Progility : Interim Results for 6 months to 31 December 2016

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 £36.5 million (2015: £30.0 million)

• Operating profit £1.6 million (2015: £0.1 million)

• Profit before tax £0.03 million (2015: Loss £1.2 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 £36.5 million (2015: £30.0 million)

• Operating profit £1.6 million (2015: £0.1 million)

• Profit before tax £0.03 million (2015: Loss £1.2 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 ended	six months ended
31 December 2016	31 December 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 £8.71m to £7.72m. 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 £0.74m, after the inclusion of £0.22m 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 £5.60m to £6.26m, and a loss in the prior year has been turned into an operating profit of £0.62m. 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 £0.25m 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 £0.8m, has now contributed £1.2m 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 £16.19m to

£22.81m, accompanied by an increase in operating profits from £0.17m to £0.83m.