REG - Mind Gym PLC - Half Year Results
01/12/2023 07:15
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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 to 6 months to 12 months to 31 Mar 2023
30 Sept 2023 30 Sept 2022 (FY23)
(H1 FY24) (H1 FY23)
Revenue £20.9m £26.8m £55.0m
US Revenue £11.1m £16.7m £31.3m
EMEA Revenue £9.8m £10.1m £23.7m
Gross profit margin 85.4% 87.5% 88.4%
Digitally enabled revenue mix 69% 71% 68%
Adjusted EBITDA(1) (£4.1m) £1.9m £5.3m
Statutory profit/(loss) before tax (£13.2m) £0.6m £3m
Diluted EPS (11.34p) 0.84p 2.84p
Cash at bank £2.1m £4.5m £7.6m
Capital expenditure £3.0m £2.2m £5.1m
( )
(1) Adjusted EBITDA represents the underlying level of profit/ (loss),
excluding exceptional items. In H1 FY24, exceptional items totalled £7.7m
(H1 FY23: £nil), comprised of: digital asset impairment £6.6m, US office
lease impairment £0.5m and restructuring costs £0.6m.
Financial Highlights
· H1 FY24 revenue of £20.9m (H1 FY23: £26.8m) 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 £11.1m (H1 FY23: £16.7m), impacted
by general market weakness, notably in the technology sector
o In EMEA, performance was resilient with revenues of £9.8m (H1 FY23:
£10.1m). £2.0m 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 £8.0m cost reduction exercise, of which
£3.0m will impact FY24:
o Opex reduced by an annualised £4.5m, generating savings from H2 FY24
onwards and leading to a £1.1m exceptional restructuring charge
o Capex reduced by an annualised £3.5m to an anticipated £2.5m 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 £6.6m
· The Group has adequate liquidity, with cash at 30 September 2023
of £2.1m (31 March 2023: £7.6m) and immediate access to £2.0m of its
undrawn £10.0m 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. £0.8m
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
£1m+ 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 +44 (0)20 7376 0626
Octavius Black, Chief Executive Officer
Dominic Neary, Chief Financial Officer
Liberum (Nominated Adviser and Sole Broker) +44 (0)20 3100 2000
Nick How
Edward Mansfield
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 (http://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 £1m-£10m 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 £50bn and forecast
to grow to £70bn 1 (#_ftn1) 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 £1m 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 £20.9m, a reduction of 22% on the equivalent period in
the prior year (H1 FY23: £26.8m), 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 £11.1m (H1 FY23: £16.7m).
In EMEA, performance was more resilient, where revenue declined 3% vs. prior
year to £9.8m (H1 FY23: £10.1m). £2m 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 £8.0m have been implemented (£4.5m in
operating expenditure and £3.5m in capital expenditure). The benefit of
these savings will have an impact of c.£3m on H2 FY24, with the full year
benefit in FY25.
These actions resulted in an exceptional charge during the period of £7.7m
comprising:
· Digital asset impairment £6.6m: This is outlined in the
Digital Asset Impairment section below;
· Impairment of lease on US office £0.5m: 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 £0.8m annual cost of
this office will end in February 2025, and be replaced by a significantly
cheaper alternative; and
· Restructuring costs £0.6m: Reflecting headcount reductions.
Net of these exceptional items and depreciation and amortisation of £1.4m (H1
FY23: £1.3m), underlying administrative expenses of £22.0m, represented a
below inflation increase of 2% on the prior period (H1 FY23: £21.5m).
Excluding the exceptional restructuring cost of £0.6m, employee costs rose 2%
to £17.6m in the period (H1 FY23: £17.2m). 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 £4.5m.
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 £3.5m 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 £6.6m in the period.
Profit/ (loss)
The adjusted EBITDA loss for the period (excluding the impact of the
exceptional items) was £4.1m (H1 FY23: £1.9m profit). The adjusted profit/
(loss) before tax was a loss of £5.5m (H1 FY23: £0.6m profit). Including the
exceptional adjusting items, the loss before tax for the period was £13.2m
(H1 FY23: £0.6m 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 £2.1m, a reduction of £5.5m from the
year-end balance at 31 March 2023 of £7.6m. Further to this, MindGym
retains immediate access to £2.0m of its undrawn £10.0m debt facility.
MIND GYM PLC
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
6 months to 6 months to Year to
30 Sept 30 Sept 31 March
2023 2022 2023
(Unaudited) (Unaudited) (Audited)
Note £'000 £'000 £'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)
(13,124) 666 3,083
Operating profit/(loss)
5 30 27 55
Finance income
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
7 1,808 207 (29)
Tax on (loss)/profit
(11,364) 848 2,935
(Loss)/profit for the financial period from continuing operations attributable
to owners of the parent
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 20 785 297
parent
(11,344) 1,633 3,232
Total comprehensive income for the period attributable to the owners of the
parent
(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
30 September 30 September 31
2023 2022 March
2023
Note (Unaudited) (Unaudited) (Audited)
£'000 £'000 £'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
24,179 36,401 37,416
Total assets
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
11,472 21,316 22,814
Net assets
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
11,472 21,316 22,814
Equity attributable to owners of the parent Company
The Board of Directors approved these condensed interim financial statements
on 30 November 2023.
MIND GYM PLC
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Share capital Share premium Share option reserve Retained earnings Total equity
Note £'000 £'000 £'000 £'000 £'000
1 213 608 18,804 19,626
At 1 April 2022
- - - 848 848
Profit for the period
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
1 242 597 20,476 21,316
At 30 September 2022
- - - 2,087 2,087
Profit for the period
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)
1 242 496 22,075 22,814
At 31 March 2023
- - - (11,364) (11,364)
(Loss) for the period
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)
1 258 474 10,739 11,472
At 30 September 2023
MIND GYM PLC
CONSOLIDATED STATEMENT OF CASH FLOWS
6 months to 6 months to Year to
30 Sept 30 Sept 31 March
2023 2022 2023
(Unaudited) (Unaudited) (Audited)
Note £'000 £'000 £'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)
(5,502) (6,175) (2,768)
Net (decrease) in cash and cash equivalents
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 £1,000 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
£'000 £'000 £'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
£'000 £'000 £'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
£'000 £'000 £'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
£'000 £'000 £'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 30 Sept 2023 6 months to 30 Sept 2022 Year to 31 March 2023
(Unaudited) (Unaudited) (Audited)
£'000 £'000 £'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 30 Sept 2023 6 months to 30 Sept 2022 Year to 31 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 30 Sept 2023 6 months to 30 Sept 2022 Year to 31 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 30 Sept 2023 6 months to 30 Sept 2022 Year to 31 March 2023
(Unaudited) (Unaudited) (Audited)
£'000 £'000 £'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 30 Sept 2023 6 months to 30 Sept 2022 Year to 31 March 2023
(Unaudited) (Unaudited) (Audited)
£'000 £'000 £'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 £1,808,000 (six months ended 30 September 2022:
credit of £207,000); year ended 31 March 2023: charge of £29,000) 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 £1.9m and corresponding deferred tax prior year adjustment
of £3.3m.
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 30 Sept 2023 6 months to 30 Sept 2022 Year to 31 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
Patents Development costs Total
£'000 £'000 £'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 £6,604k.
11. Property, plant and equipment
Right-of-use asset Leasehold improvements Development costs Total
£'000 £'000 £'000 £'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
30 Sept 2023 30 Sept 2022 31 March 2023
(Unaudited) (Unaudited) (Audited)
£'000 £'000 £'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 £233,000 (30 September 2022: £257,000; 31 March
2023: £230,000) of prepayments in respect of property deposits.
Trade receivables have been aged with respect to the payment terms as follows:
30 Sept 2023 30 Sept 2022 31 March 2023
(Unaudited) (Unaudited) (Audited)
£'000 £'000 £'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
30 Sept 2023 30 Sept 2022 31 March 2023
(Unaudited) (Unaudited) (Audited)
£'000 £'000 £'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 £10 million debt facility (£6m RCF, £4m 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 2023 31 March 2023
2023 2023 2022 2022
Cost Cost Cost
Number £'000 Number £'000 Number £'000
Ordinary shares of £0.00001 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 £0.00001 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 to 30 Sept 2023 6 months to 30 Sept 2022 Year to 31 March 2023
(Unaudited) (Unaudited) (Audited)
£'000 £'000 £'000
Equity settled share-based payments (14) 28 (73)
1 (#_ftnref1) Grandview Research 2021
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