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Mind Gym confident despite swinging to losses

By Josh White

Date: Monday 17 Jun 2024

Mind Gym confident despite swinging to losses

(Sharecast News) - Mind Gym reported on a challenging year in which it swung to losses on Monday, while also outlining a new strategy aimed at medium-term growth and profitability.
The AIM-traded firm recorded revenue of £44.9m for the year ended 31 March, an 18% decline from the prior year.

Its gross profit margin decreased by 220 basis points to 86.2%.

The company faced an adjusted EBITDA loss of £0.3m, compared to a profit of £5.3m in the 2023 financial year, while statutory losses were £12.1m, swinging from a £3m profit a year earlier, and cash used in operations total;ed £3.2 million, compared to £4.4m generated year-on-year.

Cash at the bank stood at £1.4m, a decrease of £6.2m.

The decline in performance was put down to macroeconomic headwinds, particularly affecting the tech sector in the US and consumer and manufacturing companies reliant on global supply chains.

Increased caution on human resources budgets and heightened competition for client budgets also contributed to the revenue drop.

A significant decline in client spend on diversity, equity and inclusion (DEI) initiatives, especially in the US, led to a 32% revenue decline in this region, while EMEA performance remained stable.

Despite the challenges, Mind Gym said it implemented a significant cost reduction plan, achieving an annualised reduction of over £11m in operating and capital expenditures.

That included a 10% reduction in adjusted operating expenditure to £39.1m and a 17.5% decrease in capital expenditure to £4.2m.

The company returned to adjusted EBITDA profitability in the second half of the year, with a £3.8m profit partially offsetting its £4.1m loss in the first half.

Mind Gym's CEO Christoffer Ellehuus, who joined in January, had introduced a new strategy to drive growth and profitability.

The strategy was focussed on evolving Mind Gym from a provider of individual behavioural change programs to a strategic behavioural change partner for chief human resources officers (CHROs).

It said the strategy comprised short-term commercial execution to lay the foundation for growth and medium-term initiatives to package Mind Gym's intellectual property, products, and data for scaling the business.

Looking ahead, the firm said the 2025 financial year would be one of recalibration, as Mind Gym implemented its new strategy, which was expected to return the company to historic performance levels.

The board said it anticipated EBITDA profitability and cash generation.

In the medium term, Mind Gym was aiming to achieve revenue growth exceeding 10% compound annual growth rate, and EBITDA margins between 15% and 20%, capitalising on the opportunities within the highly fragmented $80bn human capital advisory market.

Mind Gym's board also saw changes during the year, with Christoffer Ellehuus's appointment as CEO and Octavius Black transitioning to executive chair to focus on market presence, thought leadership, and client relations.

The group said it retained access to a £2m undrawn loan facility, ensuring sufficient liquidity to support its strategic initiatives.

"I believe that we have all the right foundations for future growth - strong client relationships, innovative solutions, and a very talented team," said chief executive officer Christoffer Ellehuus.

"I am excited about leading Mind Gym forward on a path of profitable, sustainable growth, profitability making Mind Gym solutions easy to buy, easy to deliver, and easy to renew."

At 1135 BST, shares in Mind Gym were down 22.08% at 30p.

Reporting by Josh White for


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