17 Nov 2008 07:00
17 November 2008
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 2008
Highlights
Financial Highlights
Revenue of £7.87 million (2007: £6.26 million)
Operating profit of £1.11 million (2007: £1.17 million)
Profit before tax of £0.93 million (2007: £0.98 million)
Adjusted EPS of 3.96p (2007: 4.14p)
Corporate Highlights
Strategy to focus on must-have technical training and diversity of offering is increasingly bearing fruit
Best Practice making market share gains, revenue up 42 per cent
CTG increasing market share in financial services sector, revenue up 9 per cent
Best Practice - real and perceived market leadership helping to feed impressive rate of growth, particularly in service side
CTG - continued investment in trainers and representative office in New York may impact on short-term profits but will position the division strongly
Ken Scott, Chief Executive of ILX Group plc, commented:
"This period has been one of unprecedented turmoil both in the financial sector as well as the wider UK and global economies. In this turbulent climate, our stated strategy of focusing on must-have technical training appears to be paying off, with revenues in both divisions showing growth in the period."
"We remain cautiously optimistic that we can continue to deliver robust revenues and profits in difficult times. We also remain open and alert to potential strategic acquisition opportunities."
For further information visit: (www.ilxgroup.com) or enquiries to:
| ILX Group plc Ken Scott / Jon Pickles | 020 7751 7100 |
| Adventis Financial PR Tarquin Edwards / Chris Steele | 020 7034 4758/4759 07879 458 364 / 07979 604 687 |
| Arbuthnot Securities Limited Tom Griffiths | 020 7012 2000 |
Editor's Notes
ILX Group plc is a leading provider of business training to the private and public sectors, delivered through Computer Based Training (CBT), e-Learning, instructor-led courses/workshops.
ILX Group now trades through two divisions:
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.
Chairman's Statement
For the Six Months ended 30 September 2008
I am pleased to present the unaudited interim results for the six months ended 30 September 2008.
Financial Results
Revenue for the six months was £7.87 million (2007: £6.26 million), representing growth of 25.7%. This delivered an operating profit of £1.11 million (2007: £1.17 million), a slight decline of 5.3%. The fall in operating margins, from 18.7% to 14.1%, is due to changes in the mix of revenue streams, continued investment in training staff, and a bad debt provision, all of which are described further below.
Net debt, defined as cash at bank less all bank debt and all future deferred consideration whether payable in cash or in shares, was £6.17 million (at 30 September 2007: £7.37 million and at 31 March 2008: £5.51 million). The Company drew down its final tranche of term debt in June as planned. We believe that with net debt of approximately 2.5 times annualised EBITDA, and interest cover in excess of 6, that this is a prudent level of gearing. There remains £750,000 in earn-out payments to be made which will be settled in full by the Company's year end from operating cash flow.
Business Review
Revenue growth of 25.7% for the six months was driven by growth across both our operating divisions.
The division has fully provided for a debt totalling £136,000 which is unlikely to be recovered. This is as a result of a single customer, Lehman Brothers, going into administration. This provision is included in the income statement under administrative expenses.
Our Best Practice division has continued the momentum which began in the second half of last year, with revenues growing 42.4% to £4.50 million (2007: £3.16 million). This growth has been driven by strong market share gains in the PRINCE2™, ITIL®, and related areas, with e-learning sales in this area up by 38.3% and classroom events, including exam events, up by 87.8%.
Classroom events accounted for 51% of Best Practice revenues for the period against a longer-term average of 35-40%. Whilst the growth in sales has boosted profits, e-learning is more profitable than classroom training and the shift in mix towards lower-margin revenue streams has inevitably resulted in lower overall margins. Nevertheless we are delighted with the growth in the services side of the business which is the result of our real and perceived market leadership across all methods of training and consultancy in this area.
Dividend
During the period the Company paid a dividend of 1.5 pence per share in respect of the year ended 31 March 2008. This dividend is covered approximately 5 times on the basis of annualised profits for the six months ended 30 September 2008. The Directors do not propose the payment of an interim dividend but expect to continue to recommend the payment of a final dividend.
We remain cautiously optimistic that we can continue to deliver robust revenues and profits in difficult times. We also remain open and alert to potential strategic acquisition opportunities.
Paul LeverChairman17 November 2008
Independent Review Report
Introduction
We have been engaged by the company to review the condensed set of financial statements in the half-yearly financial report for the six months ended 30 September 2007 which comprises specifically the primary financial statements and the related explanatory notes that have been reviewed. We have read the other information contained in the half-yearly financial report and considered whether it contains any apparent misstatements or material inconsistencies with the information in the condensed set of financial statements.
This report is made solely to the company in accordance with the terms of our engagement to assist the company in meeting the requirements of the London Stock Exchange Alternative Investment Market's (AIM) Rulebook for Companies. Our review has been undertaken so that we might state to the company those matters we are required to state to it in this report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company for our review work, for this report, or for the conclusions we have reached.
Directors' responsibilities
The half-yearly financial report is the responsibility of, and has been approved by, the directors. The directors are responsible for preparing the half-yearly financial report in accordance with the AIM Rulebook for Companies.
As disclosed in note 1, the annual financial statements of the group are prepared in accordance with IFRSs as adopted by the European Union. The condensed set of financial statements included in this half-yearly financial report has been prepared in accordance with International Accounting Standard 34, "Interim Financial Reporting," as adopted by the European Union.
Our Responsibility
Our responsibility is to express to the company a conclusion on the condensed set of financial statements in the half-yearly financial report based on our review.
Scope of Review
We conducted our review in accordance with International Standard on Review Engagements (UK and Ireland) 2410, "Review of Interim Financial Information Performed by the Independent Auditor of the Entity" issued by the Auditing Practices Board for use in the United Kingdom. A review of interim financial information consists of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing (UK and Ireland) and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.
Conclusion
Based on our review, nothing has come to our attention that causes us to believe that the condensed set of financial statements in the half-yearly financial report for the six months ended 30 September 2008 is not prepared, in all material respects, in accordance with International Accounting Standard 34 as adopted by the European Union and the AIM Rulebook for Companies.
Saffery Champness
Chartered Accountants
Beaufort House2 Beaufort RoadCliftonBristol
BS8 2AE
17 November 2008
Consolidated and Company Income Statement
For the Six Months ended 30 September 2008
| | | 6 months ended 30.9.2008 | 6 months ended 30.9.2007 | Year ended 31.3.2008 |
| | | Unaudited | Unaudited | Audited |
| | Notes | £'000 | £'000 | £'000 |
| | | | | |
| Revenue | | 7,873 | 6,262 | 13,312 |
| | | | | |
| Cost of sales | | (3,886) | (2,847) | (6,513) |
| | | | | |
| Gross profit | | 3,987 | 3,415 | 6,799 |
| | | | | |
| Administrative and distribution expenses excluding depreciation | 3 | (2,813) | (2,178) | (4,640) |
| | | | | |
| Earnings before interest, tax and depreciation | | 1,174 | 1,237 | 2,159 |
| | | | | |
| Depreciation | | (63) | (64) | (127) |
| | | | | |
| Operating profit | | 1,111 | 1,173 | 2,032 |
| | | | | |
| Interest receivable and similar income | | 11 | 10 | 16 |
| Interest payable and similar charges | | (193) | (204) | (554) |
| | | | | |
| Profit before tax | | 929 | 979 | 1,494 |
| | | | | |
| Tax | | (285) | (274) | (460) |
| | | | | |
| Profit for the year attributable to equity shareholders | | 644 | 705 | 1,034 |
| | | | | |
| Earnings per share: | | | | |
| Basic | 4 | 3.32p | 3.64p | 5.33p |
| Diluted | 4 | 3.32p | 3.51p | 5.27p |
Consolidated Balance Sheet
As at 30 September 2008
| | | As at 30.9.2008 | As at 30.9.2007 | As at 31.3.2008 |
| | | Unaudited | Unaudited | Audited |
| Assets | Notes | £'000 | £'000 | £'000 |
| Non-current assets | | | | |
| Property, plant and equipment | | 205 | 243 | 206 |
| Intangible assets | | 23,267 | 22,899 | 23,129 |
| Deferred tax asset | | - | 260 | 77 |
| Total non-current assets | | 23,472 | 23,402 | 23,412 |
| | | | | |
| Current assets | | | | |
| Trade and other receivables | | 3,751 | 3,152 | 3,464 |
| Cash and cash equivalents | | - | 112 | 994 |
| Total current assets | | 3,751 | 3,264 | 4,458 |
| | | | | |
| Total assets | | 27,223 | 26,666 | 27,870 |
| | | | | |
| Current liabilities | | | | |
| Bank overdraft | | (983) | - | - |
| Trade and other payables | | (2,230) | (1,413) | (3,249) |
| Deferred consideration | 7 | - | (1,000) | (1,000) |
| Tax liabilities | | (1,009) | (715) | (694) |
| Bank loans | | (1,250) | (1,898) | (1,250) |
| Total current liabilities | | (5,472) | (5,026) | (6,193) |
| | | | | |
| Non-current liabilities | | | | |
| Derivative financial instruments | | (19) | - | (39) |
| Bank loans | | (3,188) | (1,583) | (2,750) |
| Total non-current liabilities | | (3,207) | (1,583) | (2,789) |
| | | | | |
| Total liabilities | | (8,679) | (6,609) | (8,982) |
| | | | | |
| Net assets | | 18,544 | 20,057 | 18,888 |
| | | | | |
| Equity | | | | |
| Issued share capital | | 1,939 | 1,939 | 1,939 |
| Share premium | | 11,804 | 11,813 | 11,804 |
| Shares to be issued – deferred consideration | 7 | 750 | 3,000 | 1,500 |
| Own shares in trust | 6 | (1,825) | (1,825) | (1,825) |
| Share option reserve | | 328 | 292 | 303 |
| Buyback reserve | | 1,178 | 1,178 | 1,178 |
| Retained earnings | | 4,370 | 3,660 | 3,989 |
| Total equity | 18,544 | 20,057 | 18,888 | |
The financial statements were approved by the board of directors and authorised for issue on 17 November 2008.
Consolidated and Company Cash Flow Statement
For the Six Months ended 30 September 2008
| | 6 months ended 30.9.2008 | 6 months ended 30.9.2007 | Year ended 31.3.2008 |
| | Unaudited | Unaudited | Audited |
| | £'000 | £'000 | £'000 |
| | | | |
| Profit from operations | 1,111 | 1,173 | 2,032 |
| Adjustments for: | | | - |
| Depreciation | 63 | 64 | 127 |
| Share option charge | 25 | 34 | 45 |
| Movement in trade and other receivables | (304) | (486) | (796) |
| Movement in trade and other payables | (888) | (129) | 1,759 |
| Cash generated from operating activities | 7 | 656 | 3,167 |
| | | | |
| Interest paid | - | (16) | (21) |
| Tax paid | - | (131) | (137) |
| Net cash generated from operating activities | 7 | 509 | 3,009 |
| | | | |
| Investing activities | | | |
| Interest received | 11 | 10 | 16 |
| Proceeds on disposal of property and equipment | - | - | 7 |
| Purchases of property and equipment | (62) | (75) | (108) |
| Expenditure on product development | (138) | (119) | (350) |
| Acquisition of subsidiaries (net of cash acquired) | (1,775) | (1,000) | (2,532) |
| Net cash used by investing activities | (1,964) | (1,184) | (2,967) |
| | | | |
| Financing activities | | | |
| Increase in borrowings | 438 | 260 | 780 |
| Net proceeds of share issue | - | (3) | (8) |
| Interest and refinancing costs paid | (195) | (191) | (540) |
| Dividend paid | (263) | (123) | (123) |
| Net cash from financing activities | (20) | (57) | 109 |
| Net change in cash and cash equivalents | (1,977) | (732) | 151 |
| | | | |
| Cash and cash equivalents at start of period | 994 | 844 | 843 |
| Cash and cash equivalents at end of period | (983) | 112 | 994 |
Consolidated and Company Statement of Changes in Equity
For the Six Months ended 30 September 2008
| | 6 months ended 30.9.2008 | 6 months ended 30.9.2007 | Year ended 31.3.2008 |
| | Unaudited | Unaudited | Audited |
| | £'000 | £'000 | £'000 |
| | | | |
| Balance at start of period | 18,888 | 19,440 | 19,440 |
| Profit for the period | 644 | 705 | 1,034 |
| Dividends paid | (263) | (123) | (123) |
| Options exercised | - | 1 | 1 |
| Options granted | 25 | 34 | 45 |
| Deferred consideration | (750) | - | (1,500) |
| Costs relating to share issue | - | - | (9) |
| Balance at start of period | 18,544 | 20,057 | 18,888 |
|
| 6 months ended 30.9.2008 | 6 months ended 30.9.2007 | Year ended 31.3.2008 |
|
| £'000 | £'000 | £'000 |
|
|
|
|
|
| Post tax profit for the period | 644 | 705 | 1,034 |
| After tax interest on outstanding options multiplied by exercise price | - | 51 | 17 |
| Profit for diluted earnings per share | 644 | 756 | 1,051 |
|
|
|
|
|
|
| £'000 | £'000 | £'000 |
|
|
|
|
|
| Post tax profit for the period | 644 | 705 | 1,034 |
| Add back actual tax charge | 285 | 274 | 460 |
| Strip out non-recurring items | 136 | 167 | 364 |
| Normalised tax charge | (298) | (344) | (557) |
| Profit for adjusted earnings per share | 767 | 802 | 1,301 |
|
|
|
|
|
|
| £'000 | £'000 | £'000 |
|
|
|
|
|
| Profit for adjusted earnings per share | 767 | 802 | 1,301 |
| After tax interest on outstanding options multiplied by exercise price | - | 51 | 17 |
| Profit for adjusted diluted earnings per share | 767 | 853 | 1,318 |
|
|
|
|
|
|
| Number | Number | Number |
|
|
|
|
|
| Weighted average shares | 19,390,762 | 19,390,295 | 19,390,598 |
| Outstanding share options | - | 2,134,615 | 557,125 |
| Weighted average shares for diluted earnings per share | 19,390,762 | 21,524,910 | 19,947,723 |
|
|
|
|
|
|
|
|
|
|
| Basic earnings per share | 3.32p | 3.64p | 5.33p |
| Diluted earnings per share | 3.32p | 3.51p | 5.27p |
| Adjusted earnings per share | 3.96p | 4.14p | 6.71p |
| Adjusted diluted earnings per share | 3.96p | 3.96p | 6.61p |
|
| As at 30.9.2008 | As at 30.9.2007 | As at 31.3.2008 |
|
| £'000 | £'000 | £'000 |
| Current liabilities: Deferred consideration |
|
|
|
| Acquisition of Corporate Training Group Ltd | - | 1,000 | 1,000 |
|
| - | 1,000 | 1,000 |
|
|
|
|
|
| Equity: Deferred consideration |
|
|
|
| Acquisition of Corporate Training Group Ltd | 750 | 1,500 | 1,500 |
|
| 750 | 1,500 | 1,500 |
|
|
|
|
|
| Equity: Contingent consideration |
|
|
|
| Acquisition of Corporate Training Group Ltd | - | 1,500 | - |
|
| - | 1,500 | - |
Copies of these interim results will be sent to shareholders shortly and will also be available at the Company's registered office at 1 London Wall, London EC2Y 5AB and from the Company's website, www.ilxgroup.com, where this announcement is also reproduced.