Progility Regulatory News (PGY)

13 Jun 2005 07:01

ILX Group PLC13 June 2005 ILX GROUP PLC 2005 PRELIMINARY RESULTS ILX Group plc ('ILX'), the AIM quoted education and training company, announcesPreliminary Results for the year ended 31 March 2005, marking a return toprofitability for the company. Financial Highlights: • Turnover of £3.924m (2004: £1.606m)• Acquisitions contributed £921,908 turnover and £130,309 operating profit before goodwill• Operating profit before goodwill of £656,760 (2004: Loss £29,381)• Pre-tax profit of £373,866 (2004: Loss £256,979)• Earnings per share of 4.79p (2004: Loss 7.45p)• Strengthened balance sheet - cash reserves of £671,839 Corporate Highlights: • £482,500 acquisition of Computa-Friendly on 1 October 2004• £1.77m acquisition of Mindscope on 1 December 2004 Operational Highlights: • Trade in Computer-Based Training (CBT) products for PRINCE2 up 51%• Launch of training products for fast growing ITIL qualification• PRINCE2 training for BT, Vodafone, UN, Misys, Logica, Nato and Unisys• Financial training for Rolls-Royce, IBM, Hilton International, Heineken and Johnson Controls• Mindscope wins largest contract to date worth £250,000 (£180,000 of which impact 2006 figures)• Significant organic growth in start of new financial year In summary, Ken Scott, Chief Executive of ILX Group plc, said: "Our strategy is to build a sizeable training and software business built arounda basket of high value business models. This will be achieved both by organicgrowth and by careful acquisition. This year has allowed us to demonstrate thatwe can deliver profits, we can deliver growth, and we can deliver well judgedacquisitions successfully integrated within the framework of ILX Group plc. In addition, the first two months of trading have been very encouraging, withfigures for April and May 2005 indicating continued strong organic growth onlike-for-like figures for the four divisions combined. With the solidfoundations laid over the last year and this strong early performance the Boardviews the future with great optimism." For further information, please contact: ILX Group plc Binns & Co PR Ltd Charles Stanley & Co. LtdKen Scott, Chief Executive Paul McManus Philip DaviesTel: 020 7371 4444 Tel: 020 7153 1485 Tel: 020 7739 8200 Mob: 07980 541 893http://www.ilxgroup.com Chairman's Statement For the year ended 31 March 2005 I am pleased to present the results for the year ended 31 March 2005. Over this last year, and the last six months in particular, the Company hasgained considerable momentum. Organic growth has been strong and market share,in the growing PRINCE2 and ITIL markets, has been increased; two excellentbusinesses have been acquired and successfully integrated into the Group; theprocess of rationalising our activities and focus across the Company hascontinued; and, most importantly, profits are now being delivered and cashgenerated. Acquisitions It is the Company's aim to become the leading provider of training products andservices in its chosen subjects, and this requires that the Company can offer abroad range of delivery options to its customers. The acquisitions ofComputa-Friendly and Mindscope add a strong instructor-led training capabilityto complement its software products and services. Computa-Friendly was purchased for £482,500, 2.8 times historical post-taxprofits, in cash and shares on 1 October 2004. The business delivers a steadystream of IT related classroom training and consultancy and a suite of datagovernance e-Learning tutorials. It also has competence in developing bespokee-Learning solutions, and a well-placed training facility in Notton, Chippenham,which is now used to run project management as well as IT training courses. The Company's ability to provide instructor-led project management training,which had been started in the first half of the year through hiring of awell-respected trainer, was dramatically enhanced by the acquisition ofMindscope on 1 December 2004. Mindscope was purchased for a total of £1.77million, of which £500,000 is subject to an earn-out period ending July 2005.Mindscope has seen revenues increase significantly since acquisition with anumber of major contracts, and we expect the earn-out criteria to be comfortablymet, and to be paid at the end of August 2005 by way of £375,000 in new ordinaryshares and £125,000 in cash. This would put the price paid for the business atapproximately 6.7 times current post-tax profits. Financial Results Turnover for the year was £3.9 million (2004: £1.6 million) delivering anoperating profit before goodwill of £0.66 million (2004: loss of £29,000), areturn on sales of 17%. Net profit for the year was £0.37 million (2004: loss of£0.26 million) representing basic earnings per share of 4.79p (2003: loss pershare of 7.45p). Stripping out the exceptional items and the goodwill charge,earnings per share increased to 7.86p (2004: loss per share of 2.69p). Share Price and Capital Reduction It is apparent that whilst a great deal has been achieved over the last twoyears in turning around the fortunes of the Company, this has not been reflectedin the share price which has actually declined over the last year from 96.5pence on 31 March 2004 to 85 pence on 31 March 2005. We believe that thisreflects the historical poor performance of the business over previous years,versus the strength of the business as it now stands and its prospects forfuture growth. Our hope and expectation is that continued news of our progressover the coming months and the delivery of improving financial results will bereflected in the share price. In order to provide the Company with additional options to ensure that the valuecreated by the business flows through to shareholders, a Capital Reduction isproposed. Subject to shareholder approval and subsequent to the necessary courtprocess, this will allow us to write off accumulated balance sheet losses andcreate a capital reserve. This will enable the Company to adopt an appropriatedividend policy for coming years, and will also give the option to commence ashare buy-back programme should the Board believe it to be appropriate. New Broker I am delighted to announce the appointment of Charles Stanley as NominatedAdviser and Broker to the Company. Charles Stanley has an excellent reputationand will improve the Company's access to both institutional and private clientinvestors. The Board were particularly impressed by the attention given toselecting, developing, and maintaining a strong and close relationship with itsclients, and we look forward to excellent support through our next phase ofdevelopment. The Board would also like to thank Teather and Greenwood for its efforts overthe last two years, in particular the placing that secured the Key Skillsacquisition. Electronic Communication, ShareGift, and AGM The Company continues to have in excess of 4,000 shareholders in the register.The Board hopes that with profits and growth now being delivered this willbecome a considerable advantage to the Company, helping improve liquidity in theshares and a potential source of financing for future acquisitions. It is recognised that a large number of shareholders have very small holdings,the value of which barely exceeds the usual transaction fees charged by mostbrokers. The Company continues to support ShareGift, the charity share donationscheme administered by the Orr Mackintosh Foundation, and should you wish todonate small holdings of shares a form is available from our registrar. TheCompany is also looking to establish a relationship with a low-cost sharedealing service to make it more practical for very small shareholders, shouldthey wish, to deal in their shares. I would like to strongly encourage shareholders to attend the AGM if at allpossible. This provides an excellent opportunity not only for you to meet andquiz the Directors, and some of the management team, but also for us to receivefeedback from you as investors. I also encourage you once again, if you have not already done so, to register toreceive shareholder communications by email. This can be done by filling out andreturning the form enclosed with this annual report. Shareholder Discount Scheme The Company now caters for the training requirements not only of corporatebodies but also a very large number of individuals. The idea of a shareholderdiscount scheme has been raised a number of times and I am pleased to announcethat, effective from 1 July 2005, we will offer a 10% discount on all trainingcourses, and a 20% discount on software products, to all shareholders holding atleast 1,000 shares at the time of purchase. The discount is applicable toprivate individuals only for open course enrolments and single user licences. Prospects In last year's Chairman's statement I wrote that this year should see a doublingof revenues and a move into profit. This has been achieved and the Company isnow in a very fit state for continued growth and development. It is our statedstrategy to grow both organically from our existing businesses and by furtheracquisition, where good quality companies can be found and where potentialvendors can be realistic about the price they expect for their business. The centre of gravity for the Company is the vibrant and growing Project andService management markets which are serviced primarily through the Company'sKey Skills and Mindscope brands. This is supported by a portfolio of othertraining and consultancy services in Business Finance, IT, and Data Governance,supplied under the Intellexis and Computa-Friendly brands. It is our belief thatthese businesses will see strong organic growth over the coming years as aresult of market growth, investment in staff and products, and continued sharingof skills and products across the divisions. The recent winning of a £250,000contract with a major telecommunications company serves to underline thisbelief. There is also considerable scope for consolidation in the trainingsector and there are a number of opportunities for acquisitive growth. I believe the prospects for the Company over the coming years are very exciting. I would finally like to formally welcome the staff and management ofComputa-Friendly and Mindscope, and again to thank all ILX Group management andstaff for their dedicated efforts over a year in which their hard work has bornefruit. We look forward to building on our success in 2005/6. Paul LeverChairman Chief Executive's Review For the year ended 31 March 2005 Introduction Our stated strategy is to build a sizeable training and software business arounda basket of high value business models. This will be achieved both by organicgrowth and by careful acquisition. The year ended 31 March 2005 has seen strongorganic growth coupled with two further successfully integrated acquisitions.The resultant profitable and cash generative base now provides us with a launchpad from which to create further value. Financial Results Profit for the Year The Company delivered turnover of £3,924,465 for the year (2004: £1,606,493) andan operating profit before amortisation of £656,760 (2004: loss of £29,381).This considerable improvement in the Company's trading resulted from a number ofbeneficial factors. The full year of Key Skills' trading, which showedconsiderable growth over previous years; improved profitability at Intellexis;and contributions from the acquisitions of Mindscope and Computa-Friendly, whichadded £921,908 in turnover and £130,309 in operating profit before amortisation.Particular trends in the Company's trading are identified later in this review. Goodwill charges of £290,714 (2004: £164,365) represent the continuedamortisation over 20 years of all goodwill balances, in line with currentaccounting practices. Reorganisation costs of £49,116 were also incurred duringthe year as referred to later in this review. The Company benefited from an opportunity in the first half of the year to repayat a considerable discount the legacy convertible loan held by Park Row Groupplc. Funds were raised by way of a placing of new ordinary shares to repay thisloan at a 20% discount to its balance sheet value plus a waiver of all accruedinterest. The loan was due to be payable over a further 8 years. Its earlyrepayment has resulted in one-off gains to the profit and loss account of£100,000 (capital) and £34,000 (interest). Excluding these amounts, bankinterest payable was £85,738, representing an interest rate of 7.3% on averageterm debt during the year of £1.17 million. Profit for the Year transferred to reserves was £373,866 (2004: loss of£256,979). This represents an earnings per share of 4.79p (2004: loss per shareof 7.45p). We also believe it is appropriate to present an adjusted earnings pershare figure excluding the goodwill charge and also all exceptional itemsresulting from the repayment of debt and the restructuring. This figure is 7.86pper share (2004: loss of 2.69p per share). Acquisitions Two acquisitions were made during the year. Computa-Friendly was acquired for£482,500 in cash and shares, representing a multiple of 2.8 times historicalpost-tax profits. Established in 1989, it has a strong record of steady trading.The purchase price included £163,532 in net assets (as revalued). Mindscope was acquired for a total consideration of £1,770,565, primarily inshares, including an earn-out element of £500,000. The earn-out is payable infull if the pre-tax profits of Mindscope for the 12 month period ended 31 July2005 reach or exceed £375,000. This represents 6.7 times current post-taxprofits, assuming the earn-out target is met in full and a notional tax rate of30% is applied. Net Assets acquired (as revalued) were £326,250 including cashbalances of £346,815. As mentioned in the Chairman's statement, we expect theearn-out criteria to be fully met and to be settled by way of £375,000 in newordinary shares and £125,000 in cash. Cash Generation and Net Debt Cash generation from the Company's trading was strong, with Net Cash Inflow fromcontinuing operating activities of £497,059 (2004: Outflow of £297,942), a cashconversion rate of 75% of the Company's Operating Profit before Amortisation. Net Cash Inflow before Financing was £257,561 (2004: outflow of £2,282,202),after reorganisation costs of £49,116, interest payments of £34,064, payment ofthe pre-acquisition corporation tax balances of acquired companies of £125,396,capital expenditure of £27,626, and the net cash effect of acquisitions (outflowof £3,296). Almost 50% of the capital expenditure relates to the purchase andimplementation of a new accounts system, now accessible from all Companylocations, which will greatly enhance visibility and control. Finally, net cash outflow from the repayment of debt and the issue of newordinary shares was £129,478 (2004: inflow of £2,642,369) which gave an increasein cash in the period of £128,083 and a closing cash balance of £671,839 (2004:£543,756). With significant cash balances available and the trading operations nowgenerating cash flow, the Company continues to keep options open as to the usesfor that cash. With net debt now down to £404,170 (2004: £1,226,928) the Companyis not over-geared and it is likely that the cash will be retained in theimmediate future whilst opportunities for investing in the existing business andacquisition opportunities remain. The early repayment of the Company's long termdebt does however remain an option, and the proposed capital reduction will pavethe way for the Board to consider a suitable dividend policy for coming years aswell as the option for a share buy-back programme. Markets, Operations, and Strategy Project and Service Management The Project and Service Management markets continue to experience growth. Thesemarkets are serviced primarily through our Key Skills and Mindscope divisions.The Market for the Company's core PRINCE2 training products continues to expandat a rate estimated at 10-30% per annum, whilst trade in the Company'sComputer-Based Training (CBT) products has increased by 51%. Additionally, theacquisition of Mindscope now provides the Company with the capacity to provide afull service offer and the reputation to deliver quality classroom training andconsultancy alongside its CBT products. During the year the Company also entered the Service Management market with thelaunch of training products for the Information Technology InfrastructureLibrary (ITIL) qualification. ITIL is a set of books developed by the UK Officeof Government Commerce, describing an integrated, process based, best practiceframework for managing IT services. To date, these books are the onlycomprehensive, non-proprietary, publicly available guidance for IT ServiceManagement and are recognised worldwide. Key Skills The Key Skills division, having been smoothly integrated into the Companyfollowing its acquisition in February 2004, has had a very strong year,delivering revenues of £1.76 million - a year on year increase of 51%. Much ofthis growth has come in the last six months. Our investment in additional salespersonnel in the Key Skills Nantwich office paid off in the second half of theyear. Sales during this second half were £1.1 million, delivered by 7 salesstaff against £0.6 million delivered by 4 sales staff in the first half of theyear. Sales were further boosted by the continued success of the PRINCE2 PractitionerGold product, a blended CBT and classroom offering aimed at individuals whichwas launched in October 2003. The launch of an ITIL Foundation CBT trainingpackage which was accredited by ISEB in October last year also played a part.Sales of the blended product increased to almost £0.5 million for the year,whilst sales of the ITIL product since launch have totalled nearly £350,000 andlook set to overtake sales of PRINCE2 products in the coming year. The ITILmarket is estimated by the accreditation bodies to be considerably larger thanthat for PRINCE2 and, unlike PRINCE2 which is primarily restricted to the UK andEurope, ITIL is genuinely global. Early on in the year, the Key Skills division also successfully implemented asmooth transition from perpetual to annual licences, in line with Intellexis andwith market practice. In addition to boosting potential sales growth and repeatbusiness, practice has shown that this model also allows greater communicationwith customers and helps to improve the utilisation of the materials purchased. Major customers for the Key Skills products included British Telecom, Vodafone,United Nations, Misys, Logica, Nato, and Unisys. In total, Key Skills deliveredproducts to over 1,000 customers, spread across public sector, private sector,and individuals. Sales of Key Skills products by sector with comparatives forlast year (including pre-acquisition trade), are illustrated below. As shown,revenues in both private and public sectors have shown strong growth but a stepchange has been seen in sales to individuals. Increase Year ended Year ended 31.3.2005 31.3.2004 £'000s £'000sPrivate Sector 42% 886 (50%) 623 (53%)Public Sector 30% 520 (30%) 402 (34%)Individuals 145% 355 (20%) 145 (13%) 51% 1,761 (100%) 1,170 (100%) The majority of the business continues to come from UK customers (89%) withsmall amounts from Europe (7%) and North America (4%). During the year Key Skills started to make use of its brand name and marketpresence to enter the market for classroom training. However, the acquisition ofMindscope in December provided the opportunity to rationalise the variousrevenue streams by passing responsibility for delivery of all classroom trainingand examination fees to Mindscope, and allowing Key Skills to re-focus purely onCBT revenues. Mindscope Mindscope specialises in classroom training of process driven accreditedprogrammes. Founded in August 1998, it is recognised and licensed by theAssociation for Project Management Group (APMG), Office of Government Commerce(OGC), Information Systems Examination Board (ISEB), the British ComputerSociety (BCS) and the Association for Project Management (APM) to deliver arange of accredited Project and Programme Management standards. It was clearthat Mindscope's delivery capabilities and its excellent reputation provided theideal complement to the Company's existing products and capabilities andMindscope was purchased in December 2004. Kate Blackall, Managing Director of Mindscope, joins our management team andcontinues to run and develop business under the Mindscope brand. Since joiningILX Group, Mindscope products and services have contributed £560,000 turnover injust 4 months which is a dramatic increase from its previous run rate (turnoverfor Mindscope for its last financial year ended 31 July 2004 was £821,413). Thisincludes some £70,000 from a £250,000 contract with a major telecommunicationscompany, the remainder of which should be delivered in the next financial year.As a result of joining the Company, Mindscope is now well positioned to securefurther large training contracts. Key to the Mindscope business model is its variable cost base; facilities arehired only to meet demand and although it has a core team of full-time trainers,it is able to attract further high-quality trainers on a per-course basis asrequired. This gives the business the ability to scale up rapidly to meet demandas well as to remain lean in quieter months. The team of Associate Trainers hasexpanded rapidly since acquisition and good use has also been made of trainingroom capacity at the Computa-Friendly's facilities in Wiltshire. The combined products, services, and expertise of the Key Skills and Mindscopeteams gives the Company a strong presence in what continues to be a vibrant andgrowing marketplace. Finance, IT, and Data Governance Whilst Project and Service Management remain the key areas of focus, the Companyalso offers a range of widely-used products in Finance, with particular emphasison Finance for Non-Financial Managers, Information Technology and DataGovernance. Finance training, largely Computer-Based and Web-Based, is providedunder the Intellexis banner with the IT and Data Governance products andservices provided by the recently acquired Computa-Friendly. The lack of recognised accreditation in these areas means that demand fortraining products, particularly at individual level, is not stimulated in thesame way as with Project and Service Management. This lack of accreditationleads to lack of market definition and means that market data in these areas isconsiderably more difficult to obtain. During the year trade in these areas hasbeen relatively buoyant but we have not yet seen evidence of significant growthin the market. During the next financial year we aim to help stimulate greaterdemand by developing accreditations for a number of these products inconjunction with other organisations where suitable. Intellexis A major restructuring took place in the Intellexis division following a verypoor first 6 months of the year when revenues fell by 22% against the sameperiod the previous year and delivered a result only marginally above breakeven.As a result of this restructuring, fixed operating costs were cut by 30%. Thesecond half of the year saw a considerably improved performance, with revenuesfor the half up 11% against last year and a net margin of 37%. For the fullyear, the division experienced a 7% fall in turnover but at a healthy profitmargin of 24%. As part of the restructuring, a £49,116 exceptional charge wasincurred as stated in the notes to the accounts. Major new customers for the Intellexis products included Johnson Controls, BarryCallebaut, Borealis, Ciba Specialty Chemicals, whilst significant repeat orderswere received from Rolls-Royce, IBM, Hilton International, the IMD BusinessSchool, Heineken, GKN, and Givaudan. Continuing development work worth in excessof £115,000 in the period was also undertaken for a big four accountancy firm. Contributing to this improved performance were measures implemented in theearlier part of the year to improve the level of leads for the Intellexis salesteam. Web-marketing techniques, introduced by the acquisition of Key Skills, nowgenerate in excess of 350 requests and inquiries each month. These are activelyfollowed up and significant business has been generated from these leads,including some of the major new customers listed above. Prior to implementingthese techniques the level of incoming requests was minimal and new customerswere obtained almost entirely through referral. Unlike the three other divisions, Intellexis customers are almost exclusivelyprivate sector, with less than 1% of turnover from the public sector and fromindividuals. These both represent opportunities for growth next year which weintend to address through the development of public sector versions and ofrecognised accreditation. Furthermore, in contrast to other divisions,Intellexis obtained only 39% of its turnover from UK companies, with theremainder coming from mainland Europe (39%), North America (18%), and the Middleand Far East (4%). This is very much in line with last year's geographicalsplit. The division therefore retains a level of exposure to long-term changesin the value of the Euro and US Dollar. Income from sales of licences, both CDs and web-based licences, remains thedominant revenue stream for Intellexis. This stream increased by 7% year on yeardespite the fact that, as expected, the e-Peopleserve contract worth £175,000 inthe year ended 31 March 2004 did not renew. The division also generates ahealthy level of turnover from customisation of its products and selecteddevelopment projects, which is referred to later on in this report. Computa-Friendly Computa-Friendly started life as a software training company in 1989. It nowcovers a number of areas of IT training, both in industry standard products(such as Microsoft Office) and bespoke systems. IT training is primarilydelivered by way of classroom sessions and consultancy, but some CBT productsare also available. It also has a portfolio of Data Governance e-Learning andCommunication products, covering areas such as Data Protection Act, Freedom ofInformation Act, and Health and Safety. It is a Microsoft Certified Partner, aMicrosoft Office Specialist, an authorised testing centre for the EuropeanComputer Driving Licence, and is ISO9001 certified. The consultancy side of thebusiness spans training on bespoke systems, technical authoring, and databasedevelopment. Additionally, at the time it was acquired in October 2004, it hadstarted to build a steady stream of PRINCE2 training revenue. Computa-Friendly's facilities are in Wiltshire and its expertise in deliveringclassroom training provided a clear fit with the Group. In addition, thesoftware development skills of both Computa-Friendly and Intellexis lendthemselves to synergies as a result of shared know-how and an increased pool ofresources. Finally, the web-marketing techniques that have worked so well forIntellexis had immediate application to Computa-Friendly's e-learning productsand, whilst any significant increase in sales from this activity is yet to beseen, the division does now receive around 50 extra leads per month. Mark Butler, Managing Director of Computa-Friendly, also joins our managementteam and continues to run and develop business under the Computa-Friendly brand,taking particular responsibility for development projects. Since joining theGroup, Computa-Friendly products and services have delivered £360,000 in 6months. The range of products is wide and work has been carried out over thelast few months determining where best to focus and concentrate our efforts; asa result the division has started the new financial year with greater clarityand we hope for steady growth in this area during the coming year. Software Development In addition to the Company's extensive range of educational products, theCompany has particular expertise in software development and the use of softwarefor training purposes. In excess of 10% of the Company's turnover for the yearcame from the following areas: • Development of bespoke e-learning solutions • Assessment products and services allowing companies to identify training needs quickly • Implementation products and services allowing companies to distribute training over a wide and dispersed audience whilst maintaining a full audit trail • Customisation of products to meet customer-specific requirements These revenues related almost entirely to the Intellexis and Computa-Friendlydivisions. In the coming year it is our intention to enhance the application ofthese products and services across a wider range of our products, in particularto further enhance our competitive advantage in the Project and ServiceManagement areas. Management Changes It is important as we grow as a Company that we maintain and develop a strongmanagement team. I am therefore delighted to welcome Kate Blackall (ManagingDirector (non-statutory), Mindscope) and Mark Butler (Managing Director(non-statutory), Computa-Friendly) to the team. I would also like to thank DavidWillis who has managed the Intellexis division since April 2004 and who hasoverseen the restructuring and the subsequent improved second half performance.David now becomes Managing Director, Intellexis (non-statutory). Martyn Kinch, who has run Key Skills since its inception, now takes on anexpanded role as Commercial Director (non-statutory) of the Group. Martyn willbe responsible for implementing best practice in all aspects of our sales andmarketing. He will also be responsible for generating incremental business withparticular focus on opening new markets. Denise Maxfield, who has run the sales team at Key Skills for a number of years,steps up to Operations Manager, Key Skills, and again I am delighted to welcomeher to the management team. Future Opportunities There are a great deal of opportunities open to us as a Company and manychallenges ahead. The main focus for the first half of the next year will be oncontinued organic growth, where there is considerable potential. It is important that a dialogue can be maintained with all shareholders and thatregular news of the Company's progress is available. This is an area which haslacked attention in the past, our efforts having been fully taken up with thebuilding of the business and the delivery of solid financial results. We are nowkeen to maintain a more pro-active Investor Relations strategy. The redesignedAnnual Report, and the Shareholder Discount programme, are just two of a numberof initiatives that we hope will improve news flow and the communicationsbetween the Company and you its shareholders. It is in the light of this that Iecho Paul Lever's encouragement for as many shareholders as possible to attendthe AGM. It is hoped that continued strong trading, organic growth, and improved investorrelations, will bring about a stronger share price. This will assist in theother key element of our strategic plan - growth by acquisition. On this note wecontinue to consider opportunities and search for others. As previously stated, our strategy is to build a sizeable training and softwarebusiness built around a basket of high value business models. This will beachieved both by organic growth and by careful acquisition. This year hasallowed us to demonstrate that we can deliver profits, we can deliver growth,and we can deliver well judged acquisitions successfully integrated within theframework of ILX Group plc. We look forward to exciting times ahead. Ken ScottChief Executive Consolidated Profit and Loss AccountFor the Year ended 31 March 2005 Year ended Year ended Year ended Year ended 31.3.2005 31.3.2005 31.3.2005 31.3.2004 Continuing Acquisitions Total activities £ £ £ £ Turnover 3,002,557 921,908 3,924,465 1,606,493 Cost of sales (660,503) (297,054) (957,557) (298,960) Gross Profit 2,342,054 624,854 2,966,908 1,307,533 Distribution costs (132,462) (12,445) (144,907) (97,050)Administrative expenses excluding (1,654,527) (475,086) (2,129,613) (1,194,005)depreciation and goodwill Earnings before Interest, Tax, 555,065 137,323 692,388 16,478Depreciation and Goodwill Depreciation (28,614) (7,014) (35,628) (45,859) Operating Profit / (Loss) before Goodwill 526,451 130,309 656,760 (29,381)Amortisation Amortisation of goodwill (273,264) (17,450) (290,714) (164,365) Operating Profit / (Loss) 253,187 112,859 366,046 (193,746) Reorganisation costs (49,116) - Profit / (Loss) on Ordinary Activities 316,930 (193,746)before Interest Interest receivable and similar income 42,674 1,764Gain on early repayment of debt 100,000 -Interest payable and similar charges (85,738) (64,997) Profit / (Loss) on Ordinary Activities 373,866 (256,979)before Taxation Tax on profit on ordinary activities - - Profit / (Loss) for the Year transferred 373,866 (256,979)to Reserves Earnings / (Loss) per share - basic 4.79p (7.45)pEarnings / (Loss) per share - excluding 7.86p (2.69)pgoodwill and exceptionals There are no recognised gains and losses other than those passing through theprofit and loss account. Consolidated Balance Sheet as at 31 March 2005 31.3.2005 31.3.2005 31.3.2004 31.3.2004 £ £ £ £Fixed AssetsIntangible assets 6,362,149 4,789,956Tangible assets 262,354 220,356 6,624,503 5,010,312Current AssetsDebtors 1,059,166 558,605Cash at bank and in hand 671,839 543,756 1,731,005 1,102,361Creditors: Amounts falling due within one (1,428,065) (977,385)year Net Current Assets 302,940 124,976 Total Assets less Current Liabilities 6,927,443 5,135,288 Creditors: Amounts falling due after more (921,247) (1,543,155)than one year Net Assets 6,006,196 3,592,133 Capital and ReservesCalled up share capital 3,734,318 3,524,145Share premium account 7,338,490 5,883,466Shares to be issued - contingent 375,000 -considerationOwn shares in trust (300,772) (300,772)Profit and loss account (5,140,840) (5,514,706) Equity Shareholders' Funds 6,006,196 3,592,133 Consolidated Cash Flow StatementFor the year ended 31 March 2005 Year Year ended ended 31.3.2005 31.3.2004 £ £ £ £Net Cash Inflow / (Outflow) from Operating (i) 447,943 (297,942)Activities Returns on Investments and Servicing of FinanceInterest received 8,674 1,764Interest paid (42,738) (64,997) Net Cash Outflow for Returns on Investments and (34,064) (63,233)Servicing of Finance Taxation (125,396) - Capital ExpenditurePayments to acquire tangible fixed assets (27,626) (1,805)Payments to acquire investments - (160,272) Net Cash Outflow for Capital Expenditure (27,626) (162,077) Post-Completion Dividends (49,791) - AcquisitionsAcquisitions (372,688) (1,836,000)Acquisition costs (99,624) (145,181)Net cash acquired with subsidiary 518,807 222,231 Net Cash Inflow / (Outflow) for Acquisitions 46,495 (1,758,950) Cash Inflow / (Outflow) before Financing 257,561 (2,282,202) FinancingIssue of ordinary share capital 492,398 1,918,458Expenses paid in connection with share issues (27,201) (169,511)Debt due within a year (66,667) 163,116Debt due after a year (521,908) 766,905Capital element of finance lease rental (6,100) (36,599)payments Net Cash (Outflow) / Inflow from Financing (129,478) 2,642,369 Increase in Cash (ii) 128,083 360,167 Notes to the Consolidated Cash Flow StatementFor the year ended 31 March 2005 (i) Reconciliation of Operating Profit to Net Cash Year Year Inflow from Operating Activities ended ended 31.3.2005 31.3.2004 £ £ Operating profit / (loss) 366,046 (193,746) Depreciation 35,628 45,859 Amortisation of goodwill and intangible assets 290,714 164,365 Increase in debtors (239,604) (282,669) Increase / (decrease) in creditors 44,275 (31,751) Net cash inflow / (outflow) from continuing operating 497,059 (297,942) activities Net cash outflow in respect of reorganisation (49,116) - costs Net cash inflow / (outflow) from operating 447,943 (297,942) activities (ii) Reconciliation of Net Cash Flow to Movement in Net Debt (Note (iii)) Increase in cash in the period 128,083 360,167 Cash flow from decrease in debt and lease 594,675 (893,422) financing Change in net debt resulting from cash flows 722,758 (533,255) Change in net debt resulting from gain on early repayment 100,000 - Movement in net debt in the period 822,758 (533,255) Net debt at 31 March 2004 (1,226,928) (693,673) Net debt at 31 March 2005 (404,170) (1,226,928) (iii) Analysis of Changes in Net Debt At Cash Non-Cash At 31.3.2004 Flow Items 31.3.2005 £ £ £ £ Cash at bank and in hand 543,756 128,083 - 671,839 Debt due within one year (221,429) 66,667 - (154,762) Debt due after one year (1,543,155) 521,908 100,000 (921,247) Finance leases (6,100) 6,100 - - (1,770,684) 594,675 100,000 (1,076,009) Net debt (1,226,928) 722,758 100,000 (404,170) ILX GROUP PLC - Notes 1. Results The financial information set out in this preliminary announcement does notconstitute statutory accounts as defined in Section 240 of the Companies Act1985. The summarised balance sheet at 31 March 2005 and the summarised profit and lossaccount, summarised cash flow statement and associated notes for the year thenended have been extracted from the Group's financial statements. The comparative financial information for the year ended 31 March 2004 is anabridged version of the group's published financial statements for that period,which contained an unqualified audit report and which have been filed with theRegistrar of Companies. The statutory accounts for 2005 will be finalised on the basis of the financialinformation presented in this preliminary announcement and will be delivered tothe registrar of companies following the company's annual general meeting. 2. Accounting Policies The prinicipal accounting policies of the Group are set out in the Group's 2004Annual Report and Financial Statements. The policies have remained unchanged forthe year ended 31 March 2005. 3. Turnover Turnover is attributable to the one principal activity of the group. Geographical analysis: Year ended Year ended Year ended Year ended 31.3.2005 31.3.2005 31.3.2005 31.3.2004 Continuing Acquisitions Total £ £ £ £United Kingdom 2,044,012 921,908 2,965,920 1,112,283Rest of Europe 601,701 - 601,701 307,772North America 296,998 - 296,998 186,438Other 59,846 - 59,846 - 3,002,557 921,908 3,924,465 1,606,493 4. Earnings per Share The calculation of earnings per share is based on the profit for the year aftertax of £373,866 (2004 - loss of £256,979) and on the weighted average number ofshares in issue during the year of 7,803,413 (2004 - 3,449,304). The calculation of fully diluted earnings per share has not been disclosed asthe effect of any full conversion of outstanding share options is not dilutivein accordance with FRS14. The calculation of earnings per share excluding goodwill and exceptionals isbased on the profit for the year after adding back Goodwill Amortisation of£290,714 (2004: £164,365), Reorganisation Costs of £49,116 (2004: nil) anddeducting the Gain on Early Repayment of Debt of £100,000 (2004: nil). 5. Exceptional Items Exceptional Items relate to costs incurred in a fundamental reorganisation ofthe group's continuing operations. 6. Movements on capital and reserves Group Called up Share Share Premium Contingent Own Shares Profit and Capital Account Consideration in Trust Loss Account Total £ £ £ £ £Balance at 31 March 2004 3,524,145 5,883,466 (300,772) (5,514,706) 3,592,133Profit for the year - - - 373,866 373,866Issue of shares 210,173 - - - 210,173Contingent consideration 375,000 375,000Premium on issue of shares - 1,482,225 - - 1,482,225Costs relating to share - (27,201) - - (27,201)issue At 31 March 2005 3,734,318 7,338,490 375,000 (300,772) (5,140,840) 6,006,196 7. Annual Report The annual report will be sent to shareholders shortly and will also beavailable from the Company's registered office at 5 Old Bailey, London EC4M 7JX. END This information is provided by RNS The company news service from the London Stock Exchange