UK provider of e-learning software and consultancy services, ILX Group, had a mixed year for the period ending 31 March 2011. The good news of 9% overall revenue growth to £12.89m, was dampened by the effects an 18% drop in UK public sector spending which resulted in overall UK revenue declining by 6%.
The company was also negatively impacted by the closure of its CTG business, which provided classroom-based training to the investment banking sector. CTG is a Cinderella story in reverse – it was acquired in 2006 and provided three years of strong performance during which it contributed the lion’s share of profitability to group while ILX was restructuring other areas of the business. But due to a decline in sales to the financial sector and plummeting interest in classroom-based training, CTG was closed at the end of 2010 with ILX reporting a loss from discontinued operations of £10.48m, which has been reported separately to the overall revenue figure - and would certainly hurt the 9% growth figure it it were included directly.
Of the total revenue figure of £12.89m, UK and Ireland contributed £9.31m (69%), down 6%. This was attributed to lower public sector spend, which was reduced by 18% in the UK, to £2.28m. UK public sector accounts for 18% of ILX’s overall revenue. Despite ILX’s expectation of more centralised purchasing and the clear tightening of public sector budgets, it remains optimistic and announced “a major cross-UK government contract win for consultancy” just after the end of the financial year.
The international business represents £3.24m worth of business but grew by 79% over the year, particularly in Australia and New Zealand, and Europe and Scandinavia. ILX reported an operating profit of £1.73m and its operating profit margin improved to 13.4% (2010: 8.9%). Pre tax profit (from continuing operations) was £1.43m, up from £0.76m last year.
Training is a frequent casualty of difficult economic conditions (see SkillSoft and the shape of things to come). What is particularly interesting about these results is the combination of this factor, combined with the shift away from classroom-based learning to more economic and flexible e-learning, which has been helped by the different types of delivery devices available, such as tablets.