TIDMTPX
RNS Number : 6356V
TPXimpact Holdings PLC
05 December 2023
5 December 2023
TPXimpact Holdings PLC
("TPXimpact", the "Company or the "Group"")
Interim Results
Strong first half performance in line with management
expectations
TPXimpact Holdings PLC (AIM: TPX), the technology-enabled
services company focused on people-powered digital transformation,
is pleased to announce its interim results for the six months ended
30 September 2023.
Financial highlights(1) :
-- Revenue (like-for-like) up over 22% to GBP41.6m (H1 2023:
GBP34.1m)
-- Acceleration in revenue growth as the year has progressed:
7% in Q1, 38% in Q2
-- Record new business wins of GBP105m in the first half,
including previously announced significant contracts with
the Department for Education and His Majesty's Land Registry
-- Adjusted EBITDA(2) of GBP2.0m (H1 2023: GBP0.9m) with
Adjusted EBITDA(2) margin increasing to 4.8% (H1 2023:
2.6%)
-- Reported operating loss of GBP(9.0)m (H1 2023: GBP(3.9)m),
after including GBP5.6m (H1 2023: GBPNil) non-cash goodwill
impairment charge
-- Adjusted profit before tax (2) of GBP0.6m (H1 2023: GBP0.4m)
-- Reported loss before tax GBP(10.1)m (H1 2023: GBP(4.3)m)
-- Adjusted diluted earnings(2) per share of 0.5p (H1 2023:
0.4p)
-- Reported diluted loss per share of (10.2)p (H1 2023: (4.1)p)
-- Net debt(2) (excluding lease liabilities) as at 30 September
2023 of GBP12.8m (31 March 2023: GBP17.5m)
-- Comfortable headroom against new debt covenants reset
in June 2023
Operational and Impact highlights:
-- Over 90% of H1 revenues came from public services clients
-- Department for Education and His Majesty's Land Registry
engagements now fully mobilised and progressing in line
with expectations
-- Completed sale of Questers for GBP7.5m cash in September
2023; disposed of TPXimpact Norway as announced on 18
September and 16 October 2023, respectively
-- New talent recruited to lead our commercial and technology
capabilities
-- Staff retention rates improved to a run-rate of 86% on
an annualised basis
-- Total headcount (including contractors) of around 700
people: permanent staff (FTE) numbers increased (like-for-like)
by over 9% in H1 to 535 and the number of contractors
fell by almost 20% to 162
-- New London hub is now fully operational; new lease signed
for Chesterfield hub
-- Accreditation of ISO 27001, ISO 9001 and the UK National
Cyber Security Centre's (NCSC) Cyber Essentials accreditation
-- Carbon footprint reduced by 7% partly due to relocation
of London hub; further reductions expected in H2 due to
Questers disposal
-- Female representation stands at 51% (H1 2023: 49%) and
ethnic minority representation stands at 20% (H1 2023:
19%)
Post-period outlook
-- TPXimpact continues to trade in line with the targets
announced at the beginning of FY 2024 and expects to deliver
revenue in the range of GBP80-85 million and Adjusted
EBITDA in the range of GBP4-5 million for the full year
-- Backlog or committed revenue now represents almost 90%
of full year projected revenues and the pipeline of potential
new business remains encouraging
(1) Unless otherwise stated financial measures are based upon
the results of continuing operations.
(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 9.
Bjorn Conway, Chief Executive Officer, commented:
"I am delighted by the way the business unit leadership and
their teams have responded to the new vision and strategy for
TPXimpact, enabling us to deliver strong business results in the
first half of FY24.
Like-for-like revenue increased over 22% and adjusted EBITDA
margin at almost 5% compares well with less than 3% for FY23. The
Group is on track to meet the guidance we issued at the start of
the year with revenue growth of 15-20% and adjusted EBITDA margin
of 5-6%. This is a significant improvement on FY23 and a sign that
our focus on our customers, our people, and operational
improvements is producing the intended results.
The major wins of up to GBP49m at His Majesty's Land Registry
and up to GBP27.5m at the Department for Education demonstrate the
scale and breadth of capability that we can bring through working
together effectively to deliver Digital Transformation and the
positive impact we can have on systems that touch the lives of many
tens of thousands of people.
Equally, our Digital Experience business dramatically improves
the connection between organisations and the public as evidenced by
our award winning work with the Zoological Society of London and
our impressive work with Breast Cancer Now to support their mission
to eradicate breast cancer.
We have made excellent progress in advancing our 3-year strategy
to simplify the wider business and invest in creating our exciting
Digital Transformation and Digital Experience businesses as the
core platforms for future growth. The next 6-12 months will see
these integrations completed to enable the core businesses to
flourish.
12 months into the role of CEO at TPXimpact, my initial
impressions of the passion, capability and commitment of the teams
have been validated and I am energised by their enthusiasm for
making the business better and delivering the best outcomes for our
customers."
Enquiries:
TPXimpact Holdings PLC Via Alma
Bjorn Conway, Group CEO
Steve Winters, Group CFO
Stifel Nicolaus Europe Limited +44 (0) 207 710 7600
(Nomad and Joint Broker)
Fred Walsh
Ben Burnett
Dowgate Capital Limited
(Joint Broker)
James Serjeant
Russell Cook +44 (0) 203 903 7715
Alma Strategic Communications +44 (0) 203 405 0209
(Financial PR) tpx@almastrategic.com
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 over 90% of its client base representing
public services in the six months ended 30 September 2023.
More information is available at www.tpximpact.com.
CEO's statement
With a new vision and three-year strategic plan, the Group has
had a strong first half, delivering revenue growth and EBITDA
margin improvement in line with management expectations.
Trading performance in the first half was strong with revenues
of GBP41.6 million which equates to like-for-like revenue growth of
over 22%. Adjusted EBITDA margins increased to c.5% compared to
less than 3% in H1 2023.
New business wins in the first half amounted to GBP105m, and the
significant new engagements at the Department for Education for up
to GBP27.5m over two years, and His Majesty's Land Registry for up
to GBP49m over four years, are now fully mobilised and progressing
in line with expectations.
Net debt (excluding lease liabilities) was GBP12.8m at 30
September 2023 (compared with GBP17.5m at 31 March 2023). The Group
has comfortably satisfied its banking covenants which were reset in
June 2023.
Our growth has been led by the Consulting business which had a
strong first half, validating our strategy to invest in its
operations. This will enable it to form the bedrock of the future
Digital Transformation business which will also incorporate the
Data & Insights and Red Cortex businesses over the coming
months. Meanwhile, our Digital Experience business is well placed
to support our charity clients, who are having to be innovative to
maintain donation levels.
This positive trading performance has been achieved whilst
remaining true to our new PACT (Purpose, Accountability, Craft and
Togetherness) values and delivering a positive impact on the
planet, people and places through our work.
Focus & Balance
The Group has made good progress against its three-year-plan.
Our strategic theme for this year is 'Focus & Balance' and a
consequence of 'Focus' is a decision to invest management time and
energy on our future strategic platforms - Digital Transformation
and Digital Experience. It is for this reason that we took the
decision to divest our Bulgarian resourcing business (Questers) and
Norwegian strategy consultancy. As well as more management focus on
the core businesses, the Questers transaction enabled the Group to
reduce Net Debt.
We progressed the integration of three agencies into our Digital
Experience business with an ambition of it becoming the UK's
leading purpose-driven agency. The Digital Experience team has
re-focused their new business effort towards sectors where they
hold deep and long-lasting relationships. This includes
partnerships and charities; memberships and events organisations;
as well as a select group of public and commercial entities.
We have also strengthened our new business development and
management teams with the appointment of a Managing Partner for
Commercial clients and a Chief Technology and Innovation Officer to
lead our technology and engineering teams.
Under 'balance' we have worked to make the business better,
primarily by managing for a balance of commercial and purpose
outcomes, and in doing so putting in place the business information
tools developed internally by our Consulting business, and
management processes to monitor, predict and manage key KPIs of
utilisation, gross margin by engagement and capability team, and
adjusted EBITDA. This has enabled our businesses to better manage
internal and contractor resources and drive improved business
performance. The business information tools will be adopted by
other business units in the second half of the year.
We have maintained a high level of team member communications
and launched our new PACT values that align closely with the
strategic direction of the business:
o Purpose - positive change with measurable impact
o Accountability - self-organisation and accountability
o Craft - bringing our best capabilities to bear through
a shared vision of excellence
o Togetherness - long-lasting relationships built on honesty,
openness, and trust
Our recent pulse survey showed team member engagement scores
improved slightly to 6.7 from 6.6 against a target of 7.5 Whilst we
are working hard to achieve further progress, we see this as a
positive result given the organisational changes implemented in the
first half. Employee retention remains high at 86%, indicating
greater stability in the business.
Our purpose
Our purpose at TPXimpact is to deliver greater outcomes for
people, places and the planet. We are pleased that our carbon
emissions reduced by 7% in the first half of the year (in part due
to the move to a single London office with better sustainability
credentials) and expect further reductions in the second half of
the year, reflecting the disposal of Questers. Our purpose team is
also now fully integrated into the operational units of the
business, reinforcing a balanced approach between profit and
purpose.
We are also encouraged by the trends we are seeing in diversity
and inclusion. Female representation stands at 51% (H1 2023: 49%),
illustrating our commitment to gender equality. Furthermore, our
ethnic minority representation stands at 20% (H1 2023: 19%).
Appointment of Senior Independent Director
The Board is pleased to announce the appointment of Rachel
Neaman as Senior Independent Director. Rachel already serves as a
Non-executive Director of TPXimpact and brings a wealth of
experience of the UK charity and public sectors. In her new role,
Rachel will help ensure the Board and Management deliver against
the balanced needs of our stakeholders.
Market conditions
We continue to see exciting growth opportunities for our core
Digital Transformation and Digital Experience businesses, and our
outlook remains positive. Although a General Election in 2024 may
well introduce some degree of disruption and uncertainty next year,
we are encouraged that the policy agendas of both main political
parties place a renewed emphasis on the importance of digital
transformation and citizen engagement, both of which represent core
strengths in our business.
Whilst some industry observers, such as Tech Market View, are
predicting an easing in the rate of growth of the UK digital
transformation market in 2024*, they nevertheless expect demand to
be relatively strong, with mid single-digit CAGR forecast to 2026.
This is especially true for our core market of public services and,
within that sector, Central Government (60% of Group revenues).
TPXimpact is increasingly well-placed to increase market share and
capitalise on the opportunities these trends will create.
Bjorn Conway
CEO, TPXimpact
*Tech Market View. UK SITS Consulting Market: Suppliers, Trends
& Forecasts 2022 - 2026
Financial Review
The interim results for the six months ended 30 September 2023
(H1 2024) are in line with the trading update issued on 16 October
2023 and show strong growth in revenues, profitability and
margins.
As a result of the sale of Questers in September 2023 and
TPXimpact Norway in October 2023, the Group has treated both
businesses as discontinued operations in the first half, and prior
period comparatives have been restated accordingly. Like-for-like
performance measures are based on the results of continuing
operations.
Revenues from continuing operations were up 22.1% to GBP41.6m in
the first half of the year. Growth was driven by our Consulting
business (67% of Group revenues) due to the significant new
business wins with Central Government in the second half of last
year and first quarter of this. Revenues in our Digital Experience
business (13% of Group revenues) eased due to clients in the
charitable sector holding back spend. Sequentially, on a
like-for-like basis, Group revenues increased by 7.4% in Q1 and
38.3% in Q2, recovering from being down 7.2% in the last financial
year. New business wins amounted to a record GBP105m in the first
half.
Public service clients represented over 90% of revenues in the
first half, reflecting the increasing significance of Central
Government (60% of revenues) to the Group, as well as the disposal
of our Questers and Norway businesses, whose client base was
largely commercial. Management are committed to expansion of our
commercial sector revenues and have recently introduced new
leadership for both our commercial and technology capabilities.
As revenues grew, so did the cost of sales, which were up over
24% to GBP30.7m from GBP24.7m in H1 2023. Gross profit therefore
increased to GBP10.9m from GBP9.3m. Although gross margins reduced
to 26.2% from 27.4% in H1 2023, there was a progressive gross
margin improvement from Q1 to Q2 as we completed recruitment of
permanent roles, and reduced reliance on contractors, to service
the expansion in revenues.
Total headcount, including contractors, was around 700 people at
both 30 September 2023 and 31 March 2023, on a like-for-like basis.
There was, however, a shift in the mix between permanent FTE staff
and contractors: FTE headcount increased by over 9% to 535 people
in the first half, whilst the number of contractors reduced by
almost 20% to 162 people, providing greater efficiency going into
H2. Productivity also improved with increased utilisation rates,
particularly in Consulting. We therefore expect further improvement
in gross margins in the second half of the year. Staff retention in
the first half was 86% (on an annualised basis), a marked
improvement on a year ago.
Adjusted EBITDA of GBP2.0m and a margin of 4.8% in the first
half was significantly ahead of H123, on a like-for-like basis. All
our businesses met or exceeded budgeted Adjusted EBITDA
expectations, with the exception of RedCortex (6% of Group
revenues), which faced softness in client spend in the health
sector in Wales.
The Group made a reported operating loss on continuing
operations of GBP(9.0)m in the first half against an operating loss
of GBP(3.9)m for the same period last year. This reflects the
GBP1.6m increase in gross profit explained above, more than offset
by an increase of GBP6.6m in administrative costs, which was
largely due to a non-cash goodwill impairment charge of GBP5.6m in
relation to RedCortex. Charges for share-based payments increased
to GBP0.5m (H123: credit of GBP0.1m) due to share incentive grants
in the second half of last year, whilst restructuring costs fell to
GBP0.7m (H1 2023: GBP1.3m).
The Group made an adjusted profit before tax on continuing
operations of GBP0.6m (H1 2023: GBP0.4m) and a reported loss before
tax of GBP(10.1)m (H1 2023: loss of GBP(4.3)m). Finance costs in
the first half increased to GBP1.1m (H123: GBP0.4m) due to
increased average borrowings and higher interest rates. Taxation
amounted to a credit of GBP0.9m (H1 2023: GBP0.6m) due to deferred
tax credits on amortisation of intangible assets. Adjusted profit
after tax on continuing operations was GBP0.5m (H123: GBP0.4m).
The disposal of Questers in September 2023 gave rise to a gain
on disposal of GBP3.8m which has been included in the income
statement within profit after tax from discontinued operations. The
Group's interest in TPXimpact Norway has been presented as an asset
held for sale in the balance sheet at 30 September 2023, prior to
its disposal in October 2023. As the Norway disposal was for
nominal consideration of GBP1, the Group has recorded a goodwill
impairment charge of GBP1.9m as a cost of discontinued operations
in the first half.
Reported diluted earnings per share from continuing operations
for the first half was a loss of (10.2) pence per share (H1 2023:
(4.1) pence per share), reflecting the reported losses in the
period, including the goodwill impairment charge of GBP5.6m. On an
adjusted basis, diluted earnings per share on continuing operations
increased to 0.5 pence per share (H1 2023: 0.4 pence per
share).
Whilst the Board has decided there will be no interim dividend
in respect of the first half of this year (H123: 0.3 pence per
share), 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 30 September 2023 was
GBP12.8m compared with GBP17.5m at 31 March 2023. The decrease in
net debt of GBP4.7m includes GBP7.5m of cash proceeds from the sale
of Questers, less GBP1.0m of interest paid and a net working
capital outflow of GBP1.7m (largely attributable to the unwinding
of deferred income recorded at year-end). The disposal of Questers
resulted in GBP1.3m of cash being deconsolidated from the balance
sheet, together with a similar amount of current liabilities.
The Group used GBP4.3m of the Questers proceeds to repay debt,
so borrowings reduced to GBP20.0m at 30 September 2023, and a
further GBP1.0m was repaid in November. The Group has comfortably
satisfied its banking covenants since they were reset in June 2023
and our forecasts indicate this headroom will continue.
Current trading
Like-for-like revenue growth in the month of October 2023 was
42%, continuing the trend seen in Q2, and again driven by our
Consulting business. Margins were in line with management
expectations. Backlog or committed revenue now represents almost
90% of our full year projected revenues and the pipeline of
potential new business remains encouraging.
Outlook
In the trading update released on 16(th) October 2023, the Board
reaffirmed the FY 2024 targets of 15-20% like-for-like revenue
growth and Adjusted EBITDA margins of 5-6% and this guidance is
maintained. These targets would equate to FY 2024 revenue in the
range of GBP80-85m and Adjusted EBITDA in the range of GBP4-5m. We
expect revenue growth to be weighted towards Q3 more than Q4 given
the stronger comparative performance in Q4 of last year.
Management are also targeting net debt (excluding lease
liabilities) to be in the range of GBP11-12m at 31 March 2024 and,
therefore, a net debt to Adjusted EBITDA ratio of <2.5x by the
end of the financial year, or shortly thereafter.
The outlook for FY 2025 is also maintained with like-for-like
revenue growth of 10-15% and further margin improvement of 2-3% on
top of that achieved in FY 2024. The contract length of our recent
large wins and the ongoing, successful execution of our strategy
provides a solid foundation for our projections, notwithstanding
the possible disruption and uncertainty that may arise from a
general election in the coming year. We believe the fundamental
demand for our skills and services will remain strong for the
foreseeable future.
Steve Winters
CFO, TPXimpact
Unaudited interim results for the six months ended 30 September
2023
Consolidated Income Statement
For the six months ended 30 September 2023
Audited
Unaudited Year
Unaudited 6 months ended
6 months to 30 31
to 30 September September March
2023 2022(1) 2023(1)
Note GBP'000 GBP'000 GBP'000
Revenue 41,622 34,075 69,672
Cost of sales (30,718) (24,734) (50,816)
Gross profit 10,904 9,341 18,856
Administrative expenses (19,937) (13,369) (38,377)
Other income 45 79 492
Operating loss (8,988) (3,949) (19,029)
Finance costs (1,070) (371) (1,084)
-------------------------------------- ----- ----------------- ----------- ---------
Loss before tax from continuing
operations (10,058) (4,320) (20,113)
Taxation 874 587 1,494
-------------------------------------- ----- ----------------- ----------- ---------
Loss after tax from continuing
operations (9,184) (3,733) (18,619)
Profit after tax from discontinued
operations 2,213 1,253 1,061
-------------------------------------- ----- ----------------- ----------- ---------
Net loss (6,971) (2,480) (17,558)
Other comprehensive (loss)/income:
Exchange difference on translation
of foreign operations (22) 91 20
Exchange adjustments recycled to
the income statement on disposal
of discontinued operations 27 - -
--------------------------------------------- ----------------- ----------- ---------
Total comprehensive loss for
the period (6,966) (2,389) (17,538)
-------------------------------------- ----- ----------------- ----------- ---------
Earnings per share from continuing and discontinued
operations
Basic (p) 8 (7.7p) (2.7p) (19.5p)
Fully diluted (p) 8 (7.7p) (2.7p) (19.5p)
Earnings per share from continuing
operations
Basic (p) 8 (10.2p) (4.1p) (20.6p)
Fully diluted (p) 8 (10.2p) (4.1p) (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
Consolidated Statement of Financial Position
At 30 September 2023
Unaudited Unaudited Audited
30 September 30 September 31 March
2023 2022 2023
Note GBP'000 GBP'000 GBP'000
--------------------------------- ----- -------------- -------------- ----------
Non-current assets
Goodwill 6 49,085 68,493 59,486
Other intangible assets 19,521 29,041 23,458
Property, plant and equipment 330 544 473
Right of use assets 1,907 1,168 1,438
Other investments 2,188 2,188 2,188
Deferred tax assets 169 54 159
--------------------------------- ----- -------------- -------------- ----------
Total non-current assets 73,200 101,488 87,202
--------------------------------- ----- -------------- -------------- ----------
Current assets
Trade and other receivables 10,904 14,058 17,812
Contract assets 7,513 2,894 2,999
Corporation tax asset 257 - 335
Cash and cash equivalents 7,171 6,199 6,772
Total current assets 25,845 23,151 27,918
Assets held for sale 731 - -
--------------------------------- ----- -------------- -------------- ----------
Total assets 99,776 124,639 115,120
--------------------------------- ----- -------------- -------------- ----------
Current liabilities
Trade and other payables (8,658) (6,882) (8,943)
Contract liabilities (977) (2,368) (3,608)
Other taxes and social
security costs (2,472) (2,984) (4,073)
Corporate tax liability - (1,077) -
Deferred and contingent
consideration - (717) (225)
Lease liabilities (637) (378) (564)
Borrowings - (69) -
Total current liabilities (12,744) (14,475) (17,413)
--------------------------------- ----- -------------- -------------- ----------
Liabilities directly associated
with assets held for sale (385) - -
--------------------------------- ----- -------------- -------------- ----------
Non-current liabilities
Deferred tax liabilities (4,855) (6,769) (5,796)
Borrowings (19,979) (20,270) (24,317)
Lease liabilities (1,396) (881) (909)
--------------------------------- ----- -------------- -------------- ----------
Total non-current liabilities (26,230) (27,920) (31,022)
Total liabilities (39,359) (42,395) (48,435)
--------------------------------- ----- -------------- -------------- ----------
Net assets 60,417 82,244 66,685
--------------------------------- ----- -------------- -------------- ----------
Equity
Share capital 922 912 919
Own shares (983) (688) (983)
Share premium 6,538 6,530 6,538
Merger reserve 73,703 85,095 73,474
Capital redemption reserve 15 15 15
Foreign exchange reserve (67) (1) (72)
Retained earnings (19,711) (9,619) (13,206)
--------------------------------- ----- -------------- -------------- ----------
Total equity 60,417 82,244 66,685
--------------------------------- ----- -------------- -------------- ----------
Consolidated Statement of Changes in Equity
For the six months ended 30 September 2023
Capital
Share Share Merger redemption Own Foreign Retained
capital premium reserve reserve shares exchange earnings Total
reserve
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
------------------- ---------- ---------- ---------- ------------- --------- ----------- ----------- ---------
At 1 April
2023 919 6,538 73,474 15 (983) (72) (13,206) 66,685
---------- ---------- ---------- ------------- --------- ----------- ----------- ---------
Loss for the
period - - - - - - (6,971) (6,971)
---------- ---------- ---------- ------------- --------- ----------- ----------- ---------
Exchange
differences
on translation
of foreign
operations - - - - - (22) - (22)
---------- ---------- ---------- ------------- --------- ----------- ----------- ---------
Exchange
adjustments
recycled to
the income
statement
on disposal
of discontinued
operations - - - - - 27 - 27
---------- ---------- ---------- ------------- --------- ----------- ----------- ---------
Transactions
with owners
---------- ---------- ---------- ------------- --------- ----------- ----------- ---------
Shares issued 3 - 229 - - - - 232
---------- ---------- ---------- ------------- --------- ----------- ----------- ---------
Share-based
payments - - - - - - 466 466
------------------- ---------- ---------- ---------- ------------- --------- ----------- ----------- ---------
At 30 September
2023 (Unaudited) 922 6,538 73,703 15 (983) (67) (19,711) 60,417
------------------- ---------- ---------- ---------- ------------- --------- ----------- ----------- ---------
For the year ended 31 March 2023
Capital Foreign Share
Share Share Merger redemption Own exchange option Retained
capital premium reserve reserve shares reserve reserve earnings Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
------------------ --------- --------- --------- ------------ -------- ---------- ---------- ---------- ---------
At 1 April
2022 874 6,449 78,705 15 (356) (92) 1,089 (8,123) 78,561
--------- --------- --------- ------------ -------- ---------- ---------- ---------- ---------
Reclassification
to retained
earnings* - - - - - - (1,089) 1,089 -
--------- --------- --------- ------------ -------- ---------- ---------- ---------- ---------
Loss for the
period - - - - - - - (2,480) (2,480)
--------- --------- --------- ------------ -------- ---------- ---------- ---------- ---------
Exchange
differences
on translation
of foreign
operations - - - - - 91 - - 91
--------- --------- --------- ------------ -------- ---------- ---------- ---------- ---------
Transactions
with owners
--------- --------- --------- ------------ -------- ---------- ---------- ---------- ---------
Shares issued 38 81 6,390 - (81) - - - 6,428
--------- --------- --------- ------------ -------- ---------- ---------- ---------- ---------
Share-based
payments - - - - - - - (105) (105)
--------- --------- --------- ------------ -------- ---------- ---------- ---------- ---------
Share options
exercised - - - - (251) - - - (251)
------------------ --------- --------- --------- ------------ -------- ---------- ---------- ---------- ---------
At 30 September
2022 (Unaudited) 912 6,530 85,095 15 (688) (1) - (9,619) 82,244
------------------ --------- --------- --------- ------------ -------- ---------- ---------- ---------- ---------
Loss for the
period - - - - - - - (15,078) (15,078)
Transfer to
retained earnings - - (12,147) - - - - 12,147 -
------ -------- --------- ----- -------- ------- ---- ----------- ---------
Exchange differences
on translation
of foreign
operations - - - - - (71) - - (71)
------ -------- --------- ----- -------- ------- ---- ----------- ---------
Transactions
with owners
------ -------- --------- ----- -------- ------- ---- ----------- ---------
Shares issued 7 8 526 - (9) - - - 532
------ -------- --------- ----- -------- ------- ---- ----------- ---------
Own shares
transferred
from EBT - - - - 11 - - (11) -
------ -------- --------- ----- -------- ------- ---- ----------- ---------
Dividends paid - - - - - - - (815) (815)
------ -------- --------- ----- -------- ------- ---- ----------- ---------
Share-based
payments - - - - - - - 170 170
------ -------- --------- ----- -------- ------- ---- ----------- ---------
Own shares
purchased by
EBT - - - - (297) - - - (297)
---------------------- ------ -------- --------- ----- -------- ------- ---- ----------- ---------
At 31 March
2023 (Audited) 919 6,538 73,474 15 (983) (72) - (13,206) 66,685
---------------------- ------ -------- --------- ----- -------- ------- ---- ----------- ---------
*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 six months ended 30 September 2023
Unaudited
6 months Unaudited Audited
to 6 months Year ended
30 September to 30 September 31 March
2023(1) 2022(1) 2023(1)
GBP'000 GBP'000 GBP'000
Cash flows from operating
activities:
Loss before taxation on total
operations (Note 5) (7,820) (2,990) (18,971)
Adjustments for:
Depreciation 476 359 706
Amortisation of intangible
assets 3,918 3,215 6,347
Impairment of goodwill and
intangible assets on classification - -
as held for sale 1,848
Impairment of intangible assets - - 1,770
Impairment of goodwill 5,564 - 9,995
Share-based payments 466 (105) 65
Foreign exchange losses/(gains) 38 (2) (1)
Finance costs (Note 5) 1,081 388 1,105
Loss from fair value movement
in contingent consideration 7 148 188
Loss on disposal of property,
plant and equipment - - 6
Gain on sale of discontinued
operations (3,774) (1,474) (1,606)
Working capital adjustments:
Decrease in trade and other
receivables 358 5,068 1,271
Decrease in trade and other
payables (2,067) (5,277) (1,141)
Net cash generated from/(used
in) operations 95 (670) (266)
Tax received/(paid) 10 (350) (1,522)
Net operating cash flows 105 (1,020) (1,788)
--------------------------------------- -------------- ----------------- ------------
Cash flows from investing
activities:
Net cash paid on acquisition
of subsidiaries - (1,787) (1,969)
Disposal of subsidiaries(2) 6,236 - (127)
Purchase of property, plant
and equipment (22) (154) (340)
Additions to intangible assets (82) (269) (244)
Net cash generated from/(used
in) investing activities 6,132 (2,210) (2,680)
--------------------------------------- -------------- ----------------- ------------
Cash flows from financing
activities:
New borrowings - 2,300 6,300
Repayment of borrowings (4,300) - -
Purchase of own shares - (251) (548)
Payment of lease liabilities (332) (193) (445)
Interest paid (1,015) (380) (1,146)
Dividends paid - - (815)
--------------------------------------- -------------- ----------------- ------------
Net cash (used in)/generated
from financing activities (5,647) 1,476 3,346
--------------------------------------- -------------- ----------------- ------------
Net increase/(decrease) in
cash and cash equivalents 590 (1,754) (1,122)
Cash and cash equivalents at
beginning of the period 6,772 7,914 7,948
Effect of exchange rate fluctuations
on cash held (26) 39 (54)
--------------------------------------- -------------- ----------------- ------------
Cash and cash equivalents including
cash from discontinued operations 7,336 6,199 6,772
Cash from discontinued operations (165) - -
-------------------------------------- -------------- ----------------- ------------
Cash and cash equivalents
at end of the period 7,171 6,199 6,772
Comprising:
Cash at bank and in hand 7,115 6,099 6,717
Cash held by trust 56 100 55
--------------------------------------- -------------- ----------------- ------------
Cash and cash equivalents
at end of the period 7,171 6,199 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
period.
(2) Disposal of subsidiaries comprises cash consideration
received of GBP7.5 million less cash disposed of GBP1.3
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 interim financial information is unaudited.
2. Basis of preparation
The Group has not applied IAS 34 Interim Financial Reporting,
which is not mandatory for UK AIM listed companies, in the
preparation of this half-yearly report.
The consolidated interim financial information for the six
months ended 30 September 2023 does not, therefore, comply with all
the requirements of IAS 34 Interim Financial Reporting. The
consolidated interim financial information should be read in
conjunction with the annual financial statements of TPXimpact
Holdings plc for the year ended 31 March 2023, which have been
prepared in accordance with applicable UK-adopted international
accounting standards and the AIM rules for Companies.
This consolidated interim financial information does not
comprise statutory accounts within the meaning of section 434 of
the Companies Act 2006. Statutory accounts for the year ended 31
March 2023 were approved by the Board of directors on and delivered
to the Registrar of Companies. The report of the auditors on those
accounts was unqualified and did not contain any statement under
sections 498 (2) or (3) of the Companies Act 2006. The auditor's
report drew attention by way of an emphasis of matter to the high
degree of judgement involved in supporting the carrying value of
goodwill and other intangible assets.
The interim financial statements are presented in pound sterling
(GBP), which is the functional currency of the parent company.
3. Basis of consolidation
These interim consolidated financial statements consolidate
those of the Company and all of its subsidiary undertakings drawn
up to 30 September 2023. Subsidiaries are fully consolidated from
the date of acquisition, being the date on which the Group obtains
control, and continue to be consolidated until the date that such
control may cease. The financial statements of the subsidiaries are
prepared for the same reporting period as the parent company, using
consistent accounting policies.
4. Accounting policies
The accounting policies used in the preparation of the interim
consolidated financial information for the six months ended 30
September 2023 are in accordance with the recognition and
measurement criteria of International Financial Reporting Standards
(IFRS) and are consistent with those which were adopted in the
annual statutory financial statements for the year ended 31 March
2023.
5. Discontinued operations
The Group disposed of its subsidiaries Questers Resourcing
Limited and Questers Bulgaria EOOD ("Questers") on 18 September
2023 to Nortal AS ("Nortal") for cash consideration of GBP7.5
million.
In September 2023 the Group also decided to dispose of its
equity interests in TPXimpact Norway AS to companies controlled by
the managing partners of the business for a nominal consideration
of GBP1. This disposal is 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 associated assets
and liabilities of TPXimpact Norway have been presented as held for
sale in the statement of financial position as at 30 September
2023. The sale was completed on 13 October 2023.
The operations of both Questers and TPXimpact Norway are
presented as discontinued operations in the income statement with
the comparatives and related notes restated accordingly. The
Questers disposal generated a gain of GBP3.8 million and a GBP1.8
million goodwill impairment was recognised on classification of
TPXimpact Norway's assets as held for sale. These are included in
the profit after tax on discontinued operations in the six months
ended 30 September 2023.
Income statement reconciliation:
Continuing Discontinued Total Continuing Discontinued Discontinued Total
operations operations operations operations operations operations operations
H1 2024 H1 2024 H1 2024 H1 2023 H1 2023(1) H1 2023 H1 2023
re-presented(2)
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
---------------- ----------- ------------- ----------- ------------ ------------- ---------------- ------------
Revenue 41,622 7,171 48,793 34,075 27 6,288 40,390
Cost of
sales (30,718) (6,103) (36,821) (24,734) (58) (5,152) (29,944)
---------------- ----------- ------------- ----------- ------------ ------------- ---------------- ------------
Gross profit 10,904 1,068 11,972 9,341 (31) 1,136 10,446
Administrative
expenses (19,937) (2,640) (22,577) (13,369) (109) (1,137) (14,615)
Gain on
sale of
discontinued
operations - 3,774 3,774 - 1,474 - 1,474
Other income 45 47 92 79 - 14 93
---------------- ----------- ------------- ----------- ------------ ------------- ---------------- ------------
Operating
(loss)/profit (8,988) 2,249 (6,739) (3,949) 1,334 13 (2,602)
Finance
costs (1,070) (11) (1,081) (371) - (17) (388)
---------------- ----------- ------------- ----------- ------------ ------------- ---------------- ------------
(Loss)/profit
before tax (10,058) 2,238 (7,820) (4,320) 1,334 (4) (2,990)
Taxation 874 (25) 849 587 - (77) 510
---------------- ----------- ------------- ----------- ------------ ------------- ---------------- ------------
(Loss)/profit
after tax (9,184) 2,213 (6,971) (3,733) 1,334 (81) (2,480)
---------------- ----------- ------------- ----------- ------------ ------------- ---------------- ------------
(1) In the six months ended 30 September 2022 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.
6. Goodwill
Goodwill decreased by GBP10.4 million during the six months
ended 30 September 2023. This is primarily due to a GBP5.6 million
impairment charge in relation to Red Cortex, as well as GBP3.0
million of goodwill disposed in respect of Questers and a GBP1.8
million impairment in relation to TPXimpact Norway.
7. Borrowings
At 31 March 2023, the Group had a revolving credit facility with
HSBC of GBP30 million with a GBP15 million accordion of which
GBP24.5 million had been drawn down. The Group's financing
arrangements require the following covenants to be met: Net debt to
rolling twelve month Adjusted EBITDA of 2.5x or less and Adjusted
EBITDA to interest cover of at least 4.0x, also on a twelve month
rolling basis. The Group received a waiver of these covenants at
both 31 March 2023 and 30 June 2023.
For the following four quarters, management and HSBC have 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. These terms will apply until the quarter ending
30 September 2024, at which time the covenants will return to the
previous measures. The revised covenants at 30 September 2023 were
met.
In September 2023, the Group repaid GBP4.3 million of the
facility leaving GBP20.2 million drawn down as at 30 September
2023. A further GBP1.0 million was repaid in November 2023.
8. Earnings per share
6 months 6 months Year
to 30 September to 30 ended 31
2023 September March
Number of 2022 2023
shares Number Number
of of
shares shares
'000 '000 '000
-------------------------------------- ------------------ ------------ -------------
Weighted average number of shares
for calculating basic earnings
per share 90,299 91,426 90,185
Weighted average number of dilutive
shares 1,363 990 3,839
-------------------------------------- ------------------ ------------ -------------
Weighted average number of shares
for calculating diluted earnings
per share 91,662 92,416 94,024
-------------------------------------- ------------------ ------------ -------------
6 months 6 months Year ended
to 30 September to 30 31 March
2023 September 2023 (1)
2022 (1)
GBP'000 GBP'000 GBP'000
-------------------------------------- ------------------ ------------ -------------
Loss after tax from continuing
operations (9,184) (3,733) (18,619)
Profit after tax from discontinued
operations 2,213 1,253 1,061
-------------------------------------- ------------------ ------------ -------------
Loss after tax from total operations (6,971) (2,480) (17,558)
-------------------------------------- ------------------ ------------ -------------
Adjusted profit after tax from
continuing operations(2) 499 391 875
-------------------------------------- ------------------ ------------ -------------
Earnings per share is calculated
as follows: 6 months 6 months Year
to 30 September to 30 ended
2023 September 31 March
2022 (1) 2023 (1)
Basic earnings per share
Basic earnings per share from
continuing operations (10.2p) (4.1p) (20.6p)
Basic earnings per share from
discontinued operations 2.5p 1.4p 1.1p
----------------------------------- ------------------ ------------ -----------
Basic earnings per share from
total operations (7.7p) (2.7p) (19.5p)
----------------------------------- ------------------ ------------ -----------
Adjusted basic earnings per share
from continuing operations 0.6p 0.4p 1.0p
----------------------------------- ------------------ ------------ -----------
Diluted earnings per share
Diluted earnings per share from
continuing operations(3) (10.2p) (4.1p) (20.6p)
Diluted earnings per share from
discontinued operations(3) 2.5p 1.4p 1.1p
----------------------------------- ------------------ ------------ -----------
Diluted earnings per share from
total operations(3) (7.7p) (2.7p) (19.5p)
----------------------------------- ------------------ ------------ -----------
Adjusted diluted earnings per
share from continuing operations 0.5p 0.4p 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 5.
(2) Adjusted profit after tax on continuing operations is
defined in note 9.
(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.
9. 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 six months ended 30
September 2023, 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):
30 September 30 September 31 March
2023 2022 2023
GBP'000 GBP'000 GBP'000
--------------------------- ------------- ------------- -----------
Cash and cash equivalents 7,171 6,199 6,772
Borrowings due within
one year - (69) -
Borrowings due after
one year (19,979) (20,270) (24,317)
---------------------------- ------------- ------------- -----------
Net debt (12,808) (14,140) (17,545)
---------------------------- ------------- ------------- -----------
Reconciliation of operating loss to adjusted EBITDA:
6 months
6 months to to Year ended
30 September 30 September 31 March
2023 2022(1) 2023(1)
GBP'000 GBP'000 GBP'000
----------------------------- -------------- -------------- -----------
Operating loss (8,988) (3,949) (19,029)
Amortisation of intangible
assets 3,894 3,101 6,155
Depreciation 334 139 371
Loss from fair value
movement in contingent
consideration 7 148 188
Impairment of intangible
assets - - 1,770
Impairment of goodwill 5,564 - 9,995
Share-based payments 501 (82) 84
Costs directly attributable
to business combinations - 167 229
Costs related to business
restructuring 674 1,345 2,541
------------------------------ -------------- -------------- -----------
Adjusted EBITDA 1,986 869 2,304
------------------------------ -------------- -------------- -----------
(1) Prior period figures have been re-presented in accordance
with IFRS 5 Non-current Assets Held for Sale and Discontinued
Operations, as described in note 5.
Reconciliation of loss before tax to adjusted profit after
tax:
6 months 6 months
to to Year ended
30 September 30 September 31 March
2023 2022(1) 2023(1)
GBP'000 GBP'000 GBP'000
-------------------------------- -------------- -------------- -----------
Loss before tax from
continuing operations (10,058) (4,320) (20,113)
Amortisation of intangible
assets 3,894 3,101 6,155
Loss from fair value
movement in contingent
consideration 7 148 188
Impairment of intangible
assets - - 1,770
Impairment of goodwill 5,564 - 9,995
Share-based payments 501 (82) 84
Costs directly attributable
to business combinations - 167 229
Costs related to business
restructuring 674 1,345 2,541
--------------------------------- -------------- -------------- -----------
Adjusted profit before
tax from continuing
operations 582 359 849
Tax (excluding impact
of amortisation of intangible
assets) (83) 32 26
--------------------------------- -------------- -------------- -----------
Adjusted profit after
tax from continuing
operations 499 391 875
--------------------------------- -------------- -------------- -----------
(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 5.
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END
IR FSEFALEDSELE
(END) Dow Jones Newswires
December 05, 2023 02:00 ET (07:00 GMT)
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