Mind Gym PLC Half Year Trading Update (2685C)

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                      [phone] 
 Octavius Black (CEO) 
 Joanne Black (Chair) 
 Richard Steele (CFO) 
 
 Liberum (Nominated Adviser and 
  Broker)                          [phone] 
 Bidhi Bhoma 
 Joshua Hughes 
 Euan Brown 
 

MHP (for media enquiries) [phone]

Reg Hoare

Katie Hunt

[e-mail]

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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October 16, 2020 02:00 ET (06:00 GMT)