REG - TPXimpact Holdings - Q3 Trading Update and Revised Outlook

Tpximpact HoldingsAnnouncement

06/02/2025 07:00

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RNS Number : 0943W  TPXimpact Holdings PLC  06 February 2025

6 February 2025

 

TPXimpact Holdings PLC

("TPX", or the "Group", or the "Company")

Q3 Trading Update and Revised Outlook

TPXimpact Holdings PLC (AIM: TPX), the technology-enabled services company
focused on people-powered digital transformation, provides an unaudited update
on trading for the three months ended 31 December 2024 ("Q3").

Q3 Trading

The Board confirms that Q3 trading met management expectations, with
profitability and margins aligning with the Company's forecasts. In the first
nine months of the year, new business secured totalled approximately £65
million, including approximately £30 million in Q3.

 

FY25 Full Year Outlook

 

Although we are pleased with our positive Q3 results, our Digital
Transformation business has not seen the anticipated return to normal trading
conditions during Q4 to date. Macroeconomic conditions and the post-election
budgetary issues highlighted by the incoming Government, despite significant
appetite for digital transformation, have led to delays in the procurement of
large digital transformation programmes with tender and award decisions moving
by many months. In addition, spending controls implemented after the October
budget have had the effect of slowing the ramp-up of new business wins and the
rate at which the won backlog on some Central Government programmes can be
expended. The comprehensive spending review, that sets out departmental
budgets for the remainder of the parliamentary term, is delayed from March
until June 2025.

 

The net effect of these market conditions is that our Digital Transformation
business is not seeing the acceleration in volume originally anticipated for
Q4. The reorganisation concluded earlier in the year, simplifying and
improving the quality of the Group's businesses, has helped mitigate the
impact on Adjusted EBITDA margin and positions the Group well for future
years.

 

Management's expectations are that revenues for FY25 will decline 8-10% on the
prior year. Despite this, Adjusted EBITDA margins for the Group are expected
to improve by 1-2% year-on-year, as a result of reorganisation actions taken
earlier in FY25, and should result in an improvement in Adjusted EBITDA
compared to the prior year. Net debt at the end of FY25 is expected to be
circa 1.5-2.0x Adjusted EBITDA and comfortably ahead of the Company's banking
covenants.

 

FY26 Outlook

 

Whilst the outlook for FY25 remains challenging, the new business pipeline
remains strong and we anticipate normal market conditions to return in the
second quarter of FY26, once the comprehensive spending review is completed.

 

The Company is currently finalising its budget for FY26 and will provide more
detailed guidance in due course. We anticipate our final budget will show
revenue growth at the lower end of our previous guidance of 10-15% growth in
FY26. We also anticipate continued year-on-year Adjusted EBITDA margin
progression of 1-3%, noting the 1% headwind of increased employer National
Insurance Contribution rates may lead us to the lower end of this range.

 

The Board is confident in the Company's strategic direction and future growth
opportunities that the Government's ambitious agenda for digital
transformation should provide. The three-year strategy to simplify the
business, improve margin conversion and build solid platforms for future
growth remains on course.

 

Bjorn Conway, Chief Executive Officer, commented:

 

"Whilst short-term market conditions remain challenging for our Digital
Transformation business, we have a strong pipeline of opportunities and remain
confident in the Government's commitment to improve public services and drive
efficiencies through digital transformation and harnessing the potential of
AI. The Digital Transformation business, and the Group overall, remains well
positioned for growth as Government's spending plans begin to take shape.

We continue to see exceptional performance from our teams in delivering value
and impact for our clients and our long-term relationships and commitment to
these clients leaves us well placed to continue to support their success and
provide opportunities for our people to grow and develop.

TPXimpact is a much simpler and more coherent business than it was two years
ago with strong trading brands,  long term customer relationships, and
in-demand capabilities that are a strong foundation for future growth.

We are in the process of planning and budgeting for next year, ensuring our
strategic goals continue to align with the Government's growth priorities and
I look forward to sharing updates on our continuing progress in the months
ahead."

 

This announcement contains inside information under the UK Market Abuse
Regulation. The person responsible for arranging for the release of this
announcement on behalf of the Company is Noel Douglas, CFO.

 

 

Enquiries:

 TPXimpact Holdings                Via Alma Strategic

 Bjorn Conway, CEO

 Noel Douglas, 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
client base representing public services.

More information is available at www.tpximpact.com.

 

 

 

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