acquisition of Sapienza Consulting Holding BV.

TP Group (AIM: TPG), the specialist services and engineering group, is pleased to announce the acquisition of the entire issued share capital of Sapienza Consulting Holding BV. ("Sapienza") for an initial cash consideration of €10.0 million and €1.5 million by way of the issue of 20,612,865 new ordinary shares of 1p each in the Company (the "Consideration Shares"). In addition, a maximum of €2.0 million may also be payable in cash on delivery by the vendors of certain transition activities within two years following completion of the acquisition.

The directors of TP Group expect that the acquisition of Sapienza will be earnings accretive to the Group for the year ending 31 December 20191 and significantly earnings accretive for the year ending 31 December 20201. The cash element of the consideration will be funded from existing cash resources. The deal is to be completed on a debt-free, cash-free, normalised working capital basis, with a two-year lock-in on the Consideration Shares.

Acquisition highlights

About Sapienza

Sapienza is a privately-owned group of services and software companies serving the space and defence sectors. Sapienza's headquarters are in the Netherlands, with additional facilities in five other European countries. Sapienza provides specialist technical consultancy services for space missions and operations to international and government organisations, including the European Space Agency ("ESA"), NATO and EUMETSAT.

Furthermore, Sapienza has developed innovative software tools to support technology-centric resourcing using Artificial Intelligence and machine learning, and a suite of software tools and supporting services for large-scale development projects and system programmes. These software tools are aimed at helping projects and missions achieve higher efficiency. TP Group will invest in the further development of these tools and promote their usage by prime contractors and mission systems providers in the space, defence and other sectors.

Acquisition rationale

The directors expect that the acquisition will bring substantial market presence in the highly complementary space sector, along with new customers, skills and technologies and a much-enhanced footprint in Europe.

Through its existing customer relationships in the defence industry, TP Group understand the demands and sensitivities when advising on strategic problems in highly complex environments and implementing technology-driven solutions. Sapienza has been delivering solutions for over 25 years and has supported numerous ESA space missions. Its experience in delivering mission-critical services to customers with a similar profile, make it a highly complementary and strategic acquisition for TP Group.

The Sapienza business will be fully integrated into the Group and will contribute to the existing Consulting and Programme Services business stream.

In the financial year ended 31 December 2018, Sapienza reported unaudited consolidated revenues of €18.9 million and profit before tax of €0.7 million. As at 31 December 2018, Sapienza had unaudited consolidated gross assets of €9.2 million.

Andrea Bennetti, Mike Bearman and Tarik Larfaoui, all directors and the majority shareholders of Sapienza, will remain with the business and continue to lead Sapienza's activities and operations.

Application will be made for the Consideration Shares (the issue price for which was calculated by reference to a weighted average share price of the Company's ordinary shares over the period of 20 business days ending on 29 April 2019) to be admitted to trading on AIM. It is expected that dealings in the Consideration Shares, which will rank pari passu in all respects with the existing ordinary shares of 1p each in the Company ("Ordinary Shares"), will commence on 7 May 2019, albeit the Consideration Shares will be locked up for a two year period from the acquisition.

Following the issue of the Consideration Shares, the issued ordinary share capital of the Company will consist of 779,178,719 Ordinary Shares. No Ordinary Shares are held in Treasury. The above figure of 779,178,719 may be used by Shareholders as the denominator for the calculations by which they will determine if they are required to notify their interest in, or a change to their interest in, the Company under the Financial Conduct Authority's Disclosure Guidance and Transparency Rules.

1 The statement regarding management's views as to the accretive nature of this transaction is not a profit forecast and should not be interpreted to mean that the Group's earnings per share will necessarily match or exceed the historic earnings of the Group.

Phil Cartmell, Chief Executive Officer of TP Group, commented:

"We are delighted to welcome Sapienza into the Group, bringing highly complementary skills, technologies and customers across both the defence and space sectors.

"Several of the existing Group leadership team have experience in the space sector and we see significant opportunities to leverage the skills and technologies of both Sapienza and TP Group across the enlarged global footprint.

"We are equally excited to see the continued development of new technologies from the team at Sapienza. It is pleasing that Andrea, Mike and Tarik, will continue to work with us post-acquisition to continue managing and growing the business, including the delivery of several technology projects that will build the future propositions of the larger Group.

"We believe this acquisition enhances our unique business by further augmenting our ability to deliver services and skills into highly complex and critical environments. The combination of the two businesses presents a compelling opportunity for future success."

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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.