Progility Regulatory News (PGY)

23 Nov 2005 12:45

ILX Group PLC23 November 2005 ILX Group PLC INTERIM RESULTS ILX Group plc ('ILX'), the AIM quoted vocational education and training company,announces Interim Results for the six months ended 30 September 2005, a periodof rapid growth for the company. The company also announces today theacquisition of Mount Lane Training and Implementation Solutions Ltd for aninitial consideration of £2.2m. Financial Highlights: • Turnover of £2.94m (2004: £1.18m) • Operating Profit of £144,455 (2004: £24,195) • Net loss after interest, goodwill and exceptional items of £54,119 (2004: £52,509 loss) • Adjusted EPS (excl. goodwill and exceptionals) of 1.23p (2004: 0.35p) • Basic loss per share of 0.6p (2004: 0.75p loss) • Heavy H2 weighting in terms of profitability Corporate Highlights: • £2.2m Acquisition of Mount Lane Training and Implementation Solutions Ltd (see separate RNS) • Completion of Capital Reduction scheme, writing off historical losses from the Balance Sheet • Completion of sale and leaseback of premises in Nantwich - proceeds used to repay bank debt Operational Highlights: • Continued expansion of PRINCE2 and ITIL training markets • Key Skills generate sales growth over 50% • Mindscope turnover of over £1m in six month period (£821,413 for the previous full year pre-acquisition) • Major customers during the period include: AT&T, Cable & Wireless, Computacenter, Helphire, Serco, Rolls Royce, GKN, Legal and General, the Home Office, and NATO Commenting, Paul Lever, Chairman of ILX Group plc, said: "The last six months have seen a continuation of our momentum and rapid growth.We continue to make further inroads into the vibrant PRINCE2 and ITILmarketplaces and to deliver strong growth. The acquisition of Mount Lane takesus into new complementary markets. Trading activity remains strong and our focus remains on the delivery ofcontinued high revenue growth from our PRINCE2 and ITIL products and servicesand the integration of Mount Lane, including investment in order to provide itwith a stronger base from which to grow. The Directors also expect to takeadvantage of opportunities, particularly within the ITIL marketplace, that arisefrom the combination of the businesses. We have made good progress in the first six months of the year, and we remainconfident in our ability to deliver substantial growth in profit and earningsper share over the course of the current year." For further information, please contact: ILX Group plc Binns & Co PR LtdKen Scott, Chief Executive Paul McManusTel: 020 7371 4444 Tel: 020 7153 1485 Mob: 07980 541 893http://www.ilxgroup.com Chairman's Statement For the six months ended 30 September 2005 I am pleased to present the results for the six months ended 30 September 2005. The Company has maintained its stated strategy of rapid growth through organicdevelopment of its existing business lines following two acquisitions made inthe previous financial year. In the 6 months to 30 September 2005, the Companyhas continued to see strong organic growth from its Key Skills division and anexceptional performance from Mindscope, as highlighted below. Both Intellexisand Computa-Friendly have delivered solid performances. The proposed acquisitionof Mount Lane Training and Implementation Solutions Ltd announced today,provides the Company with an additional profitable revenue stream in acomplementary market. Financial Results The Company has delivered turnover of £2.94 million (6 months to 30 September2004: £1.18 million). Operating profit for the period was £144,455 (6 months to30 September 2004: £24,195) and net loss, after interest, goodwill, andexceptional items, was £54,119 (6 months to 30 September 2003: loss of £52,509).The Company remains strongly weighted towards the second half of the year,primarily due to the seasonality at Key Skills which typically sees up to athird of annual sales delivered in the months of December and March. The highmargin of these products contributes heavily towards delivering considerablygreater profits in the second half of the year. Goodwill charges of £174,991 (6 months to 30 September 2004: £128,299) representthe continued amortisation over 20 years of all goodwill balances, in line withcurrent accounting practices. We continue to believe it is appropriate topresent an adjusted earnings per share figure excluding the goodwill charge andany exceptional items. This figure is 1.23p per share (6 months to 30 September2004: 0.35p per share). Basic loss per share for the period was 0.6p (6 monthsto 30 September 2004: 0.75p). Business Review Organic growth for the period has been strong, driven by sales of project and ITservice management training products. Key Skills continued to generate salesgrowth in excess of 50% and Mindscope contributed revenues in excess of £1million for the six month period, compared with £821,413 for its last fullfinancial year prior to acquisition by the Company in November 2004.Accordingly, Mindscope exceeded the profit target of £375,000 (for the 12 monthperiod ended 31 July 2005) such that the full earn-out payment was made to thevendor during August 2005 by way of £375,000 in shares and £125,000 in cash. The growth in these two divisions has been driven by a combination of continuedexpansion of the PRINCE2 and ITIL training markets, by continued investment inour sales resources and by the efforts and enthusiasm of the management andstaff involved. Key Skills delivered computer-based-training software to over700 customers, with major purchasers including AT&T, the Helphire Group plc andthe Home Office; Mindscope provided training services to over 200 customers,with major purchasers including Cable & Wireless, Home Office, Computacenter,Serco, Legal and General, and NATO. Our ability to tender for and win an increasing number of larger contracts inthis area is testimony to the Company's growing visibility as a major serviceprovider within this market space. Mindscope delivers instructor-led classroomtraining whilst Key Skills provides computer-based training within the samemarket. This combination provides us with both breadth and depth in our customerbase and greater stability in our earnings. Financial training from our Intellexis division has delivered solid revenues forthe period, including significant deals with Rolls-Royce and GKN for continuedusage of the Intellexis e-learning suite and a continuing excellent relationwith the IMD, the Swiss business school. Computa-Friendly meanwhile has startedto deliver PRINCE2 training under the Mindscope umbrella as well as a continuingstream of IT desktop application training. This latter area has clear synergieswith the Mount Lane acquisition. Capital Reduction and Sale and Leaseback On 30 August of this year the Company announced to the market that the CapitalReduction scheme had been successfully completed. This has the effect of writingoff historical losses from the Balance Sheet, thereby allowing the Company topay dividends from future profits. The Company has also created a reserve fromwhich it may re-purchase its own shares should the Board consider it beneficialto do so. Additionally, during September 2005 the Company completed a sale and leasebackof its premises in Nantwich. This raised proceeds of £200,000, of which £119,545was used to repay bank debt. This allows greater flexibility going forward forthe Key Skills team in the event that it outgrows the building over the next 12to 18 months. Acquisitions The Company has today announced the acquisition of Mount Lane Training andImplementation Solutions Ltd. Founded in March 2003 by its owners Andrew Whiteand Danny Coleman, Mount Lane is a specialist provider of customised trainingand implementation solutions and services to the mid and large corporatesectors. It focuses on the provision of electronic Performance Support Tools, anhtml scripted, intranet based training and orientation package. Its targetmarket is listed companies and large organisations, typically with an ITinfrastructure in excess of 3,000 desktops. It has a blue chip customer base that includes the likes of Norwich Union, ABNAmro, Barclays Bank, Lloyds TSB, Network Rail and BSkyB, and a small technicalsupport team that is responsible for developing additional functionality for thePerformance Support Tools, writing bespoke content for specific customers andmanaging internet conformity. The team is also responsible for sourcing andoverseeing project management and training which is currently undertaken anddelivered through established relationships with freelance specialists. The Company is paying an initial consideration of £2.2 million for Mount Lane,which represents a multiple of 6.3 times its post tax earnings for the financialyear ended 31 March 2005, and is to be paid by way of £500,000 in cash and 1.7million new ordinary shares. An additional earn-out consideration of up to £1.8million is payable by July 2007, dependent on certain profit targets beingexceeded for the years ended 31 March 2006 and 31 March 2007. The acquisitionwill be partly funded by the placing of 825,000 new ordinary shares at 100 penceper share, and I would like to take the opportunity to welcome the newinstitutional and private shareholders. All Mount Lane staff will be retained and I would like to take this opportunityto welcome them to the Company. Summary and Future Opportunities The last six months have seen a continuation of our momentum and rapid growth.We continue to make further inroads into the vibrant PRINCE2 and ITILmarketplaces and to deliver strong growth. The acquisition of Mount Lane takesus into new complementary markets. Trading activity remains strong and our focus remains on the delivery ofcontinued high revenue growth from our PRINCE2 and ITIL products and servicesand the integration of Mount Lane, including investment in order to provide itwith a stronger base from which to grow. The Directors also expect to takeadvantage of opportunities, particularly within the ITIL marketplace, that arisefrom the combination of the businesses. We have made good progress in the first six months of the year, and we remainconfident in our ability to deliver substantial growth in profit and earningsper share over the course of the current year. Paul LeverChairman 23 November 2005 Independent Review Report Introduction We have been instructed by the company to review the financial information setout on pages 4 to 8 and we have read the other information contained in theinterim report and considered whether it contains any apparent misstatements ormaterial inconsistencies with the financial information. Directors' responsibilities The interim report, including the financial information contained therein, isthe responsibility of, and has been approved by the directors. The accountingpolicies and presentation applied to the interim figures should be consistentwith those applied in preparing the preceding annual accounts except where anychanges, and the reasons for them, are disclosed. Review work performed We conducted our review in accordance with guidance contained in Bulletin 1999/4issued by the Auditing Practices Board for use in the United Kingdom. A reviewconsists principally of making enquiries of group management and applyinganalytical procedures to the financial information and underlying financial dataand based thereon, assessing whether the accounting policies and presentationhave been consistently applied unless otherwise disclosed. A review excludesaudit procedures such as tests of controls and verification of assets,liabilities and transactions. It is substantially less in scope than an auditperformed in accordance with United Kingdom Auditing Standards and thereforeprovides a lower level of assurance than an audit. Accordingly we do notexpress an audit opinion on the financial information. Review conclusion On the basis of our review we are not aware of any material modifications thatshould be made to the financial information as presented for the six monthsended 30 September 2005. Saffery ChampnessChartered Accountants Beaufort House2 Beaufort RoadCliftonBristolBS8 2AE 23 November 2005 Consolidated Profit and Loss AccountFor the six months ended 30 September 2005 Six months Six months Year ended ended ended 31.3.2005 30.9.2005 30.9.2004 Notes Unaudited Unaudited Audited £ £ £ Turnover 2,940,638 1,182,189 3,924,465 Cost of sales (955,172) (236,259) (957,557) Gross Profit 1,985,466 945,930 2,966,908 Distribution costs (125,225) (73,661) (144,907)Administrative expenses excluding (1,715,786) (848,074) (2,165,241)goodwill Operating Profit before Goodwill 144,455 24,195 656,760Amortisation Amortisation of Goodwill (174,991) (128,299) (290,714) Operating Profit / (Loss) after (30,536) (104,104) 366,046Goodwill Amortisation Reorganisation Costs - (49,116) (49,116) Profit / (Loss) on Ordinary (30,536) (153,220) 316,930Activities before Interest Interest receivable and similar 5,920 5,067 42,674incomeGain on sale of fixed assets 9,861 - -Gain on early repayment of debt - 100,000 100,000Interest payable and similar charges (39,364) (4,356) (85,738) Profit / (Loss) on Ordinary (54,119) (52,509) 373,866Activities before Taxation Tax on profit / (loss) on ordinary - - -activities Profit / (Loss) for the Year (54,119) (52,509) 373,866transferred to / (from) Reserves Earnings / (Loss) per share - basic 3 (0.60)p (0.75)p 4.79p Consolidated Balance Sheet at 30 September 2005 30.9.2005 30.9.2004 31.3.2005Notes Unaudited Unaudited Audited £ £ £ £ £ £Fixed AssetsIntangible assets 6,187,161 4,661,657 6,362,149Tangible assets 91,423 211,376 262,354 6,278,584 4,873,033 6,624,503 Current AssetsDebtors 1,288,464 608,783 1,059,166Cash at bank and in hand 251,115 325,834 671,839 1,539,579 934,617 1,731,005 Creditors: Amounts falling due (1,139,129) (820,119) (1,428,065)within one year Net Current Assets 400,450 114,498 302,940 Total Assets less Current 6,679,034 4,987,531 6,927,443Liabilities Creditors: Amounts falling due (745,224) (981,710) (921,247)after more than one year Net Assets 5,933,810 4,005,821 6,006,196 Capital and ReservesCalled up share capital 6 933,694 3,606,212 3,734,318Share premium account 6 4,177,188 6,267,597 7,338,490 Shares to be issued - contingent consideration - - 375,000Own shares in trust 5 (300,772) (300,772) (300,772)Other reserves 6 1,177,819 - -Profit and loss account (54,119) (5,567,216) (5,140,840) Equity Shareholders' Funds 5,933,810 4,005,821 6,006,196 The financial statements were approved by the board on 23 November 2005 andsigned on its behalf by: J A Pickles, DirectorK P Scott, Director Consolidated Cash Flow StatementFor the six months ended 30 September 2005 Six months Six months Year ended ended ended 30.9.2005 30.9.2004 31.3.2005 Unaudited Unaudited Audited £ £ £ £ £ £ Net Cash (Outflow) / Inflow from (i) (94,085) (106,455) 447,943Operating Activities Returns on Investments and Servicing ofFinanceInterest received 5,920 5,067 8,674Interest paid (40,670) (43,846) (42,738) Net Cash Outflow for Returns on (34,750) (38,779) (34,064)Investments and Servicing of Finance Taxation (28,140) - (125,396) Capital ExpenditurePayments to acquire tangible fixed (48,085) (4,654) (27,626)assetsProceeds from disposal of fixed assets 206,430 - - Net Cash Inflow / (Outflow) for Capital 158,345 (4,654) (27,626)Expenditure Post Completion Dividends - - (49,791) AcquisitionsAcquisition (237,738) - (372,688)Acquisition Costs - - (99,624)Net cash acquired with subsidiary - - 518,807 Net Cash (Outflow) / Inflow for (237,738) - 46,495Acquisitions Cash (Outflow) / Inflow before Financing (236,368) (149,888) 257,561 FinancingIssue of ordinary share capital - 492,400 492,398Expenses paid in connection with share - (26,201) (27,201)issuesDebt due within a year (72,378) (66,687) (66,667)Debt due after a year (111,978) (461,445) (521,908)Capital element of finance lease rental - (6,100) (6,100)payments Net Financing Cash Outflow (184,356) (68,033) (129,478) (Decrease) / Increase in Cash (ii) (420,724) (217,921) 128,083 Notes to the Consolidated Cash Flow StatementFor the six months ended 30 September 2005 Six months Six months Year(i) Reconciliation of Operating Profit to Net Cash ended ended ended Inflow from Operating Activities 30.9.2005 30.9.2004 31.3.2005 £ £ £ Operating (loss) / profit (30,536) (104,104) 366,046 Depreciation 22,446 13,634 35,628 Amortisation of goodwill and intangible assets 174,991 128,299 290,714 (Increase) / decrease in debtors (229,298) (52,818) (239,604) (Decrease) / increase in creditors (31,688) (42,350) 44,275 (94,085) (57,339) 497,059 Net cash outflow in respect of reorganisation costs - (49,116) (49,116) Net cash (outflow) / inflow from operating (94,085) (106,455) 447,943 activities (ii) Reconciliation of Net Cash Flow to Movement in Net Debt (Note (iii)) (Decrease) / increase in cash in the period (420,724) (217,921) 128,083 Cash outflow from decrease in debt and lease 184,356 534,232 594,675 financing Change in net debt resulting from cash flows (236,368) 316,311 722,758 Change in net debt resulting from gain on early - 100,000 100,000 repayment Movement in net debt in the period (236,368) 416,311 822,758 Net debt at 1 April 2005 (404,170) (1,226,949) (1,226,928) Net debt at 30 September 2005 (640,538) (810,638) (404,170) (iii) Analysis of Changes in Net Debt At Cash At 31.03.2005 Flow 30.09.2005 £ £ £ Cash at bank and in hand 671,839 (420,724) 251,115 Debt due within one year (154,762) 8,333 (146,429) Debt due after one year (921,247) 176,023 (745,224) (1,076,009) 184,356 (891,653) Net debt (404,170) (236,368) (640,538) (iv) Cash Flow Relating to Exceptional Items The operating cash outflows include an outflow of £49,116, which relates to the reorganisation costs of the group as disclosed in the financial statements for the year ended 31 March 2005. Notes to the Interim ReportFor the six months ended 30 September 2005 1. The financial information contained in the Interim Report does not constitute statutory accounts as defined in section 240 of the Companies Act 1985. The comparative financial information for the six months ended 30 September 2004 and the year ended 31 March 2005 is an abridged version of the group's published financial statements for these periods. The financial statements for the year ended 31 March 2005 contained an unqualified audit report and have been filed with the Registrar of Companies. 2. The interim financial statements have been prepared on the basis of the accounting policies set out in the March 2005 financial statements of ILX Group Plc. 3. The basic earnings per share calculation is based on a weighted average number of ordinary shares of 10 pence each in issue during the period of 9,049,715 (6 months to 30 September 2004: 7,039,024). Adjusted earnings per share which exclude goodwill amortisation of £174,991 and the gain on fixed asset sales of £9,861 are shown below. The comparative adjusted earnings per share for the 6 month period to 30 September 2004 excluded goodwill amortisation of £128,299, reorganisation costs of £49,116 and a gain on early repayment of debt of £100,000. The comparative adjusted earnings per share for the 12 month period to 31 March 2005 excluded goodwill amortisation of £290,714, reorganisation costs of £49,116 and a gain on early repayment of debt of £100,000. Six months Six months Year ended ended ended 30.9.2005 30.9.2004 31.3.2005 Earnings / (Loss) per share (0.60)p (0.75)p 4.79pEarnings per share - Excluding goodwill and exceptionals 1.23p 0.35p 7.86p The calculation of fully diluted loss per share has not been disclosed as the effect of any outstanding share options is not dilutive in accordance with FRS22. 4. Turnover is attributable to the one principal activity of the group: Six months Six months Year ended ended ended 30.9.2005 30.9.2004 31.3.2005 £ £ £ United Kingdom 2,594,418 815,601 2,965,920Rest of Europe 173,860 223,434 601,701North America 72,724 124,928 296,998Other 99,636 18,226 59,846 2,940,638 1,182,189 3,924,465 5. Own shares to the value of £300,772 are shown at cost and relate to the investment in a Medium Term Incentive Plan which is administered by Investec Trust Guernsey Ltd. The shares are held in trust under the Plan and represent 3.4% of the total called up share capital. These shares become payable to directors and senior management on the achievement of certain performance criteria. These shares are now shown under Capital and Reserves rather than Investments in accordance with UITF 38. Previous year's comparatives have also been restated. This follows the treatment of this balance in the financial statements for the year ended 31 March 2005. None of the performance criteria have been met to date. 6. By a special resolution passed at an AGM held on 22 July 2005, and by Order of the High Court of Justice on 24 August 2005, the Company's 28,369,260 special non-voting 10p deferred shares were cancelled and the share capital account accordingly reduced by £2,836,926. In addition, the share premium account was reduced by £3.5 million, an aggregate reduction in capital of £6,336,926. The effect of this reduction was to eliminate the debit balance on the profit and loss account of £5,140,480 and to create a special distributable reserve of £1,196,087 for the purpose of the company purchasing its own shares. Legal fees totalling £18,268 relating to the capital restructuring have been put to the special reserve. This information is provided by RNS The company news service from the London Stock Exchange