Progility Regulatory News (PGY)

20 Nov 2007 07:00

ILX Group PLC19 November 2007 20 November 2007 ILX GROUP PLC (ILX/L) ("ILX" or "the Company") The AIM quoted business education and training specialists INTERIM RESULTS For the six months ended 30 September 2007 Highlights Financial Highlights •Revenue up 40 per cent to £6.26 million (2006: £4.47 million) •Operating profit was up 132 per cent at £1.34 million (2006: £0.58 million) •Operating margin of 21 per cent (2006: 13 per cent) •Profit before Tax up 93 per cent to £0.98 million (2006: £0.51 million) •Adjusted basic EPS up by 75 per cent to 4.14p (2006: 2.37p) Corporate Highlights •Successful restructuring and integration of the business into two trading divisions •Cost savings achieved following rationalisation •Resilient order books •Good visibility of future bookings •Corporate Training Group showing strong organic growth •Best Practice Group well placed to benefit from a traditionally stronger 2nd half Ken Scott, Chief Executive of ILX Group plc, commented: "The Group is rapidly establishing itself as a market leader in the developmentand implementation of quality e-learning software, and of high quality classroomtraining and consultancy services. We remain confident in the outlook for thefull year and our capacity to deliver growth and value across both areas of thebusiness". For further information visit: (www.ilxgroup.com) or enquiries to: ILX Group plc 020 7751 7100K Scott / J Pickles Adventis Financial PR 020 7034 4758Tarquin Edwards 07879 458 364 Charles Stanley Securities (Nominated 020 7149 6000Adviser)Philip Davies / Carl Holmes Editor's Notes ILX Group plc is a leading provider of vocational training to the private andpublic sectors, delivered through Computer Based Training (CBT), e-Learning,instructor-led courses/workshops. ILX Group now trades through two divisions: 1. Best Practice provides CBT, e-learning, instructor-led training and implementation consultancy principally to the programme and project management, IT service management and business finance markets. 2. Banking & Finance (through Corporate Training Group) provides instructor-led training, workshops and related services, principally to the investment banking community. www.ilxgroup.com Chairman's Statement For the six months ended 30 September 2007 Introduction I am pleased to present the results for the six months ended 30 September 2007,a period both of consolidation and growth. These results include a full six months of the Corporate Training Group,acquired in July 2006, which has shown exceptional growth and continues to growdespite recent uncertainty in the financial services sector. The prospects forthis business are excellent. The full integration of the Mount Lane and Customer Projects businesses into theBest Practice division was completed successfully in April this year. A newManaging Director was also appointed for the division, which is now back ontrack. Business Review - Best Practice Group The Best Practice Group has now been fully integrated to one division. This hasinvolved the consolidation of the sales and operations teams providingannualised cost savings of approximately £340,000. The division has won a number of significant new contracts, revenues from whichhave started to come through and which are expected to deliver further benefitin the second half. These contracts are primarily for classroom training andconsultancy services but include an element of e-learning. Sales of the division's desktop solutions (previously Mount Lane) products,particularly in Office 2007, have recovered, boosted by two major contracts andincreased usage of the Microsoft Office 2007 suite amongst large corporations. E-learning sales have shown growth in both Finance and PRINCE2, the projectmanagement qualification. The much anticipated change in ITIL, the servicemanagement qualification, from version 2 to version 3 has affected all of theproviders of training in this sector. We have carried out a major upgrade to ourITIL products and our ITIL version 3 e-learning product was released in Octobersignificantly ahead of our competitors. Whilst sales were inevitably delayed asa consequence the Directors believe that the Company's offering is trulystate-of-the-art and I would like to congratulate the development team on itsrelease. Finally, the division has successfully renewed its Accredited Consultancy statusfollowing the full integration of Customer Projects and has also securedISO9001:2000 accreditation across the division. We remain the only company inthe marketplace that can offer accredited classroom training and e-learning inPRINCE2 as well as being qualified to undertake PRINCE2 maturity assessments. The division remains well placed to take advantage of what is traditionally itsstrongest half of the year from October to March. Business Review - Corporate Training Group Trading at the Corporate Training Group has continued to be very strong, withlike for like sales growth in the first half in excess of 20%, and bookings forthe remainder of the year continuing to project strong growth. We remain sensitive to the current issues affecting the investment bankingsector, which makes up the majority of the client base for this division.However we are yet to see any adverse affect on the growth in demand fortraining. We are already seeing a significantly greater level of bookings fornext year than we would usually expect, with a number of clients booking earlierin order to secure preferred dates. Recruitment of high quality training staff is key to expanding this business andwe have made good progress in this area, with two new trainers already on boardand others identified to join the team. Considerable work has been done by our development team, working in conjunctionwith the trainers, in building the first two e-learning products for theCorporate Training Group which we expect to be launched into this marketplacebefore the end of the year. We expect these e-learning products (called"i-learning") to set a new standard for high quality on-line training material.These products are designed to replace existing competitor e-learning productsrather than to replace classroom training sessions as a key part of ourcontinuing objective to dominate this market. We are delighted with the growth so far and confident that the full year will beanother record year for the Corporate Training Group. Financial Results Revenue for the period was £6.26 million (6 months to September 2006: £4.47million). Operating profit, before restructuring costs of £167,269 relating tothe integration of Best Practice, was £1,340,312 (6 months to September 2006:£577,996), with an operating margin of 21% (6 months to 30 September 2006: 13%). Basic earnings per share is up by 53% to 3.63p (6 months to September 2006:2.37p). Excluding one-off costs, underlying earnings per share for the periodwas 4.14p (6 months to 30 September 2006: 2.37p). Adjusted earnings per sharefor the 12 months to 31 March 2007 was 5.94p. Dividend The Directors do not currently intend to pay an interim dividend but expect tocontinue an annual dividend. Summary and Future Opportunities The Group is rapidly establishing itself as a market leader in the developmentand implementation of quality e-learning software, and of high quality classroomtraining and consultancy services. We remain confident that with a strongperformance from Best Practice in the second half, and continued growth from theCorporate Training Group, the outlook for the full year is very positive withcapacity to deliver strong growth and value across both areas of the business. Paul LeverChairman 20 November 2007 Independent Review Report to ILX Group plc Introduction We have been engaged by the company to review the condensed set of financialstatements in the half-yearly financial report for the six months ended 30September 2007 which comprises specifically the primary financial statements andthe related explanatory notes that have been reviewed. We have read the otherinformation contained in the half-yearly financial report and considered whetherit contains any apparent misstatements or material inconsistencies with theinformation in the condensed set of financial statements. This report is made solely to the company in accordance with the terms of ourengagement to assist the company in meeting the requirements of the London StockExchange Alternative Investment Market's (AIM) Rulebook for Companies. Ourreview has been undertaken so that we might state to the company those matterswe are required to state to it in this report and for no other purpose. To thefullest extent permitted by law, we do not accept or assume responsibility toanyone other than the company for our review work, for this report, or for theconclusions we have reached. Directors' responsibilities The half-yearly financial report is the responsibility of, and has been approvedby, the directors. The directors are responsible for preparing the half-yearlyfinancial report in accordance with the AIM Rulebook for Companies. As disclosed in note 1, the annual financial statements of the group areprepared in accordance with IFRSs as adopted by the European Union. Thecondensed set of financial statements included in this half-yearly financialreport has been prepared in accordance with International Accounting Standard34, "Interim Financial Reporting," as adopted by the European Union. Our Responsibility Our responsibility is to express to the company a conclusion on the condensedset of financial statements in the half-yearly financial report based on ourreview. Scope of Review We conducted our review in accordance with International Standard on ReviewEngagements (UK and Ireland) 2410, "Review of Interim Financial InformationPerformed by the Independent Auditor of the Entity" issued by the AuditingPractices Board for use in the United Kingdom. A review of interim financialinformation consists of making enquiries, primarily of persons responsible forfinancial and accounting matters, and applying analytical and other reviewprocedures. A review is substantially less in scope than an audit conducted inaccordance with International Standards on Auditing (UK and Ireland) andconsequently does not enable us to obtain assurance that we would become awareof all significant matters that might be identified in an audit. Accordingly, wedo not express an audit opinion. Conclusion Based on our review, nothing has come to our attention that causes us to believethat the condensed set of financial statements in the half-yearly financialreport for the six months ended 30 September 2007 is not prepared, in allmaterial respects, in accordance with International Accounting Standard 34 asadopted by the European Union and the AIM Rulebook for Companies. Saffery ChampnessChartered AccountantsBeaufort House2 Beaufort RoadCliftonBristolBS8 2AE 20 November 2007 Consolidated Income Statement For the six months ended 30 September 2007 Six months Six months Year ended ended ended 30.9.2007 30.9.2006 31.3.2007 Unaudited Unaudited Audited Notes TOTAL TOTAL TOTAL £ £ £ Revenue 6,262,413 4,470,254 10,340,406 Cost of sales (2,847,264) (1,734,156) (4,488,656) Gross profit 3,415,149 2,736,098 5,851,750 Distribution costs (145,198) (119,539) (286,034)Administrative expenses (1,865,578) (2,005,587) (3,899,109)excluding depreciation andamortisation Earnings before interest, 1,404,373 610,972 1,666,607tax and depreciation andamortisation Depreciation (64,061) (32,976) (87,054) Operating profit before 1,340,312 577,996 1,579,553restructuring costs Interest receivable and 9,968 9,317 26,499similar incomeInterest payable and (204,099) (81,396) (241,344)similar charges Profit before tax and 1,146,181 505,917 1,364,708restructuring costs Restructuring Costs 3 (167,269) - - Profit before tax 978,912 505,917 1,364,708 Tax (274,095) (151,593) (257,360) Profit for the period 704,817 354,324 1,107,348attributable to equityshareholders Earnings per share: 4Basic 3.63p 2.37p 6.45pDiluted 3.51p n/a 6.33p Consolidated Statement of Changes in Equity For the six months ended 30 September 2007 Six months Six months Year ended ended ended 31.3.2007 30.9.2007 30.9.2006 £ £ £ Balance at start of 19,441,510 12,919,708 12,919,708periodProfit for the 704,817 354,324 1,107,348periodDividends paid (145,431) (96,250) (96,250)Issue of shares to - (742,500) (742,500)trustDividends received 22,125by trustIssue of shares 500 653,547 655,247Options granted and 33,857 67,424 62,659exercisedContingent - 3,000,000 970,000considerationPremium on issue of 3,000 4,718,328 4,731,927sharesCosts relating to (3,099) (161,459) (166,629)share issuesBalance at end of 20,057,279 20,713,122 19,441,510period Consolidated Balance Sheet as at 30 September 2007 Notes As at As at As at 30.9.2007 30.9.2006 31.3.2007 Unaudited Unaudited AuditedAssets £ £ £Non-current assetsProperty, plant and equipment 243,097 178,099 232,554Intangible assets 22,898,519 24,995,563 22,779,845Deferred tax asset 259,905 637,405 534,000Total non-current assets 23,401,521 25,811,067 23,546,399 Current assetsTrade and other receivables 3,152,435 3,463,195 2,660,587Cash and cash equivalents 112,221 261,435 843,686Total current assets 3,264,656 3,724,630 3,504,273 Total assets 26,666,177 29,535,697 27,050,672 Current liabilitiesTrade and other payables (1,413,283) (1,516,770) (1,743,352)Provision for deferred & 7 (1,000,000) (1,270,000) (1,000,000)contingent considerationTax liabilities (714,606) (777,911) (644,582)Bank loans (1,898,372) (1,653,743) (1,098,372)Total current liabilities (5,026,261) (5,218,424) (4,486,306) Non-current liabilitiesProvision for deferred & 7 - (1,000,000) (1,000,000)contingent considerationHire purchase creditor - (2,438) -Bank loans (1,582,637) (2,601,713) (2,122,856)Total non-current liabilities (1,582,637) (3,604,151) (3,122,856) Total liabilities (6,608,898) (8,822,575) (7,609,162) Net assets 20,057,279 20,713,122 19,441,510 EquityIssued share capital 1,939,076 1,936,876 1,938,576Share premium 11,813,236 11,804,906 11,813,335Shares to be issued - contingent 7 3,000,000 5,030,000 3,000,000considerationOwn shares in trust 6 (1,802,567) (1,824,692) (1,824,692)Share option reserve 292,138 267,040 258,281Buyback reserve 1,177,819 1,177,819 1,177,819Retained earnings 3,637,577 2,321,173 3,078,191Total equity 20,057,279 20,713,122 19,441,510 The interim financial statements were approved by the board of directors andauthorised for issue on 20 November 2007. Consolidated Cash Flow Statement For the six months ended 30 September 2007 Six months Six months Year ended ended ended 30.9.2007 30.9.2006 31.3.2007 Unaudited Unaudited Audited £ £ £Operating profit before 1,340,312 577,996 1,579,553restructuring costsAdjustments for:Depreciation and amortisation 64,061 32,976 87,054Share option charge 33,857 67,424 62,659Movement in trade and other (485,639) (472,507) 457,349receivablesMovement in trade and other payables (128,936) (528,754) (204,417)Cash generated from / (used by) 823,655 (322,865) 1,982,198operating activities Interest paid (16,150) (25,201) (24,628)Tax paid (131,192) (905) (96,858)Net cash generated from / (used by) 676,313 (348,971) 1,860,712operating activities Restructuring Costs (167,269) - - Investing activitiesInterest received 9,968 9,317 26,499Purchases of property, plant and (74,604) (55,113) (163,646)equipmentExpenditure on product development (118,674) (118,163) (198,945)Payments relating to acquisition of (1,000,000) (5,648,065) (5,780,079)subsidiariesNet cash used by investing (1,183,310) (5,812,024) (6,116,171)activities Financing activitiesPost-completion dividends paid - - (82,411)Increase in / (repayment of) 259,781 3,434,695 2,400,467borrowingsRepayment of finance lease - (610) (10,362)obligationsNet proceeds of share issues (3,099) 2,458,916 2,478,045Interest paid (190,575) (20,447) (236,470)Dividend paid (123,306) (96,250) (96,250)Net cash from financing activities (57,199) 5,776,304 4,453,019 Net change in cash and cash (731,465) (384,691) 197,560equivalents Cash and cash equivalents at start 843,686 646,126 646,126of periodCash and cash equivalents at end of 112,221 261,435 843,686period Notes to the Interim Report For the six months ended 30 September 2007 1. The financial information contained in the Interim Report does notconstitute statutory accounts as defined in section 240 of the Companies Act1985. The Interim Report is in compliance with International Accounting Standard34 (Interim Financial Reporting). The comparative financial information for thesix months ended 30 September 2006, and the year ended 31 March 2007, is anabridged version of the group's published financial statements for theseperiods. The financial statements for the year ended 31 March 2007 contained anunqualified audit report and have been filed with the Registrar of Companies. 2. The interim financial statements have been prepared on the basis ofthe accounting policies set out in the March 2007 financial statements of ILXGroup Plc. 3. During the period the company incurred exceptional costs of £167,269relating to a fundamental reorganisation of the company's continuing operations. 4. The basic earnings per share calculation is based on a weightedaverage number of ordinary shares of 10 pence each in issue during the period of19,390,295 (6 months to 30 September 2006: 14,960,662). Six months Six months Year ended ended ended 31.3.2007 30.9.2007 30.9.2006Post tax profit for the period £704,817 £354,324 £1,107,348Weighted average shares 19,390,295 14,960,662 17,179,200 Basic EPS 3.63p 2.37p 6.45p Diluted earnings per share is adjusted for outstanding options and the averageoption price, using an average interest saving of 8.00% (2006: 7.25%.) Six months Year ended ended 31.3.2007 30.9.2007Post tax profit for the period £704,817 £1,107,348After tax interest on outstanding options £51,056 £107,680multiplied by exercise priceProfit for diluted earnings per share £755,873 £1,215,028 Weighted average shares for basic earnings per 19,390,295 17,179,200shareOutstanding options 2,134,615 2,008,615Weighted average shares for diluted earnings 21,524,910 19,187,815per share Diluted EPS 3.51p 6.33p The calculation of fully diluted earnings per share has not been disclosed forthe six months ended 30 September 2006 as the effect of the company'soutstanding share options for that period was not dilutive. An underlying adjusted earnings per share figure is calculated below strippingout the effect of exceptional reorganisation costs incurred and using anormalised tax rate: Six months Six months Year ended ended ended 31.3.2007 30.9.2007 30.9.2006 £ £ £Post tax profit for the period 704,817 354,324 1,107,348Add / (deduct) actual tax charge / (credit) 274,095 151,593 257,360Add / (deduct) non-recurring items 167,269 - 92,716Normalised tax charge (343,854) (151,593) (437,227)Profit for adjusted earnings per share 802,327 354,324 1,020,197 Six months Six months Year ended ended ended 31.3.2007 30.9.2007 30.9.2006Post tax profit for the period £802,327 £354,324 £1,020,197Weighted average shares 19,390,295 14,960,662 17,179,200 Basic EPS - adjusted 4.14p 2.37p 5.94p Six months Six months Year ended ended ended 31.3.2007 30.9.2007 30.9.2006Post tax profit for the period £802,327 £354,324 £1,020,197After tax interest on outstanding options £51,056 £42,970 £107,680multiplied by exercise priceProfit for diluted earnings per share £853,383 £397,294 £1,127,877 Weighted average shares for basic earnings 19,390,295 14,960,662 17,179,200per shareOutstanding options 2,134,615 1,750,615 2,008,615Weighted average shares for diluted earnings 21,524,910 16,711,277 19,187,815per share Diluted EPS - adjusted 3.96p n/a 5.88p 5. The group operates in one business segment; that of supply of trainingand consultancy solutions. The operations are monitored by the geographicregions of UK, Mainland Europe, North America, and Other (Asia, Middle and FarEast, Africa, and South America). 6. The company holds 1,850,000 of its own ordinary shares in trust in aMedium Term Incentive Plan, administered by Investec Trust Guernsey Ltd. Theseshares become payable to directors and senior management, on the achievement ofcertain performance criteria. The shares are shown at cost as a debit againstreserves and relate to the investment. The shares are held in trust under thePlan and represent 9.9% of the total called up share capital. 7. The company has the following liabilities, some contingent on certainfuture performance criteria, arising out of earn-out provisions in theagreements relating to recent acquisitions. These contingent liabilities andtheir potential timing are as follows: At At At 30.9.2007 30.9.2006 31.3.2007Current liabilities: Contingent £ £ £considerationAcquisition of Corporate Training Group Ltd 1,000,000 1,270,000 1,000,000 1,000,000 1,270,000 1,000,000 Non-current liabilities: ContingentconsiderationAcquisition of Corporate Training Group Ltd - 1,000,000 1,000,000 - 1,000,000 1,000,000 Equity: Contingent considerationAcquisition of Mount Lane Training and - 1,530,000 -Implementation Solutions LtdAcquisition of Customer Projects Ltd - 500,000 -Acquisition of Corporate Training Group Ltd 3,000,000 3,000,000 3,000,000 3,000,000 5,030,000 3,000,000 The contingent consideration relating to The Corporate Training Group Limitedshown under current liabilities, is payable in cash on 30 June 2008. The contingent consideration relating to The Corporate Training Group Limitedshown under equity, is payable in cash or shares at the Company's option.£1,500,000 fell due on 30 June 2007 and the remaining £1,500,000 is due to besettled on 30 June 2008. The Company and the vendors of The Corporate Training Group Limited have agreedto defer payment of the amount due on 30 June 2007. Under the terms of theagreement, interest accrues on the outstanding balance at 5% above base rates. 8. The company has a related party relationship with its subsidiaries,its directors, and other employees of the company with managementresponsibility. There were no transactions with these parties during the periodoutside the usual course of business. There were no transactions with any otherrelated parties. 9. The Company's last accounts referred to a contingent liability arisingfrom a claim lodged by a former employee against the company. The claim wasscheduled to be heard by an employment tribunal in November 2007. This tribunalhas now been postponed while both parties continue discussions with theintention of reaching an amicable resolution. Copies of these interim results will be sent to shareholders shortly and willalso be available at the Company's registered office at 1 London Wall, LondonEC2Y 5AB. This information is provided by RNS The company news service from the London Stock Exchange