REG - Ten Lifestyle Group - Preliminary Results 2023
22/11/2023 07:15
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RNS Number : 2070U Ten Lifestyle Group PLC 22 November 2023
Embargoed: 07:00hrs 22 November 2023
Ten Lifestyle Group plc
("Ten", the "Company" or the "Group")
Preliminary results for the year ended 31 August 2023
Ten Lifestyle Group plc (AIM: TENG) a leading technology-enabled, global
concierge platform for the world's wealthy and mass affluent, is pleased to
announce its preliminary results for the year ended 31 August 2023.
Financial highlights
· Record Net Revenue(1) up £16.2m (35%) to £63.0m (2022: £46.8m)
o corporate revenue(2) up £14.5m (35%) to £55.6m (2022: £41.1m)
o supplier revenue(3) up £1.7m (30%) to £7.4m (2022: £5.7m)
o increased Net Corporate Revenue Retention Rate(4) of 131% (2022: 120%)
· Step-change in Adjusted EBITDA(5) up £7.1m to £12.0m (2022:
£4.9m), an 145% improvement
o Adjusted EBITDA margin(6) increased by 8.7% to 19.1% (2022: 10.4%)
· Inflection point with profit before tax up £4.7m to £0.9m (2022:
loss £3.8m)
· Cash and cash equivalents of £8.2m (2022: £6.6m) and net cash of
£3.7m (H1 2023: £0.5m; FY 2022: £3.2m)
Operational highlights
· Active Members(7) up 28% to 353k (2022: 275k) driven by strong growth
within our existing corporate clients
· Year-on-year improved levels of member satisfaction(8) which drives
repeat use and value to our corporate clients
· £13.9m (2022: £13.6m) planned investment in proprietary digital
platforms, communications and technologies to enhance member experience and
create competitive advantage
· 80% of Material Contracts(9) have now launched with the Ten Digital
Platform (2022: 80%)
o Retained all Material Contracts for fourth consecutive year
Current Trading and Outlook
We continue to drive revenue through increased activity from existing Active
Members and "first time users" from our existing Eligible Member base. In
addition, we have a healthy pipeline of new partnership opportunities that
will further increase our Eligible Member base.
Our corporate clients pay us to improve the engagement and retention of their
wealthiest customers that then drives their commercial metrics. Many of our
banking clients, partly due to higher interest rates, are reporting higher
levels of profitability from this customer demographic when compared with the
low interest rate environment from 2008 to 2021. This improves the return on
their investments with Ten and helps underpin our revenue expectations.
We expect to continue to convert our strong pipeline of contract opportunities
with global financial institutions and premium brands, with multiple new
contract developments since the start of the financial year due to deliver
revenues from H2 2024.
We remain focused on increasing both Net Revenue and Adjusted EBITDA
profitability. We plan to maintain investment in our proprietary technology,
communications, and content, which provides competitive advantage, with
investment into AI. Loans raised to date will continue to support the Group's
working capital requirements and we expect cash generation across the full
year, with H2 being stronger than H1.
To support working capital requirements, the Group has raised a further £950k
of three-year loans notes, including £250k of loan notes subscribed for by
Nitro Ventures Limited, of which Jules Pancholi, Non-Executive Chairman, is a
shareholder and director, on 21 November 2023 which is a related party
transaction under the AIM Rules for Companies and is described further below.
Trading to date, our high corporate client retention rates, strong service
levels, improving profitability, healthy sales pipeline, and continued
investment to improve our technology and proposition mean that, although early
in the year, we are optimistic about another year of growth for both Net
Revenue and profitability.
Alex Cheatle, CEO of Ten Lifestyle Group, said;
"We have delivered a second year of 35% growth in Net Revenue and a step
change in Adjusted EBITDA profitability as a result of our continued
investment in our proposition, technology and people. We expect our growth
engine will continue to deliver in the year ahead. "
1 Net Revenue includes the direct cost of sales relating to certain
member transactions managed by the Group.
2 Corporate revenue is Net Revenue from Ten's corporate clients,
including service fees, implementation fees, and fees for the customisation of
the Ten Digital Platform.
3 Supplier revenue is Net Revenue from Ten's supplier base, such as
hotels, airlines and event promoters which sometimes pay commission to Ten.
4 Net Corporate Revenue Retention Rate is the annual percentage change
in corporate revenue, less non-recurring revenue (i.e. non-recurring service
fees, implementation fees, and fees for the customisation of the Ten Digital
Platform), from corporate client programmes operating in the previous year.
5 Adjusted EBITDA is operating profit/(loss) before interest,
taxation, amortisation, depreciation, share-based payment expense, and
exceptional items. The Group's definition of Adjusted EBITDA has been updated
in the current period to include National Insurance on share options.
6 Adjusted EBITDA margin is Adjusted EBITDA as a percentage of Net
Revenue.
7 Individuals holding an eligible product, employment, account or card
with one of Ten's corporate clients are "Eligible Members", with access to
Ten's platform, configured under the relevant corporate client's programme,
with Eligible Members who have used the platform in the past twelve months
becoming "Active Members".
8 Ten measures member satisfaction using the Net Promoter Score
management tool, which gauges the loyalty of a firm's member relationships
(https://en.wikipedia.org/wiki/Net_Promoter).
9 Ten categorises its corporate client contracts based on the
annualised value paid, or expected to be paid, by the corporate client for the
provision of concierge and related services by Ten as: Small contracts (below
£0.25m); Medium contracts (between £0.25m and £2m); Large contracts
(between £2m and £5m); and Extra Large contracts (over £5m). This does not
include the revenue generated from suppliers through the provision of
concierge services. Medium, Large and Extra Large contracts are collectively
Ten's "Material Contracts".
Analyst Presentation
An online analyst presentation will be held by video link at 9:00am on 22
November 2023.
Investor Webinar
Additionally, an Investor Webinar tailored for current and prospective
investors will be presented at 5pm on 29 November 2023, providing participants
a deeper insight into the Group's results and strategic initiatives and a
chance to engage directly with the leadership team.
If you wish to attend either the Analyst Presentation or the Investor Webinar,
kindly email investorrelations@tengroup.com
(mailto:investorrelations@tengroup.com) . This will ensure that you receive
the necessary details and access information for these events.
For further information please visit www.tenlifestylegroup.com/
(http://www.tenlifestylegroup.com/) or call:
Ten Lifestyle Group plc +44 (0)20 7850 2796
Alex Cheatle, Chief Executive Officer
Alan Donald, Chief Financial Officer
Singer Capital Markets Advisory LLP, Nominated Advisor and Broker Corporate +44 (0) 20 7496 3000
Finance: James Moat / Oliver Platts
Corporate Broking: Tom Salvesen / Charles Leigh-Pemberton
Notes to Editors:
About Ten Lifestyle Group Plc
Ten Lifestyle Group Plc (http://www.tenlifestylegroup.com/) partners with
global financial institutions and other premium brands to attract and retain
wealthy and mass affluent customers.
Millions of members have access to Ten's services across lifestyle, travel,
dining, entertainment, and retail benefits on behalf of over fifty clients
including HSBC, Coutts and Royal Bank of Canada. Ten's partnerships are based
on multi-year contracts generating revenue through platform-as-a-service and
technology fees.
Ten's operations are underpinned by an increasingly sophisticated
personalisation platform comprising industry-first, proprietary technology,
thousands of supplier relationships and 25 years of proprietary expertise
delivered from over 20 global offices.
Ten is on a mission to become the most trusted service platform in the world.
For further information about Ten Lifestyle Group Plc, please go
to: www.tenlifestylegroup.com (http://www.tenlifestylegroup.com/)
Chairman's Statement
Introduction from Ten's incoming Chairman
As Ten's incoming Chairman, I start by expressing my deep thanks on behalf of
the Group to Bruce Weatherill, who stepped down as Chairman due to ill health
on 8 November 2023.
Bruce's stewardship and leadership played a pivotal role in Ten's transition
to a listed company in 2017, setting the stage for Ten's future growth.
Personally, I am grateful for his mentorship and support, facilitating a
seamless transition to my Chairmanship. On behalf of the Board, I also extend
my thanks to Gillian Davies, Non-Executive Director, who has indicated her
intention to step down from the Board at the conclusion of the AGM in February
2024, for her invaluable contributions to the Board and outstanding Chairing
of the Audit and Risk Committee.
As part of the Board's orderly succession planning, we welcome Edward Knapp
and Carolyn Jameson as Non-Executive Directors, following a robust recruitment
process. I am confident that the Board's composition is well equipped to meet
the evolving needs of our business as we move into the next stage of
development.
I assure shareholders that they should continue to expect the same high levels
of corporate governance, strategy and operational accountability established
by Bruce. Under my Chairmanship, I intend to focus on product-market fit to
ensure we are relentlessly pursuing our mission to become the most valued
service in the world. We will leverage Ten's Growth Engine to build business
momentum, and adeptly navigate the opportunities in the rapidly evolving
technology and customer landscapes.
Successfully securing B Corp certification in the year underscores our
strategy to create a unique value proposition aligned to the goals of both
corporate clients and members.
I will measure the success of my Chairmanship not only by the performance of
the business, but through the improvement of the share price to a level that
reflects the true value for our Shareholders that the Board believes Ten
delivers. We have a high degree of conviction that we are operating in a large
and growing market, and in our strategy to address it. Our focus for the
future will be on exceptional operational accountability and execution,
demonstrating our value to all stakeholders and thereby enhancing shareholder
value and liquidity.
Overview
Once again, Ten has achieved record levels of Net Revenue, accompanied by a
step-change in Adjusted EBITDA profitability and margin. This success was a
result of the 'growth engine' at the heart of Ten's business model. Our
proposition has improved, leading to increased activation and engagement of
more members, supported by our corporate clients. Our investments in
technology have also made us more efficient and profitable. Our improved
proposition also helped justify improved commercial terms with our corporate
clients.
Our overall Net Revenue increased 35% when compared to the prior year to
£63.0m (2022: £46.8m), with Adjusted EBITDA increased by £7.1m to £12.0m,
a 145% improvement on the prior year (2022: £4.9m) and Adjusted EBITDA margin
up 8.7% to 19.1% (2022:10.4%).
We continued to deliver on our mission to become the world's most trusted
service. We strengthened our ability to attract and retain wealthy and mass
affluent customers as members on behalf of global financial institutions and
other premium brands. Continued investment in our industry-first, proprietary
technology, communications and content amounted to £13.9m (2022: £13.6m).
This drives growth and sets us apart in the market. Most importantly, it
strengthened our proposition to global financial institutions, and other
premium brands, by improving their ability to attract and retain wealthy and
mass affluent customers as members.
Having achieved scale in many of the world's major economies, through
expanding with existing customers and partnering with new ones, we proudly
deliver our increasingly sophisticated and personalised platform with
thousands of integrated supplier partners from over 20 global service centres.
The market potential remains large and addressable. Our Active Member base has
grown to over 353k (2022: 275k), with millions more members eligible to access
Ten's lifestyle, travel, dining, entertainment, and retail benefits on behalf
of over 50 corporate clients.
Retaining all Material Contracts for the fourth consecutive year, an improved
Net Corporate Revenue Retention Rate and expanding corporate revenue from
existing clients demonstrates the depth and strength of our partnerships with
our corporate clients. We believe that our established corporate clients now
view Ten as an integral partner for premium product marketing, customer
engagement and insight initiatives. Many are now entrusting us with technology
integration, personalisation, and unique content projects that elevate member
experiences, drive operational efficiencies, and solidify Ten's position as
their trusted concierge technology partner.
Throughout the year, we have expanded existing and forged new strategic
corporate client partnerships, with the vast majority of Material Contracts
incorporating the Ten Digital Platform into their customer loyalty
proposition. Our technology underpins Ten's competitive strategy as the
partner of choice to a number of global financial institutions and premium
brands seeking to attract and retain affluent customers.
Continued investment in technology, strategic partnerships, and our people has
not only fortified our resilience but has also laid the groundwork for
sustained growth through improved member and corporate client proposition
whilst also achieving further efficiencies.
Strategy
Our strategy is to provide preferred access to a range of premium services for
the customers of our corporate clients, facilitating seamless organisation of
their travel, dining, entertainment and other lifestyle needs.
Central to our strategy is the creation of tailored customer loyalty
propositions, driving both new and existing corporate clients to invest in
Ten's increasingly sophisticated personalisation platform. This investment not
only enhances the profitability and loyalty of their most valuable customers
but also fuels our continuous advancements in technology, content, and service
quality. This, in turn, fortifies our unique member proposition and propels
the Growth Engine at the heart of Ten's business model.
The Group thrives on established and new corporate client partnerships,
primarily in the financial services sector, with a strong track-record of
growing the value of these partnerships over time. We are also working with
other premium brands seeking to enhance engagement, retention and acquisition
of their high-value customers.
Ten's unique member proposition ensures members access attractive and often
premium benefits and experiences not available to the public. Membership
leverages combined buying power and operational scale, enabling members to
achieve better and more cost-effective outcomes, more conveniently than they
could on their own. The member proposition is accessible for online search and
booking through Ten's market-leading proprietary lifestyle and travel
technology platform - the "Ten Digital Platform" - or via our expert Lifestyle
Managers, available by phone, email, live chat and WhatsApp.
Our continued investments in technology comprise our Ten Digital Platform -
and in the supportive infrastructure for our team. Backed by 25 years of
expertise, our Lifestyle Managers provide members with 24/7 services in over
18 languages, reflecting in our Net Promoter Score (NPS) that indicates
positive member impact to us and our corporate clients.
Artificial Intelligence (AI) and Environmental, Social and Governance (ESG)
considerations have been pivotal in shaping our decision-making and strategy
and will remain so in the future. AI presents significant opportunities for
operational efficiency and customer experience and we have adopted strategy of
rapid experimentation across all areas of the business.
Beyond supporting good governance and global climate change management, ESG
offers a substantial opportunity to enhance our differentiation and value
proposition to both our members and our corporate clients. The attainment of B
Corp status this year is a crucial milestone, underscoring our commitment to
executing this strategy successfully.
The ESG Working Group, established in 2021, will remain under my Chairmanship,
focusing on assessing material ESG risks and opportunities stemming from our
business. Its ongoing efforts aim to deliver on our strategy by developing
internal reporting and transparency, instigating behavioural change within the
business, and ensuring that we offer our members ESG-friendly choices in their
interactions with us.
The Board's commitment to ESG is exemplified by our successful B Corp
certification this year, following strong shareholder support for the
amendment to our Articles of Association in July 2022. We are dedicated to
maintaining our B Corp certification, ensuring it continues to deliver
significant positive effects for the Group and all stakeholders.
Results
Net Revenue grew by 35% to £63.0m (2022: £46.8m), surpassing pre-COVID-19
levels (2019: £45.8m). This growth was fuelled, in part, by the increased
budgets of our corporate clients leveraging Ten's platform to enhance their
own customer metrics, a clear demonstration of client-product-market fit and
shared goal alignment. Additionally, there was heightened demand for technical
platform integration services and member marketing services. Successful
contract repricing, both in the year and in previous years, also contributed
to performance.
Delivering Adjusted EBITDA profitability and maintaining a net cash position,
whilst maintaining investments in technology, are key performance indicators
of the Group's strategic Growth Engine. Notably, the Group secured contract
developments during the year, including launching a new programme in the
Americas that has grown to the equivalent of a Medium contract, expanding a
programme in Latin America to the equivalent of a Large contract and winning a
new contract in Europe expected to grow to a Medium contract.
The Group retained all of its Material Contracts and entered new agreements
with existing corporate clients for multi-year contract extensions,
significant expansions, and paid-for projects to customise the Ten Digital
Platform. To support our substantial growth and the launch of new programmes,
we raised a moderate level of debt, demonstrating a strategic approach to
working capital requirements.
Board composition and our People
The Group continues to benefit from a stable and impactful founder-led
executive management team, showcasing strength in leadership, innovation and
resilience to grow the business over the long term in all regions.
In addition to the Non-Executive changes to the Board detailed in my
introduction, I was pleased to welcome Victoria Carvalho, Chief Proposition
Officer, as an Executive Director of the Board on 22 February 2023. Victoria
brings extensive experience, spanning over 20 years in strategic roles focused
on operational growth, including notable positions at Nasdaq and Thomas
Reuters in New York and London. Since joining Ten in 2018 as a member of the
Senior Leadership Team, she has played a pivotal role in developing Ten's
unique proposition, providing access to a diverse range of benefits and
experiences across major consumer markets.
At the same time, we bid farewell to Sarah Hornbuckle as an Executive
Director, who continues to contribute as the Client Services Director. We
extend our sincere thanks to Sarah for her dedicated service since joining in
2001 and to the Board, playing an instrumental role in the success of Ten.
Our commitment to developing our people is evident, in part, through the Ten
Academy and Ten's Global Leadership Programme - a twelve-month internal
development initiative shaping the Group's future leaders on a global scale.
Nurturing an employee culture rooted in Ten's principles of transparency,
education, promotion, engagement, and Diversity, Equity, and Inclusion (DEI)
Programme, underpinned by our recent B Corp certification, continues to
support our diverse, global workforce and helps us attract, retain and develop
the best talent.
In strategic alignment with our commitment to sustained growth, the Group
adjusted headcount this year, emphasising operational efficiency, regional
variations in demand, and a reorganisation of the business, preparing the
business for the next phase of growth.
On behalf of the Board, I express gratitude to the entire Ten team for their
adaptability, professionalism, and steadfast commitment throughout the year.
Their contributions are invaluable, and we take great pride in their
dedication to our collective success.
Summary
Amidst a challenging macro environment, Ten has not only weathered the storm
but excelled with record Net Revenue and Adjusted EBITDA profit and margin,
showcasing the resilience of our business model and the inherent value we
bring to corporate clients as integral components of their customer engagement
strategies. Our ability to retain and grow corporate clients speaks to the
strength of our partnerships, serving as the chosen loyalty platform for many
of the world's leading brands.
We believe changes in technology, consumer's evolving lifestyle demands and
the fact that corporate clients need to create deeper connections with their
customers means there is considerable room for growth in the market. Actions
taken this year, and those planned for 2024, underscore our commitment to
seizing these global opportunities.
I express sincere gratitude to our Shareholders for their support throughout
the year.
Jules Pancholi
Non-Executive Chairman
21 November 2023
Chief Executive's statement
Overview
In the year, we achieved remarkable milestones, including a 35% growth in Net
Revenue for the second consecutive year. The Group also more than doubled
Adjusted EBITDA to £12.0m (2022: £4.9m), increased its Adjusted EBITDA
margin and achieved its first positive profit before tax (PBT) since IPO. This
marks a step-change in Ten's profitability, whilst continuing to invest into
our proprietary technology, including Al, that will drive our future success.
The "Growth Engine" at the heart of our business continues to demonstrate its
effectiveness.
By delivering high service levels across our high-touch and digital platforms,
which improve customer profitability metrics for our corporate clients, we
have retained all of our Material Contracts for the fourth consecutive year,
increased Net Corporate Revenue Retention Rate to 131% (2022: 120%) as well as
securing new contracts.
We closed the period with a record Net Revenue run rate, improved Adjusted
EBITDA, an enhanced digitally enabled service platform, and a healthy sales
pipeline of new business, positioning the Group well for the next phase of
growth.
Record Net Revenue and profitability
Our market-leading digital capabilities differentiate us from our competition,
paving the way for record Net Revenue and Adjusted EBITDA profitability.
Notably, Net Revenue increased by 35% to £63.0m (2022: £46.8m), Adjusted
EBITDA was up £7.1m to £12.0m (2022: £4.9m), a 145% improvement on the
prior year and Adjusted EBITDA margin increased by 8.7% to 19.1% (2022:10.4%).
The substantial growth in Net Revenue from our corporate clients, which
increased 35% to £55.6m (2022: £41.1m) can be attributed, in part, to
increased member activity (paid for by our corporate clients) and revenue from
contract developments. Additionally, Net Revenue from our supplier partners,
predominantly commission related to our members' travel, rose by 30% to £7.4m
(2022: £5.7m). Operating expenses and other income increased by £9.1m to
£51.0m (2022: £41.9m), principally driven by increased headcount required to
service the heightened activity across the business.
A step-change in Adjusted EBITDA profit and margin (and PBT) was fuelled by
enhanced efficiencies, driven by the growing professionalism of our
operational staff and advancements in our technology.
Cash generated from operations in the year increased by £6.7m to £11.5m
(2022: £4.8m). The Group concluded the year with cash and cash equivalents
totalling £8.2m (2022: £6.6m) and improved net cash of £3.7m (H1 2023:
£0.5m; FY 2022: £3.2m).
REGIONAL ANALYSIS
Europe
In Europe, our commitment to enhancing services for members and corporate
clients in our most mature markets, alongside our expansion into maturing
markets in Continental Europe, has proven successful.
Regional Net Revenue achieved robust growth of 26% to £25.9m (2022: £20.6m).
This was fuelled by increased member activity, contract expansions, and
heightened member engagement rates, paid for by supportive corporate clients.
Notably, several flagship corporate clients with Material Contracts increased
their budgets during the period. We retained all Material Contracts and we won
new mandates from corporate clients in the region.
Developments in the region also resulted in strong Adjusted EBITDA growth of
£4.3m to £9.2m (2022: £4.9m), a 88% increase. This represents a 36%
Adjusted EBITDA margin for our most mature region.
Americas
We celebrate another year of substantial growth and enhanced Adjusted EBITDA
profitability in the Americas. Developing this region, home to almost 50% of
the world's High Net Worth Individuals, is a key objective for Ten.
Net Revenue in the region was up 56% to £25.8m (2022: £16.5m), driven by the
healthy growth of existing contracts and new client mandates. The region also
achieved an Adjusted EBITDA profit of £1.9m (2022: £(0.7)m) due to the
success of contracts launched in the prior year, after a period of investment
in growth.
We believe that key developments in the US market, the largest market in the
region, such as JPM Chase's proactive efforts in developing travel and
lifestyle offerings and Capital One's acquisition of Velocity Black, a smaller
competitor of Ten, for a reported US$296m(10), have had a positive ripple
effect, sparking interest from other banks and wealth managers in Ten's
proposition, paving the way for Ten to engage with potential new corporate
clients.
AMEA
The AMEA region demonstrated solid growth, with Net Revenue increasing by 16%
to £11.3m (2022: £9.7m) and achieving a £0.2m increase in Adjusted EBITDA
to £0.9m (2022: £0.7m), an 29% increase.
10 Hurley, J. (2023, June 2). Founders of Velocity Black bank US$80m
from Capital One. The Times. Retrieved from
https://www.thetimes.co.uk/article/founders-of-velocity-black-bank-80m-from-capital-one-z6gtj9qx0
(https://www.thetimes.co.uk/article/founders-of-velocity-black-bank-80m-from-capital-one-z6gtj9qx0)
Our investments in technology, AI and content continues to drive our
market-leading digital capability
We continued to benefit from the quality, operational, and competitive
advantages of our digital capability. We invested £13.9m in technology,
communications, and content in the year (2022: £13.6m). We believe that our
strategic focus on market-leading digital capability clearly differentiates us
from our competitors and underpins our long-term "Growth Engine" strategy to
become the world's most trusted service.
Throughout the year, these investments led to significant advancements in our
digital roadmap. Notable improvements include enhanced personalisation, user
experience and the introduction of new "self-serve" digital capability,
ultimately reducing the cost to serve and delivering a stronger Return on
Investment for our client's customer loyalty budgets, unlocking additional
budget to spend on Ten's full suite of services.
Our early adoption of AI reflects our commitment to harnessing its potential
in 2024 and beyond to turbo-charge our Growth Engine by improving efficiency
and also service quality. We are already seeing material results in multiple
areas and are completely committed to leveraging AI in 2024 and beyond.
In the short term, AI is already driving efficiency and output across the
business from translations to coding and quality assurance for high touch
requests. We have also launched an AI "co-pilot" for Lifestyle Managers, who
comprise the largest group of employees, to support more efficient and high
quality service.
Our unique "not available on the internet" assets, such as exclusive tables at
top restaurants, tickets for sold-out shows, exclusive events and value-add
benefits at hotels, empowers our AI to deliver value for our members via our
digital self-serve and high touch channels. This advantage, coupled with our
digital self-serve and high-touch channels, sets us apart from mass-market AI
interfaces reliant on publicly available assets.
Enhanced member proposition, satisfaction, and engagement
Throughout the year, we have strengthened our core propositions, to deliver a
more compelling and accessible offering to serve existing members and attract
new members.
The attractiveness and accessibility of our proposition directly correlates
with heightened engagement, usage, and advocacy among our members. Member
engagement and satisfaction are key to building value for corporate clients,
who want to improve the engagement, retention, and acquisition of their most
valued customers. This, in turn, justifies increased corporate spending with
us and attracts new corporate clients and new supplier partners to work with
us.
We are delighted to have achieved another strong year of member satisfaction,
as measured by Net Promoter Score (NPS), showing a marginal increase from the
previous year.
We believe that our member satisfaction levels and strengthened member
proposition have resulted in an increase in repeat usage of our service and
growing numbers of Active Members using the service. These metrics not only
underscore the success of our member-focused initiatives but also serve as
compelling evidence of the return on corporate client investment in our
service, contributing significantly to our high levels of corporate client
retention.
Summary
We have retained all our Material Contracts for the fourth consecutive year,
with an increased Net Corporate Revenue Retention Rate of 131% (2022: 120%),
and have launched new contracts in the year. We have continued our record of
retaining all Material Contracts where we have launched our Ten Digital
Platform.
We believe our competitive position is stronger than ever, backed by global
reach and a market-leading member proposition, which delivers a strong return
on investment for our corporate clients. This has been achieved by continuing
to invest in our technology, content, and market expertise and better pricing,
access, benefits, and integration with our supplier partners.
By developing the platform, and in turn our corporate clients, we have grown
Net Revenue by 35% during the year. Our commitment to innovation is
underscored by our continued investments in technology, including AI, content,
and supplier partnerships, which has enhanced the service to members and
corporate clients. This strategy recognises the importance of innovation in
building our market position and improving service levels, whilst delivering a
step-change in Adjusted EBITDA profitability of £7.1m to £12.0m (2022:
£4.9m) and Adjusted EBITDA margin up to 19.1% (2022:10.4%).
I am proud of how our people across our offices globally continue to
professionally deliver and innovate high-quality service to our members, paid
for by our corporate clients. I would like to express my thanks also to our
outstanding management team, which continues to drive the business
successfully towards our mission of becoming the world's most trusted service.
Alex Cheatle
Chief Executive Officer
21 November 2023
Financial Review
Net Revenue increased by 35% to £63.0m. The growth in Net Revenue has been
driven by strong growth in both corporate revenue and supplier revenue. Record
Adjusted EBITDA profitability at £12.0m, delivering an inflexion point for
the business as we made our maiden profit before tax of £0.9m since IPO in
November 2017. As a result, the Adjusted EBITDA margin increased to 19.1% and
the operating cashflow of the Group increased to £11.5m.
2023 2022
£m £m
Revenue 66.7 48.7
Corporate revenue 55.6 41.1
Supplier revenue 7.4 5.7
Net Revenue 63.0 46.8
Operating expenses and other income (51.0) (41.9)
Adjusted EBITDA 12.0 4.9
Adjusted EBITDA % 19.1% 10.4%
Depreciation (2.9) (2.7)
Amortisation (5.3) (4.6)
Share-based payments (0.9) (0.5)
Exceptional items charge (1.1) (0.8)
Operating profit/ (loss) before interest and tax 1.8 (3.7)
Net finance expense and foreign exchange (0.9) (0.1)
Profit / (loss) before taxation 0.9 (3.8)
Taxation credit/(expense) 3.6 (0.5)
Profit / (loss) for the period 4.5 (4.3)
Profit / (loss) after tax % 6.7% (8.8)%
Net cash 3.7 3.2
Adjusted EBITDA
Adjusted EBITDA is not a statutory measure; however, the Board believes it is
appropriate to include this as an additional metric as it is one of the main
measures of performance used by the Board. It reflects the underlying
profitability of our business operations, excluding amortisation of investment
in platform infrastructures, exceptional charges and share-based payment
expenses and related taxes.
Revenue and Net Revenue
Revenue for the twelve months to 31 August 2023 was £66.7m, up 37% on the
twelve months to 31 August 2022 (2022: £48.7m). Net Revenue13 for the twelve
months to 31 August 2023 was £63.0m, up 35% compared to the prior year (2022:
£46.8m), 29% at constant currency. Net Revenue, which includes the direct
cost of sales relating to member transactions managed by the Group, is Ten's
preferred measure of revenue as it includes the cost of member transactions
where Ten is the principal service provider (i.e. cost of airline tickets
packaged with hotels under the Group's ATOL licences).
The uplift in Net Revenue of 35% was principally driven by record active
member numbers and requests which have helped to grow both corporate revenue
and supplier revenue to its highest levels.
The table below provides a five year history of Net Revenue. This highlights
the strong growth over the past two years post the impact of the pandemic in
2020 and 2021.
Net Revenue 2023 2022 2021 2020 2019
£m £m £m £m £m
Corporate revenue 55.6 41.1 31.9 40.9 40.3
Supplier revenue 7.4 5.7 2.8 3.3 5.5
63.0 46.8 34.7 44.2 45.8
Contract analysis
The following tables set out an analysis of our contracts by size and by
region. We have analysed only our Material Contracts. Note, the contract size
is based on the annualised value paid or expected to be paid by the corporate
client for the provision of concierge and related services by Ten. This does
not include the revenue generated from supplier partners through the provision
of these concierge services.
Contract by size 2023 2022 change
Extra Large 3 3 -
Large 6 6 -
Medium 19 19 -
28 28 -
Contract by region 2023 2022 change
Europe 10 10 -
Americas 11 11 -
AMEA 6 6 -
Global 1 1 -
28 28 -
The Group has retained all material contracts in the year which has helped to
generate record revenues in the year. Although the number of Material
Contracts have not increased during the period, a number of new mandates won
have augmented existing Material Contracts, including the expansion of a
digitally enabled concierge programme in the Americas for premium customers.
Regional analysis
While there is a clear overlap between the geographic location of our
corporate clients and their members' requests, members use our concierge
services across all the regions. Net Revenue by region reflects our servicing
location rather than the location of our corporate clients. This allows us to
track the efficiency and profitability of our operations around the world and
is therefore presented on this basis.
In the year, we have changed the regional structure to align to the
operational management of the Group with Middle East and Africa moving from
EMEA to Asia. This has created two new regions: Europe, and Asia Middle East
and Africa (AMEA). Prior year figures have been restated to reflect this
change.
Net Revenue 2023 2022 % change
£m £m
Europe 25.9 20.6 26%
Americas 25.8 16.5 56%
AMEA 11.3 9.7 16%
63.0 46.8 35%
In Europe, Net Revenue increased by 26%. The Group has continued to drive
growth in existing corporate contracts through strong member proposition and
offers. This has led to record levels of revenue being generated from these
relationships. Member activity has also reached record levels which has driven
growth in supplier revenue in the region.
Americas Net Revenue grew significantly in the year, an increase of 56%. The
growth in this region was driven by increased member activity across the
region as the Group benefited from the full year trading of contracts launched
just prior to the impact of the pandemic and expansions secured during the
period.
In AMEA, Net Revenue grew by 16%, lower than other regions as pandemic
restrictions took longer to be lifted at the start of the financial year.
Operating expenses and other income
Operating expenses and other income increased by £9.1m to £51.0m, an
increase of 22% (2022: £41.9m). The increase in cost was principally driven
by additional headcount required to service the uplift in activity across the
business. Average number of employees in the year has grown by 13% to 1,244
(2022: 1,101). The lower increase in Operating expenses and headcount versus
Net Revenue growth is driven by improved operational efficiencies across the
Group.
Regional Adjusted EBITDA
As a result of our Net Revenue growth and delivering on operational
efficiencies, Adjusted EBITDA has increased by £7.1m to £12.0m (2022:
£4.9m), £11.1m at constant currency. Adjusted EBITDA is after expenses,
other than depreciation of £2.9m (2022: £2.7m), amortisation of £5.3m
(2022: £4.6m), exceptional items expenses of £1.1m (2022: £0.8m) and
share-based payments of £0.9m (2022: £0.5m).
After allocating the costs of central IT infrastructure, software development,
property, senior management, and other central costs, the Adjusted EBITDA for
each region is set out below:
Adjusted EBITDA 2023 2022 change
£m £m £m
Europe 9.2 4.9 4.3
Americas 1.9 (0.7) 2.6
AMEA 0.9 0.7 0.2
12.0 4.9 7.1
The above regional split has taken account of the new regional structure
introduced this year to align to our operational management structure as
previously explained.
Europe
Adjusted EBITDA of £9.2m (2022: £4.9m) is an increase year on year of
£4.3m. The increase in profitability was driven by the strong growth in both
corporate revenue and supplier revenue, whilst supported by efficiencies
gained in the operating costs of the segment. The segment benefited from
hiring which had taken place in the previous year allowing the headcount to
grow by only 8% whilst driving Adjusted EBITDA growth by 88%.
Americas
The Americas region achieved an Adjusted EBITDA profit of £1.9m (2022: loss
£0.7m). The growth in Adjusted EBITDA was the result of the success of the
investments made to grow the business across the region. The region has now
benefited from a full year of trading on contracts launched in the prior year,
whilst continuing to invest in the operations to support future potential
contract wins.
AMEA
The AMEA region Adjusted EBITDA grew to £0.9m (2022: £0.7m). The region has
benefited from the ending of travel restrictions during the year, which has
driven the majority of the EBITDA growth.
Amortisation
Amortisation costs, relating to the internal platform (TenMAID) and the
member-facing platforms, were £5.3m in 2023 (2022: £4.6m) reflecting
continued investment in technology to drive improvements in service levels,
efficiency, and competitive advantage.
Net finance expense
Net finance expense in the year was £0.9m (2022: £0.1m); the expense
included loan interest of £0.4m (2022: £0.1m), IFRS 16 lease interest
expense of £0.2m (2022: £0.2m) as well as foreign exchange losses on the
translation of inter-company balances in the year of £0.2m (2022: gain of
£0.2m).
Share-based payments
The share-based payments expense in the year was £0.9m (2022: £0.5m). These
related to share-based payments expense reflecting share grants made under
management incentive plans as well as the associated national insurance
expenses.
Exceptional items expense
The exceptional items expense was £1.1m (2022: £0.8m). The expenses incurred
principally related to a one-off restructuring program during the year to
drive further operational efficiencies including rationalisation of roles in
our senior leadership team and regional management teams. In addition, further
costs were incurred relating to the closure of our Russian operation last year
plus an historic overseas tax charge relating to 2019.
Profit before tax (PBT)
The Group has made its first annual PBT since listing, achieving a PBT of
£0.9m compared to a loss before tax of £3.8m in 2022.
Deferred Tax and Taxation
The Group has previously not recognised any deferred tax asset associated to
historical losses within the Group due to the loss-making position of the
Group. In the current period, the Group's PBT is £0.9m. The generation of
profits indicates that the Group can generate future taxable profits allowing
it to utilise historical tax losses. Based on current forecasts, there are
sufficient probable future profits to recognise a deferred tax asset relating
to historical losses of £5.3m, primarily driven by the UK entity (£4.2m).
The taxation expense for the year was a tax credit of £3.6m (2022: tax
expense of £0.5m). The tax credit for the year was the result of the
recognition of deferred tax assets related to historical losses of £5.3m
(2022: £nil), offset by timing differences on deferred tax of £1.0m (2022:
£nil) and current year foreign taxes net of prior year adjustments of £0.7m
(2022: £0.5m).
Earnings per share (basic, diluted and underlying)
The profit after tax for the year was £4.5m (2022: loss £4.3 m), resulting
in a basic profit per share (excluding treasury shares) of 5.4p (2022: loss
per share of 5.2p) and diluted profit per share of 5.2p (2022: loss per share
of 5.2p). Diluted earnings per share is calculated as per IAS 33 by adjusting
the weighted average number of ordinary shares outstanding for the dilutive
effect of "in the money" share options.
Basic underlying earnings per share of 0.4p (2022 (4.2p)) and diluted
underlying earnings per share of 0.4p (2022 (4.2p)).
Underlying earnings per share is calculated by adjusting the profit / (loss)
attributable to equity shareholders for exceptional items of £1.1m (2022:
£0.8m) along with deferred tax arising from the recognition of historical
losses of £5.3m (2022: £nil). No changes are made to the weighted average
number of ordinary shares. The Board does not recommend the payment of a
dividend.
Group cash flow
2023 2022
£m £m
Profit/(loss) before tax 0.9 (3.8)
Net finance expense 0.9 0.1
Working capital changes 0.4 (0.1)
Non-cash items (share-based payments, depreciation and amortisation charges, 9.3 8.6
exceptional items)
Operating cash flow 11.5 4.8
Capital expenditure (0.5) (0.9)
Investment in intangibles (7.3) (6.4)
Taxation paid (0.8) (0.6)
Cash inflow / (outflow) 2.9 (3.1)
Cash flows from financing activities
Sale of treasury shares 0.1 0.5
Issue of shares 0.6 1.4
Loan receipts >1 year 1.2 3.4
Invoice financing facility 0.1 -
Repayment of leases and net interest (3.2) (2.7)
Net cash (used by)/generated from financing activities (1.2) 2.6
Foreign currency movements (0.1) 0.4
Net increase/(decrease) in cash and cash equivalents 1.6 (0.1)
Cash and cash equivalents 8.2 6.6
Net cash 3.7 3.2
Cash generated from operations increased by £6.7m (140%) to £11.5m (2022:
£4.8m). Non-cash items in the year of £9.3m (2022: £8.6m) were
substantially made up of depreciation of £2.9m and amortisation charges of
£5.3m for the year. The expenditure that was capitalised on IT equipment and
infrastructure, the Ten Digital Platform and TenMAID totalled £7.8m (2022:
£7.3m) as we continued to invest in our technology.
Net cash from financing activities was primarily due to loan receipts of
£1.2m (2022: £3.4m), receipts from the issue of equity of £0.6m (2022:
£1.4m), offset by IFRS 16 lease payments and interest of £3.2m (2022:
£2.7m). This has led to an overall increase in cash and cash equivalents of
£1.6m during the year with Net cash at £3.7m (2022: £3.2m), an increase of
£0.5m.
The additional loan receipts of £1.2m are repayable in August 2025. The loans
are guaranteed by Ten Lifestyle Group Plc. Interest is payable quarterly in
arrears in cash at 8% per annum during the term of the loan, a 1%
administration fee payable in cash at drawdown.
Group balance sheet
2023 2022
£'m £'m
Intangible assets 15.4 13.4
Property, plant and equipment 0.9 0.9
Right-of-use assets 1.9 2.2
Deferred tax asset 4.3 -
Cash 8.2 6.6
Other current assets 12.1 10.1
Current lease liabilities (1.7) (1.8)
Current liabilities (20.9) (17.3)
Short term borrowings (1.6) (1.5)
Non-current lease liabilities (0.4) (0.9)
Long-term borrowings (3.0) (1.9)
Net assets 15.2 9.8
Share capital/share premium 31.4 30.7
Reserves (16.2) (20.9)
Total equity 15.2 9.8
Net assets were £15.2m (2022: £9.8m). The increase in the year was driven by
increased profitability in addition to the recognition of a deferred tax asset
of £4.3m. This is made up of the £5.3m recognition of historical losses
offset by utilisation of deferred tax of £0.3m in the year, and recognition
of in other temporary differences of £0.7m. The Group has also continued to
invest in its digital platforms, driving the increase in intangible assets.
This was offset by the increase in long-term borrowing arrangements.
Key Financial Performance Indicators (KFPIs)
Management accounts are prepared on a monthly basis and include KPIs covering
revenue, Adjusted EBITDA, cash balances, and Material Contracts, and are
measured against both the Group's budget and the previous years' actual
results. The KFPIs for the year are:
2023 2022 2021 2020
Net Revenue (£m) 63.0 46.8 34.7 44.2
Corporate (£m) 55.6 41.1 31.9 40.9
Supplier (£m) 7.4 5.7 2.8 3.3
Net Revenue growth % 35% 35% -21.6% -3.5%
Adjusted EBITDA 12.0 4.9 4.4 4.8
Adjusted EBITDA Margin % 19.1% 10.4% 12.8% 10.8%
Net cash (£m) 3.7 3.2 6.7 10.0
Material Contracts 28 28 24 23
Each month the Board assesses the performance of the Group based on these
KFPIs, operational performance indicators, including the number of Active
Members, sales performance, corporate client development, technology updates.
The Group's performance has strengthened since being previously impacted by
COVID-19, achieving records across several its KFPIs.
Going concern
The impact of plausible adverse macroeconomic scenarios on Ten's business
still warrants focus and real-time management. The Group is particularly
exposed to the adverse impacts to variable revenues from these scenarios as
well as the risk of corporate revenue contracts not being renewed.
The Group has set its budget for 2024 and forecast for the following year but
we recognise that there are scenarios under which the Group could be impacted
by reductions in the number of member engagements and by prospective corporate
clients failing to renew contracts. From our budget base case, a stress
scenario of 20% reduction in variable revenues was performed as well as a
severe downside scenario of 90% reduction in variable revenues. In each of
these scenarios, if revenue is not in line with cash flow forecasts, the
Directors have identified cost savings associated with the reduction in
revenue and can identify further cost savings if necessary.
The Directors have no reason to believe that corporate revenue and receipts
will decline to the point that the Group no longer has sufficient resources to
fund its operations. However, in the unlikely event this should occur, the
Group will continue to manage its working capital position, as well as making
significant reductions in its fixed costs.
Post Year End events
Since the end of the year, the Group has:
· Announced the further expansion of an existing contract with a
financial services client in the Americas, which will now increase from a
Medium to a Large contract and announced a new contract win with a global
Private Bank client, anticipated to equate to a Medium contract.
· Raised a further £950k of three-year loans notes, including £250k
of loan notes subscribed for by Nitro Ventures Limited on 21 November 2023,
which constitutes a related party transaction under the AIM Rules for
Companies as Jules Pancholi, Non-Executive Chairman, is a shareholder and
director of Nitro Ventures Limited. The loan notes are repayable on 25
November 2026 and are guaranteed by Ten Lifestyle Group Plc. Interest is
payable quarterly in arrears in cash at 12% per annum during the term of the
loan and a 1% administration fee is payable in cash at drawdown. An early
repayment premium will be payable by the Company of 5% should it repay the
loan notes on or before 24 November 2024 or of 3% should it repay the loan
notes on or before 24 November 2025.
The independent directors of the Company (with the exception of Jules Pancholi
who is involved in the related party transaction) consider, having consulted
with Singer Capital Markets Advisory LLP, the Company's nominated adviser,
that the terms of Nitro Ventures Limited's subscription for loan notes is fair
and reasonable insofar as shareholders are concerned.
· Extended the £1.5m loan, originally entered into in March 2022, with
Mrs S Weatherill, wife of the previous Chairman Mr B Weatherill until December
2024.
Alan Donald
Chief Financial Officer
21 November 2023
Consolidated Statement of Comprehensive Income for the year ended 31 August
2023
Note 2023 2022
£'000 £'000
Revenue 3 66,656 48,651
Cost of sales on principal member transactions (3,653) (1,839)
Net Revenue 3 63,003 46,812
Other cost of sales (2,032) (1,428)
Gross profit 60,971 45,384
Administrative expenses (60,012) (49,519)
Other income 836 386
Operating profit before amortisation, depreciation, interest, share-based 12,004 4,878
payments, exceptional items and taxation ("Adjusted EBITDA")
Depreciation (2,916) (2,713)
Amortisation 8 (5,287) (4,608)
Share-based payment expense (908) (537)
Exceptional items 4 (1,098) (769)
Operating profit / (loss) 1,795 (3,749)
Net finance expense (871) (101)
Profit / (loss) before taxation 924 (3,850)
Taxation credit/(expense) 3,623 (466)
Profit / (loss) for the year 4,547 (4,316)
Other comprehensive expense:
Foreign currency translation differences (564) (137)
Total comprehensive profit / (loss) for the year 3,983 (4,453)
Basic profit / (loss) per ordinary share 6 5.4p (5.2)p
Diluted profit / (loss) per ordinary share 6 5.2p (5.2)p
Basic underlying profit / (loss) per ordinary share 6 0.4p (4.2)p
Diluted underlying profit / (loss) per ordinary share 6 0.4p (4.2)p
The consolidated statement of comprehensive income has been prepared on the
basis that all operations are continuing operations.
Consolidated Statement of Financial Position as at 31 August 2023
Company No: 08259177
Note 2023 2022
£'000 £'000
Non-current assets
Intangible assets 8 15,394 13,397
Property, plant and equipment 912 939
Right of use assets 1,911 2,274
Deferred tax asset 7 4,297 -
Total non-current assets 22,514 16,610
Current assets
Inventories 511 118
Trade and other receivables 11,608 9,930
Cash and cash equivalents 8,229 6,584
Total current assets 20,348 16,632
Total assets 42,862 33,242
Current liabilities
Trade and other payables (20,059) (16,459)
Provisions (931) (846)
Lease liabilities (1,738) (1,834)
Borrowings (1,622) (1,500)
Total current liabilities (24,350) (20,639)
Net current liabilities (4,002) (4,007)
Non-current liabilities
Borrowings (2,950) (1,940)
Lease liabilities (399) (820)
Total non-current liabilities (3,349) (2,760)
Total liabilities (27,699) (23,399)
Net assets 15,163 9,843
Equity
Called up share capital 85 84
Share premium account 31,272 30,658
Merger relief reserve 1,993 1,993
Treasury reserve 606 513
Foreign exchange reserve (1,111) (547)
Retained deficit (17,682) (22,858)
Total equity 15,163 9,843
Consolidated Statement of Changes in Equity for the year ended 31 August 2023
Called up share capital Share premium account Merger relief reserve Foreign exchange reserve Treasury reserve Retained deficit Total
£'000 £'000 £'000 £'000 £'000 £'000 £'000
Balance at 31 August 2021 82 29,356 1,993 (410) 5 (19,079) 11,947
- - - - - - -
Loss for the year - - - - - (4,316) (4,316)
Foreign exchange - - - (137) - - (137)
Total comprehensive loss for the year - - - (137) - (4,316) (4,453)
Issue of new share capital 2 1,302 - - - - 1,304
Shares purchased by Employee Benefit Trust (EBT) - - - - 508 - 508
Equity-settled share-based payments charge - - - - - 537 537
Balance at 31 August 2022 84 30,658 1,993 (547) 513 (22,858) 9,843
Profit for the year - - - - - 4,547 4,547
Foreign exchange - - - (564) - - (564)
Total comprehensive income for the year - - - (564) - 4,547 3,983
Employee Benefit Trust (EBT) costs - - - - 93 - 93
Equity-settled share-based payments charge - - - - - 629 629
Issue of new share capital 1 614 - - - - 615
Balance at 31 August 2023 85 31,272 1,993 (1,111) 606 (17,682) 15,163
Consolidated Statement of Cash Flows for the year ended 31 August 2023
Note 2023 2022
£'000 £'000
Cash flows from operating activities
Profit/(loss) for the year, after tax 4,547 (4,316)
Adjustments for:
Taxation (credit)/expense 5 (3,623) 466
Net finance expense 871 101
Amortisation of intangible assets 8 5,287 4,608
Depreciation of property, plant and equipment 511 483
Depreciation of right of use asset 2,405 2,230
Equity-settled share-based payment expense 629 537
Exceptional items 4 427 769
- -
Movement in working capital:
Increase in inventories (393) (18)
Increase in trade and other receivables (1,222) (2,012)
Increase in trade and other payables 2,106 2,020
Cash generated from operations 11,545 4,868
Tax paid (826) (623)
Net cash generated from operating activities 10,719 4,245
Cashflows from investing activities
Purchase of intangible assets 8 (7,284) (6,452)
Purchase of property, plant and equipment (531) (866)
Finance income 7 1
Net cash used by investing activities (7,808) (7,317)
Cash flows from financing activities
Lease liability repayments (2,538) (2,427)
Sale of treasury shares 102 508
Net receipts from invoice financing 122 -
Interest paid (442) (73)
Interest paid on IFRS 16 lease liabilities (216) (185)
Cash receipts from issue of share capital 615 1,302
Loan receipts - loan notes 1,185 3,440
Net cash (used by)/generated from financing activities (1,172) 2,565
Foreign currency cash and cash equivalents movements (94) 429
Net increase/decrease in cash and cash equivalents 1,645 (78)
Cash and cash equivalents at beginning of the period 6,584 6,662
Cash and cash equivalents at end of the period
Cash at bank and in hand 8,229 6,584
Cash and cash equivalents 8,229 6,584
1. Basis of preparation
The financial information set out in this document does not constitute the
Company's statutory accounts for the years ended 31 August 2023 or 2022.
Statutory accounts for the years ended 31 August 2022 and 31 August 2023,
which were approved by the Directors on 21 November 2023, have been reported
on by the Independent Auditors. The Independent Auditors' Reports on the
Annual Report and Financial Statements for each of 2022 and 2023 were
unqualified, did not draw attention to any matters by way of emphasis, and did
not contain a statement under 498(2) or 498(3) of the Companies Act 2006.
Statutory accounts for the year ended 31 August 2022 have been filed with the
Registrar of Companies. The statutory accounts for the year ended 31 August
2023 will be delivered to the Registrar in due course, and are available from
the Company's registered office at Floor 2, 355 Euston Road, London, England,
NW1 3AL and are available from the Company's website:
https://www.tenlifestylegroup.com/investors
(https://protect-eu.mimecast.com/s/7BdQCnRRvcXGgyJh9L98J?domain=tenlifestylegroup.com)
.
The financial information set out in these results has been prepared using the
recognition and measurement principles of UK adopted international accounting
standards and with those parts of the Companies Act 2006 applicable to
companies reporting under IFRS (except as otherwise stated). The accounting
policies adopted in these results have been consistently applied to all the
years presented and are consistent with the policies used in the preparation
of the financial statements for the year ended 31 August 2022. There are
deemed to be no new standards, amendments and interpretations to existing
standards, which have been adopted by the Group that have had a material
impact on the financial statements.
2. Going concern
The consolidated financial statements have been prepared on a going concern
basis. The ability of the Company to continue as a going concern is contingent
on the ongoing viability of the Group. The Group meets its day-to-day working
capital requirements through its cash balances and wider working capital
management. The current political and economic conditions continue to create
some uncertainty, particularly over (a) corporate members' engagement; and (b)
supplier revenue volumes. The Group's forecasts and projections, taking
account of reasonably possible changes in trading performance, show that the
Group expects to be able to operate within the level of its current cash
resources. Having assessed the principal risks and the other matters discussed
in connection with the going concern statement, the Directors considered it
appropriate to adopt the going concern basis of accounting in preparing the
consolidated financial statements.
Whilst the Company has grown significantly post the COVID-19 pandemic,
continued management of costs is in place to ensure operating performances
align to the Board's expectations. The Board believes that the business is
able to navigate through any macro-economic conditions that may impact
performance due to the strength of its member proposition, its balance sheet
and the net cash position of the Group.
The Group has set its budget for 2024 and forecast for the following year but
we recognise that there are scenarios under which the Group could be impacted
by reductions in the number of member engagements and by prospective corporate
clients failing to renew contracts. From our budget base case, a stress
scenario of 20% reduction in variable revenues was performed as well as a
severe downside scenario of 90% reduction in variable revenues. In each of
these scenarios, if revenue is not in line with cash flow forecasts, the
Directors have identified cost savings associated with the reduction in
revenue and can identify further cost savings if necessary to ensure there is
adequate cash and day to day working capital going forward.
Having assessed the principal risks and other matters discussed in connection
with the going concern statement, the Directors have a reasonable expectation
that the group has adequate resources to continue in operational existence for
the foreseeable future. For these reasons, they continue to adopt the going
concern basis of accounting in preparing the financial statements.
3. Segment reporting
The total revenue for the Group has been derived from its principal activity,
the provision of concierge services. This has been disaggregated appropriately
into operational segment and geographical location.
The Group has three reportable segments: Europe, Asia-Pacific, the Middle East
and Africa (AMEA) and North and South America ("the Americas"). During the
year, the Group changed the reportable segments to reflect the updated
management structure of each region, as a result, the comparative period has
been re-presented to align to the new reportable segments. Each segment is a
strategic business unit and includes businesses with similar operating
characteristics. They are managed separately in similar time zones to reflect
the geographical management structure.
2023 2022
£'000 £'000
Europe 25,914 20,615
Americas 25,834 16,534
AMEA 11,255 9,663
Net Revenue 63,003 46,812
Add back: cost of sales on principal transactions 3,653 1,839
Revenue 66,656 48,651
Europe 9,207 4,907
Americas 1,943 (700)
AMEA 854 671
Adjusted EBITDA 12,004 4,878
Amortisation (5,287) (4,608)
Depreciation (2,916) (2,713)
Share-based payment expense & national insurance (908) (537)
Exceptional items (1,098) (769)
Operating profit/(loss) 1,795 (3,749)
Foreign exchange (loss)/gain (220) 157
Other net finance expense (651) (258)
Profit/(loss) before taxation 924 (3,850)
Taxation credit/(expense) 3,623 (466)
Profit/(loss) for the year 4,547 (4,316)
Statutory revenue for the Americas and AMEA segments is the same as the Net
Revenue amounts disclosed above. Statutory revenue for the Europe segment was
£29,567k (2022: £22,454k).
The Group's statutory revenue from external corporate clients is generated
from commercial relationships entered into by various Group companies, which,
given the global nature of the Group's service delivery model, may not reflect
the location where the services are delivered, as reflected in the Net Revenue
segmentation noted below.
The Group's statutory revenue is disaggregated into the following revenue
streams. In addition, the Group disaggregates revenue into services where the
Group is considered agent or principal as below:
Segmental reporting continued
2023 2022
£'000 £'000
Direct concierge service revenue 52,257 38,030
Offers and benefits revenue 1,170 1,129
Indirect concierge service revenue 11,095 7,516
Digital platform fees 2,134 1,976
Revenue 66,656 48,651
2023 2022
£'000 £'000
Corporate revenue 55,561 41,116
Supplier revenue 11,095 7,535
Revenue 66,656 48,651
Supplier revenue (cost of sales on principal member transactions) (3,653) (1,839)
Net Revenue 63,003 46,812
2023 2022
£'000 £'000
Revenue from services as principal 61,416 46,570
Revenue from services as agent 5,240 2,081
66,656 48,651
Net Revenue is a non-GAAP Company measure that includes the direct cost of
sales relating to member transactions managed by the Group, such as the cost
of airline tickets sold under the Group's ATOL licences. Net Revenue is the
measure of the Group's income on which segmental performance is measured.
Adjusted EBITDA is a non-GAAP Company specific measure excluding interest,
taxation, amortisation, depreciation, share-based payment and exceptional
costs. Adjusted EBITDA is the main measure of performance used by the Board,
which is considered to be the chief operating decision maker. Adjusted EBITDA
is the principal operating metric for a segment.
The statement of financial position is not analysed between reporting
segments. Management and the chief operating decision maker consider the
statement of financial position at Group level.
Three corporate clients (2022: two) generated more than 10% of total revenue
each during the year ended 31 August 2023. The total combined revenue of these
corporate clients was £23.9m (2022: £9.5m) and was mainly included in the
Europe and Americas segments.
4. Exceptional items
2023 2022
£'000 £'000
Restructuring costs 995 -
Loss on disposal of subsidiary and restructuring 18 519
Provision for overseas tax authority costs 85 250
1,098 769
The Group recognised an exceptional charge which related to restructuring
costs incurred during the year of £995k (2022: £nil).During the year, the
Group recognised a further £18k (2022: £519k) related to the disposal of the
Russian subsidiary, Ten Group (RUS) LLC in 2022. The Group also recognised an
additional provision of £85k (2022: £250k) related to overseas taxes and
penalties.
5. Income tax expense
2023 2022
£'000 £'000
Current tax
UK current tax expense - -
Foreign taxes related to current year 843 466
Prior year adjustments in respect of foreign taxes (169) -
Deferred tax
Origination and reversal of timing differences 1,009 -
Historical losses recognised (5,306) -
Total tax (credit) / expense (3,623) 466
The tax expense for the year can be reconciled to the income statement as
follows:
2023 2022
£'000 £'000
Profit/(loss) before taxation 924 (3,850)
Expected tax credit based on a corporation tax rate of 21.5% (2022: 19.0%)* 199 (732)
Effect of expenses not deductible in determining taxable profit 60 3
Effect of taxes related to previous years (169) -
Origination and reversal of timing differences 1,009 975
Historical losses recognised (5,306) -
Overseas tax rate differences 584 220
Taxation (credit) / expense for the year (3,623) 466
*A blended rate of 21.5% has been used in the current period following the
change in the corporation tax rate from 19% to 25% on 1 of April 2023
6. Earnings per share
Basic earnings per share 2023 2022
£'000 £'000
Profit/(loss) attributable to equity shareholders of the parent 4,547 (4,316)
Weighted average number of ordinary shares in issue (net of treasury) 83,894,193 83,699,615
Basic profit/(loss) per share (pence) 5.4p (5.2)p
Basic profit per ordinary share
Basic profit per ordinary share is calculated by dividing the net result for
the year attributable to shareholders by the weighted number of ordinary
shares outstanding during the year. (2022: (5.2)p)
Diluted earnings per share 2023 2022
£'000 £'000
Profit/(loss) attributable to equity shareholders of the parent 4,547 (4,316)
Weighted average number of ordinary shares in issue (net of treasury) 86,986,163 83,699,615
Diluted profit/loss per share (pence) 5.2p (5.2)p
Diluted earnings per ordinary share
Diluted earnings per share is calculated as per IAS 33 by adjusting the
weighted average number of ordinary shares outstanding for the dilutive effect
of "in the money" share options, which are the only dilutive potential common
shares for the Group. The net profit attributable to ordinary shareholders is
divided by the adjusted weighted average number of shares. "Out of the money"
share options are excluded from the calculation as they are non-dilutive.
Where the Group has incurred a loss in the year, the diluted loss per share is
the same as the basic loss per share as the loss has an anti-dilutive effect.
Underlying earnings per share 2023 2022
£'000 £'000
Profit/(loss) attributable to equity shareholders of the parent 4,547 (4,316)
Excluding Exceptional Items & Taxes 1,098 769
Exceptional Items
Recognition of historical tax losses (5,306) -
Underlying profit/(loss) attributable to equity shareholders of the parent 339 (3,547)
Basic weighted average number of ordinary shares in issue (net of treasury) 83,894,193 83,699,615
Basic underlying profit/(loss) per share (pence)
0.4p (4.2)p
Diluted weighted average number of ordinary shares in issue (net of treasury)
86,986,163 83,699,615
Diluted underlying profit/(loss) per share (pence) 0.4p (4.2)p
Underlying earnings per ordinary share
Underlying earnings per share is calculated by adjusting the profit / (loss)
attributable to equity shareholders for exceptional items (note 5) and
associated taxes along with non-underlying tax items such as deferred tax
arising from the recognition of historical losses. No changes are made to the
weighted average number of ordinary shares.
7. Deferred tax
2023 2022
£'000 £'000
Opening balance - -
Credited/(charged) to the statement of comprehensive income:
Share-based payments - -
Historical losses 4,999 -
Movement in other temporary differences (702)
Closing balance 4,297 -
Deferred tax Intangible assets Capital allowances Losses Other temporary differences Total
£'000 £'000 £'000 £'000 £'000
Opening Balance as at 1 September 2022 - - - - -
Credited/(Charged) to the statement of comprehensive income
Movement in deferred tax balances (1,672) 715 - 255 (702)
Utilisation of historical losses - - (307) - (307)
Recognition of historical losses - - 5,306 - 5,306
Closing balance as at 31 August 2023 (1,672) 715 4,999 255 4,297
As at 31 August 2023, the Group has unused tax losses of £61.1m that are
available for offset against future taxable profits. During the year ended 31
August 2023, a deferred tax asset has been recognised in respect of £21.0m of
such losses (2022: £nil). Due to uncertainty as to the level and timing of
taxable profits in the future, no deferred tax asset has been recognised in
respect of the remaining £40.1m (2022: £31.6m). The losses that remain
unrecognised are not expected to expire.
8. Intangible assets
Capitalised development costs Website Trademarks Total
£'000 £'000 £'000 £'000
Cost
At 31 August 2021 35,036 1,909 - 36,945
Additions 6,452 - - 6,452
Impairment - - - -
Disposals (4) - - (4)
Write-off - - - -
At 31 August 2022 41,484 1,909 - 43,393
Additions 7,284 - - 7,284
Disposal - - - -
At 31 August 2023 48,768 1,909 - 50,677
Accumulated amortisation
At 31 August 2021 23,481 1,909 - 25,390
Charge for the year 4,608 - - 4,608
Disposal (2) - - (2)
At 31 August 2022 28,087 1,909 - 29,996
Charge for the year 5,287 - - 5,287
Disposal - - - -
At 31 August 2023 33,374 1,909 - 35,283
Carrying amount
At 31 August 2022 13,397 - - 13,397
At 31 August 2023 15,394 - - 15,394
All additions are related to internal expenditure. The useful economic lives
of the capitalised development platforms and website are assessed to be five
years and three years respectively.
9. Cautionary Statement
This document contains certain forward-looking statements relating to Ten
Lifestyle plc (the "Group"). The Group considers any statements that are not
historical facts as "forward-looking statements". They relate to events and
trends that are subject to risk and uncertainty that may cause actual results
and the financial performance of the Company to differ materially from those
contained in any forward-looking statement. These statements are made by the
Directors in good faith based on information available to them and such
statements should be treated with caution due to the inherent uncertainties,
including both economic and business risk factors, underlying any such
forward-looking information.
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