Mind Gym plc (MIND) Earnings Call Transcript & Summary

Good morning, ladies and gentlemen, and welcome to the Mind Gym plc Investor Presentation. [Operator Instructions] Before we begin, we would like to submit the following poll. And I'm sure the company will be most grateful for your participation. I'd now like to hand over to CEO, Octavius Black. Good morning.

Hello. Welcome, and thank you very much for choosing to join this talk about Mind Gym plc, which, of course, when we started in my kitchen almost 22 years ago. My name is Octavius Black. I'm the CEO and Co-founder. And we have built this business up into a glorious new adventure, which I shall share with you shortly, raising it from the start in 2021 -- 2001 and floating on the AIM stock market in 2018. We are a behavioral science business. Now what this means is that we look after organizations who are looking at how do you improve and increase the performance of their people. And traditionally, this has been done using hard power, pay benefits or threat of job loss. And where we come in is using soft power by appealing to the core psychological needs that we all have, the need to feel cared for, the need to be noticed, to feel that our work matters. And increasingly, organizations are realizing that hard power has so much as it ever had a greater effect is diminishing, and what people need is soft power. But that concern to date has been how do I harness soft power and how do I know that it's going to work. What behavioral science does is it helps us understand using controlled trials and pure evaluated research, what kinds of reactions you get to what kinds of stimulation, and therefore, what can we do as employers and large companies to shape the culture to change the way we lead to alter a whole range of dimensions around inclusion and ethics and well-being in order for people to want to choose to work here and to flourish while they do, therefore, increasing productivity and performance. So that in a nutshell is the overview of Mind Gym. As we enter our 23rd year. My name is Octavius. I'm joined today by Dom, who's our Chief Financial Officer, and we will be giving you an overview, first of all, of the market and the business; secondly, of our trading results; and thirdly and most exciting of all of the strategy and our opportunity to create a really market redefining proposition. So I'm going to go straight into talking a little bit about the market, which is vast for human capital management, as it is sometimes called. It's almost in the trillions of dollars. We put down here the corporate learning and development market. which is in the region of $370 billion, which is larger than the GDP of New Zealand. It's a massively disaggregated market. there are no market players with as much as 1% of the market. There are more learning developments in HR consultancies in the U.K. than there are hairdressers. So you get the sense of this massively disaggregated market, which is still predominantly live, predominantly delivering workshops of one sort or another, either live in person or live virtually, but with a growing presence for digital. And there -- what there is in the -- by and large, in the marketplace is people who either provide live or provide digital but then necessarily integrate them together, which is the first clue for where we may be going in sharing with you our strategy. But before we get to that, a brief story of our financial results. Up until COVID hit in February 2020, we had a CAGR of 20%, as you can see, healthy profits. We were, of course, affected by COVID much as the same way as all businesses whereas our clients focus rightly on the priority of operational effectiveness and moving large numbers of often white-collar workers for offices to working from their homes and much else besides. But we're really delighted that last year, we bounced back ahead of our pre-COVID level, and we are obviously on track this year for returning in this -- broadly in the direction of growth that we have previously enjoyed. So we are rebuilding the business and developing it and changing it at much at the same time. We have continued to invest in growth, some of that through OpEx, quite a lot of it through CapEx. We'll explain how that works. And we will also be cash positive. We have no debts at all, but we have a lovely facility just in case of another rainy day, God forbid, and we are in a healthy financial situation. So a bit of that -- more about what it is that we do. Firstly, we publish research that is proprietary, developed by our own team of psychologists on the key issues of the day, matters that all organizations are facing but don't quite know what to do in order to have the biggest impact. So we take, for example, performance or performance management. We've written a research paper on reinventing performance management, how to achieve more with less forever. And we do that not by changing the performance management system or the rating scales all the things that companies tend to look at but by identifying the 6 conditions for high performance, the sense of purpose, feeling that my work matters, the sense of growth that I'm mastering skills that are important to me. And then we help organizations in order to develop those conditions as much as possible for as many people as possible for as long as possible. We launched much of this work with Microsoft when they originally removed ratings a decade ago. We've since used the intellectual property for a wide range of organizations from Maersk to MetLife to Lloyds Banking Group recently and to many others who have seen the power of behavioral science as a way to generate performance improvements and, indeed, more contented and engaged employees. The same thing applies to diversity, equity and inclusion. It was 10 years ago that we originally said the unconscious bias training was suspect and probably wouldn't deliver the results that people wanted. And we come up with alternatives and shown how using our 4 cornerstones that you are far more likely to reduce penalization increase inclusion and harness the dividend of diversity, diversity of employees, diversity of thought and diversity of experiences. So this is where we start, a unique IP as a behavioral scientist, how you would deploy your resources in order to achieve outcomes that are important for you and for the talent in your business. But next, we then do, productize that behavioral science with a range of experience, some are live, some are digital and some are digitally enabled, they're virtual. So we've created 90-minute workouts and slightly longer ones -- shorter ones could grow larger with the large audiences that are delivered by our certified coaches or associates that are certified in Mind Gym. And they are in 40 countries across the world. And we run up to 500 live either in person or virtual courses a week. And these are all complemented by digital eWorkouts that are usually SaaS commercial arrangement, a library of 70 or growing to about 100 that are available to download and self-serve. And then we've recently launched and we'll tell you more about that in a moment, our one-to-one offer. So this is about coaching, but again, not coaching as people have known it. We've done the research to show what impact on performance most coaching has. And the answer is it varies a lot, but the average is quite low. But we're also in the research to show what coaching would make an enormous difference. And we developed a new methodology called precision coaching and we'll be bringing that to life shortly. And that's delivered through our new digital platform, which supports our product performance. And then behind the scenes and all of this, we have a library of unique assets and no one is expected to read these off the chart, just to give you a sense of the range that's involved from relaxation techniques, sort of stress to inspire and motivate to creativity for logical thinkers and courageous conversations, great [indiscernible] feedback and business brand and many, many more. And these are IP that we've generated. They are formed as existing workshops usually bite size, 90 minute, sometimes the 60 minute, the largest. And they're designed so that anyone in the network of coaches who's trained in it can deliver broadly the same experience anywhere in the world, but adapt it culturally. So if you want to run influence and persuading Missouri, Manila, Manchester and Mombasa the same day, you absolutely can and many multinationals do. And that, of course, will be broadly the same with the same outcomes, but will be adapted to local services by the live local coach who makes a relevance and bring it to resonate. And so that comes to the core of the business as today. Live workshops, diagnostics, digital workouts and also we wrap around a series of customizing potential with our team of psychologists and graphic designers. So that's the core of the business. I'm going to pass it over to Dom now to talk a little bit about the half year results before I come back and to read our exciting strategies.

Thank you very much, Octavius. So it's nice to meet you all. To briefly introduce myself, I'm the CFO at Mind Gym. I've been here for just over a year now. My background is Unilever, Reckitt Benckiser. I've spent time as a Finance Director over in the States, working with a sales organization there. And I've spent the last sort of 7, 8 years now in the technology sphere primarily with Just Eat and MoneySupermarket. But on to Mind Gym, which is the most exciting business I think I've worked in. This year, we've had a great year operationally, strategically, and I'm going to take you through some of the financials now for the first half. So in the first half, we've seen revenue growth of 11%, and that's 2% in constant currency terms. What we've seen throughout the half is improvement and progression. So at the start of the year, we had the impact of Omicron, which particularly towards the end of the previous financial year have reduced the number of meetings we could have, which had pushed out some projects and that led to a minus 2% decline in the first quarter. Q2 has shrugged off most of that, and we saw growth of 6%. And as we head into the second half, we're anticipating much faster growth coming through. One thing that I think is quite important is the FX impact in that number. So the difference between the 2% and the 11%, that very much feels like it's a long-term impact. And obviously, from a sterling perspective, that's quite a significant benefit to our business, which we weren't seeing last year. Very importantly, you'll see the return to profitability there. So EBITDA now back to GBP 1.9 million. So in the chart that Octavius showed you earlier, you will have seen the impact of our pivot to digital, setting up the business for much faster growth. And you'll have seen that there was something like $7 million of investment in areas such as the people department, marketing innovation in order to set us up for this digital strategy. We're now starting to then see the drop-down of revenue into profit and the impact of that coming through. So GBP 1.9 million EBITDA, which is up GBP 1.2 million on last year. You'll see that PBT is only up GBP 0.6 million. The differential there is that we are now amortizing Performa, a one-to-one digital coaching platform, which Octavius will come to later. As ever, we continue to focus on operating efficiencies and CapEx efficiencies, and you can see that coming through in CapEx there. So CapEx spend down GBP 0.6 million on last year. Some of that relates to office fit-out costs that were in the prior year comparison, but GBP 300,000 of that is the impact of a reorganization, which integrated technology much better into the business and has actually sped it up quite considerably. So the benefit of OpEx and CapEx savings coming through in our numbers. We'll come back to the product road map later as well. And then finally, that strong balance sheet. So we have something like GBP 5 million cash in the bank today. We're anticipating that cash will continue to build as we head towards the end of the year. And as Octavius mentioned, we do have a GBP 10 million debt facility, which currently remains undrawn, should we, for some reason, need it. But at the moment, we're not anticipating that we would need that. So those are the core financials. Going down a little bit into more detail, the regional analysis, you can see there the impact of FX on the U.S. business. So underlying growth is more like 4% in the U.S. EMEA looks like it's a small decline. Actually, if you consider the sales organization, which is the clients that are run out of EMEA, the organization would actually be flat, but there are some of their revenues and a growing portion of their revenues that have been built through the U.S. because they had to be delivered in the U.S. But broadly speaking, slow to medium growth in our regions in line with our revenue numbers. What is, of course, quite interesting is that there's that growing FX impact, the differential between the U.S. and EMEA. And that provides the opportunity that as we grow some of our [indiscernible], particularly those in delivery and in other areas can be then sourced out of the U.K. And so that's an area which potentially provides the opportunity to leverage FX and improve profitability going forward. And that's certainly -- that's something we're looking at. We have a very diverse client base. So we have 80% repeat revenue there from customers. That's a fairly normal number. It did peak a little bit up last year. What's very interesting is that we also have a diversified industrial base. So as we look at the economy and potential issues, surrounding potential recession there. There are certain industries, particularly retail and similar industries where we haven't necessarily been that strong in the past anyhow, which are going to suffer. But what we can do as a business is pivot very easily to other areas and particularly ones where we're strong, such as financial services, pharmaceuticals and some areas of technology. So that is a huge advantage for us. What we might see is that the largest account increases a little bit as we go forward. Not a huge amount, but the impact of some of the frameworks that we'll be talking about later, will change those numbers going forward a little bit. And finally, looking at product mix. Design and Advisory is now back to normal levels at about 16%. That's what we've seen historically. So it's -- the prior year comparison was a little bit lower than normal. So nothing of particular interest there. One thing that is worth mentioning is the growth of in-person delivery. So our business, 70% almost of what we produce is delivery, which is live delivery, and historically, that used to be very heavily weighted towards in-person delivery. So before COVID, you'd have seen 70% of our delivery was in person and only 30% virtual. Obviously, through COVID, that changed quite dramatically, and there was almost no in-person delivery. We're seeing some return to that. And obviously, the costs for that are a little bit higher. But from our perspective, it's actually a significant advantage for 2 reasons: One is, financially, we actually make more profit for in-person delivery than we do for virtual delivery on a per-session basis. So the gross margin percentage might be slightly lower, but the actual absolute profit per delivery is higher in person. So that's an advantage; it's also an advantage strategically because as Octavius mentioned, we have nearly 400 coaches in 40 countries. That is something that our competitors will struggle to be able to do as well as us. So we have that ability to deliver live globally at scale. And whilst competitors might have found virtual delivery more easy to do that is something that's an advantage to us. Going on to cash flow. You can see the impact there of trade and other receivables on the cash movement during the year -- during the half year. That is the impact of a -- primarily, it's the growth in revenues from Q4 at the start of the period to Q2 at the end of the period. There's also some FX impact in there. And there's also some unusual timing between -- within the quarter -- monthly sales within the quarter. That has largely unwound already. it's not something we anticipate being a long-term change. Other working capital moments, you can see the impact of bonus there, which is the minus GBP 1.6 million. And also, you can see the spend on CapEx, which is actually lower than it was last year. So that's H1 FY '23 closing position for cash we would anticipate that growing from here to the end of the year. And as the receivables unwinds and as growth levels continue to increase in the second half. And with that, I'm going to hand back to Octavius who's going to take you through some of the exciting framework agreements, which are having a positive impact on our business.

Great, Dom. Thanks so much. And to emphasize Dom's point about our confidence in the future, we're delighted to share 3 new framework agreements. Historically, Mind Gym, won an account in the million-plus range. We'd be cock-a-hoop about it. But now I'd like to share 3, one which is many times larger than we had previously secured, which is an energy company, is over 24 months and is worth in the region of GBP 10 million. It's a very important program for them about culture change and about leadership development, it's global in its reach. And already, we are seeing opportunities because they've been asking us to help in other areas linked to the leadership and culture, namely well-being diversity and inclusion and performance management. So this is a thrilling event if it was just the only story to share, we'd be absolutely delighted about it. But it is that there are others too. We have this one for the second time an electronics games multinational. The first one was also a 7 figure deal. This new one we just won is worth about $3 million over 2 years. and it gives us an enormous opportunity because it gets us into an adjacent business, and it also focuses on our ability to deliver at scale quickly, really good quality. The third example is different again. It's a mining multinational, also our second mining multinational for 7 figure amount. In this case, the issue is about bullying and harassment and inappropriate behavior at work. We have a very strong offer in the area of respect, and they have asked us to deliver this program globally quickly, including reaching far on places like Mongolia and parts of Indonesia. So our ability to deliver live in-person psychologically grounded but very practical advice to address behavior. It applies across all 3 of these, but in very different capacities. So I hope that gives you an overview of what the business is today and how it's performing at the moment. But what is really exciting about Mind Gym and why I think so many investors have chosen to commit to the business and say so strongly with the business is because of the opportunity that lies ahead. And also I wanted to share briefly our strategy firstly, by explaining how organizations buy the types of services that we offer at the moment. So on the left-hand side of the chart, you'll see what a typical enterprise organization has to deal with. They've got a whole range of different human capital and cultural priorities, and these are just a few of them. [ A reach of them ], they'll have a whole range of different providers and suppliers, maybe a business school to a couple of consultancies a behavioral change company like us, learning provider and so on and so forth. And as a result, there's an awful lot of noise going on in the system and a lack of coherence as the individual employee, I'm only receiving an untold number of initiatives and programs, but I can't quite work out how they all fit together or what is supposed to do that's most important or maybe I get conflicting messages, where on the wellness program, I'm talking to externalize problems with on the growth mindset program and [indiscernible] to internalize, well, which is it? And therefore, you have people who choose to opt out. You also have the risk of significant waste courageous conversations might be designed and run for a speak-up culture and ethics. It might also be used for account management for difficult clients or it might be used as part of performance management, design and redesign slightly differently for different purposes, often different divisions and geographies each time. It's not only is this ineffective and not only is costing more, but most seriously, there is no data. And therefore, it's almost impossible for organizations to know what is working and how to redirect investments. And it is nearly impossible to mass customize, to give the right solution to the right person at the right time. As a result, the total is unequivocally less than the sum of the parts. Our vision and the vision we shared with many clients and they are excited by this vision is to make the total more than the sum of the parts. And the key worthiness is integration. What we've shown on this chart here is integrating the different kinds of content. So what you learned as a manager is consistent with what you learned as a leader is consistent with what you learn about being [indiscernible] with integrity is consistently what you learn about health and your own well-being and that of others. And all flows together underpinned by core psychological principles. For example, we know the increasing some more sensible autonomy feeling in control, massively increases both our energy and commitment and performance, but also their well-being and ability to accept other. So we can design that overall, we've got a behavioral change platform -- ecosystem that integrates the content, the integrated distribution channels, and most important of all is fueled by data. And that means that we can serve the right content to the right person at the right time because on the platform of millions of people, there'll be thousands just like them, and we know what works for those thousands and therefore, we're much better able to serve them that content. So this is the vision of the future. And so as an organization spending all their budget on hundreds of providers, they spend hopefully less because we can say something by integrating with 1 or possibly 2 providers. Obviously, Mind Gym's ambition is to be one of those key suppliers. And that comes both on the content and also the distribution channels. So we've got one to many in the top left around [ 11:00 ], which we already deliver live one to many at scale better than pretty much anyone else at a quality level out there in the market. We then launched only one-to-one, which is really exciting. I'll come to that in a bit more in a moment. Then there's on-demand, which is our digital library eWorkouts, which is constantly being improved. Diagnostics, which is a new area for us, and I'm going to come to that in just a moment and nudges and clues and hints and toolkits that are in the flow of work. And again, we have a range of those now. And all of those will be fueled by data in the out-of-cycle there in order to -- each one benefits from the one before. So the results of my diagnostically then give insights to coach who's coaching me, who knows a bit more about what my needs are before we start rather than to start the conversation with scratch. And then their feedback on the session or my feedback on the coaching session, then direct me to the right on-demand assets that I need right now. So the opportunity to create this is incredibly valuable, both for individuals and for companies. And throughout this, we'll continue to build and develop our relationships. We currently work with 64% of the FTSE 100 or have done recently and with the [ 54% ] of the S&P 100. So we have this very deep, strong relationships with many of the world's leading organizations. And that opens up the possibility of them rather than buying from multiple providers to buy from 1, one they know, one they trust. At the same time, we must continue to keep innovating. And therefore, we don't rest on [indiscernible] and say, well, we've written these research papers on these topics. The others that are on the way. We recent -- 10 years ago, we wrote a white paper called the reorganization remedy, had to upgrade when you downsize given the current economic tailwinds it may unfortunately be time to dust that down and refresh it. We've also got new white paper coming out on Wellworking again, more of that in just a moment. So we think this is the right strategy, and we're pretty confident that it is because, firstly, can't say they want it. Secondly, from an investor perspective, it creates enormous long-term value. It's renewable. It's great access to new areas because if you translate the continent already from an ecosystem, why create it as a new topic to somebody else, why not bring in the people who've already got who are running successfully and use more data to create more mass customization and more value. And then there's also significant barriers to entry because once you're up and running and your integration to the organization is a very big lift to move to it, even if someone else comes up with the ecosystem. And to date, no one seems to be, partly because in the market, as I said before, by and large digital providers and all the live providers, but not the 2 together are not separately integrated at the personal level. So the question is not network. One question is what is the vision, and that is the vision, and that's what we believe is the colossal market opportunity. But then the next question is how big can I get there? And so there, I wanted to share a little bit of our product road map. I'm going to go in more detail on the ones in green. But at the core -- at the first row are digital -- digitally-enabled products, our one-to-one coaching our diagnostics. And DXP, which is internal name for digital user experience, but it's how we integrate the digital with the live. So there's additional shadow that sits around the live event. So you have digital experience before you go that primes, [indiscernible] digital experience within the workout that creates more data and digital follow-up that's customized to you. And then our diagnostics will also move from organizational to individual and will bring it all together and integrated in the behavioral change platform that I mentioned just earlier. And at the same time, we're innovating in content. We launched a new research paper on leadership, Leadership Regained, why leaders in a funk and how to get them out of it, which was very well received and contributed to our success with the energy company, as I mentioned earlier and there are more on the way. So I'm going to briefly talk about one of those, which is Precision Coaching where there are a number of new platforms in the one-to-one coaching area, but we are the only 1 that's suburb our proprietary methodology that's grounded in [ SaaS ] and that all our coaches are qualified to deliver. I'm here just because what we discovered was when you measure the impact of coaching, whilst people think the caching has improved their performance by a whopping 76%, the mean is actually near up to 3.4% on many studies suggest there was no impact at all and one to even suggest that things got worse. But there are outliers. And so what we did was research what exists in the outliers, we went to hundreds of different research studies. And just from that invented or created using our team of psychologists and our academic Board Precision Coaching. And this is based on 3 parts above all else. One is solutions focused, which comes from solutions-focused therapy, which is one of the most validated form of psychotherapy that focuses on the future, what does a rightsized goal look like and what's a good enough outcome. I want my team to be engaged, but they're not going to be dancing down the streets or stopping stranger to say how brilliant my boss is, that's unrealistic. So what's the realistic goal to get to. The second behavior enablement is that the gap between knowing and doing and all the things we intend to do and New Year's resolutions will be coming up shortly and many of us will make those and probably not stick to them, if the past is a good predictor of the future. But we've got developed is psychological techniques to help bridge that gap. The great increase the chance that we'll apply what we know to be helpful. And the third area is mastery, getting really good at something before we move on to something else. And we've combined all these together to create a product which we is called Performa because it's all of our improving performance. And it's based around 4 45-minute sessions that are run virtually with a precision coach -- qualified coach and that has digital experiences before and after to help diagnose remind, refresh. And when we run this, we found that on 32% of occasions, people received unsolicited feedback about how their behavior has improved and their performance changed. It's a great way to get 3%, if you will, giving unsolicited feedback. So we're absolutely thrilled about those results, and we're delighted the clients have already bought it are buying more and more license. Again, is a very encouraging need indicator. We can then compare and contrast it with the rest of the market. And again, we are the only one in the proprietary methodology, the only one with a coaching quality of assurance that sits into it, and the only one that can integrate it into the rest of our solutions, the live workshops and the eWorkouts, everything else to create a fully blended program. The next thing I'm briefly going to touch on, which is new for us. We're sort of beta trials for this, but really thrilling, is Diagnostics. By and large, what happens at the moment is organizations bring in someone who's an expert in diagnostics, then they get some results to go, oh my goodness, what do we do with that? And then they try and work out a structured format and who they should bring in to potentially partner with them. They want an RFP process sometimes. We then choose someone, hopefully, Mind Gym. We do a brilliant job. But by the time the job is done, the idea of evaluating the impact [ long since ] gone, and it takes quite a long time to get there. With our new diagnostics, they're designed to be integrated with our solutions. And therefore, what clients discover is in the site so they can act on immediately. So the solution becomes part of the process. And then it's much easier to measure impact afterwards. So we think this is a significant change, and we'll redefine our relationship with many clients that will make us more of a strategic partner and it will be end-to-end for the value chain. At the moment, we are -- one client has bought it, and we're running beta trials with them. We've done a couple of the beta trials in the pipeline, and we expect this to have proven success in the coming year, FY '24 and then be more commercial success in FY '25. And then going to talk briefly about our new IP in the area of well-being. Well-being is a $50 billion market at the moment, forecast to get to $100 billion by 2030. Organizations spend a lot about it -- in it because they know how important it is if employees are flourishing and mentally and healthy and present. That adds enormous productivity and performance. What they sometimes don't realize is there are 3 factors that drive people's well-being. There's the personal factors. Maybe I'll go with a tendency towards clinical depression or [ drugs ] early in life. They're all the factors that happen outside of work, where what I eat, how much exercise I take, whether I -- my sports team won or lost the weekend and the status of my romantic relationship. I'm getting on my children if I have [indiscernible] parents. And then there's the life at work. Is my boss delight or idiot? Do my colleagues undermine me or do they support me? Now most investments take place at the borderline between life at work and life outside work. They're trying to nudge people to eat better and sleep better and so forth. And the research emphatically shows this makes virtually, if any difference. In 1 study, health care spending was the same for people who have been through 18 months of well-being programs, as those who have not. In another 2 years of well-being programs, the 5,000 people did take part were no different from 78 out of 80 measures, including sleep, BMI, cholesterol levels as well as absenteeism and retention and so on and so forth. So [indiscernible] there probably isn't getting the results the organizations want. And what we have identified is the 5 psychological conditions that drive well-being, one of which, for example, is certainty. The more surprises I get to work, they move to the boss that affects what happens that day or the email, I need to speak to you tomorrow and you have a sleep just not worrying about it, and then, in fact, there's nothing at all through to a whole range of is business strategy change on my budgets get cut and so on and so forth. So we help organizations think about [ Honey Creek ], those conditions that brings well-being into the flow of work. And this is a massive opportunity for us as a business and for our clients to get it right, and we'll be launching a white paper in the next quarter of Q4 ready to deliver solutions in the next year FY '24. So in summary, we are feeling good for the year. Our outlook remains unchanged. There are some economic headwinds and that in the U.S. at the moment to offer the first to adjust when they think things are getting worse, but also the first to bounce back when things are getting better. We have won the significant framework agreements that give us much greater confidence about future growth. We are launching organizational diagnostics with our first client, and we'll learn from that growth from there. And we have brilliant new points of view in leadership coaching and well-being, which will fuel future growth. So we're really excited about this. We set out a strategy when we did the IPO in 2018. We're absolutely on track with our strategy. We are with a slight disruption from COVID on track with the growth that we were looking to deliver and we feel very positive and excited about the business. And hopefully, you do too. I'm very delighted now to open up to any questions anyone might have.

That's great, Octavius, Dominic. Thank you very much indeed for updating investors this morning. [Operator Instructions] I'd like to remind you that a recording of this presentation, along with a copy of the slides and the published Q&A, can be accessible via your investor meet company dashboard. Octavius, Dominic, you've received a number of questions throughout today's meeting. So firstly, thank you to everybody for your engagement this morning. If I may, Octavius, can I hand back to you just to perhaps host that Q&A.? And if I could ask you to read out the questions, and of course, where appropriate, your responses, that would be great.

Yes, certainly. [ Thomas ] asked, what's the current head count of the business? And how is that split between fully employed and contracted? And as you grow, what do you think you will need to add? Dom, do you want to start off with some guidance on that? And I'm happy to contribute.

Yes, absolutely. So there are details on our head count in our half year results. We have something like 330 employees in the business. Now that doesn't include our coaches who are self-employed contractors. The contractors within that 330 are about 60 to 70. That number obviously moves around a little bit. You'll note that, that is down a little bit on prior year. We have focused on OpEx efficiencies. And I think I touched on that a little bit earlier, which has reduced that number a bit, but it's actually made our processes, particularly our technical side, a little bit more efficient and faster. Going forward, it's -- we will obviously need to grow head count going forward. Perhaps a better way to answer that is to think about the drop-down of our profits, of our revenues into profit. because most of our costs are head count anyhow. We anticipate on our core business that the drop-down to profit is in excess of 30%, so something like 30% to 40% on our normal growth. But saying that, digital is, of course, likely to be significantly higher margin, particularly Performa will be stronger margin than that we would anticipate. And then, particularly things like eWorkouts and pure digital such as organizational diagnostics, the margins on that are going to be even higher going forward. So yes, we will continue to grow, but you should see leverage coming out from our numbers going forward.

Fantastic. Thanks, Dom, for showing that. You asked -- someone asked [ mark ] about the -- how long is the process for securing these large framework agreements? And how are they structured? Let me turn to the structure first. In our world, in our market, there are very few legally enforceable contracts of long large tail delivery because the nature of the delivery can change significantly. So what happens is the plan is this is our challenge. Overall, what do you think it would cost as we said, let's say, GBP 10 million. [ And we'd go ], that's great. What would an overview framework to say, this is what we intend. And then we'll do statements of work for the individual pieces as they are delivered. So for example, the design of the program might be 2 million or 3 million. And there might be a statement of work for different phases of that. As it's extremely unlikely they're going to spend 2 million or 3 million in designing a program and then not deliver it. And you can imagine internally, there'd be quite a few questions asked if that were the case. So by and large, once they've designed and set up the product investment, the rest of the framework will be delivered. But it's a framework agreement, and therefore, it's still open to question if we can't guarantee those earnings. Now we also have SaaS products like our digital eWorkouts, and those are obviously committed to upfront for an annualized basis. So that the process for securing them is that tends to be our average buying cycle is around 6 months. It can be a lot shorter, and obviously, it can be a little longer, but the typical is around 6 months. Quite a lot of work goes on in building relationships with CHROs as the head of HR, heads of learning, heads of diversity, heads of talent as well as with CEOs and other business leaders. Even though they know about Mind Gym, so when the time comes, they invite us to contribute to the RFP process for a framework and be known a little bit about us before we show up. And as was the case of the energy company, where we had done a little bit of work before we worked in one of their divisions in safety at one stage. We also put effort in to get to the key stakeholders across the business, so that they [ invite us along ]. We were, in fact, seen as the black horse. We didn't expect us to win because we had some big consultancies who are incumbents, but they were really impressed by the intellectual rigor of our thinking, the quality of our products, the innovation of the team, the flexibility of the team and, therefore, decided to award us the framework. The electronic games company that I mentioned actually was quite quick because they -- one of the things that was important to them was to deliver a lot of programs in a short period of time. And therefore, our ability to have proven products that they could roll out immediately, and our client delivery team, which executes on them, makes sure they happen efficiently all over the world, made us a very appealing choice for them. And that happens slightly faster than the average. So hopefully, that answers that question. You also asked a question on regulation and corporate governance requirements on a company drivers of your business. Do you have offerings to address specific areas and enable companies to comply with their requirements? And the answer to that is, is it guarded? Yes. We wrote a research paper on ethics called The Only Way is Ethics: Why good people do bad things and how to stop us. And that has been the basis for programs and the number of banks on ethical behavior and how do you avoid ethical transgressions. And those programs have been commissioned because of issues with the regulator who said that the culture is not set up for ethical behavior, some have been fined for significant missteps. And therefore, they're key to change the ethics environment. And in one case, I'll give you an example of Deutsche Bank where the conduct survey was conducted 18 months after the Mind Gym program, and people were 7 or 8 percentage points more likely to say, for example, that they would follow the spirit of the law rather the lash of the law, if they have been on the program and if they had not. So you start to see a sustained impact on exactly the kind of behaviors that regulators care about. And there's definitely an opportunity for us to do more in this space. Moving on. Sam says, given the weakness of the share price, why are you not consider buying back shares in the company for cancellation? Well, you certainly have a very good point about weaknesses of the share price, and we have clearly a range of views of where fair value might be. One of the things that people have talked to us about is ensuring a sufficient liquidity in the market. And 2/3 of the business is still owned by the founders, by me, by Seb, by my wife Joanne also non-exec. So there's only a 1/3 that's reflected. If we start to buy that back, the liquidity will become an even bigger issue. So we've taken advice on that, and the advice is to posted and let the market writes itself. But that's the reason why we made that decision.

Can I jump in on that?

Yes. Please do, Dom.

So absolutely. I endorse what Octavius has said. What I would also say is that we're very much focused on our growth drivers, so on a digital growth. And if we want to move the share price, delivering on those, which we are doing at the moment is the thing that we believe will most transform that share price. So that's our focus at the moment. And obviously, as Octavius said, we have considered this, but that's what we're focusing on.

[ James ] asked, what's the planned investment into R&D, Dom, which I might ask to you, and then how do you protect your IP rich, which you may want to cover.