Shares in TPXimpact Holdings PLC (AIM:TPX) bore the impact of a profit warning on Tuesday, as the digital transformation group warned it is in talks with its banks over debt covenants.
Based on its updated forecasts, the group is “unlikely to pass its debt covenants” at the 31 March year end, and so is “actively engaged” with bankers on “appropriate actions to address this event (including a waiver)”.
This followed a disappointing December due to the tight jobs market and some “client-driven challenges”.
The company formerly known as The Panoply, cut its full-year revenue guidance to around £80mln, down from £90mln before, with an underlying earnings margin in a range of 2-3%.
Chief executive Bjorn Conway hailed “strong momentum” in new business wins, which exceeded £41mln in the third quarter and saw £9mln won in January, but said trading in the quarter “was below our expectations: an encouraging performance in November was followed by a disappointing December”.
He mostly blamed “external factors largely outside the group's control”, explaining “challenges in recruiting the right mix of resource and skill sets” leading to pressure on profit margins, along with “client-driven challenges in some parts of the business”.
The shares plunged 43% to 26.02p on Tuesday morning, down 87% over the past year after a big spike during the pandemic.