REG - Mind Gym PLC - Half Year Results
03/12/2024 07:00
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RNS Number : 5026O Mind Gym PLC 03 December 2024
3 December 2024
Mind Gym PLC
("Mind Gym", the "Group" or the "Company")
Half year results for the six months ended 30 September 2024
MindGym returns to EBITDA profit
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 2024.
6 months to 6 months to 12 months to 31 Mar 2024 Change
30 Sept 2024 30 Sept 2023 (FY24) vs H1 FY24
(H1 FY25) (H1 FY24)
Revenue £20.2m £20.9m £44.9m -3%
EMEA Revenue £12.1m £9.8m £23.7m +24%
US Revenue £8.1m £11.1m £21.2m -27%
Gross profit margin 84.9% 85.4% 86.2% -50bps
Adjusted EBITDA(1,2) £0.8m (£4.1m) (£0.3m) +£4.9m
Statutory (loss)/profit before tax (£0.9m) (£13.2m) (£12.1m) +£12.4m
Diluted (loss)/earnings per share (0.79p) (11.34p) (10.86p) +10.55p
Cash at bank £0.7m £2.1m £1.4m -£1.4m
Capital expenditure £0.9m £3.0m £4.2m -70%
( )
(1) Adjusted EBITDA represents the underlying level of profit/(loss),
excluding exceptional items. In H1 FY25, exceptional items totalled £nil
(H1 FY24: £7.7m).
(2) Adjusted EBITDA includes £0.1m of other income (H1 FY24: £nil) relating
to Research and Development tax relief under the merged scheme. Previously
Research and Development was accounted for as a tax credit under the SME
scheme.
Overview
MindGym is in a transition, making our solutions easier to buy, easier to sell
and easier to renew. The business has returned to profitability amidst
challenging market conditions for HR services. We are making good progress on
our strategic areas of focus launching new diagnostics and AI-based products
together with a new set of packaged go-to-market solutions to deliver more
sustainable, repeatable revenues.
Financial Highlights - Return to EBITDA profit
· The Group returned to EBITDA profitability with margins of 4.0%
(HY24 adjusted EBITDA loss: margin of -20%) driven by the impact of the cost
reduction exercise in FY24.
· Revenue was broadly flat at -3% (-2% in constant currency) versus
H1 FY24, reflecting economic headwinds resulting in cautious buying behaviours
and postponed contracts:
o Performance in EMEA has been strong with revenues of £12.1m, a 24%
improvement versus H1 FY24, benefiting from the multi-year energy framework
agreement, which ends in December 2024.
o In the US, performance was weaker and has been impacted by the challenging
market conditions, including a continued reduction in DEI spending, with H1
revenues down 27% to £8.1m (25% in constant currency). There are early
indicators of market recovery with pipeline improvements and average deal size
increasing.
· Significant reduction in overheads reflecting the savings from
the prior year cost reduction exercise and operational efficiencies gained in
line with our globalised strategy:
o Decreased by 42% or £12m year on year, or 23% when excluding the
adjusting items in the prior period
o Since H1, a further £2m in annualised cost savings have been implemented.
· During the period, MindGym negotiated a new £4m overdraft
facility which replaces the existing RCF and reduces ongoing finance costs.
As at 30 September 2024, cash at bank was £0.7m which, combined with access
to the £4m overdraft facility, provides the Group with sufficient liquidity.
Strategic and Operational Highlights - New products, platforms and packaged
solutions
· Successfully launched a new diagnostics offering in Q2 with a
number of clients, to be followed by additional diagnostics products in H2
laying the foundations for a data and analytics proposition.
· Existing solutions are being enhanced by new AI-powered products
to further personalise the user experience. These products will include a new
AI-based speech coaching platform launching in H2.
· Moving from a "build" to a "partner" platform strategy, which
includes several new platform partnerships signed in early H2 to improve
operational efficiency and add new product features and offers. This
includes contracting a new third party coaching platform that will provide a
more cost-effective solution and improved features for our clients. This will
lead to a £4.4m impairment charge in H2.
· Expanded our go-to-market strategy with the launch of several new
packaged solutions that are expected to deliver multi-year agreements and
recurring revenues.
Current Trading & Outlook - Unchanged
· MindGym's outlook for the full year remains unchanged, with
actions taken to eliminate further costs, providing greater resilience and
underpinning improved profitability.
· Headline revenue in FY26 is expected to be slightly lower as a
result of the anticipated conclusion of the energy framework agreement in
December 2024. However, underlying revenue growth is expected in FY26 and
beyond.
· The new go-to-market strategy focussed on introducing package
subscription offers will lay the foundation for continued and sustainable
growth into FY26 and beyond.
· The Group continues to invest in the strategic objectives and
targets a medium-term EBITDA margin of 15% to 20%.
Board Changes
o Emily Fyffe was appointed as Chief Financial Officer and to the Board
during the period.
Analyst and Investor Webcast
The Company will host a webcast and conference call for analysts and investors
at 9:00am GMT today. Please contact mindgym@mhpgroup.com for further
information.
Christoffer Ellehuus, Chief Executive Officer of Mind Gym, said:
"MindGym has delivered a resilient performance with a significant improvement
in profitability, despite a macroeconomic environment that remains
challenging.
We are making good progress on our strategy to productise and digitise our IP,
as we evolve the business from episodic training provider to behaviour change
partner. This multi-year transformation is making MindGym solutions easy to
buy, easy to sell and easy to renew, whilst delivering more sustainable and
repeatable revenues."
Enquiries:
Mind Gym plc +44 (0)20 7376 0626
Christoffer Ellehuus, Chief Executive Officer investors@themindgym.com
Emily Fyffe, Chief Financial Officer
Panmure Liberum (Nominated Adviser and Broker) +44 (0)20 3100 2000
Nicholas How
Dougie McLeod
MHP (for media enquiries) +44 (0) 7885 447 944
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.
MindGym is listed 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)
Operational Review
MindGym is on a multi-year transformation journey to evolve the business from
episodic training provider to behaviour change partner, which is setting the
Group up to earn more sustainable, repeatable revenues. FY25 is a year of
recalibration for the business as it balances positioning the Group for growth
while delivering a return to profit.
Trading conditions continued to be challenging in H1 FY25 with cautious buying
behaviours leading to delayed contracts, particularly in the US. H1 revenues
of £20.2m were 3% lower than FY24. Strong performance in EMEA with 24%
growth largely offset the reduction in the US, which was down 27% (25% in
constant currency).
Despite the reduction in revenues, the Group achieved a return to
profitability at the EBITDA level.
The Group continues to deliver against its strategy:
Improvement in operational efficiency and resilience:
In H1 the Group continued to simplify and globalise its organisational
structure and reduce the cost base. These activities will continue into H2
and will result in eliminating a further £2m of annualised costs. The
streamlined organisation structure, combined with the simplified product
offering, builds an operating model that is more sustainable and less key
person dependent.
As anticipated, this journey will take time and the impact of the investments
are expected to benefit FY26, with the larger operational efficiencies
benefitting FY27 in full.
Integrated packages:
Through H1 FY25, the Company focussed product development on integrated
packages which combines MindGym proprietary diagnostics, digital self-directed
and live deliveries aligned with our strategy to make our solutions easier to
buy, easier to sell and easier to renew.
· According to a study conducted by MindGym of 200 CHRO's, 58% say
enhancing workforce productivity is a top priority for 2024(1). The business
has launched two packaged products in response to this market need. The
first packaged product, "Discover and Drive: Wellworking", is targeted at
helping our clients drive sustainable employee productivity by leveraging a
combination of our new proprietary employee diagnostic together with our
proven training products and application tools. A separate manager package is
targeted at helping managers have difficult performance conversations and will
feature a new AI conversation coaching tool. This will be launched in early
Q4.
· In November, the Group also launched a new licensed IP Package
for clients who have their own in-house certified MindGym coaches and want
more flexible access to MindGym's proven content. This allows clients to
access MindGym's proprietary IP over a license period of one to three years
and offers greater flexibility to use the content, separate to our
facilitation, and embed MindGym content in the clients' learning journeys.
This will lead to stickier client relationships and ultimately sustainable,
recurring revenues.
Strategic partnerships:
In early H2 MindGym has secured significant partnerships to drive operational
efficiencies and improve the scalability of the MindGym offering, signing new
vendor agreements for:
· A new third party coaching platform that in combination with
MindGym's scalable Precision Coaching solution provides a seamless, integrated
experience for clients seeking high-quality, scalable coaching interventions
via our network of accredited coaches. This partnership is a more
cost-effective solution and provides our clients with more features and a
better user experience compared to our internally developed Performa
platform. This will lead to a £4.4m impairment charge in H2 largely
relating to the Performa platform and associated assets.
· A comprehensive Training Management System (TMS) designed to
manage complex training needs more efficiently and allow us to scale
operations. The system will handle all aspects of MindGym's training
logistics, from scheduling and resource management to communication and
tracking outcomes. The platform will also provide a new capability for MindGym
to host IP subscription materials or create learning journeys for clients. It
will integrate with other business tools and systems allowing for a
streamlined solution that creates for more efficient operations.
· An AI communication coaching tool, which will be powered by
MindGym IP and sold as part of an Integrated MindGym solution targeted at
helping line managers have difficult performance conversations.
Marketing strategies:
MindGym continues to build a digital marketing infrastructure that will allow
us to better target new business client opportunities and increase in-bound
lead-flow. These efforts will also include launch of a new client facing
website to be released in Q4, which will allow MindGym to more clearly
communicate to clients who we are, what we do and how we differentiate.
The Group has also focussed on ways to engage key buyers in the market,
including the launch of MindGym's Talent Leaders Network, a by-invitation-only
network for global heads of talent management at the world's leading
organisations. This network has been launched in London and the New York
chapter will launch in January. The network is growing and initial
activities have targeted over 100 heads of talent management.
Financial Review:
Revenue
Revenue in H1 FY25 was £20.2m, broadly flat at -3% on the equivalent period
in the prior year (H1 FY24: £20.9m):
· In EMEA, performance was strong with revenues increasing by 24%
to £12.1m (H1 FY24: £9.8m). This was helped by the multi-year energy
framework agreement, which has delivered revenues above expectations as a
result of an extension beyond the initial 2-year term, concluding in December
2024. Underlying performance, excluding the framework agreement, is broadly
flat at -3%. We expect to see a return to underlying growth in this region
in H2.
· In the US, revenue decreased by 27% (25% in constant currency) to
£8.1m (H1 FY24: £11.1m). This was driven by a sustained reduction in
client spend, particularly in DEI initiatives.
Gross margin
Gross margin declined slightly to 84.9% (H1 FY24: 85.4%), reflecting the
increase to delivery revenue mix in the period.
Administrative Expenses
Overheads of £18.0m decreased by 42% (H1 FY24: £31.0m) or 23% when excluding
the adjusting items in the prior period, reflecting the savings from the prior
year cost reduction exercise and operational efficiencies gained in line with
the globalised strategy. Prior period adjusting items of £7.7m included the
digital asset impairment, impairment of the US office lease and restructuring
costs. The average headcount reduced from 358 to 264 in the six months to 30
September 2024, a 26% reduction. Further savings have been implemented since
the end of the H1 period, expected to deliver annualised savings of £2m. The
National Insurance increase announced in the Autumn budget by HMRC comes into
effect in FY26 and steps will be taken to mitigate the impact of this.
Share based payments were a credit of £0.1m, impacted by the reversal of
historic charges due to reduced employee numbers and reduced likelihood of
achieving stretch performance conditions. Awards to management, including
performance conditions and timebound options, were granted in August 2024.
Depreciation and amortisation increased slightly to £1.5m (H1 FY24: £1.4m),
driven by the launch of the new Diagnostics product in Q2 FY25.
Profit/(loss)
The EBITDA profit for the period was £0.8m (H1 FY24: £4.1m loss excluding
the impact of the exceptional items). The loss before tax was a loss of
£0.9m (H1 FY24: £13.2m loss). The comparative period loss excluding the
impact of exceptional items was £5.5m. There were no adjusting items in the
six months to 30 September 2024.
Basic loss per share in the period was 0.79p (H1 FY24: 11.34p loss).
Adjusted loss per share was 0.79p (H1 FY24: 5.61p loss).
Cash
Cash at bank at 30 September 2024 was £0.7m, a reduction of £0.7m from the
year-end balance at 31 March 2024 of £1.4m. MindGym's liquidity position is
bolstered by immediate access to the recently negotiated £4.0m bank overdraft
facility and combined these provide sufficient liquidity.
The Group continues to manage working capital tightly: overdue debt has fallen
to 6% of trade debtors compared to 13% at the same time a year ago.
Non-adjusting post balance date event
In line with the new strategy to leverage digital partnerships to drive
operational efficiencies and deliver scalable programmes, the Group signed two
vendor agreements in early H2. These vendors will replace internally
developed intangible assets that are currently in use. It is expected that
the new digital partnerships will be launched in Q4. This decision led to a
potential indicator of impairment and triggered a review of all intangible
digital assets. This will result in a one-off impairment charge of £4.4m
which will be reflected in H2.
Dividend
The Board continues to prioritise investment for growth over the coming years,
and therefore no interim dividend will be paid for the period ended 30
September 2024.
Outlook
The Group's outlook for the full year remains unchanged, with actions taken
providing greater resilience and expected to lead to improved profitability in
due course. Headline revenue in FY26 is expected to be slightly lower as a
result of the anticipated conclusion of the energy framework agreement in
December 2024. However, underlying revenue growth is expected in FY26 and
beyond. The new go-to-market strategy focussed on introducing package
subscription offers will lay the foundation for continued and sustainable
growth into FY26 and beyond. The Group continues to target a medium-term
EBITDA margin of 15% to 20%.
Forward-looking statements
Certain statements in this announcement constitute forward-looking
statements. Any statement in this announcement that is not a statement of
historical fact including, without limitation, those regarding the Company's
future expectations, operations, financial performance, financial condition
and business is a forward-looking statement. Such forward-looking statements
are subject to risks and uncertainties that may cause actual results to differ
materially. These risks and uncertainties include, among other factors,
changing economic, financial, business or other market conditions. These and
other factors could adversely affect the outcome and financial effects of the
plans and events described in this announcement and the Company undertakes no
obligation to update its view of such risks and uncertainties or to update the
forward-looking statements contained herein. Nothing in this announcement
should be constructed as a profit forecast.
MIND GYM PLC
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
6 months to 6 months to Year to
30 Sept 30 Sept 31 March
2024 2023 2024
(Unaudited) (Unaudited) (Audited)
Note £'000 £'000 £'000
Revenue 3 20,207 20,905 44,914
Cost of sales (3,042) (3,051) (6,194)
Gross profit 17,165 17,854 38,720
Administrative expenses (18,005) (30,978) (50,734)
Other income 98 - -
(742) (13,124) (12,014)
Operating profit/(loss)
5 - 30 30
Finance income
Finance costs 5 (116) (78) (163)
(Loss)/profit before taxation (858) (13,172) (12,147)
Adjusted (loss)/profit before tax (858) (5,497) (3,264)
Adjusting items 6 - (7,675) (8,883)
(Loss)/profit before tax (858) (13,172) (12,147)
7 71 1,808 1,259
Tax on (loss)/profit
(787) (11,364) (10,888)
(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 (204) 20 (98)
Other comprehensive income for the period attributable to the owners of the (204) 20
parent
(98)
(991) (11,344)
Total comprehensive income for the period attributable to the owners of the
parent
(10,986)
(Loss)/earnings per share (pence)
Basic 8 (0.79p) (11.34p) (10.86p)
Diluted 8 (0.79p) (11.34p) (10.86p)
Adjusted (loss)/earnings per share (pence)
Basic 8 (0.79p) (5.61p) (4.25)
Diluted 8 (0.79p) (5.61p) (4.25)
MIND GYM PLC
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
30 September 30 September 31
2024 2023 March
2024
Note (Unaudited) (Unaudited) (Audited)
£'000 £'000 £'000
Non-current assets
Intangible assets 10 8,131 7,904 8,252
Property, plant and equipment 11 1,623 2,697 2,100
Deferred tax assets 2,392 2,783 2,281
Other receivables - 233 -
12,146 13,617 12,633
Current assets
Inventories 26 42 40
Trade and other receivables 12 6,605 7,258 7,787
Current tax receivable 75 1,193 551
Cash and cash equivalents 746 2,069 1,369
7,452 10,562 9,747
19,598 24,179
Total assets 22,380
Current liabilities
Trade and other payables 13 7,293 10,010 8,474
Lease liability 606 1,118 980
Redeemable preference shares 50 50 50
Current tax payable - - 1
7,949 11,178 9,505
Non-current liabilities
Lease liability 867 1,529 1,038
Total liabilities 8,816 12,707 10,543
10,782 11,472
Net assets 11,837
Equity
Share capital 15 1 1 1
Share premium 274 258 258
Share option reserve 378 474 481
Retained earnings 10,129 10,739 11,097
10,782 11,472
Equity attributable to owners of the parent Company 11,837
The Board of Directors approved these condensed interim financial statements
on 2 December 2024.
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
1 242 496 22,075 22,814
At 1 April 2023
- - - (11,364) (11,364)
(Loss) for the period
Other comprehensive income:
Exchange translation differences on consolidation - - - 20 20
Total comprehensive loss 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
- - - 476 476
Profit for the period
Other comprehensive income:
Exchange translation differences on consolidation - - - (118) (118)
Total comprehensive income for the period - - - 358 358
Debit to equity for share based payments 16 - - 7 - 7
1 258 481 11,097 11,837
At 31 March 2024
- - - (787) (787)
(Loss) for the period
Other comprehensive income:
Exchange translation differences on consolidation - - - (202) (202)
Total comprehensive loss for the period (989) (989)
Exercise of options - 16 (21) 21 16
Credit to equity for share based payments 16 - - (82) - (82)
1 274 378 10,129 10,782
At 30 September 2024
MIND GYM PLC
CONSOLIDATED STATEMENT OF CASH FLOWS
6 months to 6 months to Year to
30 Sept 30 Sept 31 March
2024 2023 2024
(Unaudited) (Unaudited) (Audited)
Note £'000 £'000 £'000
Cash flows from operating activities
(Loss)/profit for the financial period (787) (11,364) (10,888)
Adjustments for:
Amortisation of intangible assets 10 1,020 740 1,615
Impairment of intangible assets 10 - 6,604 6,604
Depreciation of tangible assets 11 526 610 1,173
Impairment of right of use asset 11 - 516 517
Net finance costs 5 116 48 133
Taxation (credit)/charge 7 (71) (1,808) (1,259)
R&D expenditure credit (98) - -
Decrease/(increase) in inventories 14 11 13
Decrease/(increase) in trade and other receivables 12 1,182 2,266 1,970
(Decrease)/increase in payables and provisions 13 (1,181) (1,413) (2,965)
Share based payment charge 16 (82) (14) (7)
Cash (utilised)/generated from operations 639 (3,804) (3,094)
Net tax received/(paid) 534 1,864 1,363
R&D refund on account - - 1,066
Net cash generated from operating activities 1,173 (1,940) (665)
Cash flows from investing activities
Purchase of intangible assets 10 (899) (2,928) (4,151)
Purchase of property, plant and equipment 11 (20) (55) (82)
Interest received - 30 30
Net cash used in investing activities (919) (2,953) (4,203)
Cash flows from financing activities
Cash repayment of lease liabilities (613) (610) (1,229)
Issuance of ordinary shares 15 16 16 16
Interest paid (76) (15) (47)
Net cash used in financing activities (673) (609) (1,260)
(419) (5,502) (6,128)
Net (decrease) in cash and cash equivalents
Cash and cash equivalents at beginning of period 1,369 7,587 7,587
Effect of foreign exchange rate changes (204) (16) (90)
Cash and cash equivalents at the end of period 746 2,069 1,369
Cash and cash equivalents at the end of period comprise:
Cash at bank and in hand 746 2,069 1,369
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 2024, 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 2
December 2024.
Statutory accounts for the year ended 31 March 2024 were approved by the Board
of Directors on 14 June 2024 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.
From 1 April 2024, the UK Research and Development tax regime changed such
that small and medium sized businesses claim under the new merged scheme.
Under the merged scheme, as the majority of the Group's qualifying expenditure
is capitalised on the Balance Sheet, the Group has the option of recording the
Research and Development Expenditure Credit ("RDEC") within the Digital Asset
on the Statement of Financial Position or as a taxable credit within the
Statement of Comprehensive Income. The Group has elected to book a taxable
credit within the Statement of Comprehensive Income.
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 2024 (Unaudited)
Segment result
EMEA America Total
£'000 £'000 £'000
Revenue 12,136 8,071 20,207
Cost of sales (1,938) (1,104) (3,042)
Administrative expenses (11,381) (6,624) (18,005)
Other income 98 - 98
Profit before inter-segment charges (1,085) 343 (742)
Inter-segment charges 312 (312) -
Operating profit - segment result (773) 31 (742)
Finance income -
Finance costs (116)
(Loss) before tax (858)
Adjusted (loss) before tax EMEA America Total
£'000 £'000 £'000
Operating (loss) - segment result (773) 31 (742)
Adjusting items - - -
Adjusted EBIT (773) 31 (742)
Finance income -
Finance costs (116)
Profit before tax (858)
The mix of revenue for the six months ended 30 September 2024 is set out
below.
EMEA America Group
Delivery 76.5% 68.3% 73.2%
Design 12.4% 14.2% 13.2%
Digital 6.8% 8.6% 6.6%
Licensing and certification 1.0% 6.8% 2.2%
Other 2.1% 1.7% 4%
Advisory 1.2% 0.4% 0.8%
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 year ended 31 March 2024 (Audited)
Segment result
EMEA America Total
£'000 £'000 £'000
Revenue 23,729 21,185 44,914
Cost of sales (3,465) (2,729) (6,194)
Administrative expenses (32,453) (18,281) (50,734)
(Loss)/profit before inter-segment charges (12,189) 175 (12,014)
Inter-segment charges 75 (75) -
Operating (loss)/profit - segment result (12,114) 100 (12,014)
Finance income 30
Finance costs (163)
Loss before tax (12,147)
Adjusted (loss)/profit before tax EMEA America Total
£'000 £'000 £'000
Operating (loss)/profit - segment result (12,114) 100 (12,014)
Adjusting items 7,693 1,190 8,883
Adjusted LBIT/EBIT (4,421) 1,290 (3,131)
Finance income 30
Finance costs (163)
Loss before taxation (3,264)
The mix of revenue for the year ended 31 March 2024 is set out below.
EMEA America Group
Delivery 67.1% 67.8% 67.4%
Design 15.0% 10.9% 13.0%
Digital 9.6% 10.7% 10.2%
Licensing and certification 2.2% 8.2% 5.0%
Other 4.0% 1.7% 2.9%
Advisory 2.1% 0.7% 1.5%
4. Employees
Staff costs were as follows:
6 months to 30 Sept 2024 6 months to 30 Sept 2023 Year to 31 March 2024
(Unaudited) (Unaudited) (Audited)
£'000 £'000 £'000
Wages and salaries 12,229 16,093 28,059
Social security costs 1,121 1,481 2,678
Pension costs - defined contribution plans 453 584 1,059
Share-based payments (82) (14) (7)
13,721 18,144 31,789
Restructuring payroll costs included in adjusted items - - 1,722
13,721 18,144 33,511
The average number of Group's employees by function was:
6 months to 30 Sept 2024 6 months to 30 Sept 2023 Year to 31 March 2024
(Unaudited) (Unaudited) (Audited)
Delivery 169 226 211
Support 82 81 79
Digital 13 51 41
264 358 331
The period end number of Group's employees by function was:
6 months to 30 Sept 2024 6 months to 30 Sept 2023 Year to 31 March 2024
(Unaudited) (Unaudited) (Audited)
Delivery 162 216 175
Support 82 81 79
Digital 12 52 16
256 349 270
5. Net finance costs
6 months to 30 Sept 2024 6 months to 30 Sept 2023 Year to 31 March 2024
(Unaudited) (Unaudited) (Audited)
£'000 £'000 £'000
Finance income
Interest receivable - 30 30
Finance lease income - - -
- 30 30
Finance costs
Interest payable (46) (15) (47)
Other borrowing costs (30) - -
Lease interest (IFRS 16) (40) (63) (116)
(116) (48) (133)
6. Adjusting items
6 months to 30 Sept 2024 6 months to 30 Sept 2023 Year to 31 March 2024
(Unaudited) (Unaudited) (Audited)
£'000 £'000 £'000
Restructuring costs - 555 1,762
Impairment of intangibles - 6,604 6,604
Impairment of right of use asset - 516 516
- 7,675 8,883
Restructuring costs in the year ended 31 March 2024 included redundancy costs
related to the reduction of the cost base.
Impairment of intangible assets were excluded from the adjusted results of the
Group since the costs were one-off charges. These related 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.
No adjusting items have been identified for the six months ended 30 September
2024.
7. Tax
The statutory tax credit of £71,000 (six months ended 30 September 2023:
credit of £1,808,000); year ended 31 March 2024: credit of £1,259,000)
represents an effective tax rate on loss before tax of 9% (six months ended 30
September 2023: 13.7%; year ended 31 March 2024: 10.36%).
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 2024 30 Sept 2023 31 March 2024
(Unaudited) (Unaudited) (Audited)
Weighted average number of shares in issue 100,208,494 100,174,502 100,186,450
Potentially dilutive shares (weighted average) 3,070,090 4,324,325 7,921,037
Fully diluted number of shares (weighted average) 103,278,584 104,498,827 108,107,487
6 months to 30 Sept 2024 6 months to 30 Sept 2023 Year to 31 March 2024
(Unaudited) (Unaudited) (Audited)
pence pence pence
Basic (loss)/earnings per share (0.79) (11.34) (10.86)
Diluted (loss)/earnings per share (0.79) (11.34) (10.86)
Adjusted basic (loss)/earnings per share (0.79) (5.61) (4.25)
Adjusted diluted (loss)/earnings per share (0.79) (5.61) (4.25)
9. Dividends
The Board did not propose a final dividend for the year ended 31 March 2024.
No interim dividend is proposed for the period to 30 September 2024.
10. Intangible assets
Patents Development costs Total
£'000 £'000 £'000
Cost
At 1 April 2024 (restated)(1) 144 17,639 17,783
Additions 15 884 899
At 30 September 2024 159 18,523 18,682
Amortisation
At 1 April 2024 (restated)(1) 73 9,458 9,531
Amortisation charge 4 1,016 1,020
At 30 September 2024 77 10,474 10,551
Net book value
At 31 March 2024 71 8,181 8,252
At 30 September 2024 82 8,049 8,131
Development cost additions in the six months ended 30 September 2024 includes
software development costs directly incurred in the creation of new digital
assets.
In the six months to 30 September 2023, the Group undertook an impairment
review and as result reflected an impairment charge in the period. No such
impairment was required in the six months to 30 September 2024.
Subsequent to 30 September 2024, the Group decided to reduce the amount
invested in internally developed projects and rather leverage digital
partnerships. This decision led to a potential indicator of impairment and
triggered an impairment review of the intangible digital assets. As a result
of this review an impairment charge of £4.4m will be recognised in H2. This
is discussed further at Note 17.
(1)The gross cost and gross accumulated amortisation at 31 March 2024 included
fully amortised development costs relating to assets that are no longer in
use. The group has therefore restated the opening gross cost and gross
accumulated amortisation to correct the opening gross positions. The impact
of the restatement is a reduction of £1,662k to the gross costs and gross
accumulated depreciation at 31 March 2024. There is no impact to the net
book value or amortisation expense in the current or prior periods.
11. Property, plant and equipment
Right-of-use asset Leasehold improvements Fixtures, fittings and equipment Total
£'000 £'000 £'000 £'000
Cost
At 1 April 2024 6,168 532 1,341 8,041
Additions 52 - 20 72
Exchange differences (176) (17) (46) (239)
At 30 September 2024 6,044 515 1,315 7,874
Depreciation
At 1 April 2024 4,477 456 1,008 5,941
Depreciation charge 374 40 112 526
Exchange differences (165) (16) (35) (216)
At 30 September 2024 4,686 480 1,085 6,251
Net book value
At 31 March 2024 1,691 76 333 2,100
At 30 September 2024 1,358 35 230 1,623
In the six months to 30 September 2023, the Group undertook an impairment
review and as a result impaired the right of use asset. No such impairment was
required in the six months to 30 September 2024.
12. Trade and other receivables
30 Sept 2024 30 Sept 2023 31 March 2024
(Unaudited) (Unaudited) (Audited)
£'000 £'000 £'000
Trade receivables 5,027 5,151 6,005
Less provision for impairment (88) (94) (113)
Net trade receivables 4,939 5,057 5,892
Other receivables 28 65 27
Prepayments in respect of property deposits 213 - 226
Prepayments 605 794 796
Accrued income 820 1,342 846
6,605 7,258 7,787
Trade receivables have been aged with respect to the payment terms as follows:
30 Sept 2024 30 Sept 2023 31 March 2024
(Unaudited) (Unaudited) (Audited)
£'000 £'000 £'000
Not past due 4,735 4,503 5,617
Past due 0-30 days 135 313 313
Past due 31-60 days 133 182 39
Past due 61-90 days 3 74 35
Past due more than 90 days 21 79 1
5,027 5,151 6,005
13. Trade and other payables
30 Sept 2024 30 Sept 2023 31 March 2024
(Unaudited) (Unaudited) (Audited)
£'000 £'000 £'000
Trade payables 712 1,294 1,172
Other taxation and social security 1,704 2,023 1,525
Other payables 327 421 323
Accruals 3,259 3,406 3,055
Deferred income 1,291 2,866 2,399
7,293 10,010
8,474
14. Borrowings
The Group entered into a £10 million debt facility (£6m RCF, £4m accordion)
on 30 September 2021. This was replaced by a £4 million overdraft facility
in the period. The Overdraft facility is not in use as at 30 September 2024.
15. Share capital
30 Sept 30 Sept 30 Sept 30 Sept 31 March 2024 31 March 2024
2024 2024 2023 2023
Cost Cost Cost
Number £'000 Number £'000 Number £'000
Ordinary shares of £0.00001 At 1 April 100,198,464 1 100,167,584 1 100,167,584 1
Issue of shares to satisfy options 140,418 - 30,880 - 30,880 -
Ordinary shares of £0.00001 at period end 100,338,882 1 100,198,464 1 100,198,464 1
16. 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 2024 are either subject
to performance conditions based on revenues and EBITDA or are timebound.
The awards granted in the six months to 30 September 2023 are subject to
performance conditions based on revenues and EBITDA.
The awards granted during the year ended 31 March 2022 are subject to
performance conditions based on revenue, adjusted earnings per share and total
shareholder return.
On 30 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. Annual schemes have been launched since 2019.
The total share-based payments (credit)/expense was:
6 months to 30 Sept 2024 6 months to 30 Sept 2023 Year to 31 March 2024
(Unaudited) (Unaudited) (Audited)
£'000 £'000 £'000
Equity settled share-based payments (82) (14) (7)
17. Events after the reporting period
In October 2024 the Group decided to reduce the amount of investment in
in-house development projects and rather leverage digital partnerships. The
decision led to a potential indicator of impairment and triggered a review of
all intangible digital assets. Each cash generating unit (CGU) was assessed
and tested for impairment. The recoverable amount was estimated based on its
value in use. All digital assets impacted by the digital partnerships will
be impaired in full. All other remaining digital assets are in use, or under
development with planned launch dates. An impairment charge of £4.4m will be
recognised in the Consolidated Statement of Income.
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