REG - TPXimpact Holdings - Trading Update

Tpximpact HoldingsAnnouncement

10/09/2024 07:00

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RNS Number : 4813D  TPXimpact Holdings PLC  10 September 2024

10 September 2024

TPXimpact Holdings PLC

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

Trading Update

FY25 revenue growth now expected to be flat, reflecting current market
conditions

FY25 Adjusted EBITDA target maintained at £7- 8 million

TPXimpact Holdings PLC (AIM: TPX), the technology-enabled services company
focused on people-powered digital transformation, provides a trading update in
advance of the Company's Annual General Meeting ("AGM") on 26 September 2024.

Market conditions

The pipeline of new business opportunities in our core client sector of
Central Government (65% of FY24 Group revenues) has remained strong despite
the General Election in July. However, additional approvals processes
introduced following the Chancellor's announcement on 29 July 2024 of a £22bn
"black hole" in Government finances has slowed the award of new projects and
client spend on certain committed (or backlog) projects. Whilst it is unclear
how long these measures will last, the Board believes it is likely they will
continue until at least the conclusion of the Government's Spending Review and
the announcement of the Budget on 30 October 2024.

Current trading

In the Preliminary FY24 results announcement on 9 July 2024, the Company
indicated a stronger weighting than usual of both revenue and profit to the
second half of the year due to the timing of the snap General Election on 4
July 2024 and the expected clarity this would bring to the second half of the
year, whilst noting that the summer months were vulnerable to more subdued
spending patterns in the post-General Election period. Actual results for the
summer period have reflected this expectation, although the restrictions on
spend imposed by Central Government are proving to be more prolonged and
severe than management had previously anticipated. The Company now expects to
report first half revenues down c.8-10% against last year, with a return to
growth in the second half of the year.

New business won in the first two months of Q2 FY25 amounted to £17 million
(against £9 million in the first quarter), despite market conditions.

Continuing our three-year strategy to simplify the business, and recognising
the challenges of the current market environment, the Company has taken action
to further improve its operational efficiency, primarily in relation to staff
costs. On an annualised basis, these actions are expected to save well over
£3 million of cost, with an in-year FY25 benefit of around half this amount.
Related one-off restructuring costs are expected to be around £1 million.
These pro-active steps will make the Company more resilient and agile, and
well-placed for when the market recovers.

Outlook

Given these factors, the Company now expects to report flat revenue growth for
FY25 (FY24 revenue:  £84.3 million). The Board is, however, maintaining its
FY25 Adjusted EBITDA target of £7-8m, reflecting the benefit of the actions
already underway. This would result in a targeted Adjusted EBITDA margin of
c.8-9% (FY24: 5.5%).

With respect to FY26, the Board is maintaining its targets of like-for-like
revenue growth of 10-15% and an Adjusted EBITDA margin of 10-12%. The Board
remains confident that the Company is strongly positioned in its key markets,
with significant opportunities in digital transformation and responsible AI.

Björn Conway, Chief Executive Officer at TPXimpact, said:

"The July General Election promised stability in the second half of the year
and we were encouraged by the alignment between our service offerings and the
new Government's manifesto pledges. However, it has become increasingly
evident that the current public sector focus on budget constraint and spending
controls will persist until after the conclusion of the Government's Spending
Review and Autumn budget statement on 30 October.

"Our response is to ensure the capabilities and services we offer, and our
cost base, is correctly aligned with our revenue expectations and the
execution of our 3-year strategy.

"Whilst this is a difficult time for our people, it is very important that we
maintain a sustainable business model for all our stakeholders and continue to
deliver positive impact for our clients whilst providing a supportive
environment to our teams in line with our B-corp principles. As ever, I am
grateful to the professionalism and dedication of all our people in these
challenging times.

"The Board remains very confident that the services we offer, founded upon the
breadth and depth of talent within our businesses, will continue to be an
attractive and value-added proposition for our clients. Irrespective of the
short-term market factors at play, we firmly believe that Digital
Transformation will continue to be a major part of Central Government
strategy, and public services more widely, for the foreseeable future."

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

 

- Ends -

 

Enquiries:

 TPXimpact Holdings

 Bjorn Conway, CEO                Via Alma Strategic

 Steve Winters, CFO

 Stifel Nicolaus Europe Limited   +44 (0) 207 710 7600

 (Nomad and Joint Broker)

 Fred Walsh

 Ben Good

 Sarah Wong

 Dowgate Capital Limited

 (Joint Broker)                   +44 (0) 203 903 7715

 James Serjeant

 Russell Cook

 Alma Strategic Communications    tpx@almastrategic.com

 (Financial PR)                   +44 (0) 203 405 0209

 Josh Royston

 Kieran Breheny

 

 About TPXimpact

We believe in a world enriched by people-powered digital transformation.
Working in collaboration with organisations, we're on a mission to accelerate
positive change and build a future where people, places and the planet are
supported to thrive.

Led by passionate people, TPXimpact works closely with its clients in agile,
multidisciplinary teams; challenging assumptions, testing new approaches and
building confidence and capabilities. Combining our rich heritage with
expertise in human-centred design, data, experience and technology, we work to
create sustainable solutions with the flexibility to learn, evolve and change.

The business is being increasingly recognised as a leading alternative digital
transformation provider to the UK public services sector, with over 90% of its
client base representing public services.

More information is available at www.tpximpact.com.

 

 

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