Q3 Trading Update

TPXimpact Holdings PLC (AIM: TPX), the technology-enabled services company focused on people-powered digital transformation, provides an update on trading for the three months ended 31 December 2023 ("Q3").

Q3 trading

The Board is pleased to confirm that trading in Q3 was in line with achieving the Company's financial targets for the current financial year (FY24). On a like-for-like basis, third quarter revenues were up 32% to £20.2 million and year-to-date revenues were up 25% to £61.8 million. New business won in the first nine months of the year amounted to £130 million, including £25 million of wins in Q3, and the pipeline for new projects remains encouraging.

Net debt (excluding lease liabilities) at 31 December 2023 decreased to £10.7 million from £12.8 million at 30 September 2023, reflecting effective working capital management. The ratio of net debt to Adjusted EBITDA, on a rolling 12 month basis, reduced to below 3.0x and the Group comfortably satisfied its banking covenants.

Management have continued to simplify the business by establishing the Digital Transformation platform, which will bring together the combined talents of our Consulting, Data & Insights and RedCortex teams. Digital Transformation will officially be launched on 1 April 2024. TPXimpact will then comprise three businesses (Digital Transformation, Digital Experience and KITS), making the Group more focused, more efficient and easier to navigate for clients and all our stakeholders.

Current year outlook

As previously announced, management are targeting FY24 revenue in the range of £80-85 million (equivalent to like-for-like revenue growth of 15-20%) and Adjusted EBITDA in the range of £4-5 million (an Adjusted EBITDA margin of 5-6%). In addition, management are targeting net debt (excluding lease liabilities) of around £11 million 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.

FY25 outlook

The Company is currently undertaking its budgeting process for FY25 and will provide more specific guidance in due course. However, the Board currently has no reason to amend the existing targets of like-for-like revenue growth of 10-15% and further margin improvement of 2-3% on top of that expected to be achieved in FY24. Committed (or backlog) revenues currently stand at approximately £65 million in respect of FY25 (compared with £50 million at the same time last year in respect of FY24). This 30% increase in committed revenues provides a solid foundation for the next financial year, notwithstanding the possible disruption and uncertainty that may arise from a general election.

Bjorn Conway, Chief Executive Officer, commented:

"I am pleased by the progress in executing our strategy in Q3 and the continuing improvement in the financial performance of the business. We remain on track to meet our targets for the current financial year. I was also delighted by our certification as a B Corporation (B-Corp) announced on 9 January, reinforcing our commitment to being a responsible and sustainable business, as well as a profitable one.

"Although our budgeting process is still underway, the extent of committed revenues for next year provides a solid foundation for achieving next year's targets as they currently stand, building on our impressive new win rate this year and the successful execution of our strategy and three-year plan. The outlook remains positive, irrespective of the short-term uncertainty that may occur due to a general election, and I am grateful to all our people for their efforts and commitment to our goals and values."

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. These alternative performance measures are defined in note 28 of the Group's consolidated financial statements for the year ended 31 March 2023.