Mind Gym Plc Regulatory News (MIND)

27 April 2020

Mind Gym plc

 ("Mind Gym" or the "Company" or "Group") 

Full Year Trading Update

Mind Gym (AIM: MIND), the global provider of human capital and business improvement solutions, announces a trading update ahead of reporting its full year results for the year ended 31 March 2020.

Full Year Trading Performance

Despite the global events of the last few months, we are pleased to report that revenue is expected to be 15% ahead of the comparative period last year, having grown to £48.2 million, which is at the top end of the revised guidance published on 9 March 2020. Adjusted PBT is still to be finalised and is expected to fall within the range of £5.8 million to £7.3 million, as advised in the previous update. Cash generation continues to be strong, with a year-end cash balance of c.£15.9 million (compared with £8.3 million last year). The Group has no debt and is in a good position to accelerate its digital development to meet the demands of clients' new ways of working.

Management actions in response to COVID-19

Safeguarding the health and welfare of our clients, colleagues and coaches has been our first priority since the onset of the coronavirus crisis. We moved quickly to implement remote working and to minimise travel requirements, while adapting our delivery capabilities to ensure continuity of service. Our clients' willingness to switch to virtual delivery of our services is a significant reason why year-end results are at the top end of expectations.

Nevertheless, the Board recognises that the disruption caused by the pandemic to both Mind Gym and the wider economy is likely to continue for some time. The Group has therefore implemented mitigating actions to reduce the cost base of the business and to increase our resilience. The Group has introduced part-time working in some areas of the business and a number of employees have been furloughed under the UK Government's Coronavirus Job Retention Scheme. As of April 1st, we implemented a temporary salary reduction of 20% across the rest of the workforce and the Directors, which will be reviewed after 3 months. In addition, the founder directors have elected to forego 100% of their salary during this period.

Outlook

Whilst the current environment is challenging, the Board believes it also presents opportunities. Mind Gym's virtual classroom offer, which we have been delivering for a decade, provides clients with an immediate alternative during lockdown. Virtual training sessions receive similarly high ratings in participant feedback to "face-to-face" sessions and we have seen a significant increase in the uptake and adoption of these since the onset of the crisis.

Digital has always been key to our strategy and we are accelerating its development in light of the current situation. We have appointed a Chief Digital Officer and a digital team to execute Mind Gym's medium term digital strategy and develop new propositions, which we expect to launch in H2.

Given the uncertainty around the impact of COVID-19, it is not yet possible to assess its effect on the Group's performance for the current financial year. As such, the Group is withdrawing guidance for the year ending March 2021.

The Group will report its full-year results to 31 March 2020 in late June 2020.

Octavius Black, Chief Executive Officer of Mind Gym, commented:

"Prior to the global shock of COVID-19, Mind Gym had been on track to exceed revenue expectations for the year ended 31 March 2020. We are pleased that, despite the events of the last few months, the business delivered 15% growth in the year, with sales of £48.2m at the top end of our revised expectations, and with a strong cash balance. This healthy cash position combined with our robust cost management not only provides security but also means we can be agile and invest in in new propositions and digital products to meet our clients' fast-changing needs in this turbulent environment.

I am hugely grateful to our remarkable team across the world who are rising to the challenge with energy, diligence and optimism and I am confident that Mind Gym will emerge from the current crisis stronger than ever. We look forward to updating our stakeholders further on our performance and prospects when we announce our full year results in June."

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