TPXimpact completes turnaround with strong margin expansion and cash generation

TPXimpact has delivered the sort of update shareholders have been waiting for. These unaudited FY26 results show a business that has gone from messy turnaround story to cleaner, more credible growth case, with better margins, stronger cash generation and far less debt.

The headline is not flashy revenue growth. Revenue rose just 1% to £78.1 million. The real story is that TPXimpact made much more money from that revenue, won a lot more work, and cut net debt hard.

TPXimpact FY26 results show a finished turnaround, not just a work in progress

Metric	FY26	FY25
Revenue	£78.1 million	£77.3 million
Gross margin	31.6%	28.6%
Adjusted EBITDA	£8.6 million	£5.6 million
Adjusted EBITDA margin	11.0%	7.3%
Reported operating profit/(loss)	£0.2 million	(£8.7 million)
Adjusted diluted EPS	5.4p	3.0p
Net debt excluding lease liabilities	£4.2 million	£8.5 million
New business wins	£122 million	£70 million

Management says the three-year turnaround is complete, and the numbers back that up. Across that period, adjusted EBITDA rose from £2.3 million to £8.6 million, while debt dropped from £24.5 million to £4.2 million.

That matters because turnarounds often look good in presentations long before they show up in the accounts. Here, the improvement is visible in profit, cash flow and leverage, which is the kind of progress investors can actually bank.

TPXimpact margin expansion is the standout positive in these preliminary results

Revenue growth of 1% is modest, so this was not a blockbuster top-line year. But gross profit rose 11.5% to £24.7 million because cost of sales fell 3% to £53.4 million, pushing gross margin up by 300 basis points to 31.6%.

That is a strong sign. It suggests TPXimpact is doing a better job on utilisation, pricing, project mix and cost control. In plain English, more of each pound of revenue is sticking.

Adjusted EBITDA, which is profit before interest, tax, depreciation and amortisation, and before certain adjusting items, jumped 54% to £8.6 million. The adjusted EBITDA margin improved to 11.0% from 7.3%, which is a serious step forward for a consulting and digital services business that had been under pressure.

There is also an important milestone further down the income statement. Reported operating profit was £0.2 million, compared with an operating loss of £8.7 million last year.

That said, this is not a fully clean profit story yet. TPXimpact still reported a loss before tax of £0.6 million and a loss for the year of £0.6 million, with basic and diluted earnings per share both at minus 0.6p. So if you focus only on statutory profit, the recovery is real but not complete.

TPXimpact contract wins in government and health give FY27 growth credibility

The other big positive is demand. New business wins surged to £122 million from £70 million, which is a huge improvement and arguably the clearest sign that the turnaround has moved from internal restructuring to external commercial momentum.

There were some chunky contract wins too:

• £39 million, four-year contract with DEFRA
• £22 million, two-year contract with NHS England
• £11 million uplift with His Majesty’s Land Registry, taking total value to £60 million
• £9 million, 12-month contract with His Majesty’s Prison and Probation Service

Trading momentum also improved during the year. H2 revenue was £41.9 million, up 16% on H1 revenue of £36.2 million, which suggests the contract wins started to feed through properly in the second half.

Early FY27 trading looks encouraging as well. TPXimpact says it won £31 million of new business in the first two months of the new financial year, including a £16 million, two-year contract with the Ministry of Justice.

For retail investors, this matters because outlook statements are only useful if there is evidence behind them. In this case, there is. A stronger backlog, multi-year public sector contracts and improving second-half revenue give management’s confidence a firmer footing.

TPXimpact balance sheet repair and cash generation are better than the revenue headline

The balance sheet is where this update gets properly interesting. Net debt excluding lease liabilities was cut in half to £4.2 million, and the leverage ratio fell to 0.5x from 1.5x.

Operating cash flow rose sharply to £6.1 million from £1.4 million. The group also repaid £9.2 million of borrowings during the year, which is exactly what you want to see after a restructuring phase.

There is a slightly messy detail worth noting. Cash and cash equivalents at year end were negative £0.3 million in the cash flow statement because of a bank overdraft presentation, but the company still reports net debt of £4.2 million and says it satisfied its revised banking covenants throughout the period.

TPXimpact also refinanced its revolving credit facility in July 2025. The old £25 million facility was replaced with an £11 million facility, a £5.5 million accordion and a £4 million overdraft. That looks like a sensible reset for a business with much lower borrowings.

What still looks risky in the TPXimpact investment case

This was a strong update, but it was not flawless. First, around 90% of revenue came from public sector clients, and around 70% from central government customers. That provides visibility, but it also creates concentration risk and political spending risk.

Second, the client base is concentrated. The top five clients contributed around 60% of revenue, and the top 10 contributed around 75%. Those relationships are valuable, but losing one major contract would hurt.

Third, the people and ESG indicators were mixed. The gender pay gap widened to 9% from 7%, ethnically diverse representation dipped to 19% from 20%, and carbon intensity rose to 19.9tCO2e per £1 million of revenue from 18.5. None of that breaks the investment case, but none of it should be ignored either.

There was also a £2.2 million reduction in the value of the group’s equity investment in OpenDialog AI Limited, recorded through other comprehensive income. That helped drag total comprehensive loss to £2.8 million.

TPXimpact FY27 outlook points to acceleration, and now management needs to deliver it

Management’s FY27 guidance is ambitious but not reckless. The company expects healthy double-digit revenue growth, adjusted EBITDA of not less than £12 million, adjusted EBITDA margin improvement of around 1% year on year, and net debt to fall to zero by the end of FY27.

That is a meaningful target set from a much stronger base. If TPXimpact delivers it, the market is likely to view this business less as a former turnaround and more as a scaled public sector digital transformation specialist with improving earnings quality.

My take is that this is a genuinely positive RNS. The biggest win is not the 1% revenue growth. It is the combination of better margins, stronger cash conversion, heavy debt reduction and a much better order intake.

The main watchpoint now is execution. TPXimpact has done the hard clean-up work. FY27 is about proving that the rebuilt platform can produce sustained growth without letting margins or cash discipline slip.

For shareholders, that is a far better problem to have than the one this company faced three years ago.