TPXimpact Holdings' EBITDA rises 15% in first half of 2024

Highlights

• Improved Profitability: Adjusted EBITDA up 15% to £2.3 million, with a margin rise to 6.1%.
• New Business Wins: Secured £35 million in new contracts, including a £19 million deal with the Ministry for Housing.
• Sustainability Efforts: Reduced carbon footprint by 9.6%, aligning with environmental goals.

TPXimpact Holdings (LSE:TPX) has delivered a solid performance for the first half of 2024, with improved profitability despite facing a decline in revenue. The company’s focus on strategic cost management, business simplification, and securing new contracts has helped it navigate through a challenging market environment. As the business continues its transformation, it remains optimistic about future growth.

Financial Performance: Profitability Outpaces Revenue Decline

For the six months ending 30 September 2024, TPXimpact reported a revenue decline of 9.2% year-on-year, totaling £37.8 million, down from £41.6 million during the same period in 2023. This dip in revenue reflects ongoing market pressures, but the company was able to offset some of the impact with improved operational efficiency.

In terms of profitability, TPXimpact achieved significant growth. Adjusted EBITDA rose by more than 15% to £2.3 million, with the margin improving to 6.1% compared to 4.8% in H1 2024. Gross margins also saw a notable increase, rising to 28.3%, up from 26.2% in the previous year.

Adjusted profit before tax surged over 90%, reaching £1.1 million, compared to £0.6 million in H1 2024. While the company reported an operating loss of £3.4 million, this marked a significant improvement from the £9.0 million loss reported last year. Net debt improved to £7.9 million, a notable reduction from £12.8 million in September 2023, although slightly up from £7.1 million in March 2024.

Earnings also showed positive growth, with adjusted diluted earnings per share climbing to 1.2p, up from 0.5p in H1 2024. The reported diluted loss per share improved to (3.6)p from (10.2)p, further reflecting the company's improved financial position.

Operational Developments: Strategic Business Restructuring and New Contracts

TPXimpact has been focusing on streamlining its operations, and during the first half of 2024, it successfully simplified its business into three core divisions: Digital Transformation, Manifesto, and KITS. This restructuring was completed ahead of schedule, positioning the company for greater agility in the future.

In terms of business development, TPXimpact secured £35 million in new contracts during H1, with a significant post-period win of a £19 million contract with the Ministry for Housing, Communities, and Local Government. Public services continued to be a dominant revenue stream, accounting for over 90% of the company’s total revenues in the period.

The company’s ongoing focus on cost management also paid off, with selective cost reductions expected to yield savings of over £3 million annually. These measures have helped maintain profitability and improve margins, even as the revenue base experienced a slight decline.

Workforce and Sustainability: A Commitment to People and the Environment

TPXimpact’s workforce metrics also showed positive trends, with employee retention improving to 88%, up from 86% in H1 2024. Diversity within the workforce continued to grow, with female representation rising to 52%, and ethnic minority representation increasing to 21%. Sustainability remained a core focus, with the company reducing its carbon footprint by 9.6% to 613.7 tCO2e.

Outlook: Resilient Growth and Strong Pipeline

Looking ahead to FY25, TPXimpact has maintained its revenue targets, forecasting flat revenue growth. However, it expects to achieve adjusted EBITDA of between £7 million and £8 million, with net debt maintained around 1x EBITDA. The company also anticipates a 10-15% like-for-like revenue growth in FY26, with adjusted EBITDA margins projected between 10-12% before NIC adjustments.

With over 90% of its FY25 revenues secured through backlog or committed contracts, TPXimpact is well-positioned for continued success. The company’s strong business pipeline and strategic focus on public sector contracts place it on a steady path for sustainable growth.