TIDMTENG
RNS Number : 2070U
Ten Lifestyle Group PLC
22 November 2023
Embargoed: 07:00hrs 22 November 2023
Ten Lifestyle Group plc
("Ten", the "Company" or the "Group")
Preliminary results for the year ended 31 August 2023
Ten Lifestyle Group plc (AIM: TENG) a leading
technology-enabled, global concierge platform for the world's
wealthy and mass affluent, is pleased to announce its preliminary
results for the year ended 31 August 2023.
Financial highlights
-- Record Net Revenue(1) up GBP16.2m (35%) to GBP63.0m (2022: GBP46.8m)
o corporate revenue(2) up GBP14.5m (35%) to GBP55.6m (2022:
GBP41.1m)
o supplier revenue(3) up GBP1.7m (30%) to GBP7.4m (2022:
GBP5.7m)
o increased Net Corporate Revenue Retention Rate(4) of 131%
(2022: 120%)
-- Step-change in Adjusted EBITDA(5) up GBP7.1m to GBP12.0m
(2022: GBP4.9m), an 145% improvement
o Adjusted EBITDA margin(6) increased by 8.7% to 19.1% (2022:
10.4%)
-- Inflection point with profit before tax up GBP4.7m to GBP0.9m (2022: loss GBP3.8m)
-- Cash and cash equivalents of GBP8.2m (2022: GBP6.6m) and net
cash of GBP3.7m (H1 2023: GBP0.5m; FY 2022: GBP3.2m)
Operational highlights
-- Active Members(7) up 28% to 353k (2022: 275k) driven by
strong growth within our existing corporate clients
-- Year-on-year improved levels of member satisfaction(8) which
drives repeat use and value to our corporate clients
-- GBP13.9m (2022: GBP13.6m) planned investment in proprietary
digital platforms, communications and technologies to enhance
member experience and create competitive advantage
-- 80% of Material Contracts(9) have now launched with the Ten Digital Platform (2022: 80%)
o Retained all Material Contracts for fourth consecutive
year
Current Trading and Outlook
We continue to drive revenue through increased activity from
existing Active Members and "first time users" from our existing
Eligible Member base. In addition, we have a healthy pipeline of
new partnership opportunities that will further increase our
Eligible Member base.
Our corporate clients pay us to improve the engagement and
retention of their wealthiest customers that then drives their
commercial metrics. Many of our banking clients, partly due to
higher interest rates, are reporting higher levels of profitability
from this customer demographic when compared with the low interest
rate environment from 2008 to 2021. This improves the return on
their investments with Ten and helps underpin our revenue
expectations.
We expect to continue to convert our strong pipeline of contract
opportunities with global financial institutions and premium
brands, with multiple new contract developments since the start of
the financial year due to deliver revenues from H2 2024.
We remain focused on increasing both Net Revenue and Adjusted
EBITDA profitability. We plan to maintain investment in our
proprietary technology, communications, and content, which provides
competitive advantage, with investment into AI. Loans raised to
date will continue to support the Group's working capital
requirements and we expect cash generation across the full year,
with H2 being stronger than H1.
To support working capital requirements, the Group has raised a
further GBP950k of three-year loans notes, including GBP250k of
loan notes subscribed for by Nitro Ventures Limited, of which Jules
Pancholi, Non-Executive Chairman, is a shareholder and director, on
21 November 2023 which is a related party transaction under the AIM
Rules for Companies and is described further below.
Trading to date, our high corporate client retention rates,
strong service levels, improving profitability, healthy sales
pipeline, and continued investment to improve our technology and
proposition mean that, although early in the year, we are
optimistic about another year of growth for both Net Revenue and
profitability.
Alex Cheatle, CEO of Ten Lifestyle Group, said;
" We have delivered a second year of 35% growth in Net Revenue
and a step change in Adjusted EBITDA profitability as a result of
our continued investment in our proposition, technology and people.
We expect our growth engine will continue to deliver in the year
ahead. "
1 Net Revenue includes the direct cost of sales relating to
certain member transactions managed by the Group.
2 Corporate revenue is Net Revenue from Ten's corporate clients,
including service fees, implementation fees, and fees for the
customisation of the Ten Digital Platform.
3 Supplier revenue is Net Revenue from Ten's supplier base, such
as hotels, airlines and event promoters which sometimes pay
commission to Ten.
4 Net Corporate Revenue Retention Rate is the annual percentage
change in corporate revenue, less non-recurring revenue (i.e.
non-recurring service fees, implementation fees, and fees for the
customisation of the Ten Digital Platform), from corporate client
programmes operating in the previous year.
5 Adjusted EBITDA is operating profit/(loss) before interest,
taxation, amortisation, depreciation, share-based payment expense,
and exceptional items. The Group's definition of Adjusted EBITDA
has been updated in the current period to include National
Insurance on share options.
6 Adjusted EBITDA margin is Adjusted EBITDA as a percentage of Net Revenue.
7 Individuals holding an eligible product, employment, account
or card with one of Ten's corporate clients are "Eligible Members",
with access to Ten's platform, configured under the relevant
corporate client's programme, with Eligible Members who have used
the platform in the past twelve months becoming "Active
Members".
8 Ten measures member satisfaction using the Net Promoter Score
management tool, which gauges the loyalty of a firm's member
relationships (https://en.wikipedia.org/wiki/Net_Promoter).
9 Ten categorises its corporate client contracts based on the
annualised value paid, or expected to be paid, by the corporate
client for the provision of concierge and related services by Ten
as: Small contracts (below GBP0.25m); Medium contracts (between
GBP0.25m and GBP2m); Large contracts (between GBP2m and GBP5m); and
Extra Large contracts (over GBP5m). This does not include the
revenue generated from suppliers through the provision of concierge
services. Medium, Large and Extra Large contracts are collectively
Ten's "Material Contracts".
Analyst Presentation
An online analyst presentation will be held by video link at
9:00am on 22 November 2023.
Investor Webinar
Additionally, an Investor Webinar tailored for current and
prospective investors will be presented at 5pm on 29 November 2023,
providing participants a deeper insight into the Group's results
and strategic initiatives and a chance to engage directly with the
leadership team.
If you wish to attend either the Analyst Presentation or the
Investor Webinar, kindly email investorrelations@tengroup.com .
This will ensure that you receive the necessary details and access
information for these events.
For further information please visit www.tenlifestylegroup.com/
or call:
Ten Lifestyle Group plc
Alex Cheatle, Chief Executive Officer +44 (0)20 7850
Alan Donald, Chief Financial Officer 2796
Singer Capital Markets Advisory LLP, Nominated
Advisor and Broker Corporate Finance: James
Moat / Oliver Platts
Corporate Broking: Tom Salvesen / Charles +44 (0) 20 7496
Leigh-Pemberton 3000
Notes to Editors:
About Ten Lifestyle Group Plc
Ten Lifestyle Group Plc partners with global financial
institutions and other premium brands to attract and retain wealthy
and mass affluent customers.
Millions of members have access to Ten's services across
lifestyle, travel, dining, entertainment, and retail benefits on
behalf of over fifty clients including HSBC, Coutts and Royal Bank
of Canada. Ten's partnerships are based on multi-year contracts
generating revenue through platform-as-a-service and technology
fees.
Ten's operations are underpinned by an increasingly
sophisticated personalisation platform comprising industry-first,
proprietary technology, thousands of supplier relationships and 25
years of proprietary expertise delivered from over 20 global
offices.
Ten is on a mission to become the most trusted service platform
in the world.
For further information about Ten Lifestyle Group Plc, please go
to: www.tenlifestylegroup.com
Chairman's Statement
Introduction from Ten's incoming Chairman
As Ten's incoming Chairman, I start by expressing my deep thanks
on behalf of the Group to Bruce Weatherill, who stepped down as
Chairman due to ill health on 8 November 2023.
Bruce's stewardship and leadership played a pivotal role in
Ten's transition to a listed company in 2017, setting the stage for
Ten's future growth. Personally, I am grateful for his mentorship
and support, facilitating a seamless transition to my Chairmanship.
On behalf of the Board, I also extend my thanks to Gillian Davies,
Non-Executive Director, who has indicated her intention to step
down from the Board at the conclusion of the AGM in February 2024,
for her invaluable contributions to the Board and outstanding
Chairing of the Audit and Risk Committee.
As part of the Board's orderly succession planning, we welcome
Edward Knapp and Carolyn Jameson as Non-Executive Directors,
following a robust recruitment process. I am confident that the
Board's composition is well equipped to meet the evolving needs of
our business as we move into the next stage of development.
I assure shareholders that they should continue to expect the
same high levels of corporate governance, strategy and operational
accountability established by Bruce. Under my Chairmanship, I
intend to focus on product-market fit to ensure we are relentlessly
pursuing our mission to become the most valued service in the
world. We will leverage Ten's Growth Engine to build business
momentum, and adeptly navigate the opportunities in the rapidly
evolving technology and customer landscapes.
Successfully securing B Corp certification in the year
underscores our strategy to create a unique value proposition
aligned to the goals of both corporate clients and members.
I will measure the success of my Chairmanship not only by the
performance of the business, but through the improvement of the
share price to a level that reflects the true value for our
Shareholders that the Board believes Ten delivers. We have a high
degree of conviction that we are operating in a large and growing
market, and in our strategy to address it. Our focus for the future
will be on exceptional operational accountability and execution,
demonstrating our value to all stakeholders and thereby enhancing
shareholder value and liquidity.
Overview
Once again, Ten has achieved record levels of Net Revenue,
accompanied by a step-change in Adjusted EBITDA profitability and
margin. This success was a result of the 'growth engine' at the
heart of Ten's business model. Our proposition has improved,
leading to increased activation and engagement of more members,
supported by our corporate clients. Our investments in technology
have also made us more efficient and profitable. Our improved
proposition also helped justify improved commercial terms with our
corporate clients.
Our overall Net Revenue increased 35% when compared to the prior
year to GBP63.0m (2022: GBP46.8m), with Adjusted EBITDA increased
by GBP7.1m to GBP12.0m, a 145% improvement on the prior year (2022:
GBP4.9m) and Adjusted EBITDA margin up 8.7% to 19.1%
(2022:10.4%).
We continued to deliver on our mission to become the world's
most trusted service. We strengthened our ability to attract and
retain wealthy and mass affluent customers as members on behalf of
global financial institutions and other premium brands. Continued
investment in our industry-first, proprietary technology,
communications and content amounted to GBP13.9m (2022: GBP13.6m).
This drives growth and sets us apart in the market. Most
importantly, it strengthened our proposition to global financial
institutions, and other premium brands, by improving their ability
to attract and retain wealthy and mass affluent customers as
members.
Having achieved scale in many of the world's major economies,
through expanding with existing customers and partnering with new
ones, we proudly deliver our increasingly sophisticated and
personalised platform with thousands of integrated supplier
partners from over 20 global service centres. The market potential
remains large and addressable. Our Active Member base has grown to
over 353k (2022: 275k), with millions more members eligible to
access Ten's lifestyle, travel, dining, entertainment, and retail
benefits on behalf of over 50 corporate clients.
Retaining all Material Contracts for the fourth consecutive
year, an improved Net Corporate Revenue Retention Rate and
expanding corporate revenue from existing clients demonstrates the
depth and strength of our partnerships with our corporate clients.
We believe that our established corporate clients now view Ten as
an integral partner for premium product marketing, customer
engagement and insight initiatives. Many are now entrusting us with
technology integration, personalisation, and unique content
projects that elevate member experiences, drive operational
efficiencies, and solidify Ten's position as their trusted
concierge technology partner.
Throughout the year, we have expanded existing and forged new
strategic corporate client partnerships, with the vast majority of
Material Contracts incorporating the Ten Digital Platform into
their customer loyalty proposition. Our technology underpins Ten's
competitive strategy as the partner of choice to a number of global
financial institutions and premium brands seeking to attract and
retain affluent customers.
Continued investment in technology, strategic partnerships, and
our people has not only fortified our resilience but has also laid
the groundwork for sustained growth through improved member and
corporate client proposition whilst also achieving further
efficiencies.
Strategy
Our strategy is to provide preferred access to a range of
premium services for the customers of our corporate clients,
facilitating seamless organisation of their travel, dining,
entertainment and other lifestyle needs.
Central to our strategy is the creation of tailored customer
loyalty propositions, driving both new and existing corporate
clients to invest in Ten's increasingly sophisticated
personalisation platform. This investment not only enhances the
profitability and loyalty of their most valuable customers but also
fuels our continuous advancements in technology, content, and
service quality. This, in turn, fortifies our unique member
proposition and propels the Growth Engine at the heart of Ten's
business model.
The Group thrives on established and new corporate client
partnerships, primarily in the financial services sector, with a
strong track-record of growing the value of these partnerships over
time. We are also working with other premium brands seeking to
enhance engagement, retention and acquisition of their high-value
customers.
Ten's unique member proposition ensures members access
attractive and often premium benefits and experiences not available
to the public. Membership leverages combined buying power and
operational scale, enabling members to achieve better and more
cost-effective outcomes, more conveniently than they could on their
own. The member proposition is accessible for online search and
booking through Ten's market-leading proprietary lifestyle and
travel technology platform - the "Ten Digital Platform" - or via
our expert Lifestyle Managers, available by phone, email, live chat
and WhatsApp.
Our continued investments in technology comprise our Ten Digital
Platform - and in the supportive infrastructure for our team.
Backed by 25 years of expertise, our Lifestyle Managers provide
members with 24/7 services in over 18 languages, reflecting in our
Net Promoter Score (NPS) that indicates positive member impact to
us and our corporate clients.
Artificial Intelligence (AI) and Environmental, Social and
Governance (ESG) considerations have been pivotal in shaping our
decision-making and strategy and will remain so in the future. AI
presents significant opportunities for operational efficiency and
customer experience and we have adopted strategy of rapid
experimentation across all areas of the business.
Beyond supporting good governance and global climate change
management, ESG offers a substantial opportunity to enhance our
differentiation and value proposition to both our members and our
corporate clients. The attainment of B Corp status this year is a
crucial milestone, underscoring our commitment to executing this
strategy successfully.
The ESG Working Group, established in 2021, will remain under my
Chairmanship, focusing on assessing material ESG risks and
opportunities stemming from our business. Its ongoing efforts aim
to deliver on our strategy by developing internal reporting and
transparency, instigating behavioural change within the business,
and ensuring that we offer our members ESG-friendly choices in
their interactions with us.
The Board's commitment to ESG is exemplified by our successful B
Corp certification this year, following strong shareholder support
for the amendment to our Articles of Association in July 2022. We
are dedicated to maintaining our B Corp certification, ensuring it
continues to deliver significant positive effects for the Group and
all stakeholders.
Results
Net Revenue grew by 35% to GBP63.0m (2022: GBP46.8m), surpassing
pre-COVID-19 levels (2019: GBP45.8m). This growth was fuelled, in
part, by the increased budgets of our corporate clients leveraging
Ten's platform to enhance their own customer metrics, a clear
demonstration of client-product-market fit and shared goal
alignment. Additionally, there was heightened demand for technical
platform integration services and member marketing services.
Successful contract repricing, both in the year and in previous
years, also contributed to performance.
Delivering Adjusted EBITDA profitability and maintaining a net
cash position, whilst maintaining investments in technology, are
key performance indicators of the Group's strategic Growth Engine.
Notably, the Group secured contract developments during the year,
including launching a new programme in the Americas that has grown
to the equivalent of a Medium contract, expanding a programme in
Latin America to the equivalent of a Large contract and winning a
new contract in Europe expected to grow to a Medium contract.
The Group retained all of its Material Contracts and entered new
agreements with existing corporate clients for multi-year contract
extensions, significant expansions, and paid-for projects to
customise the Ten Digital Platform. To support our substantial
growth and the launch of new programmes, we raised a moderate level
of debt, demonstrating a strategic approach to working capital
requirements.
Board composition and our People
The Group continues to benefit from a stable and impactful
founder-led executive management team, showcasing strength in
leadership, innovation and resilience to grow the business over the
long term in all regions.
In addition to the Non-Executive changes to the Board detailed
in my introduction, I was pleased to welcome Victoria Carvalho,
Chief Proposition Officer, as an Executive Director of the Board on
22 February 2023. Victoria brings extensive experience, spanning
over 20 years in strategic roles focused on operational growth,
including notable positions at Nasdaq and Thomas Reuters in New
York and London. Since joining Ten in 2018 as a member of the
Senior Leadership Team, she has played a pivotal role in developing
Ten's unique proposition, providing access to a diverse range of
benefits and experiences across major consumer markets.
At the same time, we bid farewell to Sarah Hornbuckle as an
Executive Director, who continues to contribute as the Client
Services Director. We extend our sincere thanks to Sarah for her
dedicated service since joining in 2001 and to the Board, playing
an instrumental role in the success of Ten.
Our commitment to developing our people is evident, in part,
through the Ten Academy and Ten's Global Leadership Programme - a
twelve-month internal development initiative shaping the Group's
future leaders on a global scale. Nurturing an employee culture
rooted in Ten's principles of transparency, education, promotion,
engagement, and Diversity, Equity, and Inclusion (DEI) Programme,
underpinned by our recent B Corp certification, continues to
support our diverse, global workforce and helps us attract, retain
and develop the best talent.
In strategic alignment with our commitment to sustained growth,
the Group adjusted headcount this year, emphasising operational
efficiency, regional variations in demand, and a reorganisation of
the business, preparing the business for the next phase of
growth.
On behalf of the Board, I express gratitude to the entire Ten
team for their adaptability, professionalism, and steadfast
commitment throughout the year. Their contributions are invaluable,
and we take great pride in their dedication to our collective
success.
Summary
Amidst a challenging macro environment, Ten has not only
weathered the storm but excelled with record Net Revenue and
Adjusted EBITDA profit and margin, showcasing the resilience of our
business model and the inherent value we bring to corporate clients
as integral components of their customer engagement strategies. Our
ability to retain and grow corporate clients speaks to the strength
of our partnerships, serving as the chosen loyalty platform for
many of the world's leading brands.
We believe changes in technology, consumer's evolving lifestyle
demands and the fact that corporate clients need to create deeper
connections with their customers means there is considerable room
for growth in the market. Actions taken this year, and those
planned for 2024, underscore our commitment to seizing these global
opportunities.
I express sincere gratitude to our Shareholders for their
support throughout the year.
Jules Pancholi
Non-Executive Chairman
21 November 2023
Chief Executive's statement
Overview
In the year, we achieved remarkable milestones, including a 35%
growth in Net Revenue for the second consecutive year. The Group
also more than doubled Adjusted EBITDA to GBP12.0m (2022: GBP4.9m),
increased its Adjusted EBITDA margin and achieved its first
positive profit before tax (PBT) since IPO. This marks a
step-change in Ten's profitability, whilst continuing to invest
into our proprietary technology, including Al, that will drive our
future success.
The "Growth Engine" at the heart of our business continues to
demonstrate its effectiveness.
By delivering high service levels across our high-touch and
digital platforms, which improve customer profitability metrics for
our corporate clients, we have retained all of our Material
Contracts for the fourth consecutive year, increased Net Corporate
Revenue Retention Rate to 131% (2022: 120%) as well as securing new
contracts.
We closed the period with a record Net Revenue run rate,
improved Adjusted EBITDA, an enhanced digitally enabled service
platform, and a healthy sales pipeline of new business, positioning
the Group well for the next phase of growth.
Record Net Revenue and profitability
Our market-leading digital capabilities differentiate us from
our competition, paving the way for record Net Revenue and Adjusted
EBITDA profitability. Notably, Net Revenue increased by 35% to
GBP63.0m (2022: GBP46.8m), Adjusted EBITDA was up GBP7.1m to
GBP12.0m (2022: GBP4.9m), a 145% improvement on the prior year and
Adjusted EBITDA margin increased by 8.7% to 19.1% (2022:10.4%).
The substantial growth in Net Revenue from our corporate
clients, which increased 35% to GBP55.6m (2022: GBP41.1m) can be
attributed, in part, to increased member activity (paid for by our
corporate clients) and revenue from contract developments.
Additionally, Net Revenue from our supplier partners, predominantly
commission related to our members' travel, rose by 30% to GBP7.4m
(2022: GBP5.7m). Operating expenses and other income increased by
GBP9.1m to GBP51.0m (2022: GBP41.9m), principally driven by
increased headcount required to service the heightened activity
across the business.
A step-change in Adjusted EBITDA profit and margin (and PBT) was
fuelled by enhanced efficiencies, driven by the growing
professionalism of our operational staff and advancements in our
technology.
Cash generated from operations in the year increased by GBP6.7m
to GBP11.5m (2022: GBP4.8m). The Group concluded the year with cash
and cash equivalents totalling GBP8.2m (2022: GBP6.6m) and improved
net cash of GBP3.7m (H1 2023: GBP0.5m; FY 2022: GBP3.2m).
REGIONAL ANALYSIS
Europe
In Europe, our commitment to enhancing services for members and
corporate clients in our most mature markets, alongside our
expansion into maturing markets in Continental Europe, has proven
successful.
Regional Net Revenue achieved robust growth of 26% to GBP25.9m
(2022: GBP20.6m). This was fuelled by increased member activity,
contract expansions, and heightened member engagement rates, paid
for by supportive corporate clients. Notably, several flagship
corporate clients with Material Contracts increased their budgets
during the period. We retained all Material Contracts and we won
new mandates from corporate clients in the region.
Developments in the region also resulted in strong Adjusted
EBITDA growth of GBP4.3m to GBP9.2m (2022: GBP4.9m), a 88%
increase. This represents a 36% Adjusted EBITDA margin for our most
mature region.
Americas
We celebrate another year of substantial growth and enhanced
Adjusted EBITDA profitability in the Americas. Developing this
region, home to almost 50% of the world's High Net Worth
Individuals, is a key objective for Ten.
Net Revenue in the region was up 56% to GBP25.8m (2022:
GBP16.5m), driven by the healthy growth of existing contracts and
new client mandates. The region also achieved an Adjusted EBITDA
profit of GBP1.9m (2022: GBP(0.7)m) due to the success of contracts
launched in the prior year, after a period of investment in
growth.
We believe that key developments in the US market, the largest
market in the region, such as JPM Chase's proactive efforts in
developing travel and lifestyle offerings and Capital One's
acquisition of Velocity Black, a smaller competitor of Ten, for a
reported US$296m(10) , have had a positive ripple effect, sparking
interest from other banks and wealth managers in Ten's proposition,
paving the way for Ten to engage with potential new corporate
clients.
AMEA
The AMEA region demonstrated solid growth, with Net Revenue
increasing by 16% to GBP11.3m (2022: GBP9.7m) and achieving a
GBP0.2m increase in Adjusted EBITDA to GBP0.9m (2022: GBP0.7m), an
29% increase.
10 Hurley, J. (2023, June 2). Founders of Velocity Black bank
US$80m from Capital One. The Times. Retrieved from
https://www.thetimes.co.uk/article/founders-of-velocity-black-bank-80m-from-capital-one-z6gtj9qx0
Our investments in technology, AI and content continues to drive
our market-leading digital capability
We continued to benefit from the quality, operational, and
competitive advantages of our digital capability. We invested
GBP13.9m in technology, communications, and content in the year
(2022: GBP13.6m). We believe that our strategic focus on
market-leading digital capability clearly differentiates us from
our competitors and underpins our long-term "Growth Engine"
strategy to become the world's most trusted service.
Throughout the year, these investments led to significant
advancements in our digital roadmap. Notable improvements include
enhanced personalisation, user experience and the introduction of
new "self-serve" digital capability, ultimately reducing the cost
to serve and delivering a stronger Return on Investment for our
client's customer loyalty budgets, unlocking additional budget to
spend on Ten's full suite of services.
Our early adoption of AI reflects our commitment to harnessing
its potential in 2024 and beyond to turbo-charge our Growth Engine
by improving efficiency and also service quality. We are already
seeing material results in multiple areas and are completely
committed to leveraging AI in 2024 and beyond.
In the short term, AI is already driving efficiency and output
across the business from translations to coding and quality
assurance for high touch requests. We have also launched an AI
"co-pilot" for Lifestyle Managers, who comprise the largest group
of employees, to support more efficient and high quality
service.
Our unique "not available on the internet" assets, such as
exclusive tables at top restaurants, tickets for sold-out shows,
exclusive events and value-add benefits at hotels, empowers our AI
to deliver value for our members via our digital self-serve and
high touch channels. This advantage, coupled with our digital
self-serve and high-touch channels, sets us apart from mass-market
AI interfaces reliant on publicly available assets.
Enhanced member proposition, satisfaction, and engagement
Throughout the year, we have strengthened our core propositions,
to deliver a more compelling and accessible offering to serve
existing members and attract new members.
The attractiveness and accessibility of our proposition directly
correlates with heightened engagement, usage, and advocacy among
our members. Member engagement and satisfaction are key to building
value for corporate clients, who want to improve the engagement,
retention, and acquisition of their most valued customers. This, in
turn, justifies increased corporate spending with us and attracts
new corporate clients and new supplier partners to work with
us.
We are delighted to have achieved another strong year of member
satisfaction, as measured by Net Promoter Score (NPS), showing a
marginal increase from the previous year.
We believe that our member satisfaction levels and strengthened
member proposition have resulted in an increase in repeat usage of
our service and growing numbers of Active Members using the
service. These metrics not only underscore the success of our
member-focused initiatives but also serve as compelling evidence of
the return on corporate client investment in our service,
contributing significantly to our high levels of corporate client
retention.
Summary
We have retained all our Material Contracts for the fourth
consecutive year, with an increased Net Corporate Revenue Retention
Rate of 131% (2022: 120%), and have launched new contracts in the
year. We have continued our record of retaining all Material
Contracts where we have launched our Ten Digital Platform.
We believe our competitive position is stronger than ever,
backed by global reach and a market-leading member proposition,
which delivers a strong return on investment for our corporate
clients. This has been achieved by continuing to invest in our
technology, content, and market expertise and better pricing,
access, benefits, and integration with our supplier partners.
By developing the platform, and in turn our corporate clients,
we have grown Net Revenue by 35% during the year. Our commitment to
innovation is underscored by our continued investments in
technology, including AI, content, and supplier partnerships, which
has enhanced the service to members and corporate clients. This
strategy recognises the importance of innovation in building our
market position and improving service levels, whilst delivering a
step-change in Adjusted EBITDA profitability of GBP7.1m to GBP12.0m
(2022: GBP4.9m) and Adjusted EBITDA margin up to 19.1%
(2022:10.4%).
I am proud of how our people across our offices globally
continue to professionally deliver and innovate high-quality
service to our members, paid for by our corporate clients. I would
like to express my thanks also to our outstanding management team,
which continues to drive the business successfully towards our
mission of becoming the world's most trusted service.
Alex Cheatle
Chief Executive Officer
21 November 2023
Financial Review
Net Revenue increased by 35% to GBP63.0m. The growth in Net
Revenue has been driven by strong growth in both corporate revenue
and supplier revenue. Record Adjusted EBITDA profitability at
GBP12.0m, delivering an inflexion point for the business as we made
our maiden profit before tax of GBP0.9m since IPO in November 2017.
As a result, the Adjusted EBITDA margin increased to 19.1% and the
operating cashflow of the Group increased to GBP11.5m.
2023 2022
GBPm GBPm
Revenue 66.7 48.7
Corporate revenue 55.6 41.1
Supplier revenue 7.4 5.7
---------------------------------------------- ------- -------
Net Revenue 63.0 46.8
Operating expenses and other income (51.0) (41.9)
---------------------------------------------- ------- -------
Adjusted EBITDA 12.0 4.9
Adjusted EBITDA % 19.1% 10.4%
Depreciation (2.9) (2.7)
Amortisation (5.3) (4.6)
Share-based payments (0.9) (0.5)
Exceptional items charge (1.1) (0.8)
---------------------------------------------- ------- -------
Operating profit/ (loss) before interest and
tax 1.8 (3.7)
Net finance expense and foreign exchange (0.9) (0.1)
---------------------------------------------- ------- -------
Profit / (loss) before taxation 0.9 (3.8)
Taxation credit/(expense) 3.6 (0.5)
---------------------------------------------- ------- -------
Profit / (loss) for the period 4.5 (4.3)
Profit / (loss) after tax % 6.7% (8.8)%
Net cash 3.7 3.2
Adjusted EBITDA
Adjusted EBITDA is not a statutory measure; however, the Board
believes it is appropriate to include this as an additional metric
as it is one of the main measures of performance used by the Board.
It reflects the underlying profitability of our business
operations, excluding amortisation of investment in platform
infrastructures, exceptional charges and share-based payment
expenses and related taxes.
Revenue and Net Revenue
Revenue for the twelve months to 31 August 2023 was GBP66.7m, up
37% on the twelve months to 31 August 2022 (2022: GBP48.7m). Net
Revenue13 for the twelve months to 31 August 2023 was GBP63.0m, up
35% compared to the prior year (2022: GBP46.8m), 29% at constant
currency. Net Revenue, which includes the direct cost of sales
relating to member transactions managed by the Group, is Ten's
preferred measure of revenue as it includes the cost of member
transactions where Ten is the principal service provider (i.e. cost
of airline tickets packaged with hotels under the Group's ATOL
licences).
The uplift in Net Revenue of 35% was principally driven by
record active member numbers and requests which have helped to grow
both corporate revenue and supplier revenue to its highest
levels.
The table below provides a five year history of Net Revenue.
This highlights the strong growth over the past two years post the
impact of the pandemic in 2020 and 2021.
Net Revenue 2023 2022 2021 2020 2019
GBPm GBPm GBPm GBPm GBPm
------------------- ------ ------ ------ ------ ------
Corporate revenue 55.6 41.1 31.9 40.9 40.3
Supplier revenue 7.4 5.7 2.8 3.3 5.5
------------------- ------ ------ ------ ------ ------
63.0 46.8 34.7 44.2 45.8
------------------- ------ ------ ------ ------ ------
Contract analysis
The following tables set out an analysis of our contracts by
size and by region. We have analysed only our Material Contracts.
Note, the contract size is based on the annualised value paid or
expected to be paid by the corporate client for the provision of
concierge and related services by Ten. This does not include the
revenue generated from supplier partners through the provision of
these concierge services.
Contract by
size 2023 2022 change
------------ ---- ---- ------
Extra Large 3 3 -
Large 6 6 -
Medium 19 19 -
------------ ---- ---- ------
28 28 -
------------ ---- ---- ------
Contract by
region 2023 2022 change
------------ ---- ---- ------
Europe 10 10 -
Americas 11 11 -
AMEA 6 6 -
Global 1 1 -
------------ ---- ---- ------
28 28 -
------------ ---- ---- ------
The Group has retained all material contracts in the year which
has helped to generate record revenues in the year. Although the
number of Material Contracts have not increased during the period,
a number of new mandates won have augmented existing Material
Contracts, including the expansion of a digitally enabled concierge
programme in the Americas for premium customers.
Regional analysis
While there is a clear overlap between the geographic location
of our corporate clients and their members' requests, members use
our concierge services across all the regions. Net Revenue by
region reflects our servicing location rather than the location of
our corporate clients. This allows us to track the efficiency and
profitability of our operations around the world and is therefore
presented on this basis.
In the year, we have changed the regional structure to align to
the operational management of the Group with Middle East and Africa
moving from EMEA to Asia. This has created two new regions: Europe,
and Asia Middle East and Africa (AMEA). Prior year figures have
been restated to reflect this change.
Net Revenue 2023 2022 % change
GBPm GBPm
------------ ----- ----- --------
Europe 25.9 20.6 26%
Americas 25.8 16.5 56%
AMEA 11.3 9.7 16%
------------ ----- ----- --------
63.0 46.8 35%
------------ ----- ----- --------
In Europe, Net Revenue increased by 26%. The Group has continued
to drive growth in existing corporate contracts through strong
member proposition and offers. This has led to record levels of
revenue being generated from these relationships. Member activity
has also reached record levels which has driven growth in supplier
revenue in the region.
Americas Net Revenue grew significantly in the year, an increase
of 56%. The growth in this region was driven by increased member
activity across the region as the Group benefited from the full
year trading of contracts launched just prior to the impact of the
pandemic and expansions secured during the period.
In AMEA, Net Revenue grew by 16%, lower than other regions as
pandemic restrictions took longer to be lifted at the start of the
financial year.
Operating expenses and other income
Operating expenses and other income increased by GBP9.1m to
GBP51.0m, an increase of 22% (2022: GBP41.9m). The increase in cost
was principally driven by additional headcount required to service
the uplift in activity across the business. Average number of
employees in the year has grown by 13% to 1,244 (2022: 1,101). The
lower increase in Operating expenses and headcount versus Net
Revenue growth is driven by improved operational efficiencies
across the Group.
Regional Adjusted EBITDA
As a result of our Net Revenue growth and delivering on
operational efficiencies, Adjusted EBITDA has increased by GBP7.1m
to GBP12.0m (2022: GBP4.9m), GBP11.1m at constant currency.
Adjusted EBITDA is after expenses, other than depreciation of
GBP2.9m (2022: GBP2.7m), amortisation of GBP5.3m (2022: GBP4.6m),
exceptional items expenses of GBP1.1m (2022: GBP0.8m) and
share-based payments of GBP0.9m (2022: GBP0.5m).
After allocating the costs of central IT infrastructure,
software development, property, senior management, and other
central costs, the Adjusted EBITDA for each region is set out
below:
Adjusted 2023 2022 change
EBITDA
GBPm GBPm GBPm
----- ------ -------
Europe 9.2 4.9 4.3
Americas 1.9 (0.7) 2.6
AMEA 0.9 0.7 0.2
----- ------ -------
12.0 4.9 7.1
----- ------ -------
The above regional split has taken account of the new regional
structure introduced this year to align to our operational
management structure as previously explained.
Europe
Adjusted EBITDA of GBP9.2m (2022: GBP4.9m) is an increase year
on year of GBP4.3m. The increase in profitability was driven by the
strong growth in both corporate revenue and supplier revenue,
whilst supported by efficiencies gained in the operating costs of
the segment. The segment benefited from hiring which had taken
place in the previous year allowing the headcount to grow by only
8% whilst driving Adjusted EBITDA growth by 88%.
Americas
The Americas region achieved an Adjusted EBITDA profit of
GBP1.9m (2022: loss GBP0.7m). The growth in Adjusted EBITDA was the
result of the success of the investments made to grow the business
across the region. The region has now benefited from a full year of
trading on contracts launched in the prior year, whilst continuing
to invest in the operations to support future potential contract
wins.
AMEA
The AMEA region Adjusted EBITDA grew to GBP0.9m (2022: GBP0.7m).
The region has benefited from the ending of travel restrictions
during the year, which has driven the majority of the EBITDA
growth.
Amortisation
Amortisation costs, relating to the internal platform (TenMAID)
and the member-facing platforms, were GBP5.3m in 2023 (2022:
GBP4.6m) reflecting continued investment in technology to drive
improvements in service levels, efficiency, and competitive
advantage.
Net finance expense
Net finance expense in the year was GBP0.9m (2022: GBP0.1m); the
expense included loan interest of GBP0.4m (2022: GBP0.1m), IFRS 16
lease interest expense of GBP0.2m (2022: GBP0.2m) as well as
foreign exchange losses on the translation of inter-company
balances in the year of GBP0.2m (2022: gain of GBP0.2m).
Share-based payments
The share-based payments expense in the year was GBP0.9m (2022:
GBP0.5m). These related to share-based payments expense reflecting
share grants made under management incentive plans as well as the
associated national insurance expenses.
Exceptional items expense
The exceptional items expense was GBP1.1m (2022: GBP0.8m). The
expenses incurred principally related to a one-off restructuring
program during the year to drive further operational efficiencies
including rationalisation of roles in our senior leadership team
and regional management teams. In addition, further costs were
incurred relating to the closure of our Russian operation last year
plus an historic overseas tax charge relating to 2019.
Profit before tax (PBT)
The Group has made its first annual PBT since listing, achieving
a PBT of GBP0.9m compared to a loss before tax of GBP3.8m in
2022.
Deferred Tax and Taxation
The Group has previously not recognised any deferred tax asset
associated to historical losses within the Group due to the
loss-making position of the Group. In the current period, the
Group's PBT is GBP0.9m. The generation of profits indicates that
the Group can generate future taxable profits allowing it to
utilise historical tax losses. Based on current forecasts, there
are sufficient probable future profits to recognise a deferred tax
asset relating to historical losses of GBP5.3m, primarily driven by
the UK entity (GBP4.2m).
The taxation expense for the year was a tax credit of GBP3.6m
(2022: tax expense of GBP0.5m). The tax credit for the year was the
result of the recognition of deferred tax assets related to
historical losses of GBP5.3m (2022: GBPnil), offset by timing
differences on deferred tax of GBP1.0m (2022: GBPnil) and current
year foreign taxes net of prior year adjustments of GBP0.7m (2022:
GBP0.5m).
Earnings per share (basic, diluted and underlying)
The profit after tax for the year was GBP4.5m (2022: loss GBP4.3
m), resulting in a basic profit per share (excluding treasury
shares) of 5.4p (2022: loss per share of 5.2p) and diluted profit
per share of 5.2p (2022: loss per share of 5.2p). Diluted earnings
per share is calculated as per IAS 33 by adjusting the weighted
average number of ordinary shares outstanding for the dilutive
effect of "in the money" share options.
Basic underlying earnings per share of 0.4p (2022 (4.2p)) and
diluted underlying earnings per share of 0.4p (2022 (4.2p)).
Underlying earnings per share is calculated by adjusting the
profit / (loss) attributable to equity shareholders for exceptional
items of GBP1.1m (2022: GBP0.8m) along with deferred tax arising
from the recognition of historical losses of GBP5.3m (2022:
GBPnil). No changes are made to the weighted average number of
ordinary shares. The Board does not recommend the payment of a
dividend.
Group cash flow
2023 2022
GBPm GBPm
Profit/(loss) before tax 0.9 (3.8)
Net finance expense 0.9 0.1
Working capital changes 0.4 (0.1)
Non-cash items (share-based payments, depreciation
and amortisation charges, exceptional items) 9.3 8.6
------------------------------------------------------- ----- -----
Operating cash flow 11.5 4.8
Capital expenditure (0.5) (0.9)
Investment in intangibles (7.3) (6.4)
Taxation paid (0.8) (0.6)
------------------------------------------------------- ----- -----
Cash inflow / (outflow) 2.9 (3.1)
Cash flows from financing activities
Sale of treasury shares 0.1 0.5
Issue of shares 0.6 1.4
Loan receipts >1 year 1.2 3.4
Invoice financing facility 0.1 -
Repayment of leases and net interest (3.2) (2.7)
------------------------------------------------------- ----- -----
Net cash (used by)/generated from financing activities (1.2) 2.6
Foreign currency movements (0.1) 0.4
------------------------------------------------------- ----- -----
Net increase/(decrease) in cash and cash equivalents 1.6 (0.1)
------------------------------------------------------- -----
Cash and cash equivalents 8.2 6.6
------------------------------------------------------- -----
Net cash 3.7 3.2
------------------------------------------------------- ----- -----
Cash generated from operations increased by GBP6.7m (140%) to
GBP11.5m (2022: GBP4.8m). Non-cash items in the year of GBP9.3m
(2022: GBP8.6m) were substantially made up of depreciation of
GBP2.9m and amortisation charges of GBP5.3m for the year. The
expenditure that was capitalised on IT equipment and
infrastructure, the Ten Digital Platform and TenMAID totalled
GBP7.8m (2022: GBP7.3m) as we continued to invest in our
technology.
Net cash from financing activities was primarily due to loan
receipts of GBP1.2m (2022: GBP3.4m), receipts from the issue of
equity of GBP0.6m (2022: GBP1.4m), offset by IFRS 16 lease payments
and interest of GBP3.2m (2022: GBP2.7m). This has led to an overall
increase in cash and cash equivalents of GBP1.6m during the year
with Net cash at GBP3.7m (2022: GBP3.2m), an increase of
GBP0.5m.
The additional loan receipts of GBP1.2m are repayable in August
2025. The loans are guaranteed by Ten Lifestyle Group Plc. Interest
is payable quarterly in arrears in cash at 8% per annum during the
term of the loan, a 1% administration fee payable in cash at
drawdown.
Group balance sheet
2023 2022
GBP'm GBP'm
------------------------------ ------ ------
Intangible assets 15.4 13.4
Property, plant and equipment 0.9 0.9
Right-of-use assets 1.9 2.2
Deferred tax asset 4.3 -
Cash 8.2 6.6
Other current assets 12.1 10.1
Current lease liabilities (1.7) (1.8)
Current liabilities (20.9) (17.3)
Short term borrowings (1.6) (1.5)
Non-current lease liabilities (0.4) (0.9)
Long-term borrowings (3.0) (1.9)
------------------------------ ------
Net assets 15.2 9.8
------------------------------ ------ ------
Share capital/share premium 31.4 30.7
Reserves (16.2) (20.9)
------------------------------ ------ ------
Total equity 15.2 9.8
------------------------------ ------ ------
Net assets were GBP15.2m (2022: GBP9.8m). The increase in the
year was driven by increased profitability in addition to the
recognition of a deferred tax asset of GBP4.3m. This is made up of
the GBP5.3m recognition of historical losses offset by utilisation
of deferred tax of GBP0.3m in the year, and recognition of in other
temporary differences of GBP0.7m. The Group has also continued to
invest in its digital platforms, driving the increase in intangible
assets. This was offset by the increase in long-term borrowing
arrangements.
Key Financial Performance Indicators (KFPIs)
Management accounts are prepared on a monthly basis and include
KPIs covering revenue, Adjusted EBITDA, cash balances, and Material
Contracts, and are measured against both the Group's budget and the
previous years' actual results. The KFPIs for the year are:
2023 2022 2021 2020
Net Revenue (GBPm) 63.0 46.8 34.7 44.2
Corporate (GBPm) 55.6 41.1 31.9 40.9
Supplier (GBPm) 7.4 5.7 2.8 3.3
Net Revenue growth % 35% 35% -21.6% -3.5%
Adjusted EBITDA 12.0 4.9 4.4 4.8
Adjusted EBITDA Margin % 19.1% 10.4% 12.8% 10.8%
Net cash (GBPm) 3.7 3.2 6.7 10.0
Material Contracts 28 28 24 23
Each month the Board assesses the performance of the Group based
on these KFPIs, operational performance indicators, including the
number of Active Members, sales performance, corporate client
development, technology updates. The Group's performance has
strengthened since being previously impacted by COVID-19, achieving
records across several its KFPIs.
Going concern
The impact of plausible adverse macroeconomic scenarios on Ten's
business still warrants focus and real-time management. The Group
is particularly exposed to the adverse impacts to variable revenues
from these scenarios as well as the risk of corporate revenue
contracts not being renewed.
The Group has set its budget for 2024 and forecast for the
following year but we recognise that there are scenarios under
which the Group could be impacted by reductions in the number of
member engagements and by prospective corporate clients failing to
renew contracts. From our budget base case, a stress scenario of
20% reduction in variable revenues was performed as well as a
severe downside scenario of 90% reduction in variable revenues. In
each of these scenarios, if revenue is not in line with cash flow
forecasts, the Directors have identified cost savings associated
with the reduction in revenue and can identify further cost savings
if necessary.
The Directors have no reason to believe that corporate revenue
and receipts will decline to the point that the Group no longer has
sufficient resources to fund its operations. However, in the
unlikely event this should occur, the Group will continue to manage
its working capital position, as well as making significant
reductions in its fixed costs.
Post Year End events
Since the end of the year, the Group has:
-- Announced the further expansion of an existing contract with
a financial services client in the Americas, which will now
increase from a Medium to a Large contract and announced a new
contract win with a global Private Bank client, anticipated to
equate to a Medium contract.
-- Raised a further GBP950k of three-year loans notes, including
GBP250k of loan notes subscribed for by Nitro Ventures Limited on
21 November 2023, which constitutes a related party transaction
under the AIM Rules for Companies as Jules Pancholi, Non-Executive
Chairman, is a shareholder and director of Nitro Ventures Limited.
The loan notes are repayable on 25 November 2026 and are guaranteed
by Ten Lifestyle Group Plc. Interest is payable quarterly in
arrears in cash at 12% per annum during the term of the loan and a
1% administration fee is payable in cash at drawdown. An early
repayment premium will be payable by the Company of 5% should it
repay the loan notes on or before 24 November 2024 or of 3% should
it repay the loan notes on or before 24 November 2025.
The independent directors of the Company (with the exception of
Jules Pancholi who is involved in the related party transaction)
consider, having consulted with Singer Capital Markets Advisory
LLP, the Company's nominated adviser, that the terms of Nitro
Ventures Limited's subscription for loan notes is fair and
reasonable insofar as shareholders are concerned.
-- Extended the GBP1.5m loan, originally entered into in March
2022, with Mrs S Weatherill, wife of the previous Chairman Mr B
Weatherill until December 2024.
Alan Donald
Chief Financial Officer
21 November 2023
Consolidated Statement of Comprehensive Income for the year
ended 31 August 2023
Note 2023 2022
GBP'000 GBP'000
Revenue 3 66,656 48,651
Cost of sales on principal member transactions (3,653) (1,839)
--------- ---------
Net Revenue 3 63,003 46,812
Other cost of sales (2,032) (1,428)
Gross profit 60,971 45,384
Administrative expenses (60,012) (49,519)
Other income 836 386
Operating profit before amortisation, depreciation,
interest, share-based payments, exceptional items
and taxation ("Adjusted EBITDA") 12,004 4,878
Depreciation (2,916) (2,713)
Amortisation 8 (5,287) (4,608)
Share-based payment expense (908) (537)
Exceptional items 4 (1,098) (769)
----------------------------------------------------- ----- --------- ---------
Operating profit / (loss) 1,795 (3,749)
Net finance expense (871) (101)
--------- ---------
Profit / (loss) before taxation 924 (3,850)
Taxation credit/(expense) 3,623 (466)
--------- ---------
Profit / (loss) for the year 4,547 (4,316)
========= =========
Other comprehensive expense:
Foreign currency translation differences (564) (137)
Total comprehensive profit / (loss) for the year 3,983 (4,453)
========= =========
Basic profit / (loss) per ordinary share 6 5.4p (5.2)p
Diluted profit / (loss) per ordinary share 6 5.2p (5.2)p
Basic underlying profit / (loss) per ordinary
share 6 0.4p (4.2)p
Diluted underlying profit / (loss) per ordinary
share 6 0.4p (4.2)p
The consolidated statement of comprehensive income has been
prepared on the basis that all operations are continuing
operations.
Consolidated Statement of Financial Position as at 31 August
2023
Company No: 08259177
Note 2023 2022
GBP'000 GBP'000
Non-current assets
Intangible assets 8 15,394 13,397
Property, plant and equipment 912 939
Right of use assets 1,911 2,274
Deferred tax asset 7 4,297 -
Total non-current assets 22,514 16,610
--------- ---------
Current assets
Inventories 511 118
Trade and other receivables 11,608 9,930
Cash and cash equivalents 8,229 6,584
---------
Total current assets 20,348 16,632
--------- ---------
Total assets 42,862 33,242
========= =========
Current liabilities
Trade and other payables (20,059) (16,459)
Provisions (931) (846)
Lease liabilities (1,738) (1,834)
Borrowings (1,622) (1,500)
Total current liabilities (24,350) (20,639)
--------- ---------
Net current liabilities (4,002) (4,007)
========= =========
Non-current liabilities
Borrowings (2,950) (1,940)
Lease liabilities (399) (820)
Total non-current liabilities (3,349) (2,760)
--------- ---------
Total liabilities (27,699) (23,399)
========= =========
Net assets 15,163 9,843
========= =========
Equity
Called up share capital 85 84
Share premium account 31,272 30,658
Merger relief reserve 1,993 1,993
Treasury reserve 606 513
Foreign exchange reserve (1,111) (547)
Retained deficit (17,682) (22,858)
Total equity 15,163 9,843
========= =========
Consolidated Statement of Changes in Equity for the year ended
31 August 2023
Called Share Merger Foreign
up share premium relief exchange Treasury Retained
capital account reserve reserve reserve deficit Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Balance at 31 August
2021 82 29,356 1,993 (410) 5 (19,079) 11,947
---------- --------- --------- ---------- --------- --------- --------
- - - - - - -
Loss for the year - - - - - (4,316) (4,316)
Foreign exchange - - - (137) - - (137)
--------
Total comprehensive loss
for the year - - - (137) - (4,316) (4,453)
Issue of new share capital 2 1,302 - - - - 1,304
Shares purchased by Employee
Benefit Trust (EBT) - - - - 508 - 508
Equity-settled share-based
payments charge - - - - - 537 537
Balance at 31 August
2022 84 30,658 1,993 (547) 513 (22,858) 9,843
Profit for the year - - - - - 4,547 4,547
Foreign exchange - - - (564) - - (564)
Total comprehensive income
for the year - - - (564) - 4,547 3,983
Employee Benefit Trust
(EBT) costs - - - - 93 - 93
Equity-settled share-based
payments charge - - - - - 629 629
Issue of new share capital 1 614 - - - - 615
Balance at 31 August
2023 85 31,272 1,993 (1,111) 606 (17,682) 15,163
========== ========= ========= ========== ========= ========= ========
Consolidated Statement of Cash Flows for the year ended 31
August 2023
Note 2023 2022
GBP'000 GBP'000
Cash flows from operating activities
Profit/(loss) for the year, after tax 4,547 (4,316)
Adjustments for:
Taxation (credit)/expense 5 (3,623) 466
Net finance expense 871 101
Amortisation of intangible assets 8 5,287 4,608
Depreciation of property, plant and equipment 511 483
Depreciation of right of use asset 2,405 2,230
Equity-settled share-based payment expense 629 537
Exceptional items 4 427 769
- -
Movement in working capital:
Increase in inventories (393) (18)
Increase in trade and other receivables (1,222) (2,012)
Increase in trade and other payables 2,106 2,020
Cash generated from operations 11,545 4,868
Tax paid (826) (623)
Net cash generated from operating activities 10,719 4,245
-------- --------
Cashflows from investing activities
Purchase of intangible assets 8 (7,284) (6,452)
Purchase of property, plant and equipment (531) (866)
Finance income 7 1
Net cash used by investing activities (7,808) (7,317)
-------- --------
Cash flows from financing activities
Lease liability repayments (2,538) (2,427)
Sale of treasury shares 102 508
Net receipts from invoice financing 122 -
Interest paid (442) (73)
Interest paid on IFRS 16 lease liabilities (216) (185)
Cash receipts from issue of share capital 615 1,302
Loan receipts - loan notes 1,185 3,440
Net cash (used by)/generated from financing activities (1,172) 2,565
-------- --------
Foreign currency cash and cash equivalents movements (94) 429
Net increase/decrease in cash and cash equivalents 1,645 (78)
Cash and cash equivalents at beginning of the
period 6,584 6,662
Cash and cash equivalents at end of the period
Cash at bank and in hand 8,229 6,584
Cash and cash equivalents 8,229 6,584
======== ========
1. Basis of preparation
The financial information set out in this document does not
constitute the Company's statutory accounts for the years ended 31
August 2023 or 2022. Statutory accounts for the years ended 31
August 2022 and 31 August 2023, which were approved by the
Directors on 21 November 2023, have been reported on by the
Independent Auditors. The Independent Auditors' Reports on the
Annual Report and Financial Statements for each of 2022 and 2023
were unqualified, did not draw attention to any matters by way of
emphasis, and did not contain a statement under 498(2) or 498(3) of
the Companies Act 2006.
Statutory accounts for the year ended 31 August 2022 have been
filed with the Registrar of Companies. The statutory accounts for
the year ended 31 August 2023 will be delivered to the Registrar in
due course, and are available from the Company's registered office
at Floor 2, 355 Euston Road, London, England, NW1 3AL and are
available from the Company's website:
https://www.tenlifestylegroup.com/investors .
The financial information set out in these results has been
prepared using the recognition and measurement principles of UK
adopted international accounting standards and with those parts of
the Companies Act 2006 applicable to companies reporting under IFRS
(except as otherwise stated). The accounting policies adopted in
these results have been consistently applied to all the years
presented and are consistent with the policies used in the
preparation of the financial statements for the year ended 31
August 2022. There are deemed to be no new standards, amendments
and interpretations to existing standards, which have been adopted
by the Group that have had a material impact on the financial
statements.
2. Going concern
The consolidated financial statements have been prepared on a
going concern basis. The ability of the Company to continue as a
going concern is contingent on the ongoing viability of the Group.
The Group meets its day-to-day working capital requirements through
its cash balances and wider working capital management. The current
political and economic conditions continue to create some
uncertainty, particularly over (a) corporate members' engagement;
and (b) supplier revenue volumes. The Group's forecasts and
projections, taking account of reasonably possible changes in
trading performance, show that the Group expects to be able to
operate within the level of its current cash resources. Having
assessed the principal risks and the other matters discussed in
connection with the going concern statement, the Directors
considered it appropriate to adopt the going concern basis of
accounting in preparing the consolidated financial statements.
Whilst the Company has grown significantly post the COVID-19
pandemic, continued management of costs is in place to ensure
operating performances align to the Board's expectations. The Board
believes that the business is able to navigate through any
macro-economic conditions that may impact performance due to the
strength of its member proposition, its balance sheet and the net
cash position of the Group.
The Group has set its budget for 2024 and forecast for the
following year but we recognise that there are scenarios under
which the Group could be impacted by reductions in the number of
member engagements and by prospective corporate clients failing to
renew contracts. From our budget base case, a stress scenario of
20% reduction in variable revenues was performed as well as a
severe downside scenario of 90% reduction in variable revenues. In
each of these scenarios, if revenue is not in line with cash flow
forecasts, the Directors have identified cost savings associated
with the reduction in revenue and can identify further cost savings
if necessary to ensure there is adequate cash and day to day
working capital going forward.
Having assessed the principal risks and other matters discussed
in connection with the going concern statement, the Directors have
a reasonable expectation that the group has adequate resources to
continue in operational existence for the foreseeable future. For
these reasons, they continue to adopt the going concern basis of
accounting in preparing the financial statements.
3. Segment reporting
The total revenue for the Group has been derived from its
principal activity, the provision of concierge services. This has
been disaggregated appropriately into operational segment and
geographical location.
The Group has three reportable segments: Europe, Asia-Pacific,
the Middle East and Africa (AMEA) and North and South America ("the
Americas"). During the year, the Group changed the reportable
segments to reflect the updated management structure of each
region, as a result, the comparative period has been re-presented
to align to the new reportable segments. Each segment is a
strategic business unit and includes businesses with similar
operating characteristics. They are managed separately in similar
time zones to reflect the geographical management structure.
2023 2022
GBP'000 GBP'000
Europe 25,914 20,615
Americas 25,834 16,534
AMEA 11,255 9,663
-------- --------
Net Revenue 63,003 46,812
Add back: cost of sales on principal transactions 3,653 1,839
-------- --------
Revenue 66,656 48,651
Europe 9,207 4,907
Americas 1,943 (700)
AMEA 854 671
-------- --------
Adjusted EBITDA 12,004 4,878
Amortisation (5,287) (4,608)
Depreciation (2,916) (2,713)
Share-based payment expense & national insurance (908) (537)
Exceptional items (1,098) (769)
-------- --------
Operating profit/(loss) 1,795 (3,749)
Foreign exchange (loss)/gain (220) 157
Other net finance expense (651) (258)
-------- --------
Profit/(loss) before taxation 924 (3,850)
Taxation credit/(expense) 3,623 (466)
Profit/(loss) for the year 4,547 (4,316)
======== ========
Statutory revenue for the Americas and AMEA segments is the same
as the Net Revenue amounts disclosed above. Statutory revenue for
the Europe segment was GBP29,567k (2022: GBP22,454k).
The Group's statutory revenue from external corporate clients is
generated from commercial relationships entered into by various
Group companies, which, given the global nature of the Group's
service delivery model, may not reflect the location where the
services are delivered, as reflected in the Net Revenue
segmentation noted below.
The Group's statutory revenue is disaggregated into the
following revenue streams. In addition, the Group disaggregates
revenue into services where the Group is considered agent or
principal as below:
Segmental reporting continued
2023 2022
GBP'000 GBP'000
Direct concierge service revenue 52,257 38,030
Offers and benefits revenue 1,170 1,129
Indirect concierge service revenue 11,095 7,516
Digital platform fees 2,134 1,976
-------- --------
Revenue 66,656 48,651
-------- --------
2023 2022
GBP'000 GBP'000
Corporate revenue 55,561 41,116
Supplier revenue 11,095 7,535
-------- --------
Revenue 66,656 48,651
Supplier revenue (cost of sales on principal member transactions) (3,653) (1,839)
-------- --------
Net Revenue 63,003 46,812
-------- --------
2023 2022
GBP'000 GBP'000
Revenue from services as principal 61,416 46,570
Revenue from services as agent 5,240 2,081
-------- --------
66,656 48,651
-------- --------
Net Revenue is a non-GAAP Company measure that includes the
direct cost of sales relating to member transactions managed by the
Group, such as the cost of airline tickets sold under the Group's
ATOL licences. Net Revenue is the measure of the Group's income on
which segmental performance is measured.
Adjusted EBITDA is a non-GAAP Company specific measure excluding
interest, taxation, amortisation, depreciation, share-based payment
and exceptional costs. Adjusted EBITDA is the main measure of
performance used by the Board, which is considered to be the chief
operating decision maker. Adjusted EBITDA is the principal
operating metric for a segment.
The statement of financial position is not analysed between
reporting segments. Management and the chief operating decision
maker consider the statement of financial position at Group
level.
Three corporate clients (2022: two) generated more than 10% of
total revenue each during the year ended 31 August 2023. The total
combined revenue of these corporate clients was GBP23.9m (2022:
GBP9.5m) and was mainly included in the Europe and Americas
segments.
4. Exceptional items
2023 2022
GBP'000 GBP'000
Restructuring costs 995 -
Loss on disposal of subsidiary and restructuring 18 519
Provision for overseas tax authority costs 85 250
1,098 769
======== ========
The Group recognised an exceptional charge which related to
restructuring costs incurred during the year of GBP995k (2022:
GBPnil).During the year, the Group recognised a further GBP18k
(2022: GBP519k) related to the disposal of the Russian subsidiary,
Ten Group (RUS) LLC in 2022. The Group also recognised an
additional provision of GBP85k (2022: GBP250k) related to overseas
taxes and penalties.
5. Income tax expense
2023 2022
GBP'000 GBP'000
Current tax
UK current tax expense - -
Foreign taxes related to current year 843 466
Prior year adjustments in respect of foreign taxes (169) -
Deferred tax
Origination and reversal of timing differences 1,009 -
Historical losses recognised (5,306) -
Total tax (credit) / expense (3,623) 466
========= ========
The tax expense for the year can be reconciled to
the income statement as follows:
2023 2022
GBP'000 GBP'000
Profit/(loss) before taxation 924 (3,850)
--------- --------
Expected tax credit based on a corporation tax rate
of 21.5% (2022: 19.0%)* 199 (732)
Effect of expenses not deductible in determining
taxable profit 60 3
Effect of taxes related to previous years (169) -
Origination and reversal of timing differences 1,009 975
Historical losses recognised (5,306) -
Overseas tax rate differences 584 220
Taxation (credit) / expense for the year (3,623) 466
========= ========
*A blended rate of 21.5% has been used in the current period
following the change in the corporation tax rate from 19% to 25% on
1 of April 2023
6. Earnings per share
Basic earnings per share 2023 2022
GBP'000 GBP'000
Profit/(loss) attributable to equity shareholders
of the parent 4,547 (4,316)
----------- -----------
Weighted average number of ordinary shares in issue
(net of treasury) 83,894,193 83,699,615
Basic profit/(loss) per share (pence) 5.4p (5.2)p
----------- -----------
Basic profit per ordinary share
Basic profit per ordinary share is calculated by dividing the
net result for the year attributable to shareholders by the
weighted number of ordinary shares outstanding during the year.
(2022: (5.2)p)
Diluted earnings per share 2023 2022
GBP'000 GBP'000
Profit/(loss) attributable to equity shareholders
of the parent 4,547 (4,316)
----------- -----------
Weighted average number of ordinary shares in issue
(net of treasury) 86,986,163 83,699,615
Diluted profit/loss per share (pence) 5.2p (5.2)p
----------- -----------
Diluted earnings per ordinary share
Diluted earnings per share is calculated as per IAS 33 by
adjusting the weighted average number of ordinary shares
outstanding for the dilutive effect of "in the money" share
options, which are the only dilutive potential common shares for
the Group. The net profit attributable to ordinary shareholders is
divided by the adjusted weighted average number of shares. "Out of
the money" share options are excluded from the calculation as they
are non-dilutive. Where the Group has incurred a loss in the year,
the diluted loss per share is the same as the basic loss per share
as the loss has an anti-dilutive effect.
Underlying earnings per share 2023 2022
GBP'000 GBP'000
Profit/(loss) attributable to equity shareholders
of the parent 4,547 (4,316)
------------- -------------
Excluding Exceptional Items & Taxes
Exceptional Items 1,098 769
Recognition of historical tax losses (5,306) -
------------- -------------
Underlying profit/(loss) attributable to equity shareholders
of the parent 339 (3,547)
Basic weighted average number of ordinary shares
in issue (net of treasury) 83,894,193 83,699,615
Basic underlying profit/(loss) per share (pence) 0.4p (4.2)p
------------- -------------
Diluted weighted average number of ordinary shares
in issue (net of treasury) 86,986,163 83,699,615
------------- -------------
Diluted underlying profit/(loss) per share (pence) 0.4p (4.2)p
------------- -------------
Underlying earnings per ordinary share
Underlying earnings per share is calculated by adjusting the
profit / (loss) attributable to equity shareholders for exceptional
items (note 5) and associated taxes along with non-underlying tax
items such as deferred tax arising from the recognition of
historical losses. No changes are made to the weighted average
number of ordinary shares.
7. Deferred tax
2023 2022
GBP'000 GBP'000
Opening balance - -
Credited/(charged) to the statement of comprehensive income:
Share-based payments - -
Historical losses 4,999 -
Movement in other temporary differences (702)
Closing balance 4,297 -
======== ========
Other temporary
Deferred tax Intangible assets Capital allowances Losses differences Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
---------------------------- ------------------ ------------------- -------- --------------------------- --------
Opening Balance as at 1
September 2022 - - - - -
Credited/(Charged) to the
statement of comprehensive
income
Movement in deferred tax
balances (1,672) 715 - 255 (702)
Utilisation of historical
losses - - (307) - (307)
Recognition of historical
losses - - 5,306 - 5,306
Closing balance as at 31
August 2023 (1,672) 715 4,999 255 4,297
---------------------------- ------------------ ------------------- -------- --------------------------- --------
As at 31 August 2023, the Group has unused tax losses of
GBP61.1m that are available for offset against future taxable
profits. During the year ended 31 August 2023, a deferred tax asset
has been recognised in respect of GBP21.0m of such losses (2022:
GBPnil). Due to uncertainty as to the level and timing of taxable
profits in the future, no deferred tax asset has been recognised in
respect of the remaining GBP40.1m (2022: GBP31.6m). The losses that
remain unrecognised are not expected to expire.
8. Intangible assets
Capitalised Website Trademarks Total
development
costs
GBP'000 GBP'000 GBP'000 GBP'000
Cost
At 31 August 2021 35,036 1,909 - 36,945
Additions 6,452 - - 6,452
Impairment - - - -
Disposals (4) - - (4)
Write-off - - - -
At 31 August 2022 41,484 1,909 - 43,393
------------------------- --------------------- -------------------- --------
Additions 7,284 - - 7,284
Disposal - - - -
At 31 August 2023 48,768 1,909 - 50,677
------------------------- --------------------- -------------------- --------
Accumulated amortisation
At 31 August 2021 23,481 1,909 - 25,390
Charge for the year 4,608 - - 4,608
Disposal (2) - - (2)
At 31 August 2022 28,087 1,909 - 29,996
------------------------- --------------------- -------------------- --------
Charge for the year 5,287 - - 5,287
Disposal - - - -
At 31 August 2023 33,374 1,909 - 35,283
------------------------- --------------------- -------------------- --------
Carrying amount
At 31 August 2022 13,397 - - 13,397
------------------------- --------------------- -------------------- --------
At 31 August 2023 15,394 - - 15,394
------------------------- --------------------- -------------------- --------
All additions are related to internal expenditure. The useful
economic lives of the capitalised development platforms and website
are assessed to be five years and three years respectively.
9. Cautionary Statement
This document contains certain forward-looking statements
relating to Ten Lifestyle plc (the "Group"). The Group considers
any statements that are not historical facts as "forward-looking
statements". They relate to events and trends that are subject to
risk and uncertainty that may cause actual results and the
financial performance of the Company to differ materially from
those contained in any forward-looking statement. These statements
are made by the Directors in good faith based on information
available to them and such statements should be treated with
caution due to the inherent uncertainties, including both economic
and business risk factors, underlying any such forward-looking
information.
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END
FR FEFEFFEDSEIF
(END) Dow Jones Newswires
November 22, 2023 02:00 ET (07:00 GMT)
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