Tpximpact Holdings (LSE:TPX) — Interim Results

0:01 Good afternoon, and welcome to the TPXIMPACT HOLDINGS PLC interim results investor presentation. Throughout this recorded presentation, investors will be in listen only mode. Questions are encouraged, and they can be submitted at any time using the q and a tab situated on the right hand corner of your screen. Simply type in your questions and press send. The company may not be in a position to answer every question received during the meeting itself. However, the company can review all questions submitted today and publish responses where it is appropriate to do so. Before we begin, I would like to submit the following poll. And I would now like to hand you over to CEO, Conway. Good afternoon to you. Thank you very much, and thank you very much to everybody who's attending this call. I think we've got a a really good attendance today, so thank you for making the time. We're gonna be talking through our results for the first six months of this year.

0:51 We've got a presentation to run through. What we'll do is we'll keep the presentation reasonably short and succinct. So there should be plenty of time to ask questions afterwards. And if you if you put your questions through, then clearly, we'll try and answer as many of those as we can as we go through the meeting. So if we can move on. So very briefly today, I'll give a little bit of an introduction. They're gonna talk through, as I always do, a couple of case studies just to for those of you who are less familiar with TPXIMPACT and the businesses we live and what we do, give you a bit of a flavor around that. Noel will then talk to the h one financial results and also cover our ESG measures. And then I'll talk a little bit about the market, both in terms of generally where the public sector market is for our sort of services, so public sector primarily, but also what that means for us for the balance of this year. So okay.

1:47 So if we go on to the next slide. For those who haven't met before, I'm Bjorn Conway. I'm chief executive of TPXIMPACT. I've been with the business about three years. And largely, what we're gonna be talking through today is a three year plan that we initiated shortly after I joined, and we'll talk through I'm gonna talk through some of the strategic and operational points around that. So we've gone to the next slide. So in terms of our key objectives of the three year plan, essentially, the three year plan that TPXIMPACT and the panoply before undertook a lot of acquisitions and brought some really, really good businesses together. Unfortunately, some of that coming together went less well as plat than planned. And so this three year plan was really about getting the business back from a situation where we had, as you'll see later in the presentation, about 24,000,000 of gross debt. We had an EBITDA leverage ratio on a net debt of about 7.6 times when we had a banking covenant limits of two and a half times to a position now where we're trending towards that EBITDA net debt ratio at about one times, and we've also seen EBITDA progress through that three year period. So really that speaks to a story of trying to take those original businesses to cluster them in sensible groups and to help that business perform.

3:14 And we've made a number of decisions through that. A lot of it is around improving our performance, both in terms of cash management and that conversion of revenue through to EBITDA. And you can see that in these results in terms of the progress around EBITDA margin and gross margin and a reduction of net debt. We've also done a lot of operational streamlining. So we are now managing three business units as opposed to nine when I first arrived. So that's allowed us both to focus on those business units, but also to streamline some of the operations that surround them. We tried to do that whilst staying true to the principles of many of the founding organizations, and that's our employee retention rate is currently at 91%. So we're very proud of the environment we've managed to maintain through what has been a very significant period of change.

4:04 Throughout that, we're obviously a client serving business, and it's really fundamental to us that we remain focused on the value we deliver and the impact we deliver for our clients. So I'm gonna go through a couple of examples as we go through this presentation. Some of clients that we've had for many years and were actual clients of the predecessor organizations and some new clients that have come onboard very recently and the sort of value we create for. So this this sort of story of the last three years has really been around operational streamlining. So a little bit is about looking at what our clients are asking from us and making sure we've got the right people and the right services internally to offer that. Looking wherever we can at the indirect cost and the indirect support to those client delivery services to try and make sure we've got a very lean and agile structure.

4:58 And if you like, the summary for the whole of the transformation program is we really wanted to get the business to a point where we were providing really good solid financial outcomes, but also we built a platform for future growth. A lot of the things, lot of the levers we've pulled during this time, obviously, around utilization. So that's about thinking where do our best people work and how do we provide them with the opportunities to do great work for client. Enhancing profitability, you'll see that when particularly when Noel speaks later about the consistency of that progression, and that's despite sort of market conditions being quite tricky over the election and the periods following the election. Obviously, very pleased about the debt situation now. I think we're in a position where we're operating with very comfortable levels of debt, particularly in line with the profitability of the business now.

5:55 And as I said earlier, the main thing here is about the platform for future growth. And so we're sort of fine tuning our investment in the business really around new business development. So we have a new health partner that's joined recently. We're sort of refocusing some of the new business development team, and we're also very focused where, you know, building on our foundations of very long term and deep relationships with our clients around account retention and growth to make sure that we're making the best of the opportunities that exist in the public sector market. So I've popped this next slide in just to act as a reminder for where we have ended up at the sort of two and a half years into that three year plan. So we go to market through three brands.

6:42 And the reason for having three brands is we're actually speaking to three different client groups, and we wanna be very clear about the proposition and the offer for those client groups. So TPXIMPACT, we call internally the DT business or digital transformation business, but that's really our go to market brand for end to end digital transformation. So that's everything from policy to user centered design to the data analytics and the technology that supports that. Primarily public sector focused. KITS or keep it simple is really aimed at program recovery, managed services, deep technical expertise, tends to operate with the really sort of heavy lifting systems, so payment processing systems, for example. And Manifesto is an agency, so it's a digital experience agency.

7:30 Really concentrates and plays very well in the not for profit or charity space and also in the visits and attraction space where it's all about engaging with people, getting them to come back, and taking them on that journey from being engaged to being active donors. So these are the these are the three businesses that have kind of resolved the initial group of businesses on the panoply into. And as I said at the beginning, I'm just gonna talk a little bit about a couple of client case studies. These I'll come on to those in a minute, but what I want to do first of all is just paint a picture of the landscape of clients that we've got. So if you can go on to the next slide. So a lot of these will be names that you may recognize.

8:16 So we've got a lot of the main government departments represented here. Ministry of Justice, you would have seen our release earlier in the year about his majesty's prisons and probation service, where we secured a £9,000,000 piece of work with the potential for a 50% extension on that. Land registry is our largest client. It remains our largest client. It's a four year £49,000,000 program. We've also got some clients on here who we've had more recently. So to speak to a couple of those, people like the World Wildlife Fund, people like Water Aid, people like the City of London, recently acquired clients. I'm gonna pick up on a couple of these in a couple of case studies. So the first case study really sort of speaks to the fact that we get involved in active problem solving and policy development quite early on in the process. So we're not just producing technology solutions or data analytics solutions.

9:16 So this example here is with the Ministry of Housing, Communities, and Local Government, and this is an area where both in terms of TPX and the predecessor organizations, we've had a really good history and close client relationships. So if you like, the exam question here was, how do we look at the process of house buying, and where do we look how do we look at capturing some of the values? So reducing the number of those sales that fall through primarily because the process is difficult or the data is not quite in the right place. So how can we think about that from the application of clearer policies, clearer data solutions, and technology support to try and reduce those fall throughs? Now the reason why that's a really interesting piece of work is because it gets us involved in the conversations in the department at a really early level around, you know, what sort of problems are they tackling, what sort of solutions exist.

10:14 And you can see in this example, we identified sort of improvements that would reduce the number of fall throughs by about 16%. And because of the scale of things that happen in government, that can lead to a value for the government department involved in terms of cost saving of 231,000,000. So these can be quite significant. And then it allows us to be well positioned for the follow on work. So that's an example from TPXIMPACT that goes to market on the digital transformation space. Another example is RNIB. So one of the longest established charities in The UK, and this talks to our manifesto business. So as I said at the beginning, our manifesto business is very much around being a a digital engagement agency, experience agency. So it's very much about how do you engage with people in the appropriate way? How do you convert that engagement?

11:10 If you revisit an attraction, how do you keep people coming back? How do you keep them engaged with that attraction? If you're a charity, how do you keep them engaged? So either they benefit from the information charity can provide, or they turn into donors and support the charity. Again, as you would expect, there were really hard outcomes to this sort of work. So you can see here working with RNIB, looking at how they actually engage the strategy that sits behind that sort of tools and techniques that they use. We can demonstrate really tangible results. So we speak here to click through rates at the 84% higher than they would otherwise achieve and also sort of getting through through personalized emails. Again, higher click through rate, 63% higher than was originally envisaged.

11:59 So that really speaks to and the manifesto business really speaks to the experience of the people in that business and across TPX generally of people who've worked walked in their client shoes, really understand their business, and can actually help them optimize what they do. So I'm gonna stop there, and I'm just gonna hand over to Noel to talk a little bit about the Half One financial results. Thanks very much, Bjorn, and, hello, everyone. Thank you so much for joining us as I turn to our headline numbers now for the first half of twenty twenty five. And I'd just like to echo Bjorn's comments to start really. It's been a good first half overall in line with the three year plan. We're really pleased. The group has continued to move forward in all key profitability measures and also reduced our net debt despite some headwinds to top line revenue over the period.

12:49 And just focusing on revenue initially, I think it's important to set some context for everyone on the call. So our first half is April to September. And over that period, the first two and a half months were part of the company's comprehensive spending review, which came out on June 11. And in our digital transformation unit, in particular, that goes to market TPXIMPACT, we saw a continuation of the uncertain and somewhat disrupted market that we experienced much of last fiscal year. The remaining months post spending review saw growing pipeline activity, but muted by the normal pausing whiteboard summer period. So as a result, revenue for the six months ended thirty fifth of September twenty twenty five was 36,200,000, down 4% from 37,800,000 in the prior year. Just moving on to gross margin.

13:35 The first half recorded gross margin of 31.0%, an improvement of 2.7% from the prior year of 28.3%, driven by higher average utilization over the period and robust pricing. And adjusted EBITDA was up to 3,200,000, up 900,000 or 39% compared to 2,300,000 in the prior period, driven by the improvement in gross margin just mentioned and the benefit of restructuring actions taken midway through last financial year. So those improvements led to, a better adjusted EBITDA margin of 8.8% for the period, up 2.7% compared to 6.1%, for the same period last year. And that led to adjusted diluted earnings per share of 1.7 p compared to 1.2 p for the first half of last year.

14:23 Net debt, as we've already mentioned, fell to £7,000,000 at the half year, down sequentially from £8,500,000 at the end of last financial year, driven by healthy cash conversion from our EBITDA over the period. And that takes us to leverage at the half year measured as net debt over adjusted EBITDA of just 1.1 times, down from 1.5 times at the end of f y twenty five. And Bjorn will talk about our updated guidance to net debt, in his closing comments. Looking on this chart as well, in the bottom left corner, you can see our revenue by sector splits. And in the bottom left hand side, you can kind of see that 69% of and the bulk of our revenue comes from clients, central government, no change to the last recent periods. But just wanted to add a bit of color here by breaking out that central government revenue and showing a little bit about the different areas and departments that we work with.

15:15 So in the right hand pie chart, you can see that of the central government revenue, 53% comes from projects linked to place infrastructure, particular strength of ours, largely working with his majesty's land registry and the Ministry of Housing, Communities and Local Government that Bjorn just highlighted in his case study. 16% comes from project linked to the environment, 11% from, energy and trade, 10% from justice, and 10% from other areas. So we're reasonably comfortable with the spread of different departments that we are working with that we feel are are good long term priorities for any government. We're also very proud of the relationships we've built across these central government departments, and our reputation for delivering against planned outcomes is reflected in the healthy tenure that we can see on the right hand side of this graphic with four fifths of our revenue coming from clients we've worked with for at least three years.

16:07 So just turning now to the charts of revenue and adjusted EBITDA over time, you can see on the left hand side, revenue in h one twenty six at a slightly lower level to the same period last year. And on the right hand side, can see an EBITDA chart, steady progress over the last three and a half years with gradually increasing adjusted EBITDA and adjusted EBITDA margin moving up from 900,000 adjusted EBITDA and just under 3% adjusted EBITDA margin in in the first half of twenty three on the left hand side of the chart, all the way up to, 3,200,000 of adjusted EBITDA and 8.8% EBITDA margin for the half year results that we're just, reporting. So the last three years have seen a really significant turnaround in the group's finances, and the current structure of three distinct operating units that Bjorn mentioned sets us up well, with a settled management team and a lean supporting cost structure for continued improvements in the future.

17:05 Just turning to indebtedness. We've touched on this already, but I'll start with the net debt waterfall on the left hand side. We closed financial year '25 with net debt of 8,500,000, as I've mentioned. And during the first half of this financial year, the group's generated 2,600,000 of cash from operations, paid interest payments on borrowings of 500,000, made limited purchases of shares into the employee benefit trust of 100,000 and paid 500,000 for long term leases, leading to the closing net debt of 7,000,000 at the half year that I mentioned previously. We're pleased with our progress in reducing net debt over the half, and the chart on the right hand side kind of shows how gross borrowings have also gradually reduced over a longer time period. So we've moved from a gross borrowing of nearly 25,000,000 in f y twenty three through steady debt reduction over the last three years via a combination of disposals of non core businesses, really careful cost control and operational improvements, leading to the gross debt of just over 7,000,000, you can see, for the half year just closed.

18:09 And just to round out this section then, I'm gonna talk a little bit about our nonfinancial metrics and ESG metrics. So we ended the half with total headcount of 552 heads, including associates, of which 405 were permanent TPX employees. Our female representation remains healthy at 50, and our ethnic minority representation was stable and healthy compared to the market average of 20%. Our carbon emissions the half were 699 tons, and our carbon intensity for the period expressed as tons of c o two per million pounds of revenue was 19.3, with a small increase compared to the prior year driven by a small uptick in purchase goods and services. And finally, as Bjorn's already mentioned, we're really pleased that our employee retention rate remains high at 99%, which compares pretty favorably to the IT sector average.

19:00 So I'll hand back to Bjorn now to talk a little bit more about our forward outlook. Brilliant. Thank you very much, Noel. So in terms of looking at the outlook, what I'm gonna do first of all is talk a little bit about the market, and then I'll talk about the balance of this half year. So in terms of the market, obviously, a big factor in the public sector market is the budget, the various budgets we had. So the change of government, then the budget, and then the spending review, which was delayed from March this year through to June, and that's what gives departments sort of three years worth of money. And in the original spending review, so the autumn budget and the spending review, there were several cross cutting initiatives and large investments that were put into those budgetary spends.

19:49 So I've put up here on the slide. I've just picked a few, quite helpfully, tech market view, and did a nice little budget summary. So it's well worth a look if you're interested in the digital transformation space. And, actually, they've also written up our announcement today, which is worth a look as well. But, essentially, the autumn budget that we've just had last week really sort of protected those commitments. So there was nothing in those that budget update that causes us any concern in terms of this money being available. Now the new money in this comprehensive spending review actually becomes available from April next year. So what we are starting to see, we're starting to see our pipeline, both quality and size of deals improve. And I think that's partly the those funding that funding is starting to flow through to departments.

20:39 In terms of where we sort of focus our attention, there there are three main areas. So place and infrastructure, you would have seen on the pie chart that Noel showed. It's quite a high area for revenue for us at the moment. We've got some very large clients in there. So MHCLG and His bachelors land registry are two notable examples. On the latter, we're about halfway through a four year contract as their digital transformation partner, and we're getting close to, you know, the high t high tens, getting close to a 100 statements of work delivered with them. Transforming government really speaks to more of a cross departmental and cross arms length body and into local government focus, and that's really around the digital transformation space.

21:27 And in health, again, we've made some investments recently. We've got a new health partner that started because we see that as an opportunity area. We see that as an area where, there is more opportunity for us. Some of the work we've done over the past couple of years is very, very good and very, very strong, and we'd like to see whether we compete that in more areas. So in terms of the market generally, it feels very positive for businesses in digital transformation, and I think we've seen that in terms of sort of the maintained rhetoric from government departments about the importance of digital transformation, both to improve the effectiveness and efficiency of customer of citizen service delivery. So we go on to the the final slide. So just to really round out, well, what does that mean for this year?

22:17 Client delivery, that's obviously the anchor for all of our work and our activity. We have a high proportion of clients who we've had for many years. Our current engagements continue to go well and extend, which is a really positive sign. As I mentioned before, pipeline quality, we spent quite a lot of time sort of scrubbing the pipeline, particularly having had a disruptive period through various elections and budgets and spending reviews of making sure that the opportunities in there are opportunities that we really want to be focused on. So they fit with our differentiation and the ones that we feel we have a good chance of being successful. And based on our existing engagements, we've got a pretty good line of sight for the rest of this year and particularly around EBITDA visibility.

23:09 And as a result of that, we're confirming our adjusted EBITDA guidance for the year of 6 to 7,000,000, and you can kind of see the trend that we've maintained on that from Nolan's slides earlier over the past three years. Because we're now in a position where we are generating a good level of adjusted EBITDA and we're managing our costs, we're also generating cash. So we're actually the board is adjusting its net debt target for the year. So we we're signaling that that will be low be below 6,000,000 for the year. So we were previously signaling it was gonna be in the order of 7 to 8,000,000, and that brings our leverage target down to one times. So at the half year, as I've said previously, it was 1.1 times, and our previous guidance was in the range of 1.5 times to one times. So what that really does is that gives us a really good platform, a really solid business performance to look at the market as it's developing and to be successful in growing in that market.

24:10 So in summary, we've executed and we are executing against our three year plan, sort of two and a half years into it, into the final six months. We will talk more about our ambitions for the business beyond that when we come back with our full year results, but that gives us a very firm foundation for growth over the next three years. So that's about all we wanted to cover in the formal presentation. We're really happy to answer any questions. So I'll hand back That's for questions. Thank you. Great. And I can see a couple in the window here already. Okay. What I've seen on the screen, but I'll read them out. So there was one around financials, which we cover, and it's about utilization, which I think I'll continue on to talk to.

24:57 So we had a pre submitted question around our financial position and just wanting a little bit of clarity on our, you know, our current financial position and outlook. Hopefully, it's pretty clear from the slides, but the headline response to the the question that was pre submitted around what's the health of our financial position is very healthy, very secure, and stable. We agreed a new long term debt facility with HSBC, which are a banking partner with for a long period of time. We agreed that in the summer. That's a three year commitment with an extra two years to be added on if we wish and allows us to to borrow everything that we need and more to meet our short term capital commitments. The business is profitable and cash generative, and the net debt is falling as we've already talked about. And our net debt is now gonna be under 6,000,000 is our target for the end of the year and less than one times leverage, which is a far cry from the sort of seven and a half times leverage three years ago, which was clearly unsustainable.

25:49 And I think, as we already talked to, we've got a pretty good backlog of work with existing customers, stable long term relationships. So it's a very stable position overall financially that we find ourselves in and stark contrast to a few years ago. Yeah. And just to build on that, if it if it helps with confidence, when we when we bid for work and when we look at new opportunities, we look to maintain pricing. We look we have margin thresholds for bids, and that's all to make sure that we've got the sort of the done all of this work to get the business where it is in the current financial position is in order to maintain that. So hopefully hopefully, that question's well answered. Yeah. So then there's a question. What steps did you take to improve your utilization? Presume you're using software to schedule your staff. Maybe I'll offer a couple of comments. Yeah. That's good.

26:41 Yeah. So, you know, when we think about our utilization, we're looking at our long term skills demand. We're hiring people into skill areas that we think will continue to have long term demand from clients. We're obviously reskilling where possible if we see people with skills that are less relevant to the market, and we're trying to give people a range of skills that will allow them to be busy on a variety of projects and clients over the long term. And I guess the focus in terms of utilization is not just looking backwards, but also looking forwards and making sure that the pockets of teams that have been busy for the last six months will continue to be for the next six to twelve months. So I'm not sure there's one magic bullet to improving utilization other than continued management focus, backwards looking and forward looking. And to the point around of using software to schedule your stuff, we are we're actually spending some time, effort, a small amount of money this year, part of which goes through our one off restructuring and transformation costs related to implementing a new system built by a company called, is all about helping us manage resources, schedule them in the future, do scenario planning around existing margin and potential future margin for new deals we're we're quoting for. So we end together live with that towards the end of the year, and I think that will help the management of that further.

27:55 Anything you got? No. Well, probably only only one point. You'll see that we have a mix of associates and permanent staff and subcontractors. That mix towards associates went up slightly, and that reflected some of the market uncertainty that we saw over the last twelve months or so. You'll also notice that we are recruiting. We're actively recruiting for new permanent employees at the moment, and that's across all of our delivery areas. That's across design. It's across product management. It's for business analysts. It's for data analytics specialists, software engineers, technologists. So we're we're sort of tweaking that a little bit to sort of bring on more of our permanent teams.

28:43 But all of those recruitments, we will always use an associate where there is a very specific skill set required for a particular client, and it's not somebody that we can see long term a long term role for in TPX because that gives us lots of flexibility. But wherever possible, we will also invest in permanent employees and and build our own teams. Yeah. Thank you. So then there's a question, George, which might be better asked by you. Can you scale up enough to win large UK gov jobs to the big IT consultancy players owned? Asked by Brian T. Yeah. So it I I guess there's a little bit about, you know, how big is that. I guess one of the things that we've seen over the last three years is we've gone from a business that was originally winning and scaling up to deliver small single digit million wins.

29:37 We then went through a sort of period, particularly with MHCLG, what was called in those times, but again, around the whole sort of housing at local government space of winning deals just shy of 10,000,000. And then, obviously, as we've gone through there, we've won deals. Our largest one is with land registry at 49,000,000. Now that definitely did require a scale up effort, but it is something that we have done, and we're positioned and able to do that. We're probably not in the in reality, we're not in the position where we could take on a, you know, £500,000,000 contract or £250,000,000 contract, but there are plenty of very significant deals that we can bid for and that we can scale up effectively for. We've we've done it before. We've demonstrated we know how to do it. And, you know, almost every day in our operations, we get clients coming to us, and they need a they need a squad, which is kind of a multidisciplinary team to be stood up very, very quickly.

30:40 So it's a muscle that we're exercising virtually every day of the week. Yeah. Thank you. So then there's a question I should cover around diff I'll just read it to make sure it's clear. Can you just can you clarify the difference between our reported and adjusted profit and our profitable now? So I'll talk this through in the back of our press release. It's sort of buried in the notes, but there is a helpful reconciliation from reported operating loss to the adjusted EBITDA that we talked to. And so if I just call it out, our operating losses gradually shrunk on a statutory basis as one as one would expect given EBITDA is improving. So for the first half of this year, there's a reported operating loss of 1,100,000, and the bridge from that 3,200,000 of EBITDA is 2,400,000 of amortization of intangible assets. So that's amortization linked to the accounting for acquisitions done in the past. That amortization will continue to roll, but it's a noncash cost for us as a business.

31:36 So an accounting legacy of the acquisitions, but not a cash cost that we need to concern ourselves with. We have about 500,000 of depreciation, which is related to the accounting for long term leases, but we're generally pretty CapEx light. So that will remain fairly stable in the future. And then we have 800 k of £800,000 of share based payments, which relates to show incentive plans, which is the right way to incentivize key people across our teams. And then we have £700,000 of restructuring and transformation costs, which is a combination of restructuring certain teams as and where we see the need and the implementation of the professional services tool that I talked about to help us manage resources and plan resources.

32:21 So that's the bridge. It is in the notes and note seven of the press release if anyone wants to read through it. But the short answer is, yes. We consider ourselves to be a profitable business now. We're paying tax, which is the first time in a long time, and we're doing all the normal things what we do as a profitable business to to keep costs under control and make sure that profit is moving in the right direction. But there's one here for you. You're on for. What trends are we seeing pipeline activity and conversion rates? How are they comparing to pre disruption levels? Yeah. I think I think in the in the release, I talk about things normalizing, which is essentially they're coming back to something that's a bit more familiar. So one of the characteristics that we saw around the budget and then the run up to sorry, the election and then run up to the budget when we're everyone was talking about the black hole last autumn and then up to the spending review in June is we saw lots of bid activity being severely delayed.

33:21 So we would have bids actually, we're still waiting to hear on some things that have been delayed well over twelve months. So things slipped a long way in timing, but also some things fell out of the pipeline because they get all the way down the pipeline, and then there'll be a restructuring with the department and the requirement go away with a view to coming back later in a different form. And we're certainly seeing a lot less of that. We are still seeing some delays in the pipeline, but we're seeing a lot more a lot more discussions around some of this new funding that I've been talking about and some of the new opportunities that will come through. It's fair to say that varies by different parts of government. So where we've been, you'll you'll remember that we talk a lot about place and infrastructure.

34:09 That has been a pretty secure part of government to be in for the last six to twelve months. So you can imagine we've got lots of existing and long running engagements there. So those have been, you know, very secure, and we haven't had sort of reductions in terms of volumes or sort of pricing pressure on those. So I guess in summary, the pipeline's feeling more normal. We scrub it really hard because it's a very expensive business to bid for these large government contracts. So we've probably tuned up a little bit how hard we're scrubbing that pipeline to make sure that we're bidding for things that we really want to win, and we think we're well positioned to win. Bill, more on the con yep. This topic area, there's a question from you. When do you expect to return to revenue growth? And I think we talk about the same subject.

34:58 It feels like we're making the right investments in Yeah. Sales and bid team, marketing function alignment to set up that platform for growth. So whilst we haven't put any revenue guidance out there, you know, for any comment on that. Yeah. So, look, one of the principles that we've been working under is that we've been really focused on getting the business into good shape and on delivering the the sort of the restructuring elements and getting the business set up in that three year plan to provide that scalable base. We are doing more to prepare ourselves for the next three years, and that involves looking at the way we find new business. So the new business development team, the way that we look after our accounts, our current clients, both in terms of retaining those clients, because obviously the easiest thing to do is to retain an existing client. It's even easier than winning a new client, and how we grow within those clients.

35:54 And we've made some you know, we continue to make changes in the business. We brought marketing team alongside our growth team, so it's far more focused on early client engagement, building those relationships, positioning ourselves well. We've made some changes in the bid team. We've brought some new people in. These are the people who actually write the proposals, which is a really important part of working in government. And we're we're recruiting people. I mentioned earlier on in the call, I think, about a new health partner we've brought in because we feel that's an area that, you know, we've probably been you know, we could have done more. We can do more going forward. So area where we're making a selective investment. So these are really about sort of deploying our resources, getting people lined up behind where we think the opportunities are.

36:43 New business in this first half, we put some numbers in the release. They're a little bit shy still of where we were in f y twenty four, but, you know, a lot of that comes down to these larger bids, which can be, you know, pretty significant for us. And we've gotta be on the right side of the one or 2% that determines whether you're successful and you win or whether you come a close second and you end up with nothing. So I think given where the market is, we feel very confident about the market ahead. We feel very confident that the business is set up well. We're making some pragmatic changes around marketing, new business development, account management, account retention, and bidding process and our qualification process to sort of stack the odds in our favor.

37:32 Yeah. Super. Thanks. Hopefully, that answers the question. So the next question is around AI. And, yep, what's our position on AI? Do you have examples of work in the space? I'm aware that it comes into a lot of our engagements. I see it in manifesto and, obviously, what we're doing in DT and discussions we have with coming to our offices, but do you wanna expand on that? Yeah. Absolutely. It's good questions. Thank you for that. There is actually something in the release. There's a little a little comment I put in there about using AI to support case casework delivery in a government area. So that's a very typical use where you're using it to augment activity. We have good representation, good connections with government departments. So about ten days ago, we we had a lot of the sort of the AI technology leads from a lot of bigger government departments in our offices, our head office in the Hickman, and they're very much exchanging their experiences in the AI space, and we were also lending our experience and and credibility there.

38:36 Our positioning is that virtually on on most of our large engagements, AI plays a role in it. We don't have many engagements which are purely AI engagements, so it tends to be part of the delivery. It'll be a statement of work or it'll be part of something that contributes to a statement of work. Our position very much is that because we are very familiar with the public sector environment, we understand the benefits that can be gained from more effective delivery of system services, the efficiency benefits that we can gain, but also the importance of maintaining data in a safe environment and using AI in an ethical way. So I guess what we're what we're seeing is there are a number of AI pilots going on across government. We see it embedded into our engagements.

39:25 We don't see sort of people just where people don't just come and buy AI from us. Having said that, you know, for the client side in Manifesto, which is our digital experience agency, a lot of the clients there are dealing with the challenges of how to operate with websites where they're trying to provide information perhaps for medical patients if they happen to be a medical charity and how to actually encourage people to get to the website to get to the real information rather than just use the AI synth esized summary and not get to the website. So our our clients have some real challenges to navigate through the use of AI and the use of chat GPT by people. Probably the final point is that we do use AI to augment our own delivery.

40:16 Our business is very much a people oriented business, so our clients really benefit from our people working alongside their people. So that person to person interaction is really key. So we tend to use AI as an augmentation tool, so it will allow us to provide better products and better services and deliver those more effectively. We do actually have a small AI data analytics solution that we provide through the Oracle Cloud. But that's really sort of for us. That's a that's a really good idea for us because it puts a toe in the water and allows us to see how other clients deal with those sort of solutions, which helps inform our broader work. So I think, you know, AI is here to stay in terms of the impact across government.

41:06 It's not something that we're gonna sell as a standalone proposition. And then really in a public sector context, it's really important how you use it. And so that sort of ethical, safe, pragmatic approach that we've adopted seems to be going down really well. Perfect. Thanks, Bjorn. And I can see George has asked a bunch of questions, which include AI. I think we've heard that part. Thank you very much. But to pick up George's other questions, George says, thanks for the presentation. Any disclosure on revenue for the three divisions, please? We don't disclose that at the half year. We do at the year end. I think it's probably fair to say that there there's no material change in the split of our revenue by segment compared to the year end. So I hope that covers your question. We talk about digital transformation a lot because it it's the largest segment of our group, and, therefore, it can make the weather, but we're we're fairly comfortable with performance of both manifesto and kits as well. It's fair to say.

42:00 Nice work on DSO management. Are there any lessons to draw out for the full year in working capital? As George's second question, the short answer is there's nothing particular that I call out in terms of working capital. We do the normal things in terms of collecting cash on a sensible basis. We have the luxury of sensible government clients who pay us very regularly without needing an an awful lot of chasing. So I wouldn't expect any large movements in working capital over the course of the financial year this year. And there was then a question around AI, which I think we've covered. And maybe, George, your final question was I'll read it, but it talks to restructuring and growth orientation. I appreciate restructuring is more inward looking. But in terms of making you more growth oriented, do you have a must do list, some of which we've talked about in terms of investing in sales a bit function? Yeah. And and, George, the the comment I'd make on that because we we said it on a couple of previous calls. When we do look at the shape of the organization, we do very much look outward because, actually, you know, we take the perspective that we are there to serve our clients and meet our clients' needs. So, therefore, when we shape the organization so characterized by the three brands, if you like, the three business units, Those are really designed around the customers that we're gonna serve with those businesses and the best way of showing up to those customers, and that pervades everything that we do. You know, every decision we make will have an element of how does that help how does that help our clients, and how does that help us be more successful

43:30 than winning new business or delivering for those clients. So, actually, funnily enough, very little of it is sort of inward looking. It's mostly outward looking. And how do we sort ourselves out to be, you know, as fit as possible for that external world? Yeah. Great. Okay. And I think we're just probably moving into our last question now, and then I'll Okay. Ask you to give closing comments and ask Alex to help us wrap up. And the question was, is there any plan to restart dividends in the future? The short answer is no. When we think about capital allocation strategy, as you have seen in terms of the group structure and what's changed over the last few years, the important thing for us is to reduce our debt. And that's because when investors look at us compared to maybe other IT services companies, some of them have net cash, and we are still carrying net debt. So we wanna remove any potential buying obstacle from new investors, and we'd like to make ourselves as safe and credible as we can do.

44:25 So the short term capital allocation policy is to focus on debt reduction as opposed to dividends as opposed to share buybacks, which I don't anticipate in the near future. And to the extent that we can contain our costs and do the things that we should do to make sure the operation is very lean in everywhere everywhere it can be them to use any of that money to fund investments in organic growth largely, which will be tied into sales and and bidding. And then I suppose the only thing that we may look at if we're in a nice position of having excess cash in future years is whether we look at modest m and a. But I would say that our recent history doesn't give us the the license to go and do lots of large m and a in the short term.

45:10 We'd like to be in a position where the market believes that we're rated fairly compared to our peers, and we have and a a a currency for acquisitions in terms of a healthy share price as well as cash in order to do that. So I think that's still some way for us to be able to. Okay. Alright. So just to just to summarize, I guess, hopefully, what you've heard today and you've heard consistently from us is that our main priority has been to establish a business that is very secure fundamentals. So really good conversion of revenue through to EBIT. There are managed well. You can see that on some of the slides we've taken you through in terms of the progression. You can see the impact that has on our net debt position, which has gone from, you know, what was frankly quite precarious position three years ago to a very, very solid position now for a listed business and particularly compared to some of our private sector comparators.

46:06 We've done that whilst trying to maintain a real focus on our clients because we are a client serving business. So maintaining that client delivery, creating a great environment for our people. There's been a lot of change in the business, and it's a lot for a services business to go through. So it's really important that we're coming towards the end of this sort of three year plan with a well shaped business. As Noel's talked about, we've got a few systems improvements that we're making at the moment, which should help us work even more efficiently and more effectively. With the market where it is currently, it feels like the digital transformation market, the demand is still there. And sort of AI has turned into something that's a little bit more pragmatic and practical, and it's permeating the work we do, which is a good sign. So it feels like we the market's in a reasonable place, and it feels like we're fit in order and in a good position to both be a platform for growth, but also to be able to maintain our sort of margins as we move forward in that market.

47:10 So we're pretty pleased with where we are. We're sort of, you know, at sort of tweaks and changes in the business now are really oriented towards that growth dimension, towards new business, towards account management, account retention. And we'll be talking a little bit more about what the next three years have in store for TPXIMPACT when we come back with our annual results. So with that, I will hand back to Alex, and thank you very much for your time. Really appreciate it. Fantastic. You and Noel, thank you very much indeed for updating investors today. Could I please ask investors not to close this session? As you know, I'll be automatically redirected to provide your feedback in order that the board can better understand your views and expectations. This will only take a few moments to complete, and I'm sure will be greatly valued by the company. On behalf of the management team of TPXIMPACT HOLDINGS PLC, we would like to thank you for attending today's presentation, and good afternoon to you all.