Mind Gym (AIM: MIND), the global provider of human capital and business improvement solutions, is pleased to announce its half year results for the six months ended 30 September 2019.
Financial highlights
6 months to 30 Sept 2019 (H1 FY20) | 6 months to 30 Sept 2018 (H1 FY19) | 12 months to 31 Mar 2019 (FY19) | Change (H1 FY20 v H1 FY19) | |
Revenue | £23.9m | £19.4m | £42.1m | +24% |
Gross profit margin | 78.8% | 81.6% | 80.6% | -2.8pps |
Adjusted1 PBT | £4.0m | £4.1m | £8.5m | -3.6% |
Adjusted1 PBT margin | 16.7% | 21.4% | 20.3% | -4.7pps |
Statutory PBT | £3.9m | £1.1m | £5.1m | +247% |
Basic EPS | 3.07p | 0.65p | 4.08p | +372% |
Adjusted1 Diluted EPS | 3.17p | 3.18p | 6.85p | -0.3% |
Total Dividend per share | 0.90p | 0.80p | 2.40p | +12.5% |
Net Cash | £10.7m | £2.5m | £8.3m | +328% |
Adjusted1 EBITDA cash conversion2 | 98% | 71% | 113% | +27pps |
1Adjustments include IPO transaction costs and aborted transaction advisory fees, employee share option surrender bonuses in 1H FY19 and FY19 only and share-based payment charges in all periods. A reconciliation of these adjustments is shown in Note 5.
2EBITDA cash conversion defined as cash generated from operations/EBITDA
Group Highlights
· Revenue up 24% to £23.9 million (1H FY19: £19.4 million); ahead of expectations as announced previously, driven by both higher repeat revenue and new client wins. On a constant currency basis revenue grew 20%.
· Gross margin of 78.8% decreased 2.8 percentage points as higher than expected revenue lead to increased coach costs.
· Adjusted1 PBT 3.6% below the same period past year as the Group invested surplus profits in talent, innovation and infrastructure.
· Continued improvements in cash conversion at 98% during the period driven by debtor and accrued income reduction (1H FY19: 71%), and period end cash balance of £10.7m (1H FY19: £2.5m)
· Adjusted1 diluted EPS decreased by 0.3% to 3.17p (1H FY19: 3.18p)
· Interim dividend of 0.9 pence per share will be paid in January 2020 (H1 FY19: 0.8 pence)
Operating Highlights
· Revenue grew in both regions during the period compared to the same period last year. EMEA revenue increased by 18% to £10.2m (1H FY19: £8.7m) and represented 43% of total revenue. The US region increased revenue by 28% (21% in constant currency) to £13.7m (1H FY19: £10.7m)
· Repeat revenue3 increased to 92% of Group revenue (1H FY19: 87%).
· Digital revenue grew by 25% to £1.9 million, representing 8.3% of total revenue (1H FY19: 8.0%). Digitally-enabled4 revenue increased by 36% on the prior year period and represented 30% of revenue (1H FY19 26%)
· Product innovation creating new revenue opportunities:
o Customer Experience (“CX”) ‘Point of View’ launched
o Diversity & Inclusion 3.0 tested with several key clients
o Judgement Quotient (“JQ”) diagnostic launched
· Operational investments in client support, coach recruitment, legal and IT.
· Average headcount increased by 19% on the comparative period last year to meet business growth.
· Continued consolidation of the senior leadership including the appointment of Wei-Li Chong as President Mind Gym US to commence January 2020 and Desi Kimmins as Chief Commercial Officer EMEA to commence February 2020.
3Repeat revenue is defined as revenue from clients that have purchased products during a comparative period in one or more of the previous three years.
4Digitally-enabled revenue includes revenue from sessions delivered virtually.
Outlook
The Board is very pleased with the progress Mind Gym has made in the first half of FY20 particularly as the increased growth in revenue allows for further investment in talent, innovation and operational infrastructure which in turn will provide the platform to sustain significant growth. We remain confident that the Company will deliver on its short and medium-term expectations whilst building solid foundations for the future as a global leader in its space.
Octavius Black, Chief Executive Officer of Mind Gym, said:
“Company bosses are increasingly turning to corporate culture as a strategic tool to drive performance. Our strong revenue growth in the first half shows that leading businesses are choosing our proven behavioural science-based solutions over traditional alternatives. We continue to make significant investments in infrastructure, our digital proposition, talent and senior leadership in our pursuit of long term, sustainable growth.”
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