REG - TPXimpact Holdings - Preliminary Results
19/07/2022 07:00
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RNS Number : 8911S TPXimpact Holdings PLC 19 July 2022
19 July 2022
TPXimpact Holdings PLC
("TPXimpact", "TPX" or the "Group")
Unaudited preliminary results for the year ended 31 March 2022
TPXimpact Holdings PLC (AIM: TPX), the technology-enabled services Group
focused on digital transformation, announces its unaudited preliminary results
for the year ended 31 March 2022.
Financial highlights:
● Revenue from continuing operations up 58% to £79.7m (FY2021(1): £50.3m)
o Organic like-for-like(2) revenue growth of 16%
● Statutory EBITDA of £11.5m (FY2021(1): £1.9m)
● Adjusted EBITDA(3) up 72% to £12.2m (FY2021(1): £7.1m)
● Adjusted EBITDA(3) margin up to 15% from 14% in the prior year
● First statutory profit after tax on continuing operations of £2.5m
(FY2021(1): loss of £2.0m)
● Adjusted profit after tax(4) of £8.7m (FY2021(1): £5.2m)
● Basic earnings per share from total operations of 2.1p (FY2021: loss per share
of 3.5p)
● Diluted earnings per shares from total operations of 2.0p (FY2021: loss per
share of 3.5p)
● Adjusted diluted earnings per share(5) of 9.4p (FY2021(1): 6.2p)
● Cash conversion(6) of 110% (FY2021(1): 109%) and cash at bank(7) of £7.9m as
at 31 March 2022 (31 March 2021: £5.7m). Adjusted net debt(8) as at 31 March
2022 of £10.1m (31 March 2021: £7.3m)
● Sales backlog(9) as at 1 April 2022 of £41.2m to 31 March 2023 (1 April 2021:
£39.0m)
● Final dividend of 0.6 pence per share (FY2021: 0.4p). This follows the interim
dividend of 0.3 pence per share paid in January 2022, and will be paid on 14
October 2022 to shareholders on the register at the close of business on 7
October 2022
Operational and Impact highlights:
● Substantial progress in the consolidation of Group businesses into one
company, expected to drive continued growth and targeting of larger projects
● £85.1m of total contract wins in FY2022, up 92% (FY2021: £44.4m)
● 72% of revenue from public services in the period (FY2021: 71%), with Local
Government representing 17% Central Government 35% Healthcare 9%, Education
4%, and the remaining 7% coming from other public services
● Completion of acquisitions of Nudge Digital, RedCortex with Peak Indicators
and Swirrl acquired post-period end
● Launched Employee Resource Groups (ERGs) for women, LGBTQI+ employees and
minority ethnic employees
● Achieved Social Value Quality Mark Level 1 in recognition of the Group's
commitment to research, measure and report social impact and value
● Created an internal carbon tracker
Other KPIs:
● 7 contracts signed over £3m (FY2021: 4) and 18 customers billed over £1m
(FY2021: 11)
● Average contract spend increased to £226k (FY2021: £176k)
● 353 customers billed (FY2021: 290)
● 67% of customers billed in FY2022 also billed in FY2021, FY2020 and FY2019
(FY2021: 67% of customers billed in FY2021 were also billed in FY2020, FY2019
or FY2018)
● Top ten clients generating 42% of revenue (FY2021: 30%)
Neal Gandhi, Chief Executive Officer, commented:
"We have achieved a great deal this year. In financial terms, we've delivered
revenue up 58%, adjusted EBITDA up 72%, 110% cash conversion and our first
statutory profit after tax. We've also made great progress against our ESG
goals, with countless projects underway in this area.
Our team has worked incredibly hard to generate these results, and I am very
proud of the positive impact their efforts have had on our clients. Over the
year we've sped up the delivery of crucial public services, helped empower
local communities and improved the effectiveness of numerous organisations'
operations.
Alongside this work we've also started implementing a substantial change
programme internally, bringing multiple different businesses together as one
company. We have made good progress and as a result are beginning to see just
how impactful making this move will ultimately be for our people, our clients,
our partners and our shareholders. Our investment into the programme continues
this year, and we look forward to updating our shareholders on our progress in
due course. Notwithstanding the broader macro environment, digital
transformation remains a high growth market and we are excited to see what we
can achieve as we continue to work towards our 2025 commercial vision."
A video overview of the results is available to watch here:
https://bit.ly/TPXfy22-Overview (https://bit.ly/TPXfy22-Overview)
TPX will be hosting a webinar for analysts at 9:30am today. If you would like
to register for the analyst webinar, please contact tpx@almapr.co.uk
(mailto:tpx@almapr.co.uk) .
The Group will also be hosting a webinar for retail investors at 12.00 noon
today. Retail investors can register for the webinar using the following link:
https://bit.ly/TPX_FY22_webinar (https://bit.ly/TPX_FY22_webinar)
(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
the accounting policies. Full disclosure of discontinued operations in the
year are disclosed in the notes.
(2 )Like-for-like is a non-GAAP/IFRS measure that presents the prior year
being restated to show the unaudited numbers of the existing and acquired
businesses consolidated for the same number of months as they have been
in FY2022. For FY2021, this incorporates the like-for-like pre-acquisition
results for Arthurly, Difrent, Keep IT Simple, Nudge Digital and Red Cortex
Limited as if they have been included in the Group for the same amount of time
as they have been in FY2022.
(3 )Adjusted EBITDA is a non-IFRS measure that the Group uses to measure
its performance and is defined as earnings before interest, taxation,
depreciation and amortisation and after add back of costs related to
acquisitions, restructuring and the TPXimpact Change Programme announced in
September 2021. It also adds back discontinued operations in the year, fair
value adjustments and share based payment charge.
(4 ) Adjusted profit after tax is calculated as a non-IFRS measure relating
to continuing operations only. To arrive at adjusted profit after tax,
adjustments made include the add back of acquisition, restructuring and costs
associated with the Change Programmes, amortisation related to acquired
intangibles, share-based payments, the impact of fair value adjustments, and
the tax impact of these adjustments.
(5) Adjusted diluted earnings per share is calculated based on adjusted profit
before tax as defined above. An adjusted diluted share count is calculated by
taking the weighted average basic shares and including the maximum shares to
be issued in respect of contingent consideration to be paid based on
performance measures met in the period, together with the maximum share
options and other share awards outstanding.
(6) Cash conversion is calculated by reference to adjusted profit after tax
after deducting the costs relating to acquisitions and restructuring
(7) In FY2021, cash in bank figure was reduced by £2.1m reflecting the
completion cash payable to the sellers of Nudge Digital. This was settled in
Q3 FY2022
(8) Adjusted net debt is calculated excluding the impact of lease liabilities.
FY2021 was reduced to include the impact of £2.1m completion cash payable to
the sellers of Nudge Digital.
(9) The value of contracted revenue that has yet to be recognised.
Enquiries
TPXimpact Holdings PLC Via Alma PR
Neal Gandhi (CEO)
Oliver Rigby (CFO)
Stifel Nicolaus Europe Limited +44 (0)207 710 7600
(Nomad and Joint Broker)
Alex Price
Fred Walsh
Dowgate Capital Limited +44 (0)203 903 7715
(Joint Broker)
James Serjeant
Nicholas Chambers
Alma PR tpx@almapr.co.uk (mailto:tpx@almapr.co.uk)
(Financial PR) +44 (0)203 405 0209
Susie Hudson
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 Group 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.75% of its
client base representing the public sector and c.25% representing the
commercial sector.
More information is available at www.tpximpact.com (http://www.tpximpact.com)
Chairman's statement
This year we have delivered a strong financial performance while making
extensive operational changes. As a Group we are driven by a distinct sense of
purpose and throughout the year we have continued to deliver impactful change
for our clients and communities. Our success to date can be attributed to the
Group's agile leadership, strategic acquisitive growth and our talented team
of employees whose commitment, skill and dedication are the backbone of our
best-in-class service offering.
The restructuring of the business under the single brand TPXimpact is a vital
step towards achieving our strategic targets and I am proud of all our teams,
particularly those closest to the project, for the hard work that has gone
into progressing towards full integration so far.
Complementing our organic growth, throughout this year we have successfully
executed on our acquisitive strategy by welcoming Nudge Digital and RedCortex
Ltd to the Group with a further two post-period acquisitions in Peak
Indicators Ltd and Swirrl IT Ltd. These additions have significantly enhanced
our service offering and have opened new market opportunities to us that were
previously addressed by working with associates. The success of this strategy
has significantly bolstered our competitive position in the public sector and
allows us to continue delivering impactful digital change to organisations
across the public, not-for-profit and commercial sectors.
Macro-economic developments
We, in common with all businesses, are currently facing a series of
macro-economic challenges we have seen develop across this year and
post-period end. We are now confronting a severely inflationary environment,
together with a cost-of-living crisis amongst heightened political and
economic uncertainty. However, TPXimpact is well-positioned to weather these
challenges, and in many instances, to leverage opportunities that may appear
amongst the disruption.
Digital transformation is an enduring theme, and one where we believe all
organisations will continue to invest in the coming months. As during the
pandemic, it is now even more imperative that companies deliver increased
efficiencies and are best able to serve their customers.
Our purpose
TPXimpact is a purpose-led Group, determined to do business that delivers
positive sustainable change to wider society and our unified brand reflects
the importance of this mission to everyone across the business. I am proud to
say that from Board level down, TPX is committed to improving people's lives
through both its day-to-day digital transformation work, and also its
extensive ESG programme.
In a year which has seen increasing pressure on essential public sector
bodies, we are proud that our work has gone some way in allowing them to
continue delivering their essential services to those most in need.
TPXimpact is committed to leading by example and in doing so, we want to
change the composition of the technology sector. In the past year, we have had
a focus on ethnic diversity and have continued to host a number of schemes,
apprenticeships and partnerships to better enable those from underrepresented
backgrounds to gain access to the expertise, mentorship and support needed to
thrive in this area. We are pleased to say that these have been a success and
through our focus on D&I, we have increased our overall minority
representation from 13% to 19%. Whilst we understand that there is some way to
go, we are pleased with the progress made and will continue to make TPXimpact
a diverse and inclusive workplace while reporting our progress along the way.
Alongside our investment in people, we have been focused on further advancing
our commitment to the other two areas of our ESG agenda, Planet and
Communities. Moving forward, we will be committing to setting short and
long-term Science Based Targets to align with the SBTi Net-Zero Standard. As a
Group, we are also proud to report that our philanthropic donations have kept
pace with our commercial growth through our 1% pledge. Over the course of the
last year, we have donated over £59,000 to charities through our community
investment and employee-led giving programmes.
I am also pleased that we have once again delivered our Future Leaders
programme which aims to create positive change in communities and in the wider
industry by supporting 10 digital entrepreneurs from underrepresented
backgrounds over a two-month period to build their businesses; providing the
expertise, mentorship and support needed to successfully develop themselves
and their companies.
In addition to Future Leaders, TPXimpact supports; the Arkwright Scholarship,
which sponsors diverse students looking to get into engineering; In2Science,
which promotes social mobility and diversity in science, technology,
engineering, and maths through work experience; and Code First Girls, which
places four women or non-binary people on a Full-Stack Nanodegree.
Corporate governance
The Board is working to continuously improve the governance of TPXimpact. We
carefully monitor the market and frequently assess the principal risks to the
Group, remaining cognisant of the ongoing impact sector-wide challenges have
on our end markets and stakeholders.
We greatly value our shareholders, for whom we are ultimately seeking to
deliver value which has been achieved with purpose. Therefore, we believe that
it is a priority to keep all shareholders up-to-date and engaged and we are
committed to continually increasing transparency in all our corporate
communications.
This year we have heightened our ESG governance and have built DEI
requirements into the share award eligibility for all leaders. We want DEI to
be a priority within the business and therefore we are going to use it as a
metric to measure the performance of senior leaders within the Group.
Performance on these metrics for leadership are now linked directly to their
remuneration.
People
Our people are at the very centre of everything that we do and I would like to
take this opportunity to sincerely thank all of them for their continued hard
work and dedication. We have worked hard to create an environment which allows
the diverse range of talent within TPX to thrive and I believe that this plays
a significant part in our continued success.
We are continually investing in our people in order to retain and attract the
best talent available. This year we have launched our new employee value
proposition which delivers increased benefits to staff including 30 days
holiday each year on top of bank holidays, two months full sick pay for
colleagues struggling with their mental or physical health, and green
incentive schemes to encourage sustainable living such as an electric vehicle
leasing scheme.
The Board is also pleased to note the launch of Employee Resource Groups
(ERGs) to help amplify the voices of underrepresented employees and make sure
our workplace is inclusive for everyone and a board mentoring scheme to
support diverse talent within the business.
Outlook
Looking ahead, we expect TPXimpact to greatly benefit from its structural
change, expanded service offering and extended geographic outreach as we
capitalise on the market opportunity available to us. Investment in digital
transformation is continuing in the public and commercial sectors and it has
become clear that this is now a necessity for all modern businesses. We are
also bolstered by our growing presence in the commercial sector which allows
for a diversification in our revenue streams and gives us strong foundations
to navigate any headwinds in the coming period.
We will also continue to look at best-in-class companies who might join
TPXimpact through acquisition and strengthen our existing client offering,
geographical expansion in key areas and further our purpose driven strategy to
enact meaningful change in the areas we work.
While we expect testing macro-economic conditions to continue, I am confident
that our experienced and agile management team have the necessary skillset to
capitalise on these opportunities and continue our strong momentum into
FY2023. Moreover, with best-in-class expanded service offering and substantial
market opportunity, we are well positioned to achieve our 2025 commercial
objectives and continue delivering positive, sustainable change.
Chief Executive's review
It has been an incredible year of change for the Group, and one of great
success.
We began the year trading under The Panoply Holdings plc as a collection of 12
separate businesses and have now come together under one unified brand:
TPXimpact. Coming together in this way necessitated a comprehensive change
programme across the Group but, even whilst this progresses, our teams have
continued to perform excellently, demonstrating passion and drive across their
work. As a result, we've achieved revenue from continuing operations of
£79.7m, up 58% and delivered like-for-like organic revenue growth of 16%. We
have achieved our first statutory profit after tax on continuing operations of
£2.5m and adjusted EBITDA of £12.2m slightly ahead of expectations, up 72%
year on year and at an improved adjusted EBITDA margin.
In a significant milestone for the Group, we hit the run rate revenue target
of our 2023 Commercial Vision a full year ahead of schedule. However, we
haven't sat on our laurels and immediately began looking ahead to our next
major set of goals: our Commercial Vision for 2025. This includes our ambition
to achieve a run rate revenue of £200m, deliver 70% of operating profit
through to positive cash flow and to become a top 20 public sector supplier,
by March 2025.
Alongside our financial success, we've also continued to deliver against our
overarching purpose of delivering sustainable change with a positive impact.
For example, we've helped the Welsh Ambulance Service - NHS Trust (WAST)
modernise their internal operations, with Office 365, data insights and
flexible mobile solutions; we've helped UNICEF UK design and deliver a new way
of operating to work more effectively and achieve better outcomes for
children; and we partnered with the Department for Education to find a way to
identify users and deliver services more effectively.
We have continued to win an increasing number of new clients and secured 7 new
contracts worth over £3m in the year, up from 4 in FY2021, demonstrating our
increasing ability to win and deliver more impactful projects.
Alongside delivering strong organic growth, we made two acquisitions in the
period, and two post-period end. Together, these new businesses (Nudge
Digital, RedCortex, Peak Indicators, and Swirrl) have bolstered the Group's
capabilities, particularly around data, and helped establish our presence in
new regions in the UK.
Growth strategy
Since inception, our growth strategy has always been built on the idea of
bringing together complementary companies in order to build a full-service
digital transformation capability, able to deliver outcomes to large clients
at a fraction of the cost and time of their traditional suppliers. We build
the business through organic growth and acquisitions, with the aim of moving
towards our commercial and impact visions. Our culture and values allow us to
remain agile and entrepreneurial while we grow.
The change programme the Group is undergoing, to come together as a single
company, will see us streamline our service offering to clients, enabling
increased organic growth in the future. The integration of our businesses will
allow us to more efficiently deliver our services to the organisations that
underpin society and further our objective to maximise our impact and effect
fundamental and sustainable change that shapes organisations, services and
systems.
Commercial Vision for FY2025
Last year, we set out new Commercial and Impact Visions for FY2025. Below is a
summary of our performance against these goals so far.
Ambition FY2022 progress
1. To achieve a run rate revenue of £200m (£150m public sector, £50m ● Revenue FY2022 of £79.7m up 58%
commercial sector) by March 2025
● Consensus revenue for FY2023 of £97.4m
2. To deliver 10-15% organic revenue growth per annum ● 16% organic revenue growth
3. To make further earnings enhancing acquisitions to strengthen our offer, ● Two acquisitions completed during the period, two post-period
achieve greater scale and support our overall vision end
4. To become a top 20 public sector supplier by March 2025 on run rate basis ● Started integration to one brand to allow us to report as a
single supplier
5. To deliver 70% of operating profit through to positive cash flow ● 110% OP to cash flow
6. To deliver progressive dividend policy at 15%-20% of net income ● Aggregate Dividends of 0.9p
● c.9% of net income (adjusted profit after tax)
7. To deliver improving EBITDA margins ● EBITDA margin of 15% (up 100 bps on FY2021)
Impact Vision for FY25
Ambition FY2022 progress
1. Work towards halving the 21 gaps that we have identified across ● Made progress against 30% of our gaps this year, halving or
representation, pay and inclusion for employees from underrepresented removing 5/21
backgrounds.
2. To implement science-based reduction targets ● Created an in-house carbon tracker
3. To kick-start 5,000 digital careers, reaching 5,000 unique beneficiaries ● Kickstarted 686 careers in FY2022 adding up to over 1200 in total
through our community action and community investment programmes
Strategic progress
Brand consolidation under TPXimpact
In September 2021, we announced our intention to restructure, from a
collection of businesses to a single company under the name TPXimpact. By
operating as one company and one team we are able to work more
collaboratively, pitch for and deliver larger projects, eliminate
inefficiencies and - in the longer term - build more substantial brand value.
We have made significant progress on this change programme over the period. We
have, for example, overhauled the operating structure of the group, creating
an environment within which we have launched two divisions as of April 1 2022
under the TPXimpact umbrella: 'Consulting' and Digital Experience ('DX'). This
structure better reflects the way that we operate and charge. Several of our
companies are now trading solely under 'TPXimpact'. And, importantly, we've
also brought together multiple HR teams into one structure, giving us for the
first time a single consolidated view of our people, which will enable us to
focus on key productivity areas such as time to recruit, staff turnover,
learning and development and of course utilisation.
Post period end we continue to work on creating an improved, single
operational structure, which is just beginning to deliver substantial benefits
around the elimination of inefficiencies. In a step-change for the Group we
are creating a more professional, robust, mature business. As we reconstruct
the Group, we are being careful to evaluate each process and ensure it is
best-in-class, giving ourselves the strongest possible foundation on which to
build. While this process is taking longer than initially envisaged, we know
that it will benefit us exponentially in the longer term. We therefore now
anticipate the change programme continuing to run throughout the balance of
FY2023, with some further one-off associated costs. As we move forward, we
remain confident that coming together will drive our future success.
We have also started to invest in the TPXimpact brand, with a view towards
creating a market leading and differentiated brand promise and then telling
our target audiences about it. While there will be a transitional phase
between our old brands being retired and the new one achieving higher
recognition, in the long term this new, innovative enterprise brand will
enable the Group to win bigger than ever before.
Complementary acquisitions
We have retained our core focus on acquiring complementary acquisitions to
bolster our capabilities and enhance our go-to-market proposition. During the
period, we acquired two companies:
· Nudge Digital, a Bristol-based digital services agency which delivers
strategy-led services and has a good pipeline of pharmaceutical customers
· RedCortex Ltd, a Cardiff-based digital and cloud-based transformation
Microsoft focused consultancy
And two more post-period end:
· Peak Indicators Ltd, a Chesterfield-based, leading data science services and
analytics consultancy
· Swirrl IT Ltd, a Stirling-based, open data consultancy specialist with a focus
on data integration and dissemination in public sector organisations
A key benefit of the acquisitions has been to bolster the Group's position in
Wales and Scotland.. As a result, we have won significant contracts with
organisations based in these countries, for example with Digital Health and
Care Wales, Transport for Wales and the Scottish Government.
In line with our commercial vision we remain focused on adding further
earnings enhancing acquisitions in the current year.
Increased bank facilities
Post period end we have also renewed and extended our existing banking
facilities with HSBC in order to provide access to further capital. We now
have an extended revolving credit facility with HSBC (which has an initial
term of three years and may be extended by a further year by mutual agreement)
from £20.0m to £30.0m (of which £11m is undrawn) with a £15m accordion.
The extended facility has the same security package as announced on 12 June
2019, namely that HSBC has taken security over TPX and all of the Group's
material subsidiaries and their assets in connection with the RCF Facility.
The RCF Facility contains customary terms and covenants, including financial
covenants. However, despite this increased facility, we reiterate our
commitment to net debt being no more than 1.5x adjusted EBITDA.
Establishing a strong foothold in healthcare
Through complementary acquisitions, new contract wins and further embedding
with existing clients we have maintained our public sector presence further
during the year, with this market now representing c.72% of Group revenue
(FY2021: 71%).
One sector within the public sector which is increasingly becoming a key focus
is healthcare. In July 2021, as part of our strategy to expand our presence in
the sector, we announced the appointment of Noel Gordon as Senior Advisor to
the Group. Noel has experience in public healthcare and the not-for-profit
sector, including in previous roles as Chair of NHS Digital and Chair of
Healthcare UK's advisory board. His leadership, together with some fantastic
case studies in this area from recent acquisitions, have enabled us to build
an exciting pipeline of healthcare projects and we look forward to growing our
presence in the sector going forward.
Continued strong performance in Commercial
For FY2022, 28% of Group revenue came from the commercial sector, and it
remains a key focus area for the business as maintaining a healthy balance of
Commercial business provides the Group with resilience through
diversification.
In the period we strengthened our presence in utilities and pharma in
particular. Acquisitions made during the year have also bolstered TPX's
commercial sector portfolio, including contracts with two major multinational
financial services companies brought to the Group through the acquisition of
Peak Indicators.
Continued strength of digital transformation market
Digital transformation continues to be high on the agenda for organisations
across the public and commercial sectors, with data from PWC revealing 60% of
executives believe that digital transformation will be their most critical
growth driver in 2022.
The UK Government announced a new Digital Strategy in June 2022, including a
section on 'improving public services' that commits to publishing a
cross-Government digital and data strategy later in 2022, setting out a vision
for how the Government will improve the use of digital, data and technology
across all public services. While the challenging broader macro-economic
circumstances make operating in many spheres of business more difficult, facts
such as these underpin our continued confidence moving forward.
Current trading and outlook
We are pleased to report over £20m of business won in Q1 FY2023. As part of
this, we have made good strides in the commercial sector with at least three
commercial clients expected to generate more than £3m revenue in the coming
year. Alongside this, our latest acquisitions are performing well, with us
already beginning to see substantial opportunities in Microsoft and data-based
projects unlocking, thanks to the additional capabilities they brought the
Group. Overall, we observe healthy market conditions and a continued high
demand for our digital transformation services.
We have made significant progress on our change programme to move from a
collection of businesses to a single company with unitary processes under the
name TPXimpact, a process that has required a considerable investment of time
and resource. This continued into the current year with investments being made
in marketing our new brand, bringing in a number of senior hires across the
organisation, centralised HR and finance teams and in improving our
operational software.
Inevitably this had meant a period of substantial change in work processes and
an internal focus which has, in the short term, impacted both top line growth
and staff utilisation. This had a temporary impact on revenues and Adjusted
EBITDA for April and May which have subsequently returned to more normalised
levels in June and so far in July. As a consequence of this, we anticipate
FY2023 to be a little more second half weighted than usual and have every
confidence in meeting FY2023 market expectations of revenues of £97.4m and
Adjusted EBITDA of £13.7m.
Financial Review
The year to 31 March 2022 saw significant further growth in the Group with
statutory revenue up £29.4m or 58% to £79.7m (FY2021(1): £50.3m). The
revenue increase was driven by like-for-like organic growth of 16% as well as
the full year impact of FY2021 acquisitions and the acquisitions of Nudge in
June 2021 and Red Cortex in December 2021. The revenue mix continued to be
focused on public services which accounted for 72% of revenue, slightly up
year on year, from 71% in 2021. Healthcare remained at 9% of revenue, growing
year on year from £4.6m in 2021 to £7.2m in 2022.
We continued to see a large amount of repeat business from customers, with 67%
of customers billed in FY2022 also billed in FY2021, FY2020 or FY2019. Most
excitingly we have seen an increase in the scale of the contracts we are now
winning as a result of the combined services of the Group including seven
deals over £3m up from just four in the prior year.
Gross Margins were flat at 31% against 31% in the prior year. We are targeting
an improvement to our Gross Margin going forward and the strategy of moving to
one brand and integrating operations is being implemented to achieve this.
As multiple brands with separate operating models it meant that hiring
decisions were being made on an individual company rather than group wide
basis. This has meant that our contractor to permanent staff ratio is higher
than we would like which has a negative impact on margins given the higher
relative cost of contractors.
Adjusted EBITDA was £12.2m up from £7.1m(1) in FY2021 representing an
increase of 72%. Statutory EBITDA was £11.5m, up from £1.9m(1) in FY2021
representing an increase of 505%. Adjusted EBITDA margin was 15% up from 14%
in the prior year. Margin grew as a result of management costs not growing in
line with revenue growth offset by an increase in post-Covid travel and
entertaining related spend.
The Group reported its first statutory profit after tax on continuing
activities of £2.5m (FY2021(1): loss of £2.0m). The Directors believe that
an 'adjusted profit before tax' measure is more representative of the
underlying performance of the Group. To arrive at adjusted results,
adjustments made include acquisition and change related expenses, amortisation
related to acquired intangibles and share-based payments and the impact of
fair value adjustments along with the corresponding tax impact of the
adjustments.
In addition, in the current year we have pulled out specific costs relating to
the integration of group companies, the rebrand to TPXimpact.
The following table summarises the adjustments:
2022 2021 Restated(1) 2021
£'000
£'000s £'000s
Statutory profit / (loss) before tax on continuing operations 4,893 (1,656) (1,845)
Amortisation of intangible assets relating to acquisitions 5,330 2,458 2,458
(Gain) / loss from fair value movement in contingent consideration (2,517) 4,260 4,260
Share-based Payments 416 294 294
Costs relating to acquisition and restructuring 1,033 746 746
Costs relating to the change programme 1,764 - -
Adjusted profit before tax on continuing operations 10,919 6,102 5,913
Tax (including impact of amortisation and costs relating to acquisition and (2,200) (898) (898)
restructuring adjustments)
Adjusted profit after tax on continuing operations 8,719 5,204 5,015
As a result of the acquisitive nature of the Group and its use of shares as
consideration, the Directors believe that an adjusted share count for the
purposes of calculating earnings per share is required. As such the
Directors calculate an adjusted diluted share number by taking the weighted
average basic shares and including the maximum shares to be issued in respect
of contingent consideration to be paid, together with the maximum share
options outstanding. The following table summarises the adjustments:
2022 2021
'000s 000s
Weighted average basic shares (excluding contingent shares) 84,583 63,784
Shares relating to future contingent consideration 4,051 13,728
Shares relating to share-based payments 3,732 4,436
92,366 81,948
Adjusted diluted earnings per share (pence) 9.4 6.1
Based on these alternative non-GAAP measures the Group achieved adjusted
profit after tax on continuing operations of £8.7m (FY2021(1): £5.2m)
resulting in adjusted diluted earnings per share of 9.5p (FY2020: 6.1p). The
statutory earnings per share for the period was 2.1p (FY2021: 3.5p loss).
(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
the accounting policies.
Cash Flow and cash conversion
Net cash generated from operations before tax and including lease payments was
£6.5m. Cash conversion, calculated by reference to the adjusted profit before
tax but after deducting costs relating to acquisition and restructuring was
110%.
In total, cash increased in the year from £5.7m to £7.9m but net debt
increased from £7.3m to £10.1m as a result of payments made for acquisitions
completed in the period. The cash consideration for the acquisitions was
£8.1m, with £3.1m funded from cash reserves and £5.0m funded through a
drawdown from our revolving credit facility with HSBC. The net debt position
at the year end was significantly below 1x Pro Forma EBITDA.
Post period end HSBC have extended their revolving credit facility with the
Group to £30m with a £15m accordion. The new facility is a
sustainability-linked revolving credit facility that incorporates targets
which align with our long-term ESG objectives. £19m has been drawn down in
total for acquisitions leaving the Group at the year end with a further £11m
to draw down for further acquisitions. This together with cash flow generated
from operations provides a strong basis to continue our acquisitive growth
into FY2023 although we remain committed to maintaining net debt to EBITDA
below 1.5x.
Balance Sheet
Goodwill and Intangible assets in aggregate have increased significantly in
the year as a result of the acquisitions completed.
Total deferred consideration at 31 March 2022 was £2.6m. We continue to
note that this is a liability that will be satisfied through the issue of
shares and not through cash. Once this is removed, the Group's current ratio
at the year end was 1.6 (FY2021: 1.6) providing solid liquidity.
Dividend
The Board are pleased to announce a final dividend of 0.6p per share subject
to approval at the AGM. The proposed final dividend, if approved by
shareholders, will be paid on 14 October 2022 to shareholders on the register
at the close of business on 7 October 2022. This will take the total dividend
paid to shareholders in respect of FY2022 to 0.9p per share up 125% year on
year in line with the Board's progressive dividend policy.
Additional consideration
As at 31 March 2022, the total value of consideration that is payable is
£3.6m, resulting in maximum further shares to be issued totalling 4.5m which
reduces to 2.4m based on the closing share price as at 15 July 2022. A
claw-back of £0.5m is due to the Group on publication of the Group's FY2022
financial statements resulting in a clawback of 0.4m shares. This is a
significant reduction on prior year and reflects the Board's switch to
non-earn-out based acquisitions.
Value £'000 Minimum share price Max shares to be issued '000
961 0.740 1,299
1,587 0.820 1,935
119 0.825 144
898 0.831 1,081
(500) 1.225 (408)
3,065 4,051
Oliver Rigby
Chief Financial Officer
Consolidated Income Statement
For the year ended 31 March 2022
Unaudited Audited
Restated(1)
2022 2021
Note £'000 £'000
Revenue 79,709 50,315
Cost of Sales (55,341) (34,479)
Gross Profit 24,368 15,836
Administrative expenses (19,371)
(17,586)
Other income 579 394
Operating profit / (loss) 5,576 (1,356)
Finance income - 3
Finance costs (683) (303)
Profit / (Loss) before tax on continuing operations 4,893 (1,656)
Taxation (2,396) (384)
Profit / (Loss) after tax on continuing operations 2,497 (2,040)
Loss after tax on discontinued operations (723) (189)
Net profit / (loss) 1,774 (2,229)
Other Comprehensive income
Exchange difference on translation of foreign operations (226) 85
Total comprehensive profit / (loss) for the period 1,548 (2,144)
Earnings per share from continuing and discontinued operations
Basic (p) 4 2.1p (3.5p)
Fully diluted (p) 4 2.0p (3.5p)
Earnings per share from continuing operations
Basic (p) 4 2.9p (3.2p)
Fully diluted (p) 4 2.8p (3.2p)
( )
(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
the accounting policies.
Consolidated Statement of Financial Position
For the year ended 31 March 2022
Unaudited
2022 Audited
2021
£'000 £'000
Non-current assets
Goodwill 66,157 53,323
Intangible assets 28,493 29,370
Property, plant and equipment 297 292
Right of use assets 1,293 445
Deferred tax assets 47 15
Total non-current assets 96,287 83,445
Current assets
Trade and other receivables 16,853 14,014
Contract assets 3,840 1,144
Other taxes and social security costs 71 137
Cash and cash equivalents 7,914 5,734
Assets held for sale 708 -
Total current assets 29,386 21,029
Total assets 125,673 104,474
Current liabilities
Trade and other payables (7,718) (5,681)
Contract liabilities (4,536) (1,941)
Other taxes and social security costs (6,064) (5,326)
Deferred and contingent consideration (2,362) (8,478)
Lease liabilities (416) (336)
Borrowings (20) (55)
Liabilities directly associated with assets held for sale (103) -
Total current liabilities (21,219) (21,817)
Non-current liabilities
Deferred tax liabilities (6,696) (5,133)
Deferred and contingent consideration (198) (3,741)
Borrowings (18,000) (13,000)
Provisions - dilapidations - (76)
Lease liabilities (878) (53)
Total non-current liabilities (25,772) (22,003)
Total liabilities (46,991) (43,820)
Net assets 78,682 60,654
EQUITY
Share capital 874 804
Own shares (356) -
Share premium 6,449 5,691
Merger reserve 77,159 60,926
Capital redemption reserve 5 5
Other reserves 997 796
Retained earnings (6,002) (7,568)
Reserves of a disposal group held for sale (444) -
Total equity 78,682 60,654
Consolidated Statement of Changes in Equity
for the year ended 31 March 2022
Share capital Share premium Merger reserve Capital Redemption Foreign exchange reserve Share Option Reserve Retained earnings Total
£'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000
At 1 April 2020 551 5,673 25,804 5 66 368 (5,201) 27,266
Loss for the period - - - - - - (2,229) (2,229)
Exchange differences on translation of foreign operations - - - - 68 - - 68
Transactions with owners
Shares issued 253 18 35,122 - - - - 35,393
Dividends paid - - - - - - (138) (138)
Share - based payments - - - - - 294 - 294
Equity at 31 March 2021 (Audited) 804 5,691 60,926 5 134 662 (7,568) 60,654
Share capital Share premium Merger reserve Capital Redemption Own shares Foreign exchange reserve Share Option Reserve Retained earnings Total
£'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000
At 1 April 2021 804 5,691 60,926 5 - 134 662 (7,568) 60,654
Profit for the period - - - - - - - 1,774 1,774
Exchange differences on translation of foreign operations - - - - - (226) - - (226)
Transactions with owners
Shares issued 80 - 17,779 - - - - - 17,859
Share cancellations (10) - (1,546) - - - - - (1,556)
Dividends paid - - - - - - - (652) (652)
Share - based payments - 758 - - (257) - 427 - 928
Own shares purchased by EBT - - - - (99) - - - (99)
Equity at 31 March 2022 (Unaudited) 874 6,449 77,159 5 (356) (92) 1,089 (6,446) 78,682
Consolidated Statement of Cash Flows
for the year ended 31 March 2022
Unaudited Audited
2022 2021
£'000 £'000
Cash flows from operating activities:
Profit / (loss) before taxation on total operations 4,131 (1,845)
Adjustments for:
Depreciation 597 835
Amortisation 5,330 2,509
Share-based payments 429 294
Foreign exchange gains (62) (5)
Finance expense 683 303
Finance income - (1)
(Gain) / loss in fair value of contingent consideration (2,517) 4,260
Profit on disposal of property, plant and equipment 4 -
Working capital adjustments:
Increase in trade and other receivables (3,742) (1,032)
Increase in trade and other payables 4,193 483
Net cash generated from operations 9,046 5,801
Tax paid (1,614) (159)
Net cash generated from continuing operating activities 7,432 5,642
Net cash used in discontinued operating activities (748) -
Net operating cash flows from total activities 6,684 5,642
Cash flows from investing activities:
Net cash paid on acquisition of subsidiaries (7,307) (10,813)
Deferred consideration payment - (259)
Purchase of property, plant and equipment (249) (137)
Additions to intangibles (292) (321)
Proceeds from sale of PPE 6 -
Interest received - 1
Net cash used in investing activities from continuing activities (7,692) (11,529)
Net cash used in investing in discontinued activities (165) -
Net cash used in investing activities for total activities (8,007) (11,529)
Cash flows from financing activities:
New borrowings 5,000 8,000
Proceeds from exercise of share options 509 -
Purchase of own shares (99) -
Payment of lease liabilities (362) (610)
Finance costs (711) (331)
Dividends paid (652) (138)
Net cash generated from financing activities 3,685 6,921
Net increase in cash and cash equivalents 2,362 1,034
Cash and cash equivalents at beginning of the period 5,734 4,614
Effect of exchange rate fluctuations on cash held (148) 86
Cash from discontinued operations (34) -
Cash and cash equivalents at end of the period 7,914 5,734
Comprising:
Cash at bank and in hand 7,864 5,734
Cash held by trust 50 -
Cash and cash equivalents at end of the period 7,914 5,734
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 the AIM Market 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 financial information set out in this announcement does not comprise the
Group's statutory accounts as defined in section 434 of the Companies Act 2006
for the year ended 31 March 2022.
The statutory accounts for the year ended 31 March 2022 have not yet been
delivered to the Registrar of Companies, nor have the auditors yet reported on
them. The preliminary announcement does not constitute statutory accounts
under Section 435 of the companies Act 2006.
2. Basis of preparation
The Consolidated Financial Statements 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. The measurement
bases and principal accounting policies of the Group are set out below. These
policies have been consistently applied to all years presented unless
otherwise stated.
After reviewing the budgets and cash projections for the next twelve months
and beyond, the Directors believe that the Group have adequate resources to
continue operations for the foreseeable future and for this reason they have
adopted a going concern basis in preparing these financial statements.
In considering the business activities for the forthcoming 12 months, the
directors have assessed the impact of principal risks and uncertainties
through scenario modelling. This includes an assessment of the ongoing impact
of Covid-19 and inflation by assessing the impact on our services, sector,
customers and through looking at trends in the digital transformation sector.
At year end, the Group has a rolling credit facility with HSBC of £20m of
which £18m has been drawn down. Of the £20m, the £2m is available as a
working capital facility. This facility with HSBC, together with strong cash
reserves within the Group provide comfort over the viability of the Group to
prepare the financial statements on a going concern basis. Post period end
HSBC have extended their revolving credit facility with the Group to £30m
with a £15m accordion. The new facility is a sustainability-linked revolving
credit facility that incorporates targets which align with our long-term ESG
objectives.
After performing all the above assessments and through modelling scenarios, it
is concluded that we would maintain sufficient undrawn capacity and satisfy
all borrowing facility covenants in the next 12 months.
The financial statements include the financial results of the subsidiaries
listed below for the full year except for the acquisitions in the year which
have been incorporated from the date of acquisition. All subsidiaries are
incorporated in the UK unless otherwise stated:
· Bene Agere Norden AS (incorporated in Norway)
· Manifesto Digital Limited
· Foundry4 Consulting Limited
· Human Plus Limited
· Questers Global Group Limited
· Questers Resourcing Limited
· Questers Bulgaria EOOD
· Deeson Group Holdings Limited
· Deeson Group Limited
· iDisrupted Limited
· Greenshoot Labs Limited - subsidiary held for sale
· FutureGov Limited
· FutureGov Australia Pty Limited - ceased trading in the year
· US Creates Limited
· Ameo Professional Services Limited
· Arthurly Limited
· Difrent Limited
· Keep IT Simple Limited
· Nudge Digital Limited - acquired on 30 June 2021
· Red Cortex Limited - acquired on 8 December 2021
The results, assets and liabilities of the TPXimpact Holdings Plc Employee
Benefit Trust ('Employee Trust') have been included in the Group financial
statements. The costs of purchasing own shares held by the Employee Trust are
shown as a deduction in arriving at total shareholders' equity. The proceeds
from the sale of own shares held increase shareholders' equity. Any gains or
losses arising from the sale or repurchase of own shares are reflected
directly in reserves and do not affect the consolidated profit for the year.
3. Principal accounting policies
a) Basis of consolidation
The Group financial statements consolidate those of the Company and all of its
subsidiary undertakings drawn up to 31 March 2022. Subsidiaries are entities
over which the Group has the power to control the financial and operating
policies so as to obtain benefits from its activities. The Group obtains and
exercises control through voting rights.
Unrealised gains on transactions between the Group and its subsidiaries or
associates are eliminated. Unrealised losses are also eliminated unless the
transaction provides evidence of an impairment of the asset transferred.
Amounts reported in the financial statements of subsidiaries have been
adjusted where necessary to ensure consistency with the accounting policies
adopted by the Group.
Acquisitions of subsidiaries are dealt with using the purchase method. The
purchase method involves the recognition at fair value of all identifiable
assets and liabilities, including contingent liabilities of the subsidiary, at
the acquisition date, regardless of whether or not they were recorded in the
financial statements of the subsidiary prior to acquisition. On initial
recognition, the assets and liabilities of the subsidiary are included in the
Consolidated Statement of Financial Position at their fair values, which are
also used as the cost bases for subsequent measurement in accordance with the
Group accounting policies.
The consideration transferred in the acquisition is measured at fair value, as
are the identifiable net assets acquired. Any goodwill that arises is tested
annually for impairment. Any gain on a bargain purchase is recognised in the
profit or loss immediately. Transaction costs are expensed as incurred, except
if related to the issue of debt or equity securities. The consideration
transferred does not include amounts related to the settlement of pre-existing
relationships. Such amounts, to the extent that they exceed the settlement
amounts, are generally recognised in the profit or loss. Any deferred
contingent consideration payable is measured at fair value at the acquisition
date. If an obligation to pay contingent consideration that meets the
definition of a financial instrument is classified as equity, then it is not
remeasured, and settlement is accounted for within equity. Otherwise, other
contingent consideration is remeasured at fair value at each reporting date
and subsequent changes in the fair value of the contingent consideration are
recognised in profit or loss.
Goodwill is stated after separating out identifiable intangible assets.
Goodwill represents the excess of consideration payable over the fair value of
the Group's share of the identifiable net assets of the acquired subsidiary at
the date of acquisition.
The Group disposed of its subsidiary Greenshoot Labs Limited (‘GSL’) on 24
May 2022. The operations of GSL is therefore presented as discontinued
operations. Note 6 sets out the details and impact of discontinued operations
b) Goodwill
The Group measures goodwill at the acquisition date as:
• the fair value of the consideration transferred; plus
• the recognised amount of any non-controlling interests in the acquiree;
plus, if the business combination is achieved in stages, the fair value of the
existing equity interest in the acquiree; less
• the net recognised amount of the identifiable assets acquired, and
liabilities assumed.
When the excess is negative, a bargain purchase gain is recognised immediately
in profit or loss.
The consideration transferred does not include amounts related to the
settlement of pre-existing relationships. Such amounts are generally
recognised in profit or loss.
Costs related to acquisition, other than those associated with the issue of
debt or equity securities that the Group incurs in connection with a business
combination, are expensed as incurred.
If the contingent consideration is classified as equity, it is not remeasured,
and settlement is accounted for within equity. Otherwise, subsequent changes
to the fair value of the contingent consideration are recognised in profit or
loss. Goodwill is carried at cost less accumulated impairment losses.
Impairment review is carried out annually. If there is an impairment, the cost
is reduced by the accumulated impairment amount.
c) Revenue and revenue recognition
Revenue consists of the value of work delivered to clients during the year
exclusive of VAT and is recognised as performance obligations are met in
accordance with the terms of the contract which are primarily on a time and
materials basis. Revenue is wholly attributable to the principal activities of
the Group. The Group adopt IFRS 15 principles in recognising the revenue.
Revenue recognised in excess of invoices raised is included within contract
assets. Where amounts have been invoiced in excess of revenue recognised, the
excess is included within contract liability.
The majority of the services are provided on a time and material basis where
clients are billed monthly for the time spent on a project which corresponds
directly with the value to the customer of the entity's performance completed
to date and accordingly revenue is recognised at the amount billed. For
fixed-price contracts where criteria to recognise performance obligations over
time have been met, revenue is recognised based on the actual service provided
to the end of the reporting period as a proportion of the total services to be
provided. This is determined by actual labour hours and cost incurred relative
to the total expected labour hours and cost. The use of labour hours and costs
is a faithful depiction of the transfer of services as it directly relates to
the effort required to satisfy the performance obligation. Only inputs
relating directly to the performance in transferring the services are included
when measuring progress to date. Due to changing circumstances, extent of
progress and completion may be revised which may affect revenue and costs. Any
resulting increases or decreases in estimated revenues or costs are reflected
in profit or loss in the period in which the circumstances that give rise to
the revision become known by management.
Majority of the contracts are on single performance obligations. However, some
contracts include multiple deliverables. In most cases, the deliverable is
separately identifiable from other promises in the contract; therefore, it is
accounted for as a separate performance obligation. In this case, the
transaction price will be allocated to each performance obligation based on
the stand-alone selling prices.
Standard terms of payment within 30 or 60 days are typically adopted. There is
therefore no financing component.
Revenue is recognised when the Group satisfies the performance obligations.
For the majority, contracts are for performance obligations that are satisfied
over time. However, there are some contracts which contain performance
obligations that are only satisfied at a point in time. The revenue for these
contracts is recognised when the performance obligation has been satisfied,
for project development work this occurs when the customer accepts the final
output.
When the customer has a right to return the product within a given period, the
entity is obliged to refund the purchase price. For instance, if potential
candidates put forward are considered unsuitable by the client and no one is
recruited. The contract stipulates reimbursement of 50% - 100% of the fee,
under the agreed terms of contract. Under IFRS15, revenue is only recognised
to the extent it is highly probable there will not be a significant reversal
of revenue in a future period and is usually therefore recognised only when a
successful candidate is recruited.
A small number of contracts have variable consideration associated with it,
whereby a bonus is paid if certain cost savings are made by the client. These
are recognised using the 'most likely amount method' once it has been
identified that a significant reversal in the amount of cumulative revenue
will not occur.
d) Intangible assets acquired as part of a business combination and amortisation
In accordance with IFRS 3 "Business Combinations", an intangible asset
acquired in a business combination is recognised at fair value at the
acquisition date. A fair value calculation is carried out based on evaluating
the net recurring income stream from each type of intangible asset.
Intangibles are initially recognised at fair value, and are subsequently
carried at this fair value, less accumulated amortisation and impairment. The
following items were identified as part of the acquisitions of entities by the
Group and were still owned at 31 March 2022:
· brand amortised over two to five years;
· customer lists amortised over three to eight years;
· database over five years;
· Intellectual property over ten years and
· Software over three years
The allocation of fair values to the tangible assets and the identification
and valuation of intangible assets affect the calculation of goodwill
recognised in respect of an acquisition and as such represent a key source of
estimation uncertainty.
4. Earnings per share
Basic earnings per share are calculated by dividing the profit attributable to
ordinary shareholders by the weighted average number of ordinary shares in
issue during the period. The weighted average number of shares excludes shares
held by an Employee Benefit Trust and has been adjusted for the issue/purchase
of shares during the period.
For diluted earnings per share, the weighted average number of ordinary shares
in issue is adjusted to assume conversion of all dilutive potential ordinary
shares. These represent share-based paymentsgranted to employees where the
exercise price is less than the average market price of the Company's ordinary
shares and share purchase agreements where the terms and conditions could
affect the measurement of basic and diluted earnings per share during the year
ended 31 March 2022. A number of shares that were issued during the period are
contingent on certain conditions being met and therefore these have been
excluded from the calculation of the weighted average number of Ordinary
Shares in issue.
Unaudited Audited
2022 2021 Number of shares
Number of
shares
For the year '000 '000
Weighted average number of shares in issue, basic 84,583 63,783
Contingent consideration where all conditions are met 1,698 -
Less: Shares held by the Employee Benefit Trust (weighted average) (3) -
Less: Shares held by the SIP (weighted average) (67) -
Weighted average number of shares for calculating basic earnings per share 86,211 63,783
Weighted average number of dilutive shares 1,768 -
Weighted average number of shares for calculating basic earnings per share 87,979 63,783
Unaudited Audited
2022 2021
For the year £'000 £'000
Profit / (Loss) after tax on continuing operations 2,497 (2,040)
Loss after tax on discontinued operations (723) (189)
Profit / (Loss) after tax on total operations 1,774 (2,229)
Earning per share is calculated as follows:
Unaudited Audited
2022 2021
For the year
Basic earnings per share on continuing operations 2.9p (3.5)p)
Basic earnings per share on discontinued operations (0.8)p -
Basic earnings per share on total operations 2.1p (3.5)p
For the year
Unaudited Audited
2022 2021
Diluted earnings per share on continuing operations 2.8p (3.5)p)
Diluted earnings per share on discontinued operations (0.8)p -
Diluted earnings per share on total operations 2.0p (3.5)p
5. Adjusted EBITDA
Our consolidated financial statements are prepared in accordance with
International Financial Reporting Standards ("IFRS"). 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.
Unaudited Audited
2022 2021
£'000 £'000
Operating profit / (loss) 5,576 (1,543)
Amortisation of intangible assets 5,330 2,509
Depreciation 597 835
Loss from fair value movement in contingent consideration (2,517) 4,260
Share-based payments 416 294
Costs directly attributable to business combinations 1,013 496
Costs relating to the Change Programme 1,764 -
Costs relating to business restructuring 20 250
Adjusted EBITDA 12,199 7,101
6. Discontinued operations
On 1 December 2021 the group announced its intention to dispose of Greenshoot
Labs Limited, "GSL", a wholly owned subsidiary. The Board considers that GSL
has a great product, however it would require significant investment to
develop the right sales and marketing functions required to gain commercial
traction in an Enterprise software market. As the entity operates within a
non-core sector for the group, the directors made the decision to dispose of
the entity.
The associated assets and liabilities were consequently presented as held for
sale in the 2022 financial statements. The sale of the subsidiary was
completed post year end on 24 May 2022 and as such is reported in the current
period as a discontinued operation. Financial information relating to the
discontinued operation for the is set out below.
Unaudited Audited
2022 2021
£'000 £'000
Revenue 93 782
Cost of Sales (439) (489)
Gross Profit (346) 293
Administrative expenses (427) (499)
Other income 16 19
Operating profit / (loss) (758) (187)
Finance income - (2)
Finance costs (4) -
Profit / (Loss) before tax from discontinued operations (762) (189)
Taxation 39 -
Profit / (Loss) for the year from discontinued operations (723) (189)
The major classes of assets and liabilities of Greenshoot Labs Limited classified as held for sale as at 31 March 2022 are, as follows:
Unaudited
2022
£'000
Assets
Intangible assets 579
Property, plant and equipment 8
Trade and other receivables 19
Contract assets 13
Other tax and other statutory assets 55
Cash and cash equivalents 34
Assets held for sale 708
Liabilities
Trade and other payables (86)
Other tax and other statutory liabilities (17)
Liabilities directly associated with assets held for sale (103)
Net assets directly associated with disposal group 606
Reserves of a disposal group held for sale 444
Immediately before the classification of Greenshoot Labs Limited as
discontinued operations, the recoverable amount was estimated for the assets
of the entity and no impairment loss was identified.
As at 31 March 2022, there was no further write-down as the carrying amount of
the disposal group did not fall below its fair value less costs to sell.
A write back of the intercompany loan with TPXimpact Holdings plc was
recognised during the year resulting in gains on £1.7m being recorded.
Income statement reconciliation:
Unaudited Unaudited Unaudited Audited Audited Audited
Continuing Discontinued Total Continuing Discontinued Total
2022 2022 2022 2021 2021 2021
£'000 £'000 £'000 £'000 £'000 £'000
Revenue 79,709 93 79,802 50,315 782 51,097
Cost of Sales (55,341) (439) (55,780) (34,479) (489) (34,968)
Gross Profit 24,368 (346) 24,022 15,836 293 16,129
Administrative expenses (19,371) (427) (19,798) (17,586) (499) (18,085)
Other income 579 16 595 394 19 413
Operating profit / (loss) 5,576 (758) 4,818 1,356 (187) (1,543)
Finance income - - - 3 (2) 1
Finance costs (683) (4) (687) (303) - (303)
Profit / (Loss) before tax 4,893 (762) 4,131 1,656 (189) (1,845)
Taxation (2,396) 39 (2,357) (384) - (384)
Profit / (Loss) after tax for the year 2,497 (723) 1,774 (2,040) (189) (2,229)
7. Post balance sheet events
On 6 April 2022, The TPXimpact Holdings plc acquired the entire issued share
capital of Swirrl IT Limited, a software and services business. The core
operations of the business are to help government organisations to disseminate
and manage their data enabled decisions. Swirrl IT Limited, company
registration number SC337356 is incorporated in Scotland. Its registered
office is Macfarlane Gray House Castlecraig Business Park, Springbank Road,
Stirling, Stirlingshire, FK7 7WT.
The consideration for the acquisition was £3.2m, satisfied through the
payment of £1.2m cash and the issue of 888,888 new ordinary shares in The
TPXimpact Holdings plc.
On 7 April 2022, The TPXimpact Holdings plc acquired the entire issued share
capital of Peak Indicators Limited, a visionary data science and analytics
consultancy offering services such as analytics, Data engineering and Data
science. Peak Indicators Limited, company registration number 06704556 is
incorporated in England. Its registered office is 7 Savoy Court, London,
United Kingdom, WC2R 0EX.
The consideration for the acquisition was £3.46m, satisfied through the
payment of £1.35m cash and the issue of 938,888 new ordinary shares in
TPXimpact Holdings plc.
The Group is currently performing a fair value review of Peak Indicators
Limited and Swirrl IT Limited’s assets and liabilities and will report these
within its next published financial statements.
Post period end HSBC have extended their revolving credit facility with the
Group to £30m with a £15m accordion. The new facility is a
sustainability-linked revolving credit facility that incorporates targets
which align with our long-term ESG objectives.
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