RNS Number : 2388I
ILX Group PLC
17 November 2008
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 020 7751 7100
Ken Scott / Jon Pickles
Adventis Financial PR 020 7034 4758/4759
Tarquin Edwards / Chris Steele 07879 458 364 / 07979 604 687
Arbuthnot Securities Limited 020 7012 2000
Tom Griffiths
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.
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 have paid off, with revenues in both divisions
showing growth in the period.
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.
Profit before taxation was down 5.1% to £0.93 million (2007: £0.98 million). Net profit after tax for the period was down 8.7% to £0.64
million (2007: £0.71 million), giving basic earnings per share of 3.32p (2007: 3.64p), also down 8.7%. Adjusted earnings per share was 3.96p
(2007: 4.14p), down 4.4%.
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.
Our Corporate Training Group (CTG) division, servicing primarily the financial services sector, saw revenues grow by 8.7% to £3.38 million
(2007: £3.10 million). CTG has grown considerably in stature and in reputation since being acquired in July 2006, making market share gains
as a result. As a consequence, we have continued to invest in this division by expanding our base of highly regarded trainers and by opening
a representative office on Wall Street. These investments in our future are likely to impact short-term on CTG profits, but we believe will
position the division well to take advantage of UK and global opportunities in what is certain to be a difficult year ahead for the sector.
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.
Summary
The Group is continuing to make progress during a time of economic uncertainty and difficulty for a number of its customers and competitors.This is a testament to the strength and diversity of our business and our strategy.
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 Lever
Chairman
17 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 House
2 Beaufort Road
Clifton
Bristol
BS8 2AE
17 November 2008
Consolidated and Company Income Statement
For the Six Months ended 30 September 2008
6 months ended 6 months ended Year
30.9.2008 30.9.2007 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 3 (2,813) (2,178) (4,640)
distribution expenses
excluding depreciation
Earnings before interest, tax 1,174 1,237 2,159
and depreciation
Depreciation (63) (64) (127)
Operating profit 1,111 1,173 2,032
Interest receivable and 11 10 16
similar income
Interest payable and similar (193) (204) (554)
charges
Profit before tax 929 979 1,494
Tax (285) (274) (460)
Profit for the year 644 705 1,034
attributable to equity
shareholders
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 (19) - (39)
instruments
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 7 750 3,000 1,500
consideration
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 6 months ended 30.9.2007 Year
30.9.2008 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 (304) (486) (796)
receivables
Movement in trade and other (888) (129) 1,759
payables
Cash generated from operating 7 656 3,167
activities
Interest paid - (16) (21)
Tax paid - (131) (137)
Net cash generated from 7 509 3,009
operating activities
Investing activities
Interest received 11 10 16
Proceeds on disposal of - - 7
property and equipment
Purchases of property and (62) (75) (108)
equipment
Expenditure on product (138) (119) (350)
development
Acquisition of subsidiaries (1,775) (1,000) (2,532)
(net of cash acquired)
Net cash used by investing (1,964) (1,184) (2,967)
activities
Financing activities
Increase in borrowings 438 260 780
Net proceeds of share issue - (3) (8)
Interest and refinancing costs (195) (191) (540)
paid
Dividend paid (263) (123) (123)
Net cash from financing (20) (57) 109
activities
Net change in cash and cash (1,977) (732) 151
equivalents
Cash and cash equivalents at 994 844 843
start of period
Cash and cash equivalents at (983) 112 994
end of period
Consolidated and Company Statement of Changes in Equity
For the Six Months ended 30 September 2008
6 months ended 6 months ended Year ended 31.3.2008
30.9.2008 30.9.2007
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
Notes to the Financial Statements
For the Six Months ended 30 September 2008
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 Interim Report is in compliance with International Accounting Standard 34 (Interim Financial Reporting). The
comparative financial information for the six months ended 30 September 2007, and the year ended 31 March 2008, is an abridged version of
the group's published financial statements for these periods. The financial statements for the year ended 31 March 2008 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 2008 financial
statements of ILX Group Plc.
3. During the period the company made a provision of £136,000 as a result of a single customer going into administration. In the six
months to 30 September 2007 the company incurred exceptional costs of £167,000 relating to a fundamental re-organisation of the company*s
continuing operations. Both costs are shown under administrative expenses, in line with the presentation adopted in the company*s annual
accounts.
4. 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 19,390,762 (6 months to 30 September 2007: 19,390,295).
To allow shareholders to gain a better understanding of the underlying trading performance of the company, an adjusted earnings per share
and adjusted diluted earnings per share has been calculated using an adjusted profit after taxation before post-taxation non-recurring
costs.
At the period end all share options had exercise prices higher than the average share price for the period. In accordance with IAS 33, the
company has excluded these shares in arriving at diluted earnings per share and adjusted diluted earnings per share.
6 months ended 6 months ended Year
30.9.2008 30.9.2007 ended 31.3.2008
£'000 £'000 £'000
Post tax profit for the period 644 705 1,034
After tax interest on - 51 17
outstanding options multiplied
by exercise price
Profit for diluted earnings 644 756 1,051
per share
£'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 767 802 1,301
per share
£'000 £'000 £'000
Profit for adjusted earnings 767 802 1,301
per share
After tax interest on - 51 17
outstanding options multiplied
by exercise price
Profit for adjusted diluted 767 853 1,318
earnings per share
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 19,390,762 21,524,910 19,947,723
diluted earnings per share
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 3.96p 3.96p 6.61p
share
5. The group operates in one business segment; that of supply of training and consultancy solutions. The operations are monitored by the
geographic regions of UK, Mainland Europe, North America, and Other (Asia, Middle and Far East, Africa, and South America).
6. The company holds 1,850,000 of its own ordinary shares in trust in a Medium Term Incentive Plan, administered by Investec Trust
Guernsey Ltd. These shares become payable to directors and senior management, on the achievement of certain performance criteria. The shares
are shown at cost as a debit against reserves and relate to the investment. The shares are held in trust under the Plan and represent 9.9%
of the total called up share capital.
7. The company has the following liabilities arising out of earn-out provisions in the agreements relating to recent acquisitions. These
liabilities and their timing are as follows:
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 - 1,000 1,000
Training Group Ltd
- 1,000 1,000
Equity: Deferred consideration
Acquisition of Corporate 750 1,500 1,500
Training Group Ltd
750 1,500 1,500
Equity: Contingent
consideration
Acquisition of Corporate - 1,500 -
Training Group Ltd
- 1,500 -
£2,500,000 fell due on 30 June 2008 of which £1,750,000 had been paid, in cash, at 30 September 2008. It has been agreed that the remaining
£750,000 will be paid by way of 3 equal monthly installments. Under the terms of the agreement, interest accrues on the outstanding balance
at 5% above Bank of England Base Rate, and the Company retains the ability to pay in shares.
8. The company has a related party relationship with its subsidiaries, its directors, and other employees of the company with management
responsibility. There were no transactions with these parties during the period outside the usual course of business. There were no
transactions with any other related parties.
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.
This information is provided by RNS
The company news service from the London Stock Exchange
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