REG - TPXimpact Holdings - Interim Results
30/11/2022 07:00
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RNS Number : 9909H TPXimpact Holdings PLC 30 November 2022
30 November 2022
TPXimpact Holdings PLC
("TPXimpact", "TPX", the "Company" or the "Group")
Interim Results
Results in line with the trading update made on 30 September 2022. No change
to full-year guidance.
TPXimpact Holdings PLC (AIM: TPX), the technology-enabled services company
focused on digital transformation, announces its interim results for the six
months ended 30 September 2022.
Financial highlights:
● Revenue up 7.7% to £40.4m (H1 2022: £37.5m) and down 6.5% on a like-for-like
basis
● Reported operating loss of £(3.9)m (H1 2022: operating profit of £1.3m)
● Adjusted EBITDA(1) of £1.2m (H1 2022: £5.3m)
● Adjusted EBITDA(1) margin of 3.0% (H1 2022: 14.3%)
● Reported loss before tax on continuing operations of £(4.3)m (H1 2022: profit
before tax of £0.9m)
● Adjusted profit before tax on continuing operations(1) of £0.4m (H1 2022:
£4.7m)
● Basic loss per share from continuing operations of (4.2)p (H1 2022: earnings
per share of 0.7p)
● Diluted loss per share from continuing operations of (4.2)p (H1 2022: earnings
per share of 0.7p)
● Adjusted diluted earnings(1) per share from continuing operations of 0.4p (H1
2022: 4.6p)
● Net debt(1) as at 30 September 2022 of £14.1m (31 March 2022: £10.1m)
● Strong pipeline of new business with £26m of new orders in Q2
● An interim dividend of 0.3p per share has been declared for H1 (H1 2022: 0.3p)
Operational and Impact highlights:
● 65% of revenue from public services in the period (H1 2022: 74%)
● Completed acquisitions of Peak Indicators and Swirrl. Integration into a new
Data & Insights Division progressing well
● In line with the requirements to become B-Corp certified, our Articles of
Association have changed so that our constitution reflects a requirement for
the Directors to consider the interests of all stakeholders in the Company
● Became a founding customer of CO2.com and have offset our entire historic
carbon liability
● Top ten clients generating 43% of revenue (H1 2022: 43%)
Post-period outlook:
● TPXimpact continues to trade in line with the targets announced on 30
September 2022 of full year revenues of c.£90m and Adjusted EBITDA in the
range of £7.0-7.5m
● Around 85% of full year revenues (75% at the time of the AGM) are represented
by committed client spend as at today's date
● £26m of new orders won in the first two months of Q3
Bjorn Conway, Chief Executive Officer, commented:
"Since joining TPX I have been impressed by the dedication and professionalism
of the team as we transition the Group from a bold and disruptive start-up to
a unified brand that can grow at scale. While this transition is still
ongoing, I am confident that we have the experience and sector knowledge in
place to navigate these challenges and continue on a strong positive growth
trajectory.
"The market opportunity available to TPX remains significant with
organisations across public and commercial sectors needing to adapt to the
evolving market challenges and invest in digital transformation, as supported
by our very healthy sales pipeline. The Board remains confident that bringing
our separate businesses together under a single TPXimpact brand is the correct
strategy in the long term as we look to improve internal efficiencies and
better position the Group to deliver sustainable profitable growth over the
coming years.
"TPXimpact's purpose-driven culture is a key differentiator within the market
and something that greatly attracted me to taking on this role. These values
run through every aspect of the business and will continue to be a key
motivating factor for the Group as we scale and create impactful change for
our people, planet and the communities in which we work.
"Having commenced a comprehensive review of operations, I have had the
pleasure of engaging with staff at many levels of the business and have been
deeply impressed by the talent and commitment of our people who are truly the
centre of everything we do. Once this review is complete, I look forward to
engaging fully with all stakeholders and updating them on our strategic
roadmap."
(1)In measuring our performance, the financial measures that we use include
those which have been derived from our reported results in order to eliminate
factors which distort period-on-period comparisons. These are considered
non-GAAP financial measures, and include measures such as like-for-like
revenue, adjusted EBITDA and net debt. All are defined in note 8.
Enquiries:
TPXimpact Holdings
Bjorn Conway, CEO Via Alma PR
Steve Winters, Group CFO
Stifel Nicolaus Europe Limited +44 (0) 207 710 7600
(Nomad and Joint Broker)
Alex Price
Fred Walsh
Ben Burnett
Dowgate Capital Limited +44 (0) 203 903 7715
(Joint Broker)
James Serjeant
David Poutney
Russell Cook
Alma PR tpx@almapr.co.uk
(Financial PR) +44 (0) 203 405 0209
Josh Royston
Kieran Breheny
Matthew Young
About TPXimpact
TPXimpact exists to transform the organisations, services and systems that
underpin society and that drive business success. It applies strategic and
creative thinking, technology, innovative design and user-centred approaches
to bring about numerous improvements which together multiply the impact of
change.
The Company works closely with its clients in agile, multidisciplinary teams
that span organisational design, technology, and digital experiences. It
shares a deep understanding of people and behaviours and a philosophy of
putting people and communities at the heart of every transformation.
The business is being increasingly recognised as a leading alternative digital
transformation provider to the UK public services sector, with c.65% of its
client base representing the public sector and c.35% representing the
commercial sector.
More information is available at www.tpximpact.com
(http://www.tpximpact.com/) .
Chairman's statement
As previously reported on 30 September 2022, the first half of the year was a
challenging one largely because of the impact of strategically important
changes we had started to implement within the Group. Nevertheless, we feel
that these changes needed to be made in order to transform our structure and
evolve the leadership of the Group in order to position it for long-term and
scalable growth.
First half trading was in-line with our update at the time of the AGM, with H1
revenues of £40.4m and Adjusted EBITDA of £1.2m, with revenues in H1 being
approximately 45% of our expectation for the full year. Our confidence in the
business, balance sheet and outlook is highlighted in our decision to
recommend an interim dividend of 0.3p per share (H1 2022: 0.3p).
We have been committed to building a business capable of scaling beyond being
a portfolio of founder-led companies. This required sufficient resource to
enable strong top-line growth in both the short and long-term which has
primarily involved investment in talent through a central sales, growth and
bid management team, as well as increased spending in marketing initiatives.
As the first half progressed, it became evident that the pace of change had
led to some internal inefficiencies. This resulted in a Q1 order book lower
than expected, impacting revenues in Q2 and, as a result, we took action to
reposition the sales, growth and bid management team into the specific
divisions (largely the Consulting division) in order to bring them closer to
the account management and delivery teams driving ongoing revenue and
compelling solutions. This impacted gross margins and, together with the
investments we made, had a negative impact on reported profit in H1.
I am pleased to report that, post the half-year end, the Group is on track and
performing as we thought it would. We are continuing to implement the
programme in a measured way and sales activity, client engagement and order
book growth have all been encouraging. The pipeline of opportunity remains
very strong with a healthy mix across both the public and private sectors.
We re-confirm the previously announced FY23 financial targets of c.£90m of
revenue and an Adjusted EBITDA of £7.0-7.5m. This is supported by the
continuing trend of winning new business in the eight weeks since the AGM with
contracts secured with a total value of £26m. I am also encouraged to note
that around 85% of full year forecast revenues (75% at the time of the AGM)
are represented by committed client spend as at today's date.
The Board remains of the view that the integration of the separate businesses
that form the Group is the correct strategy so as to enable long-term,
sustainable growth and the sales, growth and bid team are an intrinsic part of
this strategy. This is strategically the most effective way in which to
address the market and leverage the depth of expertise and talent. Alongside
this, we are committed to making further investments in talent to enhance the
Group's back-office (including finance, HR, and IT) to support the Group's
continued expansion and growth. This is balanced against delivering on our
financial targets for FY23 and beyond.
I would like to thank all of our colleagues at TPX who have worked tirelessly
over the last few months to support the implementation of strategic vision and
their willingness to embrace operational change without losing their
entrepreneurial ambition or their focus on delivering on the fantastic
long-term growth potential in-front of us. We remain a Group with strong
capability and track record in digital transformation, with highly
knowledgeable and experienced delivery teams, offering a wide range of leading
capabilities and supported by access to major public sector framework
agreements and a growing presence in the private sector.
As part of the operational changes to support the Group's growth, we announced
at the AGM that Neal Gandhi and Oliver Rigby, co-founders & CEO and CFO
respectively, would step down from their executive roles and day-to-day
activities with effect as of 1 October 2022. There has been a natural
evolution for the business, from the bold and disruptive mindset required in
founding and building the Group to a more mature and structured business with
the ambition to bid for and win larger contracts and deliver sustainable
margins. Neal and Olly demonstrated exceptional self-awareness in recognising
that a different type of leadership was required for the Group to achieve its
full potential.
Bjorn Conway joined the Group as CEO on 1 October 2022. Between 2011 and 2016,
Bjorn led EY's UK Government and Public Sector team operating across central
government, local government, health and infrastructure. That business doubled
in size over 5 years and was EY UKI's largest market segment. Since then,
Bjorn has concentrated on building a number of private businesses, with a
focus on digital transformation.
Steve Winters, previously Deputy Group CFO, became Group CFO on 1 October
2022. Steve joined in April 2022 on an interim basis and has been heavily
involved in the transformation of the divisional and central finance teams, as
well as expanding the quarterly re-forecasting and management reporting
process. Both Bjorn and Steve have worked hard over the last few weeks to meet
colleagues, review the strategy and identify further internal and external
opportunities and we look forward to reporting on this over the next few
months.
The digital transformation market in the UK, in both the public and private
sectors, remains vibrant and attractive, with plenty of long-term potential
for continued growth. As expected, we have seen some delays in commencing
programmes given the political backdrop. However, demand remains very high as
digital transformation continues to be a business priority. We have improving
systems and order book management, increasingly optimised teams and a clear
market proposition. With a strong pipeline for FY23, our targets remain
unchanged.
Mark Smith
Chairman, TPXimpact
Business Review
Strategy
TPXimpact's core strategy remains focused on developing the Company to be a
leading provider of digital transformation to public and commercial
organisations. Delivery against our targets and wider strategy will play a
pivotal role in stabilising the business and positioning TPX for scalable
growth while providing value for both our customers and investors.
Performance against growth strategy
Key to TPX's strategy is the continued execution of public and commercial
sector contract wins and the Group is pleased to report new agreements during
the period with organisations including the Department for International Trade
(DIT), Care Quality Commission, Historic Environment Scotland, Digital Health
& Care Wales and Transport for Wales.
In the commercial sector, TPX is also currently delivering a number of
projects for Legal and General, providing technical capabilities and expertise
across Data, DevOps, and cloud migration in collaboration with in-house teams.
TPX has built modelling solutions faster and more efficiently, which, in turn,
seek to increase LGRI (Legal & General Retail Investment)'s market
competitiveness for new business.
Within the public sector, we worked with the Thinkuknow team at the National
Crime Agency to create a safe online environment for children aged 4-7 years.
Their primary objective was to promote understanding with this age group that
if anything online made them feel scared, worried or sad, they should tell a
trusted adult. Through gamification and positive reinforcement, the team were
able to launch a new website that used familiar and welcoming characters to
deliver content that enables difficult conversations between young children
and trusted adults.
Consolidation under TPXimpact
The Board remains confident that continuing with brand consolidation is the
correct strategy and will maintain investment in operational efficiencies.
During the period, TPX has continued to progress its internal change programme
with the appointment of an internal communications team to help improve
company culture and ensure the brand is being expanded throughout the teams
across the UK and further afield. Moreover, the new shared operations team
created during the period which includes IT, Legal, Commercial &
Compliance exemplifies the investments being made in the back office to create
the foundations to grow at scale.
The Company has furthered its operational rigour by cementing its divisional
structure. TPX now operates through three core divisions; Consultancy, Digital
Experience (DX) and International, and is establishing a Data & Insight
division. The divisional structure positions TPX for scalable growth.
Our purpose in action (ESG)
Purpose remains core to the business, the Board and management team are
committed to continuing to make a meaningful impact to our people, planet and
communities through our work. These values are a key differentiating factor
for TPX and run through every facet of the business. Most recently the
amendments to TPX's Articles of Association enshrine purpose at the very core
of governance. TPXimpact and the Board are now accountable to all
stakeholders, as well as our shareholders.
In the first half of this year, we launched the fifth edition of our flagship
programme, Future Leaders, which is designed to support young entrepreneurs
from underrepresented backgrounds through funding, coaching, professional
development training and networking. This edition built upon the previous
foundations set by the other cohorts, by extending the programme from three to
six months. This enabled TPX to provide a greater level of support and
coaching to the five young entrepreneurs, who all successfully graduated the
programme post-period end.
Market update
The underlying trends in the UK digital transformation market remain strong
and, as TPX continues to invest in its internal efficiencies and service
offering, the Board is confident that it can take advantage of the increasing
opportunity within the sector with total spending on digital transformation
programmes forecast to grow consistently over the next few years.
TechMarketView* estimates that the UK public sector software and IT services
(SITS) sector will be worth £17.6bn by 2025, a £3.4bn increase from 2021, as
companies invest in their digital transformation to optimise internal
operational efficiencies and combat the rising costs associated with
inflation.
In the public sector, central government and healthcare are forecast* to be
the most resilient areas and both are strategic priorities for the Group,
playing to TPX's strengths.
Most importantly, the market continues to move away from heritage solutions in
favour of more efficient new offerings. This year we saw the weighting move
past 50% for the first time and, by 2025, the market is expected to represent
67.5% of spending in favour of new technologies. With Central and Local
Government predicted to be the strongest subsectors of the SITS market,
growing at a CAGR of 14.9% and 15.5% respectively, TPX is perfectly positioned
to help the public sector transition over this period.
*Source: TechMarketView, Public Sector: SITS Suppliers, Trends &
Forecasts, 2022
Financial Review
The interim results for the six months ended 30 September 2022 reflect the
impact of a number of strategic initiatives (primarily investments in people)
that will position the business for future growth in the medium- and
long-term. The timing of these initiatives, however, coincided with a period
of challenge in respect of revenue growth, which had a short-term effect on
profitability in the first half. These results are in line with management's
projections for the first half, as announced in the AGM trading update on 30
September 2022.
Prior period comparatives have been restated to exclude the results of
Greenshoot Labs Limited, which was disposed of in May 2022.
Reported revenues were up 7.7% to £40.4m in the first half, reflecting the
contribution of acquisitions in the last twelve months, including Peak
Indicators Limited and Swirrl IT Limited both of which completed in April
2022, and RedCortex Limited which completed in December 2021. The performance
of these new members of the TPXimpact family was very encouraging in the first
half, with all of them showing double-digit like-for-like revenue growth.
For the Group as a whole, revenues were down 6.5% in the first half of the
year on a like-for-like basis. This compares with a very strong rate of
like-for-like growth of 21% for the corresponding period last year, providing
a tough comparison. A number of factors contributed to this performance,
including a lower-than-normal order book in certain parts of the business as
they entered this financial year and delays in implementing projects that had
been awarded to the Group, which especially impacted the second quarter.
Sequentially, like-for-like revenue fell by 1.6% in Q1 and 11.2% in Q2.
New business wins of £26m in the first two months of Q3, on top of £26m in
Q2, should provide a solid foundation for growth in the second half of the
year. Backlog or committed revenue represents around 85% of our full year
projected revenues. Public sector client revenues now represent 65% of
revenues (74% for the same period last year).
Gross profit of £10.5m was down 11.2% from £11.8m on a reported basis and
down 20.5% on a like-for-like basis. Cost of sales were £29.9m in the first
half, an increase of 16.5% on a reported basis and a decrease of 0.4% on a
like-for-like basis, again reflecting the impact of acquisitions on the first
half. Gross margins therefore reduced to 26.0% in the first half from 31.5%
for the same period last year, and from 30.5% on a like-for-like basis. As
announced on 30 September 2022, we expect gross margins to recover to around
30% for the full year.
The Group continually assesses the appropriate mix of permanent headcount and
contractors within cost of sales, with a view to optimising efficiency in
servicing the needs of our clients. In the first half, however, this
efficiency was more challenging to achieve due to client delays in
implementing projects, which impacted utilisation rates, particularly in our
Consulting division, which represents 40% of Group revenues.
Further, a new benefits package for permanent staff was introduced in April
2022, which included increases in holiday entitlements, pensions and other
benefits. This coincided with the effect of the salary reviews conducted in
March 2022, which taken together, impacted gross margins. Nevertheless,
management remain committed to offering our staff a highly attractive benefits
package as one of a number of measures to attract and retain talent and
differentiate TPXimpact as an employer which truly values the contribution and
well-being of our staff.
We expect the current, healthy order book, combined with a continued focus on
capacity and utilisation, should lead to an improvement in utilisation rates
and gross margins in the second half.
The Group made an operating loss of £(3.9)m in the first half on a reported
basis, against an operating profit of £1.3m for the same period last year.
This reflects the £1.3m reduction in gross profit explained above, as well as
the effect of administrative costs increasing to £14.5m from £10.6m last
year.
The increase in administrative costs includes a continuing investment in
talent, together with sales, bid management and marketing initiatives, to
support a long-term growth strategy that will benefit the top-line. In total,
Group headcount of 713 people (on an FTE basis) at 30 September 2022 compares
with 659 people at 31 March 2022, an increase of 8% on a like-for-like basis.
Including contractors, the Group's aggregate workforce is around 1,000 people.
Administrative costs also include £1.3m of restructuring costs (compared with
£0.1m for the first half and £1.8m in the second half of last year)
associated with integration and restructuring actions taken in the first six
months of this financial year.
Adjusted EBITDA of £1.2m in the first half compares with £5.3m for the same
period last year, representing a margin of 3.0% against 14.3%. A
reconciliation of Operating profit to Adjusted EBITDA is provided in Note 8 to
the unaudited interim results.
The Group made a reported loss before tax on continuing operations of £(4.3)m
in the first half of the year, compared with a profit of £0.9m for the prior
period, and an adjusted profit before tax on continuing operations of £0.4m
(£4.7m profit for the first half of last year). Finance costs in the first
half of £0.4m were flat on last year.
Adjusted profit after tax on continuing operations was £0.4m (compared with
an adjusted profit after tax of £3.9m last year).
The disposal of Greenshoot Labs gave rise to a gain on disposal of £1.5m
which has been included in the income statement within income from
discontinued operations.
Reported diluted earnings per share from continuing operations for the first
half was a loss of (4.2) pence per share (compared with earnings of 0.7 pence
per share in the first half of last year), reflecting the decrease in
profitability in the period. On an adjusted basis, diluted earnings per share
on continuing operations was 0.4 pence per share (compared with 4.6 pence per
share in the first half of last year).
The Board is declaring an interim dividend of 0.3 pence per share (H1 2022 0.3
pence per share). The record date for the interim dividend is 20 January 2023
and the dividend will be payable on 28 January 2023.
Cash flow and Net Debt
Net debt (excluding lease liabilities) at 30 September 2022 was £14.1m
compared with £10.1m at 31 March 2022. The net debt to Adjusted EBITDA ratio
was 1.7x at 30 September 2022 (based on a rolling 12-month Adjusted EBITDA),
which is well within the Group's banking covenant of 2.5x, although higher
than the Group's historical objective of 1.5x. Interest cover of 12x (also
based on a rolling 12-month Adjusted EBITDA) is comfortably above the Group's
banking covenant of 4.0x.
The movement in net debt in the first six months of the year of £4.0m
includes £1.8m cash paid for acquisitions (net of cash acquired), £0.2m of
net working capital outflows, £0.4m of capital expenditure (including
intangible assets), £0.3m of share repurchases into the Group's EBT, and
£0.7m of finance costs/taxation paid.
The Group is very focused on improving cash flow and working capital
management and a number of initiatives are underway in these areas which, when
combined with the expected improvement in operating performance in the second
half, should lead to an improved net debt position by year-end.
Current trading and Outlook
In October, our recent acquisitions continued to show significant growth,
whilst the rest of the business encountered similar challenges to Q2. New
business continues to be strong with £26m of new orders won in the first
eight weeks of Q3, and a very healthy pipeline of new projects in which the
Group is actively participating.
In the AGM trading statement released on 30th September, the Group indicated
full year revenues of c. £90m and Adjusted EBITDA in the range of £7.0-7.5m.
We have subsequently refreshed our reforecast for the balance of year,
incorporating October's results and the impact of recent wins, and concluded
our outlook will remain unchanged. Committed revenue now represents around 85%
of the total c. £90m forecast. Through new tools and processes, we also have
greater visibility over capacity and utilisation than earlier in the year,
which means we are now more able to manage our cost base effectively as we
progress through the remainder of the financial year.
We also reiterate our preliminary guidance with regard to next year:
like-for-like revenue growth of 10-15% and an Adjusted EBITDA margin of around
12%. We continue to believe the digital transformation market in the UK - in
both the public and private sectors - remains attractive, with plenty of
potential for continued growth, and that the Group is well-placed to take
advantage of these trends.
Steve Winters
CFO, TPXimpact
Consolidated Income Statement
For the six months ended 30 September 2022
Unaudited Unaudited Audited
6 months to 30 September 2022 6 months to 30 September 2021(1) Year
ended 30
March
2022
£'000 £'000 £'000
Revenue 40,363 37,460 79,709
Cost of sales (29,886) (25,656) (55,341)
Gross profit 10,477 11,804 24,368
Administrative expenses (14,506) (10,580) (21,738)
Other income 93 52 579
Operating (loss)/profit (3,936) 1,276 3,209
Finance costs (388) (393) (683)
(Loss)/profit before tax on continuing operations (4,324) 883 2,526
Taxation 510 (282) (1,706)
(Loss)/profit after tax on continuing operations (3,814) 601 820
Profit/(loss) after tax on discontinued operations 1,334 (323) (723)
Net (loss)/profit (2,480) 278 97
Other comprehensive income/(loss):
Exchange difference on translation of foreign operations 91 (82) (226)
Total comprehensive (loss)/income for the period (2,389) 196 (129)
Earnings per share from continuing and discontinued operations
Basic (p) 7 (2.7p) 0.3p 0.2p
Fully diluted (p) 7 (2.7p) 0.3p 0.1p
Earnings per share from continuing operations
Basic (p) 7 (4.2p) 0.7p 1.0p
Fully diluted (p) 7 (4.2p) 0.7p 0.9p
( )
(1) Prior period figures have been re-presented in accordance with IFRS 5
Non-current Assets Held for Sale and Discontinued Operations, as described in
note 3.
( )
(1) Prior period figures have been re-presented in accordance with IFRS 5
Non-current Assets Held for Sale and Discontinued Operations, as described in
note 3.
Consolidated Statement of Financial Position
At 30 September 2022
Unaudited Unaudited Audited
30 September 30 September 31 March
2022 2021 2022
£'000 £'000 £'000
Non-current assets
Goodwill 68,493 56,616 66,157
Intangible assets 29,041 28,412 28,493
Property, plant and equipment 544 292 297
Right of use assets 1,168 263 1,293
Other investments 2,188 - -
Deferred tax assets 54 30 47
Total non-current assets 101,488 85,613 96,287
Current assets
Trade and other receivables 14,058 11,135 16,924
Contract assets 2,894 2,832 3,840
Cash and cash equivalents 6,199 10,413 7,914
Total current assets 23,151 24,380 28,678
Assets held for sale - - 708
Total assets 124,639 109,993 125,673
Current liabilities
Trade and other payables (6,882) (6,218) (7,718)
Contract liabilities (2,368) (1,620) (4,536)
Other taxes and social security costs (2,984) (3,807) (4,160)
Corporate tax liability (1,077) (1,209) (1,214)
Deferred and contingent consideration (717) (7,775) (3,173)
Lease liabilities (378) (271) (416)
Borrowings (69) (53) (20)
Total current liabilities (14,475) (20,953) (21,237)
Liabilities directly associated with assets held for sale - - (103)
Non-current liabilities
Deferred tax liabilities (6,769) (4,643) (6,696)
Deferred and contingent consideration - (630) (198)
Provisions - (76) -
Borrowings (20,270) (13,000) (18,000)
Lease liabilities (881) (77) (878)
Total non-current liabilities (27,920) (18,426) (25,772)
Total liabilities (42,395) (39,379) (47,112)
Net assets 82,244 70,614 78,561
Equity
Share capital 912 848 874
Own shares (688) - (356)
Share premium 6,530 6,253 6,449
Merger reserve 85,095 70,231 78,705
Capital redemption reserve 15 5 15
Other reserves 983 906 997
Retained earnings (10,603) (7,629) (8,123)
Total equity 82,244 70,614 78,561
Consolidated Statement of Changes in Equity
For the six months ended 30 September 2022
Capital redemption reserve
Share capital Share premium Merger reserve Own shares Other reserves Retained earnings
Total
£'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000
At 1 April 2022 874 6,449 78,705 15 (356) 997 (8,123) 78,561
Loss for the period - - - - - - (2,480) (2,480)
Exchange differences on translation of foreign operations
- - - - - 91 - 91
Transactions with owners
Shares issued 38 81 6,390 - (81) - - 6,428
Share-based payments
- - - - - (105) - (105)
Own shares purchased by EBT
- - - - (251) - - (251)
At 30 September 2022 (Unaudited)
912 6,530 85,095 15 (688) 983 (10,603) 82,244
For the year ended 31 March 2022
Capital redemption reserve
Share capital Share premium Merger reserve Own shares Other reserves Retained earnings
Total
£'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000
At 1 April 2021 804 5,691 60,926 5 - 796 (7,568) 60,654
Profit for the period - - - - - - 278 278
Exchange differences on translation of foreign operations
- - - - - (82) - (82)
Transactions with owners
Shares issued 44 61 9,305 - - - - 9,410
Dividends paid - - - - - - (339) (339)
Share-based payments
- - - - - 192 - 192
Share options exercised
- 501 - - - - - 501
At 30 September 2021 (Unaudited)
848 6,253 70,231 5 - 906 (7,629) 70,614
Loss for the period - - - - - - (181) (181)
Exchange differences on translation of foreign operations
- - - - - (144) - (144)
Transactions with owners
Shares issued 36 196 8,474 - (257) - - 8,449
Share cancellations (10) - - 10 - - - -
Dividends paid - - - - - - (264) (264)
Other adjustments - - - - - - (49) (49)
Share-based payments
- - - - - 235 - 235
Own shares purchased by EBT
- - - - (99) - - (99)
At 31 March 2022 (Audited)
874 6,449 78,705 15 (356) 997 (8,123) 78,561
Consolidated Statement of Cash Flows
For the six months ended 30 September 2022
Unaudited Unaudited Audited
6 months to 6 months to 30 September 2021(1) Year ended
30 September 2022(1) 31 March
2022
£'000 £'000 £'000
Cash flows from operating activities:
(Loss)/profit before taxation on total operations (2,990) 559 1,764
Adjustments for:
Depreciation 359 295 584
Amortisation of intangible assets 3,215 2,553 5,347
Share-based payments (105) 192 427
Foreign exchange gains (2) (27) (292)
Finance expense 388 393 683
Loss/(gain) from fair value movement in contingent consideration 148
688 (152)
Loss on disposal of property, plant and equipment -
- 4
Gain on sale of discontinued operations (1,474) - -
Working capital adjustments:
Decrease/(increase) in trade and other receivables 5,068
2,262 (3,754)
(Decrease)/increase in trade and other payables (5,277) (1,959) 3,488
Net cash (used in)/generated from operations (670) 4,956 8,099
Tax (paid)/received (350) 87 (921)
Net operating cash (used in)/generated from continuing operating activities (1,020)
5,043 7,178
Net cash used in discontinued operating activities -
- (563)
Net operating cash flows from total operations (1,020) 5,043 6,615
Cash flows from investing activities:
Net cash (paid)/received on acquisition of subsidiaries (1,787)
658 (6,840)
Deferred consideration payment - (467) (467)
Purchase of property, plant and equipment (154) (105) (249)
Additions to intangibles (269) (183) (292)
Proceeds from sale of property, plant and equipment -
- 6
Net cash used in investing activities from continuing operations (2,210)
(97) (7,842)
Net cash used in investing in discontinued operations -
- (165)
Net cash used in investing activities for total operations (2,210)
(97) (8,007)
Cash flows from financing activities:
New borrowings 2,300 - 5,000
Proceeds from exercise of share options - 501 501
Purchase of own shares (251) - (99)
Payment of lease liabilities (193) (41) (362)
Finance costs (380) (390) (683)
Dividends paid - (339) (603)
Net cash generated from/(used in) financing activities 1,476
(269) 3,754
Net (decrease)/increase in cash and cash equivalents (1,754)
4,677 2,362
Cash and cash equivalents at beginning of the period 7,914
5,734 5,734
Effect of exchange rate fluctuations on cash held 39
2 (148)
Cash from discontinued operations - - (34)
Cash and cash equivalents at end of the period 6,199 10,413 7,914
Comprising:
Cash at bank and in hand 6,099 10,413 7,864
Cash held by trust 100 - 50
Cash and cash equivalents at end of the period 6,199 10,413 7,914
(1) The cash flows of discontinued operations are immaterial to the
Consolidated Statement of Cash Flows and so have not been presented separately
for the current or previous financial period.
Notes to the Consolidated Financial Statements
1. General information
TPXimpact Holdings plc is a public limited company incorporated in England and
Wales under the Companies Act 2006 with registered number 10533096. The
Company's shares are publicly traded on AIM, part of the London Stock
Exchange.
The address of the registered office is 7 Savoy Court, London, England, WC2R
0EX. The principal activity of the Group is the provision of digitally native
technology services to clients within the commercial, government and
non-government organisation (NGO) sectors.
The interim financial information is unaudited.
2. Basis of preparation
The Group has not applied IAS 34 Interim Financial Reporting, which is not
mandatory for UK AIM listed companies, in the preparation of this half-yearly
report.
The consolidated interim financial information for the six months ended 30
September 2022 does not, therefore, comply with all the requirements of IAS 34
Interim Financial Reporting. The consolidation interim financial information
should be read in conjunction with the annual financial statements of
TPXimpact Holdings plc for the year ended 31 March 2022, which have been
prepared in accordance with applicable International Financial Reporting
Standards (IFRS) in conformity with the Companies Act 2006 and the AIM rules
for Companies.
This consolidated interim financial information does not comprise statutory
accounts within the meaning of section 434 of the Companies Act 20096.
Statutory accounts for the year ended 31 March 2022 were approved by the Board
of directors on and delivered to the Registrar of Companies. The report of the
auditors on those accounts was unqualified and did not contain any statement
under sections 498 (2) or (3) of the Companies Act 2006.
The interim financial statements are presented in pound sterling (GBP), which
is the functional currency of the parent company.
3. Basis of consolidation
These interim consolidated financial statements consolidate those of the
Company and all of its subsidiary undertakings drawn up to 30 September 2022.
Subsidiaries are fully consolidated from the date of acquisition, being the
date on which the Group obtains control, and continue to be consolidated until
the date that such control may cease. The financial statements of the
subsidiaries are prepared for the same reporting period as the parent company,
using consistent accounting policies.
The Group disposed of its subsidiary Greenshoot Labs Limited ('GSL') on 24 May
2022 to OpenDialog AI Limited (ODAL). Consideration of £2,187,500 was
received through the allotment and issue of ordinary shares by ODAL and is
presented as an "Other investment" on the Group's consolidated statement of
financial position. The operations of GSL is presented as discontinued
operations with the comparatives and related notes restated accordingly. The
disposal generated a gain of £1.5 million included in the profit after tax on
discontinued operations in the six months ended 30 September 2022.
4. Accounting policies
The accounting policies used in the preparation of the interim consolidated
financial information for the six months ended 30 September 2022 are in
accordance with the recognition and measurement criteria of IFRS and are
consistent with those which were adopted in the annual statutory financial
statements for the year ended 31 March 2022.
5. Business combinations
On 6 April 2022, the Group acquired the entire issued share capital of Swirrl
IT Limited ("Swirrl"), a software and services business.
On 7 April 2022, the Group acquired the entire issued share capital of Peak
Indicators Limited ("Peak"), a visionary data science and analytics
consultancy offering services such as analytics, data engineering and data
science.
The Group has performed an initial review of Peak and Swirrl's assets and
liabilities which have been included in this set of interim accounts. The
Group is currently obtaining the information necessary to finalise its
valuation which will be updated within its next published financial
statements.
6. Borrowings
In July 2022 HSBC extended their revolving credit facility with the Group to
£30 million with a £15 million accordion. The new facility is a
sustainability-linked revolving credit facility that incorporates targets
which align with the Group's long-term ESG objectives.
7. Earnings per share
6 months to 30 September 2022 6 months Year
Number of to 30 September 2021 ended 31 March
shares Number of 2021
shares Number of
shares
'000 '000 '000
Weighted average number of shares for calculating basic earnings per share
91,426 83,655 86,211
Weighted average number of dilutive shares 990 1,863 1,768
Weighted average number of shares for calculating diluted earnings per share
92,416 85,518 87,979
6 months to 30 September 2022 6 months Year ended 31 March 2022
to 30 September 2021
£'000 £'000 £'000
(Loss)/profit after tax on continuing operations (3,814) 601 820
Profit/(loss) after tax on discontinued operations 1,334 (323) (723)
(Loss)/profit after tax on total operations (2,480) 278 97
Adjusted profit after tax on continuing operations(1) 379 3,909 9,951
Earnings per share is calculated as follows:
6 months 6 months Year ended 31 March 2022
to 30 September to 30 September 2021
2022
Basic earnings per share
Basic earnings per share on continuing operations (4.2p) 0.7p 1.0p
Basic earnings per share on discontinued operations 1.5p (0.4p) (0.8p)
Basic earnings per share on total operations (2.7p) 0.3p 0.2p
Adjusted basic earnings per share on continuing operations
0.4p 4.7p 11.5p
Diluted earnings per share
Diluted earnings per share on continuing operations(2) (4.2p) 0.7p 0.9p
Diluted earnings per share on discontinued operations(2)
1.5p (0.4p) (0.8p)
Diluted earnings per share on total operations(2) (2.7p) 0.3p 0.1p
Adjusted diluted earnings per share on continuing operations
0.4p 4.6p 11.3p
(1) Adjusted profit after tax on continuing operations is defined in note 8.
(2) In the six months ended 30 September 2022, the weighted average shares
used in the basic EPS calculation has also been used for reported diluted EPS
due to the anti-dilutive effect of the weighted average shares calculated for
the reported diluted EPS calculation.
8. Alternative performance measures (unaudited)
In measuring our performance, the financial measures that we use include those
which have been derived from our reported results in order to eliminate
factors which distort period-on-period comparisons. These are considered
non-GAAP financial measures, and include measures such as like-for-like
revenue, adjusted EBITDA and net debt. We believe this information, along with
comparable GAAP measurements, is useful to shareholders and analysts in
providing a basis for measuring our financial performance.
Reconciliation of net debt (excluding lease liabilities):
30 September 30 September
2022 2021 31 March
2022
£'000 £'000 £'000
Cash and cash equivalents 6,199 10,413 7,914
Borrowings due within one year (69) (53) (20)
Borrowings due after one year (20,270) (13,000) (18,000)
Net debt (14,140) (2,640) (10,106)
Reconciliation of operating (loss)/profit to adjusted EBITDA:
6 months to 6 months to Year ended
30 September 30 September 31 March
2022 2021(1) 2022
£'000 £'000 £'000
Operating (loss)/profit (3,936) 1,276 3,209
Amortisation of intangible assets 3,215 2,489 5,347
Depreciation 359 294 584
Loss/(gain) from fair value movement in contingent consideration 148 668 (152)
Share-based payments (105) 192 427
Costs directly attributable to business combinations 167 350 1,013
Costs related to business restructuring 1,345 80 1,769
Adjusted EBITDA 1,193 5,349 12,197
(1) Prior period figures have been re-presented in accordance with IFRS 5
Non-current Assets Held for Sale and Discontinued Operations, as described in
note 3.
Reconciliation of (loss)/profit before tax to adjusted profit after tax:
6 months to 6 months to Year ended
30 September 30 September 31 March
2022 2021(1) 2022
£'000 £'000 £'000
(Loss)/profit before tax on continuing operations (4,324) 883 2,526
Amortisation of intangible assets 3,215 2,489 5,347
Loss/(gain) from fair value movement in contingent consideration 148 668 (152)
Share-based payments (105) 192 427
Costs directly attributable to business combinations 167 350 1,013
Costs related to business restructuring 1,345 80 1,769
Adjusted profit before tax on continuing operations 446 4,662 10,930
Tax (excluding impact of amortisation of intangible assets) (67) (753) (979)
Adjusted profit after tax on continuing operations 379 3,909 9,951
(1) Prior year figures have been re-presented in accordance with IFRS 5
Non-current Assets Held for Sale and Discontinued Operations, as described in
note 3.
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