Half-year Results
Mind Gym returned to EBITDA profit of £0.8m in H1 FY25 despite 3% revenue decline to £20.2m.
vs expectations: ahead
- Revenue £20.2m (prior £20.9m)
- Adjusted EBITDA £0.8m (prior (£4.1m))
- EMEA Revenue £12.1m (prior £9.8m)
- US Revenue £8.1m (prior £11.1m)
- Gross profit margin 84.9% (prior 85.4%)
- Cash at bank £0.7m (prior £1.4m)
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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 30 Sept 2024 (H1 FY25) | 6 months to 30 Sept 2023 (H1 FY24) | 12 months to 31 Mar 2024 (FY24) | Change vs 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."
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 20241. 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%.
MIND GYM PLC
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
| 6 months to 30 Sept 2024 (Unaudited) | 6 months to 30 Sept 2023 (Unaudited) | Year to 31 March 2024 (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 | - | - | |
| Operating profit/(loss) | (742) | (13,124) | (12,014) | |
| Finance income | 5 | - | 30 | 30 |
| 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) | |
| Tax on (loss)/profit | 7 | 71 | 1,808 | 1,259 |
| (Loss)/profit for the financial period from continuing operations attributable to owners of the parent | (787) | (11,364) | (10,888) |
Items that may be reclassified subsequently to profit or loss
| 6 months to 30 Sept 2024 (Unaudited) | 6 months to 30 Sept 2023 (Unaudited) | Year to 31 March 2024 (Audited) | ||
|---|---|---|---|---|
| Note | £'000 | £'000 | £'000 | |
| Exchange translation differences on consolidation | (204) | 20 | (98) | |
| Other comprehensive income for the period attributable to the owners of the parent | (204) | 20 | (98) | |
| Total comprehensive income for the period attributable to the owners of the parent | (991) | (11,344) | (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 2024 | 30 September 2023 | 31 March 2024 | ||
| Note | (Unaudited) £'000 | (Unaudited) £'000 | (Audited) £'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 | ||
| Total assets | 19,598 | 24,179 | 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 | |
| Net assets | 10,782 | 11,472 | 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 | |
| Equity attributable to owners of the parent Company | 10,782 | 11,472 | 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 | |
| At 1 April 2023 | 1 | 242 | 496 | 22,075 | 22,814 | |
| (Loss) for the period | - | - | - | (11,364) | (11,364) | |
| Other comprehensive income: | ||||||
| Exchange translation differences on consolidation | - | - | - | 20 | 20 | |
| Total comprehensive 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) |
| At 30 September 2023 | 1 | 258 | 474 | 10,739 | 11,472 | |
| Profit for the period | - | - | - | 476 | 476 | |
| 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 |
| At 31 March 2024 | 1 | 258 | 481 | 11,097 | 11,837 | |
| (Loss) for the period | - | - | - | (787) | (787) | |
| 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) |
| At 30 September 2024 | 1 | 274 | 378 | 10,129 | 10,782 | |
| MIND GYM PLC | ||||||
| CONSOLIDATED STATEMENT OF CASH FLOWS | ||||||
| 6 months to 30 Sept 2024 (Unaudited) | 6 months to 30 Sept 2023 (Unaudited) | Year to 31 March 2024 (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) | |||
| Net (decrease) in cash and cash equivalents | (419) | (5,502) | (6,128) | |||
| 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
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.
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.
Segmental analysis
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 (Unaudited) | 6 months to 30 Sept 2023 (Unaudited) | Year to 31 March 2024 (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 (Unaudited) | 6 months to 30 Sept 2023 (Unaudited) | Year to 31 March 2024 (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 (Unaudited) | 6 months to 30 Sept 2023 (Unaudited) | Year to 31 March 2024 (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 (Unaudited) | 6 months to 30 Sept 2023 (Unaudited) | Year to 31 March 2024 (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 (Unaudited) | 6 months to 30 Sept 2023 (Unaudited) | Year to 31 March 2024 (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.
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%).
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 (Unaudited) | 30 Sept 2023 (Unaudited) | 31 March 2024 (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 (Unaudited) pence | 6 months to 30 Sept 2023 (Unaudited) pence | Year to 31 March 2024 (Audited) 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) |
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.
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.
1The 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.
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.
Trade and other receivables
| 30 Sept 2024 (Unaudited) | 30 Sept 2023 (Unaudited) | 31 March 2024 (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 (Unaudited) | 30 Sept 2023 (Unaudited) | 31 March 2024 (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 (Unaudited) | 30 Sept 2023 (Unaudited) | 31 March 2024 (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 | |
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.
Share capital
| 30 Sept 2024 | 30 Sept 2024 | 30 Sept 2023 | 30 Sept 2023 | 31 March 2024 | 31 March 2024 | |
|---|---|---|---|---|---|---|
| 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 |
Share based payments
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 (Unaudited) | 6 months to 30 Sept 2023 (Unaudited) | Year to 31 March 2024 (Audited) | |
|---|---|---|---|
| £'000 | £'000 | £'000 | |
| Equity settled share-based payments | (82) | (14) | (7) |
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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