Tpximpact Hldg Regulatory News (TPX)

This announcement contains inside information

28 April 2020

The Panoply Holdings PLC

("The Panoply", or the "Group")

Trading and COVID-19 Update

The Panoply Holdings PLC, a digitally native technology services group, today announces a trading update for the year ended 31 March 2020 (FY20).

The Board expects to report Revenue and Adjusted EBITDA performance in line with market expectations. Revenues in the second half increased to approximately £18m (H1: £13m), driven by new client wins along with Brexit and election related stability. On a pro forma basis, including the acquisition of Ameo, revenue for H2 would have been approximately £21.8m.

During the year the Group completed two acquisitions in the public services sector: FutureGov, a leader in digital service design; and Ameo, a consultancy specialising in delivering business change. These acquisitions, alongside developments made across the Group's existing business, have significantly strengthened The Panoply's public sector offering, which now represents approximately 70% of the Group's revenues on a pro forma basis (FY19: 56%). With the Group able to collaborate effectively across its constituent companies, The Panoply represents a compelling end-to-end offering for organisations in this sector looking to embrace digital transformation at pace.

Financial position

As at 31 March 2020 the Group's balance sheet had retained cash reserves of approximately £4.5m and a net debt position of £0.5m. As of 24 April the Group held £6.2m of cash and cash generation is expected to remain strong as trading profits from the final quarter are realised. Following the year end the Group has agreed a £1.5m overdraft facility with HSBC and is in early discussions about extending the Revolving Credit Facility in order to provide sufficient financial flexibility should it be required for further acquisitions or otherwise.

Pleasingly, the acquisitions made by the Group to date have traded in line with expectations and so it is anticipated that further consideration will become payable on publication of the full year result. This is expected to be in line with previous guidance of approximately £17m. Any consideration will be satisfied by the issue of new shares in The Panoply based on the share price at that time and in accordance with the pre-announced formulas subject always to a minimum floor of 74p.

COVID-19

The Group's top priority is the health and safety of its team, clients and the communities in which it operates in and it implemented remote working ahead of government guidance. As an agile technology services group, The Panoply has been able to continue operating effectively during this period and its teams are continuing to fully service clients. At present, the Group has not seen a net negative impact on revenue and staff utilisation remains greater than 70%, which is in line with previous periods.

The Group is proud to be working with a number of clients on the COVID-19 emergency response. FutureGov have been working with Camden Council, having together designed and built an open source directory of service tool, "Beacon", which helps the council and local public service partners understand the needs of vulnerable residents, matching them to the relevant support. FutureGov and Notbinary have built both ventilator and PPE 'dashboards' in order to help manage the effective supply of these crucial products, whilst Notbinary has created a system with the Competition and Markets Authority via the Department for Business, Energy & Industrial Strategy which allows businesses to be held to account for unfair behaviour during the crisis.

Human+ & FutureGov along with other industry partners are proud to be working with NHSx to assist NHS efforts to support vulnerable people during COVID-19. The Group will be supporting the development and execution of user-centred design, Intelligent Automation and Artificial Intelligence. This includes user research, robotic process automation (RPA) and service design support to help evaluate and design remote care and digital mental health solutions, as well as data coalition and automation opportunities, across the NHS.

The Group continues to closely monitor and manage its costs throughout this time of increased uncertainty in order to be prudent, with a hiring freeze in place and careful management of any discretionary spending. The Group has also introduced a number of additional short-term data points to the range of KPIs monitored to provide greater visibility throughout the Group. To date the Group has not furloughed any staff and in the UK, where there are very small pockets of underutilised staff, they have been encouraged to volunteer in their communities on full pay.

Outlook

There are several factors which should reassure the Group's employees and shareholders that the business has the resilience to be ready to capitalise on opportunities when they emerge. The majority of revenues are generated from existing client relationships and the Group continues to win business currently scheduled for completion in the balance of the year.

The Group is therefore confident in its decision to continue making investments in the business in FY2021 and that its growth strategy over the longer term will continue to see consistent investment in innovation and through further acquisitions to support its growth in the following years. In line with its entrepreneurial values, the Group will continue to invest in business opportunities developed by its talented and innovative employees. The Board believes pursuing these opportunities is in the best interests of all stakeholders and the right strategy to ensure the Group's long term, sustainable success.

In the first half of FY2021 the Group anticipates revenues to exceed the prior period and for the business to remain profitable and cash generative. Whilst the increase in public sector work is expected to more than mitigate the softening in demand from clients in other sectors, given the nature of public sector work the Group expects margins to be somewhat lower than previously. Some of the work is being done on an entirely pro bono basis.

It is difficult to predict how the developing situation will impact the behaviour of clients and therefore, given the lack of visibility on the period beyond H1, the Group is suspending future guidance. Notwithstanding this, the Group is confident that it will remain cash generative and EBITDA profitable for FY21. The Board recognises the importance of dividend income to shareholders but, in light of the current uncertainty, is not intending to pay a dividend for FY20 and is currently reviewing when to commence dividend payments.

Neal Gandhi, CEO of The Panoply, commented:

"I am pleased with the progress that we made last year and honoured to now be supporting a number of public sector businesses, including NHSx, tackling the COVID-19 pandemic. Notwithstanding the challenging macro-economic environment we currently face, we are well structured to continue to provide our services to clients, and believe that this situation will ultimately bring greater focus to the benefits of digital transformation and accelerate demand for our services further."

Enquiries:

The person responsible for making this announcement is Oliver Rigby, CFO.

About The Panoply

The Panoply is a digitally native technology services company, built to service clients' digital transformation needs. Founded in 2016, with the aim of identifying and acquiring best-of-breed specialist information technology, design and innovation consulting businesses across Europe, the Group collaborates with its clients to deliver the technology outcomes they're looking for at the pace that they expect and demand.

More information is available at www.thepanoply.com