REG - TPXimpact Holdings - Preliminary Results
09/07/2024 07:00
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RNS Number : 5803V TPXimpact Holdings PLC 09 July 2024
TPXimpact Holdings PLC
("TPXimpact", "TPX" or the "Group" or the "Company")
Unaudited preliminary results for the year ended 31 March 2024
Strong performance in line with the trading update made on 30 May 2024;
FY25 outlook unchanged
TPXimpact Holdings PLC (AIM: TPX), the technology-enabled services company
focused on people-powered digital transformation, announces its unaudited
preliminary results for the year ended 31 March 2024.
FY24 Financial highlights:
● Strong performance, achieving all our financial targets and above market
expectations(1)
● New business reaches a record high with £139m won in the year
● Revenue from continuing operations (like-for-like) up 21% to £84.3m (2023:
£69.7m)
● Adjusted EBITDA(2) of £4.6m (2023: £2.3m)
● Adjusted EBITDA margin of 5.5% (2023: 3.3%)
● Reported operating loss of £(22.8)m (2023: (£19.0)m), after including
£16.2m non-cash impairment charge on goodwill & intangible assets
● Adjusted profit before tax from continuing operations of £1.8m (2023: £0.8m)
● Reported loss before tax from continuing operations of £(24.8)m (2023:
£(20.1)m)
● Adjusted diluted earnings(2) per share from continuing operations of 2.1p
(2023: 0.9p)
● Reported diluted loss per share from continuing operations of (24.5)p (2023:
(20.6)p)
● Net debt(2) at 31 March 2024 of £7.1m (2023: £17.5m), lowest level in over
three years
Operational and Impact highlights:
● Successfully executed the first (and some aspects of the second) year of our
three-year plan
● Simplified the business into three core businesses: Digital Transformation,
manifesto and KITS
● Completed sale of non-core, international businesses Questers and TPXimpact
Norway, generating gross cash proceeds of £7.5m
● Rationalised and improved property portfolio incl. new London HQ at the
Hickman Building
● Total headcount of c. 670 people (including contractors), with FTE headcount
increasing 9% like-for-like, and contractors decreasing by over a third
● Staff retention rates for the year improved to 88% from 84% last year
● Improved our gender pay gap to 8% from 14% last year and 20% two years ago
● Ethnically diverse representation increased to 22% from 19% last year
● Carbon intensity decreased by over 15% like-for-like to 15.33 tCO2e/£1m of
revenue
● B-Corp Certification achieved in January 2024
Post-period trading and outlook:
● Trading for the first two months of FY25 was in line with budget, with
like-for-like revenue growth of over 11% within the full-year target range of
10-15%
● £9m of new business won in Q125; strong pipeline of opportunities despite
General Election
● Around 70% of targeted FY25 revenues are represented by committed (backlog)
revenues
● Debt facility extended by one year to July 2026, with improved borrowing
conditions, achieved one quarter ahead of schedule
● FY25 outlook unchanged with target like-for-like revenue growth of 10-15% and
Adjusted EBITDA margins up 2-3 margin points on FY24, with growth more
weighted to H2 than usual
● FY26 targets unchanged: revenue growth of 10-15% and Adjusted EBITDA margin
target of 10-12%
(1) Consensus figures for FY24: Revenue £83.0m, Adjusted EBITDA £4.5m
(consensus prior to trading update on 30 May 2024)(
2)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.
Bjorn Conway, Chief Executive Officer, commented:
"I am delighted by the rapid progress the Company has made in the first year
of our three-year plan. We have successfully executed the strategy we laid out
a year ago and the numbers tell the story of that success, achieving all our
financial targets and ahead of market expectations.
"The simplification of the business into our three core platforms of Digital
Transformation, manifesto and KITS was achieved ahead of schedule and we have
entered the new financial year with a more stable financial and organisational
foundation for future growth and success.
"The current pipeline of new business opportunities is robust and despite the
phasing effect of an early General Election, has not diminished the appetite
for the digital transformation services that form the bedrock of our offering.
Demand for the insightful, effective and thought-provoking advice and support
that is at the heart of our capabilities is set to continue for the
foreseeable future.
"Commercial success and opportunity, however, go hand-in-hand with our
founding vision of believing business can fully contribute to a better world
for all its citizens. With staff retention of 88%, we have a passionate, as
well as talented, group of people ready to make the world a better place for
all our stakeholders. Our successful accreditation as a registered B-Corp was
a tremendous achievement which reaffirms our values and ways of doing
business.
"With the General Election behind us, we look forward to another year of
progress, where we will continue to demonstrate the value we can bring to our
clients and, through them, the impact we can have on the world around us.
"My sincere thanks are due to all our people for their contribution to the
success of the last year and what promises to be an exciting year ahead."
TPXimpact will be hosting a webinar for analysts at 9:00am BST today. If you
would like to register for the analyst webinar, please contact
tpx@almastrategic.com
The Group will also be hosting a webinar for retail investors at 11.30am
today. Retail investors can register for the webinar using the following link:
https://www.investormeetcompany.com/tpximpact-holdings-plc/register-investor
(https://www.investormeetcompany.com/tpximpact-holdings-plc/register-investor)
Enquiries:
TPXimpact Holdings
Bjorn Conway, CEO Via Alma Strategic
Steve Winters, CFO
Stifel Nicolaus Europe Limited +44 (0) 207 710 7600
(Nomad and Joint Broker)
Fred Walsh
Ben Good
Sarah Wong
Dowgate Capital Limited +44 (0) 203 903 7715
(Joint Broker)
James Serjeant
Russell Cook
Alma Strategic Communications tpx@almastrategic.com
(Financial PR) +44 (0) 203 405 0209
Josh Royston
Kieran Breheny
About TPXimpact
We believe in a world enriched by people-powered digital transformation.
Working in collaboration with organisations, we're on a mission to accelerate
positive change and build a future where people, places and the planet are
supported to thrive.
Led by passionate people, TPXimpact works closely with its clients in agile,
multidisciplinary teams; challenging assumptions, testing new approaches and
building confidence and capabilities. Combining our rich heritage with
expertise in human-centred design, data, experience and technology, we work to
create sustainable solutions with the flexibility to learn, evolve and change.
The business is being increasingly recognised as a leading alternative digital
transformation provider to the UK public services sector, with over 90% of its
FY24 revenues represented by public services clients.
More information is available at www.tpximpact.com.
CEO Statement
I am pleased to report that we have successfully executed the first (and some
aspects of the second) year of our three-year plan in line with our
objectives. The business is now simpler to navigate and manage, distilled into
our three core businesses of Digital Transformation, manifesto and KITS. A
year ago, we were focussed on stability, reinvigorating the strength of our
offering, and balancing commercial focus with our dedication to Purpose. With
a stable platform now established, founded upon sound financial and
operational management, we are now in a position to accelerate growth and take
advantage of the opportunities a post-General Election environment will bring.
Our recent B-Corp accreditation provides further affirmation of our Purpose
credentials which are core to our stakeholder proposition.
The key financials are very positive: we have achieved or exceeded all our
targets for the year, with like-for-like revenue growth of 21%, Adjusted
EBITDA of £4.6m (double last year) and an Adjusted EBITDA margin of 5.5%. New
business wins totalled a record £139m, including major wins early in the year
with His Majesty's Land Registry (up to £49m over four years) and the
Department of Education (up to £27m over two years). Net debt ended the year
at £7.1m, the lowest level in over three years.
But the year was about much more than the numbers. Our story is about
sustainable recovery, successful execution of strategy, and delivering on our
promises to all our stakeholders, including our investors, our clients and,
perhaps most importantly, our people. We have remained true to our PACT
(Purpose, Accountability, Craft and Togetherness) values and delivering a
positive impact on the planet, people and places through our work. We have
laid the foundations for success in the years ahead. But there is still plenty
to be done.
Focus & balance
The first year of our three-year plan was characterised as "Focus and
balance". Key to this was to ensure more commercially-focussed
decision-making, with an emphasis on top-line growth and improvement in profit
margins, balanced with a continuing commitment to our purpose objectives.
With effect from 1 April 2024, the business is focussed on the three core
strategic platforms where we see the greatest opportunities for future growth:
Digital Transformation (comprising our Consulting, Data & Insights and
RedCortex businesses): manifesto (formerly Digital Experience and comprising
three legacy agencies) and KITS (our IT services business).
As a consequence, we made the strategic decision to sell our non-core overseas
businesses (the Questers resourcing business in Bulgaria and our strategic
consulting business in Norway), generating £7.5 million of gross proceeds
that we used to repay debt. Our new, simplified structure is more agile and
provides a more focussed platform for delivering growth and improving the
bottom-line.
Digital Transformation (c.75% of revenues) had an excellent year, driven by
significant new wins in what was the Consulting business, and now has the
scale to further build its client base in Central Government, whilst also
increasing its presence in local government, health and social care, and the
private sector. Our RedCortex business experienced some challenges, including
reductions in spend in the health sector in Wales, whilst Data & Insights
benefited from a three-year contract renewal with a major financial services
client. RedCortex and Data & Insights capabilities are now fully
integrated alongside those in Consulting under a single Digital Transformation
leadership team, so our client proposition has even greater strength and
depth, whilst our internal structure is more efficient and easier to manage.
Manifesto (c.15% of revenues) faced an environment of reduced spending from
its core client base in the charitable sector due to pressures on donation and
fund-raising levels, as well as reduced spend in the commercial healthcare
sector. However, the re-branding from Digital Experience to manifesto has
generated a significant amount of interest and opened up a number of
opportunities for growth. Our ambition to be the UK's leading purpose-driven
agency remains, built on the core sectors of charities and memberships &
visits.
KITS (c.10% of revenues) remains a powerful support to Central Government
clients in terms of robust management of IT services, and recovering
programmes to transition legacy systems to modern solutions. Despite some
client retrenchment in the year, performance has shown signs of improvement.
Making the business better
Key to our vision is to make the business better, which means a balanced
approach to both commercial and purpose outcomes. We have improved our
internal business information tools and management processes to monitor,
predict and manage core KPIs with greater rigour and foresight, including
staff utilisation, gross margin by engagement and capability team. This will
enable our businesses to better manage internal and contractor resources and
drive improved business performance.
The Company's Operational Board has continued to put into practice a number of
policy and change initiatives to enhance operational efficiency, reduce risk
and reinforce good governance. These included securing or renewing a number of
external certifications including Cyber Essentials+, ISO9001 Quality
Management, ISO27001 Information Security Management and, post year-end,
ISO14001 Environmental Management and ISO45001 Occupational Health &
Safety Management. These standards provide the necessary assurance to our
clients that we operate in a safe, secure and well-governed way.
People, Places, Planet
TPXimpact was founded on the belief that businesses can and should be
catalysts for social and environmental change. The attainment of B-Corp
Certification in January 2024 was a milestone achievement for the Group, and a
reflection of our long-standing commitment to conducting business responsibly,
which also means ensuring social and environmental considerations are woven
into the very fabric of our operations and, fundamentally, how we do business.
Central government contracts typically allocate at least 10% of assessment
criteria to social value requirements, so the Company's track-record of
delivering benefit to our immediate and wider communities, as well as the
planet, is very aligned with client expectations. Our social value commitments
are exemplified by our Future Leaders programme which offers coaching to
young, aspiring entrepreneurs from under-privileged or under-represented
socio-economic backgrounds. We recently welcomed the 2024 cohort into this
inspiring programme.
Staff retention rates have continued to improve to 88% from 84% last year and
less than 80% two years ago. We have narrowed our median gender pay gap to 8%
from 14% last year and 20% the year before. Overall female representation was
up slightly at 51% and senior female representation increased to 40% from 36%.
Overall minority ethnic representation increased to 22% from 19%. Our
ethnicity pay gap has, however, increased to 15% from 8% due to a decrease in
ethnically diverse senior leaders. So whilst we have made good progress in
some respects of Diversity & Inclusion (recognised by winning the 2024
Small Cap Award for Diversity, Inclusivity and Engagement), there is still
work to be done.
Togetherness is one of our key PACT values and captures the energy, fun, and
collaborative approach that we embrace. We measure togetherness through
employee inclusion surveys, and these scores have risen to 74% from 72% in the
last year. We also conduct staff "Pulse" surveys to gain an understanding of
employee engagement and satisfaction. The most recent Pulse survey indicated a
score of 7.4 in February 2024 vs 6.7 in 2023 (our goal is 7.5 or more).
We continue to invest in training our people. We recently introduced a
Leadership Essentials programme for around 130 leaders and managers in the
Company (almost 25% of staff), which will provide them with a continuing
framework for personal and professional growth. We have also developed a
progression framework for all our job families that covers the skills,
behaviours and impact that we expect from our people.
A key driver in bringing our people together in person is our hub strategy.
This year, we have rationalised and improved our real estate portfolio, most
notably moving into our new London headquarters at The Hickman Building
(BREEAM-rated Excellent and Best New Place To Work in the Building London
Planning Awards). Additionally, we have made improvements to our Chesterfield,
Bristol and Manchester offices.
We continue to make good progress on our carbon footprint, despite the
increasing scale of the business. All our offices now run on electricity that
is entirely from renewable sources. On a like-for-like basis, our carbon
intensity in the year decreased by over 15% to 15.33 tCO2e/£1m of revenue and
by over 11% to 2.45 tCO2e/FTE.
Scope 3 emissions form the largest part of our carbon usage and are a
continuing area of focus, given Scope 1 and 2 emissions are negligible. We
have strengthened our procurement and sustainability team in recent months, so
we are improving our grasp of the supply chain in terms of carbon usage and
modern slavery, as well as cost-effectiveness. We have improved our MSAT (the
Modern Slavery Assessment Tool created by Central Government) score to 70%
from 43% a year ago and are aiming to achieve 90% next year.
Looking ahead
The announcement of the snap General Election was welcome as it removed
uncertainty from our core client sector. With the outcome now known, we look
forward to a more stable environment in which the skills and insights of our
talented people will be even more in demand. Over the last month or so,
despite the General Election, we have seen a significant expansion in the
pipeline of new projects and the current volume of proposals is very
encouraging for both TPXimpact and the Digital Transformation sector as a
whole. We therefore expect the short-term disruption of the General Election
to pass as we enter the second half of the financial year.
Digital transformation remains a critical focus for organisations aiming to
streamline costs, enhance agility and improve productivity - expected to be a
rapidly growing market in support of the new Government's growth agenda. As
businesses shift investments from outdated systems to more nimble, modern
solutions, the potential of responsible AI-enabled systems, contingent upon
robust data quality, becomes increasingly relevant. Responsible AI also
represents a key opportunity for TPXimpact as we can use our expertise to
ensure AI systems operate safely and ethically. Like the clients we serve, we
are dynamic and constantly evolving; and we are well-placed to respond to
these changing needs with innovation, insight and agility.
Year Two of our three-year plan is characterised as "Form and Integrate". We
have already achieved some key aspects of this ahead of schedule, including
the integration of complementary businesses into the Digital Transformation
platform and the launch of the manifesto brand for our Digital Experience
businesses. Our people strategy increasingly embeds performance, commercial
focus and purpose; and we'll continue to push the boundaries of what
responsible, sustainable business genuinely means and can achieve.
We have successfully executed our strategy to date and are confident that we
will continue to do so, founded upon robust client relationships and
exceptional talent throughout the business, as well as a stable financial
base. As our journey continues, the outlook is encouraging and we are on track
to achieve our ambitions.
Bjorn Conway
CEO, TPXimpact
9 July 2024
Financial Review
The unaudited preliminary results for the year ended 31 March 2024 (FY24) are
in line with the trading update issued on 30 May 2024 and show strong growth
in revenues, Adjusted EBITDA and margins, as well as significant improvement
in net debt. The Company achieved or exceeded all its financial targets for
the year.
As a result of the sale of Questers and our strategic consulting business in
Norway in September and October 2023 respectively, the Group has treated both
businesses as discontinued operations in the year and prior period
comparatives have been restated accordingly. Like-for-like performance
measures are based on the results from continuing operations. Both disposals
were consistent with the three-year plan adopted a year ago to simplify the
business and focus on our core strategic pillars of Digital Transformation,
manifesto and KITS.
Revenues from continuing operations were up 21.0% to £84.3m in the year,
ahead of our target of 15-20%. This growth was driven by our Consulting
business (now the largest part of our Digital Transformation business) due to
significant new business wins with Central Government in the second half of
FY23 and first quarter of FY24. Revenues in our Digital Experience (now
manifesto) business eased due to clients in the charitable and commercial
healthcare sectors holding back spend. Our RedCortex business (now part of
Digital Transformation) faced some challenges, including a contraction in
spend in the health sector in Wales.
Sequentially, on a like-for-like basis, Group revenues increased by 7.4% in
Q1, 38.3% in Q2, 31.6% in Q3 and 10.8% in Q4, demonstrating sustained positive
momentum throughout the year. New business wins amounted to a record £139m in
the year, including two very significant wins in Central Government: up to
£49m over four years with His Majesty's Land Registry (HMLR) and up to £27m
over two years with the Department for Education (DfE).
Public service clients represented over 90% of revenues, reflecting the
increasing significance of Central Government (c.65% of revenues) to the
Group, as well as the disposal of our Questers and Norway businesses, whose
client base was largely in the private sector. Management believe the private
sector represents a significant growth opportunity for the Digital
Transformation business, founded upon our long-standing relationships with a
number of clients in the financial services and utilities sectors, amongst
others. Our top 10 clients represented 68% of 2024 revenues.
As revenues grew, so did the cost of sales, which were up over 24% to £63.1m
from £50.8m last year. Gross profit therefore increased by 12.3% to £21.2m
from £18.9m. Full year gross margins of 25.1% (2023: 27.1% like-for-like)
reflected the H2 impact of the challenges at RedCortex, combined with the
impact of some sub-contractor arrangements contractually required to service
certain new business wins. We expect this limited dependency on external
partners to reduce over time and, consequently, gross margins to improve.
We have made good progress in re-balancing the weighting of permanent and
contractor staff. Permanent FTE headcount increased by 9% on a like-for-like
basis to 533 people at 31 March 2024, whilst the number of contractors reduced
by over one-third to 133 people. Total headcount, including contractors, was
therefore around 670 people at the end of the financial year.
This shift in resource mix should lead to increased efficiency in the cost
base in FY25 and beyond. Productivity also improved with increased utilisation
rates, particularly in our Consulting (now Digital Transformation) business.
Staff retention showed continued improvement to 88% for the year, compared
with around 75% two years ago.
Adjusted EBITDA of £4.6m was double the £2.3m figure for 2023 and our
adjusted EBITDA margin of 5.5% was significantly ahead of last year's 3.3% on
a like-for-like basis. All of our businesses met or exceeded budgeted FY24
Adjusted EBITDA margin expectations, with the exception of RedCortex.
The Group made a reported operating loss from continuing operations of
£(22.8)m against an operating loss of £(19.0)m last year. Administrative
expenses of £44.4m (2023: £38.4m) include a non-cash goodwill impairment
charge of £14.5m (2023: £10.0m) largely in relation to RedCortex, and a
charge for impairment of acquired intangible assets of £1.7m (2023: £1.8m).
Charges for share-based payments increased to £1.4m (2023: £0.1m) due to the
full year impact of share incentive awards granted in the second half of 2023.
Restructuring and transformation costs of £1.4m (2023: £2.5m) arose from the
aggregate impact of the rationalisation of our London property portfolio,
systems transformation initiatives and selective action on staff costs to
support the Group's strategic goals. Amortisation of acquired intangible
assets increased to £7.7m (2023: £6.2m) as we shortened the expected useful
life of a number of these assets.
Excluding these items, the core administrative expenses of the Group were down
slightly on last year at £17.7m despite revenue growth of 21%, reflecting
further investment in back-office resources, offset by reductions in
discretionary spend.
The Group made an adjusted profit before tax from continuing operations of
£1.8m (2023: £0.8m) and a reported loss before tax of £(24.8)m (2023: loss
of £(20.1)m). Finance costs increased to £2.0m (2023: £1.1m) due to
increased average borrowings and higher interest rates. Taxation amounted to a
credit of £2.7m (2023: £1.5m credit) largely due to deferred tax credits on
amortisation of acquired intangible assets. Adjusted profit after tax from
continuing operations was £1.9m (2023: £0.9m).
The disposal of Questers in September 2023 gave rise to a gain on disposal of
£3.7m which has been included in the income statement within profit after tax
from discontinued operations. The disposal of TPXimpact Norway in October 2023
for nominal consideration gave rise to a goodwill impairment charge of £1.8m
as a cost of discontinued operations. Total profit after tax from discontinued
operations was £1.8m (2023: £1.1m).
Reported diluted earnings per share from continuing operations was a loss of
(24.5) pence per share (2023: loss of (20.6) pence per share), reflecting the
reported losses in the period, including the goodwill/intangible asset
impairment charges of £16.2m. On an adjusted basis, diluted earnings per
share from continuing operations more than doubled to 2.1 pence per share
(2023: 0.9 pence per share).
Whilst the Board has decided there will be no dividend in respect of FY24, the
improvement in performance is encouraging and dividend policy will continue to
be reviewed on a regular basis.
Net debt and Cash flow
Net debt (excluding lease liabilities) at 31 March 2024 was £7.1m (the lowest
level in over three years and significantly better than our £11m target)
compared with £17.5m at 31 March 2023. Net cash generated from operations
amounted to £7.3m, reflecting the cash benefit of improved trading and
effective working capital management. Debtor days were 43 at year-end compared
with over 70 days a year ago.
The disposal of Questers and TPXimpact Norway gave rise to a net cash inflow
of £6.1m (£7.5m of gross cash proceeds less cash deconsolidated from the
Group balance sheet). Other cash outflows included interest payments of
£2.2m, long-term lease payments of £0.7m and capital expenditure of £0.2m,
with an inflow of £0.2m due to a corporate tax refund. Free cash flow
therefore amounted to £10.5m.
The Group used £8.3m of this free cash flow to repay debt, so gross
borrowings reduced to £16.2m at 31 March 2024 (2023: £24.5m). Since
year-end, a further £4.0m has been repaid, so gross borrowings at 30 June
2024 amounted to £12.2m, a 50% decrease on a year ago. The leverage ratio
(net debt/12M Adjusted EBITDA) at 31 March 2024 was 1.54x and the Group has
comfortably satisfied its banking covenants since they were reset a year ago.
Debt facility
As announced on 24 June 2024, given the significant improvement in the Group's
debt position over the last year, the Company and its bankers agreed to extend
the maturity of the Group's revolving credit facility (RCF) by one year to
July 2026 and reduce the amount of the facility from £30m to £25m, to better
reflect the ongoing needs of the business. The existing accordion of £15m
continues to be available if required.
In addition, the borrowing conditions (covenants) of the RCF have been eased,
one quarter ahead of schedule. These favourable amendments to the Group's
financing arrangements represent a return to a more normal framework for debt
and cash management and will allow management greater freedom to manage and
invest in the business effectively.
Balance sheet
The Company holds a minority stake of c. 11% of equity (on a diluted basis) in
OpenDialog AI Limited ("ODAL"), a conversational AI software business. As
illustrated by the successful Series A capital raise in early 2024, this
investment provides the Company with an exciting exposure to the
conversational AI market and we look forward to supporting its continued,
rapid development.
Current trading
Like-for-like revenue growth for the two months ending 31 May 2024 was over
11%, which is in line with our full year target range of 10-15%. Profitability
was in line with budget and ahead of the same period last year. £9m of new
business was won in the first quarter and the current pipeline of
opportunities is very strong, despite the General Election.
Outlook
In the trading update released on 30 May 2024, the Board reaffirmed the 2025
full-year targets of 10-15% like-for-like revenue growth and further
improvement in Adjusted EBITDA margins of 2-3% on top of the 5.5% achieved in
2024. We expect the July General Election to lead to a heavier second-half
weighting of revenue and profitability than usual. This is likely to mean more
subdued top-line growth in the summer months (against tough comparatives),
with a subsequent acceleration commencing in Q3. Backlog or committed revenues
represent around 70% of targeted full year revenues.
Management are also targeting a leverage ratio of c.1.0x at 31 March 2025,
which would allow for share repurchases of £1-2m into the Company's EBT
during the second half of the year. These shares will be used to satisfy
long-term employee share incentive awards due to vest next year.
With respect to 2026, management continue to target like-for-like revenue
growth of 10-15% and an Adjusted EBITDA margin of 10-12%, in line with our
previously announced, three-year strategic goals. The ongoing, successful
execution of our strategy provides a solid foundation for achieving our
targets and we firmly believe that the fundamental demand for our skills and
services will remain strong for the foreseeable future.
Steve Winters
CFO, TPXimpact
9 July 2024
Unaudited preliminary results for the year ended 31 March 2024
Consolidated Income Statement
For the year ended 31 March 2024
Unaudited Audited
2024 2023(1)
Note £'000 £'000
Revenue 84,269 69,672
Cost of sales (63,090) (50,816)
Gross profit 21,179 18,856
Administrative expenses (44,384) (38,377)
Other income 404 492
Operating loss (22,801) (19,029)
Finance costs (2,046) (1,084)
Loss before tax from continuing operations (24,847) (20,113)
Taxation 2,664 1,494
Loss after tax from continuing operations (22,183) (18,619)
Profit after tax from discontinued operations 1,811 1,061
Net loss (20,372) (17,558)
Other comprehensive (loss)/income:
Exchange differences on translation of foreign operations (22) 20
Exchange adjustments recycled to the income statement on disposal of
discontinued operations
94 -
Total comprehensive loss for the year (20,300) (17,538)
Earnings per share from continuing and discontinued operations
Basic (p) 7 (22.5p) (19.5p)
Fully diluted (p) 7 (22.5p) (19.5p)
Earnings per share from continuing operations
Basic (p) 7 (24.5p) (20.6p)
Fully diluted (p) 7 (24.5p) (20.6p)
( )
(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 4.
Consolidated Statement of Financial Position
At 31 March 2024
Unaudited Audited
2024 2023
Note £'000 £'000
Non-current assets
Goodwill 5 40,167 59,486
Intangible assets 14,173 23,458
Property, plant and equipment 220 473
Right of use assets 1,546 1,438
Other investments 2,188 2,188
Deferred tax assets 613 159
Total non-current assets 58,907 87,202
Current assets
Trade and other receivables 11,449 17,812
Contract assets 3,214 2,999
Corporate tax asset 437 335
Cash and cash equivalents 8,934 6,772
Total current assets 24,034 27,918
Total assets 82,941 115,120
Current liabilities
Trade and other payables (7,762) (8,943)
Contract liabilities (1,784) (3,608)
Other taxes and social security costs (4,250) (4,073)
Deferred and contingent consideration - (225)
Lease liabilities (714) (564)
Total current liabilities (14,510) (17,413)
Non-current liabilities
Deferred tax liabilities (3,537) (5,796)
Borrowings (16,050) (24,317)
Lease liabilities (1,009) (909)
Total non-current liabilities (20,596) (31,022)
Total liabilities (35,106) (48,435)
Net assets 47,835 66,685
Equity
Share capital 922 919
Own shares (955) (983)
Share premium 6,538 6,538
Merger reserve 50,449 73,474
Capital redemption reserve 15 15
Foreign exchange reserve - (72)
Retained earnings (9,134) (13,206)
Total equity 47,835 66,685
Consolidated Statement of Changes in Equity
For the year ended 31 March 2024
Capital redemption reserve Foreign exchange reserve
Share capital Share premium Merger reserve Own shares Retained earnings
Total
£'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000
At 1 April 2023 919 6,538 73,474 15 (983) (72) (13,206) 66,685
Loss for the year - - - - - - (20,372) (20,372)
Transfer to retained earnings - - (23,254) - - - 23,254 -
Exchange differences on translation of foreign operations
- - - - - (22) - (22)
Exchange adjustments recycled to the income statement on disposal of
discontinued operations
- - - - - 94 - 94
Transactions with owners
Shares issued 3 - 229 - - - - 232
Own shares transferred from EBT - - - - 28 - (28) -
Share-based payments - - - - - - 1,218 1,218
At 31 March 2024 (Unaudited)
922 6,538 50,449 15 (955) - (9,134) 47,835
For the year ended 31 March 2023
Capital redemption reserve Foreign exchange reserve Share option reserve
Share capital Share premium Merger reserve Own shares Retained earnings
Total
£'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000
At 1 April 2022 874 6,449 78,705 15 (356) (92) 1,089 (8,123) 78,561
Loss for the year - - - - - - - (17,558) (17,558)
Reclassification to retained earnings(1)
- - - - - - (1,089) 1,089 -
Exchange differences on translation of foreign operations
- - - - - 20 - - 20
Transfer to retained earnings - - (12,147) - - - - 12,147 -
Transactions with owners
Shares issued 45 89 6,916 - (90) - - - 6,960
Own shares transferred from EBT - - - - 11 - - (11) -
Dividends paid - - - - - - - (815) (815)
Share-based payments - - - - - - - 65 65
Own shares purchased by EBT
- - - - (548) - - - (548)
At 31 March 2023 (Audited)
919 6,538 73,474 15 (983) (72) - (13,206) 66,685
(1) In the year ended 31 March 2023, the share option reserve was reclassified
to form part of retained earnings.
Consolidated Statement of Cash Flows
For the year ended 31 March 2024
Unaudited Audited
2024(1) 2023(1)
£'000 £'000
Cash flows from operating activities:
Loss before taxation from total operations (23,014) (18,971)
Adjustments for:
Depreciation 931 706
Amortisation of intangible assets 7,681 6,347
Impairment of intangible assets 1,673 1,770
Impairment of goodwill 14,492 9,995
Impairment of goodwill and intangible assets on classification as held for 1,848 -
sale
Share-based payments 1,390 65
Foreign exchange losses/(gains) 38 (1)
Finance costs 2,057 1,105
Loss from fair value movement in contingent consideration
7 188
Loss on disposal of property, plant and equipment
16 6
Gain on sale of discontinued operations (3,580) (1,606)
Working capital adjustments:
Decrease in trade and other receivables
4,111 1,271
Decrease in trade and other payables (346) (1,141)
Net cash generated from/(used in) operations 7,304 (266)
Tax received/(paid) 236 (1,522)
Net operating cash flows 7,540 (1,788)
Consolidated Statement of Cash Flows continued
For the year ended 31 March 2024
Cash flows from investing activities:
Net cash paid on acquisition of subsidiaries - (1,969)
Disposal of subsidiaries(2) 6,071 (127)
Purchase of property, plant and equipment (37) (340)
Additions to intangibles (170) (244)
Proceeds from sale of property, plant and equipment
12 -
Net cash generated from/(used in) investing activities
5,876 (2,680)
Cash flows from financing activities:
New borrowings - 6,300
Repayment of borrowings (8,300) -
Purchase of own shares - (548)
Payment of lease liabilities (718) (445)
Interest paid (2,211) (1,146)
Dividends paid - (815)
Net cash (used in)/generated from financing activities
(11,229) 3,346
Net increase/(decrease) in cash and cash equivalents
2,187 (1,122)
Cash and cash equivalents at beginning of the year
6,772 7,948
Effect of exchange rate fluctuations on cash held
(25) (54)
Cash and cash equivalents at the end of the year
8,934 6,772
Comprising:
Cash at bank and in hand 8,882 6,717
Cash held by trust 52 55
Cash and cash equivalents at end of the year 8,934 6,772
Cash flows from investing activities:
Net cash paid on acquisition of subsidiaries
-
(1,969)
Disposal of subsidiaries(2)
6,071
(127)
Purchase of property, plant and equipment
(37)
(340)
Additions to intangibles
(170)
(244)
Proceeds from sale of property, plant and equipment
12
-
Net cash generated from/(used in) investing activities
5,876
(2,680)
Cash flows from financing activities:
New borrowings
-
6,300
Repayment of borrowings
(8,300)
-
Purchase of own shares
-
(548)
Payment of lease liabilities
(718)
(445)
Interest paid
(2,211)
(1,146)
Dividends paid
-
(815)
Net cash (used in)/generated from financing activities
(11,229)
3,346
Net increase/(decrease) in cash and cash equivalents
2,187
(1,122)
Cash and cash equivalents at beginning of the year
6,772
7,948
Effect of exchange rate fluctuations on cash held
(25)
(54)
Cash and cash equivalents at the end of the year
8,934
6,772
Comprising:
Cash at bank and in hand
8,882
6,717
Cash held by trust
52
55
Cash and cash equivalents at end of the year
8,934
6,772
(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 year.
(2) Disposal of subsidiaries comprises cash consideration received of £7.5
million less cash disposed of £1.4 million.
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 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 2024. The statutory accounts for the year ended 31
March 2024 have not yet been delivered to the Registrar of Companies, nor have
the auditors yet reported on them. This preliminary announcement does not
constitute statutory accounts under section 435 of the Companies Act 2006.
2. Basis of preparation
The unaudited consolidated preliminary financial statements have been prepared
in accordance with the recognition and measurement criteria of International
Financial Reporting Standards (IFRS) as adopted by the UK and the AIM rules
for Companies.
The financial statements are presented in pound sterling (GBP), which is the
functional currency of the parent company.
Going concern
After reviewing the budgets and cash projections for the next twelve months
and beyond, the Directors believe that the Group and the Company has adequate
resources to continue operations for the foreseeable future and to meet the
requirements of its debt covenants. For this reason they continue to adopt the
going concern basis in preparing the financial statements.
3. Accounting policies
The accounting policies used in the preparation of the unaudited preliminary
consolidated financial statements for the year ended 31 March 2024 are
consistent with those which were adopted in the annual statutory financial
statements for the year ended 31 March 2023.
4. Discontinued operations
The Group disposed of its subsidiaries Questers Resourcing Limited and
Questers Bulgaria EOOD ("Questers") on 18 September 2023 for cash
consideration of £7.5 million.
The Group disposed of its equity interests in TPXimpact Norway AS on 13
October 2023 to companies controlled by the managing partners of the business
for a nominal consideration of £1. This disposal was considered a related
party transaction and the directors consider, having consulted with its
nominated adviser, that the terms of the transaction were fair and reasonable
insofar as its shareholders are concerned.
The operations of both Questers and TPXimpact Norway are presented as
discontinued operations in the consolidated income statement with the
comparatives and related notes restated accordingly. The Questers disposal
generated a gain of £3.7 million and the TPXimpact Norway disposal generated
a loss of £0.1 million and a £1.8 million impairment was recognised on
classification as held for sale. These are included in profit after tax on
discontinued operations in the year ended 31 March 2024.
Income statement reconciliation:
Continuing Discontinued Total Continuing Discontinued Discontinued Total
operations operations operations operations operations operations operations
2024 2024 2024 2023 2023(1) 2023 2023
re-presented(2)
£'000 £'000 £'000 £'000 £'000 £'000 £'000
Revenue 84,269 7,171 91,440 69,672 27 14,008 83,707
Cost of sales (63,090) (6,102) (69,192) (50,816) (58) (11,959) (62,833)
Gross profit 21,179 1,069 22,248 18,856 (31) 2,049 20,874
Administrative expenses
(44,384) (2,852) (47,236) (38,377) (76) (2,412) (40,865)
Gain on sale of discontinued operations
- 3,580 3,580 - 1,606 - 1,606
Other income 404 47 451 492 - 27 519
Operating (loss)/profit
(22,801) 1,844 (20,957) (19,029) 1,499 (336) (17,866)
Finance costs (2,046) (11) (2,057) (1,084) - (21) (1,105)
(Loss)/profit before tax
(24,847) 1,833 (23,014) (20,113) 1,499 (357) (18,971)
Taxation 2,664 (22) 2,642 1,494 (54) (27) 1,413
(Loss)/profit after tax
(22,183) 1,811 (20,372) (18,619) 1,445 (384) (17,558)
(1) In the year ended 31 March 2023 discontinued operations represents
Greenshoots Lab Limited ('GSL'), a subsidiary of the Group which was disposed
of in May 2022.
(2) Prior year figures have been re-presented to include Questers and
TPXimpact Norway as discontinued operations.
5. Goodwill
Goodwill decreased by £19.3 million during the year ended 31 March 2024. This
is primarily due to impairment charges in relation to RedCortex and Digital
Experience of £10.4 million and £4.1 million respectively, as well as £3.0
million of goodwill disposed in respect of Questers and a £1.8 million
impairment in TPXimpact Norway on classification as held for sale.
6. Borrowings
At 31 March 2024, the Group had a revolving credit facility with HSBC of £30
million (with a £15 million accordion) of which £16.2 million had been drawn
down following repayments during the year of £8.3 million.
In June 2023, management and HSBC agreed a reset of the Group's lending
covenants based on minimum levels of liquidity at each month end and minimum
Adjusted EBITDA levels at each quarter-end. The revised covenants at 31 March
2024 were met. In June 2024, management and HSBC agreed to ease the covenants
one quarter ahead of schedule. The covenants now comprise two measures to be
assessed at each quarter end: (i) Net debt (excluding lease liabilities) to
rolling twelve month Adjusted EBITDA of 2.5x or less; and (ii) rolling twelve
month Adjusted EBITDA to net finance costs of at least 3.0x for the periods
ending 30 September and 31 December 2024 and 3.5x for the year ending 31 March
2025 and thereafter.
In June 2024, a further £4.0 million was repaid and the Group and HSBC also
agreed to extend the maturity of the revolving credit facility by one year to
July 2026 while reducing the amount of the facility from £30 million to £25
million.
7. Earnings per share
2024 2023
Number of Number of
shares shares
'000 '000
Weighted average number of shares for calculating basic earnings per share
90,368 90,185
Weighted average number of dilutive shares 3,142 3,839
Weighted average number of shares for calculating diluted earnings per share
93,510 94,024
2024 2023(1)
£'000 £'000
Loss after tax from continuing operations (22,183) (18,619)
Profit after tax from discontinued operations 1,811 1,061
Loss after tax from total operations (20,372) (17,558)
Adjusted profit after tax from continuing operations(2) 1,919 875
Earnings per share is calculated as follows:
2024 2023(1)
Basic earnings per share
Basic earnings per share from continuing operations (24.5p) (20.6p)
Basic earnings per share from discontinued operations 2.0p 1.1p
Basic earnings per share from total operations (22.5p) (19.5p)
Adjusted basic earnings per share from continuing operations
2.1p 1.0p
Diluted earnings per share
Diluted earnings per share from continuing operations(3) (24.5p) (20.6p)
Diluted earnings per share from discontinued operations(3)
2.0p 1.1p
Diluted earnings per share from total operations(3) (22.5p) (19.5p)
Adjusted diluted earnings per share from continuing operations
2.1p 0.9p
(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 4.
(2) Adjusted profit after tax on continuing operations is defined in note 8.
(3) 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.
Like-for-like
Like-for-like comparisons are calculated by comparing current year results for
continuing operations (which includes acquisitions from the relevant date of
completion) to prior year results, adjusted to include the results of
acquisitions for the commensurate period in the prior year. In the year ended
31 March 2024, there were no differences in the like-for-like and reported
comparisons due to there being no acquisitions in either period.
Reconciliation of net debt (excluding lease liabilities):
2024 2023
£'000 £'000
Cash and cash equivalents 8,934 6,772
Borrowings due after one year(1) (16,050) (24,317)
Net debt (7,116) (17,545)
Reconciliation of operating loss to adjusted EBITDA:
2024 2023
£'000 £'000(2)
Operating loss (22,801) (19,029)
Amortisation of intangible assets 7,657 6,155
Depreciation 789 371
Loss from fair value movement in contingent consideration 7 188
Impairment of intangible assets 1,673 1,770
Impairment of goodwill 14,492 9,995
Share-based payments(3) 1,425 84
Costs directly attributable to business combinations - 229
Restructuring and transformation costs 1,387 2,541
Adjusted EBITDA 4,629 2,304
(1) Borrowings due after one year comprise gross borrowings less unamortised
debt issuance costs.
(2) 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 4.
(3) Includes social security costs.
Reconciliation of loss before tax to adjusted profit after tax:
2024 2023
£'000 £'000(1)
Loss before tax on continuing operations (24,847) (20,113)
Amortisation of intangible assets 7,657 6,155
Loss from fair value movement in contingent consideration 7 188
Impairment of intangible assets 1,673 1,770
Impairment of goodwill 14,492 9,995
Share-based payments(2) 1,425 84
Costs directly attributable to business combinations - 229
Restructuring and transformation costs 1,387 2,541
Adjusted profit before tax on continuing operations 1,794 849
Tax (excluding impact of amortisation of intangible assets and share-based 125 26
payments)
Adjusted profit after tax on continuing operations 1,919 875
(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 4.
(2) Includes social security costs.
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