TIDMMIND
RNS Number : 3673V
Mind Gym PLC
01 December 2023
1 December 2023
Mind Gym PLC
("Mind Gym", the "Group" or the "Company")
Half year results for the six months ended 30 September 2023
Strong pipeline following a challenging first half
MindGym (AIM: MIND), the global provider of human capital and
business improvement solutions, announces its half year results for
the six months ended 30 September 2023.
6 months 6 months to 12 months
to to 31 Mar
2023
30 Sept 30 Sept 2022 (FY23)
2023
(H1 FY24) (H1 FY23)
Revenue GBP20.9m GBP26.8m GBP55.0m
------------- ---------------- ------------
US Revenue GBP11.1m GBP16.7m GBP31.3m
------------- ---------------- ------------
EMEA Revenue GBP9.8m GBP10.1m GBP23.7m
------------- ---------------- ------------
Gross profit margin 85.4% 87.5% 88.4%
------------- ---------------- ------------
Digitally enabled revenue
mix 69% 71% 68%
------------- ---------------- ------------
Adjusted EBITDA(1) (GBP4.1m) GBP1.9m GBP5.3m
------------- ---------------- ------------
Statutory profit/(loss) (GBP13.2m) GBP0.6m GBP3m
before tax
------------- ---------------- ------------
Diluted EPS (11.34p) 0.84p 2.84p
------------- ---------------- ------------
Cash at bank GBP2.1m GBP4.5m GBP7.6m
------------- ---------------- ------------
Capital expenditure GBP3.0m GBP2.2m GBP5.1m
------------- ---------------- ------------
(1) Adjusted EBITDA represents the underlying level of profit/
(loss), excluding exceptional items. In H1 FY24, exceptional items
totalled GBP7.7m (H1 FY23: GBPnil), comprised of: digital asset
impairment GBP6.6m, US office lease impairment GBP0.5m and
restructuring costs GBP0.6m.
Financial Highlights
-- H1 FY24 revenue of GBP20.9m (H1 FY23: GBP26.8m) impacted by
economic headwinds, resulting in delays and cancellations in Q2,
which have affected the whole industry, particularly in the US
o In the US, revenue declined by 33% to GBP11.1m (H1 FY23:
GBP16.7m), impacted by general market weakness, notably in the
technology sector
o In EMEA, performance was resilient with revenues of GBP9.8m
(H1 FY23: GBP10.1m). GBP2.0m of expected revenue moved into H2
FY24, resulting from a delay to the start of our large energy
framework, which launched successfully in September
-- Digitally enabled revenue, as a proportion of total revenue
in the period, was broadly flat at 69% (H1 FY23: 71%) reflecting a
small increase in the proportion of face-to-face delivery
-- Completed an annualised GBP8.0m cost reduction exercise, of which GBP3.0m will impact FY24:
o Opex reduced by an annualised GBP4.5m, generating savings from
H2 FY24 onwards and leading to a GBP1.1m exceptional restructuring
charge
o Capex reduced by an annualised GBP3.5m to an anticipated
GBP2.5m in FY25. This focuses investment on digital assets which
are already revenue generating, with other activities paused. This
resulted in a one-off, non-cash, impairment charge of GBP6.6m
-- The Group has adequate liquidity, with cash at 30 September
2023 of GBP2.1m (31 March 2023: GBP7.6m) and immediate access to
GBP2.0m of its undrawn GBP10.0m debt facility, which it does not
expect to utilise
Operational Highlights and Board Changes:
-- Following consultation with major shareholders, the Board has
separately announced changes which reflect the planned evolution to
the next stage of MindGym's growth and transition away from a
founder dependent business:
o Christoffer Ellehuus to join MindGym as CEO designate on 8(th)
January 2024 with the intention to join the Board and transition to
CEO by the time of the FY24 AGM
o Octavius Black will move to Executive Chairman as part of a
broader Board restructure to retain strong corporate governance and
support delivery of MindGym's strategy
-- MindGym continues to bring innovative products to market:
o Awarded the prestigious Brandon Hall award for work with
Burberry using Performa
o The recently acquired organisational diagnostics platform is
now in trial with two clients
o Three awards won with the Association of Business
Psychologists for our three year, multi million GBP work with Citi,
utilising our new 'habit-lab' approach to culture change
o Launched the Point of View: 'Wellworking: how we can all be
better at work', with a foreword by Amy Edmondson, Professor of
Leadership at Harvard Business School. This has already been
instrumental in securing a new contract with an estimated value of
c. GBP0.8m
Current Trading & Outlook
-- The Company is trading in line with the Board's recently
revised expectations for the full year
-- H2 FY24 will see a significant benefit from the Energy
framework, which was successfully launched in September 2023, and
continues through FY25
-- Six-month forward bookings at the start of H2 FY24 are higher
than the same position twelve months ago.
-- There has been substantial growth in the pipeline in both
regions, including a number of multi-year and multi-million pound
frameworks
-- The level of the pipeline benefit on H2 FY24 is dependent on
the speed of decision making and the rate at which clients
mobilise. We note that:
o Since the start of October, there have been several notable
project wins in EMEA
o Conversion of opportunities in the US remains slow
-- Combined with the impact of the revised cost base, this will
enable a return to strong profitability in H2 FY24
-- The Group continues to target a medium-term EBITDA margin of 15% to 20%.
Analyst and Investor Webcast
The Company will host a webcast and conference call for analysts
and investors at 9:00am BST today. Please contact
mindgym@mhpgroup.com for further information.
Octavius Black, Chief Executive Officer of Mind Gym, said:
"We have had a challenging first half of FY24, with tough market
pressures brought on by significant client restructures, especially
in the US technology sector. These have led to programme delays and
cancellations. We have responded by rapidly realigning the cost
base and focusing capital expenditure on digital assets which are
already revenue generating.
"Moreover, recent wins and strong pipeline growth with several
significant GBP1m+ opportunities in healthcare, industrial and
financial services, means we are confident of a significant
improvement in financial performance in the second half of
FY24.
"We have the right strategy, based on providing integrated
solutions that deliver impact at scale. The opportunity for MindGym
in this large and disaggregated market, remains strong."
Enquiries:
Mind Gym plc
Octavius Black, Chief Executive Officer
Dominic Neary, Chief Financial Officer +44 (0)20 7376 0626
Liberum (Nominated Adviser and Sole
Broker)
Nick How
Edward Mansfield +44 (0)20 3100 2000
-----------------------
MHP (for media enquiries) +44 (0)20 3128 8100
Reg Hoare mindgym@mhpgroup.com
Katie Hunt
Veronica Farah
-----------------------
About MindGym
MindGym is a company that delivers business improvement
solutions using scalable, proprietary products which are based on
behavioural science. The Group operates in three global markets:
business transformation, human capital management and learning
& development. Mind Gym is quoted on the London Stock Exchange
Alternative Investment Market (ticker: MIND) and headquartered in
London. The business has offices in London, New York and Singapore.
Further information is available at www.themindgym.com
The information contained within this announcement is deemed by
the Company to constitute inside information as stipulated under
the Market Abuse Regulation ("MAR") EU no.596/2014. Upon the
publication of this announcement via Regulatory Information Service
("RIS"), this inside information is now considered to be in the
public domain.
Operational Review
While trading conditions during H1 FY24 have been challenging,
the Company is well-positioned for future success. Businesses
continue to operate in a tight labour market with a shortage of
skills driving a commercial necessity to invest to attract, retain
and develop talent. There is no scale player in the highly
fragmented $370bn Learning & Development market and MindGym
offers a standout proposition in culture, leadership and
productivity with 23 years of proprietary IP, clients who include
most of FTSE-100 and S&P-100, and an omnichannel solution that
integrates live, virtual and digital, fuelled by data.
Board changes:
As announced separately today, Christoffer Ellehuus will join
MindGym as CEO designate on 8(th) January 2024, transitioning to
CEO by the time of the AGM in July 2024 when Octavius Black will
transition to Executive Chair and Ruby McGregor-Smith's three year
term as Chair ends. In conjunction, a broader Board restructure
will be undertaken to retain strong corporate governance, providing
the right balance of skills, experience and independence and
supporting delivery of MindGym's strategy.
Improvement in pipeline and conversion:
Despite the challenging conditions experienced during H1 FY24
there has been strong pipeline growth in both regions since the end
of the period, including an increasing number of opportunities of
GBP1m-GBP10m in value. Whilst conversion of opportunities in the US
remains slow, there have been several notable project wins recently
in EMEA, which will primarily benefit FY25, with FY24 impact
dependent upon final agreed project phasing.
Developing market leading products
MindGym continues to bring innovative products to market, which
are meeting with client approval:
-- In H1 FY24 we have seen a 31% uplift in the number of users
utilising our Performa product. We were recently awarded the
prestigious Brandon Hall award for our work with Burberry who used
Performa as an integrated part of their MindGym leadership
programme;
-- The Company's proprietary organisational diagnostics
delivered on our new platform is now in trial with two clients and
receiving positive feedback; and
-- We have had success with our new 'habit lab' approach to
culture change, working with Citi on a multi-million, 3-year
programme, which recently won three awards at the prestigious
Association of Business Psychologist's awards. Several other
clients are in conversations with the Company about adopting 'habit
labs' for their culture change initiatives.
New wellness market opportunity
The global market for corporate wellbeing is estimated at
GBP50bn and forecast to grow to GBP70bn [1] by 2030.
MindGym has launched a new point of view in a research paper
'Wellworking: how we can all be better at work' with a foreword by
Amy Edmondson, Professor of Leadership at Harvard Business School.
This has already been instrumental in securing one new contract
with an estimated value of almost GBP1m and the Board expects this
to be a driver of future growth.
Outlook
The Company is trading in line with the Board's recently revised
expectations for the full year. We started H2 FY24 with higher
forward bookings than at the same point in the prior year. We have
also seen substantial growth in the pipeline in both regions,
including a number of multi-year, multi-million pound frameworks,
which will impact both FY25 and H2 FY24. The level of pipeline
impact on H2 FY24 will depend on the speed of decision making and
the rate at which clients mobilise once decisions are taken.
Whilst US conversion of opportunities remains subdued, several
recent wins in EMEA, together with the ramp up of activity under
our major energy framework provide increased confidence that we
will see a step change in revenues vs. H1 FY24. This, coupled with
the impact of the revised cost based will enable a return to strong
profitability in H2 FY24, and into FY25. The Group continues to
target a medium term EBITDA margin of 15% to 20%.
Financial Review:
Revenue and Gross Margin
Revenue in H1 FY24 was GBP20.9m, a reduction of 22% on the
equivalent period in the prior year (H1 FY23: GBP26.8m), impacted
by economic headwinds. In Q2, these trading conditions resulted in
several clients and prospective clients undergoing major
restructuring programmes and showing caution in committing to new
spend. This both pushed out the timeframe for the delivery of
existing programmes and resulted in delays to the procurement of
new projects.
The effects of this were more pronounced in the US, where
MindGym's client base, especially in the technology sector, were
particularly affected. As a result, revenue in the Americas
declined by 33% to GBP11.1m (H1 FY23: GBP16.7m).
In EMEA, performance was more resilient, where revenue declined
3% vs. prior year to GBP9.8m (H1 FY23: GBP10.1m). GBP2m of expected
revenue slipped into H2 FY24, resulting from a delay to the start
of our large energy framework, which launched successfully in
September.
Digitally enabled revenue in the period was broadly flat at as a
proportion of total revenue at 69% (H1 FY23: 71%) reflecting a
small increase in the proportion of face-to-face delivery.
Revenue from the Group's top 25 clients increased slightly to
48% (H1 FY23: 40%) in line with the trend towards a greater
proportion of opportunities of scale.
Gross margin declined slightly to 85.4% (H1 FY23: 87.5%),
reflecting the change in revenue mix from Design and Advisory to
Delivery in the period.
Administrative Expenses
In response to the reduction in revenue, management reacted
during the period to realign the cost base and preserve cash. Since
the start of FY24, annualised cost reductions of GBP8.0m have been
implemented (GBP4.5m in operating expenditure and GBP3.5m in
capital expenditure). The benefit of these savings will have an
impact of c.GBP3m on H2 FY24, with the full year benefit in
FY25.
These actions resulted in an exceptional charge during the
period of GBP7.7m comprising:
-- Digital asset impairment GBP6.6m: This is outlined in the
Digital Asset Impairment section below;
-- Impairment of lease on US office GBP0.5m: With a greater
proportion of the team working remotely, the decision was taken
during the period to vacate a proportion of the office. Directors
are exploring opportunities to sub-let this space, however, with no
certainty over any recovery from such sub-letting and with a
proportion of the office not now being utilised, an impairment
charge in respect of that proportion of the lease has been applied
in the period. The pre-COVID GBP0.8m annual cost of this office
will end in February 2025, and be replaced by a significantly
cheaper alternative; and
-- Restructuring costs GBP0.6m: Reflecting headcount reductions.
Net of these exceptional items and depreciation and amortisation
of GBP1.4m (H1 FY23: GBP1.3m), underlying administrative expenses
of GBP22.0m, represented a below inflation increase of 2% on the
prior period (H1 FY23: GBP21.5m).
Excluding the exceptional restructuring cost of GBP0.6m,
employee costs rose 2% to GBP17.6m in the period (H1 FY23:
GBP17.2m). This reflected average employee numbers of 358, an
increase of 10% on the equivalent period in the prior year,
following an increase in employee numbers during FY23. The period
end employee number of 349, however, represented a 6% reduction on
the start of the period. Including further savings implemented
since the end of the period, the total annualised value of
operating cost savings delivered since the start of FY24 is
GBP4.5m.
Digital Asset Impairment
In response to the downturn in Q2 revenue, with the
corresponding impact that this has had on the cash position, the
directors reviewed the ongoing investment being made across several
digital products in development. Following this revsview, the
decision has been taken to pause ongoing funding on longer-term
opportunities that are not currently revenue generating, primarily
relating to the Digital Experience user journey (DXP) and the
platform which supports this. This decision will result in an
annualised cash reduction of GBP3.5m in capital expenditure.
A significant proportion of the features and underlying
technology built in the development of these assets will be
utilised in the integrated products and solutions MindGym continues
to deliver to clients. However, since it is now uncertain whether
this technology will not now form part of discrete and separately
identifiable products in line with IAS38, the directors have taken
the decision to fully impair the carrying value of the impacted
products. This has resulted in a one-off impairment charge of
GBP6.6m in the period.
Profit/ (loss)
The adjusted EBITDA loss for the period (excluding the impact of
the exceptional items) was GBP4.1m (H1 FY23: GBP1.9m profit). The
adjusted profit/ (loss) before tax was a loss of GBP5.5m (H1 FY23:
GBP0.6m profit). Including the exceptional adjusting items, the
loss before tax for the period was GBP13.2m (H1 FY23: GBP0.6m
profit).
On an adjusted basis, basic earnings per share for the period
were -5.61p (loss) (H1 FY23: 0.83p) and diluted earnings per share
were -5.61p (loss) (H1 FY23: 0.84p). On an unadjusted basis
earnings per share for the period were -11.34p (loss) (H1 FY23:
0.83p) and diluted earnings per share were -11.34p (loss) (H1 FY23:
0.84p).
Cash
Despite the loss in the period, the Group has adequate cash
liquidity. Cash at bank at 30 September 2023 was GBP2.1m, a
reduction of GBP5.5m from the year-end balance at 31 March 2023 of
GBP7.6m. Further to this, MindGym retains immediate access to
GBP2.0m of its undrawn GBP10.0m debt facility.
MIND GYM PLC
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
6 months 6 months
to to Year to
30 Sept 30 Sept 31 March
2023 2022 2023
(Unaudited) (Unaudited) (Audited)
Note GBP'000 GBP'000 GBP'000
Revenue 3 20,905 26,759 55,011
Cost of sales (3,051) (3,344) (6,360)
-------------- -------------- ------------
Gross profit 17,854 23,415 48,651
Administrative expenses (30,978) (22,749) (45,568)
-------------- -------------- ------------
Operating profit/(loss) (13,124) 666 3,083
Finance income 5 30 27 55
Finance costs 5 (78) (52) (174)
-------------- -------------- ------------
(Loss)/profit before taxation (13,172) 641 2,964
Adjusted (loss)/profit before tax (5,497) 641 2,964
Adjusting items 6 (7,675) - -
-------------- -------------- ------------
(Loss)/profit before tax (13,172) 641 2,964
---------------------------------------------- ------ -------------- -------------- ------------
Tax on (loss)/profit 7 1,808 207 (29)
-------------- -------------- ------------
(Loss)/profit for the financial period
from continuing operations attributable
to owners of the parent (11,364) 848 2,935
============== ============== ============
Items that may be reclassified subsequently
to profit or loss
Exchange translation differences on
consolidation 20 785 297
-------------- -------------- ------------
Other comprehensive income for the
period attributable to the owners of
the parent 20 785 297
-------------- -------------- ------------
Total comprehensive income for the
period attributable to the owners of
the parent (11,344) 1,633 3,232
============== ============== ============
(Loss)/earnings per share (pence)
Basic 8 (11.34p) 0.83p 2.93p
Diluted 8 (11.34p) 0.84p 2.84p
-------------- -------------- ------------
Adjusted (loss)/earnings per share
(pence)
Basic 8 (5.61p) 0.83p 2.93p
Diluted 8 (5.61p) 0.84p 2.84p
--------- ------- -------
MIND GYM PLC
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
31
30 September 30 September March
2023 2022 2023
(Unaudited) (Unaudited) (Audited)
Note GBP'000 GBP'000 GBP'000
Non-current assets
Intangible assets 10 7,904 9,787 12,320
Property, plant and equipment 11 2,697 4,584 3,691
Deferred tax assets 2,783 3,084 3,229
Other receivables 233 257 230
-------------- -------------- -----------
13,617 17,712 19,470
Current assets
Inventories 42 35 53
Trade and other receivables 12 7,258 13,553 9,527
Current tax receivable 1,193 594 779
Cash and cash equivalents 2,069 4,507 7,587
-------------- -------------- -----------
10,562 18,689 17,946
-------------- -------------- -----------
Total assets 24,179 36,401 37,416
============== ============== ===========
Current liabilities
Trade and other payables 13 10,010 11,123 11,423
Lease liability 1,118 1,151 1,121
Redeemable preference shares 50 50 50
Current tax payable - - 20
-------------- -------------- -----------
11,178 12,324 12,614
Non-current liabilities
Lease liability 1,529 2,761 1,988
Total liabilities 12,707 15,085 14,602
-------------- -------------- -----------
Net assets 11,472 21,316 22,814
============== ============== ===========
Equity
Share capital 15 1 1 1
Share premium 258 242 242
Share option reserve 474 597 496
Retained earnings 10,739 20,476 22,075
-------------- -------------- -----------
Equity attributable to owners of the
parent Company 11,472 21,316 22,814
============== ============== ===========
The Board of Directors approved these condensed interim
financial statements on 30 November 2023.
MIND GYM PLC
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Share
Share Share option Retained
capital premium reserve earnings Total equity
Note GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
At 1 April 2022 1 213 608 18,804 19,626
========== ========== ========== =========== ==============
Profit for the period - - - 848 848
Other comprehensive income:
Exchange translation differences
on consolidation - - - 785 785
---------- ---------- ---------- ----------- --------------
Total comprehensive income
for the period - - - 1,633 1,633
Exercise of options - 29 (39) 39 29
Credit to equity for share
based payments 16 - - 28 - 28
At 30 September 2022 1 242 597 20,476 21,316
========== ========== ========== =========== ==============
Profit for the period - - - 2,087 2,087
Other comprehensive income:
Exchange translation differences
on consolidation - - - (488) (488)
---------- ---------- ---------- ----------- --------------
Total comprehensive income
for the period - - - 1,599 1,599
Debit to equity for share
based payments 16 - - (101) - (101)
At 31 March 2023 1 242 496 22,075 22,814
========== ========== ========== =========== ==============
(Loss) for the period - - - (11,364) (11,364)
Other comprehensive income:
Exchange translation differences
on consolidation - - - 20 20
---------- ---------- ---------- ----------- --------------
Total comprehensive income
for the period (11,344) (11,344)
Exercise of options - 16 (8) 8 16
Credit to equity for share
based payments 16 - - (14) - (14)
At 30 September 2023 1 258 474 10,739 11,472
========== ========== ========== =========== ==============
MIND GYM PLC
CONSOLIDATED STATEMENT OF CASH FLOWS
6 months 6 months
to to Year to
30 Sept 30 Sept 31 March
2023 2022 2023
(Unaudited) (Unaudited) (Audited)
Note GBP'000 GBP'000 GBP'000
Cash flows from operating activities
(Loss)/profit for the financial
period (11,364) 848 2,935
Adjustments for:
Amortisation of intangible assets 10 740 508 743
Impairment of intangible assets 10 6,604 - -
Depreciation of tangible assets 11 610 713 1,468
Impairment of right of use asset 11 516 - -
Net finance costs 5 48 25 119
Taxation (credit)/charge 7 (1,808) (207) 29
(Increase)/decrease in inventories 11 (28) (46)
Decrease/(increase) in trade and
other receivables 12 2,266 (3,489) 524
Increase/(decrease) in payables
and provisions 13 (1,413) (1,606) (1,306)
Share based payment charge 16 (14) 28 (73)
------------
Cash (utilised)/generated from
operations (3,804) (3,208) 4,393
Net tax (paid) 1,864 (128) (766)
--------------- ---------------
Net cash generated from operating
activities (1,940) (3,336) 3,627
--------------- --------------- ------------
Cash flows from investing activities
Purchase of intangible assets 10 (2,928) (2,120) (4,888)
Purchase of property, plant and
equipment (55) (91) (240)
Interest received 30 26 54
--------------- --------------- ------------
Net cash used in investing activities (2,953) (2,185) (5,074)
--------------- --------------- ------------
Cash flows from financing activities
Cash repayment of lease liabilities (610) (683) (1,298)
Issuance of ordinary shares 16 29 29
Interest paid (15) - (52)
Net cash used in financing activities (609) (654) (1,321)
--------------- --------------- ------------
Net (decrease) in cash and cash
equivalents (5,502) (6,175) (2,768)
Cash and cash equivalents at beginning
of period 7,587 10,021 10,021
Effect of foreign exchange rate
changes (16) 661 334
--------------- --------------- ------------
Cash and cash equivalents at the
end of period 2,069 4,507 7,587
=============== =============== ============
Cash and cash equivalents at the
end of period comprise:
Cash at bank and in hand 2,069 4,507 7,587
=============== =============== ============
MIND GYM PLC
NOTES TO THE GROUP FINANCIAL STATEMENTS
1. General information
Mind Gym plc ("the Company") is a public limited company
incorporated in England & Wales and its ordinary shares are
traded on the Alternative Investment Market of the London Stock
Exchange ("AIM"). The address of the registered office is 160
Kensington High Street, London W8 7RG. The group consists of Mind
Gym plc and its subsidiaries, Mind Gym (USA) Inc., Mind Gym
Performance (Asia) Pte. Ltd and Mind Gym (Canada) Inc. (together
"the Group").
The principal activity of the Group is to apply behavioural
science to transform the performance of companies and the lives of
the people who work in them. The Group does this primarily through
research, strategic advice, management and employee development,
employee communication, and related services.
2. Basis of preparation
The condensed interim financial statements have been prepared in
accordance with the requirements of the AIM Rules for Companies. As
permitted, the Company has chosen not to adopt IAS 34 "Interim
Financial Statements" in preparing this interim financial
information. The condensed interim financial statements should be
read in conjunction with the annual financial statements for the
year ended 31 March 2023, which have been prepared in accordance
with International Financial Reporting Standards (IFRS) as adopted
by the European Union, including interpretations issued by the
International Financial Reporting Interpretations Committee
("IFRIC"), and with the Companies Act 2006 applicable to companies
reporting under IFRS. The unaudited interim financial information
does not constitute statutory accounts within the meaning of the
Companies Act 2006. This interim report, which has neither been
audited nor reviewed by independent auditors, was approved by the
Board of directors on 30 November 2023.
Statutory accounts for the year ended 31 March 2023 were
approved by the Board of Directors on 12 June 2023 and delivered to
the Registrar of Companies. The report of the auditors on those
accounts was unqualified, did not contain an emphasis of matter
paragraph and did not contain any statement under Section 498 of
the Companies Act 2006.
The interim financial statements have been prepared on a going
concern basis under the historical cost convention.
The interim financial statements are presented in pounds
sterling. All values are rounded to GBP1,000 except where otherwise
indicated.
The accounting policies used in preparing the interim results
are the same as those applied to the latest audited annual
financial statements.
The Group has chosen to present an adjusted measure of profit
and earnings per share, which excludes certain items which are
separately disclosed due to their size, nature or incidence, and
are not considered to be part of normal operating costs of the
Group. These costs include restructuring costs and impairment
charges.
3. Segmental analysis
Operating segments are reported in a manner consistent with the
internal reporting provided to the chief operating decision maker,
who is responsible for allocating resources and assessing
performance of the business. The chief operating decision maker has
been identified as the Board. The Group has two operating segments:
EMEA (comprising the United Kingdom and Singapore) and America
(comprising the United States and Canada).
Both segments derive their revenue from a single business
activity, the provision of human capital and business improvement
solutions.
The Group's business is not highly seasonal and the Group's
customer base is diversified with no individually significant
customer.
Segment results for the 6 months ended 30 September 2023
(Unaudited)
Segment result
EMEA America Total
GBP'000 GBP'000 GBP'000
Revenue 9,807 11,098 20,905
Cost of sales (1,508) (1,543) (3,051)
Administrative expenses (19,999) (10,979) (30,978)
---------- ---------- ----------
Profit before inter-segment charges (11,700) (1,424) (13,124)
Inter-segment charges (295) 295 -
---------- ---------- ----------
Operating profit - segment result (11,995) (1,129) (13,124)
Finance income 30
Finance costs (78)
----------
(Loss) before tax (13,172)
==========
Adjusted (loss) before tax EMEA America Total
GBP'000 GBP'000 GBP'000
Operating (loss) - segment result (11,995) (1,129) (13,124)
Adjusting items 6,714 961 7,675
Adjusted EBIT (5,281) (168) (5,449)
Finance income 30
Finance costs (78)
----------
Profit before tax (5,497)
==========
The mix of revenue for the six months ended 30 September 2023 is
set out below.
EMEA America Group
Delivery 69.4% 75.0% 72.3%
---------- ------------ ----------
Design 15.0% 9.2% 11.7%
---------- ------------ ----------
Digital 10.2% 8.7% 9.7%
---------- ------------ ----------
Licensing and certification 2.5% 2.6% 3.3%
---------- ------------ ----------
Other 1.8% 4.0% 2.2%
---------- ------------ ----------
Advisory 1.1% 0.5% 0.8%
---------- ------------ ----------
Segment results for the 6 months ended 30 September 2022
(Unaudited)
Segment result
EMEA America Total
GBP'000 GBP'000 GBP'000
Revenue 10,078 16,681 26,759
Cost of sales (1,285) (2,059) (3,344)
Administrative expenses (11,639) (11,110) (22,749)
---------- ---------- ----------
Profit before inter-segment charges (2,846) 3,512 666
Inter-segment charges 3,260 (3,260) -
---------- ---------- ----------
Operating profit - segment result 414 252 666
Finance income 27
Finance costs (52)
----------
Profit before tax 641
==========
The mix of revenue for the six months ended 30 September 2022 is
set out below.
EMEA America Group
Delivery 67.1% 64.7% 65.6%
---------- ------------ ----------
Design 13.2% 14.8% 14.1%
---------- ------------ ----------
Digital 11.6% 10.0% 10.7%
---------- ------------ ----------
Licensing and certification 4.5% 6.7% 5.8%
---------- ------------ ----------
Other 2.1% 2.4% 2.3%
---------- ------------ ----------
Advisory 1.5% 1.4% 1.5%
---------- ------------ ----------
Segment results for the year ended 31 March 2023 (Audited)
Segment result
EMEA America Total
GBP'000 GBP'000 GBP'000
Revenue 23,742 31,269 55,011
Cost of sales (2,740) (3,620) (6,360)
Administrative expenses (23,092) (22,476) (45,568)
---------- ---------- ----------
(Loss)/profit before inter-segment charges (2,090) 5,173 3,083
Inter-segment charges 5,067 (5,067) -
---------- ---------- ----------
Operating (loss)/profit - segment result 2,977 106 3,083
Finance income 55
Finance costs (174)
----------
Loss before tax 2,964
==========
The mix of revenue for the year ended 31 March 2023 is set out
below.
EMEA America Group
Delivery 60.2% 60.6% 60.3%
---------- ------------ ----------
Design 19.0% 15.7% 17.2%
---------- ------------ ----------
Digital 13.4% 12.8% 13.1%
---------- ------------ ----------
Licensing and certification 3.3% 7.5% 5.6%
---------- ------------ ----------
Other 2.4% 2.3% 2.4%
---------- ------------ ----------
Advisory 1.7% 1.1% 1.4%
---------- ------------ ----------
4. Employees
Staff costs were as follows:
6 months to 6 months to Year to 31
30 Sept 2023 30 Sept 2022 March 2023
(Unaudited) (Unaudited) (Audited)
GBP'000 GBP'000 GBP'000
Wages and salaries 16,093 15,194 31,036
Social security costs 1,481 1,395 2,944
Pension costs - defined contribution
plans 584 550 1,055
Share-based payments (14) 28 (73)
18,144 17,167 34,962
=============== =============== =============
The average number of Group's employees by function was:
6 months to 6 months to Year to 31
30 Sept 2023 30 Sept 2022 March 2023
(Unaudited) (Unaudited) (Audited)
Delivery 226 208 218
Support 81 77 79
Digital 51 39 44
358 324 341
=============== =============== =============
The period end number of Group's employees by function was:
6 months to 6 months to Year to 31
30 Sept 2023 30 Sept 2022 March 2023
(Unaudited) (Unaudited) (Audited)
Delivery 216 212 241
Support 81 77 86
Digital 52 43 46
349 332 373
=============== =============== =============
5. Net finance costs
6 months to 6 months to Year to 31
30 Sept 2023 30 Sept 2022 March 2023
(Unaudited) (Unaudited) (Audited)
GBP'000 GBP'000 GBP'000
Finance income
Bank interest receivable 30 26 54
Finance lease income - 1 1
Finance costs
Bank interest payable (15) - (52)
Lease interest (IFRS 16) (63) (52) (122)
(48) (25) (119)
=============== =============== =============
6. Adjusting items
6 months to 6 months to Year to 31
30 Sept 2023 30 Sept 2022 March 2023
(Unaudited) (Unaudited) (Audited)
GBP'000 GBP'000 GBP'000
Restructuring costs 555 - -
Impairment of intangibles 6,604 - -
Impairment of right of use asset 516 - -
7,675 - -
=============== =============== =============
Restructuring costs in the six months ended 30 September 2023
include redundancy costs related to the headcount reduction
exercise undertaken to reduce the cost base.
Impairment of intangible assets are excluded from the adjusted
results of the Group since the costs are one-off charges. These
relate to digital assets not in use that are no longer being
developed.
The Group tested right-of-use assets for impairment, and
recognised an impairment loss on a leased asset.
7. Tax
The statutory tax credit of GBP1,808,000 (six months ended 30
September 2022: credit of GBP207,000); year ended 31 March 2023:
charge of GBP29,000) represents an effective tax rate on loss
before tax of 13.7% (six months ended 30 September 2022: -32%; year
ended 31 March 2023: 1%).
During the period, The Company resubmitted the UK tax returns
for the years ended 31 March 2022 and 31 March 2023, in order to
surrender the Research and Development tax credit for a cash
refund. This resulted in a current tax prior year adjustment of
GBP1.9m and corresponding deferred tax prior year adjustment of
GBP3.3m.
8. Earnings per share
Basic earnings per share is calculated by dividing the earnings
attributable to shareholders of the Company by the weighted average
number of ordinary shares in issue during the year. The Company has
potentially dilutive shares in respect of the share-based payment
plans (see Note 16).
30 Sept 2023 30 Sept 2022 31 March
2023
(Unaudited) (Unaudited) (Audited)
Weighted average number of shares
in issue 100,174,502 100,119,558 100,143,571
Potentially dilutive shares (weighted
average) 4,324,325 1,059,821 3,141,506
-------------- -------------- ---------------
Fully diluted number of shares (weighted
average) 104,498,827 101,179,379 103,285,077
-------------- -------------- ---------------
6 months to 6 months to Year to 31
30 Sept 2023 30 Sept 2022 March 2023
(Unaudited) (Unaudited) (Audited)
pence pence pence
Basic earnings per share (11.34) 0.85 2.93
Diluted earnings per share (11.34) 0.84 2.84
Adjusted basic earnings per share (5.61) 0.85 2.93
Adjusted diluted earnings per share (5.61) 0.84 2.84
9. Dividends
The Board did not propose a final dividend for the year ended 31
March 2023. No interim dividend is proposed for the period to 30
September 2023.
10. Intangible assets
Development
Patents costs Total
GBP'000 GBP'000 GBP'000
Cost
At 1 April 2023 121 15,173 15,294
Additions 16 2,912 2,928
At 30 September 2023 137 18,085 18,222
Amortisation
At 1 April 2023 66 2,908 2,974
Amortisation charge 3 737 740
Impairment - 6,604 6,604
--------- ------------- ---------
At 30 September 2023 69 10,249 10,318
========= ============= =========
Net book value
At 31 March 2023 55 12,265 12,320
--------- ------------- ---------
At 30 September 2023 68 7,836 7,904
========= ============= =========
Development cost additions in the six months ended 30 September
2023 includes software development costs directly incurred in the
creation of new digital assets. The Group undertook an impairment
review and as a result reflected an impairment charge of
GBP6,604k.
11. Property, plant and equipment
Right-of-use Leasehold Development
asset improvements costs Total
GBP'000 GBP'000 GBP'000 GBP'000
Cost
At 1 April 2023 6,189 538 1,793 8,520
Additions 69 - 55 124
Exchange differences 50 5 16 71
-------------- --------------- ------------- ---------
At 30 September 2023 6,308 543 1,864 8,715
Depreciation
At 1 April 2023 3,235 374 1,220 4,829
Depreciation charge 404 41 168 613
Impairment 516 - - 516
Exchange differences 42 6 12 60
-------------- --------------- ------------- ---------
At 30 September 2023 4,197 421 1,400 6,018
============== =============== ============= =========
Net book value
At 31 March 2023 2,954 164 573 3,691
-------------- --------------- ------------- ---------
At 30 September 2023 2,111 122 464 2,697
============== =============== ============= =========
12. Trade and other receivables
31 March
30 Sept 2023 30 Sept 2022 2023
(Unaudited) (Unaudited) (Audited)
GBP'000 GBP'000 GBP'000
Trade receivables 5,151 10,657 6,730
Less provision for impairment (94) (259) (102)
-------------- -------------- ------------
Net trade receivables 5,057 10,398 6,628
Other receivables 65 202 80
Prepayments 794 1,074 1,125
Accrued income 1,342 1,879 1,694
7,258 13,553 9,527
============== ============== ============
Non-current assets includes GBP233,000 (30 September 2022:
GBP257,000; 31 March 2023: GBP230,000) of prepayments in respect of
property deposits.
Trade receivables have been aged with respect to the payment
terms as follows:
31 March
30 Sept 2023 30 Sept 2022 2023
(Unaudited) (Unaudited) (Audited)
GBP'000 GBP'000 GBP'000
Not past due 4,503 9,311 6,282
Past due 0-30 days 313 693 336
Past due 31-60 days 182 216 74
Past due 61-90 days 74 344 12
Past due more than 90 days 79 92 26
5,151 10,656 6,730
============== ============== ============
13. Trade and other payables
31 March
30 Sept 2023 30 Sept 2022 2023
(Unaudited) (Unaudited) (Audited)
GBP'000 GBP'000 GBP'000
Trade payables 1,294 1,019 1,257
Other taxation and social security 2,023 829 744
Other payables 421 623 396
Accruals 3,406 4,248 4,606
Deferred income 2,866 4,404 4,420
10,010 11,123 11,423
============== ============== ============
14. Borrowings
The Group entered into a GBP10 million debt facility (GBP6m RCF,
GBP4m accordion) on 30 September 2021 which matures after 3 years.
The facility remains undrawn as at 30 November 2023.
15. Share capital
30 Sept 30 Sept 30 Sept 30 Sept 31 March 31 March
2023 2023 2022 2022 2023 2023
Cost Cost Cost
Number GBP'000 Number GBP'000 Number GBP'000
Ordinary shares of GBP0.00001
At 1 April 100,167,584 1 100,105,660 1 100,105,660 1
Issue of shares to satisfy
options 30,880 - 61,924 - 61,924 -
Ordinary shares of GBP0.00001
at period end 100,198,464 1 100,167,584 1 100,167,584 1
============= ========= ============= ========= ============= ==========
Share based payments
The Group awards options to selected employees under a Long-Term
Incentive Share Option Plan ("LTIP"). The options granted to date
vest subject only to remaining employed up to the vesting date.
Unexercised options do not entitle the holder to dividends or to
voting rights.
The awards granted in the six months to 30 September 2023 are
subject to performance conditions based on revenues and EBITDA.
The awards granted in the six months to 30 September 2022 are
subject to performance conditions based on revenues and EBITDA.
Some awards granted during this time period are time bound
only.
The awards granted during FY22 are subject to performance
conditions based on revenue, adjusted earnings per share and total
shareholder return.
On the 30(th) September 2019 the Group launched an annual Save
As You Earn Scheme and an Employee Share Purchase Plan for all
eligible employees in the UK and USA respectively.
The total share-based payments (credit)/expense was:
6 months 6 months Year to
to 30 Sept to 30 Sept 31 March
2023 2022 2023
(Unaudited) (Unaudited) (Audited)
GBP'000 GBP'000 GBP'000
Equity settled share-based payments (14) 28 (73)
============== ============== ============
[1] Grandview Research 2021
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