RNS Number:4956Y
Xpertise Group PLC
16 February 2006
FOR RELEASE 7.00 AM 16 FEBRUARY 2006
Xpertise Group PLC
("Xpertise", "the group", or "the company")
One of the UK's leading IT Training companies
PRELIMINARY RESULTS FOR THE YEAR ENDED 31 DECEMBER 2005
HIGHLIGHTS
RESULTS
* Turnover up 16% to #15.3 million (2004: #13.2 million)
* Operating profit before exceptional items and goodwill amortisation of
#201,000 (2004: loss of #349,000), a turnaround of #550,000
* Reduced loss on ordinary activities before tax of #245,000 (2004: loss
of #668,000)
* Increased net cash to #1,275,000 (2004: #989,000)
* Awarded Microsoft's European Learning Solution Partner of the Year
OUTLOOK
* Primary aim is to ensure sustained improvement in business performance
through revenue growth and stringent cost control
* UK IT training market remains highly competitive
* Acquisition of soft skills training business in January 2006 will
extend Xpertise's training portfolio
* The Board will continue to explore corporate opportunities to enhance
shareholder value
For further information:
Xpertise Group PLC
Richard Last (Chairman) 0186 531 0150
Ian Johnson (Managing Director) 0113 382 6150
Daniel Stewart & Company Plc
Lindsay Mair / Nic Marren 020 7776 6550
Cubitt Consulting
Brian Coleman-Smith / Allison Reid / Nia Thomas 020 7367 5100
BACKGROUND NOTE
Xpertise is one of the UK's leading providers of authorised IT, professional and
soft skills training. Its aim is to help companies nationwide to exploit
technology to become more efficient, more productive and more competitive.
Training delivery
Xpertise has a nationwide network of training centres located in London, Thames
Valley, Leeds, Manchester, East Midlands and Tyne & Wear. These centres have 42
fully equipped training rooms offering a capacity of 458 delegate places.
Training is also carried out at customer locations.
There are 27 full-time instructors and approximately 100 associate instructors
available to deliver training throughout the UK. During 2005, Xpertise carried
out approximately 61,000 training days for 17,000 delegates.
XPERTISE GROUP PLC
PRELIMINARY RESULTS FOR THE YEAR ENDED 31 DECEMBER 2005
CHAIRMAN'S STATEMENT
INTRODUCTION
I am pleased to report the group's return to profitability at the operating
level before exceptional items and goodwill amortisation. The group's results
are in line with market expectations and reflect a 16% increase in turnover
compared to last year. This has been achieved through the continued hard work
and dedication of our employees throughout 2005, a year that has been
challenging for all those involved in the provision of IT training.
RESULTS AND DIVIDEND
Turnover increased by 16% to #15.3 million (2004: #13.2 million) and operating
profit before exceptional items and goodwill amortisation was #201,000 (2004:
loss of #349,000). After exceptional costs of #143,000 relating to due diligence
costs incurred on a potential acquisition that was not completed (2004: #nil),
goodwill amortisation of #336,000 (2004: #335,000) and net interest receivable
of #33,000 (2004: #16,000), the group loss on ordinary activities before
taxation reduced to #245,000 (2004: loss of #668,000).
The group generated cash from operating activities of #534,000 (2004: #417,000)
and had net cash at 31 December 2005 of #1,275,000 (2004: #989,000).
No dividend is proposed (2004: #nil).
BUSINESS REVIEW
The 16% increase in delivered turnover reflects improved activity in all parts
of our business including public scheduled courses, bespoke training services,
single company events and training at customers' sites. This is particularly
encouraging given that the UK IT training market was forecast to decline by 1%
in 2005 (Source: Ovum Holway).
We have achieved some notable business successes in 2005, including being
appointed a preferred supplier for EDS in Europe and securing managed training
services contracts with Capital One Bank (Europe) plc and T-Systems Limited. In
addition we have provided significant training programmes for Atos Origin,
Accenture, BT plc, Carphone Warehouse and Caterpillar.
In 2005, Xpertise was named Microsoft's European Learning Solution Partner of
the Year, in recognition of Xpertise's ability to deliver high quality training
services. We have also been recognised by Microsoft as the fastest growing
worldwide Certified Partner for Learning Solutions based on the delivery of
training using Microsoft official course materials. Xpertise was selected to
deliver early readiness programmes to Microsoft's partners and key customers on
new Microsoft technologies, including SQL Server 2005, Visual Studio 2005 and
Visual Studio Team System. The delivery of these early readiness programmes
ensures Xpertise is ideally placed to drive training on these new technologies
to the general market in 2006.
We have seen substantial growth in professional skills training in 2005.
Xpertise is now fully accredited by the ISEB to deliver ITIL service management
courses and by the APM Group for the delivery of PRINCE2 project management
training. Sales of professional skills training increased by 114% and amounted
to #3.0m (2004: #1.4m).
The UK IT training market remains highly competitive and this is reflected in
the gross profit percentage, which has declined to 37.0% (2004: 38.6%). Part of
this reduction is due to winning several managed training service contracts with
major customers where part of the training is provided by third parties at lower
margins. We continually review the composition of course schedules to ensure
optimum utilisation of training rooms and instructors and to maximise course
fill rates. During 2005, we improved course fill rates by 8% and classroom
utilisation by 6%.
We have maintained tight control over our cost base whilst continuing to invest
in the business. As a result of both the increase in turnover and tight cost
control, overhead costs as a percentage of turnover reduced to 36% (2004: 41%).
We have maintained good working capital control during the year. In 2005, cash
inflow from operating activities was #534,000 (2004: #417,000). This has
resulted in a consistently higher net cash balance throughout 2005 and increased
net interest received of #33,000 (2004: #16,000). We also continued our capital
investment programme in 2005 by investing #293,000 (2004: #297,000) in
improvements to classroom facilities and our business infrastructure.
EMPLOYEES
I would like to thank all our employees for their considerable contribution
towards our continued improved business performance. Xpertise has the management
and staff to continue the successful development of the business in a highly
competitive marketplace.
BUSINESS DEVELOPMENT
I stated last year that the UK IT training market is characterised by numerous
medium sized companies with no clear leader, over capacity and many companies
making operating losses, thus providing opportunities for consolidation to take
place. During 2005, Xpertise entered into discussions to acquire a major UK IT
training provider that, if successful, would have made Xpertise the largest IT
training provider in the UK. However, in the course of the due diligence
process, a number of material factors were identified that significantly reduced
the attractiveness of the acquisition opportunity and culminated in the
termination of discussions. Costs amounting to #143,000 were incurred in respect
of this potential acquisition and these have been written off as exceptional
items in 2005.
I am pleased, however, that we successfully acquired Waterman's People and
Organisational Development Limited ("Waterman's") in January 2006. Waterman's
provides soft skills training, including personal development, management, team
development, customer service and computer applications training to a blue chip
customer base. In the year ended 31 March 2005, Waterman's had a turnover of
#693,000 and made an operating profit of #103,000. Initial and deferred
consideration of up to #300,000 is payable depending on operating profit
performance in the two years ending 31 December 2007 in cash and shares.
Waterman's had cash at bank of #85,000 at completion. Our intention is to
promote Waterman's training to the existing Xpertise customer base across the
UK.
CONSOLIDATION OF SHARE CAPITAL
The Company is proposing a share consolidation to improve the marketability of
the shares to investors. Under the proposed share consolidation, each
shareholder will receive one consolidated share in place of every eighty
ordinary shares currently held.
The share consolidation will take place following completion of the Company's
Annual General Meeting on 23 March 2006 and will be conditional upon the
approval of shareholders.
OUTLOOK
During 2006, we look forward to continued revenue growth, which together with
tight cost control, we expect will lead to a further improvement in business
performance. The UK IT training market does, however, remain highly competitive
and is subject to downward price pressures. As a result, it is our intention to
continue to broaden our training portfolio by expanding our professional and
soft skills training business.
The Board will continue to explore corporate opportunities that will provide
additional scale and cost savings, thereby delivering enhanced shareholder
value.
Richard Last
Chairman
16 February 2006
XPERTISE GROUP PLC
Consolidated Profit and Loss Account
For the year ended 31 December 2005
Note Year ended Year ended
31 December 31 December
2005 2004
#000 #000
Turnover 15,274 13,170
Cost of sales (9,629) (8,085)
-------------- --------------
Gross profit 5,645 5,085
Administrative expenses (including
goodwill charge and exceptional items) (5,923) (5,769)
-------------- --------------
Operating profit/(loss) before goodwill
charge and exceptional items 201 (349)
Amortisation of goodwill (336) (335)
Exceptional items 2 (143) -
-------------- --------------
Operating loss (278) (684)
Interest receivable 48 27
Interest payable (15) (11)
-------------- --------------
Loss on ordinary activities before
taxation (245) (668)
Tax on loss on ordinary activities - -
-------------- --------------
Loss on ordinary activities after
taxation (245) (668)
Dividends - -
-------------- --------------
Loss for the year (245) (668)
-------------- --------------
Profit/(loss) per share
- basic and diluted 3 (0.06p) (0.16p)
- excluding goodwill charge and
exceptional items 4 0.06p (0.08p)
-------------- --------------
All recognised gains and losses are included in the profit and loss account.
All amounts relate to continuing activities.
XPERTISE GROUP PLC
Consolidated balance sheet
At 31 December 2005
31 December 31 December
2005 2004
#000 #000 #000 #000
Fixed assets
Intangible assets 4,979 5,315
Tangible assets 506 500
----------- -----------
5,485 5,815
Current assets
Stocks 84 111
Debtors - due 2,418 2,352
within one year
Cash at bank and in 1,327 1,109
hand
----------- -----------
3,829 3,572
Creditors: amounts
falling due within 5,046 4,832
one
year
----------- -----------
Net current (1,217) (1,260)
liabilities
----------- -----------
Total assets less 4,268 4,555
current liabilities
Creditors: amounts
falling due after
more than one year
Convertible debt 175 200
Other - 52
----------- -----------
175 252
----------- -----------
Net assets 4,093 4,303
----------- ------------
Capital and
reserves
Called up share 3,510 3,510
capital
Share premium 9,275 9,275
account
Convertible debt 50 -
reserve
Merger reserve 1,217 1,217
Profit and loss (9,959) (9,699)
account
----------- -----------
Equity 4,093 4,303
shareholders' funds
----------- -----------
These financial statements were approved by the Board on 16 February 2006.
XPERTISE GROUP PLC
Consolidated cash flow statement
For the year ended 31 December 2005
Year ended Year ended
31 December 31 December
2005 2004
#000 #000
Net cash inflow from operating activities 534 417
Returns on investments and servicing of
finance 43 16
Capital expenditure (291) (290)
----------- -----------
Net cash inflow before financing 286 143
Net financing (68) (60)
----------- -----------
Increase in cash in the year 218 83
----------- -----------
Reconciliation of net cash flow to movement in net funds
Increase in cash in the year 218 83
Non cash adjustment 25 -
Loans repaid 68 60
----------- ------------
Change in net funds 311 143
Net funds at beginning of year 789 646
---------- -----------
Net funds at end of year 1,100 789
----------- -----------
Reconciliation of operating loss to net cash inflow from
operating activities
Operating loss (278) (684)
Amortisation of goodwill 336 335
Depreciation 285 298
Decrease in stocks 27 24
Increase in debtors (66) (338)
Increase in creditors 230 782
----------- -----------
Net cash inflow from operating activities 534 417
----------- -----------
XPERTISE GROUP PLC
NOTES TO THE FINANCIAL STATEMENTS
1. The financial statements have been prepared under the historical cost
convention, in accordance with the Companies Act 1985 and with applicable
United Kingdom accounting standards. The company has adopted Financial
Reporting Standard 25 ("Financial Instruments") in respect of convertible
debt. The impact of adopting this standard is an interest charge of #10,000
for the year and an increase in net assets of #35,000 as at 1 January 2005.
2. Exceptional items relate to due diligence costs in respect of an aborted
acquisition
3. Basic loss per share has been calculated by dividing loss after tax of
#244,991 (2004 - loss of #667,208) by the number of shares in issue during
the period of 418,947,240 (2004 - 418,947,240).
4. Profit/(loss) per share before goodwill amortisation and exceptional items
has been calculated by dividing profit after tax before goodwill
amortisation and exceptional items of #234,189 (2004 - loss of #348,302) by
the number of shares in issue during the period of 418,947,240 (2004 -
418,947,240).
5. Analysis of changes in net funds.
At 31 Cash Non-cash At 31 December
December flow changes 2005
2004 #000 #000 #000
#000
Cash at bank and in hand 1,109 218 - 1,327
Debt due within one year (68) 68 (52) (52)
Debt due after one year (52) - 52 -
--------- -------- ---------- ----------
Net cash 989 286 - 1,275
Convertible debt due
after (200) - 25 (175)
one year
--------- -------- ---------- ----------
Net funds 789 286 25 1,100
===== ===== ====== ======
6. The financial information set out above does not constitute the company's
statutory accounts for the years ended 31 December 2004 or 31 December 2005 but
is derived from those accounts. Statutory accounts for the year ended 31
December 2004 have been delivered to the Registrar of Companies and those for
the year ended 31 December 2005 will be delivered to the Registrar of Companies
following the company's annual general meeting. The auditors have reported on
those accounts; their reports were unqualified and did not contain statements
under s237 (2) or (3) Companies Act 1985.
7. The Annual Report will be posted to shareholders on or about 21 February 2006
and copies will be available from the Company Secretary, Islington House, Brown
Lane West, Leeds, LS12 6BD.
8. The Annual General Meeting will be held on 23 March 2006.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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