ARGP.L Regulatory News (ARGP)

18 Aug 2006 10:20

Intellego Holdings PLC18 August 2006 FOR IMMEDIATE RELEASE 18 August 2006 INTELLEGO HOLDINGS PLC AUDITED RESULTS FOR THE YEAR TO 31 MARCH 2006 CHAIRMAN'S STATEMENT Financial Highlights •Revenue up by 19% to £615,198, (2005 £517,812) •Gross margin stable at 66% (2005 66%) •Deferred income up by 330% •Loss before tax £543,565, (2005 £176,284) reflecting significant one off investments •Sales revenue from technical services activities increased to 50% of total revenue (2005 36%). Business Highlights •Company has evolved into a full service e-Learning player with a balanced solutions portfolio and revenue profile across three major vendor partnerships, reduced business risk and increased market penetration. •Technical services capacity enhanced by new commercial and technical infrastructure to provide competitive differentiation and added customer satisfaction. •First acquisition made strengthening service capacity in the ERP and Business Automation software training market. •Increased number of bespoke content development projects won. Mike Couzens, Chairman of Intellego Holdings plc, said: "Our Group has once again delivered revenue and gross profit growth whilstmaintaining the quality of its gross margin. The Board's strategy of expandingboth product and service offerings and targeting larger ticket sales hasresulted in the need for greater investment in human resources and businessinfrastructure. A much higher proportion ofservice-led, training and maintenance contracts secured is evidenced by asignificant increase in the amount of income treated as deferred, creating asolid foundation for the coming year" Contact: Andy Green, Group Managing Director on: 0870 428 1250 Ranjit Roy-Choudhuri, Group Finance Director on: 0870 428 1250 Roland Cornish, Beaumont Cornish Limited on : 0207 628 3396 INTELLEGO HOLDINGS PLC CHAIRMAN'S STATEMENT continued Our Group This has been a year in which the Group has evolved from a business that hadbeen focused around the technologies of a single lead vendor providing "Rapid"authoring tools into a service-led e-Learning solutions business capable ofdesigning and building business training materials and then enabling thedelivery and management of this training. This transition was the cornerstone ofour stated strategy when we were admitted to AIM in December 2004. At the end of June 2005 we announced that we had secured exclusive distributionrights in the United Kingdom and Republic of Ireland, to a suite of systems,training and process documentation authoring software, from Team Trainer NetGmbH. These distribution rights combined with the acquisition of Modinex Limitedon 1st July 2005, a specialist Enterprise Resource Planning implementation andtraining consultancy, has enabled Intellego to address significantly largersolution sales opportunities in the ERP and Business Automation softwaretraining markets. In November 2005 we announced that we had strengthened our relationship withNetDimensions Ltd, our Learning Management Systems (LMS) vendor, by virtue of athree-year exclusive contract for UK distribution rights to their solutionssuite. This relationship will enable us to establish indirect sales channels fortheir LMS suite the "Enterprise Knowledge Platform" (EKP) and provides improvedcommercial terms for Intellego. Importantly, in the year we undertook an increased number of bespoke contentdevelopment projects for customers, utilising our "Rapid" e-Learning authoringtechnologies. This growth has been driven largely from our existing "Rapid"authoring tool for clients with pressing operational needs who require a fastturn around on developing a turnkey solution. This line of business represented13% of our revenue in the year, (2005 10%) we believe this will become anincreasingly important element of our business mix, as our clients place greateremphasis on "Rapid" authoring technologies and require assistance in meetingaggressive timelines for the delivery of content for their training projects. As a consequence of these efforts Intellego now provide full service e-Learningsolutions to its increasing number of blue chip clients. Our Market Our market continues to grow. More blue chip corporates have joined thee-Learning bandwagon and are comfortable purchasing online courseware to trainstaff in standard IT applications, such as Microsoft Office. This is confirmedby a survey carried out by the Chartered Institute for Personnel Development in2005 that predicted e-Learning would account for up to 50% of training time by2009, up from 10% in 2005. The "Rapid" e-Learning sector of the market, which Intellego originallyaddressed at its AIM launch in 2004, continues to be buoyant and our exclusivedistribution contract with XStream Software, for their "Rapid" family ofproducts, enables us to continue to sell aggressively to the large corporatetraining departments. However, it is in the upcoming wave of demand for LMS where we see much of ourincremental growth. These are web-based software solutions that enable theorganisation to deliver e-Learning materials, provide management reports ontraining activity and increasingly, the integration of e-Learning andclassroom-based training and other personnel management systems. In a recentreport by Bersin Associates, a leading US based analyst specialising in thee-Learning market, they forecast that the strongest growth opportunity for LMSwould be in organisations with 1,000 to 10,000 employees, with revenue growthforecast in excess of 40% during 2006. INTELLEGO HOLDINGS PLC CHAIRMAN'S STATEMENT continued Our Partners We continue to offer the, award-winning, products from XStream Software ourlongest established partner and NetDimensions our provider of LMS software. This year, we have added Team Trainer Net GmbH whose technologies we havealready described above and Composica, who provide a highly innovative web-basedcollaborative e-Learning authoring environment. We select our vendor partners against rigorous criteria encompassing technicaland functional excellence, minimal overlap with existing partners, attractivecommercial terms and wherever possible exclusivity. Our Result I am pleased to report that reported revenue in the year rose by 19% to£615,198, (2005 £517,812). Whilst growth of 19% is less than the historic yearon year revenue growth we have previously achieved it should be noted that as at31st March 2006 the company has deferred income of £135,588 (2005 £31,349)relating to services to be delivered during the next financial year. Thisreflects the shift of the business from a revenue mix that historically has beendominated by a single vendor providing project-based solutions to a lower riskmodel which now embraces the technologies of three key vendors and enables thebusiness to address the provision of much larger and strategically importantworkforce training projects. This change of emphasis led to some delays insecuring contracts at the end of the calendar year 2005 and the beginning of2006 which adversely impacted sales in the second half of the year. The quality of our gross margin remained stable at 66% (2005 66%) as we continueto increase the percentage of overall revenue achieved from the delivery oftechnical services, which in the year was 50% (2005 36%). We have made significant investment in increasing the size of our sales-force,executing marketing initiatives which included attendance at and sponsorship ofleading UK training industry trade-shows; events which have been successful insurfacing opportunities and building the Intellego brand. In order to supportour three main vendor partner products with a broad range of technical servicesand build competitive differentiation, we have expanded our technical servicesto include application hosting services, an online training and technicalsupport portal and a web-based project management capability which allows ourcustomers to follow the progress of their projects. These investments shouldenable us to underpin our requirement for repeat business, grow revenues andtake an increasing share of the e-Learning market. These significant investmentsfor the future resulted in pre-tax losses in the year of £543,565 (2005£176,284). At the start of the new financial year, we appointed our first full time FinanceDirector, Ranjit Roy-Choudhuri, who replaced Christopher Saltrick, theNon-Executive Director responsible for Finance. Recognizing the Group'sevolution we have refocused the company to win and to deliver long termsustainable growth. In August 2006, Andy Green becomes Group Managing Directorwith overall responsible for all new business development in the Group andEdward Arnett, becomes Group Commercial Director responsible for indirect saleschannels (the recruitment of additional Value Added Resellers and theirsubsequent sales performance) and Customer Services (pre-sales support,post-sales technical support and content development services). I should like tothank Edward Arnett for his contribution in leading Intellego through our IPOand the first two years on AIM as well as Chris Saltrick for his contributionand guidance as one of our initial Non-Executive Directors. These changescoupled with the appointment of our first executive Finance Director, sets thefoundation for the success of our business going forward. INTELLEGO HOLDINGS PLC CHAIRMAN' STATEMENT continued Our Future Outlook With the constant pressure for speed-to-market, operational efficiency andincreasing regulatory compliance, the need for organisations to train and thento refresh that training underpins, the requirement for our "Rapid" e-Learningtools and LMS, but increasingly our clients are turning to us to provide themanpower to create training materials for them - the so-called contentdevelopment market. A secondary market for outsourced content development isemerging, suddenly and quite quickly. We must be ready to embrace thisopportunity and are actively looking to acquire content development capabilityto supplement our organic growth. I would like to record my thanks to my fellow directors, the highly dedicatedworkforce at Intellego and our professional advisers for their collective andindividual contributions during the past year. Michael Couzens BSc MSc - Chairman INTELLEGO HOLDINGS PLC GROUP MANAGING DIRECTOR'S REPORT Firstly, I must add my thanks to those of the Chairman to our shareholders, mycolleagues and our professional advisers for their support, efforts andachievements in the past year. As a consequence, Intellego can now provideend-to-end e-Learning solutions to its increasing number of customers themajority of whom are household names. Our customers are mainly service-based organisations facing challenges inproviding their workforces with operationally specific training in a timely andcost effective way in order to improve and sustain their competitive advantage.We also see increasing regulation and compliance legislation mandating greateraccountability for employers to measure workforce competence against prescribedframeworks. A perfect example of this was our recent contract win with the UK's leading oneproperty sales website. Intellego has provided this organisation with ane-Learning authoring and learner management solution to facilitate the trainingand certification of up to 20,000 users across their UK wide network of memberestate agents. The provision of e-Learning authoring technologies that simulate complex ERPsoftware applications is at the core of our solutions offer. In his report theChairman highlighted our new relationship with Team Trainer Net GmbH and theacquisition of Modinex Limited which was acquired to strengthen our servicecapability in this important arena. These initiatives have been validated by anumber of important supply contracts that we have already announced includingNorwich Union, the Spirits Group and Expotel Hotel Reservations. During the past year an increasing number of our customers have turned to us forassistance in authoring e-Learning content to help them meet volume requirementsand time-lines. This is a new line of activity for us, but one of increasingimportance, based upon our discussions with existing customers and our pipelineof future opportunities. It is also an area that provides Intellego with theopportunity to add more value to our customers and win repeat business. In the medium term we believe that much of our incremental growth will be fueledby the demand for LMS. In the year under review we have made sales of suchsystems to OKI, Berwin Leighton and Paisner, Engage Mutual, Kingston HospitalNHS Trust and the NSPCC. Additionally, we have completed a successful pilot withGroup 4 Cash Services (formerly Securicor) and we now have an advanced systeminstalled with them serving over 5,000 users. In his report our Chairman alsomentioned a recent report from Bersin Associates, which forecast that thestrongest growth opportunity for LMS would be in organisations with 1,000 to10,000 employees. This is an expectation that we see tangible evidence of in oursales pipeline and an opportunity that we are extraordinarily well positioned toaddress as result of our strong relationship with NetDimensions Ltd. In the 2005LMS Customer Satisfaction Study, also conducted by Bersin Associates,NetDimensions Ltd distinguished itself with the highest global LMS customerloyalty of any vendor. Against this potentially burgeoning market, Intellego is well positioned todeliver a comprehensive range of solutions. We have established a strongcustomer support and technical capability which includes content developmentservices, application hosting and project management. Our sales opportunity pipeline which is currently at record levels reflects agood balance across our three lead vendor relationships, XStream Software, TeamTrainer and NetDimensions Ltd plus a significant number of bespoke contentauthoring projects. We maintain vigilance in relation to acquisition opportunities, in particularthose that will enhance our service delivery capability or provide us withsignificant new target customers. It remains our intention to scale Intellegovia carefully selected acquisitions at the appropriate juncture. Andy Green - Group Managing Director INTELLEGO HOLDINGS PLC CONSOLIDATED PROFIT AND LOSS ACCOUNT FOR THE YEAR ENDED 31 MARCH 2006 Year ended Year ended Year ended Year ended 31 March 31 March 31 March 31 March 2006 2006 2006 2005 £ £ £ £ Continuing Acquisitions Group Group Operations TURNOVER 615,198 - 615,198 517,812 Cost of sales (205,143) - (205,143) (176,345) _______________ _______________ _______________ _______________ GROSS PROFIT 410,055 - 410,055 341,467 Administrativeexpenses (909,325) (23,780) (933,105) (506,996) _______________ _______________ _______________ _______________ OPERATING LOSS (499,270) (23,780) (523,050) (165,529) Interestreceivable 315 834 Interestpayable (20,830) (11,589) _______________ _______________LOSS ONORDINARY (543,565) (176,284)ACTIVITIESBEFORETAXATION Taxation - - ______________ ______________LOSS ONORDINARYACTIVITIESAFTER TAXATION (543,565) (176,284) ___ ________ ___ ________ LOSS PER SHARE- basic (1.34)p (0.84)p - fully diluted (1.15)p (0.70)p There are no recognised gains and losses other than those passing through theprofit and loss account. The results for the year derive exclusively from continuing and acquiredoperations. There is no difference between the results as stated and the historical costequivalent. INTELLEGO HOLDINGS PLC BALANCE SHEETS AS AT 31 MARCH 2006 Group Company 2006 2005 2006 2005 £ £ £ £Fixed AssetsIntangibleassets 241,452 22,125 - -Tangible assets 118,379 64,946 - -Investments - - 274,089 100,000 _____________ _____________ _____________ _____________ 359,831 87,071 274,089 100,000 _____________ _____________ _____________ _____________Current AssetsStock 19,428 3,996 - -Debtors:Amountsfalling duewithin oneyear 579,484 425,700 - -Debtors:Amountsfalling dueafter morethan oneyear - - 877,940 322,018Cash at bankand in hand - 200,477 - 171,728 _____________ _____________ _____________ _____________ 598,912 630,173 877,940 493,746 Creditors:amountsfalling duewithin one (566,430) (331,731) (704) -Year _____________ _____________ _____________ _____________Net CurrentAssets 32,482 298,442 877,236 493,746 _____________ _____________ _____________ _____________Total AssetsLess CurrentLiabilities 392,313 385,513 1,151,325 593,746 Creditors:amountsfalling dueafter morethan (27,665) (34,879) - -one year _____________ _____________ _____________ _____________ 364,648 350,634 1,151,325 593,746 _____________ _____________ _____________ _____________ Capital and ReservesCalled upshare capital 235,500 185,000 235,500 185,000Share premium 762,226 408,746 762,226 408,746Shares to beissued 153,599 - 153,599 -Profit andloss account (786,677) (243,112) - - _____________ _____________ _____________ _____________Shareholders'funds - equityinterests 364,648 350,634 1,151,325 593,746 _____________ _____________ _____________ _____________ INTELLEGO HOLDINGS PLC CONSOLIDATED CASH FLOW STATEMENT FOR THE YEAR ENDED 31 MARCH 2006 2006 2005 £ £ Net cash outflow from operatingactivities (439,098) (247,743) Returns on investments andservicing (20,515) (10,755)of finance Capital expenditure and financialinvestment (147,744) (45,698) ____________ ____________ Net cash outflow beforemanagement of (607,357) (304,196)liquid resources and financing Financing 389,690 498,818 ____________ ____________(Decrease) / increase in cash inthe (217,667) 194,622year _____________ _____________ RECONCILIATION OF NET CASH FLOW TO MOVEMENT 2006 2005IN NET (DEBT) / FUNDS £ £ (Decrease) / increase in cash in the year (217,667) 194,622Cash inflow from increase debt 8,910 9,929 ___________ ___________Movement in net (debt) / funds in the year (208,757) 204,551 Opening net funds / (debt) 111,464 (93,087) ____________ ____________Closing net (debt) / funds (97,293) 111,464 _____________ _____________ INTELLEGO HOLDINGS PLC NOTE 1 This preliminary announcement of the results for the period ended 31 March 2006is an excerpt from the forthcoming Report and Accounts for the period ended 31March 2006 and does not constitute statutory accounts for the period ended 31March 2006. NOTE 2 Copies of the Report and Accounts for the period ended 31 March 2006 will besent to shareholders in due course and will be available, free of charge, from 1Orlando House, High Street, Teddington, Middlesex TW11 8LZ. This information is provided by RNS The company news service from the London Stock Exchange