TPG.L Regulatory News (TPG)

This announcement contains inside information

TP Group plc

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

Business Update

At 31 December 2021, TP Group's net debt was £1.6 million, with £5.4m of cash, £7.0m of bank debt, and the Science Group loan undrawn. The year-end cash balance benefitted from approximately £1.0m of deferred payments, most of which are now paid. The Science Group standby facility has not to date been required.

In the update on 16 December 2021, the Board advised that exceptional costs would increase and the business would likely incur additional one-off costs in the 2021 financial year in relation to contract liabilities in Maritime and impairment of goodwill and intangibles.

· Exceptional costs have increased to £3.0m from the previously reported £2.1m due to further headcount restructuring, and fees associated with the HSBC and Science Group loans.

· In recent weeks, the Board has been working closely with operating management to review legacy contracts in the Maritime business and it is apparent that project governance has been inadequate. As a result, provisions related to onerous Maritime contracts are now anticipated of approximately £4.5 million. At the present time, it is unclear whether this will all be a charge in 2021 or may relate to prior periods.

· The TP Group strategy was set out in the announcement on 1 November 2021. The corporate processes in relation to the non-core operations are continuing with interested parties. However, the anticipated valuations are lower than the current book values which are primarily based on the acquisition cost. As a result, an impairment of goodwill and intangibles is anticipated. While this non-cash charge is still under review, and subject to audit, the Board currently anticipate a write-down of intangible assets of around £11 million in 2021.

With regard to 2022 planning, the Board is now well advanced. Taking the difficult decisions in relation to legacy Maritime contracts should provide a more robust platform for the future. We expect our consultancy business to continue to perform in line with management expectations as it did in 2021. Subject to resolution of the issues within Maritime, the Board anticipate an improvement in performance through growth and margin enhancement programmes in the Services businesses and the reduction in the central costs undertaken in 2021.