ILX Share Discussion Threads

[woodcutter] 12/12/2012 14:13

I read all the past history on the board going back some time and you have my heartfelt sympathy, having cleary tried to engage managment both past and present, for your predicament.

You're right though it could easily multibag but i think we need to see Bos intentions as you say or better still see the whites of his eyes so to speak.

Such a poor response is disturbing but he may have a lot on his plate sorting out the mess.

One thing is for certain i was more than put off by his past experience, despite the success story who on earth calls a company sausage software:-))

WC

[woodcutter] 12/12/2012 08:23

After further research and consideration i have decided to pass on ilx. I couldn't find any reference to recurring revenues and with the old management now removed (due to their profligacy) any client relationaships will need to be rebuilt so even if there is recurring revenue there's some work to be done in maintaining those clients.

Equally there doesn't seem to be any significant barriers to entry and a quick browse through google highlighted numerous companies that offer similar servies so i think it's a very crowded market place indeed i recall reference being made to a price war in one of the annual reports.

I'm struggling to find value out there at the moment most of the shares i'm looking at seem to be up to speed on share price and when bottom fishing i just can't find anything that appeals sadly.

It didn't help when i realised ilx was recommended by TW. When i read his web page on ilx it was the same old same old i'm afraid, too close and friendly with the management to see the real picture.

kiss of death. Such a poor reputation.

Woody

[woodcutter] 11/12/2012 18:05

Noticed you here G1TY

This came out on a number of my advfn filters and looking at it briefly it could be a very good turnaround play. There's still a few things to iron out in my analysis and it might be worth waiting to see how the additional funding requirements develop so i'll be keeping a close eye on things in the short term but it could easily double from here with the right management approach. The client base is very impressive.

Woody

[graham1ty] 07/12/2012 15:59

4alex

Yes, agree re acquisition cost.

re multiples, yes it looks cheap.

re money......they only managed to pay down £1.9m by using all Wayne Bos new money ( £1.2m), existing cash £254,000 and rest from cash flow. Despite c £1m of cash from operations, restructuring costs are flagged at £760,000 ( paying off the old Board....)of which another £600,000 to pay, and Bos says "will put pressure on working capital. We are therefore planning a further cash injection".

I am thrilled as a shareholder that there is action. Just fear dilution. Pre the CTG acquisition there were 12m shares in issue. There are now 40m.......There have already been three placings, each one flagged as getting ILX out of its funding problems. Now we have a fourth mentioned.

Just praying Bos the right man to transform this

[4lexandertg] 07/12/2012 12:10

Graham1TY

The announcement states the amount payable will be a maximum of "£1m plus working capital".

So looking at the numbers the £420,000 (based on net assets of £480,000) will presumably be the working capital amount. Given the nature of the business (consultancy) I'd expect most of this to be cash (or near cash). More tax efficient for Dave Hopkins to sell the cash to ILX than to dividend it out.

As to why Hopkins would join ILX, interesting question looking at the multiples. If Obrar continues at the current levels of £280k PBT, he gets just £350k (1.25x). If he grows the business to £725k profit in year 3, total consideration £1m (1.4x). So I guess Hopkins and Bos must reckon that a lot of that growth will come from the synergies between the businesses, otherwise why would Bos get away with paying so little.

Provided the consultants hang around it looks a decent deal.

They must be confident about the financing (or else the cash position is better than they are making out - £1.9 million of debt was repaid in the last 6 months per interims) in order to fork out £350k. (Unless most of that £480k in assets is of course cash in which case....)

[graham1ty] 07/12/2012 10:17

Reread the acquisitions announcement. Maximum £1m consideration. Comprising
£350,000 upfront
£420,000 for assets
£300,000 earnout
£350,000 earnout

I assume that the £1m consideration is deemed to exclude assets bought ? Er, how does that work ? Consideration is consideration. It is as if they have said maximum £1m goodwill ( ie the excess of the price, over net assets).

There is no indication that the net assets are cash ( which you could argue therefore can be offset against the acquisition price)

Odd

[graham1ty] 07/12/2012 09:49

Interesting acquisition. Interesting that just 24 hrs after saying they had no money. Is this a mate of his ? It says "we know David Hopkins well".....who is we ? All the rest of the ILX Board has gone so unlikely a target from the old management.

Can he immediately afford £350,000 ( though less than KS' salary...). If you were David Hopkins, why join this rag ? Or if you do why not take shares ? Presumably shares were not offered as WB thinks would be too dilutive ? But he either issues them to a new MD/vendot or he has to do yet another share issue, presumably at about ( or at a discount to) this level?

Why not a suggestion that David Hopkins go on the Board ?

No price reaction....the jury still very much out on ILX

[davidlloyd] 05/12/2012 12:00

He does admit it though.

DL

[graham1ty] 04/12/2012 14:43

I wrote 3 times to the new Chairman after he failed to turn up for the AGM, just two short months ago. I had gone to the AGm with a fairly aggressive list of questions, particularly questioning the £650,000 Board cost, the excessive executive pay and the 90% fall in the share price.

Mr Bos has not replied to my letter so in a fit of pique I dumped my list of questions on this Board ( see above, 1604). Well today's sneaked out results have answered one question, my question three: "there have been placings of £1m at 25p, £900,000 at 26p and now £1.2m at 10p.....Is this the last ?"

The answer is NO. Massive restructuring costs, net current liabilities of £3m ( see the balance sheet, NCA £2.6m, NCL £5.5m) and a specific statement that "we are therefore planning a further cash injection".

Oh dear, oh dear. Among other things the Bos injection of cash has entirely been used in paying down debt and restructuring. Nothing for moving the business on. Does this mean Mr Bos found a far deeper can of worms than he thought ? He will be writing off most of his £1.2m......after just two months.

Now I wonder if he will deign to contact me ?

[graham1ty] 04/12/2012 14:27

Slip the results out at 14.07pm on a cold afternoon....does that mean the Chairman/CEO is in the States and only just woken up ? Or he thinks he can do what he likes now he is the only exec Director.

Now to read them. ILX really beginning to worry me.....

[graham1ty] 28/11/2012 11:13

They do not like this..........

Real governance issues now. One, entirely new joint CEO/Chairman, only exec.

Only non-Exec is the ex Chairman ( who presumably is on the way out as well)

Mr Bos had better present his vision for this and what he thinks will happen going forward.........

[graham1ty] 28/11/2012 08:08

Suprised these haven't jumped ! Why sell now ?

[paleje] 28/11/2012 07:49

I don't hold these any more but today's rns looks like good news, pity the chairman can't be bothered to answer your letters Graham1TY. Even if the content might rile him an acknowledgement and thank you for your concern....sensitive areas...undergoing change...blah blah kind of reply would have been better than just blanking a shareholder. Back on my watch list anyway.

[graham1ty] 28/11/2012 07:15

Well, he never replied to my three letters.

He was busy getting rid of the ultimate overhead. KS has taken £2.44m out of this business over the last ten years.......presided over disastrous acquisitions, and let the share price fall 90%.

I am very pleased that the Board has supported the coup by their new shareholder. Entrenched interests might well have not let this happen

[graham1ty] 29/10/2012 12:55

How very disappointing. I went to the AGM to meet the new Chairman. Amazingly, he did not attend !!!! Someone needs to put a rocket up this Board and I hoped he might be the man. Yes, things are changing and the Board is now transformed but.....

However, I went to the AGM with a list of questions for him. I have subsequently written three times enclosing the list of questions, and hoping that we shareholders might actually get a chance to meet him. But no. A one line reply to one of the letters and no attempt to address my questions. Might as well put them up here then and see if that gets a reply from anyone. These were my questions:

"1. Mr Chairman, how actively are you going to be involved ?
2. All the new overseas offices.......do they make sense ? Are they using vast amounts of management time on aeroplanes ?
3. There have been placings of £1m at 25p, £900,000 at 26p and now £1.2m at 10p. Pre CTG there were 12.8m shares in issue, there are now 40m so each has been massively dilutive. Is this the last ?
4. ILX moved to HSBC in November 2011. How did they get into breaching banking covenants by the end of March ? And to such an extent that the dividend had to go ?
5. What is yr view on a dividend ? It was started in 2006, cancelled by 2010, reinstated in 2011, and then cancelled in 2012. It has been handled appallingly.
6. In the accounts, of 87 employees, 25 are listed as admin and management. In the segmental reporting in Note 3, unallocated central costs are £2.4m, up almost 30%. Note 7 lists Admin expenses as £3.8m, more than double the cost of sales. What will you do about overheads ?
7. What is yr view on overheads and executive pay ? Total Board remuneration has been £4.7m over the last ten years. That compares with a market cap of £3m prior to yr investment. The CEO has been paid over £270,000 for each of the last six years. Is that appropriate compared to the market cap? The shareprice has fallen over 90% over that period
8. Was KS's investment a condition of your investment ? Prior to this investment, Mr Scott's entire holding of 418,000 shares was worth £40,000, not much of an equity exposure after 10 years in the business. KS' entire financial exposure to ILX has been through his salary, not equity exposure. Do you agree with this ?
9. What changes will you make to the Options policy. Prior to 2008 KS had 875,000 shares with an option price of on average 100p and MTIP options of 875,000. In 2008 these were all ripped up and since then KS has been issued 1.5m options at a zero exercise price. Is this the kind of equity incentive scheme that you approve ?"

Other than the AGM, small shareholders may not get a chance to meet the Board all year......they are not invited to results meetings. Let us see if Mr Bos will reply to this now ?

[graham1ty] 24/10/2012 10:03

Well, is this the start of a real shake up ?

The Board has been bloated. Ken Scott's pay ( allowing for bonuses and salary taken as shares) has been £2.44million, yes, £2,440,000 !!!!) over the last ten years. The Company is capitalised at about £5m. He has presided over a 90% drop in the share price.

Total Board pay has been over £575,000 for each of the last 5 years ( bar 2011) and total Board pay has been £4.72m !!!!!!!!!!

So, goodbye John Pickles ( £149,000); goodbye Ed Kilkelly ( a lower, non Board salary); goodbye Paul Lever as Chairman; goodbye Lane and Virik ( about £30,000, some paid to their companies)AND revealed at the AGM Ken Scott has taken a "voluntary" pay cut. Voluntary or enforced by the Remuneration Committee recognising the mess the Company has got itself into ? Suspect though that the Remuneration Committee has been toothless ( or why have salaries been so high for so long ???). So, presume that the new Chairman has kicked some backsides, imposed some thrift and a reality check on this bloated Board.

So, new times. Let us hope that the current forecasts of about £1m pbt and 2.5p eps can be met, then at 13p this is dirt cheap.

Come on Mr Chair, shake the tree

[markt] 01/8/2012 12:41

Chairman has stepped aside....good move imo...
yet again ILX issues more shares in order to get cash to pay debts and interest...

last time it was Octopus that bought a large chunk to help ILX out...T1PS fund as well ??

and mention of breaking bank covenants if it had not happened !....

----

Many people would say that a company should operate by re-investing its self generated profits....not by always issuing more new shares just to stay afloat...while cap. value reduces...(if issue new shares to help fund expansion while EPS grows and cap. value grows ...that would be a different story...but it is not the case)

[markt] 15/7/2012 13:31

"ken scott's pay over the last ten years is over £2m.......twice the total payout to shareholders who actually own the bloody company. Ken has shares now worth £15,000. Does he care if the share price is 10p or 100p......notnif the pay cheque keeps coming."

I agree with your points....

KS salary is in fact much higher imho...since need to add bonuses !....often taken as shares....

KS and JP now own around 7-10% of the company.
A cynic may argue that they have been taking bits if it for nothing....since the company has performed badly in the eyes of most shareholders.

imho the award of the bonuses in recent years is dubious legally....since the performance target was imho only met by not taking salary/cash...and taking as deferred shares instead....at 0p exercise price....a fiddle for tax imho....in reality they got the shares, fully in their names already...(imho if had taken the bonus then would not have met the perf. criteria)

The pay and bonuses of the exec. dirs. is now a massive % of the company PAT. Too high a % imo. And with the bad perf. over last 10 years, I dont think they deserve it.