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PGY Progility

47.50
0.00 (0.00%)
Last Updated: 00:00:00
Delayed by 15 minutes
Share Name Share Symbol Market Type Share ISIN Share Description
Progility LSE:PGY London Ordinary Share GB00BF5L3580 ORD 0.25P
  Price Change % Change Share Price Bid Price Offer Price High Price Low Price Open Price Shares Traded Last Trade
  0.00 0.00% 47.50 40.00 55.00 0.00 00:00:00
Industry Sector Turnover Profit EPS - Basic PE Ratio Market Cap
0 0 N/A 0

Progility PLC Interim Results (2581A)

23/03/2017 7:00am

UK Regulatory


Progility (LSE:PGY)
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TIDMPGY

RNS Number : 2581A

Progility PLC

23 March 2017

Embargoed: 7.00a.m. 23 March 2017

Dissemination of a Regulatory Announcement that contains inside information according to REGULATION (EU) No 596/2014 (MAR).

Progility plc

("Progility" or "the Group")

Interim Results

Progility plc (AIM: PGY) the Professional Services, Healthcare and Communications firm is pleased to announce its Interim Results for the six months to 31 December 2016.

The results for the six months to 31 December 2016 have shown a significant growth in sales, up by 22% over the prior period, a result of organic growth and favourable exchange rate movements. There have been no acquisitions in the period. The businesses' performance continues to be reported in three segments; Professional Services (comprising the training and recruitment businesses), Healthcare (comprising Starkstrom) and Communications (which is comprised of our communications technology businesses in India and Australia). Professional Services revenues declined in the period. Healthcare has performed well in the period achieving a 12% increase in revenue, and Communications has achieved a 41% increase in revenue, some of which is as a result of the weakness of Sterling following the 'Brexit' referendum, as well as organic growth in India and Australia.

Six months' highlights from continuing operations - good revenue growth, achieved profits

   --      Revenues up to GBP36.5 million (2015: GBP30.0 million) 
   --      Operating profit GBP1.6 million (2015: GBP0.1 million) 
   --      Profit before tax GBP0.03 million (2015: Loss GBP1.2 million) 
   --      Gross profit margin of 34.9% (2015: 38.5%) 
   --      Operating profit margin of 4.5% (2015: 0.2%) 
   --      Delivery of major contracts in the Healthcare division 

-- Weakness of Sterling has benefitted Group performance, in combination with improved underlying performance of foreign operations

   --      Significant reduction in Central corporate costs 
   --      Turnaround in Australian operations and improving business environment 

Wayne Bos, Executive Chairman, commented:

"The Group has progressed in the first half of the financial year. This improvement is encouraging but does not yet meet what we would consider an acceptable performance. Some major contracts have been won by Starkstrom in the Healthcare division and the closure of our marketing office in the Middle East has enabled cost savings to

be achieved.   Healthcare revenue and profits showed progress. 

The Communications business has performed well, with both the Indian and Australian operations achieving increases in both revenue and reporting higher profits. In India, revenue increased by more than profits, so there was a decrease in profit margins, whilst Australia has increased both revenue and profitability, reversing the operating loss in the prior period.

Professional Services had a weaker first half to the financial year. The ILX brand continues to be recognised as a mark of quality, but has encountered intense price competition in the UK, resulting in a decline in reported revenue and profits. Overseas the ILX businesses have reported both higher revenue and profits, due to the exchange rate benefit, which has resulted in ILX profits overall being in line with the prior year. The ILX management also intends to strengthen its corporate sales division to better complement online sales, where a year on year increase was achieved. In the recruitment business revenue was hampered by the loss of one major customer.

In addition to the above, there has been a reduction in Central corporate costs, which has contributed to the improved Group result.

Overall, we continue to pursue our strategic objectives, and we remain optimistic for the full year to June 2017. Management will continue to seek means to reduce costs and increase revenue, and to improve performance across all areas of the business."

Enquiries:

 
 Progility plc 
 Wayne Bos, Executive Chairman    020 7371 4444 
 
 SPARK Advisory Partners 
  Limited (Nominated Advisor) 
 Mark Brady/Sean Wyndham-Quin     0203 368 3551 
 
 W H Ireland Limited (Broker) 
 Adrian Hadden                    020 7220 1666 
 

Executive Chairman and Financial Review

Introduction

The results for the six months to 31 December 2016 have shown a significant growth in sales, up by 22% over the prior period, a result of organic growth and favourable exchange rate movements. There have been no acquisitions in the period. The businesses' performance continues to be reported in three segments; Professional Services (comprising the training and recruitment businesses), Healthcare (comprising Starkstrom) and Communications (which is comprised of our communications technology businesses in India and Australia). Professional Services revenues declined in the period. Healthcare has performed well in the period achieving a 12% increase in revenue, and Communications has achieved a 41% increase in revenue, some of which is as a result of the weakness of Sterling following the 'Brexit' referendum, as well as organic growth in India and Australia.

Highlights from continuing operations - good revenue growth, achieved profits

   --      Revenues up 21.6% to GBP36.5 million (2015: GBP30.0 million) 
   --      Operating profit GBP1.6 million (2015: GBP0.1 million) 
   --      Profit before tax GBP0.03 million (2015: Loss GBP1.2 million) 
   --      Gross profit margin of 34.9% (2015: 38.5%) 
   --      Operating profit margin of 4.5% (2015: 0.2%) 
   --      Delivery of major contracts in the Healthcare division 

-- Weakness of Sterling has benefitted Group performance, in combination with improved underlying performance of foreign operations

   --      Significant reduction in Central corporate costs 
   --      Turnaround in Australian operations and improving business environment 

The last six months have seen an improvement in the performance of the Group as a whole. Gross profit margins have declined compared to the previous year, due to competitive pressures, however better efficiencies and savings in Central corporate costs have translated into an improvement in the operating profit margin. Market conditions have improved in mining in Australia, and the Indian operations continue to deliver positive results. There are challenges to face in Professional Services. The current period saw no acquisitions or disposals, thereby allowing the management to focus on the existing businesses and their individual operating performance.

Overview and summary of results

The geographic spread of our Group has been helpful to a developing business, particularly in the digital age; it allows access for our offerings to more markets, as is clearly illustrated with the international spread of the project management training business.

Our business continues to be managed through three business segments to maximize our ability to communicate and to deliver our full range of products and expertise to our key clients' decision makers across the diverse territories and time zones in which we operate. These three segments reflect the management responsibility and accounting arrangements used to manage and report upon the performance of the business. Key performance indicators (KPI's) for each business are revenue, gross profit margin and earnings before interest, taxation, depreciation and amortisation (EBITDA).

Revenue in the Professional Services segment declined in the current period, a result of pricing pressures in the UK ILX business and also the loss of a major client in one of the recruitment businesses. Further afield the ILX businesses continue to perform, assisted by favourable exchange rates, with both the Australian and Dubai based businesses reporting improvement in both revenues and profits.

Executive Chairman and Financial Review (continued)

The UK-based Starkstrom Healthcare business continues to integrate within Progility. Starkstrom has won some major contracts in the period. The decision to close our marketing office in Dubai, which was not successful, has resulted in cost savings.

The Communications segment has been the leading performer in the first half, with the improved underlying business performance enhanced by the weaker Sterling on consolidation into the Group result. The performance in Australia has been noteworthy, where an operating loss in the first half of last year has been converted to an operating profit. The strengthening of our management team in Australia has also contributed, following the appointment of a fully focused Chief Executive. In India the economy continues to perform, which is reflected in the continued performance of the business.

Summary of results and operating performance from continuing operations

The table below sets out a summary of our results:

 
                          Unaudited 
                                six      Unaudited 
                             months     six months 
                              ended          ended 
                        31 December    31 December 
                               2016           2015 
 
 Revenue                     36,486         30,002 
                      -------------  ------------- 
 Gross 
  profit                     12,736         11,539 
                      -------------  ------------- 
 
 Operating profit             1,628             74 
                      -------------  ------------- 
 
 Net finance 
  costs                     (1,600)        (1,267) 
                      -------------  ------------- 
 
 Profit / (loss) 
  before tax                     28        (1,193) 
                      -------------  ------------- 
 
 

Professional Services' revenues declined 11.4% against prior year, from GBP8.71m to GBP7.72m. Revenue fell in the UK ILX business, but increased in Australia and the Middle East. Revenue also fell in the recruitment businesses. However, operating profitability within the segment was maintained at GBP0.74m, after the inclusion of GBP0.22m of costs in the prior year, which had previously been included within Central corporate costs. The management of the ILX businesses remain focused on the reasons for the decline in revenue generation.

In the Healthcare segment revenue increased 11.8% against prior year, year-on-year from GBP5.60m to GBP6.26m, and a loss in the prior year has been turned into an operating profit of GBP0.62m. Margins have improved at gross profit and operating profit levels, a result of maximising value from contracts and containing costs. The closure of the overseas operation has resulted in a saving of GBP0.25m compared to the prior year, which has contributed to the overall result.

The Communications segment has performed well in the first half of the year both in India and Australia. The Australian operations in particular have seen a revival in the mining sector as well as an increase in sales of radio equipment in the retail market, which has translated into a 36% increase in revenue and enable an operating profit to be achieved, reversing the losses reported in the prior year. The Indian business, acquired in December 2014 for GBP0.8m, has now contributed GBP1.2m of dividends to the UK and continues to grow in its home market. As a whole the Communications division achieved a 40.9% increase in turnover year on year, from GBP16.19m to GBP22.81m, accompanied by an increase in operating profits from GBP0.17m to GBP0.83m.

Executive Chairman and Financial Review (continued)

Central corporate costs have declined by 39.4% from the prior year, a direct result of measures taken to reduce costs due to less corporate activity, but also to achieve greater efficiencies in the management of the Group. Central corporate costs totalled GBP0.57m in the period, compared to GBP0.94m a year before.

The operating profit from continuing business in the period was GBP1.63m, compared to GBP0.74m in the prior period. There are no items being highlighted in either the current reporting period or the same period last year.

The level of debt has increased by GBP0.2m in the period but, as a result of an increase in accrued unpaid interest on existing debt, the net interest charge rose to GBP1.60m (2015 GBP1.27m), resulting in a small profit before tax of GBP0.03m for the six months to December 2016 (2015: loss before tax GBP1.19m).

The tax charge in the period was GBP0.31m, relating to corporation tax on profits in India and a distribution tax on the payment of dividends from India.

Discontinued operations in the current period resulted in a small GBP5k loss after tax compared to a loss of GBP161k in the previous year.

Cash flow, net debt and facilities

Cash generated from operations in the period was GBP0.38m (2015: GBP(0.35)m), principally reflecting the improvement in profitability offset by increases in working capital, including an increase in inventory within the Healthcare sector required for contracts to be delivered. Capital expenditure was GBP0.31m in the period, broadly similar to the previous year and, in combination with the final GBP0.68m deferred payment for the acquisition of Starkstrom, resulted in a GBP0.94m cash outflow from investing activities.

At the balance sheet date the Group's debt facilities, including unpaid interest, comprised GBP1.14m of invoice discounting facility (2015 GBP2.39m) and GBP24.31m of shareholder loans (including convertible loan notes) (2015 GBP17.10m). In the prior year there were an additional GBP1.38m of third party loans which have since been repaid.

At the same date the Group's cash and cash equivalents amounted to GBP2.93m (2015 GBP3.46m).

Shareholder loans

The Group's acquisitions have been funded in recent years entirely through the issue of 12% loan notes which are listed on the Channel Islands Stock Exchange.

The subscriber for all these notes has been DNY Investments Limited, a company which is an asset of the DNY Trust, a family trust of which Wayne Bos, Executive Chairman, is a discretionary beneficiary and of which Praxis Trustees Limited, the company's controlling shareholder, is trustee. Praxis Trustees remain supportive of the Group's strategy.

Dividend

The Board does not recommend a dividend for the period ended 31 December 2016. Given the Group's strategic direction and historic financial performance, the Board does not envisage the Company's paying a dividend for the foreseeable future.

By order of the Board

 
 Wayne M Bos 
  Executive Chairman 
 23 March 2017 
 

Unaudited consolidated statement of Comprehensive Income for the six months ended 31 December 2016

 
                                        Unaudited     Unaudited     Audited 
                                       six months    six months        year 
                                            ended         ended       ended 
                                       31.12.2016    31.12.2015    30.06.16 
 
 Continuing operations         Note        GBP000        GBP000      GBP000 
 
 Revenue                       3,4         36,486        30,002      61,631 
 
 Cost of Sales                           (23,750)      (18,463)    (39,015) 
                                     ------------  ------------  ---------- 
 Gross profit                              12,736        11,539      22,616 
 
 Administrative and 
  distribution expenses 
  - excluding highlighted 
  items                                  (11,108)      (11,465)    (22,722) 
 Administrative and 
  distribution expenses 
  - highlighted items                           -             -       (588) 
----------------------------  -----  ------------  ------------  ---------- 
 Total administrative 
  and distribution 
  expenses                               (11,108)      (11,465)    (23,310) 
 
 Other income - highlighted 
  items                                         -             -       2,000 
 Other expenses - 
  highlighted items                             -             -           - 
 
 Operating (loss)/profit 
  before highlighted 
  items                                     1,628            74       (106) 
 Highlighted items                              -             -       1,412 
----------------------------  -----  ------------  ------------  ---------- 
 Operating (loss)/profit                    1,628            74       1,306 
 
 Finance income                                74           124         263 
 Finance costs                            (1,674)       (1,391)     (2,962) 
                                     ------------  ------------  ---------- 
 
 (Loss)/profit before 
  tax and highlighted 
  items                                        28       (1,193)     (2,805) 
 Highlighted items                              -             -       1,412 
----------------------------  -----  ------------  ------------  ---------- 
 
 (Loss)/profit before 
  tax                                          28       (1,193)     (1,393) 
 
 Tax charge                                 (306)         (433)     (1,038) 
                                     ------------  ------------  ---------- 
 (Loss)/profit after 
  tax                                       (278)       (1,626)     (2,431) 
 
 Discontinued operation 
 Loss after tax from 
  discontinued operations       5             (5)         (161)       (268) 
                                     ------------  ------------  ---------- 
 
 (Loss)/profit for 
  the period attributable 
  to equity shareholders                    (283)       (1,787)     (2,699) 
                                     ------------  ------------  ---------- 
 
 Items that may be 
  reclassified to profit 
  or loss 
                                     ------------  ------------  ---------- 
 
 Currency translation 
  differences on foreign 
  operations                                  440           216         662 
                                     ------------  ------------  ---------- 
 
 Other comprehensive 
  income, net of tax                          440           216         662 
                                     ------------  ------------  ---------- 
 
 Total comprehensive 
  (loss)/profit                               157       (1,571)     (2,037) 
                                     ============  ============  ========== 
 
 (Loss)/earnings per 
  share 
 Basic                          6         (0.14)p       (0.89)p     (1.22)p 
 Diluted                        6         (0.14)p       (0.89)p     (1.22)p 
 

Unaudited consolidated statement of Financial Position as at 31 December 2016

 
 
                                    Unaudited     Unaudited      Audited 
                                        As at         As at        As at 
                                   31.12.2016    31.12.2015    30.6.2016 
                                       GBP000        GBP000       GBP000 
 Assets 
 Non-current assets 
 Property, plant and 
  equipment                             1,097         1,316        1,029 
 Intangible assets                     19,527        20,009       19,501 
 Deferred tax asset                       839           848          709 
                                 ------------  ------------  ----------- 
 Total non-current 
  assets                               21,463        22,173       21,239 
                                 ------------  ------------  ----------- 
 
 Current assets 
 Inventories                            4,389         3,473        3,260 
 Trade and other receivables           18,040        13,503       14,931 
 Other current assets                   3,288         3,182        2,827 
 Tax receivable                             -            49            - 
 Cash and cash equivalents              2,930         3,460        3,564 
                                 ------------  ------------  ----------- 
 Total current assets                  28,647        23,667       24,582 
 
 Total assets                          50,110        45,840       45,821 
                                 ------------  ------------  ----------- 
 
 Current liabilities 
 Trade and other payables            (24,071)      (17,257)     (20,309) 
 Deferred consideration                     -       (1,361)        (681) 
 Provisions                           (2,694)       (4,275)      (2,650) 
 Tax liabilities                        (205)         (412)        (174) 
 Bank and shareholder 
  loans                               (1,521)       (2,965)      (1,174) 
                                 ------------  ------------  ----------- 
 Total current liabilities           (28,491)      (26,270)     (24,988) 
                                 ------------  ------------  ----------- 
 
 Non-current liabilities 
 Shareholder loans                   (19,039)      (16,699)     (18,463) 
 Deferred tax liability                 (217)         (199)        (186) 
 Provisions                             (142)         (180)        (131) 
                                 ------------  ------------  ----------- 
 Total non-current 
  liabilities                        (19,398)      (17,078)     (18,780) 
                                 ------------  ------------  ----------- 
 
 Total liabilities                   (47,889)      (43,348)     (43,768) 
                                 ------------  ------------  ----------- 
 
 Net assets                             2,221         2,492        2,053 
                                 ============  ============  =========== 
 
 Issued share capital                  19,967        19,967       19,967 
 Share premium                            114           114          114 
 Other reserve                             75            75           75 
 Merger reserve                      (14,854)      (14,854)     (14,854) 
 Own shares in trust                      (2)           (2)          (2) 
 Share option reserve                      47            47           42 
 Retained earnings                    (3,897)       (2,740)      (3,620) 
 Foreign currency translation 
  reserve                                 771         (115)          331 
 Total equity                           2,221         2,492        2,053 
                                 ============  ============  =========== 
 

Unaudited consolidated Cash Flow Statement for the six months ended 31 December 2016

 
                                     Unaudited     Unaudited      Audited 
                                    Six months    Six months   Year ended 
                                         ended         ended    30.6.2016 
                                    31.12.2016    31.12.2015 
 
                                        GBP000        GBP000       GBP000 
 Operating profit/(loss)                 1,623          (87)        1,038 
 
 Adjustments for: 
 Depreciation and amortisation             395           525        1,135 
 Loss on fixed asset 
  disposal                                   -            56           96 
 Impairment of intangibles                   -             -          588 
 Gain on bargain purchase                    -             -            - 
 Share option charge                        11             4           31 
 Revaluation of own 
  shares held in trust                       -             -            - 
 Movement in inventories                 (949)           529        1,113 
 Movement in trade 
  and other receivables                (2,314)         1,991        2,400 
 Movement in trade 
  and other payables                     1,755       (3,634)      (4,446) 
 Exchange difference 
  on consolidation                       (142)           266        (170) 
                                  ------------  ------------  ----------- 
 Cash generated from 
  operations                               379         (350)        1,785 
 
 Income tax paid                         (360)          (15)        (590) 
 
 Net cash generated 
  from operations                           19         (365)        1,195 
                                  ------------  ------------  ----------- 
 
 Investing activities 
 Interest received                          73           124          263 
 Purchases of property 
  and equipment                          (305)         (258)        (388) 
 Capitalised expenditure 
  on product development                  (28)          (45)         (64) 
 Acquisition of subsidiaries 
  (net of cash acquired)                 (681)         (680)      (1,361) 
                                  ------------  ------------  ----------- 
 Net cash used in investing 
  activities                             (941)         (859)      (1,550) 
                                  ------------  ------------  ----------- 
 
 Financing activities 
 Proceeds from borrowings                  191         1,901        2,775 
 Repayment of borrowings                     -         (413)      (2,402) 
 Interest costs paid                      (88)         (158)         (75) 
 Net cash from financing 
  activities                               103         1,330          298 
                                  ------------  ------------  ----------- 
 
 Net change in cash 
  and cash equivalents                   (819)           106         (57) 
 
 Cash and cash equivalents 
  at start of period                     3,564         3,350        3,350 
 Foreign exchange rate 
  differences                              185             4          271 
 Cash and cash equivalents 
  at end of period                       2,930         3,460        3,564 
                                  ============  ============  =========== 
 
 Cash and cash equivalents 
  comprise: 
 Cash in hand and at 
  bank                                   2,930         3,460        3,564 
 Bank overdraft                              -             -            - 
                                         2,930         3,460        3,564 
                                  ============  ============  =========== 
 
 

Unaudited consolidated Statement of Changes in Equity for the six months ended 31 December 2016

 
                   Called                                      Own                 Foreign 
                       up     Share                         shares     Share      currency 
                    share   premium     Other     Merger        in    option   translation   Retained 
                  capital   account   reserve    reserve     trust   reserve       reserve   earnings     Total 
 Group            GBP'000   GBP'000   GBP'000    GBP'000   GBP'000   GBP'000       GBP'000    GBP'000   GBP'000 
 
 As at 
  30.6.2015        19,967       114        75   (14,854)       (2)        43         (331)      (953)     4,059 
 Options 
  granted               -         -         -          -         -         4             -          -         4 
 Options 
  lapsed 
  and waived            -         -         -          -         -         -             -          -         - 
 Transactions 
  with owners           -         -         -          -         -         4             -          -         4 
                 --------  --------  --------  ---------  --------  --------  ------------  ---------  -------- 
 
 Profit 
  for the 
  year                  -         -         -          -         -         -             -    (1,787)   (1,787) 
 Other 
 comprehensive 
 income: 
 Foreign 
  currency 
  translation 
  adjustment            -         -         -          -         -         -           216          -       216 
                 --------  --------  --------  ---------  --------  -------- 
 Total 
  comprehensive 
  income 
  for the 
  year                  -         -         -          -         -         -           216    (1,787)   (1,571) 
                 --------  --------  --------  ---------  --------  --------  ------------  ---------  -------- 
 As at 
  30.12.2015       19,967       114        75   (14,854)       (2)        47         (115)    (2,740)     2,492 
                 ========  ========  ========  =========  ========  ========  ============  =========  ======== 
 
 
 
                   Called                                      Own                 Foreign 
                       up     Share                         shares     Share      currency 
                    share   premium     Other     Merger        in    option   translation   Retained 
                  capital   account   reserve    reserve     trust   reserve       reserve   earnings     Total 
 Group            GBP'000   GBP'000   GBP'000    GBP'000   GBP'000   GBP'000       GBP'000    GBP'000   GBP'000 
 
 As at 
  30.6.2016        19,967       114        75   (14,854)       (2)        42           331    (3,620)     2,053 
 Options 
  granted               -         -         -          -         -        11             -          -        11 
 Options 
  lapsed 
  and waived            -         -         -          -         -       (6)             -          6         - 
 Transactions 
  with owners           -         -         -          -         -         5             -          6        11 
                 --------  --------  --------  ---------  --------  --------  ------------  ---------  -------- 
 
 Profit 
  for the 
  year                  -         -         -          -         -         -             -      (283)     (283) 
 Other 
 comprehensive 
 income: 
 Foreign 
  currency 
  translation 
  adjustment            -         -         -          -         -         -           440          -       440 
                 --------  --------  --------  ---------  --------  -------- 
 Total 
  comprehensive 
  income 
  for the 
  year                  -         -         -          -         -         -           440      (283)       157 
                 --------  --------  --------  ---------  --------  --------  ------------  ---------  -------- 
 As at 
  30.12.2016       19,967       114        75   (14,854)       (2)        47           771    (3,897)     2,221 
                 ========  ========  ========  =========  ========  ========  ============  =========  ======== 
 
 

Notes to the unaudited accounts:

   1.     Basis of preparation and accounting policies 

These interim financial statements are for the six months ended 31 December 2016. They have been prepared based on the measurement and recognition principles of International Financial Reporting Standards as adopted by the European Union (EU-IFRS) and IFRC interpretations issued and effective at the time of preparing these statements. They do not include all of the information required for full annual financial statements, and should be read in conjunction with the audited financial statements of Progility plc for the year ended 30 June 2016. The financial information for the period ended 31 December 2016 set out in this interim report does not constitute statutory accounts as defined in Section 434 of the Companies Act 2006. The Group's statutory financial statements for the period ended 30 June 2016 have been filed with the Registrar of Companies and can be found on the Group's website www.progility.com. The auditor's report on those financial statements was unqualified and did not contain statements under Section 498(2) or Section 498(3) of the Companies Act 2006. These interim financial statements have been prepared under the historical cost convention as modified by the revaluation of derivative financial instruments. These interim financial statements have been prepared in accordance with the accounting policies detailed in the Group's financial statements for the year ended 30 June 2016 except as documented herein. The accounting policies have been applied consistently throughout the Group for the purposes of preparation of these interim financial statements. The interim financial statements are presented in Sterling (GBP), which is also the functional currency of the Company.

These interim financial statements have been approved for issue by the board of directors. It should be noted that accounting estimates and assumptions are used in preparation of the interim financial information. Although these estimates are based on management's best knowledge and judgement of current events and actions, actual results may ultimately differ from those estimates. The areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the interim financial information, are set out in note 2 to the interim financial information. In the future, actual experience may deviate from these estimates and assumptions.

The consolidated financial statements include the financial statements of Progility plc and its subsidiaries. There are no associates or joint ventures to be considered.

   2.     Accounting estimates and key judgements 

The preparation of the interim financial statements in conformity with IFRS requires management to make estimates and assumptions that affect the reported amounts of revenues, expenses, assets and liabilities, and the disclosure of contingent liabilities at the date of the financial statements. Such estimates and assumptions are based on historical experience and various other factors that are believed to be reasonable in the circumstances and constitute management's best judgment of conditions at the date of the financial statements. Key estimates and judgments relate to impairment analysis assumptions, revenue recognition over exam vouchers, stock movement and deferred tax assets. In the future, actual experience may deviate from these estimates and assumptions, which could affect the interim financial statements as the original estimates and assumptions are modified, as appropriate, in the period in which the circumstances change.

Key judgement - Goodwill

In respect of acquisitions, the Group measures goodwill at the acquisition date as:

-- The fair value of the consideration transferred; plus the recognised amount of any non-controlling interests in the acquired; plus

   --      The fair value of the existing equity interest in the acquiree; less 

-- The net recognised amount (generally fair value) of the identifiable assets acquired and liabilities assumed.

When the excess is negative, the negative goodwill is recognised immediately in the profit and loss. Costs related to the acquisition, other than those associated with the issue of debt or equity securities, are expensed as incurred.

Notes to the unaudited accounts (continued):

   2.    Accounting estimates and key judgements (continued) 

Key judgement - Going concern

The Directors, after making enquiries of its loan note holders, considering its financing arrangements and based on its cash flow projections, have a reasonable expectation that the Company and the Group will have adequate resources to continue in operational existence for the foreseeable future. Accordingly, they continue to adopt the going concern basis in preparing the annual report and financial statements.

   3.     Prior year comparatives 

In line with the 30 June 2016 audited financial statements, the prior period comparatives in these financial statements have been re-presented to reflect the decision by Woodspeen Training Limited to discontinue operations in the south of England, and provide all training services in the north of the country. Details of the discontinued operations are provided in note 5 below.

In addition, for the purpose of segmental reporting, certain prior period costs have been reallocated from Central corporate costs to the Professional Services segment, as detailed in note 4, to ensure a like for like comparison with the current period.

   4.     Segmental reporting 

In accordance with IFRS 8 the Group's operating segments are based on the reports reviewed by the Executive Directors that are used to make strategic decisions.

The Group reports its results in three segments:-

Professional Services - The Group's Professional operations comprise the training, recruitment and consultancy activities operating in the UK, Dubai, Australia and New Zealand.

Healthcare - The Group's Health operations comprise the activities of Starkstrom Limited.

Communications - The Group's Communications operations comprise the technology solutions goods and services businesses which operate in Australia and India.

Central corporate costs comprise Head Office functions, including Finance, Treasury and Human Resources. A total of GBP0.22m of costs incurred in the prior six month period have been reallocated to the Professional Services division to allow a like for like comparison to be achieved. These costs related to the transfer of the ILX training business from Progility plc to ILX Group plc.

Segment profit or loss consists of earnings before interest, tax and highlighted items. This measurement excludes the effects of non-recurring expenditure from the operating segments such as restructuring costs and purchased intangibles amortisation. Interest income and expenditure are not allocated to segments as this type of activity is driven by the central treasury activities, which manages the cash position of the Group.

Notes to the unaudited accounts (continued):

   4.      Segmental reporting (continued) 
 
                                                              Six months 
                                         Six months                ended           Year ended 
                                   ended 31.12.2016           31.12.2015            30.6.2016 
                                            Segment              Segment              Segment 
                                            Profit/              Profit/              Profit/ 
                                 Revenue     (loss)   Revenue     (loss)   Revenue     (loss) 
                                 GBP'000    GBP'000   GBP'000    GBP'000   GBP'000    GBP'000 
 
 Professional services             7,719        737     8,712        728    16,748        819 
 Healthcare                        6,255        622     5,596       (53)    11,148         62 
 Communications                   22,810        831    16,185        174    34,559        515 
 Elimination of Professional 
  Services discontinued 
  operations                       (298)          5     (491)        161     (824)        268 
 Central corporate 
  costs                                       (567)                (936)              (1,770) 
                               ---------  ---------  --------  ---------  --------  --------- 
 
 Total segmental 
  result                          36,486      1,628    30,002         74    61,631      (106) 
                               =========             ========             ======== 
 
 Highlighted items                                -                    -                1,412 
                                          ---------            ---------            --------- 
 Operating profit 
  from continuing 
  operations                                  1,628                   74                1,306 
 Net finance costs                          (1,600)              (1,267)              (2,699) 
 Profit before tax 
  from continuing 
  operations                                     28              (1,193)              (1,393) 
                                          =========            =========            ========= 
 
 Adjusting for highlighted 
  items 
 Reversal of provisions 
  - Non-recurring,                                -                    -              (2,000) 
 Impairment charges 
  - Non-recurring                                 -                    -                  588 
                                          ---------            ---------            --------- 
                                                  -                    -              (1,412) 
                                          =========            =========            ========= 
 
 
                       As at 31.12.2016           As at 31.12.2015           As at 30.6.2016 
 
                   Segmental      Segmental   Segmental      Segmental   Segmental      Segmental 
                      assets    liabilities      assets    liabilities      assets    liabilities 
                     GBP'000        GBP'000     GBP'000        GBP'000     GBP'000        GBP'000 
 Professional 
  services            22,052         24,979      21,511         22,335      21,384         24,123 
 Healthcare            3,510          3,757       4,933          4,505       3,543          3,601 
 Communications       24,548         19,153      19,396         16,508      20,894         16,044 
                  ----------  -------------  ----------  -------------  ----------  ------------- 
 
 Total                50,110         47,889      45,840         43,348      45,821         43,768 
                  ==========  =============  ==========  =============  ==========  ============= 
 
 
   5.     Discontinued operations 

In February 2016, Woodspeen Training Limited, part of the Group's Professional Services sector, decided to discontinue operations in the south of England and provide all training services in the north of the country. The revenues, expenses and pre-tax profit of the discontinued operations for the current period and the prior period are detailed below.

Notes to the unaudited accounts (continued):

   5.      Discontinued operations (continued) 
 
                                               Six months          Six months 
                                         ended 30.12.2016    ended 30.12.2015 
                                                  GBP'000             GBP'000 
 Revenue                                              298                 491 
 Expenses                                           (303)               (652) 
 Pre-tax loss                                         (5)               (161) 
 Taxation                                               -                   - 
                                       ------------------  ------------------ 
 Post-tax loss                                        (5)               (161) 
                                       ==================  ================== 
 
 Basic and diluted loss per 
  share from discontinued operations                    -               0.08p 
 
   6.     Loss per share 

This has been calculated on the loss for the period of GBP283,000 (2015: Loss GBP1,787,000) and the number of shares used was 199,666,880 (2015: 199,666,880), being the weighted average number of share in issue during the period.

   7.     Dividends 

No dividend is proposed for the six months ended 31 December 2016.

   8.     Copies of Interim financial statements 

The Interim Results will be posted on the Company's web site www.progility.com.

This information is provided by RNS

The company news service from the London Stock Exchange

END

IR PGUUGWUPMGBP

(END) Dow Jones Newswires

March 23, 2017 03:00 ET (07:00 GMT)

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