FOR IMMEDIATE RELEASE
3 August 2009
Intellego Holdings plc ('Intellego' or 'the Company')
FINAL RESULTS FOR THE YEAR ENDED 31 MARCH 2009
The Board of Intellego, the AIM traded eLearning and compliance
courseware solutions business, is pleased to announce final audited
results for the year ended 31 March 2009.
HIGHLIGHTS
* Revenues increased by 40% to £2.34 million (2008: £1.67
million).
* Losses grew to £502,608 (2008: £408,118).
* Losses include non-recurring annual costs and those related to
the previously announced restructuring, totaling £423,914.
* Potential for recurring revenues 2009/10 to more than double .
* Acquisition and successful integration of Zenosis Limited and
The Professional Development Partnership Limited ("PDP").
* Post balance sheet placing and loan raised £370,000; agreement
with HMRC to repay £460,000 by instalment. The resulting £830,000
goes a long way to improve the Company's financial position.
Commenting on these results Chairman Angus Forrest, said,
"The past two years have been a transformational period for the
Company. It has achieved its first stated objective of increased
scale through a combination of strong organic growth and
acquisition. This provides a platform for further expansion and
means we can concentrate on achieving profitability. In the period
the Company refocused its sales mix - growing publishing and
services which now provide our main revenue streams.
"In common with many businesses we have been affected by the
Recession, but with the cost reduction programme and a
determination to continue to grow the business we plan to
outperform our peer group. I expect Intellego will show further
revenue growth this year which will enable the Company to qualify
as a top 50 IT training company for the first time."
The report and accounts for this period are being posted to
shareholders and are also available on the Company's website
www.intellego.co.uk
Intellego Holdings
plc
Angus Forrest / Ranjit Roy Choudhuri
Tel: 0845 0583960
Beaumont Cornish Limited
Roland Cornish
Tel: 020 7628 3396
Bishopsgate Communications Limited
Maxine Barnes / Siobhra Murphy
intellego@bishopsgatecommunications.com
Tel: 020 7562 3350
Chairman's statement
During the period your Company continued to undergo considerable
development and change, continuing the transformation we have seen
over the last two years. As a result the business has achieved
greater scale through a combination of organic growth and
acquisition. This provides Intellego with a platform for further
growth and for profitable trading. Importantly our revenue mix has
changed with a shift from distribution - now publishing and
services provide the main streams of income.
In the face of the tough economic climate the shifting sales mix
provides the Company with higher margin business and increased
visibility.
Acquisitions
Zenosis Limited publishes regulatory e-learning for the
pharmaceutical industry. We have invested significantly in
developing these courses to increase the customer appeal. All the
major customers renewed their subscriptions and we are negotiating
contracts with several new opportunities.
PDP provides instructor lead training serving the financial
services industry. We have invested in developing eLearning
products for sale alongside the more traditional training.
Having fully integrated the new businesses the Company continues to
restructure with the aim of reducing fixed overheads by up to 20%
per annum. This should improve Intellego's profitability and
generate positive cash flow in 2009.
Underlying operations
During the period we increased sales of our own published material,
enabling the Company to resell the same material repeatedly so
increasing the yield from the cost of development.
We also expanded our library of published material. Intellego owns
libraries of: pharmaceutical compliance and regulation, post
qualification medical study material, training for retailers and
financial services.
As a result the Company is well placed to more than double
recurring revenues in the coming year.
Financials
Income statement
Sales increased by 40% to £2.34 million (2008: £1.67 million) and
gross margin by 34% to £1.6 million (2008: £1.2 million).
While overall losses grew to £502,608 (2008: £408,118) this figure
includes non-recurring annual costs and those related to the
restructuring, which was announced in February, totalling £423,914.
Losses also included an increase of £48,000 depreciation and
amortisation which is a non-cash charge relating to the businesses
acquired in the year.
Balance sheet
The Company has taken a conservative approach to accounting for its
acquisitions depreciating fixed assets and amortising intangible
assets acquired over no more than four years. Your Directors
believe that whilst this is the correct accounting treatment under
IFRS it does not fairly represent the cost of setting up the
business, building the customer base and libraries of published
material. If starting from scratch we believe that this would cost
significantly in excess of £3 million, compared with the value
shown in the balance sheet of £667,000.
Post balance sheet events
Following the year-end Intellego's financial position was
strengthened significantly:
- Placing on 23 April raised £170,000;
- Bank loan arranged in June, providing the Company with
£200,000 to be repaid over five years;
- Agreement with HMRC to repay £460,000 by way of
instalment.
These three agreements with a total value of £830,000 go a long way
to improve the Company s financial position and secure its future.
As your Company continues to expand quickly the Board is aware of
the need to strengthen the management team and reorganise in order
to better manage the existing business and its growth.
We are very pleased to announce John Hammond's arrival in August to
head up the sales function. John has experience in all aspects of
the sale of computer solutions and training since his early
training with IBM in their graduate programme and subsequently with
training specialist Silverlake UK Ltd, and leading systems house
Logicalis Computing Solutions Ltd and subsequently Centiq Ltd.
We expect there will be further recruitment and announcements as we
continue to put together a team capable of building the business to
annual sales of £10 million + .
Outlook
In common with many businesses we have been affected by the
recession, but with the cost reduction programme referred to
earlier and a determination to continue to grow the business we
plan to outperform our peer group. I expect
Intellego will show further revenue growth this year which will
enable the Company to qualify as a top 50 IT training company for
the first time.
The Board of your Company remains focussed on creating value. The
profile and focus of the business has changed and evolved
significantly over the past two and a half years. We are optimistic
that the actions we have taken to transform the business will begin
to improve the cash generation and profitability of the business.
During the year we identified a number of acquisition opportunities
however we were unable to agree terms that in the Board's view,
would have represented good short term value for Intellego
shareholders. We will continue to evaluate this strategy in the
coming period.
I would like to thank all shareholders for their support throughout
the year, also to welcome Bruce Leith to the Board and acknowledge
the contributions of all our staff, advisers, customers and
suppliers.
Angus Forrest
Chairman
31 July 2009
Consolidated income statement
2009 2008
Note £ £
Revenue 2 2,342,124 1,671,967
Cost of sales (674,903) (429,592)
Gross profit 1,667,221 1,242,375
Operating charges before (1,947,114) (1,544,233)
depreciation and amortisation and
restructuring
EBITDA[1] before restructuring (279,893) (301,858)
costs
4 (73,914) -
Restructuring costs
EBITDA (353,807) (301,858)
Depreciation and amortisation (126,403) (77,605)
3 (480,210) (379,463)
Operating loss
Finance income 1,310 3,343
Finance cost (31,062) (31,998)
Loss on ordinary activities before (509,962) (408,118)
taxation
Taxation 7,354 -
Loss on ordinary activities after (502,608) (408,118)
taxation
Basic and diluted loss per share (0.40)p (0.42)p
[1] EBITDA represents earnings before depreciation and
amortisation, profit on sale of non-current assets, finance income,
finance costs and UK income tax.
Consolidated balance sheet
Note 2009 2008
£ £
Assets
Non-Current Assets
Property, plant and equipment 81,668 81,746
Goodwill 278,295 179,070
Other intangible assets 307,376 142,672
667,339 403,488
Current Assets
Inventory 4,575 5,472
Trade and other receivables 691,802 576,577
Cash and cash equivalents 92,905 370,738
789,282 952,787
Total Assets 1,456,621 1,356,275
Liabilities
Non-Current Liabilities
Long term borrowings 29,022 48,236
29,022 48,236
Current Liabilities
Trade and other payables 1,373,330 773,020
Borrowings 173,049 150,057
1,546,379 923,077
Total Liabilities 1,575,401 971,313
Net Assets (118,780) 384,962
Equity
Share capital 661,567 649,314
Share premium 1,423,849 1,423,849
Merger reserve 31,000 29,387
Shares to be issued - 15,000
Profit and loss account (2,235,196) (1,732,588)
Total Equity (118,780) 384,962
Consolidated statement of changes in
equity
Share Share Merger Shares Profit and Total
capital premium reserve to be loss equity
issued account
£ £ £ £ £ £
Balance at 1 415,138 1,104,574 - - (1,324,470) 195,242
April 2007
Shares 234,176 319,275 29,387 - - 582,838
issued
Shares to be - - - 15,000 - 15,000
issued in
respect of
Copia
acquisition
Loss for the - - - - (408,118) (408,118)
year and
total income
and expense
Balance at 649,314 1,423,849 29,387 15,000 (1,732,588) 384,962
31 March
2008
Balance at 1 649,314 1,423,849 29,387 15,000 (1,732,588) 384,962
April 2008
Shares 4,753 - 410 - - 5,163
issued in
respect of
Professional
Development
Partnership
Limited
Reversal of 7,500 - 1,203 (15,000) - (6,297)
shares to be
issued in
respect of
Copia
acquisition
Loss for the - - - - (502,608) (502,608)
year and
total income
and expense
Balance at 661,567 1,423,849 31,000 - (2,235,196) (118,780)
31 March
2009
Consolidated cash flow
statement
Year to 31 March Year to 31 March
2009 2008
Note £ £
Cash flows from operating activities
Loss after taxation (502,608) (408,118)
Adjustments for:
Depreciation 45,322 47,975
Amortisation 81,081 29,630
Investment income (1,310) (3,343)
Interest expense 31,068 31,998
Increase in trade and other receivables (97,572) (10,132)
Decrease in inventories 897 1,001
Increase in trade and other payables 581,021 144,852
Cash generated from/(used in) operations 137,899 (166,137)
Interest paid (31,068) (31,998)
Net cash generated from/(used in) operating 106,831 (198,135)
activities
Cash flows from investing activities
Purchase of property, plant and equipment (45,244) (26,906)
Investment in intangible assets (128,969) -
Overdraft acquired with business (8,155) (19,991)
Acquisition of business (191,990) (18,750)
Interest received 1,310 3,343
Net cash used in investing activities (373,048) (62,304)
Cash flows from financing activities
Net proceeds from issue of share capital (15,394) 532,837
Principal payment of long-term bank loan (19,214) (12,135)
Net cash (used in)/generated from financing (34,608) 520,702
activities
Net (decrease)/increase in cash and cash (300,825) 260,263
equivalents
Cash and cash equivalents at beginning of 239,895 (20,368)
period
Cash and cash equivalents at end of period (60,930) 239,895
Notes:
1. Going concern
The Group incurred losses in both the current and prior year. As
announced in January the Group underwent a cost reduction programme
in the last quarter of the year to March 2009 which included
reducing the number of operating locations from three to one and
reducing the number of staff. Details of the savings in a full
year are shown in the table below.
The office costs and wages and salaries costs for the current year
in respect of the operating locations that have been closed and the
employees who have been made redundant are shown below under the
discontinued operating charges column together with the direct
costs associated with the office closure and redundancies under the
reorganisation costs column. Both these costs will be
non-recurring in the year to 31 March 2010.
Re-organisation overview
Discontinued operating Reorganisation costs Total
charges
2009 2009 2009
£ £ £
Wages and 270,000 59,484 329,484
Salaries
Office costs 80,000 14,430 94,430
350,000 73,914 423,914
The savings identified above will have a major impact on the
financial results of the Group in the current and future years.
The Directors of the business having considered the cash forecasts
believe that with the re-organisation savings in region of £350,000
per annum, current trading and prospects together with the recent
injection of equity and loan capital totalling £370,000 there is a
reasonable expectation that the funds available to the Group are
sufficient to meet the requirements indicated by those forecasts.
Therefore it is appropriate to adopt the going concern basis in
the preparation of these financial statements.
2. Segment analysis
The Group's primary reporting format is business segment and its
secondary format is geographical segment by origin of revenue.
Intellego operates three main business segments Distribution,
Services and Publishing. The activity undertaken by the
Distribution segment is the resale of software developed by third
parties. The Services segment includes consultancy, customisation,
including development of content, and integration of e-learning
systems. Maintenance of these systems is undertaken by the
Distribution segment. The Publishing segment includes the sale of
internally generated content. The revenues and net result
generated by each of Intellego plc's business segments are
summarised as follows:
Year to 31 March 2009
Distribution Services Publishing Group
£ £ £ £
Revenue 808,353 1,169,191 364,580 2,342,124
Loss for the period (194,017) (289,267) (19,324) (502,608)
Segment assets 376,548 643,127 436,946 1,456,621
Segment liabilities (764,964) (597,143) (213,294) (1,575,401)
Segment depreciation 39,660 43,572 43,171 126,403
and amortisation
Segment capital 7,354 29,224 8,666 45,244
additions
Year to 31 March 2008
Distribution Services Publishing Group
£ £ £ £
Revenue 776,442 744,195 151,330 1,671,967
Loss for the period (203,644) (179,065) (25,409) (408,118)
Segment assets 443,473 757,347 155,455 1,356,275
Segment liabilities (458,651) (468,876) (43,786) (971,313)
Segment depreciation 38,058 38,524 1,023 77,605
and amortisation
Segment capital 18,055 8,465 386 26,906
additions
Inter segment pricing is performed at an arms length basis.
The Group's revenues from external customers may also be summarised
by geographical segments as follows.
All operations are located in the UK:
2009 2008
£ £
United Kingdom 2,112,408 1,620,965
North America 54,948 38,358
Europe 174,768 12,644
2,342,124 1,671,967
3. Loss before taxation
Loss before taxation is stated after charging:
2009 2008
£ £
Amortisation of intangible fixed assets 81,081 29,630
Depreciation of plant, property and equipment
- owned by the group 45,322 47,975
Auditors' remuneration:
Fees payable to the company's auditors for the audit 3,500 3,500
of the company's annual accounts
Fees payable to the company's auditors for other
services:
- The audit of the company's subsidiaries, pursuant 13,000 13,000
to legislation
- Taxation services 3,500 3,500
- Other services 5,000 8,000
Operating lease rentals
- other operating leases 47,792 31,000
4. Restructuring costs
As detailed in the Chairman's Statement the Group has undergone a
restructuring in the last quarter of the year to March 2009 which
has included reducing the number of operating locations from three
to one and reducing the staff base through a restructuring
programme. The direct costs associated with the office closure and
the staff restructuring are as follows.
Restructuring costs
2009
£
Wages and salaries 59,484
Office costs 14,430
73,914
5. Summary accounts
The summary accounts set out above do not constitute statutory
accounts as defined by Section 240 of the UK Companies Act 1985.
The summarised consolidated balance sheet at 31 March 2009 and the
summarised consolidated income statement, summarised consolidated
statement of changes in equity and the summarised consolidated cash
flow statement for the year then ended have been extracted from the
Group's 2009 audited statutory financial statements. The auditor's
report on the statutory financial statements for the year ended 31
March 2009 was unqualified and did not contain any statement under
Section 237(2) or (3) of the Companies Act 1985.
The comparative figures relating to the year to 31 March 2008 are
taken from the audited statutory accounts for that year.
This financial statements for the year ended 31 March 2008 have
been reported on by the Company's auditors and delivered to the
Register of Companies.
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