Mind Gym (LSE:MIND) — Investor Presentation

0:00 Good morning, and welcome to the MIND GYM PLC investor presentation. Throughout this recorded presentation, investors will be in listen only mode. Questions are encouraged and can be submitted at any time by the q and a tab situated in the right hand corner of your screen. Just simply type in your questions and press send. The company may not be in a position to answer every question it receives during the meeting itself. Have the company will review all questions submitted today and publish responses where it's appropriate to do so. Before we begin, I'd like to submit the following poll. I'd now like to hand you over to Octavius Black, CEO. Good morning to you, sir.

0:30 Hello, and thank you very much indeed. I'm joined today by my collaborator in arms, Dom Neri, our chief financial officer. I'm the CEO and cofounder of MIND GYM, which we started, twenty three years ago now. I'm absolutely thrilled to be telling you more about our strategy and even more excitingly the progress we're making in delivering it. But before I do that, can I just talk through the agenda for what we're gonna be covering in our time together? First of all, the highlight, we got double digit revenue growth. We'll return to profitability. Now the business is in good shape. And Dom, in a few moments, will talk through the FY '23 highlights. But more exciting than that is our strategy, our opportunity to create a really transformational business and redefine the marketplace.

1:15 And I want to share with you, for those who are regular viewers and followers, it will be a repeat of the overall direction because we've been consistent in where we're heading and the opportunity ahead. But there's also great updates on what we've done and what we are doing to deliver on that strategy. And I'll finish off with a brief outlook for the year ahead. So over to Don and our FY twenty three highlights.

1:37 Thank you very much, Octavius, and good morning. It's a pleasure to be here. As we step into our financials, we are very pleased to announce that our FY twenty three results are in line with expectations. We have revenues of 55,000,000, which is 13% growth. This business continues to be an extremely digitally focused business. We have 68% of our revenue, which comes from digitally enabled revenues, primarily virtually a virtual delivery of live sessions. Now that is down a little bit from last year as we expected and and we've said in the past. And and that's because as we've emerged from COVID, people have started to do a bit more face to face delivery.

2:24 That is in line with expectations. It does seem to have stabilized. We don't anticipate it changing significantly, although we are agnostic as to whether that really happens. Our digital revenues pure digital revenues have increased somewhat, and we're seeing improved growth of e workouts there. But probably the biggest news this year is the return to profitability. So profit of 3,000,000 is up on the naught 400,000 loss we had last year, and EBITDA is doing the same thing. So what we're seeing here is we're starting to see both leverage normal leverage on our revenues, but increasing leverage and return on investment on some of our investments to bake make the business more efficient and more scalable. We'll touch on that in a slide later on.

3:15 And we remain a very in a strong financial position. Our cash at the bank is 7,600,000, and we also have a 10,000,000 loan facility that remains untouched. You'll see CapEx has fallen versus last year. So as part of an initiative, a restructure to make the technology organization more efficient, we integrated it into the business. And that has increased the pace of the digital pipeline, and we'll be talking about that in the strategy section. But one of the impacts of that is that the cost has come down as well. And then finally, we'll come back to this later, but we've acquired the rights to a diagnostics platform. And that's very exciting because it speeds up our some of our digital pipeline significantly, something like eighteen months.

4:05 And it's also significantly cheaper than we were anticipating we would have to be investing in the next few years. So our expectations for CapEx spend will go the CapEx will go up, but the level won't be as high as we had anticipated in the past. As we break down into the regions, you can see there, The US is growing 8%, and that largely reflects the impact of FX. But you can really see a step up in the EMEA region there, and that's underlying growth, but it's also the impact of an energy framework, which we've talked about in the past, which will particularly drive growth in the second half this year and will have a bit significant impact on revenues. When we start to look at our clients, you can see that we're not heavily reliant on one client. The largest client there is five and a half percent, just under 6% of our business.

5:00 So and we also have a very broadly based client base. So lots of different industries. So for example, when technology suffers a little bit, we still got strength in pharmaceuticals. We still got strength in the financial services and many other industries. And finally, when we look at the product breakdown, there is quite a significant growth in our design and advisory services up from 12% to 19%. That's the re largely the impact of the frameworks that we've announced in the past and particularly the energy framework, which we're seeing coming through there. That will move around a bit from year to year, but what's interesting is that that design and advisory work will often lead to a strong tail of delivery, and delivery is where a lot of our profits are made. So that's very positive, and we're as we've said, we anticipate that particularly driving growth in the second half.

5:55 And the final one is to put a point to make here is is about the operating margin improvement. So you can see that we've made significant progress from 3% last year to 10% this year, and we're targeting for the first time an EBITDA margin of bit between 15 to 20% in the medium term. And the reason we're so confident in that is because some of the investments we made a couple of years ago, which we have talked about in the past, are now starting to show an ROI. So we've taken we've improved our systems. We've improved our processes, and that's enabled us to set up, for example, a new shared service center in Newcastle. That was done in the second half of the year. And the the impact of that is better service for our clients, and it's also more efficient and more scalable.

6:42 And that's why we have confidence in that target which we set for the first time. And there's a strong pipeline of automations coming down the next couple of years. Codesourcing, session booking, you can see those bullets there, and that's going to help drive towards that 15 to 20% margin target we set ourselves. So strong growth as you can see, a real turnaround in profitability, and a strong profit growth going forward with some strong drivers behind it. And now we're gonna get come back to the strategy section, and Octavius is gonna take you through that. Dom, thanks very much indeed. And I think the reason as investors you choose to back MIND GYM is above all for the enormous opportunity we have, the potential hockey stick that will at some stage emerge based on our very clear strategy about how we understand what the market is operating now and how it can change to deliver greater value for our clients in the future. And the overall market size is in the region of 370,000,000,000.

7:43 That's just learning and development, and it it's the size of larger than the GDP of most countries around the world. And it's spent in this extraordinary way. It's extraordinary because it's very siloed. Almost all organizations have a range of different human performance challenges from leadership to management to diversity, equity, inclusion, well-being, and much else besides. And each of these tends to be run by a single budget holder or collection of budget holders who are working to design programs to address their particular issue or priority. And then they, in turn, collect three or four or half a dozen different providers who may provide different services as part of the mix that they're creating in order to deliver impact. Now across the whole business, this lacks coherence. So getting messages that are duplicated and messages are inconsistent.

8:31 It also creates waste because things are overlapping and things are constantly removed then restart all over again. And most importantly, there's no consistent data. So our future, the future for business, how do we make the total more than the sum of the parts, is to integrate, particularly to integrate the content. So what I learn in onboarding fits with what I'm learning in manager development, which is linked to what I'm learning in well-being and inclusion. But if there are certain core psychological principles, like how to increase agency or to think slightly longer term out that help in one area, they're used to apply across all the areas because they'll have an exponential effect. And so what we imagine is organizations moving from spending, let us say, imagine $50,000,000 a year with a 100 plus providers to saving some money because the integration will need to do it at less cost, but also far greater impact than spending with one or two providers.

9:24 And that integration isn't just about content, but also about the distribution channels. And here, we build not just on the twenty three years of IP development, but also over twenty three years of working out how to affect change in people who work in organizations. We've got 5,000,000 people who've now been to one of our one to many programs, our bite sized workshops. We run up to 500 a week in 40 countries around world. So we're really good at one to many, and that's a great route for learning. We learn from peers, we learn from colleagues, and it actually causes us to engage in in content and solving problems. But sometimes you just need something to go to solve it right now by myself on the way into work or when I've got a free moment to have a sort of thing exist, when I've got a particular problem to address. And so five years ago, we developed our e workouts, are asynchronous digital assets that are on demand. And those are a really great way of getting your heads quickly around how to have a tough conversation or set goals that really drive performance or whatever else it may happen to be.

10:22 You just see from Dom, they account for 10% plus of our revenue. Then there are times when actually I need to speak to someone, but I need to do that alone. I need to speak to somebody about my particular challenge. And the great thing here is we've launched a unique performer one to one coaching offer off the back of our proprietary platform, and I'll talk a bit more about that in just a second. Then on top of that, you can build in diagnostics, and I'll talk about it a bit about that too, which helps me work out as an individual. What is it about me that I can most focus on that will give me the best chances of success? And organizationally, where should I target my investment to maximize my return? And then also, critically as part of the civics, we need learning in the flow of work that's happening as and when we're doing things in in our daily working lives.

11:10 And all of this comes together fueled by dense data and integrated so that what I'm learning in one place or discovering somewhere is also replicated and built on and reinforced in the other channels and other routes, the jigsaw puzzle that you saw before. So this is the vision that we're heading on, and this we believe is where organizations will derive significantly greater value. When we tested it with clients and CHROs, many of the world's most impressive companies, they love the idea of this. They're just like, how soon can we have it? So I wanted to share a bit more about the progress we're making in each of these areas. Not the one to many and on demand because we've been doing those for many years. It's going next to the area of one to one. Now we we actually held a summit at the Royal Opera House a few weeks ago where we had the almost 200 CHROs of many of the world's leading companies from Shell to Chanel, Rolls Royce to British Aerospace, and many more others, Kingfisher, Sage, Ricketts, and so on and so forth.

12:09 And we asked them, what do you think is the single most important thing when deciding for coaching to get the right coaching solution? And 90% said the most important thing was coach chemistry, the relationship between the coach and the person that they're coaching. We then revealed what the research shows, which is only 8% of the performance improvement from coaching is derived by the chemistry between the coach and the coachee. And actually, the vast majority of the impact is derived by having a consistent proven coaching methodology. Now that's a big shift in the market because only 14% of people when they're commissioning coaching even consider the coaching methodology as one of the criteria. So there are fantastic opportunities to reeducate the market. And you'll see on the on the side of this chart our new research paper, precision coaching, Better, Faster, Always, Whatever Your Goal, which we launched at the CHRO Summit, which is part of our process of redefining the market and recalibrating the way clients choose and commission coaching.

13:11 And we're able to do that uniquely because we have the coaching methodology which we've developed called precision coaching. That's what makes it better. We've managed to organize that in a very precise way over cycles of four by forty five minute one to one sessions, which are proven to deliver significant goal improvements. I'll come to that data in just a second. And that uses people's time more effectively and gets more guaranteed results. And on top of that, we're able to do it consistently. Now this doesn't exist anywhere else in the market. We are the only provider in the whole marketplace who qualifies all our coaches in our proprietary methodology to ensure they deliver consistent quality. So yes, there's a shift in the market from thinking all about coach chemistry and finding exceptional coaches to realizing it's almost all about the coach methodology and making sure your coaches are trained in those. But the evidence is unequivocal that that is the direction to go, and that puts us in a unique leading place for the one to one coaching offer. To give you an illustration of how that's already working in practice, we're delighted about our partnership with Burberry, a tremendously successful fashion business where we are running their leadership development program, integrating the live bite sized workshops for leadership development with Performa, the one to one coaching.

14:27 And one of the ways that's most accurate to Metro performance improvement is what a manager thinks of the person who's going through the coaching and the program. Because we often self enhance ourselves, but the manager tends to have a relatively good idea. And 85% of managers are actually seeing an improvement off the back of this program. So that's a tremendous result. Then we're also seeing that goal attainment has gone from around 40% to around 80% of the ability to achieve the goal. So that's just a a tremendous shift. So one to one coaching, we're in a really good place. How quickly the market recognizes and appreciates that the key is to have a consistent methodology and therefore to adopt performer, we don't yet know. But we obviously know this is direction it's heading in, and therefore there's a fantastic opportunity even just with one to one coaching, but also even more so as an integrated solution.

15:16 We're not stopping at one to one coaching. Really pleased to share with you the progress we're making with diagnostics. Diagnostic market at the moment is quite interesting. In the bar and large, the people who run the diagnostics aren't the same as the people who provide the solutions. And that leads to a big delay. So I get the results from my employee survey, and then we spend ages on understanding and analyzing it, what are the benchmarks and what are the data tells about this or that. And then often we're dancing on pinheads. There's not a lot of difference, but we're not focusing our attention on the thing that really matters, which is the solution, what to do about it. And then eventually we get around to try to commission a

15:54 solution, but but the people who provide the solutions are are not necessarily aligned with what the data providers have produced. And therefore, there's a whole trying to get the two to work together. And it can take six months or even a year before you've actually got a program touching people that addresses the results in your survey. And as a result, don't manage to do another survey, not much has changed. We're tying that on its head because we're integrating the diagnostic with a solution. Our diagnostics come with, in light of what research says, here is a program that helps solve it. And that means you can then quickly and easily reuse the diagnostic to measure impact. So the whole thing becomes a single flow, which is transformational.

16:33 Transformation in the sense of the speed with which you can get a tailored solution to solve the problem that you've identified. And we're also excited about building our own platform in order to service our clients to do this. So rather than relying on a third party and the vagaries and wins of how they've designed their platform for class of customers to use quite apart from the cost, We've actually got our own. When I say build, we've done some building, but we've also critically done some buying. We've bought the instance of a very effective diagnostics platform and we're using that and adapting it for us particular needs. And that, as Don has said, has accelerated the road map so that we're able to deliver diagnostics twelve to eighteen months sooner than we had anticipated and also means we're spending less CapEx than we thought we would need to if we had to build it ourselves. So we're in a good place to have the ability to deliver, in a great place with the strategy, but we're also in a fantastic place with developing the content.

17:28 So to give you an illustration of this, we're talk a bit about well-being, which is a massive market opportunity, $50,000,000,000 a year spent on corporate well-being programs. It's destined to go to $100,000,000,000 And here we built our own MIND GYM proprietary diagnostic with a combination of our psychologists, our psychometricians, and our data team. And what we've done here, to explain the chart on the right, is we separated ill being from well-being. So ill being, just because I haven't got a broken leg doesn't mean I can run a marathon. So ill being is the lack of broken leg and well-being is the fitness to run a marathon. And what we've discovered here using MIND GYM's benchmark data is that people sit in different categories. So those who are flourishing, high on well-being, low on ill being. But we've also got two other interesting categories.

18:14 One is the fragile thrivers who are high on well-being, but also quite high on ill-being. They look like they're doing fantastically well. They're high flyers. You really admire them. Give a busy person more to do outside to get the job done. But underneath, they're under pressure. They're exhausted, they get overwhelmed, they're not sure how long they can keep up this front. On the other end, you've got people who are boring out. These people are not overworked, they're not feeling stressed, but they haven't got more exercise at what they're doing either. And they can be an energy suck on the organization in a way that the fragile thrivers can have a much higher risk of leaving. What happens is the solution for the fragile thriver might well be to give them less work or more resources. Do that for the person who's boring out, and you'll only make the situation worse.

19:00 So the first thing is to diagnose what the problem is and then to come up with a solution that fits that. And we've got three programs that at the basic level cover these three needs. So the first one is to recover. That's about reducing ill being. So if you've got people who are high on ill being, that's what you need to give them. Reignite is for those who are low on well-being and increasing that. And then reinforce is to stop anybody from getting worse on either well-being or ill being. How you spot your alarm calls and trip wires to spot your risk of going down on either of those axes. So not only do we have the overall programs for these, which we can then customize to suit particular needs, but we've also got the solutions. These are existing proven MIND GYM assets that have been run all over the world countless times.

19:47 The squares are go largest. They're virtual TED talks about faster, longer, more interactive. The green circles are our MIND GYM workouts. Those are ninety minute smaller groups, 16 virtually, 20 in person that address an issue that are more committed to behavioral change. And the other symbols represent other kinds of product, the orange circles are e workouts that I mentioned earlier. So you can see you've got the instant programs and your diagnostics might tell you that your digital marketing team is in need of reignite whereas your full stack engineers are in need of recover. And therefore, we can go straight away with here's the answer, here's the solution that you can give them that immediately gets a turnaround. So for business, there's a massive cost saving here, all that time and effort trying to move from the results of those diagnostics to the solution. There's also a big opportunity cost, the time delay to get answers out there. So we're really thrilled. This is another part of our building an integrated solution and creating the behavioral change platform.

20:49 For those with really good memories, you'll remember that the last part of that circle I shared was in the flow of work. How do we give people answers they can address immediately? And so the early stages here of using AI and in particular an instance of chat three chat TBT three and three point five, and we've taught it MIND GYM content. Because the challenge with AI is it gets up to about average or about anodyne solutions and often ones that aren't actually quite accurate. So what we've done is teach you the content that we've developed over twenty one years

21:20 and tested with 5,000,000 people. And as a result, we've created a what we called Sigmund Friend, who is our coach pot, if you like, equipped with MIND GYM content. And you ask Sigmund Freund questions, and Sigmund Freund can give you answers that are far more likely to be the sorts of things that you need that will work than if you just went directly to the open source AI. And this is only for internal use now. We're developing it, but you can see how this can go and how this can become part of the solution where it complements the one to one coaching,

21:51 the one to many group sessions, the e workouts and so on and so forth, and becomes in the flow way of learning. So we're really thrilled about our product pipeline. We think this is absolutely consistent with the strategy that we shared over the last few years. We can see the market opportunity there and we can see a route to make and are already making significant progress to deliver on it. So hopefully that gives you a good sense of the overall strategy, where we're heading and how we're getting there. I'm going to just finish off now by sharing the highlights of our outlook for FY24, what we think the direction to give you,

22:27 which is that the digital share will continue to increase. We'll continue to make progress with the launch of the diagnostics. Margins are in a better place and heading in the better place still. CapEx is probably going to be slightly lower than we had previously set as expectations, thanks to this acquisition of the digital diagnostic platform. And we're seeing further progress for growth in FY twenty twenty four. It will be skewed very much for the second half. We can see that from the big framework agreements that we signed, but it will take to come to fruition. But we still feel really good about the growth on both top and bottom line for MIND GYM PLC. But above all, what we feel excited about is the medium to longer term. But the opportunity here is colossal. And at some moment, we will have a hockey stick. And we don't know when that will come, but we're absolutely confident that as we build these assets and continue to work with most of the FTSE one hundred, most of the S and P one hundred, with these great organizations, who find MIND GYM as a a a proven

23:27 solution to their human capital needs, that they will increasingly come to us and see the value of this integrated data driven approach. So thank you for your time. And I'm now very happy to open up to questions. Octavius, Dominic, thank you very much for your presentation. What I'll do is I'll just bring up your camera to full screen now. Ladies and gentlemen, please do continue to submit your questions just by using the q and a tab, which is situated on the top right hand corner of your screen. Just while the company take a few moments to review those questions that have been submitted today, I'd like to remind you that recording of this presentation

23:58 along with a copy of the slides and the published q and a can be accessed via your investor dashboard. Octavius, Dominic, as you can see, received a number of questions throughout today's presentation. I could just ask you to read out those questions and give responses where it is appropriate to do so, I'll then pick up from you at the end. Thank you very much. So we'll start off with the first question, which is what level of cash generation is the company capable of achieving over the next few years? So

24:27 as you will you will probably have seen in the results, we utilized about £2,500,000 of cash in FY twenty three, which was significantly down on the year before. The if when we start to look ahead, our market expectations are for our cash generation to start probably from the second half of this year and then to build as the years progress. We're not dropping all of our cash generation down to the bottom line because we're reinvesting some of that in our digital strategy. But again, if you look at expectations, whilst you see CapEx going up, you're also seeing cash generation over the next few years growing by one to 3,000,000 depending on which year you're looking at.

25:14 So our focus is on building the behavioral change platform that Octavus is taking you through because our clients really want it. We're making great progress with that. It's a huge opportunity. But at the same time, this is a profitable underlying business, which is investing in digital. And it's you're going to start to see those that cash coming through in the next couple of years. That is a fantastic set of questions. I love this. What is your USP, and how does that differentiate you to your competitors? A tremendous question, and I've got quite a long answer to this, which I should try and keep short. USP number one is grounded in behavioral science, So the evidence of what works. Ten years ago we said unconscious bias training didn't work.

26:00 Everyone actually fairly ignored us. Now they've come around to our point of view. Hopefully our new findings on welding won't take ten years for people to come around. But we're happy to tell the truth, often to speak truth to power or truth to orthodoxy and say this is what does work, this is what doesn't work, and this is what you should do. We republish the market leading research white papers on areas like performance management, leadership, coaching, well-being, diversity and inclusion, and so forth. So we're absolutely just in the field and we're thinking of what to do to get it right. Secondly, we productize behavioral science and we are the only business in the world that delivers at the scale of live either in person or virtual one to many sessions. So that's a really strong USP that we have. And we've delivered, as I said before, to 5,000,000 people. So we've got a really strong base of proven ability.

26:50 And then on top of that, we've also got amazing library of proprietary IP. All the content that we've developed and delivered over twenty three years is that. On top of that, we have a really strong team of psychologists and instructional designers who design the customer solutions and very adapt solutions. So we're not just a product business. We can also flex and deliver more custom solutions to our clients. We've got this global network of coaches, and they're all certified in our methodology, both for the one to many, which is an iSCAN methodology,

27:22 and in precision coaching, which is the one to one one for the performer. So I think those are just a few of the USPs we have and we have more I could go to. Hopefully that gives you a sense of what's different. And in particular, this ability to integrate across all those distribution channels. So you have diagnostic providers, you've got one to one coaching providers, you've got people who run programs and courses. What you haven't got is anyone who brings it all together. And so we think we're better in each of those than the competition, but we certainly think that we're much better as the sum of the parts versus the individual parts. Next question. In your results, you referenced building a standalone psychometric assessment tool into your diagnostics platform. What other features would you like to add to the acquired diagnostics platform moving forward?

28:08 That is a tremendous question, And there's quite a lot to answer into that. One of the areas that we well, one of reasons why we like this platform is it allows you to have a personal individual one to one relationship with the recipient. So you someone fills the question and goes, I think this is all a complete load of nonsense and your strategy is rubbish. You can write back to them, so have you been to any of the sessions on the strategy development? Or what bits of the strategy do you think do make sense? Or whatever else and you can start to have a conversation with them. So you're not just getting this blanket data, but you're getting that personal relationship.

28:41 And what that will move on to is us being able to give personal programs and solutions to individuals. So I fill in my survey on well-being, and not only do the results go as as a aggregated level to the people who run the business and the people who run my division. But personally, I get a report saying this is where your state of well-being is, and these are the things that are getting in the way. And frankly, you've got a really high sense of belonging, so I wouldn't worry too much about that. But you've got a really low level of certainty. So you either have to get more comfortable with your uncertainty or find ways to get more certainty. And these are ways to do it. A practical program, for example, would be workouts to have that. So there's an awful lot we can do with a with a diagnostics platform that personalizes the insights and the content. We'll also integrate it into the performer platform, which delivers the one to one coaching. So you start to build a whole person view of people who are coming to MIND GYM, whichever experiences they're coming to hopefully increasingly to all of them. So there's enormous upside potential there.

29:41 Next question, is the CHRO some of the biggest event in MIND GYM's annual calendar? And can you describe how your sales team follow-up on this event to lock in new business wins for the coming year? How confident are you in how that sales process is rolling out this year? The first answer to that question is yes. It is the biggest event in MIND GYM PLC calendar. It's actually the biggest gathering of senior HR people anywhere in the world this year, we believe. So it's it's a massive place for event to happen. It helps on a number of fronts. So we have clients who are already keen to buy from us, but actually what it's done is not only reinforced that they should go with us, but it's helped them think in larger and more specific ways. For example, case studies, we had Citi do a case study on culture change and how we've been helping with them and other clients who wanted to work with us saw that case and they go, oh, I'd like a bit of that. Yes, please. Now know what I want to do with you.

30:32 Let's see if we can accelerate to make that happen. We got clients who didn't know us at all before who are now having follow-up meetings. All our sales team at the conference. Everybody who came to the conference and indeed those who registered but for whatever reason didn't make it, there are follow ups with them. Many of them have already led to meetings or meetings are in the calendar. So there's a a field sales team that is driving that, and they're allocated by industry expertise. And then there's a how confident are you that Salesforce is rolling out this year? I'm never completely confident about the sales process. I always think it could be better. There is always more we can do. But we have streamlined the way in which leads have been dealt and handled through our CRM and increasingly a marketing adjunct to that, which is going to come live in the next month or so.

31:20 We've also got much better at managing the processes. And I think in EMEA, we are in a better place of how we generate leads, generate opportunities, follow those opportunities through and indeed convert them. I think in The U. S. We are in a slightly less strong place for all sorts of reasons mainly to do with COVID and I certainly wasn't able to be over there. Wasn't as close to the business during that period. I think we've made some changes in leadership there, and I'm really confident that our new leader knows exactly what to do, but it will take a bit longer to get there. I think I'll hopefully be very honest in all these conversations is that we are an entrepreneurial business. We know where we want to be in five years' time. We're really confident in getting there. But will there be bumps on the road? Will there be crosswinds and headwinds between now and then? For sure, there will.

32:09 In the past, we've had great growth in The U. S. And EMEA hasn't been so strong. Now I'm glad we've got great growth in EMEA. U. S. Unfortunately isn't so strong. Soon, we'll get them both growing at the same pace, but there will continue to be challenges in the sales process. And that's very much where we are focused at the moment. Another good question, how you find the impact of a weaker economy on client demand and interest? I think the biggest challenge with the weaker economy is the restructuring clients do, which then means that everything's put on hold while the stakeholders move around and some of them leave and exit. So in the end, yes, companies absolutely need to address these sorts of challenges. Now they might be doing slightly less on diversity inclusion and slightly more on productivity or performance management, but make it for sure, 100%, companies realize they need to cherish and look after their talent. And the ability to completely reinvent the talent, I can fuck all these people, bring in new people, is just a myth that has been exploded.

33:09 A, there are all these brilliant, fantastic people waiting to come and join your company. B, there's a high risk that they may not work out. C, there's a long time elapsed to get there. So companies increasingly recognize and appreciate they need to make the most of the talent they've got, help grow, nurture, engage and develop them. And the agency with employees to be able to move and transition to other places is far greater. And therefore companies are very focused on how to make the most of the people that they have got. What happens is that with the restructure, you find that the which individual is responsible for what or who owns which budget becomes obfuscated for a while. And that then delays the sales process. It doesn't stop it or prevent it, but it certainly delays it. And we are certainly seeing things being delayed at the moment. So whilst I'm absolutely confident of growth, knowing exactly when, where and how is harder to do with economic headwinds, and we are absolutely noticing that with our clients.

34:07 Are you seeing CFS having to operate within flat or reduced annual budgets for training given the economic climate? I think so far it may be flat, but it doesn't seem to be declining. And I think that's actually a really good thing for us because it forces our clients to think differently about how they spend their money. And when we clients are really happy with how things are, they don't go to the pioneer, the disruptor, they'll say, things are fine. But actually when budgets are under pressure, then they think, actually, is there a clever way of doing this? Do I need to do things differently? Necessity is the mother of invention. And we are that source of pioneer and invention of difference that can give a much greater return on investment, but you have to be willing to give us that a go. And so, yes, I think we'll see budgets flatline potentially.

34:56 But as I said before, the market size is $360,000,000,000. This is much larger than the GDP in New Zealand. So if the market goes up or down in size, that shouldn't affect us. Our job is to increase our representation and the depth and breadth of our relationships and clients. Are you planning to bring a dividend back anytime soon? Dom, do want to talk to that? Yes. Absolutely. So historically, this has been a business that's made strong profits. And we then back in FY 2021, 2022 made a decision to invest significantly in digital, and we've talked to you today a lot about a lot of the progress that we've really seen coming through, and you can see that starting to come through in the numbers.

35:41 At the moment, we're not paying a dividend. But but over the coming years next few years, you'll see cash generation starting to increase. And once we get to a cash generative position, the board will then continue to look at that dividend policy and assess whether it makes sense to pay a dividend. So as I said earlier and asked the cash price question, we're generating we're anticipating returning to cash generation. That's what market expectations are about. And assuming that comes true, that provides an opportunity to to look at the dividend again. What are you finding as the biggest obstacles to progress right now? Is it more about you having the time to build out the assets, or is it more about market coming around your offering?

36:27 Estimable, exceptionally good question. And the answer is disappointing to me perhaps, but the truth is it's both. You know, we do need to build out these assets and show they work. We've got the diagnostic out there. We've been trialing with one client. They want to be trial with more clients. These things just take time. So you've to have clients so we need to give it a go. And then that takes time for how you build out your assets. So both of those are challenges. I think the harder challenge is getting the market, the clients to think differently. If I come back to one to one coaching, I think it's very clear what the answer is to deliver consistent one to one coaching, but it's also very different from how people have been buying and choosing coaching in the past. And how long it takes to educate the market, how long it takes for clients to come with us, I think is the bigger obstacle to.

37:13 But we also clearly need to get on with building the products and proving that they work. Dom said delivery is where a lot of the profits are made. Can you expand on that? How do gross margins with delivery compare with other lines? Dom, over to you. Yeah. Absolutely. So, obviously, delivery is a very large proportion of our business. You can see that in the numbers. So, of course, that's where a lot of the profits are made. It's also there are aspects of our business which are, whilst they make profits, they make less profits because we're investing in generating delivery. So for example, our design and advisory areas, whilst they're profitable, they they tend to be involve a lot of sort of scientific, almost consulting services.

37:59 And in the design elements, they don't make us strong profit margins, but what they tend to do is then lead to a strong delivery tail. So when our DNA, design and advisory mix of the business increased this year to 19%, that's why we're talking about a very strong h two, which is driven by delivery. The other aspect to think about would be our digital business, and there are aspects of that which are like the e workouts, which are almost 100100% margins because they're obviously a pure digital product. And increasingly, there are new products coming out which depending on how we sell them could also have that kind of profile. And finally, well, the other thing to think about is cash generation. As you grow a digital business, a lot of those services will be paid for upfront, so there is a cash benefit there as well.

38:51 But, yeah, I think that's Boris, are are clients committing any spend to the development of features that they want? I think at the moment that is not the case. We're not asking them to fund features because I think we'd rather create a product that's going to work across the full suite of clients, and therefore we'll make the investment in that. But they are very much part of the discussions about what those features should be. So we're listening to clients and we're aggregating what they tell us, and then we're learning from that what is and what isn't working so well and therefore what to adapt and shape. So Performa, we've already done a soft launch for that. We've got great client feedback on that. And we know from the collection of clients, what are the things that matter most. And we might go to particular so we've got single sign on, but we go to a particular client for their methodology for single sign on first and then work out how to expand it to others. So we're listening to clients and building features that they want.

39:43 What's the expectation for CapEx over the next two years? Yeah. I'd say market expectations are we we had about 5,500,000 in CapEx in FY twenty three. Market expectations are for that to increase to something like 8,500,000 over the next couple of years. And that will take us a long way towards building our existing pipeline of products. So depending what might come after that, that might change, but for the moment, that's that's what expectations are. Can you talk about what you're seeing as the backdrop regarding institutional small cap investors and how that is affecting turnover in your register? Should I start off with that, Darwin, you're very good at that? Our register is incredibly consistent. The as you will see, the the volume of trading is is modest because key investors by and large have been with us. If not since IPO, there was a little washout in that kind of months after that. They've been with us for a number of years now. They see this as a three to five year journey that they recognize that the opportunity is enormous.

40:45 They believe in our strategy and our ability to execute on it. We don't we don't know and they don't know when it's going to come good in the sense of the hockey stick. It's obviously coming good in terms of the results we're already delivering as you shared today, but really exceptional. That will come down the road. And so we're seeing a fairly consistent status of the register. Do you anything to add to that? No. I think you've covered it. Know the company previously contributed one to the turnover to Parent Is that still the case? And if not, what is the level of financial support provided to this important charitable aspect? You're absolutely right. This is a vitally important charitable aspect. We're really proud of the work that Parent Gym does. It slightly declined during COVID. A lot of our courses are run-in person in primary schools, and it was harder to get obviously, was impossible, as I would say, just children were going to school to get parents back together.

41:37 So we're rebuilding that a bit. And we're also looking at different models. So we've got a partnership with a charity, and we're running Parent Jew in prisons. One of the single factors that most affects recidivism is whether you return to a family where you are accepted and part of it or not. And one of the challenges is that they may return back to civilian life. I find it hard to know how to parent and how to build a relationship with their child or children. And so we're actually running a parent gym in prisons at moment. Was actually in Wilmington's scrubs a few weeks ago talking to inmates about this. And so it's a vitally important part. The actual level of investment varies from year to year. We're not making an express commitment about how much we're spending because we're trying to do things in a clever and more efficient way. But we obviously are making a commitment to the impact that we're having, and we are returning to the volumes of programs that we have pre COVID.

42:29 Also, our employees get involved with this as well. So they'll they have charity days, which they contribute. I think we have people running the marathon with PAC this year. So there's quite a lot of it's not specifically cost, it's not measuring cost, but there's a lot of enthusiasm and and involvement in the business for it as well. Will diagnostics deliver similar, better, or worse gross margins than existing business? I think that I understand the point of that question. I think it's thinking of it like as a silo product category, whereas actually what we want to do is to integrate it so we can do holistic solutions for clients. We can solve a problem like leadership development or a problem like performance culture. And the diagnostics will be an integral part of that and one of the key reasons why we win that work. We won't necessarily charge for diagnostics as a separate category. What we'll do is charge for the whole package. And therefore, with the diagnostics, a smaller, better, worse gross margins will in effect depend on our pricing strategy rather than on whether the kind of margin that they could generate. Once they're self serving, then they if you're charging for it, the gross margin would be a bit like eWorkouts, it would be enormously high. But how we price it, how we package it, that's still in development.

43:41 What kind of customer churn stats do you maintain internally and what insights have they given you? As those who've tracked our business will know that we tend to have repeat custom from 85% plus or minus a bit of our revenue comes from repeat customers. And what we tend to find is when customers disappear, it's because we have only had one or two stakeholders, they've left, the new people have come in, they don't know us or know about us or want to start something fresh and new. But even those that do that, the organization tends to come back as a cloud further down the road. So our issue is less about customer churn and more about deepening and broadening our relationships with the clients that we've got, so we're not dependent on one or two stakeholders to continue the business in the short to medium term. What is the single best point of proof that digital investment from recent years is working as we appear to be pre revenue on that investment today. Well, we're not pre revenue on the e workout investment. Now that was an investment we made. We did it just before the IPO, and that continues to be we barely touched the e workouts, and that continues to be almost 10% of revenue. We're now actually refreshing and renewing them. We're increasing the UX, increasing the content.

44:53 We are making sure they run incredibly smoothly. And I think that will give another boost to the eWorkout revenue. But what that obviously proves is that clients are happy to subscribe to MIND GYM digital assets. And then when we get the investment right, it comes good. So I think we are continuing to track pipeline across all our digital investments. Anything to add to that? Yeah. I think the if you look at some of the KPIs in particular out of Performa, we've got some really so we touched on some of the KPIs working with Burberry, and you saw the significant impact that's having. Also the I'm I'm gonna forget the word, but the sort of we're seeing about a third of people who are going through Performa are getting sort of unrequested feedback saying that they've been improving in an area, and that sort of almost never happens.

45:38 So that's really exciting as well. So the early data from some of our digital products is quite exciting. Brilliant. Thank you very much. I think this is definitely a question for you, Dom. Are you keeping track of what your company is achieving in terms of return on invested capital? And with your new strategies products, do you have any idea of how these are going to affect your ROIC? Yes. So I think it's very early days for this. As you as you know, we've we've obviously have clear plans for our digital products. I I so we are monitoring this. I think we will have a better view for it as time progresses. I think the as that digital pipeline progresses, we're starting to see the revenue growth the revenue growth should pick up. We're not exactly clear when that will happen. When it does, you'll see, obviously, significant improvements on that.

46:32 And then one final question, at least for now, is have you got any thoughts on how VRAR XR is being used in the training coaching field and how you might capitalize on this tech. Well, we're obviously tracking that and keeping a careful eye on what is happening in these these areas. What we've noticed so far is it tends to be a fairly situation specific and quite marginal cases. Where they are used, they can be very effective, but they're very hard to scale cost effectively. And that will I'm sure change the technology changes. But the I remember many years ago, I'm going to say five or six years ago, but it could be more. People saying, you you need to get into VR. VR is going to totally change the whole field. And we're like, well, let's let's keep a careful eye on this and watch it. And as it does, we'll be ready to move. But it hasn't so far. I think at the moment, we're more focused on other technologies, AI is the obvious one, than we are on VR and AR. But as we will keep tracking it and as the time and the market starts to shift, we will be ready to move.

47:35 Octavius, Dominic, thank you very much for that. I think I actually managed to address every question from investors and of course the company will review all those questions submitted today and we'll publish those responses out on the Investor Me company platform. But just before redirecting investors to provide you with their feedback, which is particularly important to you both, Octavius, could I just ask you for a few closing comments? Yes. Well, first of thank you for coming to the call. Thank you for giving us your time and attention, which I greatly appreciate. And I think the the story of MIND GYM, which I make no embarrassment about repeating, is the massive opportunity down the road. We we've got a solid business. We're delivering profits. We've got cash. All of these things are good healthy science. But the real change comes when the integrated solution that we are developing becomes a dominant force in the market. And I think the people who have found that this journey is most exciting for them are the ones who can see that upside and recognize the path to get there is not always straight and directed and so forth, but is very clear in terms of the strategic milestones and is absolutely with us so that when the opportunity arises, when we seize that moment, you will be part of the success that this business will deliver. So thank you to all of you who are our investors, and and hopefully, this has given you a clear rationale and reason to be part of this if you are not yet.

48:55 Octavius, Dominic, thanks once again for updating investors today. Could I please ask investors not to close the session as you'll now be automatically redirected to provide your feedback in order that the management team can better understand your views and expectations? This will only take a few moments to complete, but I'm sure will be greatly valued by the company. On behalf of the management team of MIND GYM PLC, we'd like to thank you for attending today's presentation, and good afternoon to you all.