TIDMILX
RNS Number : 7025S
ILX Group PLC
04 December 2012
ILX Group PLC
Unaudited Interim Results for the six months ended 30 September
2012
Summary:
-- New Executive Chairman and board restructuring
-- Investment of GBP1.2 million by Praxis Trustees
-- Net debt reduced to GBP0.6 million (GBP2.3 million at 31 March 2012)
-- Revenue lifted to GBP6.0 million (6 months to 30 September 2011: GBP5.9 million)
-- Gross profit restated to reflect a 43% margin of GBP2.6
million (6 months to 30 September 2011 restated: 50% gross profit
margin of GBP2.9 million)
-- Adjusted loss before tax GBP0.3 million (6 months to 30
September 2011: profit of GBP0.2 million) (Note 4)
-- Adjusted diluted loss per share 0.86p (6 months to 30
September 2011: earnings of 0.46p) (Note 4)
-- Restructuring charge of GBP1.9 million (of which GBP1.1
million is non cash: refer to Note 5)
-- Total comprehensive loss GBP2.2 million (6 months to 30
September 2011: income of GBP0.1 million)
-- Corporate wide business review and restructure
Wayne Bos, Executive Chairman, ILX Group plc, commented:
"We have initiated a number of changes within the group. Revenue
has increased slightly during the period and ILX has maintained its
market leading position. However, the bottom line has not reflected
this and is being addressed as a matter of urgency.
ILX's digital learning solutions and technology platform
continue to be improved and provide a highly efficient and cost
effective solution. Demand for project and programme management
training remains high.
The potential of the current ILX business remains strong. There
is an excellent range of digital learning solutions as well as a
talented industry team. We expect the business will continue to
develop organically but we will be looking to restructure the cost
base and to also expand through acquisition."
4 December 2012
For further information please contact:
ILX Group plc 020 7751 7100
Wayne Bos, Executive Chairman
FinnCap 020 7220 0500
Marc Young / Charlotte Stranner
Allerton Communications 020 3137 2500
Peter Curtain
Chairman's statement
For Unaudited Interim Results for the six months ended 30
September 2012
Introduction
I joined the business in August this year because I saw
potential in the existing ILX business as well as the opportunity
to build scale in the group through acquisitions.
The existing ILX business has a wealth of experience in the
industry, an extraordinary customer base, and an extensive range of
market leading digital products. Over the last 18 months it has
struggled to translate growth into increased profitability, and
this is being addressed through a review of operations, costs and
subsequent restructure.
The investment made by Praxis at the time of my appointment has
reduced the Group's debt and prepared the business for continued
success. It has also begun a new chapter in the history of ILX
including the review of the operations, processes, costs and
overall performance. To this end these interim results will be made
available on the group's website but will not be printed and mailed
to shareholders; one of the actions we are undertaking to reduce
costs.
Board Changes
The board is also being restructured to ensure the right team
are focused on the right areas. As announced on 28 November, Ken
Scott, CEO, decided to leave the Company, stepping down from the
Board with effect from 27 November, 2012 and I have assumed the
role of Interim CEO. As announced last month, Paul Virik and Damien
Lane, both non-executive directors, have now stepped down. Eddie
Kilkelly, our Chief Operating Officer, remains in the business but
no longer as a board member. Jon Pickles, CFO, previously announced
his intention to resign from the business and has now also stepped
down from the board. He will depart early in the New Year having
completed a handover to his successor. Paul Lever remains an
independent non-executive Director.
Restructuring
Recently the performance of the business has been disappointing
and has resulted in a loss for the previous six months. Therefore,
we have engaged in a business review and restructure to ensure
costs are proportionate to income. Accordingly, we have acted
swiftly to achieve cost reductions, both in business processes and
in staffing levels and have appointed an experienced interim CFO
for this purpose.
Financial Results and Funding
As part of the restructuring, we have undertaken a thorough
internal review of group finances. As a result of this review it
has been necessary to recalculate gross profit as presented in the
Preliminary Results announced on 25 June and subsequently in the
Annual Report. The effect of this has been to move certain costs,
including administrative staff costs, technical staff costs, and
shipping costs, from administrative and distribution expenses to
cost of sales. It has also been necessary to undertake a
post-balance sheet review, which has resulted in a non-cash GBP1.1
million impairment of intangible assets and a provision of GBP0.6
million for restructuring costs in addition to GBP0.1 million of
costs already incurred. Details appear hereunder. Clearly these
calculations alter the historic performance of the company, and
will have an effect on the funding requirements of the company as
it progresses. Consequently, the group will consider its options in
relation to additional funding.
The group delivered a small increase in revenue to GBP6.0
million (six months to 30 September 2011: GBP5.9 million). Our
Australian and New Zealand businesses have driven this growth with
revenues up by 17% to GBP1.6 million (six months to 30 September
2011: GBP1.2 million). UK revenues have declined by 10% and
revenues elsewhere in the world have increased by 3%.
Operating loss for the period was GBP0.25 million (six months to
30 September 2011: profit of GBP0.26 million). Cash generated from
continuing operating activities was GBP1.09 million (six months to
30 September 2011: GBP0.62 million).
Our interest cost for the period was GBP0.06 million (six months
to 30 September 2011: GBP0.15 million), reflecting the
substantially cheaper cost of debt following the refinancing
completed in the last financial year.
As in previous years we expect the group to remain strong in the
second half, with software sales in particular having shown a
long-term consistent bias towards year end customer purchasing.
Net Debt and Facilities
The group repaid GBP1.9 million of bank debt during the period,
from both positive cash flow from operations and the proceeds of
Praxis' investment. At the balance sheet date the group's debt
comprised GBP1.0 million in term debt, with GBP0.7 million falling
due within one year.
In addition to the term debt the group has a revolving credit
facility of GBP1.1 million which was undrawn at the balance sheet
date. Adding back cash, net debt at the balance sheet date was
GBP0.6 million, compared with GBP2.3 million at 31 March 2012 and
GBP1.7 million at 30 September 2011.
The operating performance and the restructuring costs will put
pressure on the group's working capital. We are therefore planning
a further cash injection to fund additional working capital and
ensure the appropriate reorganisation changes are carried out. The
group remains within the terms of all its banking covenants.
Summary
ILX is entering a new chapter in its development. I look forward
to the restructure of the current business delivering a positive
impact and to reviewing potential acquisition opportunities.
Wayne Bos, Executive Chairman
4 December 2012
Unaudited Consolidated Statement of Comprehensive Income
For the six months ended 30 September 2012
Six months Six months Year
ended ended ended
30.9.2012 30.9.2011 31.3.2012
Unaudited Unaudited Unaudited
[ restated] [restated]
Notes GBP'000 GBP'000 GBP'000
Revenue 6,013 5,906 13,473
Cost of sales (3,432) (2,974) (6,811)
----------- ------------- ------------
Gross profit 2,581 2,932 6,662
Administrative and distribution expenses (2,784) (2,633) (5,517)
----------- ------------- ------------
(Loss) / earnings before interest,
tax and depreciation (203) 299 1,145
Depreciation (45) (37) (137)
Operating (loss) / profit (248) 262 1,008
Finance income - - 4
Finance costs (63) (147) (365)
----------- ------------- ------------
(Loss) / profit before tax from continuing
operations (311) 115 647
Tax expense (1) - (101)
----------- ------------- ------------
(Loss) / profit for the year from
continuing operations (312) 115 546
Restructuring costs 6 (1,917) - -
----------- ------------- ------------
Total comprehensive (loss) / income (2,229) 115 546
=========== ============= ============
(Loss) / earnings per share 4
From continuing operations:
Basic (7.27p) 0.43p 2.00p
Diluted (7.13p) 0.41p 1.94p
Unaudited Consolidated Statement of Financial Position
As at 30 September 2012
As at As at As at
30.9.2012 30.9.2011 31.3.2012
Unaudited Unaudited Unaudited
Assets Notes GBP'000 GBP'000 GBP'000
Non-current assets
Property, plant and equipment 171 163 194
Intangible assets 8,819 9,799 9,804
Total non-current assets 8,990 9,962 9,998
----------- ----------- -----------
Current assets
Trade and other receivables 2,178 2,176 3,266
Cash and cash equivalents 384 379 638
----------- ----------- -----------
Total current assets 2,562 2,555 3,904
Total assets 11,552 12,517 13,902
=========== =========== ===========
Current liabilities
Trade and other payables (3,658) (2,880) (3,410)
Contingent consideration - (35) (28)
Provisions (546) - -
Tax liabilities (630) (773) (860)
Bank loans and overdrafts (676) (800) (2,888)
----------- ----------- -----------
Total current liabilities (5,510) (4,488) (7,186)
----------- ----------- -----------
Non-current liabilities
Derivative financial instruments - (10) -
Contingent consideration - (280) (28)
Bank loans (341) (1,301) -
----------- ----------- -----------
Total non-current liabilities (341) (1,591) (28)
----------- ----------- -----------
Total liabilities (5,851) (6,079) (7,214)
=========== =========== ===========
Net assets 5,701 6,438 6,688
=========== =========== ===========
Equity
Issued share capital 3,993 2,697 2,759
Share premium 71 - 114
Own shares in trust 7 (1,775) (1,852) (1,881)
Share option reserve 444 375 427
Retained earnings 2,978 5,231 5,288
Exchange differences arising
on consolidation (10) (13) (19)
----------- ----------- -----------
Total equity 5,701 6,438 6,688
=========== =========== ===========
The financial statements were approved by the board of directors
and authorised for issue on 4 December 2012.
Unaudited Consolidated Cash Flow Statement
For the six months ended 30 September 2012
Six months Six months Year
ended ended ended
30.9.2012 30.9.2011 31.3.2012
Unaudited Unaudited Unaudited
GBP'000 GBP'000 GBP'000
(Loss) / profit from continuing
operations (248) 262 1,008
Adjustments for:
Depreciation 45 37 137
Share option charge 42 57 113
Movement in trade and other receivables 1,103 749 (461)
Movement in trade and other payables 135 (502) 358
Exchange difference on consolidation 8 15 9
Cash generated from continuing operating
activities 1,085 618 1,164
Tax paid (115) (3) (342)
----------- ----------- -----------
Net cash generated from continuing
operating activities 970 615 822
----------- ----------- -----------
Restructuring costs (222) - -
Net cash used by discontinued operating
activities - (24) (23)
----------- ----------- -----------
Net cash generated from operating
activities 748 591 799
----------- ----------- -----------
Investing activities
Interest received - - 4
Purchases of property and equipment (21) (106) (178)
Expenditure on product development (166) (189) (489)
Acquisition of subsidiaries (net
of cash acquired) (53) - (23)
----------- ----------- -----------
Net cash used by investing activities (240) (295) (686)
----------- ----------- -----------
Financing activities
Decrease in borrowings (1,871) (1,050) (263)
Net proceeds of share issue 1,191 - -
Interest and refinancing costs paid (82) (132) (245)
Dividend paid - - (232)
-----------
Net cash used by financing activities (762) (1,182) (740)
----------- ----------- -----------
Net change in cash and cash equivalents (254) (886) (627)
Cash and cash equivalents at start
of period 638 1,265 1,265
-----------
Cash and cash equivalents at end
of period 384 379 638
=========== =========== ===========
Unaudited Consolidated Statement of Changes in Equity
For the six months ended 30 September 2012
Six months Six months Year
ended ended ended
30.9.2012 30.9.2011 31.3.2012
Unaudited Unaudited Unaudited
GBP'000 GBP'000 GBP'000
Balance at start of period 6,688 6,250 6,250
Comprehensive (loss) / income (2,229) 115 546
Transactions with owners
Dividend paid - - (406)
Exchange differences on consolidation 9 15 9
Options granted 42 58 113
Sale of shares from MTIP Trust 106 - -
Loss on sale of shares from MTIP
trust (91) - -
Options exercised (15) - -
Share issue 1,234 - -
Scrip issue - - 176
Costs relating to share issue (43) - -
----------- ----------- -----------
Balance at end of period 5,701 6,438 6,688
=========== =========== ===========
Notes to the Unaudited Interim Report
For the six months ended 30 September 2012
1. The financial information contained in the Interim Report
does not constitute statutory accounts as defined by the Companies
Act 2006. The comparative unaudited figures for the year ended 31
March 2012 were derived from the statutory accounts for that year
which have been delivered to the Registrar of Companies.
It should be noted that accounting estimates and assumptions are
used in preparation of the interim financial information. Although
these estimates are based on management's best knowledge and
judgement of current events and actions, actual results may
ultimately differ from those estimates. The areas involving a
higher degree of judgement or complexity, or areas where
assumptions and estimates are significant to the interim financial
information, are set out in note 2 to the interim financial
information.
2. The key estimates and judgements made by management are detailed below:
Goodwill
Goodwill is determined by comparing the amount paid, including
the full undiscounted value of any deferred and contingent
consideration, on the acquisition of a subsidiary or associated
undertaking and the group's share of the aggregate fair value of
its separable net assets. It is considered to have an indefinite
useful economic life as there are no legal, regulatory,
contractual, or other limitations on its life. Goodwill is
therefore capitalised and is subject to annual impairment reviews
in accordance with applicable accounting standards.
Research and development
Research expenditure is written off to the statement of
comprehensive income in the year in which it is incurred. Costs
incurred on product development relating to the design and
development of new or enhanced products are capitalised as
intangible assets when it is probable that the development will
provide economic benefits, considering its commercial and
technological feasibility and the resources available for the
completion and marketing of the development, and where the costs
can be measured reliably. The expenditures capitalised are the
direct labour costs, which are managed and controlled centrally.
Other development costs are recognised as an expense as incurred.
Product development costs previously recognised as an expense are
not recognised as an asset in a subsequent period.
Capitalised product development expenditure is considered to
have an indefinite economic life and is subject to regular
impairment reviews, based on the continued sales and profitability
of the products developed. It is stated at cost less any
accumulated impairment losses. Any permanent impairment taken
during the year is shown under amortisation on the statement of
comprehensive income. These assets have been reviewed for
indications of impairment at the balance sheet date.
3. The interim financial statements have been prepared on the
basis of the accounting policies set out in the March 2012
financial statements of ILX Group Plc.
4. 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.
Six months Six months Year
ended ended ended
30.9.2012 30.9.2011 31.3.2012
Unaudited Unaudited Unaudited
GBP'000 GBP'000 GBP'000
(Loss) / profit for the year attributable
to equity shareholders (2,229) 115 546
=========== =========== ===========
Weighted average shares 30,639,255 26,972,580 27,260,017
Outstanding share options 606,685 884,049 1,234,705
----------- ----------- -----------
Weighted average shares for diluted earnings
per share 31,245,940 27,856,629 28,494,722
=========== =========== ===========
Basic (loss) / earnings per share (7.27p) 0.43p 2.00p
Diluted (loss) / earnings per share (7.13p) 0.41p 1.94p
Six months Six months Year
ended ended ended
30.9.2012 30.9.2011 31.3.2012
GBP'000 GBP'000 GBP'000
Adjusted (loss) / profit before tax (see
note 5) (269) 172 959
less notional tax at 26% - (45) (249)
----------- ----------- -----------
Adjusted (loss) / profit after tax (269) 127 710
Adjusted (loss) / earnings per share (0.88p) 0.47p 2.60p
Adjusted diluted (loss) / earnings per
share (0.86p) 0.46p 2.49p
5. The group presents as exceptional restructuring costs those
material items of expenditure and other charges which, because of
the nature or expected infrequency of the events giving rise to
them, merit separate presentation. This allows a better
understanding of trading performance for the period.
During the period, the group incurred exceptional restructuring
costs totalling GBP1.9 million (6 months to 30 September 2011:
nil). These costs are shown separately on the face of the
consolidated statement of comprehensive income.
A breakdown of these costs is as follows:
Six months Six months Year
ended ended ended
30.9.2012 30.9.2011 31.3.2012
Unaudited Unaudited Unaudited
GBP'000 GBP'000 GBP'000
Restructuring costs incurred 143 - -
Provision for further restructuring
costs 625 - -
Impairment of intangibles 1,149 - -
----------- ----------- -----------
1,917 - -
=========== =========== ===========
6. At the balance sheet date the company held 1,918,235 of its
own ordinary shares in a trust, administered by Investec Trust
Jersey Ltd. The shares are held in trust and represent 4.8% of the
total called up share capital. They will be utilised as required to
satisfy share options granted to directors and other senior
management on vesting and exercise.
7. The group has a related party relationship with its
subsidiaries, its directors, and other employees of the group 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 available from the group'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
END
IR EADALESPAFFF
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