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ILX boosts financials

• FROM: July 2006 |
• TAGS: support services, ilx |
• COMMENTS: Add yours

• ILX boosts financials
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Training provider ILX could double its profit through the proposed acquisition of Corporate Training Group.

ILX is paying an initial £7m in cash and shares for CTG with the potential to pay an additional £5m over two years depending on performance. Part of the cash consideration is being funded by a £2.6m placing at 80p a share. CTG provides financial modelling, accounting and valuation courses on customers own premises which helps reduce working capital requirements and enhances cash generation. Customers include HSBC and Barclays. ILX will help CTG to sell its training in the form of e-learning and there should be cross-selling opportunities between the businesses. ILX has always been second half weighted whereas CTG’s strong period is in the summer. This should make the group figures less seasonal. Last year CTG made an operating profit of £1.15m on turnover of £3.32m. In the year to March 2006 ILX made operating profits of £1m and pre-tax profits of £942,000 - just short of forecasts.

The group is becoming a much more significant size and it will be easier to find and finance additional acquisitions. The acquisition record has been good so far. Prior to the acquisition the shares were trading on 11 times fully taxed earnings and CTG should be earnings enhancing this year although updated forecasts won’t be issued until the end of July. In reality ILX won’t pay a full tax charge this year but the purchase of CTG will make that day come faster.

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