Xpertise Group PLC interim results for the six months ended 30 June 2002
Highlights
· Results
- Turnover from continuing operations up by 12% against the previous year
- Order intake remains at a similar level to last year
- Operating profit at Xpertise Training, before allocation of group costs, of £104,000 (2001 - £20,000)
- Opening half costs of £133,000 in the new Training Solutions division
- Operating loss on continuing operations before goodwill amortisation of £246,000 (2001 - loss of £81,000)
- Loss on ordinary activities before tax of £333,000 (2001 - loss of £231,000)
- Successful establishment of Training Solutions division
- London base secured through acquisition of a scheduled training business
- Board optimism with regard to the expansion of the group
For further information:
Bob Bradley (Chief Executive) 0161 929 2200
Ian Johnson (Finance Director) 0161 929 2200
Brian Coleman-Smith / Amanda Sheehy
Beattie Financial 020 7398 3300
XPERTISE GROUP PLC
INTERIM RESULTS FOR THE SIX MONTHS ENDED 30 JUNE 2002
CHAIRMAN'S STATEMENT
SUMMARY
I am pleased to report that the group has made good progress in the opening half both in its core business of technical training and in the newly formed Training Solutions division.
RESULTS
Despite continuing difficult trading conditions in the UK IT training market, turnover in the core business of Xpertise Training improved by 12% to £2.1 million compared with the opening half of 2001. Operating profit at Xpertise Training, before the allocation of central group costs, improved from £20,000 to £104,000.
Continuing activities now include the new national training projects and consultancy division which was launched as the "Training Solutions" division in April 2002. Training Solutions has made a positive start in winning training contracts, cultivating business relationships and identifying business opportunities. Net costs of £133,000 have been incurred in the successful establishment of this division which have impacted on group operating results.
The comparative results are affected by the discontinued activities of Direct Computer Training Limited and DCT Resources Limited. These businesses were sold in August 2001 and they made an operating profit, before the allocation of central group costs, of £99,000 in the opening half of 2001.
After central overhead costs, the group operating loss before goodwill amortisation was £246,000 (2001 - operating loss of £81,000). Following goodwill amortisation of £87,000 (2001 - £111,000), net interest charges of zero (2001 - £39,000) and tax of zero (2001 - zero), the retained loss for the period was £333,000 (2001 - loss of £231,000).
No interim dividend will be paid.
BUSINESS REVIEW
Xpertise Training
Delivered sales in the opening half were 12% ahead of the corresponding period in 2001. This reflects the delivery of the strong order intake from 2001. Orders received in the eight months to 31 August 2002 are at the same level as the corresponding period in 2001. It is pleasing to consolidate on the good progress made last year when orders improved by 10%, particularly in the light of the declining revenues reported by some of our competitors.
The 12% increase in revenues, amounting to £216,000, on a business that has a relatively fixed cost base, results in a significant improvement in operating profit from £20,000 to £104,000. It is important that we are able to continue to improve the revenue stream whilst maintaining tight control over operating costs.
We have succeeded in implementing many of the plans we identified at the start of the year: scalable systems have been implemented for the core booking and customer relationship management processes; the sales and marketing model has been strengthened and is successfully driving new business from enterprise customer accounts and; the course portfolio has been reviewed and revised with new products in the areas of Unix, XML/Java generic language training and project management.
Training Solutions
Although the Training Solutions division was launched in April 2002 rather than in January as originally planned, I am pleased to report that we have recruited an extremely strong team which has already won projects with a value of over £200,000 during its first five months of operation. These projects, which will be delivered in the second half of 2002, will provide a solid foundation from which we can expand this business.
The focus of Xpertise Training Solutions is to enable customers to make the most of their investment in information technology. We provide learning strategies to enable customers to fully utilise their networked computer systems through tightly managed training programmes.
BUSINESS DEVELOPMENT
I stated in the 2001 Annual Report that the group has a good core business in Xpertise Training but that it lacked the scale and geographic coverage to compete at the highest level in this market.
The new management team established in the early part of the year has now started to address the matter of scale and geographic coverage by the acquisition on 27 July 2002 of specific key assets and goodwill of John Bryce Training (UK) Limited (formerly Aris Education) which was in administrative receivership ("JBT") for £190,000. JBT operated training centres in London, Oxford and Birmingham and was a training delivery partner of Xpertise Training. It had an unaudited turnover of £7.7 million in the year ended 31 December 2001. Although its trading immediately prior to receivership was substantially below this level, we are optimistic that we can renew confidence in its customer base and secure anticipated levels of ongoing business.
The business of JBT that was previously delivered through its London, Oxford and Birmingham training centres is being routed through Xpertise Training's existing centre in the Midlands and its new centre in London. A sales team, primarily formed by ex-JBT employees, has been established and we are recruiting trainers according to demand levels. Operational and management functions are being supplied by existing Xpertise Training staff. The business is now being branded as Xpertise Training.
Although losses will be incurred in this business in the second half of 2002, it is expected to become profitable in early 2003.
It is too early to assess the success of this acquisition but it is a business with similar products that provides us with the opportunity to develop a business stream in an area of the country in which we have long been seeking a presence.
We continue to examine other opportunities to expand the group in a way that will deliver enhanced value for shareholders.
OUTLOOK
It is pleasing, in the current difficult market for IT training, to see that orders received in the eight months to 31 August 2002 in the core business of Xpertise Training have been at a similar level to last year.
Additionally, the progress we have made in establishing the Training Solutions division and in expanding our geographic coverage through the JBT acquisition, provides the Board with optimism regarding the expansion of the group and the achievement of an enhanced scale of operations.
Mike McGoun
Chairman
26 September 2002
CONSOLIDATED PROFIT AND LOSS ACCOUNT
for the six months ended 30 June 2002
6 months to30 June 2002(unaudited) 6 months to30 June 2001(unaudited) Year to 31 December 2001(audited)
Continuing Continuing Discontinued Total Continuing Discontinued Total
£000 £000 £000 £000 £000 £000 £000
Turnover 2,120 1,894 1,042 2,936 4,073 1,203 5,276
Cost of sales (916) (837) (373) (1,210) (1,845) (434) (2,279)
-------- -------- -------- -------- -------- -------- --------
Gross profit 1,204 1,057 669 1,726 2,228 769 2,997
Administrative expenses (including goodwill amortisation) (1,537) (1,254) (664) (1,918) (2,799) (778) (3,577)
-------- -------- -------- -------- -------- -------- --------
Operating (loss)/profit before goodwill amortisation and exceptional item (246) (110) 29 (81) (245) 19 (226)
Amortisation of goodwill (87) (87) (24) (111) (174) (28) (202)
Exceptional item - - - - (152) - (152)
-------- -------- -------- -------- -------- -------- --------
Operating (loss)/profit (333) (197) 5 (192) (571) (9) (580)
Loss on sale of subsidiaries - - - - - (930) (930)
-------- -------- -------- -------- -------- -------- --------
(Loss)/profit before interest (333) (197) 5 (192) (571) (939) (1510)
Interest receivable 17 4 11
Interest payable (17) (43) (72)
-------- -------- --------
Loss on ordinary activities before taxation (333) (231) (1,571)
Tax on loss on ordinary activities - - (5)
-------- -------- --------
Loss for the period (333) (231) (1,576)
Dividends - - -
-------- -------- --------
Retained loss for the period (333) (231) (1,576)
===== ===== =====
Loss per ordinary share:
Basic (0.46p) (0.74p) (4.83p)
Excluding goodwill (0.34p) (0.38p) (0.90p)
CONSOLIDATED BALANCE SHEET
as at 30 June 2002
Unaudited30 June 2002 Unaudited30 June 2001 Audited31 December 2001
£000 £000 £000
Fixed assets
Intangible assets 2,845 3,911 2,932
Tangible assets 322 611 367
-------- -------- --------
3,167 4,522 3,299
-------- -------- --------
Current assets
Stocks 83 111 74
Debtors 798 1,147 538
Cash 838 400 1,260
-------- -------- --------
1,719 1,658 1,872
Creditors: amounts falling due within one year 2,057 2,240 1,881
-------- -------- --------
Net current liabilities (338) (582) (9)
-------- -------- --------
Total assets less current liabilities 2,829 3,940 3,290
Creditors: amounts falling due after more than one year 193 707 321
-------- -------- --------
Net assets 2,636 3,233 2,969
===== ===== =====
Capital and reserves
Called up share capital 3,163 3,123 3,163
Share premium account 5,553 4,512 5,553
Profit and loss account (6,080) (4,402) (5,747)
-------- -------- --------
Shareholders' funds 2,636 3,233 2,969
===== ===== =====
All items under capital and reserves are equity.
NOTES
1. Copies of this statement are being sent to all shareholders. Copies are also available at the registered office of the company: Pacific Road, Atlantic Office Park, Altrincham, Cheshire, WA14 5BJ.
2. On 27 July 2002, the group completed the acquisition of specific assets including goodwill of John Bryce Training (UK) Limited, which was in administrative receivership, for cash consideration of £190,254.
3. Basic earnings per share has been calculated by dividing loss after tax of £333,404 (six months to 30 June 2001 - loss of £230,412) by the number of shares in issue during the period of 72,118,668 (six months to 30 June 2001 - 31,225,334).
4. Earnings per share before goodwill amortisation has been calculated by dividing loss after tax before goodwill amortisation of £246,638 (six months to 30 June 2001 - loss of £119,544) by the number of shares in issue during the period of 72,118,668 (six months to 30 June 2001 - 31,225,334).
5. The financial information given does not constitute accounts within the meaning of Section 240 (5) of the Companies Act 1985. This information has been neither audited nor reviewed. The figures for the year ended 31 December 2001 are extracted from the Annual Report and Accounts as filed with the Registrar of Companies. These were audited and reported on without qualification by BDO Stoy Hayward and did not contain a statement under Section 237 (2) or (3) of the Companies Act 1985.
6. All recognised gains and losses have been included in the profit and loss account.
7. The Board has not declared a dividend for the period ended 30 June 2002.