Ten Lifestyle Group failed to make a profit in the first half of the financial year after demand for its services was stunted by the arrival of the Omicron variant.
The London-based concierge firm reported a £3.2million loss in the six months to the end of February as a strong recovery in trade at the start of the period was thrown adrift from late November.
Rather than shrink staff numbers and costs, the group said it decided to hold onto its new employees in anticipation that demand would rebound and support the expected growth in current contracts and fresh contract launches.
Period of two halves: Ten Lifestyle Group reported a £3.2million first-half loss as a strong recovery in trade at the start of the period was thrown adrift from late November
This caused the company’s operating expenses to rise by £4.4million to just shy of £20million, yet it still managed to shrink losses by £700,000 from the same period last year.
Net revenue at the group grew 21.8 per cent to £20.8million during the six months even after trade weakened in the second half of the period thanks to significant growth in sales across all regions.
A recovery in base business and larger supplier revenue, alongside a relaxation of Covid restrictions, helped net revenues in the Americas climb 30 per cent and by 15 per cent to £10million in the EMEA market.
At the same time, the gaining of a major contract with Japanese financial services company Credit Saison drove a 23 per cent net revenue increase in the Asia-Pacific territory.
Other major companies to sign new contracts with Ten Lifestyle during the period included Barclays Bank, Norway’s DNB Bank and wealth management business St James’s Place.
Since then, net revenues have risen above pre-Covid levels even though travel restrictions hit its business in some Americas and Asia-Pacific markets.
Big deals: Other major companies to sign new contracts with Ten Lifestyle during the first-half period were Barclays Bank (pictured) and wealth management business St James’s Place
Further financial impact came from the firm’s decision to close down its Moscow office following the escalation of the Russo-Ukrainian war, though it pointed out that its Russian business brought in less than 1.5 per cent of net revenue.
It said that monthly request numbers by clients have grown since the end of March in all markets, including in the Americas and Asia-Pacific regions, where current travel rules tend to be much stricter.
Ten Lifestyle expects the continued relaxation of international travel rules and other concerns to further boost organic sales and requests.
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Because of the expansion in employee numbers, it also expects to see enhanced profitability in the second half of the fiscal year and full-year adjusted underlying earnings in line with forecasts.
Chief executive Alex Cheatle said: ‘In order to manage the increased level of demand, we recruited new staff at the start of the period and retained them despite the temporary fall in demand caused by Omicron, to support new contract launches and the recovery in demand we are now seeing.
‘This increase in cost base, combined with the nonrecurrence of payroll assistance, caused a short-term fall in profitability during the period.’
Ten Lifestyle Group shares were 5.1 per cent higher at 62p during the mid-afternoon on Wednesday, although their value has plunged by more than 40 per cent in the past six months.
