18 September 2023

TPXimpact Holdings PLC

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

Sale of Questers for £7.5m

Reinforces strategic focus on core businesses

FY24 and FY25 forecasts unchanged for revenue growth and EBITDA margins

TPXimpact Holdings PLC (AIM: TPX), the technology-enabled services company focused on people-powered transformation, announces that it has completed the sale of Questers Resourcing Limited and Questers Bulgaria EOOD ("Questers") to pwrteams OÜ, the outsourcing and team augmentation business owned by Nortal AS ("Nortal"), for cash consideration of £7.5m.

Questers is based in Sofia, Bulgaria and has around 300 employees who provide cross-border IT support and related services to the commercial sector. For the year ended 31 March 2023, Questers generated £13.1m of revenue and £1.3m of Adjusted EBITDA. Gross assets as at 31 March were £7.6m.

Strategic rationale
The Board has a clear strategy to focus the Company on its core strengths of Digital Transformation and Digital Experience and has concluded that Questers' offering is no longer core to this strategy. The Board also believes that fresh ownership, under Nortal, will be better placed to take Questers to the next level of its development.

Proceeds and debt covenants

TPXimpact has disposed of the entirety of its equity interests in Questers for cash consideration of £7.5m. Of this amount, up to £5.0m will be used to repay borrowings, with the remainder used to fund investment and growth in our core capabilities. Management are therefore targeting net debt (excluding lease liabilities) to be in the range of £11m to £12m at 31 March 2024, compared with £17.9m at 30 June 2023.

The Group's banking covenants require minimum cash liquidity levels on a monthly basis and minimum Adjusted EBITDA performance levels on a quarterly basis. The Group's bankers have agreed to revise the Adjusted EBITDA levels in these requirements, to allow for the deconsolidation of Questers from the Group's results.

Current trading and forward guidance

Current trading (excluding Questers) remains in line with budget and management expectations. The Board reiterates the FY24 targets of 15-20% like-for-like revenue growth and Adjusted EBITDA margins of 5-6%. These targets would equate to FY24 revenue in the range of £81m to £85m and Adjusted EBITDA in the range of £4m to £5m. Management therefore expect the net debt to Adjusted EBITDA ratio to return to < 2.5x by the end of the financial year, or shortly thereafter.

The outlook for FY25 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 FY24.

Björn Conway, Chief Executive Officer at TPXimpact, said:

"At our preliminary results in July 2023, we set out a three year plan to ensure we continue to drive efficiencies across the Group and capitalise on the sizeable market opportunity ahead. Today's announcement firmly aligns with this strategic vision for TPXimpact by enabling us to concentrate our resources and energies around those prospects within the UK public sector and broader digital transformation market where there is considerable scope for further growth.

I would like to thank all our colleagues at Questers for the important work they have contributed to the Group over the past five years, and I am confident Nortal represents an excellent fit for the business going forward."

Priit Almae, Chief Executive Officer at Nortal AS said:

"The Questers acquisition strengthens our pwrteams business that is focused on building dedicated cross-border teams for our customers. The acquisition will add market presence in the US and UK and complement our strong organic double-digit growth over the last 5 years. I am glad to welcome the 300+ new colleagues into our team."

Enquiries:

About TPXimpact

We believe in a world enriched by people-powered digital transformation. Working together in close collaboration, we want to help our clients reimagine their organisations, services and experiences to accelerate positive change and build a future where people, places and the planet are supported to thrive.

Led by passionate people, we care deeply about the work we do and the impact we have in the world. Working alongside our clients teams, we work to understand their unique challenges and find new ways forward together; challenging assumptions, testing new approaches and building capabilities, leaving them with the tools, the insight and the confidence to continue iterating and innovating.

Combining rich heritage and expertise in human-centred design, data, experience and technology, we bring over 15 years experience across the public, private and third sectors, creating 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 c.72% of its client base representing the public sector and c.28% representing the commercial sector.

More information is available at www.tpximpact.com.