TIDMILX
RNS Number : 1140J
ILX Group PLC
27 June 2011
ILX Group PLC
("ILX" or the "Group")
PRELIMINARY RESULTS FOR THE YEAR ENDED 31 MARCH 2011
ILX Group plc (AiM: ILX), the AIM quoted provider of e-learning
software and consulting services, announces its unaudited
preliminary results for the year ended 31 March 2011.
Corporate Highlights
-- Strong growth in International revenues, particularly
Australia and Middle East
-- UK revenues remain robust with increased profitability
-- ILX reclassified as a software business
-- Octopus Capital for Enterprise increases holding to 20%
-- ILX remains global market leader in PRINCE2(R)
-- Board strengthened by the addition of Chris Allner and Eddie
Kilkelly
-- Financial classroom training business (CTG) closed during the
year
Financial Highlights
-- Profit before tax (from continuing operations) GBP1.42
million (2010: GBP0.76 million)
-- Revenue of GBP12.89 million (2010: GBP11.87 million)
-- Software revenues comprise over 50% of Group revenues
-- Strong operating cash flow
-- Net debt reduced to GBP1.89 million (2010: GBP3.16
million)
-- Fully diluted earnings per share from continuing operations
4.06p (2010: 2.64p)
-- Dividend reinstated at 1.50p per share with scrip
alternative
-- Additional equity placing raising GBP900,000 at 26.5p per
share
Ken Scott, Chief Executive, ILX Group commented:
"This has been a defining year. The growth in software sales and
the successful international expansion has delivered significant
growth in operating profit. The closure of CTG has left a more
focused business, which has flourished.
Our e-learning solutions and technology platform provides a
highly efficient and effective way for our customers to accredit
themselves, or their staff, by delivering excellent value for money
together with an enjoyable user experience. At a time when both the
private and public sector have to put all costs under the
microscope, e-learning offers an engaging way for staff to develop
themselves, at their desks or on the move, at an affordable
cost.
We have seen significant expansion internationally, whilst
maintaining our domestic position, and have an excellent
opportunity to further expand the business. We look forward to a
period of sustained organic growth."
27 June 2011
For further information, please contact:
ILX Group plc 020 7751 7100
Ken Scott, Chief Executive
FinnCap 020 7600 1658
Marc Young, Charlotte Stranner - Corporate
Finance
Tom Jenkins, Joanna Weaving - Corporate
Broking
Lothbury Financial Services Limited 020 7868 2010
Michael Padley / Chris Roberts
Editors' Note
ILX Group plc (www.ilxgroup.com) is a leading provider of Best
Practice learning products and services to the private and public
sectors. ILX Group offers a variety of accredited technology led
courses through a blend of traditional classroom, workshops &
live forums and across all multi-media platforms: e-learning,
social learning & mobile learning. It has developed its own
proprietary software and is the market leader in PRINCE2. It trades
through two divisions:
1. Best Practice provides e-learning, instructor-led learning
and implementation consultancy principally to the programme and
project management, IT service management and business finance
markets.
2. International was formed in late 2009 and provides products
and services to overseas markets, including Australia, New Zealand,
Middle East, US as well as the UK and across Europe.
ENDS
Chairman's Statement
For the year ended 31 March 2011
I am pleased to present the results for the year ended 31 March
2011.
General Update
The year has been a defining one for the Group. Whilst the
closure of CTG represented a setback, this left a more focused
business which has flourished and delivered significant growth in
operating profit, driven mainly by growth in software sales and
international expansion.
The Company's CTG division, delivering financial classroom
training to the UK investment banking sector, delivered three years
of strong financial performance post acquisition, but the
performance declined significantly thereafter. It was therefore
with regret that we announced in our October 2010 trading update
that the division was to be closed from December of that year.
This has had the effect of galvanising and strengthening
management's focus on the core business. This has further developed
the reputation of ILX, both in the UK and internationally, as a
major player in the e-learning technology space, not only in the
project and service management fields currently served, but also as
an innovative e-learning software developer in its own right.
Revenues from software licences now exceed 50% of Group revenues,
which has resulted in the Group's London Stock Exchange sector
reclassification from Business Training to Software, with effect
from 20 June 2011.
Whilst the Group continues to offer both software and
classroom-based learning to customers, the software led solutions
remain the core of the Group's growth strategy. Our software and
technology provides a highly efficient and effective set of tools
for our customers to accredit themselves, or their staff,
delivering excellent value for money and an enjoyable user
experience. This is of great importance, particularly in the cost
constrained environment of the current economic climate.
Financial Results
In accordance with International Accounting Standards, items
relating to the CTG business are presented separately on the face
of the Consolidated Statement of Comprehensive Income, as loss from
discontinued operations, which provides users of the accounts with
a clearer picture of the performance of the remaining business.
Revenue for the year was GBP12.89 million (2010: GBP11.87
million), an increase of 9%. Operating profit was GBP1.73 million
(2010: GBP1.06 million), an increase of 64% and an improvement in
operating margin. Profit before taxation was GBP1.42 million (2010:
GBP0.76 million), an increase of 88%. Diluted earnings per share,
from continuing operations, increased by 54% to 4.06p (2010:
2.64p).
Loss from discontinued operations was GBP10.48 million (2010:
GBP2.26 million), principally comprising write-downs of goodwill
and other intangible assets acquired with CTG of GBP10.35 million
(2010: GBP2.29 million).
Net debt was reduced during the year by GBP1.27 million to
GBP1.89 million (2010: GBP3.16 million), strengthening the Group's
balance sheet.
These results are explained in fuller detail in the Finance
Review.
Dividend and Capital Restructure
Your Board continues to believe that, whilst there are
substantial opportunities for growth, an annual dividend is
nevertheless an important part of our plan to deliver long-term
shareholder value. Accordingly, in 2006, the Group commenced a
dividend payment of 0.75p per share which was doubled to 1.5p per
share in 2008. Additionally, in 2009, a scrip alternative was
introduced allowing investors who wished the opportunity to take
their dividend in shares rather than cash. This option was taken up
by 12.6% of the Company's shareholder base.
On 13 August 2010, the Group announced that it was in
discussions with its bankers to refinance its term debt and invoice
finance facility, and this refinance was put in place by 30
September 2010. This was required to address cash flow issues
arising from both the unsuitability of the bank's invoice finance
facility for international trade and also the continued decline in
CTG, which had in previous years delivered substantial operating
cash flow in the first half of the year. Regrettably, this
necessary refinance required the cancellation of our dividend for
the year ended 31 March 2010.
In addition, the impairment charges arising from the closure of
CTG, whilst not affecting the Group's cash position, gave rise to a
loss in the Company's distributable reserves. This in turn required
the Company to apply to the Court to effect a capital restructure
before further dividends could be declared. Permission to effect
the restructure was granted in March 2011.
This action has allowed the Board to re-instate the dividend,
which we have chosen to do at the 1.5p per share level, whilst at
the same time maintaining the scrip option. Shareholders who wish
to elect for the scrip issue should consult the notes in the Notice
of Annual General Meeting at the back of this document. The
Directors' confirm their intention to take up their entitlements to
the scrip option.
The dividend will be paid on 14 October 2011 to shareholders on
the register on 5 August 2011, and the shares will therefore become
ex-dividend on 3 August 2011. Elections for the scrip issue need to
be made by 16 September 2011.
Fundraising and Board Appointments
Further to the refinancing, the Group raised a further GBP0.90
million through the placing of 3,396,228 shares at 26.5p to the
Octopus Capital for Enterprise Fund. This cash was used to reduce
the most expensive tranche of the Group's debt and also to fund
international growth.
This investment took Octopus' shareholding in the Group to 20%.
Following this, Chris Allner of Octopus Ventures was appointed to
the Board as a non-executive director on 30 November 2010.
In addition, Eddie Kilkelly, Chief Operating Officer, joined the
Board as an executive director on 9 February 2011. Eddie joined the
Group in 2006 as Operations Director, progressing to Sales Director
and then Managing Director of Best Practice before becoming Chief
Operating Officer.
I am delighted to welcome both to the Board, thanking them for
their contributions to date and looking forward to their input and
experience as the Group expands.
Outlook
The last two years have been amongst the most difficult economic
conditions in living memory, and yet ILX has delivered significant
expansion internationally whilst maintaining our domestic position.
The UK remains a challenging market but one where our products and
approach are well placed to thrive. Internationally the
opportunities for growth are very significant and the challenge for
us will be the effective management of this growth. We have made
significant strides in the year just ended and look forward to a
period of sustained organic growth in the medium term.
Once again I would like to thank management and all staff. Our
International division deserves congratulations for an exceptional
performance; our UK and operations teams deserve praise for
increasing profitability in testing market conditions, and
recognition to our technology team is due for their contribution to
maintaining the creativity and innovation within our e-learning
solutions.
Paul Lever
Chairman
27 June 2011
Business Review
For the year ended 31 March 2011
I am delighted with the results for the year ended 31 March
2011. The Group experienced its fair share of challenges with the
closure of CTG, and a necessary refinancing of bank debt. However,
the Group met its market expectations despite these setbacks and
has delivered growth in profit before tax of over 80%.
A Technology Business
Last year, I highlighted that the Group's origins had been in
e-learning and although some of the subsequent expansion had come
through classroom training, our core strength as a software and
technology provider was re-emerging. With our recent change in
sector from Business Training to Software, it is worth both
reinforcing and further explaining this point.
The way people learn is becoming more and more subjective with
great variances in styles and methods of learning, driven by
cultural and territorial nuances as well as individual customer and
business preference for learning. At ILX, we aim to provide the
best quality learning in a form driven by customer demand. The
economic advantages of e-learning, together with the way technology
now infuses all aspects of our lives, clearly points to increasing
demand for software products, and this is borne out by the fact
that the majority of our learners, and over 50% of our revenues,
now come from software sales.
This trend is accelerating with the advent of new technology in
social media, smart phones, and tablets. Working and communicating
whilst on the move is becoming an accepted and increasingly
important part of our lives. The ability to learn whilst on the
move is now another key attraction of e-Learning, in addition to
the accepted benefits of learning at the users' own pace, in their
own time, and without the need for travel.
There remains considerable demand for learning in more
traditional classroom settings, and we will continue to provide
this to customers; not just because of the profit it generates but
also because it is the real experience in the classroom that feeds
back into ensuring our e-learning products are both fun and
effective. Additionally, the use of technology within the classroom
itself provides many opportunities for innovation as well as a key
differentiator in what is a competitive marketplace.
However, our proprietary software gives more to ILX as a
technology business than merely a competitive edge. The scalability
of software sales, and the minimal infrastructure required for
expansion, has been key to our ability to expand rapidly. By way of
example, in the space of 12 months we have been able, from a
standing start, to take a substantial share of the Australian
PRINCE2(R) market, driven principally by e-learning sales direct to
consumers in a market previously covered almost entirely by
classroom training.
Corporate Training Group (CTG)
Whilst the Group overall had a strong year, the closure of the
CTG division was nevertheless a major event which needs to be
addressed in this review.
CTG was acquired in July 2006. From that point, and while the
newly formed Best Practice division was consolidating, it provided
the lion's share of profit contribution to the Group, and generated
three years of excellent performance within ILX.
From the beginning of 2009, the disruptions within the global
investment banking industry began to affect the CTG business as
training budgets were squeezed with a consequent impact on both
revenues and margins. The following year saw the departure of Peter
Evans together with a number of the senior CTG team. Peter was a
main board member and the founder of CTG.
Whilst we made substantial efforts to shore up and protect the
business so that it could return to profitability, we proved unable
to do so in the wake of the loss of some key clients and a number
of further staff defections. More importantly perhaps, we were
unable to achieve one of the key strategic objectives of the CTG
acquisition, which was to introduce significant levels of
e-learning to the CTG offering. As the business had lost money
since October 2009, we took the decision to close it down, with an
arrangement with another training provider to take on the remaining
customers and leads for a contingent fee.
Whilst a disappointing outcome, the closure of CTG brought to an
end a difficult period for the business and allowed us to move on
and focus firmly on our future.
Divisional Structure and Operating Performance
With the closure of CTG, ILX Group now operates as two principal
divisions; an International division, which covers sales outside
the UK, and a UK domestic division, which sells to UK customers
(including UK-based multinationals) and also manages our global
delivery and operations. Technology, finance, and other support
functions are managed centrally.
The performance of these divisions is covered in more detail in
the Finance Review, but as we expected, it has been the
International division that has delivered the growth, with revenues
increasing by 79% to GBP3.24 million. The UK division has also
performed creditably in difficult conditions, delivering a
marginally improved profit despite revenues declining slightly,
down 3% to GBP9.31 million.
The Group also reports separately the results of its much
smaller Finance division, which following the closure of CTG now
comprises purely sales of financial e-learning. This has been run
as a distinct entity due to the longer sales cycle and more
customised nature of the services provided, but we expect to
integrate it within the remainder of the business when
appropriate.
The financial e-learning sales, at GBP0.34 million for the year,
are down on the previous year (GBP0.49 million) but the nature of
these sales, with large and sometimes irregular contracts, does
give rise to fluctuations. The division delivered a creditable and
profitable result.
At Group level, revenue of GBP12.89 million (2010: GBP11.87
million) represented growth of 9%. The growth of the International
division, and the improved profitability of the UK division,
combined with a 10% reduction in central costs, improved operating
margins to 13.4% (2010: 8.9%) and operating profit to GBP1.73
million (2010: GBP1.06 million).
Our Strategy and Vision
ILX is in the business of transforming the way people learn. In
essence, this means that our focus is on the learning experience of
our users, versus just the delivery of our products and services.
Although this may appear to be merely a play on words, it is having
a profound influence on the culture within ILX, and on how we are
developing the business.
Over the next period we will be announcing a number of
initiatives which will support this and at the same time enable us
to scale the ILX business significantly.
At the start of the year, we set out four key drivers for
strategic growth over a 5 year period:
Build on our position as a global market leader in the
PRINCE2(R) project management qualification by focusing on
innovative product development and customer retention. With over
10% of the PRINCE2(R) market, measured by exam passes, and with
over 5,000 customers in over 100 countries, ILX remains the major
player in this area. During the year our e-learning products
continued to be at the forefront of this, accounting for 52% of our
PRINCE2(R) revenues (2010: 50%). Customer retention metrics, both
in terms of repeat business and renewed software licences, have
shown improvement year on year.
Leverage our proprietary technology to drive significant
international expansion, focusing initially on PRINCE2(R) and
project management where we can disrupt established markets. Our
International division grew sales by almost 80% in the year, from
GBP1.81 million to GBP3.24 million. The major areas of growth were
in Australia and New Zealand, and the Middle East, particularly
Oman. As noted already, the focus on PRINCE2(R) and e-learning
software in Australia allowed us to take substantial market share
in a rapid timeframe.
Develop our strong capability in other markets for Finance,
Service Management, and Software Testing to build market leading
positions. There remains much to do in this area which is a key
focus area for growth. Our PRINCE2(R) revenues, which grew by 5% in
the year, still account for 58% of our business (2010: 60%),
whereas ITIL(R) and ISO20000(R) revenues, which grew by 3% in the
year, only account for 9% of our business (2010: 10%), despite the
market for the latter being larger than that for PRINCE2(R).
We have made progress in developing products in other Office of
Government Commerce (OGC is a division of the UK Treasury
Department) accredited areas, principally Programme and Project
Sponsorship, Project Support (P3O(R)), Risk Management (M_o_R(R)),
and Value Management (MoV), all of which have been developed during
the year. In addition to MSP(R) and the APM Introductory
Certificate in Project Management, revenues increased by 18% and
accounted for 19% of the business (2010: 18%).
In addition, sales of our Portal, which provides access to our
full range, increased by 162% during the year to GBP0.8 million
(2010: GBP0.3 million).
Focus on increasing the number of learners worldwide using ILX
technology. Whether an e-learning user or a classroom student, all
our learners are exposed to our technology, whether this is
straightforward progress through a course, access to revision games
for hand-held devices, or a classroom-based simulation. During the
year we licensed e-learning for 60,000 users, and gave access to
our portal to 30,000 users. We also welcomed 15,000 students to our
classroom events.
In the coming year we intend to build heavily on this progress
through:
Developing the ILX brand.As we expand into new territories we
are very aware of the need to elevate the ILX brand to reduce our
reliance on sales-led new business generation and increase
awareness, customer retention and e-commerce.
Continuing to expand our international footprint by further
developing existing bases in Australia, the Middle East, and
Scandinavia, together with expansion into Central Europe, Africa,
and the USA. Over the next two to three years we expect
international revenues to outstrip those generated from the UK.
Make rapid inroads into markets outside PRINCE2(R), particularly
ITIL(R), Software Testing, and Finance e-Learning. We aim to do
this through more investment in marketing, product management, and
sales training.
Markets and Risks
Global Coverage
ILX Group now operates internationally across the globe, with
over 5,000 customers in over 100 countries and over 30% of revenues
now coming from outside the UK. Revenues for the year, with the
comparative for last year, by geographic area were as follows:
Year ended Year ended
31.3.2011 31.3.2010
GBP'000 %age GBP'000 %age
UK & Ireland 9,005 69.9% 9,545 80.4%
Australasia 1,191 9.2% 362 3.1%
Europe & Scandinavia 1,144 8.9% 948 8.0%
Middle East 808 6.3% 272 2.3%
Americas 352 2.7% 325 2.7%
Africa 309 2.4% 310 2.6%
Asia 77 0.6% 106 0.9%
-------- ------- -------- -------
12,886 100.0% 11,868 100.0%
Our overall revenues from the UK declined by around 6%
principally due to the expected tightening in the public sector,
with our UK public sector revenues decreasing by 18% to GBP2.28
million. The effect of the public sector cuts is still present but
with this sector accounting for just 18% of revenues (2010: 24%)
our exposure is manageable. We expect to see more centralisation of
purchasing and despite the obvious tightening of public sector
budgets the announcement post year end of a major cross-UK
government contract win for consultancy bodes well for our
continued success in this area.
Elsewhere in the UK we have seen a highly competitive
environment, particularly for public classroom training. In the
consumer marketplace, we have seen significant movement from
classroom delivery to e-learning; whilst this transition has
adversely affected top line revenues, the higher profitability of
the software sales has been a major factor behind increased UK
profitability.
With the establishment of the Sydney office at the start of the
financial year, Australia and New Zealand now represent the second
largest area in terms of revenues for the Group. Here the sales are
almost entirely e-learning with approximately two thirds being
consumer sales, but there is significant opportunity to expand into
more corporate sales in the coming year.
In terms of size, Europe and Scandinavia follows with a number
of key finance e-learning contracts in this area. Ken Baek, who
joined during the year to develop our business in Scandinavia, has
been promoted to take on a wider role developing opportunities
across mainland Europe.
The Middle East revenues have been secured principally in Oman
and thus have been largely unaffected by the political turmoil
experienced in this region in recent months. In contrast to the
Australian operation, our Omani operations are almost entirely
consultancy and classroom based, reflecting the differing cultural
preferences.
Subject Areas
Our revenues by subject for the year, with the comparative for
last year, were as follows:
Year ended Year ended
31.3.2011 31.3.2010
e-learning Events Total e-learning Events Total
GBP'000 GBP'000 GBP'000 %age GBP'000 GBP'000 GBP'000 %age
PRINCE2 3,886 3,601 7,487 58.1% 3,575 3,570 7,145 60.2%
ITIL &
ISO20000 632 579 1,211 9.4% 757 418 1,175 9.9%
Other OGC Best
Practice 787 1,687 2,474 19.2% 675 1,414 2,089 17.6%
Finance 342 - 342 2.6% 493 - 493 4.2%
Software
testing 72 - 72 0.6% 8 - 8 0.1%
Microsoft 20 - 20 0.2% 100 - 100 0.8%
Multi-subject
portals 779 - 779 6.0% 297 - 297 2.5%
Other revenues 18 483 501 3.9% 43 518 561 4.7%
----------- -------- -------- ------- ----------- -------- -------- -------
6,536 6,350 12,886 100.0% 5,948 5,920 11,868 100.0%
50.7% 49.3% 100.0% 50.1% 49.9% 100.0%
The revenues in the e-Learning column relate specifically to
software licences and blended products (for the 5 main subject
areas) and bespoke development (other revenues); events revenue
relates to classroom events, consultancy, and provision of exams
(for subject areas) and recharged expenses (other revenues).
PRINCE2(R) remains a key area with over half our revenues
derived from this qualification, where our market leading position
gives us a strong competitive position. Our aim continues to be to
exploit this position globally whilst at the same time building up
our revenues in other subjects to reduce our overall exposure to
PRINCE2(R).
Values and People
The executive management team within ILX Group is experienced
and committed. We work exceptionally well as a team and it is the
strength of this dynamic that forms the foundation upon which we
are building the exciting future for ILX. This commitment and
teamwork is reflected throughout the staff across the business. Our
core values of ownership, passion, teamwork and making a difference
continue to be at the heart of our culture.
There have been two changes which took place during and
immediately after the year end. Firstly, we strengthened the
management team with the addition of Mel Scott-Taylor as Chief
Marketing Officer. Mel joined us from Disney where she was
responsible for marketing across Europe, Middle East and Africa for
the Disney Channel. Secondly, I am delighted that Eddie Kilkelly,
our Chief Operating Officer, joined the main Board in February
2011.
Martyn Kinch, who heads up our International division, and David
Willis our Chief Technology Officer, complete the team.
I would like to thank all our staff for their hard work and
determination in what has been a good year, and we look to the
future with confidence.
Ken Scott
Chief Executive Officer
27 June 2011
Finance Review
For the year ended 31 March 2011
Financial Results
Operating Performance
The Group delivered revenues of GBP12.89 million (2010: GBP11.87
million) and operating profit of GBP1.73 million (2010: GBP1.06
million). This represents a strong performance with revenue growth
of 9% translating into operating profit growth of 64%.
In accordance with IFRS 5, the results from the Group's CTG
division closed during the year are presented as a net loss from
discontinued operations on the face of the Statement of
Comprehensive Income. The loss from discontinued items was GBP10.48
million (2010: GBP2.26 million), and principally comprises
write-downs of goodwill and intangible assets. All expenses of the
closure have been fully provided for within these figures.
The revenue growth for the year was driven by the International
division, which grew by 79% to GBP3.24 million, representing 25% of
Group revenues (2010: 15%). The UK division revenues fell
marginally by 3% to GBP9.31 million, and the Finance e-learning
revenues contributed GBP0.34 million (2010: GBP0.49 million).
A combination of a gradual shift in revenue from classroom
events to e-learning, and greater efficiencies in product and
material costs, increased the Group's overall gross margin to 55.2%
(2010: 51.7%), growing Gross Profit by 16%. The Group has kept a
tight rein on fixed costs through the year and despite the
international expansion, these increased by just 6% for the year.
Operating profit margin as a result improved to 13.4% (2010:
8.9%).
At divisional level, the breakdown of revenues and profits is
disclosed in the notes to the accounts as required by IFRS 8. This
breakdown has changed from last year as a result of the separate
presentation of the International division as well as the closure
of CTG. These highlight that the UK division increased its
contribution to Group operating profits by 4% despite the slight
fall in top line revenues, and that the International division was
able to substantially increase both profit and profitability during
the year.
Given that the operations of the two principal divisions are the
same aside for geography, and that the finance e-learning revenues
are relatively small in comparison, we have taken the decision not
to apportion between the divisions the central costs relating to
technology, IT, finance, and personnel. These costs, together with
the costs of the Board, advisors, and other AiM related
expenditure, are presented separately as unallocated central costs.
The total figure of GBP1.89 million (2010: GBP2.15 million)
represents a decrease of 12%. As noted last year, this saving in
part is due to the loss last year of the Business Development
Director role.
Whilst we are pleased with our operating margin of 13.4%, the
high profitability associated with software sales and the
relatively high operational gearing in the business gives plenty of
opportunity for this to be improved upon as the business grows.
International expansion
Revenues delivered outside the UK were GBP3.89 million (2010:
GBP2.32 million), growth of 70%. These revenues include all of our
International division revenues plus the international element of
the Finance e-learning sales and some sales to multinational
business where the sales were made in the UK by the UK division,
with elements of the delivery occurring internationally.
The Company now has three trading subsidiaries: ILX Group Inc, a
"virtual office" subsidiary in New York, which dealt solely with
CTG-related business during the year; ILX Group Pty Limited, an
Australian subsidiary based in Sydney, which delivered GBP1.19
million in revenue during the year, and ILX Group Aps, a Danish
subsidiary which started trading after the year end.
These subsidiaries remain sales and marketing led with all
financial management and operational support handled from the
UK.
Finance costs
The Group incurred finance costs of GBP0.31 million (2010:
GBP0.30 million) during the year. This cost comprised GBP0.33
million in interest on bank loans and facilities (2010: GBP0.34
million); GBP0.07 million in loan arrangement costs and other bank
fees (2010: GBP0.05 million); and a credit of GBP0.09 million
relating to the Group's interest rate swap arrangement (2010:
GBP0.09 million).
Under IAS 39, fees incurred in securing term finance, including
bank arrangement fees, are capitalised and amortised over the term
of the debt. At the year end, the remaining balance of such fees
was GBP0.18 million, due to be fully written down by 30 September
2013 at a rate of GBP0.07 million per annum.
Profit before tax
Profit before tax was GBP1.42 million (2010: GBP0.76 million),
in line with market expectations and an increase of 88%.
Taxation
The tax charge for the year was GBP0.40 million (2010: GBP0.21
million), representing 28% of Profit before Tax (2010: 28%).
Earnings per share
Earnings per share from continuing operations were 4.14p (2010:
2.67p). Diluted earnings per share from continuing operations were
4.06p (2010: 2.64p), increases of 55% and 54% respectively.
Including the impact of discontinued operations, basic loss per
share was 38.16p (2010: loss per share of 8.44p), and diluted loss
per share was 37.42p (2010: 8.36p).
Cash Flow and Net Debt
Cash generated from continuing operating activities was GBP1.79
million (2010: GBP1.72 million). This represents 103% of operating
profit (2010: 163% of operating profit). The figure for the year
ended 31 March 2010 was distorted by timing differences around the
year end.
The Group continues to manage working capital tightly. Adjusting
for continuing operations and sales tax, trade receivables at year
end represented 60 days' sales (2010: 64) although this figure is
affected by the Group's seasonality which gives higher sales in
March than any other month. Cash sales made up 30% of total sales
(2010: 30%). In addition, our deferred revenues, representing
amounts paid by customers for services not yet delivered, increased
by 31% to GBP1.50 million (2010: GBP1.14 million).
During the year, the Group refinanced its bank debt and also
raised GBP0.84 million in additional capital. The bank refinance
was required as the Group's confidential invoice finance facility
was providing an unacceptable level of visibility and headroom,
given in particular the Group's international expansion. In
addition, the decline and closure of CTG meant that, in the short
term at least, the Group's profit and cash profile once again
becomes strongly weighted towards the second half of the year.
Net debt at the year end, defined as all bank debt, less cash at
bank, was GBP1.89 million (2010: GBP3.16 million). This represents
1.1 times operating profit from continuing operations (2010: 3.0
times). This comprised GBP2.20 million in amortising 3-year term
debt, GBP0.40 million in 3-year bullet debt repayable on 30
September 2013, and GBP0.55 million drawn on a GBP0.95 million
revolving credit facility, less GBP1.27 million in cash
balances.
Interest Rate and Currency risk
The Group entered into an interest rate swap agreement with
Barclays Bank in February 2008, to hedge its exposure to interest
rate movements in respect of its term loan. This agreement
effectively fixes LIBOR to 5.7% for GBP1.27 million of the Group's
debt at 31 March 2011, reducing to zero on a straight line basis by
February 2012. To the extent that the Group's debt is not covered
by this hedge, the Group is exposed to changes in LIBOR.
18.7% of the Group's turnover for the year was invoiced in 6
separate foreign currencies (2010: 8.9% in 5 foreign currencies).
These are: Australian Dollars (8.9%), Euros (3.6%), US Dollars
(3.1%), New Zealand Dollars (1.6%), South African Rand (0.9%), and
Danish Kroner (0.5%). At the year end, GBP0.95 million of assets
(2010: GBP0.58 million) and GBP0.42 million of liabilities (2010:
GBP0.02 million) were denominated in these currencies. No currency
hedging arrangements were in place during the year. The Group
maintains currency accounts in all these currencies except South
African Rand and New Zealand Dollars, in order to match currency
income and expenditure and to benefit from bulk rates on transfer
to sterling.
Dividend
We commenced a dividend programme in 2006 which has returned
more than GBP0.7 million to shareholders to date. Regrettably
during the year, the Group was forced to cancel its proposed
dividend in order to secure the necessary refinance to support the
growth of the business. As noted in the Chairman's statement, the
Board is aware of the importance to our shareholders of maintaining
an annual dividend but is also committed in the short term to
reducing the Group's net debt.
In 2009 we introduced a scrip dividend scheme under which
shareholders were given the opportunity to elect to receive new
shares in the Company instead of a cash dividend. Under this scheme
a dividend of 1.50 pence per share was paid in respect of the year
ended 31 March 2009, with elections to receive the scrip issue
totalling 12.6% of ordinary shares in issue.
The write-down of goodwill and intangibles resulting from our
closure of CTG necessitated a capital restructure, whereby the
Company has cancelled its share premium account. This cancellation,
which was approved by the High Court in March 2011, has no effect
on cash or on the rights attached to the Company's shares, but has
the effect of reinstating distributable reserves allowing dividends
to be resumed.
This dividend of 1.50 pence per share and the scrip alternative
will therefore be resumed with respect to the year ended 31 March
2011.
Jon Pickles
Chief Financial Officer
27 June 2011
Consolidated Statement of Comprehensive Income
For the Year ended 31 March 2011
Year Year ended
ended 31.3.2010
31.3.2011 As restated
Unaudited Audited
Notes GBP'000 GBP'000
Revenue 3 12,886 11,868
Cost of sales (5,768) (5,731)
----------- -------------
Gross profit 7,118 6,137
Administrative and distribution
expenses (5,303) (4,984)
----------- -------------
Earnings before interest, tax
and depreciation 1,815 1,153
Depreciation (82) (97)
Operating profit 1,733 1,056
Finance income - 1
Finance costs (311) (300)
----------- -------------
Profit before tax 1,422 757
Tax expense (396) (214)
----------- -------------
Profit for the year from continuing
operations 1,026 543
Loss from discontinued operations 4 (10,478) (2,263)
----------- -------------
Loss for the year attributable
to equity shareholders (9,452) (1,720)
Other comprehensive income - -
----------- -------------
Total comprehensive income (9,452) (1,720)
=========== =============
Earnings per share 5
From continuing operations:
Basic 4.14p 2.67p
Diluted 4.06p 2.64p
From discontinued operations:
Basic (42.30p) (11.11p)
Diluted (41.48p) (11.00p)
Consolidated Statement of Financial Position
As at 31 March 2011
As at 31.3.2011 As at 31.3.2010
Unaudited Audited
Assets GBP'000 GBP'000
Non-current assets
Property, plant and equipment 95 135
Intangible assets 9,618 19,496
Total non-current assets 9,713 19,631
---------------- ----------------
Current assets
Trade and other receivables 3,009 2,916
Cash and cash equivalents 1,265 838
---------------- ----------------
Total current assets 4,274 3,754
Total assets 13,987 23,385
================ ================
Current liabilities
Trade and other payables (3,234) (3,044)
Contingent consideration (35) (35)
Tax liabilities (995) (1,077)
Bank loans and overdrafts (1,350) (1,757)
---------------- ----------------
Total current liabilities (5,614) (5,913)
---------------- ----------------
Non-current liabilities
Derivative financial instruments (35) (125)
Contingent consideration (287) (300)
Bank loans (1,801) (2,243)
---------------- ----------------
Total non-current liabilities (2,123) (2,668)
---------------- ----------------
Total liabilities (7,737) (8,581)
================ ================
Net assets 6,250 14,804
================ ================
Equity
Issued share capital 2,697 2,357
Share premium - 12,341
Own shares in trust (1,852) (1,852)
Share option reserve 317 204
Retained earnings 5,116 1,754
Exchange differences arising on
consolidation (28) -
---------------- ----------------
Net assets 6,250 14,804
================ ================
Consolidated Cash Flow Statement
For the year ended 31 March 2011
Year Year
ended ended
31.3.2011 31.3.2010
Unaudited Audited
GBP'000 GBP'000
Profit from continuing operations 1,733 1,056
Adjustments for:
Depreciation 82 97
Share option charge 118 101
Movement in trade and other receivables (188) (38)
Movement in trade and other payables 71 506
Exchange differences on consolidation (28) -
----------- -----------
Cash generated from continuing operating
activities 1,788 1,722
Tax paid (183) (284)
----------- -----------
Net cash generated from continuing operating
activities 1,605 1,438
Net cash (used by) / generated from discontinued
operating activities (146) 316
----------- -----------
Net cash generated from operating activities 1,459 1,754
----------- -----------
Investing activities
Interest received - 1
Proceeds on disposal of property and equipment 1 1
Purchases of property and equipment (53) (66)
Expenditure on product development (477) (441)
Acquisition of subsidiaries (net of cash
acquired) (9) (4)
----------- -----------
Net cash used by investing activities (538) (509)
----------- -----------
Financing activities
(Decrease) / increase in borrowings (373) (667)
Net proceeds of share issue 842 930
Outflow relating to capital restructure (34) -
Interest and refinancing costs paid (454) (383)
Dividend paid - (263)
Net cash from financing activities (19) (383)
----------- -----------
Net change in cash and cash equivalents 902 862
Cash and cash equivalents at start of
year 363 (499)
Cash and cash equivalents at end of year 1,265 363
=========== ===========
Cash and cash equivalents represented
by:
Bank overdraft - (475)
Cash at bank 1,265 838
1,265 363
=========== ===========
Notes to the Preliminary Results
For the year ended 31 March 2011
1 Results
The financial information set out in this unaudited preliminary
announcement does not constitute the statutory financial statements
for the years ended 31 March 2011 or 2010 but is derived from those
accounts. Statutory accounts for 2010 have been delivered to the
registrar of companies, and those for 2011 will be delivered in due
course. The auditors have reported on the accounts for 2010; their
report was (i) unqualified, (ii) did not include a reference to any
matters to which the auditors drew attention by way of emphasis
without qualifying their report and (iii) did not contain a
statement under section 498 of the Companies Act 2006. The auditors
have not yet reported on the accounts for 2011.
2 Accounting policies
The principal accounting policies of the Group are set out in
the Group's 2010 Annual Report and Financial Statements. The
policies have remained unchanged for the year ended 31 March
2011.
3 Segment reporting
In accordance with IFRS 8, the Group now presents its segmental
analysis in terms of its three operating divisions, UK Best
Practice, International Best Practice and Finance e-Learning, as
opposed to two segments of Best Practice and Finance. The analysis
of revenue and profit by division for the period, and restated for
prior periods, is as follows:
Year ended Year ended
31.3.2011 31.3.2010
Revenue Profit Revenue Profit
GBP'000 GBP'000 GBP'000 GBP'000
UK Best Practice Division 9,309 2,634 9,565 2,535
International Best Practice
Division 3,235 876 1,810 421
Finance e-Learning division 342 113 493 246
Unallocated central costs - (1,890) - (2,146)
-------- -------- -------- --------
Continuing operations 12,886 1,733 11,868 1,056
======== ========
Interest (311) (299)
-------- --------
Profit before Tax from Continuing
Operations 1,422 757
======== ========
The discontinued operation is treated as a further segment under
IFRS 8 and analysis of the results of this segment is provided in
Note 4.
In addition, revenues for the year and prior year split by
geographical area were as follows:
Year ended Year ended
31.3.2011 31.3.2010
Continuing Discontinued Total Continuing Discontinued Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
UK & Ireland 9,005 816 9,821 9,545 2,399 11,944
Australasia 1,191 - 1,191 362 - 362
Europe &
Scandinavia 1,144 376 1,520 948 257 1,205
Middle East 808 96 904 272 69 341
Americas 352 143 495 325 110 435
Africa 309 - 309 310 - 310
Asia 77 - 77 106 - 106
----------- ------------- -------- ----------- ------------- --------
12,886 1,431 14,317 11,868 2,835 14,703
=========== ============= ======== =========== ============= ========
4 Discontinued Operations
The results of the Corporate Training Group (CTG), which was
closed during the year, have been included in the Consolidated
Statement of Comprehensive Income as loss from discontinued items
in accordance with IFRS 5. The comparatives have also been restated
in the Consolidated Statement of Comprehensive Income. A breakdown
of these results is as follows:
Year ended Year ended
31.3.2011 31.3.2010
Total Total
GBP'000 GBP'000
Revenue 1,431 2,835
Cost of sales and administrative expenses (1,653) (2,781)
----------- -----------
(Loss) / earnings before interest, tax
and depreciation (222) 54
Depreciation (11) (17)
Impairment (10,351) (2,290)
----------- -----------
Loss before tax (10,584) (2,253)
Tax 106 (10)
----------- -----------
Loss for the year from discontinued operations (10,478) (2,263)
=========== ===========
5 Earnings per share
Earnings per share is calculated by dividing profit attributable
to shareholders by the weighted average number of shares in issue
during the year.
Diluted earnings per share is adjusted for outstanding share
options and the average option price, using an average interest
saving of 8.0% (2010: 8.0%).
Year ended Year ended
31.3.2011 31.3.2010
GBP'000 GBP'000
Loss for the year attributable to equity
shareholders (9,452) (1,720)
=========== ===========
Weighted average shares 24,768,797 20,360,949
Outstanding share options 492,250 211,500
----------- -----------
Weighted average shares for diluted earnings
per share 25,261,047 20,572,449
=========== ===========
Basic loss per share (38.16p) (8.44p)
Diluted loss per share (37.42p) (8.36p)
Year ended Year ended
31.3.2011 31.3.2010
From continuing operations GBP'000 GBP'000
Profit for the year from continuing operations 1,026 543
Basic earnings per share 4.14p 2.67p
Diluted earnings per share 4.06p 2.64p
Year ended Year ended
31.3.2011 31.3.2010
From discontinued operations GBP'000 GBP'000
Loss from discontinued operations (10,478) (2,263)
Basic loss per share (42.30p) (11.11p)
Diluted loss per share (41.48p) (11.00p)
6 Dividend
As stated in the Directors' report, the directors recommend
payment of a dividend of 1.50 pence per share, subject to
shareholder approval at the Annual General Meeting on 20 September
2011. This dividend will be paid on 14 October 2011 to shareholders
on the register at 5 August 2011. The shares will therefore become
ex-dividend on 3 August 2011. A scrip alternative will be offered,
at the average share price for the period 3 August to 9 August
inclusive. Shareholders who elected to receive the scrip
alternative in 2009 will receive the scrip alternative for 2011
automatically. Shareholders who wish to elect to receive the scrip
alternative will need to obtain a mandate form from the company and
return it to the registrars no later than 10am on 16 September
2011.
These financial statements do not reflect this dividend payable,
which will be accounted for in the statement of changes in equity
as an appropriation of retained earnings, in the year ending 31
March 2012.
7 Annual report
The annual report will be sent to shareholders in due course and
will also be available from the Company's website www.ilxgroup.com
and from the Company's registered office at 1 London Wall, London
EC2Y 5AB.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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