TIDMMIND
RNS Number : 2685C
Mind Gym PLC
16 October 2020
16 October 2020
Mind Gym plc
("Mind Gym" or the "Company" or "Group")
Half Year Trading Update,
Notice of Interim Results
and Board Changes
Improving trading performance following COVID-19 disruption
Mind Gym (AIM: MIND), the global provider of human capital and
business improvement solutions, is pleased to provide a trading
update for the six months ended 30 September 2020 ("H1"), ahead of
reporting its interim results on 23 November 2020.
H1 Trading
As the Group anticipated in its full year results in June 2020,
trading for H1 has reflected the disruption caused by the emergence
of the COVID crisis to our global client base. As our clients
focused on dealing with their own operational changes, including
moving to remote working, they were forced to cancel face-to-face
leadership events and training programmes and most of the new work
usually commissioned with us between February and July was
suspended.
The Group's acceleration of its digital strategy, and the
underlying strengths and flexibility of its proposition, mitigated
some of the impact by enabling a change in mix, including:
-- A significant shift from live face-to-face to virtual
deliveries and to supporting clients with standalone digital
solutions.
o Revenues from virtual live deliveries increased significantly
to 78% of total revenues compared to 32% for the same period last
year.
o Despite declines in revenue elsewhere, revenue from standalone
digital solutions increased by 6% year on year (from 8% to 15% of
the mix).
-- Moving quickly to offer new products to train clients in how
to lead and work virtually, which quickly became top sellers.
As a result of the anticipated disruption to our clients,
revenue for the six months to 30 September 2020 is expected to be
GBP14.5m, 40% (39% on a constant currency basis) behind the
comparative period last year. Both the US and EMEA regions were
materially affected by COVID-19, with revenues expected to be 36%
and 44% behind the comparative period last year respectively,
resulting in the US mix of global revenue increasing to 60% (H1
2019: 57%).
The Group has taken action to reduce costs to reflect current
revenues, whilst continuing to invest to support growth. In H1,
people costs are anticipated to be 9% below the comparative period
last year as a result of the measures taken, including temporary
salary reductions, greater part-time work during lock down and
restructuring partially offset by continued investment in
operational leadership, sales team and marketing. As a consequence,
the Group anticipates making an adjusted loss before tax in the six
months to 30 September 2020 of between GBP1.0m and GBP1.5m (before
exceptional restructuring costs of GBP0.7m), with the Group having
operated profitably by the end of the period, prior to investment
in growth.
The Group continues to maintain a resilient balance sheet with
GBP14.5m cash at 30 September 2020 (H1 2019: GBP10.7m) and no bank
debt. We had no material bad debts during the period and overdue
debt at 30 September 2020 reduced to 14% of total debtors from 24%
at the same time last year.
Current trading
October is forecast to deliver a marked increase in revenue,
continuing the Group's month-on-month improvement in performance
through August and September. In addition, the Group's pipeline has
expanded substantially, pointing to a continuation in this
recovery. As a result, it is anticipated that the second half of
the current financial year ending 31 March 2021, will see
significant growth in both revenue and profits compared to the
first half of this year.
Board Changes
The Group is delighted to announce the appointment of Trevor
Phillips OBE, ARCS, FIC as an independent Non-Executive Director of
the Company, with immediate effect.
Trevor has a breadth of strategic business leadership experience
in the private sector and has over four decades of public sector
experience. He is currently Chairman of the Board at Green Park, a
fast growing recruitment and consultancy services company, and
co-founder of Webber Phillips Ltd a leading data analytics
provider. Until 2018, Trevor was also President of the Partnership
Council of the John Lewis Partnership.
Trevor spent over a decade as a senior executive in ITV plc,
rising to become Head of Current Affairs in the network. He is also
well known as an award-winning TV producer and presenter, with
three RTS journalism awards to his name. He is a regular columnist
for The Times newspaper.
As the founding Chair of the Equality and Human Rights
Commission, and the first elected Chair of the Greater London
Authority, Trevor has deep expertise in regulatory practice and
investigation, particularly in relation to social and governance
matters. Trevor is also currently Chair of Index on Censorship, the
international campaigning and publishing group promoting freedom of
expression, and a Senior Fellow at the influential think-tank
Policy Exchange. Trevor has been the recipient of several honorary
doctorates, an OBE and was awarded the Chevalier de la Legion
d'Honneur by the French Government.
Baroness Dido Harding, Senior Independent Non-Executive Director
and Chair of the Remuneration Committee is stepping down from the
Board, with immediate effect. Sally Tilleray, Non-Executive
Director and Chair of the Audit and Risk Committee since June 2019
will take on the role of Senior Independent Director, with
immediate effect.
The Board intends to appoint a further independent Non-Executive
Director, to be announced in due course. The Remuneration Committee
will be chaired on an interim basis by David Nelson.
Octavius Black, Chief Executive Officer of Mind Gym,
commented:
"The first six months of the current financial year was a period
of great uncertainty as companies focused their attention on the
operational challenges of adapting to COVID-19. We were successful
in pivoting clients to virtual delivery, feedback for which is very
strong, and in leading the market again in product development.
"The Group has taken the opportunity to increase its focus on
the medium to long term digital strategy and investment which will
ensure Mind Gym grows its share of the corporate development and
behaviourial change market. Growth is returning, showing up in both
booked revenues and the opportunity pipeline and we are confident
that revenue performance and profitability in H2 FY21 will be
significantly better than H1.
"We continue to have a strong cash balance that protects the
business and provides the resources for investing in growth.
"Despite the challenges brought by COVID, our strong
proposition, team and financial position combined with an improving
performance leaves us confident about the future."
Joanne Cash, Chair of Mind Gym, commented:
"The challenges of the past six months have tested everything
the world knew about work and there is no question that the Group
suffered a blow to revenue as clients were affected by global
lockdowns. However, these events have also highlighted the Group's
strengths and, in particular, the importance of its digital
strategy. The Board is confident that the business will return to
its former strength, the signs of which have already begun.
"I would like to take this opportunity to thank Baroness Harding
for her valuable contribution to the Group since she joined the
Board for its successful public listing and subsequent pre-Covid
growth. We are extremely grateful for her guidance and support.
"At the same time, it is a tremendous privilege to welcome
Trevor Phillips to our Board and we very much look forward to
working with him to address the increasing number of challenges our
clients are confronting in these unusual times."
Enquiries
Mind Gym plc +44 (0) 20 7376 0626
Octavius Black (CEO)
Joanne Black (Chair)
Richard Steele (CFO)
Liberum (Nominated Adviser and
Broker) +44 (0) 20 3100 2000
Bidhi Bhoma
Joshua Hughes
Euan Brown
MHP (for media enquiries) +44 (0) 20 3128 8572
Reg Hoare
Katie Hunt
Mindgym@mhpc.com
Regulatory Information
The following disclosures in relation to the appointment of Mark
Trevor Phillips, aged 66, are required pursuant to Schedule 2(g) of
the AIM Rules for Companies:
Current directorships and partnerships: Past directorships and partnerships
held over the last five years:
1 Cent Magenta Communications
Limited Britten Pears Arts
------------------------------------
Employers Network For Equality
& Inclusion Coqual Inc.
------------------------------------
Engage Britain Diversity Analytics Limited
------------------------------------
Green Park Interim & Executive Green Park Diversity Analytics
Limited Limited
------------------------------------
Headlong Theatre Limited Kaleidoscope Diversity Trust
------------------------------------
The Social Market Foundation Open Britain Limited
------------------------------------
Webber Phillips Limited Pepper Productions Limited
------------------------------------
Workers' Educational Association The Social Mobility Foundation
------------------------------------
Writers And Scholars International
Limited
------------------------------------
WSET Trustee Ltd
------------------------------------
Trevor Phillips has confirmed that there is no other additional
information to be disclosed under Schedule 2 (g) of the AIM
Rules.
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