TP Group PLC (L:TPG) has announced a £1.95m contract for the overhaul of two atmosphere control systems during the refit of two UK submarines, highlighting the A&D division's strength. This follows a recent trading update where ongoing restricted capital programmes in energy markets have caused several large contracts to slip into FY16, affecting short-term revenues. The group has acted swiftly to offset the profitability impact, reducing losses and remaining on track to deliver break-even adjusted EBITDA in FY15. We update forecasts to reflect this mix shift. With a robust year-end order book further supported by the refit win, strengthened opportunity pipeline and new technology applications being delivered, progress, positive EBITDA and cash generation are expected in FY16.
Contract win highlights strength of A&D
TP Group has won a refurbishment contract from Babcock for two atmosphere control systems (ACS) for refit of two UK submarines. The contract will be delivered over the next two years from the group’s Portsmouth facility and highlights the strength of the A&D division, particularly in atmosphere control. With a significant pipeline of opportunities in both the UK and the export markets, we continue to see this division as the core profit contributor in the short term.
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