Portfolio

Mind Gym swings to statutory loss in pandemic year

By Josh White

Date: Friday 11 Jun 2021

Mind Gym swings to statutory loss in pandemic year

(Sharecast News) - Training consultancy Mind Gym reported an 18% decline in revenue in its full-year results on Friday, at £39.4m, as its gross profit margin improved 7.5 percentage points to 87.4%.
The AIM-traded firm's adjusted profit before tax plunged 95% to £0.3m for the 12 months ended 31 March, as it swung to a statutory loss of £0.4m from a profit of £7.4m in the 2020 financial year.

Adjusted diluted earnings per share slid 94% to 0.3p, with the board declaring no dividend for the period, compared to the 0.9p distribution announced a year ago.

Cash at bank at year-end was 5.5% higher than the prior period at £16.8m, while cash generated from operations was 44% weaker year-on-year at £5.9m.

Capital expenditure in the year was 396% higher at £3.2m, and adjusted EBITDA cash conversion was ahead 282 percentage points at 418%.

"We are pleased with how the group responded to the extraordinary circumstances of the last year with a clear plan to deliver highly topical, fresh insight to clients and accelerate our pivot to virtual and pure digital delivery," said chief executive officer Octavius Black.

"We are already seeing the results with a much faster than anticipated return to revenue growth and 51% increase in our pure digital business, which now represents 16% of revenue, up from 9% last year.

"While our repeat revenues remained high at 78%, we were delighted to see significant revenue wins from new clients."

Black said that recovery in revenue was before the company started to see the return from its continuing digital capital expenditure, with the launch of two new, "market-leading" digital products in the 2022 financial year.

"We anticipate that even with the return to live, in-person delivery, the majority of our business will be digitally enabled (which includes virtual) and our pure digital offer will also continue to grow.

"As the core business returns to profitability, we will invest those profits, primarily in digital, proprietary intellectual property and marketing.

"This will form the basis for long term, sustainable growth and puts us in a better position than ever to become one of the dominant players in this vast, growing and highly fragmented market."

The company had a "strong" first quarter, Octavius Black said, with revenue expected to be "well ahead" of the first quarter last year, which suffered from the pandemic, and also up on the previous pre-Covid year.

"While there is still global and economic uncertainty, we and our clients have adapted quickly, and we anticipate building on the momentum of the second half in the year ahead.

"We are well-placed to at least match our 2020 financial year pre-Covid revenues in the 2022 financial year, and return to profitability in the 2023 year."

At 1140 BST, shares in Mind Gym were down 7.21% at 141.5p.

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