Trading update

ILX Group PLC

("ILX" or "the Company")

Trading Update 

ILX Group plc (AiM: ILX), the AIM quoted provider of e-learning software and business training, today announces that its year-end profits are likely to be below expectations due to slower than anticipated trading in the UK. Despite the continued challenging market conditions in the UK, the Group has experienced overall revenue growth because of the expansion of International sales.

The Group's strategy continues to be to build recurring revenue streams from its software products, supported by investment in marketing and an international sales footprint. Sales of software licences have increased by 30% year on year. The International growth has been driven particularly by Australia where year on year revenues are up 150% to almost AU$3 million and by the Middle East where consultancy contracts worth in excess of £350,000 have been awarded to ILX within the last month.

UK purchasing confidence has remained weak in the area of classroom training, where the Group has seen a slowdown in spending and a classic price war. At the same time however, elearning has grown substantially year on year, which confirms the Group's decision to move increasingly to digital training: a fundamental part of its marketing strategy. Its ability to develop overseas markets on the back of elearning has also been vindicated by the continuing substantial international growth. The pipeline in the UK remains encouraging, as flagged at the time of our interim results, but lengthening sales cycles and commodity pricing pressure in classroom training has given rise to a shortfall in profitability against expectations for the current year.

The final two months of the financial year remain key in determining the full year result but the expected net impact is that the Group is now anticipating full year sales in the region of £13.5 million and operating profits in the region of £900,000 to £1,200,000.

Ken Scott, Chief Executive, ILX Group plc commented:

"The UK domestic market has become increasingly difficult throughout the year and while that business remains profitable, it will come in below our expectations for the full year and this will reduce the overall profitability.

Within the UK we will continue to focus on recurring revenues, ensuring our e-learning software remains best of breed, and maintaining and developing key relationships with our larger customers. We have made a conscious decision not to chase business at a loss.

We will continue to invest in our proprietary software and in new channels to market to exploit the opportunities for harnessing the inherent scalability of our business model.

The decision to expand internationally continues to be validated and although we recognize that we have work to do to bolster our position domestically, the prospects for the business continue to look good in the medium term."

ILX Group plc 020 7751 7100

Ken Scott, Chief Executive

FinnCap 020 7600 1658

Marc Young/ Charlotte Stranner

Lothbury Financial Services Limited 020 7868 2010

Michael Padley / Chris Roberts