Progility Regulatory News (PGY)

25 Jun 2007 07:01

ILX Group PLC25 June 2007 For release25 June 2007 ILX GROUP PLC 2007 PRELIMINARY RESULTS ILX Group plc ('ILX'), the AIM quoted business education and training company,announces Preliminary Results for the year ended 31 March 2007, another year ofsignificant growth. Financial Highlights: • Turnover up 49.6% to £10.34m (2006: £6.91m) • Acquisitions contributed £3.34m turnover and £1.40m operating profit • Operating profit up 58.0% to £1.58m (2006: £1.00m) • Profit before tax up 44.9% £1.36m (2006: £0.94m) • Adjusted earnings per share of 5.94p (2006: 6.29p) • Strong cash generation during the year - operating cash flow of £1.98m (2006: £0.95m) • Dividend of 0.75p (2006: 0.75p) - payable to shareholders on the register at 27 July 2007 Corporate Highlights: • £12.3m acquisition of Corporate Training Group (CTG) on 26 July 2006 • Group reorganised into two divisions: CTG and Best Practice • Trading at CTG has been excellent with good order book visibility • Core areas of Best Practice performed well with 26% growth in E-learning • Full integration of poorly performing Mount Lane and Customer Projects • Larger contract wins due to Best Practice combined offering of computer based training, classroom training and project management implementation consultancy services In summary, Ken Scott, Chief Executive of ILX Group plc, said: "Both our operating divisions are capable of achieving high levels of growth andhave significant challenges and opportunities for the year ahead. In particularthe opportunities for overseas expansion and the iLearning developments are veryexciting. Our primary focus for the first half is to deliver strong interim results tounderline the growth in the businesses and demonstrate that the changes madewithin the Best Practice division have borne fruit. Our strategy continues to be to build a sizeable training and software businessin the vocational training market, achieved through organic growth and byearnings enhancing acquisitions. Despite the setbacks during 2006/7 we havecontinued to deliver overall profit growth and remain well placed to capitaliseon the base that has been built to date." For further information, please contact: ILX Group plc Parkgreen Communications Ltd Charles Stanley SecuritiesKen Scott, Chief Executive Paul McManus Philip DaviesTel: 020 7371 4444 Tel: 020 7479 7933 Tel: 020 7953 2457 Mob: 07980 541 893http://www.ilxgroup.com Chairman's Statement For the year ended 31 March 2007 I am pleased to present the results for the year ended 31 March 2007. ILX Group plc has experienced another year of significant change and growth asthe company continues to expand by way of organic growth and throughacquisitions. The company's ability to provide a wide offering of high qualityclassroom training, e-learning, and consultancy remains a very powerfulproposition, and with the acquisition of The Corporate Training Group thisproposition has been broadened to include high level financial and bankingtraining in addition to the existing portfolio of project and service managementcourseware. Nevertheless, whilst the company saw operating profit growth of 58%year-on-year, we did not deliver fully to expectations, as previously announcedin the trading update on 13 April 2007, due primarily to underperformance in theMount Lane and Customer Projects acquisitions. This has been addressed through arestructure that sees these businesses even more fully integrated within thecompany's Best Practice division. Financial results Turnover for the year was £10,340,406 (2006: £6,913,255) delivering an operatingprofit of £1,579,553 (2006: £1,000,725). Net profit for the year was £1,107,348(2006: £1,699,430) representing basic earnings per share of 6.45p (2006:16.39p). However, the underlying adjusted earnings per share figure is 5.94p(2006: 6.29p), as explained further in the Chief Executive's review. I am pleased to announce that your board has approved the issue of the company'ssecond dividend which will be at 0.75p per share (2006: 0.75p per share), andwill be paid subject to shareholder approval at the company's forthcoming AGM. Acquisitions On 26 July 2006 the company purchased The Corporate Training Group Ltd ("CTG"),a leading financial training company. The company was purchased for £12.3million, in cash and shares, of which £2.5 million was contingent upon meetingperformance criteria for the year ended 31 March 2007 which have now been met,and of which £2.5 million remains contingent upon certain performance criteriafor the year ended 31 March 2008. CTG was started in 1996 by its current management team and is based inClerkenwell, London. It provides in-house financially focused classroom trainingcourses to major global organisations, and has grown to be regarded as one ofthe leading companies in its sector. It has an impressive blue chip client base,predominantly in the investment banking sector, where ongoing trainingrequirements are of particular importance. It benefits from a large and highlyvisible order book, arising from the strength of the customer relationships andthe nature of the courses that it operates. The CTG business has historically been seasonal in that its busiest period isfrom July to November, with August as the peak training month, reflecting thegraduate and associate training programmes undertaken for major investmentbanks. In future years this should complement our current seasonality which hasbeen until now heavily weighted to the December to March period. Investor newsletters The company continues to have in excess of 3,000 shareholders on the registerand the board reiterates its hope that this will become a considerable advantageto the company, helping improve liquidity in the shares. With this in mind, thecompany continues to provide regular updates to shareholders by way of periodicnewsletters. Their purpose is to give additional information on the group, itspeople and its challenges as it grows and matures. I would strongly encourage shareholders to attend the AGM, to be held on Friday20 July 2007, if at all possible. This provides an excellent opportunity notonly for you to meet and quiz the directors, and some of the management team,but also for us to receive feedback from you as investors. 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 we continue to offer a 10% discount on all training courses, and a 20%discount on software products, to all shareholders holding at least 1,000 sharesat the time of purchase. The discount is applicable to private individuals onlyfor open course enrolments and single user licences. Directorate Change John Davies resigned from the board in January this year having served as anon-executive director since the company floated as Time2Learn plc in 2000. At the same time Paul Virik joined the board as non executive director. Hebrings with him a wealth of experience spanning over 30 years leading a broadrange of professional and business to business publishing operations across ReedElsevier in the UK and US, spanning magazine publishing, conferences,exhibitions, directories and major internet developments. He has led operationsacross diverse markets including IT, Agriculture, Aviation, Social Work, Legal,Electronics, Hospitality, Human Resources, and Construction. His focus hasalways been on long term sustainable market leadership through teamwork,innovation and customer focus. Paul takes over from John as a member of the remuneration committee and chairmanof the audit committee. I would like to warmly welcome Paul to the company and also to thank John forhis service and contributions to the company over the last six years. Prospects Whilst some areas of the business within the Best Practice division haveexperienced difficulties in the last year, these issues have now been fullyaddressed and the early signs, a series of new and repeat contract wins, aremost encouraging. CTG meanwhile continues to go from strength to strength withfurther growth for the year ahead already coming through in terms of customerbookings; in addition the development of a series of e-learning products tocomplement the classroom offering is well under way. There remains work to do to ensure all elements of the business continue to growand to rebuild investor confidence, but the prospects nevertheless remainexcellent. Finally, I would like to formally welcome the staff and management of CTG, andonce again to thank all ILX Group employees for their dedicated efforts over ayear which has at times been difficult. We look forward to a strong performanceand a successful year in 2007/8. Paul LeverChairman 22 June 2007 Chief Executive's Review For the year ended 31 March 2007 Introduction Our strategy continues to be to build a significant vocational training businessboth through organic growth and by making earnings enhancing acquisitions. Theyear to 31 March 2007 has seen significant steps taken both through theacquisition of The Corporate Training Group Ltd ("CTG"), taking us into a newand exciting marketplace, and the integration of the other six individualbusinesses into one consolidated Best Practice division. The final integrationof the last two of these businesses, Customer Projects and Mount Lane, tookplace in the six weeks immediately following the year end. Whilst the year hasseen disappointing results in some areas, overall we have delivered another yearof significantly increased turnover and profit. Financial Results Profit for the year The company delivered turnover of £10,340,406 for the year (2006: £6,913,255)and an operating profit of £1,579,553 (2006: £1,000,725). This growth resultedprimarily from the acquisition of CTG, which contributed turnover of £3,338,850during the 8 months post acquisition. Revenues from continuing business wereflat despite a full year's trading from both the Mount Lane and CustomerProjects acquisitions; the company's core computer-based training and blendedproducts continued to show strong growth in the year, but this was offset bydisappointing performances in other areas. Particular trends in the company'strading are identified later in this review. Net profit for the year was £1,107,348 (2006: £1,699,430), giving basic earningsper share of 6.45p (2006: 16.39p). The underlying earnings per share is 5.94p(2006: 6.29p), and on that basis the 2007 performance represents a 5.6% fall onan enlarged base of 17.18 million weighted average shares (2006: 10.36 million). The underlying figure is calculated by stripping out £92,716 in costs of aone-off nature relating to reorganisations of the company's ongoing activities,and from the 2006 figures the one-off recognition of a tax asset, relating totax losses that are available to offset against future profits, before applyinga notional tax charge of 30% to both years. The directors recommend payment of a dividend of 0.75p per share. This dividendwill be paid to shareholders on the register at 27 July 2007, subject toshareholder approval at the company's AGM. The company has utilised £1.21 million of tax losses during the year. Unrelievedtax losses of £1.78 million remain available to be offset against futureprofits. Acquisitions CTG was purchased on 26 July 2006 for £12.3 million, in cash and shares, ofwhich £5.0 million is deferred and contingent. The contingent consideration,which is payable 40% in cash and 60% in cash or shares at the company's option,is payable in two instalments on or before 30 June 2007 and on or before 30 June2008. Of the cash paid, the sum of £700,000 was ring fenced within an escrow accountto be released on or before 30 June 2008, provided that the average annualpre-tax profit of CTG over the two-year period ended 31 March 2008 exceeds£1.149 million. This will now be released in July 2007 based on the profits ofCTG for the year ended 31 March 2007 and the extent of bookings for the yearended 31 March 2008. The first instalment is calculated as 9 times the excess of CTG's pre-taxprofits for the year ended 31 March 2007 over £1.149 million. This payment iscapped at £2.5 million and the first £1.0 million is to be made in cash with theremainder in cash or ordinary shares at the company's option. This firstinstalment is now payable in full based on CTG results for the year ended 31March 2007; the precise split of cash and shares will be determined shortly. The second instalment, which is capped at £5.0 million less the amount of thefirst instalment, is calculated as a total of 9 times the amount by which CTG'spre-tax profits for the 2 year period ended 31 March 2008 exceed the sum of£2.576 million, less the amount of the first instalment. Earn-out agreements were also in place on the acquisitions of Mount LaneTraining and Implementations Solutions Ltd and Customer Projects Ltd during theyear, which finished on 31 March 2007. Both divisions fell significantly shortof their earn-out targets and hence none of the amounts previously provided forin respect of these acquisitions will be payable. This is shown in the parentcompany accounts as an adjustment to the cost of investments and in theconsolidated accounts as an adjustment to goodwill. Cash generation and net debt Cash generated from operating activities during the year was £1,982,198 (2006:£953,192), a conversion rate of 125% (2006: 95%) of profit from operations. Thecash conversion was boosted by the significant level of debtors and accruedincome that was acquired with CTG in the height of their busiest period andcollected post acquisition. Nevertheless, the generation of almost £2 million inoperating cash flow highlights the strong cash generation from the business. Net cash from operating activities, which is stated after interest paid inrelation to working capital facilities and corporation tax, was £1,860,712(2006: £752,178). The tax payments totalling £96,858 (2006: £187,307) againrelate entirely to pre-acquisition tax balances on acquired companies.Corporation tax balances payable in the coming year, relating to thepre-acquisition profits of CTG, are £130,773. Net cash used in investing activities was £6,116,171 (2006: £1,186,117). Thecompany spent £5,780,079 (2006: £839,914) on the cash elements of acquisitions(net of cash balances received) primarily in relation to CTG but also a smallbalance of deferred consideration on Customer Projects Ltd. The company alsospent £198,945 on product development (2006: £474,305) relating to new productslaunched during the year or expected to be launched in the first half of the newfinancial year, and £163,646 (2006: £90,402) on capital expenditure,particularly in relation to investment in new computer hardware and systems tosupport group-wide IT over our four locations and an increasing demand fromcustomers for hosted solutions. Net cash from financing activities was an inflow of £4,453,019 (2006: £408,226),including £2,400,467 in increased borrowings (2006: £255,247 reduced borrowings)and £2,478,045 representing net proceeds from an issue of new ordinary shares,at a price of 80p, to help finance the CTG acquisition. At the end of the year the company had cash balances of £843,686 (2006:£646,126) and total bank debt of £3,221,228 (2006: £820,761). The company's netdebt position at the end of the year was therefore £2,377,542 (2006: £174,635),a multiple of 1.4 times EBITDA for the year. Best Practice Division - Business Review Reorganisation In last year's Chief Executive's Review I announced that the company wasreorganising its four separate divisions into one Best Practice division,effective from April 1 2006. This was a natural evolution of the acquisitionprocess and designed to enable the company to focus on its core areas and keycustomers more effectively, through the combination of particularly the KeySkills and Mindscope brands but also Intellexis and Computa-Friendly. As a result of this, the company's sales team was consolidated during the yearto allow them to offer solutions across the division's range of products. Thetechnical and development teams were also brought together to gain efficienciesand ensure maximum focus on the division's growth products. The administrationof all the company's service business was brought together at a new office inTheale Lakes Business Park, just off the M4. As part of this process, we ceasedto provide desktop applications training in order to allow us to focus on ourcore area of accreditation-led training. Finally, the individual trading nameswere dropped during the year and the division now trades simply as ILX(International Learning Xchange) Group plc. Mount Lane and Customer Projects, acquired in November 2005 and February 2006respectively, were included in the Best Practice division but as separatelymanaged entities under the terms of their earn-outs. These have been fullyintegrated following the year end as covered later in this report. Performance Whilst the major core areas within the Best Practice division in 2006/7performed well, the overall result was disappointing. The table below shows thatwhilst the core project and service management revenues grew by 19%, otherrevenues fell by 32%. Turnover by subject Year ended 31.3.2007 Year ended 31.3.2006 Growth% £ % £ % PRINCE2 and other project management 16% 4,353,713 63% 3,753,760 54%ITIL and service management 34% 1,005,114 14% 747,364 11% Core Best Practice subjects 19% 5,358,827 77% 4,501,124 65% IT and migration -32% 632,253 9% 933,862 14%Finance for non-financial managers -45% 574,571 8% 1,045,898 15%Non-subject revenues 1% 435,905 6% 432,371 6% Other revenue streams -32% 1,642,729 23% 2,412,131 35% Total revenue 1% 7,001,556 100% 6,913,255 100% Within the core Best Practice areas, as detailed below, e-learning showed stronggrowth of 26%. Classroom revenues fell by 1% overall but by 10% in the firsthalf of the year, largely as a result of some customer service issues which wereaddressed by the consolidation of the administrative team at Theale. In thesecond half of the year revenues recovered and indeed grew by 10% over theprevious year; thus providing additional momentum into 2007/8. Revenues from consultancy and sale of books both increased substantially butfrom very low bases. Core Best Practice by product/service type Year ended 31.3.2007 Year ended 31.3.2006 Growth% £ % £ % e-Learning 26% 3,109,522 58% 2,468,511 55%Classroom -1% 1,818,863 34% 1,838,364 41%Consultancy 109% 306,774 6% 147,043 3%Books 162% 123,668 2% 47,206 1% Total revenue 19% 5,358,827 100% 4,501,124 100% Trading outside of the core Best Practice areas was disappointing; whilst a dropin finance for non-financial managers sales was anticipated, the poorperformance from Mount Lane, primarily due to the loss of that division'sCommercial Director, was not. The long sales cycle for Mount Lane's range ofproducts has meant that although a replacement is now in place it has taken somewhile to build up the sales pipeline, and as previously announced a number ofdeals expected to close in the year were delayed. The outlook for the futuregrowth of the self-help and desktop migration areas remains promising however,particularly with the forthcoming launch of Microsoft Vista, and we arecautiously optimistic for a recovery in sales. Geographic and product split The chart below shows that the division continues to derive almost half itsrevenues from sales of software licences and a third from classroom training.The remainder is made up from consultancy, software development, and otherrevenue streams including recharges of expenses. Turnover by product/service type Year ended 31.3.2007 Year ended 31.3.2006 Growth% £ % £ % e-Learning 5% 3,413,325 49% 3,265,753 48%Classroom 4% 2,402,148 34% 2,306,841 33%Consultancy 20% 341,094 5% 284,586 4%Software development -34% 376,266 5% 567,913 8%Recharges and other -4% 468,723 7% 488,162 7% Total revenue 1% 7,001,556 100% 6,913,255 100% The division continues to derive most of its revenues from the UK, as follows: Turnover by geographical sector Year ended 31.3.2007 Year ended 31.3.2006 Growth% £ % £ % UK 1% 6,176,360 88% 6,092,440 88%Mainland Europe -2% 569,795 8% 578,724 8%North America -45% 63,387 1% 116,179 2%Other 52% 192,014 3% 125,912 2% Total revenue 1% 7,001,556 100% 6,913,255 100% The directors see the current lack of overseas sales as a major opportunity for future growth. Post year-end action Following the year end a number of changes have taken place within the Best Practice division. Firstly, the integration of the Mount Lane and Customer Projects divisions hasbeen swiftly completed following the below-par performance from thesebusinesses. The company has exercised its break clause in the lease of itspremises at Wyvol Court and relocated Mount Lane staff to other existingpremises. Additionally, the Theale administration team has taken overresponsibility for all services delivery including the consultancy providedthrough Customer Projects and the migration training previously provided throughMount Lane. The resulting cut in premises and headcount has reducedadministrative expenses within the Best Practice division by approximately 7%. The full integration of the division's consultancy arm has given the combinedsales force the ability to better address opportunities across the range of thedivision's services and to bid for larger contracts. I was therefore delightedthat the company announced in May details of new and repeat contract winstotaling approximately £1 million, at least three of which were as a directresult of the combined approach. As mentioned earlier the directors see overseas expansion as a major opportunityfor future growth, and I am therefore excited to report on two recent managementchanges. Martyn Kinch, who for the past two years has headed the Best Practice division,steps into a new role as International Sales Director (non-statutory). Martyn'sconsiderable energy and sales expertise has helped drive the growth first in KeySkills and then the Best Practice division, and we are excited about theconsiderable opportunities for overseas business that have to date not yet beenfully addressed. This leaves a vacancy and I am delighted to confirm that we have appointed TonyGlass as Managing Director (non-statutory) of its Best Practice division, witheffect from June 18. Tony, aged 53, was previously EMEA Sales Director ofSkillSoft; a NASDAQ quoted leading provider of e-learning and performancesupport solutions for global enterprises, governments, education and small tomedium-sized businesses. Tony joined SkillSoft in March 2001 and has beencredited with growing sales revenue substantially over a sustained period. Hejoins ILX from a background of extensive experience in the training industry andparticularly in product marketing, customer retention and in managing successfulsales operations. Marketplace and prospects The marketplace within which the Best Practice division operates remains highlyfragmented and is increasingly competitive, as a result of a number of moretraditional IT training businesses turning to more profitable specialistsubjects such as PRINCE2 and ITIL in order to boost their margins. The division's strategy is to continue its focus on e-learning as the preferredproduct, particularly at the less advanced stages of the various subjects, butto make available a full service offer that effectively provides a "one-stopshop" that can offer accredited e-learning, classroom, and consultancy services.Classroom training supports the e-learning in particular for the more advancedstages of the subjects and remains available as a stand-alone to those customerswho, for whatever reason, prefer the instructor-led approach. Consultancy canhelp to identify the customers' learning requirements as well as to ensure thatthe expected benefits of the training are fully delivered. We believe this approach is compelling as the combination and integration ofofferings is unique in the marketplace and the e-learning element allowssignificant pricing flexibility for our customers. Customers who will accept e-learning products, although growing as a proportion of the market, remain in theminority. Accordingly we will continue to invest in research and development andin our core development team to ensure that our products remain of the highestquality. In addition we will continue to own the intellectual property for allour products, thus ensuring the necessary control. The continued fragmentation of the marketplace remains an opportunity for futureacquisitions should the right opportunity arise. Corporate Training Group - Business Review Background CTG was acquired on 26 July 2006. These results therefore reflect just overeight months' trading from the new division. CTG is headed up by Peter Evans, who has a PhD from the London School ofEconomics and qualified as a chartered accountant with Moore Stephens in 1988.He founded the business with colleagues having previously been the UK ManagingDirector of a well known accountancy training business. Peter has worked withnumerous global investment banks and multinational corporations developing anddelivering specialist training programmes with a generic focus on equityvaluation and shareholder wealth creation. The business provides in-house financial training to major internationalorganisations, primarily through its small team of twelve highly qualifiedtrainers, with a particular focus on graduate training for major investmentbanks. I would like to echo the Chairman's sentiments and welcome Peter and histeam to the company. Performance Trading at CTG has been excellent. Turnover for the year ended 31 March 2007,including the 4 months' pre-acquisition trading, was £4,679,138, an increase of41% over its last published results of £3,318,538 for the year ended 31 December2005. The division has experienced increases in both market size and in marketshare. CTG offers very good visibility to the group with significant revenuesfor the current financial year already booked and continuing to show stronggrowth. As reported in the company's interim results the graduate training programmesthat form a key element of CTG's business have reached record levels in 2005 and2006 and graduate intakes for 2007 already look to exceed this. This in turn hasled to much higher demand for follow on continuous professional developmentcourses. Mobility of staff between banks is also at record levels and this inturn feeds through with an increase in contact referrals from bankers who havemoved and now want high quality training in their new companies. New expanding areas include wealth management, and private banking, with anumber of our clients investing in this area. We are also seeing private equityfirms starting to seriously invest in skills training, in particular financialmodelling, as well as accountants and lawyers being recruited as lateral hireswho need immediate training to get them up to speed. Geographical split As with the Best Practice division the bulk of the revenues are UK based. Thisagain represents an excellent opportunity for growth and we are currentlypursuing a number of options. Turnover by geographical sector Year ended 31.3.2007 £ % UK 3,230,987 97%Overseas 107,863 3% Total revenue 3,338,850 100% Marketplace and prospects The strategy for CTG is threefold: to continue optimizing its pole position asthe training provider of choice for the UK investment banking community; tointroduce elements of state-of-the-art e-learning into this market to meetexisting strong customer demand; and to grow the business overseas. The UK and international capital markets are buoyant at present and we expectthis to continue for the foreseeable future. We have consistently maintained anexcellent reputation with our customers for high quality training, and in orderto maintain this quality and the levels of growth we need to ensure we retainand recruit the very best trainers. Staff turnover for the last few years hasbeen zero and two additional trainers have been recruited in June 2007 to meetthe strong demand. A key driver for the acquisition of CTG was the desire of both CTG and ILX Groupto enter the market for e-learning products within the investment banking space.The combination of CTG's extensive intellectual property and subject matterexpertise, and the company's existing experience in developing world-classlearning software, is now coming together with the development of anext-generation suite of learning products, called iLearning, that will mirrorand complement the quality classroom training already delivered by CTG. Initialcustomer reaction to prototypes has been extremely favourable and we expect tostart launching these during the year. Finally, as stated earlier, there is considerable opportunity to capitalise onthe value of the CTG brand in overseas markets, and we continue to investigatesuitable structures and partners to assist us in this area. Summary and prospects Both our operating divisions are capable of achieving high levels of growth andhave significant challenges and opportunities for the year ahead. In particularthe opportunities for overseas expansion and the iLearning developments are veryexciting. Our primary focus for the first half is to deliver strong interim results tounderline the growth in the businesses and demonstrate that the changes madewithin the Best Practice division have borne fruit. Our strategy continues to be to build a sizeable training and software businessin the vocational training market, achieved through organic growth and byearnings enhancing acquisitions. Despite the setbacks during 2006/7 we havecontinued to deliver overall profit growth and remain well placed to capitaliseon the base that has been built to date. Ken ScottChief Executive 22 June 2007 Consolidated and Company Income Statement For the Year ended 31 March 2007 Year ended Year ended Year ended Year ended 31.3.2007 31.3.2007 31.3.2007 31.3.2006 Notes Continuing Acquisitions TOTAL TOTAL £ £ £ £ Revenue 2 7,001,556 3,338,850 10,340,406 6,913,255 Cost of sales (3,093,673) (1,394,983) (4,488,656) (2,335,574) Gross profit 3,907,883 1,943,867 5,851,750 4,577,681 Distribution Costs (275,709) (10,325) (286,034) (227,548)Administrative expenses excluding (3,371,085) (528,024) (3,899,109) (3,302,092)depreciation and amortisation Earnings before interest, tax and 261,089 1,405,518 1,666,607 1,048,041depreciation and amortisation Depreciation (81,284) (5,770) (87,054) (47,316) Operating profit 2 179,805 1,399,748 1,579,553 1,000,725 Interest receivable and similar income 26,499 12,073Interest payable and similar charges (241,344) (71,123) Profit before tax 1,364,708 941,675 Tax (257,360) 757,755 Profit for the year attributable to equity 1,107,348 1,699,430shareholders Earnings per share - from continuing 4operations and acquisitionsBasic 6.45p 16.39pDiluted 6.33p 15.08p Consolidated Balance Sheet as at 31 March 2007 As at 31.3.2007 As at 31.3.2006Assets £ £Non-current assetsProperty, plant and equipment 232,554 132,872Intangible assets 22,779,845 12,386,146Deferred tax asset 534,000 789,000 Total non-current assets 23,546,399 13,308,018 Current assetsTrade and other receivables 2,660,587 2,031,070Cash and cash equivalents 843,686 646,126 Total current assets 3,504,273 2,677,196 Total assets 27,050,672 15,985,214 Current liabilitiesTrade and other payables (1,743,352) (1,317,742)Deferred consideration (1,000,000) (236,869)Tax liabilities (644,582) (417,086)Bank loans (1,098,372) (146,429) Total current liabilities (4,486,306) (2,118,126) Non-current liabilitiesProvision for contingent consideration (1,000,000) (270,000)Hire purchase creditor - (3,048)Bank loans (2,122,856) (674,332) Total non-current liabilities (3,122,856) (947,380) Total liabilities (7,609,162) (3,065,506) Net assets 19,441,510 12,919,708 EquityIssued share capital 1,938,576 1,283,329Share premium 11,813,335 7,248,037Shares to be issued - contingent consideration 3,000,000 2,030,000Own shares in trust (1,824,692) (1,082,192)Share option reserve 258,281 199,616Buyback reserve 1,177,819 1,177,819Retained earnings 3,078,191 2,063,099 Total equity 19,441,510 12,919,708 The financial statements were approved by the board of directors and authorisedfor issue on 22 June 2007. They were signed on its behalf by: J A Pickles, DirectorK P Scott, Director Consolidated and Company Cash Flow Statement For the year ended 31 March 2007 Year Year ended ended 31.3.2007 31.3.2006 £ £ Profit from operations 1,579,553 1,000,725Adjustments for:Profit on disposal of non-current assets - (9,861)Depreciation and amortisation 87,054 47,316Share option charge 62,659 108,750Movement in trade and other receivables 457,349 (821,795)Movement in trade and other payables (204,417) 628,057 Cash generated from operating activities 1,982,198 953,192 Interest paid (24,628) (13,707)Tax paid (96,858) (187,307) Net cash generated from operating activities 1,860,712 752,178 Investing activitiesInterest received 26,499 12,073Proceeds on disposal of property, plant and equipment - 206,431Purchases of property, plant and equipment (163,646) (90,402)Expenditure on product development (198,945) (474,305)Acquisition of subsidiaries (net of cash acquired) (5,780,079) (839,914) Net cash used by investing activities (6,116,171) (1,186,117) Financing activitiesPost-completion dividends paid (82,411) -Increase in / (repayment of) borrowings 2,400,467 (255,247)Repayment of finance lease obligations (10,362) -Net proceeds of share issue 2,478,045 720,796Interest paid (236,470) (57,323)Dividend paid (96,250) -Net cash from financing activities 4,453,019 408,226 Net change in cash and cash equivalents 197,560 (25,713) Cash and cash equivalents at start of year 646,126 671,839 Cash and cash equivalents at end of year 843,686 646,126 Notes to the Preliminary Results For the Year ended 31 March 2007 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 2007 and the summarised incomestatement, 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 2006 is basedon an abridged version of the group's published financial statements for thatperiod, which contained an unqualified audit report and which have been filedwith the Registrar of Companies. The statutory accounts for 2007 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 principal accounting policies of the Group are set out in the Group's 2006Annual Report and Financial Statements. The policies have remained unchanged forthe year ended 31 March 2006. 3. Segment reporting The Group operates in one business segment; that of supply of training andconsultancy solutions. The operations are monitored by the geographic regions ofUK, Mainland Europe, North America, and Other (Asia, Middle and Far East,Africa, and South America). Tax assets and liabilities and the intangible assetfor product development capitalised are excluded from segment assets andliabilities. All other assets and liabilities are maintained and managedcentrally and are apportioned between the regions on a pro-rata basis below. For the year ended 31 March 2007 UK Mainland North Other Total Europe America £ £ £ £ £ Segment revenue 9,407,348 611,303 63,387 258,368 10,340,406Segment result 5,063,499 329,033 34,118 139,066 5,565,716 Central costs (3,986,163) Operating profit 1,579,553 Capital additions 169,886 11,039 1,145 4,666 186,736Depreciation and amortisation 79,199 5,146 534 2,175 87,054Segment assets 24,609,781 1,599,177 165,821 675,893 27,050,672Segment liabilities 6,922,557 449,837 46,644 190,124 7,609,162 For the year ended 31 March 2006 UK Mainland North Other Total Europe America £ £ £ £ £ Segment revenue 6,092,440 578,724 116,179 125,912 6,913,255Segment result 3,833,639 364,159 73,105 79,230 4,350,133 Central costs (3,349,408) Operating profit 1,000,725 Capital additions 79,668 7,568 1,519 1,647 90,402Depreciation and amortisation 41,698 3,961 795 862 47,316Segment assets 14,542,804 945,011 97,990 399,409 15,985,214Segment liabilities 2,788,893 181,226 18,792 76,595 3,065,506 4. Earnings per share The calculation of earnings per share is calculated by dividing profitattributable to shareholders of £1,107,348 (2006: £1,699,430) by the weightedaverage number of shares in issue during the year of 17,179,200 (200610,363,803). Diluted earnings per share is adjusted for outstanding options and the averageoption price using an average interest saving of 8.0%. 5. Dividend The directors recommend payment of a dividend of 0.75 pence per share, subjectto shareholder approval at the Annual General Meeting on 20 July 2007. Thisdividend will be paid on 15 August 2006 to shareholders on the register at 27July 2007. The ordinary shares will become ex-dividend on 25 July 2007. Thesefinancial statements do not reflect this dividend payable, which will beaccounted for in the statement of changes in equity as an appropriation ofretained earnings, in the year ended 31 March 2008. 6. Annual Report The annual report will be sent to shareholders shortly and will also beavailable from the Company's registered office at 1 London Wall, London EC2Y5AB. This information is provided by RNS The company news service from the London Stock Exchange