TPXimpact Holdings plc (TPX) Earnings Call Transcript & Summary

Good afternoon, and welcome to the TPXimpact Holdings plc Full Year Results Investor Presentation. [Operator Instructions] Before we begin, I would like to submit the following poll. And I would now like to hand you over to CEO, Bjorn Conway. Good afternoon to you, sir.

Thank you very much. Thank you for the introduction, and welcome, everybody. I really appreciate you joining this call and your interest in TPX. Before we get into the presentation in full, I think I'd probably just like to make a couple of key points. The first is -- and these are sort of themes that you'll see coming through the presentation. The first is last year was a difficult and unusual year. And I'm very pleased with the way that the team has responded and the way that we've navigated that. So you'll see, as we go through the presentation, revenue is down, but absolute profitability as measured by adjusted EBITDA is up, and is up by 21% in relative terms to the year before. So that's a good outcome. And we've also maintained a good position with respect to our net debt and our banking covenants. So we've demonstrated resilience in the business, and we've continued to improve it during what was a challenging year. I think the second aspect is that the business is well set up in the 3 business units that are focused on their individual clients. So we are sort of lean in those business units, and we are ready and we are currently dealing with a high volume of client work, but we're also in a position where we can grow and expand. And then I think the third comment is we had the comprehensive spending review just over a week ago. Obviously, a large part of our business is our digital transformation business, largely focused on the public sector. So that's quite key and critical to us. I think the important point to draw out is the spending review did not have any surprises in it. It talked very consistently about digital transformation, areas that we are strong seem to get good investment and good settlements. So things like social housing, planning, infrastructure, health. So for us, it seemed very positive and I think should set the scene for a strong market over the coming months and next few years. So having said that, we've got a presentation to take you through. And before we do, I'd like to introduce Noel Douglas, who joined us as CFO earlier this calendar year. So Noel, do you want to say a few words?

Yes. Thanks, Bjorn. Thanks for the intro. My name is Noel Douglas. I'm a qualified chartered accountant having started my career at EY. I've been working in finance for 20 years, and this is my third role in professional services and digital transformation, specifically. I've come from a company called AND Digital, who have annual revenue of about GBP 140 million and then before that, a company called Endava, where I spent 5 years during a period of pretty high growth for the company, overseeing multiple acquisitions and integrations, multiple setups in new countries over a period when the business quadrupled in size from GBP 200 million to GBP 800 million. So I've been here since February, 5 months in. Really pleased to be here, really enjoying my time so far working with Bjorn and very much looking forward to what's ahead of us.

Brilliant. Thank you very much, Noel. So if we go on to the sort of the summary slide for what we've put out in our update. So key points to draw to your attention here. I mean, revenue is down 8%. We're still bigger than we were a couple of years ago, but that reflects the sort of market conditions over the last year. We saw, to give you an example, some of our major frameworks were down 25% in revenue across the sector. So 8% reflects some of the backlog we have coming into the year and the way we've navigated that year. As I said at the overview, we've concentrated very much on the things that we can control and then making the business better, so conversion from revenue through to adjusted EBITDA. So adjusted EBITDA is up 21% relative to the prior year and currently running at an EBITDA margin of 7.3%. So we're pleased to have had that progression despite some of the challenges on the top line. Net debt, which Noel will talk about a little bit more, still very well and comfortable within our banking covenants. And I'll let Noel talk to sort of the adjusted diluted EPS. One important point is that TPX is probably a unique organization actually in our field in that the people that we have really turn up to their clients with a deep sense of purpose and they're really interested in helping our clients deliver the sort of social impact, which is really important from a public sector point of view that they're looking to achieve. And so one of the things about last year, we've navigated last year, and we've tried and I believe we've succeeded in maintaining sort of the integrity of what TPX stands for, particularly for team members and employees. So the retention rate remains very, very comfortable for our business. We're happy with that sort of level. Our headcount obviously reduced slightly because we made some structural changes to reflect both the trading conditions that we had, but also what we anticipated would be the future demand for our services in particular areas. It's good that our female representation remains very strong. So 51% is a good number. And also, we've continued to sort of focus on carbon reduction. So you can see the lowering in the figures there. In terms of our revenue split, it's pretty consistent year-on-year. So there's nothing really to draw to your attention there. We're obviously still quite exposed to the public sector, which was a challenge last year and hopefully will be a benefit as we go through this year. Just as a bit of a reminder, this is important for us because it's part of our differentiation in the market. We talk about people-powered transformation. What we really mean by that is that a lot of what the work that we do is about the interactions with citizens, users of services. So it's important to take their perspective when thinking about how we approach work and the work that we do. It is also a reminder that it's our people that make the difference. And in the world that we increasingly talk about AI and we talk about other tools, it is actually the understanding of the policy agenda if you're in a public sector environment and understanding of the particular challenges within the department and how you actually drive change and make things happen is really key to what makes TPX stand out and it supports our very strong delivery track record with clients. We are in the second year -- or sorry, we're at the end of the second year of our 3-year plan. So in the first year, you'll remember that the business was in a very different position. We had quite high levels of debt. We had very low levels of profitability, and we had quite a fragmented business. So the first year was really about balancing sort of the impact we are delivering and the value we're creating for clients, but actually trying to do that on a more commercial basis and make the business more secure. The second year, the year we've just completed, was really about rationalizing our business into 3 business units, which have put a very clear focus on their clients and really setting that platform for future growth through that. And then the third year, as you can see, there is about growing and differentiating. So it's really about using what's special about TPX, the deep relationships, the framework access, the track record, the people and capability we've got to grow as the market comes back. One other small point to make here is that we're obviously at the end of our 2-year -- year 2 of our 3-year plan. We'll be working over the summer to talk about the next 3 years of TPX's journey when we come back in the autumn. In terms of some of the specifics on the last year, so a key priority was to remain resilient, particularly what we saw in the market, in the public sector market, which is the largest part of our revenue. A lot of our bids and opportunities are quite large. So you get quite binary outcomes. If something is delayed or canceled or descoped or we don't win it, that can have quite a big impact on the business. So it's quite a challenging environment to navigate our way through. So our priority was to navigate through that safely. We've simplified the business, as I've just touched on. I think that leaves us in a really good position because each of those areas has got a very clear focus on the clients they want to deal with and the sort of services they want to deliver. As part of keeping the business safe and a part of improving the business, we've also looked hard at our internal processes and the data that supports those so that we can actively manage utilization, which is both good for our people because it means they spend more time with clients to get on to more interesting work, but also has an obvious positive impact on our financial results. I'll let Noel talk a little bit about headcount. And as I've mentioned before, one of the key things that's really important to us and also the people who work within TPX is we continue to drive an inclusive or lead an inclusive and purpose-driven business. So it's great to see the gender pay gap reduce over the year. Ethnic diversity remain very, very good relative to the U.K. population and our industry. And as I said earlier, we continue to grow our focus on other ESG measures such as carbon usage. So I've got 3 quick case studies just to take you through. And we do -- we use sort of 3 every time we come to market. It just gives you a bit of a flavor of the sort of work that we do. So I mentioned earlier about people, and I guess a great sort of manifestation of that is a city council. So Manchester City Council spends hundreds of millions of pounds a year, sort of best part of GBP 1 billion a year, on delivering services for its constituents. And it's really important that they both understand and buy into what's being delivered. They understand the impact, they understand some of the trade-offs that are being made and they also appreciate the outcomes that are delivered because otherwise, it's very difficult for a council to be sort of operating in a positive environment and particularly in the future if things like council tax are going up. So this is really an example of a piece of work where we bring some of the inherent thinking, the inherent approach that we have in TPX, and we help to upskill a very large council like Manchester City Council to have some of those skills. So the ability to go out, understand what people need and want, articulate that in the language that's appropriate so they can engage with it and understand it and then actually feedback some of the benefits. So as we talk about here, we talk about 10,000 responses, which is pretty good. And as I say, when you're spending hundreds of millions of pounds, you want to make sure that, that spend is being appreciated and recognized and seen positively by people in your area. The second example is really around health and the delivery, the improvement of care pathways. And the nice thing about this example is it actually brings together a lot of threads. So a lot of work was done to look at the underlying data and the data architecture that NHS Sussex had to make sure that data was accurate, it was up to date, and it could be presented in a way that was answering a real business need for them. And the need that they have was they needed to know exactly where patients were on a care pathway. They needed to bring that together on to a dashboard. So the data, obviously, needs to be very resilient and right. And the sort of positive outcome that, that gave them is it allows them to discharge patients safely and in many respects, more quickly into a social care environment. And the obvious advantage of that for the NHS is that, that bed can then be used to treat another patient and take them on their care pathway. So it's all about how do you actually get more efficient use of the assets that you've got in the NHS, which is very top at the moment. And then the third area that we're talking about is a client that we're really proud about. So Trussell Trust, the largest food bank provider in the U.K. They have -- because of their scale and because of the nature of what they do, they've got a very particular sort of need, and that's to engage with people who use the food banks, and some of those will be digitally native and some of them will have some of the most basic technology that is available. So you need to provide a range of access points and keep things fairly straightforward for people to access their services. You also have a very large number of volunteers who you want to keep engaged. And then you obviously have a large number of donors as well because you want to keep the sort of supply of food into those food banks going. So it's a real digital transformation challenge, a real opportunity for our Manifesto business, which led on this engagement to really look at how do you engage people, how do you promote sort of donations. So fundraising is something that's very, very -- a real strength of Manifesto, how do you do that in a way that you're providing a digital infrastructure that is efficient in its use of carbon, accessible to a wide range of people. So I think it's a really great case study, and it really supports Trussell Trust in their sort of charitable mission. So I'm going to hand back to Noel now to take you through a bit more of the financial and ESG results, and then I'll come back and talk a little bit about the market and the outlook. Over to you, Noel.

Thanks very much, Bjorn. So just going through the headline numbers in a bit more detail then. Revenue for the year ended March 2025 was GBP 77.3 million, as Bjorn mentioned, down 8% from the prior year of GBP 84.3 million, primarily as a result of the change in government, slow customer decision-making and spending controls linked to that in place across most departments during the period. Gross margin closed the year at 28.6%, an improvement of 3.5% from the prior year of 25.1%, driven by higher average utilization over the period. And adjusted EBITDA was GBP 5.6 million, up 21% or GBP 4.6 million in the prior period. As a group, we went through a restructuring in the first half of FY '25, reducing the number of roles, particularly in billable areas to better align our capacity and skills to the level of client demand that we were seeing in the market. And that rightsizing has helped to underpin our gross margin and adjusted EBITDA progression compared to the prior period. So you see that flowing through as well into adjusted EBITDA margin, which was 7.3%, up 1.8% on 5.5% in the prior year and also flowing into adjusted diluted earnings per share, which closed at GBP 0.03, up 43% on GBP 0.021 in the prior period. Net debt grew slightly year-on-year from GBP 7.1 million in the prior period to GBP 8.5 million at the end of FY '25, driven mainly by movements in working capital and some in-year restructuring costs. But leverage, important to say, as measured as net debt relative to rolling 12-month EBITDA, at the end of FY '25 was 1.51, broadly in line with the prior year of 1.54. So leverage is in a good place and well within our banking covenants. And then just closing off this slide and the numbers here. Gross borrowings at year-end finished at GBP 13.2 million, down from GBP 16.2 million in the year prior, with a further GBP 1.5 million paid down post period end as we seek to optimize borrowings and minimize our interest charges. So turning to some of the charts. On the left-hand side, you can see our revenue performance over the last couple of years; in FY '23, GBP 69.7 million, substantial growth into FY '24 and then slightly more challenging market in FY '25, but still sees us at GBP 77.3 million higher than we were 2 years ago. And then on the right-hand side, you can see the positive progress we've made on adjusted EBITDA margin over that same time period, moving from 3.3% margin in FY '23 to 7.3% margin in FY '25. So just turning to the reconciliations and going through the reconciliation of operating loss to adjusted EBITDA. We recorded a statutory operating loss of GBP 8.7 million in the year. And then moving to the right-hand side, we have backed GBP 6.3 million of amortization and depreciation, GBP 4.5 million of impairment charges related to goodwill and GBP 2.1 million of restructuring and one-off transformation costs and GBP 1.4 million of share-based payments/charges linked to management incentive schemes, which takes us to GBP 5.6 million of adjusted EBITDA for the period. Looking at our net debt waterfall. Here, we kind of see the bridge from the year prior to the closing point at the end of FY '25. So we closed FY '24 with GBP 7.1 million of net debt. During the period, we generated GBP 1 million of cash from operations, which was sort of offset by what would otherwise have been larger if it were not for working capital movements against us over the course of the period. We received a further inflow of GBP 0.4 million of corporation tax credits. And then those movements were offset by interest payments on borrowings of GBP 1.1 million, share buybacks of GBP 0.7 million and long-term lease payments of GBP 1 million, which takes us to our closing net debt of GBP 8.5 million for the end of FY '25. Moving now to some of our nonfinancial metrics. We closed the year with headcount of 608, including associates, of which 431 were permanent TPXimpact employees. Our female representation remains fairly healthy and stable at 51% of our workforce. And we're also pleased to see our ethnic minority representation being broadly stable at 20% and comfortably above the average of the U.K. as a whole. Our gender pay gap for FY '25 closed a little more than the year before and ended at 7%. There's clearly still more work to do in this area, but nice to see it moving in the right direction. And we're really pleased that our employee retention rate of 86% remains fairly high, certainly relative to the IT sector average that we're part of. And finally, our carbon emissions during the period were 1,289 tonnes, which is down 23% on the previous year. And our carbon intensity was down 16% from 19.9 million tonnes per GBP 1 million of revenue. In the prior year to 16.7 tonnes per GBP 1 million of revenue in FY '25. So with that, I'll hand back to Bjorn to talk more about the market as we see it following the government's comprehensive spending review.

Thank you very much, Noel. So I'll give a quick overview of the market, and I suspect there will probably be some questions in the following section about spending reviews and various other things. So over the last 12 months, we've seen -- if I talk primarily about the public sector market as that's where the majority of our revenues come from. We've had an election, we've had some challenges around the government's fiscal position with a GBP 22 billion hole in their finances and various spending constraints and changes that have come on since then. About a week ago, on the 11th of June, we had the Comprehensive Spending Review. Key things about that, it's the first time in the decade that we've seen a multiyear budget so it gives people a bit more certainty. So effectively, the balance of this year and the 2 following years in terms of the budgets that they're likely to have to spend. It wasn't full of surprises for us. I think, really, it was a confirmation of what we've heard several times since the government came in. And you may remember when the new government came in, one of the first things -- one of the first structural changes they made was they pulled government digital services, the incubator for AI and also the cabinet offices CDDO area, which is a sort of digital data organization together in one area, and that was to drive digital transformation and AI across the government state. So we've seen that echoed in the Comprehensive Spending Review. We've seen departments getting admin improvement challenges that average about 10% across most of the departments over the next 2 years. So there's a real drive to improve effectiveness, improve efficiency and use digital transformation services. I mean other things that we've -- obviously, key things to pick up, the investment in social housing, an area we're really strong is housing, planning and infrastructure, so anything related with the place agenda. So that will help sort of energize that area. It's good to see investments in health, and that's an area that we are investing again in our growth teams around the health agenda. And in terms of what we -- how we position ourselves, I think the way of thinking about TPXimpact is that we can provide the end-to-end service in government and we've got a very clear business in Manifesto, focused on charities, museums and attractions. We've got a clear business in kits that's focused more in terms of deep technical architecture questions and sort of more legacy operational IT. We've got businesses that have got framework access, good capability, good track records, have demonstrated that they can run large multiyear engagements. So as this market starts to come back after the Spending Review, we're very well positioned to actually grow. And the other aspect of it is there are certain things that we have to hold as a business because we are a listed business, and we are run on a professional basis. So a lot of those sort of core costs of the business will not scale as the business scales. So that, in turn, gives us opportunity to improve the financial performance of the business as we go forward because we can grow the revenue-generating parts without having to grow the indirect parts by the same quantum. If we go on to the next slide, just talk a little bit about current trading and outlook. So in terms of the outlook, key things around there on the Spending Review, I mean, that's obviously quite important to us. We'd expect to see because of the time that the Spending Review announcements take to get through into sort of authorization letters within departments and then for people leaving programs and then for procurement activities to go through, I guess new things we're probably expecting to see more sort of at the back end of the first half and the early part of the second half of this year. But we are seeing sort of increased confidence in government departments now, which is great. I think the -- we set out our sort of aspirations for the year. So we've talked about continuing to improve our adjusted EBITDA margins. So we talked about a range of GBP 6 million to GBP 7 million for the year, which again continues that trend that we've had for the last 3 years of improving our EBITDA. Our focus is still on reducing net debt, and we'll continue to bring that down, and that will accelerate as EBITDA clearly increases. And one of the things that we're focused on over the summer period now is looking at -- because we're coming to the end of our 3-year plan -- is looking at what we do for the next 3 years. So really putting together a strategy that will underpin how the market is changing for our services, how we're adapting our services, how we're embracing things like AI, both in the delivery of our services and in the types of services that we offer to our government clients, and we'll share that in the autumn. So in terms of current trading in the first couple of months of this year, I mean, the key highlights around that is the pipeline remains strong, but it has remained strong for a while, but it's been slowed down as things have moved to the right. We're still seeing a little bit of that, but not quite as much as we saw during the middle part of last year. Very pleased with our new business performance in the first couple of months, with a good engagement at the Department of Business and Trade. And then also probably just worth emphasizing the importance of the engagement we won at His Majesty's Prison and Probation Service. Because one of the things on the government's agenda, one of the things that they really need to focus on is prison spaces and prison overcrowding, and this is a digital solution that will help address some of those issues. So really, really high on the government's agenda, may not have featured hugely the Ministry of Justice feature hugely in the comprehensive spending review, but it just shows where you've got a really important policy priority, we can actually provide really good support around that and make a big difference. So that's the end of our formal presentation. I'm happy to go for questions, and then I'll do a little bit of a summary at the back. So thank you very much for listening.

[Operator Instructions] While the company takes a few moments to view the questions submitted today, I would like to remind you that a recording of this presentation, along with the copies of the slides and the published Q&A can be accessed via Investor dashboard. Bjorn, Noel, if I may now hand back to you and kindly ask you to read out the questions where appropriate to do so, and I'll pick up from you both at the end. Thank you.

Perfect. Thank you very much. Yes. So we have a question here on AI. How are you using AI capabilities? And where do you see this going within the business?

Yes, brilliant. Thank you very much for your question. So there are probably 3 parts to this -- got 3 parts to my answer to this question. So we clearly use AI capabilities ourselves. So we use it in running our own business. We've been using AI for a long time in sort of previous formats. We use it for things like access to our policies so that people can get in there. We provide AI tools to our teams because it's really important that our own people are familiar with AI. So they know how to prompt, they know the limitations and know what some of the benefits are. In terms of our clients, we provide a lot of advice at the moment based on our own understanding and the expertise we've got, particularly within the public sector, there's a lot of interest in the ethical use of AI and also how to use AI in a context where you want to keep your data secure. You don't necessarily want to put it on to big sort of worldwide commercial infrastructure. And then the third element is we're incubating various AI tools that we can use to complement our work. So part of the sort of the heritage of this business is a very strong data analytics background. So we're sort of looking at that sort of combination of data analytics and large language models, bringing those together to provide really tailored solutions, primarily for businesses at the moment, funny enough, rather than public sector, but where you need to have really robust, really precise sort of dashboards and using AI capabilities to make those easier to use and easier to manage and more versatile.

Thank you very much. We have a question here regarding employee retention. How are you managing this, and the delivery of quality and shifting the split of workforce between perms and contractors?

Yes. So I'll crack this and Bjorn, please do fill in afterwards. But I think it's worth saying that our employee retention of 86% is fairly high, so we're not actually getting that much churn. It's a fairly healthy level. We're always looking at the split of permanent staff versus contractors overall and how we deploy to clients, it varies engagement by engagement. It's important to say that the contractors we present to clients present no differently to permanent staff. We're trying to put the best talent we can find in the market in front of our clients to deliver the outcomes they need. So if there are certain niche skill sets that we don't think have consistent demand in the marketplace, we'll happily find a contractor we think can meet that need, and we'll keep them on for as long as the engagement merits it. They will be part of a blended team. So generally speaking, the client will see no difference between how they're interacting with a contractor or a permanent number of staff. We look at the balance of permanent versus contractor staff, mostly around somewhere between 70-30 and 80-20 because there's a natural healthy balance between consistency of delivery, understanding of clients' needs at deep technical level and remaining close to the account many cycles and years and also optimizing the margin we can generate from those engagements.

Could we stick with you now to talk about the net debt position and what our plan for that is?

Yes. The net debt does show an increase from FY '24 to FY '25. It's important to call out, we had some working capital swings over the course of FY '25, which is the main driver for that. Our medium-term aim continues to be to reduce net debt, and you'll see in our guidance that we're aiming to get to the bottom end of 1 to 1.5x leverage at the end of FY '26. So that will be a reduction from 1.5 right now. And I think we're making reasonable progress in that regard. We are also fairly comfortable relative to our banking covenants. So it's not an area that we're under any great stress or pressure from a banking point of view.

And I think probably just to add to that, we're in a very different position to the one we were in 2 years ago. At that stage, our sort of net debt position was pretty much what was unsustainable. So it has come down significantly over that period. I acknowledge the person who asked the question that it has gone up slightly over the last 12 months. But as Noel says, that's largely due to timing around working capital flows.

Can we kind of talk to some of the kind of benefits of B Corp certification and kind of our current position on that?

Yes. So B Corp is something that we've held for just over a year. And really, what it did is it provided a real fill up to our team members and also sort of demonstrated that the things that we were doing anyway, so our approach to business, our approach to being an inclusive employer, reflecting our clients really, which is one of the things we do very, very well. We bring a good, diverse, gender diverse, neurodiverse workforce to apply to client problems It was really a sort of external accreditation that what we were doing was recognized to be very good practice in the wider marketplace. In terms of B Corp itself, the cost of maintaining B Corp isn't a particularly high cost. The regulations that all businesses now have to meet have in some way risen to be close to B Corp level. So it's less of a question about is B Corp a valuable thing from a financial point of view or not. It's certainly valuable for our employees. It certainly puts us in the right positioning around social value, which tends to account for between 10% and 20% of marks on a government procurement. So we start from the right point in that respect. And I think B Corp at the moment, we've got a 3-year -- accreditation last for 3 years. At the moment, it provides a really good external accreditation of what we're doing. And I think going forward, we will either reaccredit with B Corp or we'll look for something else that provides that sort of degree of confidence and underpins the way we approach anyway.

Thank you very much. We move to our final question. So please do submit any more if you have them. The U.K. public sector is moving into orbit following a difficult period with new administration. Do you have any line of sight on pricing or day rates or how are these progressing?

Yes. No, it's a very good question. Maybe I'll talk a little bit and I don't know, Noel, if you want to chip in on that one. I mean, certainly, the public sector is a very, very large environment. Obviously, if you narrow it down, we think we're in the right place around digital transformation and the sort of approaches that we take. So we're agile, we can tailor things. We're very sort of empathetic with our clients' particular needs. So it feels like we're in a good position. In terms of pricing or day rates, the environment is still dominated by framework. So they tend to keep day rates at a sort of a fairly consistent level. So it's an environment that we do have to be very efficient and very effective in how we deploy people in order to meet those rates. We are looking as part of our strategy, and we're already doing it from a day-to-day basis as to how we can use AI and other tools to deliver more value and be efficient in that public sector environment. We're not seeing a huge movement towards value-based pricing or outcome-based pricing. So we are still -- the majority of our work is still on a time and materials basis. So it is linked to day rates. I think the general trend has been that day rates have been sort of relatively flat for several years now. So we have had to become more efficient as other organizations will be operating in this environment. And I don't see a particular reason to expect that to change in the near future. What we do try and do is we try and innovate, we try and differentiate so that we can stand out from the pack, and that does allow us to, in some cases, attract a premium. I don't know if there's anything that you want to add to that.

Maybe just the frameworks we're on have lasted for some time, but the frameworks come out for renewal most often. So we will be involved in positioning ourselves for new frameworks for certain indexes before. But in certain frameworks, rate card increases basically aren't allowed for and other ones they are, and so we have benefited in some cases from uplift to framework day rates and even have fairly constructive and productive conversations with certain clients where we can demonstrate that we've experienced the cost of living inflation that many others have. And they recognize the good quality work that we're doing, so they're open to discussions around moving up rates. I think that's offset by obviously, government being in a mood of wanting to control the spend they have on external consultants to a reasonable.

We've got two questions around EBITDA here, so you might be able to tie them all together. So well done for improving EBITDA with a lower revenue. Did improve utilization play a part in this? And yes, talking about margins and how they're improving over time kind of post the heavy lifting we did last year, restructuring, et cetera.

Yes. Improved utilization did play a part in improving EBITDA for sure, making sure that we consistently have the right balance of team and skills to meet market demand is key, and we can't afford to run large benches of teams who are billable long periods of time. So yes, improved utilization is a key part of how we develop EBITDA over time. Is there anything I've not covered in that question?

I think there was a question around the outturn from last year relative to the beginning of the year in terms of EBITDA. We concentrated very much on making the business more effective. So absolute EBITDA did grow. It didn't grow quite as much as we had anticipated because we had anticipated revenue being stronger last year because at that stage, pre-election, the signaling from government was that they were going to rapidly come to market with lots of ideas and lots of initiatives, and they hadn't talked about GBP 22 billion spending shortfall. So essentially, last year, we concentrated very much on improving the effectiveness of the business, which is why you saw EBITDA go up by 21% on the previous year and improved to 7.3% absolute margin during the year. And I think that sets us in a good position for times ahead because we have those well-practiced disciplines in the business around cost management, utilization management, recruiting people on a strategic basis for the work and the capabilities that we can see are going to be in demand.

And it's probably worth also mentioning, Bjorn, that when we look at the largest frameworks in public sector, G-Cloud and DOS, the overall aggregate spend was down 25% in FY '25 versus the year before. So what we've seen in terms of the market, we've experienced in our revenue shrinkage is actually modest relative to the overall decrease in spending in public sector last year.

We've got a question here regarding kind of leadership and Board level and the diversity on that. Do you want to give an update?

Yes. So a good question. So we talked a lot about diversity. We had a question about this call, and is it reflective of broader leadership team. So if we look at the leadership team we have here in TPXimpact, 2 out of our 3 business units are run by female leaders, and run very well by female leaders. We have a lot of diversity at the senior levels of the business and our Board, we have a good gender mix in terms of diversity as well. As an organization, we also look beyond sort of the physical manifestations of diversity. So one of the things that we're really proud about is that we have a very high degree of neurodiversity in our workforce, which means that we are -- can sort of really benefit from the areas they're strong. So we can be very innovative. We can sometimes come up with solutions that in a less diverse workforce, you wouldn't necessarily come up with as strong and as valuable solution. So it's something we're really conscious of. I will make the point that for any role that we appoint to, we always appoint the strongest, most capable candidate, but we always start with the point of attracting a diverse pool of candidates because that way we can actually ensure that the business is run as effectively as possible with the best people running it, but we have the largest catchment to sort of fish in, if you like, to attract that talent. So I hope that answers that question.

That's great. Bjorn, Noel, Luke, if I may, just thank you for addressing those questions from investors today. And of course, the company can review all questions submitted today, and we'll publish responses on the Investor Meet Company platform. But Bjorn, before we redirect investors to provide you with their feedback, which is particularly important to the company, could I please just ask you for a few closing comments to wrap up?

Yes. So first of all, I'd like to say thank you for taking the time to join this call. Thank you for the questions. I think we answered all of them, which is good. As I said at the beginning, our main focus, this business has been on a journey. We're 2 years into our 3-year plan. We've done the simplification that we wanted to do. We've got those business units focused on the right market. Last year was undoubtedly a more challenging year in terms of the availability of work and revenue to businesses like ours. We think we approached it in the right way and also made changes as we went through the year, and I think that's reflected in the results that we just talked through in terms of the improvement in proportional and relative adjusted EBITDA. There is still further to go with this business. We've got good frameworks. We've got good team set up. We've got a clear business structure. As the market comes back, and I think it will based on what we've seen in the comprehensive spending review, we're in a position where we can grow the business, grow our sort of direct costs without proportionately needing to grow our indirect costs, which should, again, improve our profitability and our business performance as we go forward. Finally, and most importantly, our teams are the people who show up to clients and make all this stuff happen. We have a really passionate and motivated workforce, and we want to create the best environment we can to attract and retain those high-quality people because even in a world of AI, it will come down to how we differentiate by the individuals that we can attract and employ in this organization. So it's a real focus for us. So thank you very much for your time. I hope it's been useful. It's been good to introduce Noel to you as well. And thank you for your support for TPX, and we look forward to updating you in a few months' time. Thank you.

Fantastic. Bjorn, Noel, Luke, thank you once again for updating investors today. Could I please ask investors not to close this session as you will now 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, I'd like to thank you for attending today's presentation, and good afternoon to you all.