TIDMILX

RNS Number : 9949Z

ILX Group PLC

25 January 2011

ILX Group PLC

("ILX", "the Group" or the "Company")

Proposed cancellation of share capital and Notice of General Meeting

ILX Group plc (AiM: ILX), the AIM quoted provider of e-learning software announces that it has posted a Circular to Shareholders setting out the details of a proposed capital reduction. At the General Meeting to be held at 10 a.m. on 14 February 2011, the Company will ask Shareholders to approve proposals to restructure the balance sheet of the Company by means of the Capital Cancellation for the purpose of eliminating the current deficit on the Company's profit and loss account and thereby to facilitate the payment of dividends by the Company in due course.

Defined terms used in this announcement have the same meaning as set out in the Circular.

Information about the Capital Cancellation is set out below with an expected timetable of events. Your attention is drawn to the further information concerning the Capital Cancellation included within the Circular.

A copy of the Circular is available for download from the Company's website at www.ilxgroup.com. Further announcements will be made as appropriate.

25 January 2011

 
 ILX Group plc                                 020 7751 7100 
 Ken Scott, Chief Executive 
 FinnCap                                       020 7600 1658 
 Marc Young/ Charlotte Stranner - Corporate 
  Finance 
  Tom Jenkins - Corporate Broking 
 Lothbury Financial Services Limited           020 7868 2010 
 Michael Padley / Chris Roberts

Background

During the period 1 April 2010 to 30 September 2010, the Group's Best Practice Division continued to grow steadily but this was offset by the underperforming financial services trading operation, the Corporate Training Group ("CTG"). In October 2010, the Company took the decision to undertake a controlled closure of CTG. This decline and closure of CTG gave rise to an exceptional write-down of goodwill and other intangible assets of GBP10.351 million and a loss shown in the Group's distributable reserves of GBP8.626 million, both reflected in the Group's Interim Accounts for the 6 months to 30 September 2010.

Until the deficit to the distributable reserves has been eliminated, the Company is precluded by the Companies Act 2006 from paying dividends to Shareholders. The Directors propose to eliminate the deficit by the Capital Cancellation.

Capital Cancellation

Under English law, a company may reduce or cancel its share capital (including its share premium account) and apply the reserve arising on the reduction in order to write off an accumulated deficit on its profit and loss account provided that it obtains the approval of shareholders in a general meeting and the confirmation of the High Court.

Accordingly, subject to the approval of Shareholders at the General Meeting and the confirmation of the High Court, it is intended that the Company cancel the amount standing to the credit of the share premium account, which as at the date of this document is GBP12.874 million, and apply the reserve arising on the cancellation to eliminate the accumulated deficit on the Company's profit and loss account. The Capital Cancellation will enable the Company to pay future dividends when, and in such amounts, as the Directors determine, subject to the usual shareholder approvals and any conditions imposed by the Court.

As a condition to approving the Capital Cancellation, the High Court will need to be satisfied that the interests of the Company's creditors are not adversely affected, i.e. that there is no material likelihood of creditors not being paid. The Company is satisfied that it will be able to demonstrate this to the High Court but, if necessary, the Company will put into place such form of creditor protection as it may be advised is appropriate.

The Directors reserve the right to abandon or discontinue any application to the High Court if they believe that the terms required to obtain confirmation are unsatisfactory to the Company.

Once the Capital Cancellation has been completed and any creditor protection requirements imposed by the High Court have been satisfied, the Company, once it has an accumulated surplus on its profit and loss account, would then be in a position to pay dividends thereafter.

General Meeting

To effect the Capital Cancellation, Shareholders must approve the cancellation of the share premium account by way of a special resolution at the General Meeting. Notice convening the General Meeting is set out at the end of this document. Subject to Shareholders passing the Resolution, approval of the High Court will be sought as soon as reasonably practicable after the General Meeting and it is anticipated that the process shall be completed before the end of March 2011.

Recommendation

Your Directors consider the passing of the Resolution and the proposed Capital Cancellation to be fair and reasonable and in the best interests of the Shareholders and the Company as a whole. Accordingly, your Directors recommend that all Shareholders vote in favour of the Resolution to be proposed at the General Meeting.

EXPECTED TIMETABLE

 
 Date of this document                             25 January 2011 
 Latest time and date for receipt   10.00 a.m. on 10 February 2011 
  of Forms of Proxy for use at 
  the General Meeting 
 General Meeting                    10.00 a.m. on 14 February 2011 
 Date for directions hearing                          1 March 2011 
  and giving of orders 
 Date for hearing of claim and                       16 March 2011 
  confirmation of the Capital 
  Cancellation by the Court 
 Expected effective date of                          25 March 2011 
  Capital Cancellation

This information is provided by RNS

The company news service from the London Stock Exchange

END

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