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Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
---|---|---|---|---|---|
Tpximpact Holdings Plc | LSE:TPX | London | Ordinary Share | GB00BGGK0V60 | ORD 1P |
Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|---|---|
0.00 | 0.00% | 32.50 | 31.00 | 34.00 | 32.50 | 32.50 | 32.50 | 3,071 | 08:00:00 |
Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
---|---|---|---|---|---|
Business Consulting Svcs,nec | 83.71M | -17.56M | -0.1944 | -1.67 | 29.35M |
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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