TIDMLTG
RNS Number : 3810M
Learning Technologies Group PLC
21 September 2021
Learning Technologies Group plc
HALF YEAR RESULTS 2021
7% organic revenue growth; delivering on strategy
In line with expectations for full year performance
Learning Technologies Group plc ("LTG" or the "Company"), the
provider of services and technologies for digital learning and
talent management, announces half year results for the six months
ended 30 June 2021.
Strategic highlights
-- Successful integration of Q1 acquisitions Reflektive, PDT Global and Bridge
o Refle ktive and Bridge swiftly moved to profit
o PDT Global achieving high margins and complements LTG's
D&I solutions offering
-- Software & Platforms: functionality enhanced and go-to-market strategy embedded
-- Announcement in July 2021 of proposed acquisition of GP
Strategies for $394 million; will create a global business with
more than 5,000 employees and proforma revenues of c.GBP500m
o The strategically compelling combination will create a
leading, global workforce transformation business focused on
learning and talent management
o LTG has identified significant margin enhancement potential
and cross-sell opportunities and expects the
transaction to be significantly EPS accretive from 2022
Financial highlights
-- Revenue up 29% to GBP82.6m (H1 2020: GBP64.1m) including
first time contributions from Reflektive, PDT Global and Bridge
-- Organic revenue growth* rate of 7% includes strong recovery in professional services
o Software & Platforms : 5% organic growth; particularly
strong growth at Rustici and Breezy
o Content & Services : 14% organic growth; on track to
return to 2019 levels as expected
-- Recurring revenues at 77% (H1 2020: 81%) as C&S revenues recover
-- Adjusted EBIT increased 20% to GBP22.0m (H1 2020: GBP18.4m)
-- EBIT margin down to 26.7% (H1 2020: 28.7%) primarily due to
currency headwinds and short-term losses from Reflektive and Bridge
following acquisition in Q1 2021; expect to return to guided margin
levels for FY 2021
-- Operating cash conversion at 79% (H1 2020: 100%; FY 2020: 85%)
-- Net cash of GBP24.9 million (FY 2020 GBP70.2 million) after
deployment of GBP52.1 million for the three acquisitions made
during the first half
Dividend
-- The Board is committed to a progressive dividend policy and
is pleased to approve an interim dividend of 0.30 pence per share
(H1 2020 0.25 pence per share) representing a 20% increase.
-- Interim dividend will be paid on 29(th) October 2021 to all
shareholders on the register as at 8(th) October 2021.
Current trading and outlook
-- Good start to second half reflecting strong order book growth during the first half
-- Content & Services on track to return to 2019 revenue levels for the full year
-- Robust organic and acquired growth across Software &
Platforms division; market offering positioned to leverage
opportunities in the small and mid-market sectors
-- Acquisition of GP Strategies on track to complete in Q4 2021,
funded by the GBP85m equity placing and $305m debt refinancing
completed in July 2021
-- LTG remains on target to deliver on market expectations for
the full year despite continuing currency headwinds
Jonathan Satchell, CEO of LTG, said:
"LTG's swift return to organic revenue growth reflects a strong
and well-integrated business with class-leading multi-product
solutions for the growing global learning and talent management
market. Delivering 7% organic revenue growth has been an
exceptional achievement by our employees who have adapted well to
an evolving and more flexible working environment.
Following this excellent first half performance, including the
integration of our three most recent acquisitions, we are excited
about the potential to generate further substantial shareholder
value from the addition of GP Strategies, which is expected to
complete in Q4 2021. The enlarged business provides a platform for
further organic growth in a marketplace that is increasingly
receptive to solutions that help organisations efficiently recruit,
train, motivate and retain their people."
Financial summary:
GBPm unless otherwise stated H1 2021 H1 2020 Change
--------------------------------------
Revenue 82.6 64.1 +29%
-------- -------- -------
Organic growth* 7% -7%
-------- -------- -------
Software & Platforms organic
growth 5% -1%
-------- -------- -------
Content & Services organic growth 1 4% -20%
-------- -------- -------
Recurring Revenue 77% 81%
-------- -------- -------
Adjusted EBIT 22.0 18.4 +20%
-------- -------- -------
Adjusted EBIT margin 26.7% 28.7%
-------- -------- -------
Statutory PBT 4.6 4.1 +11%
-------- -------- -------
Basic EPS (pence) 0.705 0.710 -1%
-------- -------- -------
Adj. Diluted EPS (pence) 2.310 2.251 +3%
-------- -------- -------
Net Cash 24.9 77.8
-------- -------- -------
* Organic growth is stated on a constant currency basis and
excludes 2021 acquisitions Reflektive, PDT Global and Bridge. It
includes acquisitions made in 2020 restated as if they had been
owned for the full comparative period.
Analyst and investor presentation:
LTG will host an analyst and investor webcast at 09:00 today,
Tuesday 21 September 2021.
The registration link can be found here:
https://attendee.gotowebinar.com/register/853539199442689035
Telephone audio is available +44 20 3713 5012 or via
international dial-in:
https://attendee.gotowebinar.com/audio/853539199442689035
Webinar ID: 626-546-723
Enquiries :
Learning Technologies Group plc
Jonathan Satchell, Chief Executive +44 (0)20 7402
Neil Elton, Chief Financial Officer 1554
Numis Securities Limited (NOMAD and Corporate
Broker) +44 (0)20 7260
Stuart Skinner, Nick Westlake, Ben Stoop 1000
Goldman Sachs International (Joint Corporate
Broker) +44 (0)20 7774
Bertie Whitehead, Adam Laikin 1000
FTI Consulting (Public Relations Adviser) +44 (0)20 3727
Rob Mindell, Jamie Ricketts, Jamille Smith 1000
About LTG:
LTG is a leader in the growing workplace digital learning and
talent management market. The Group offers end-to-end learning and
talent solutions ranging from strategic consultancy, through a
range of content and platform solutions to analytical insights that
enable corporate and government clients to close the gap between
current and future workforce capability.
LTG is listed on the London Stock Exchange's Alternative
Investment Market (LTG.L) and headquartered in London. The Group
has offices in Europe, North America, LATAM and Asia-Pacific.
Chairman's Statement
Introduction
The Board is delighted to report that Learning Technologies
Group plc ('LTG') has delivered a robust performance in the first
half of 2021, in line with management expectations at the start of
the year, and against a backdrop of significant currency headwinds.
As expected, our Content & Services division has bounced back
strongly as, following the upheaval created by COVID-19, clients
restarted postponed projects and reassessed how to deliver
effective workforce transformation solutions in a more digital,
flexible and fast-paced corporate environment. Our Software &
Platforms division has also demonstrated robust growth and has been
substantially augmented through a number of strategic bolt-on
acquisitions over the past year.
The COVID-19 pandemic has accelerated the trends that we have
witnessed for several years and it is these trends that define our
strategy. Demand for workforce transformation solutions is growing
as organisations increasingly see themselves not only as profit
generators, but as developers of talent and creators of meaningful
and rewarding careers. Recruiting, developing and retaining
employees is now understood to be a more effective and profitable
way of growing than to 'buy-in' skills that have been learned
elsewhere. By developing their own talent, organisations are
finding more effective and profitable ways to create winning and
sustainable cultures.
LTG has combined solid organic revenue growth with a number of
strategic acquisitions. In 2020 we completed five acquisitions,
most notably the integration of three businesses to form Open LMS,
creating the global leader in the open-source Moodle(TM) market. In
the first quarter of 2021 we acquired Bridge and Reflektive, two
strategically important SaaS-based talent platforms, and PDT
Global, a specialist D&I consultancy that complements our
Affirmity business. The combined cash outflow (net of cash
acquired) for these first half acquisitions was GBP52.1 million.
All three businesses are performing well and generating profits,
although margins at Bridge and Reflektive are currently below the
Group average and expected to improve by the year end.
In July, LTG announced the proposed acquisition of GP
Strategies, a leading provider of managed learning services and
workforce transformation, for $394 million. The strategically
compelling combination will create a leading global workforce
transformation business focused on learning and talent. LTG has
identified significant margin enhancement and cross-sell
opportunities, with the proposed transaction expected to be
significantly EPS
accretive in the first year following completion.
Results
In the six months ended 30(th) June 2021, revenues increased by
28.9% to GBP82.6 million (H1 2020: GBP64.1 million) reflecting the
contribution from acquired business and like-for-like constant
currency organic growth of c.7% compared with a decline of c.8% in
2020.
Revenue in Software & Platforms increased 26% to GBP60.9
million (H1 2020: GBP48.5 million) with the division now
representing 74% of overall revenue. On a like-for-like constant
currency basis the Software & Platforms division grew by c.5%
(2020: 0%) with large increases from Rustici and Breezy in
particular, offset as expected, by a decline in PeopleFluent where
COVID-19 has delayed large enterprise procurement processes.
Acquired businesses including Open LMS and Bridge made a
substantial contribution to the year-on-year increase and are both
demonstrating strong top line growth.
Revenue in Content & Services ('C&S') increased 39% to
GBP21.6 million (H1 2020: GBP15.6 million) with the division now
accounting for 26% of overall revenue. On a like-for-like constant
currency basis the Content & Services division grew by c. 14%
(2020: -24%). This strong recovery has been led by LEO and we
expect to see this continue into the second half of the year.
PRELOADED's sales recovery started in Q2 and has accelerated in the
last few months which we expect will result in a very strong H2
performance. C&S is firmly underpinned by a strong order book
and sales pipeline which shows no signs of diminishing.
Recurring revenues as a proportion of total revenue reduced from
81% in H1 2020 to 77% in the first half of 2021, reflecting the
strong growth seen in Content & Services, partly offset by the
change in business mix due to the predominantly SaaS businesses
acquired over the past 12 months.
Adjusted EBIT(1) increased 19.8% to GBP22.0 million (H1 2020:
GBP18.4 million). The resulting EBIT margin of 26.7% was down from
28.7% in H1 2020, driven primarily by currency headwinds. Software
& Platforms margins reduced from 31.5% in H1 2020 to 26.7% in
H1 2021. This was partly due to the temporary impact of the
post-acquisition contributions from Reflektive and Bridge which
have both been rapidly turned to profit following their
integration; these businesses will deliver improved margins in the
second half of the year. The three businesses comprising Open LMS
acquired during 2020 also deliver lower margins than other parts of
the Software & Platforms division and this has changed the
margin mix. It is anticipated that underlying margins will improve
over the medium term as the division sees the benefits of
operational leverage.
Adjusted EBIT margins have increased substantially in the
Content & Services division from 19.7% in H1 2020 to 26.4% in
the first half of 2021. This is primarily as a result of improved
margins in the LEO business as well as the incorporation of the
higher margin PDT Global business into the Group.
Group reported operating profit of GBP5.1 million (H1 2020:
GBP5.1 million) is stated after amortisation of acquired
intangibles, various acquisition earn-out charges, and acquisition
transaction and integration costs. Amortisation of acquired
intangibles increased to GBP11.7 million (H1 2020: GBP10.9
million). Acquisition transaction costs increased to GBP1.6 million
(H1 2020: GBP0.4 million) and integration costs to GBP0.9 million
(H1 2020: GBP0.2 million) and were primarily related to the first
quarter acquisitions of Reflektive, PDT Global and Bridge. The
acquisition related contingent consideration charge increased from
GBP0.9 million in H1 2020 to GBP2.4 million. Contingent
consideration arrangements are in place for Breezy, eThink,
eCreators and PDT and are all contingent on challenging incremental
revenue growth targets. There were no net foreign exchange gains or
losses arising as a result of business acquisitions during the
period (H1 2020: GBP1.1 million).
Finance expenses of GBP0.5 million (H1 2020: GBP0.9 million)
include interest on borrowings of GBP0.3 million (H1 2020: GBP0.6
million) and GBP0.2 million (H1 2020: GBP0.2 million) relating to
the Group's leases under IFRS 16.
The Group reported a profit before tax of GBP4.6 million for the
six months ended 30th June 2021 (H1 2020: GBP4.1 million). The tax
credit of GBP0.6 million (H1 2020: tax credit of GBP0.8 million)
primarily results from taxes on UK and international profits,
offset by the anticipated utilisation of brought forward tax losses
and the change in the UK deferred tax rate from 19 to 25 per cent
(see Note 5.)
Basic earnings per share in H1 2021 was 0.705 pence (H1 2020:
0.710 pence). Adjusted diluted earnings per share as set out in
Note 9 was 3% up on the prior year at 2.310 pence (H1 2020: 2.251
pence) reflecting the strong growth in underlying earnings offset
by an increase in the effective tax rate, the impact of the May
2020 share placing and the potential dilutive impact of share
options.
Gross cash of GBP39.3 million and net cash(1) of GBP24.9 million
at 30(th) June 2021 compares with gross cash of GBP88.6 million and
net cash of GBP70.2 million at 31(st) December 2020. LTG continued
to show good operating cash conversion of 79% (H1 2020: 100%; FY
2020: 85%). Net interest payments reduced from GBP0.8 million to
GBP0.2 million and tax payments increased to GBP4.3 million (H1
2020: GBP1.8 million). Net cash outflows due to the acquisition of
subsidiaries of GBP52.1 million (H1 2020: GBP22.5 million) relate
to the acquisition of Bridge, Reflektive and PDT Global. Spend on
development of intangible assets increased from GBP3.1 million to
GBP3.6 million.
At 30(th) June LTG had a debt facility with Silicon Valley Bank
('SVB') and Barclays Bank for $63.0 million. The facility comprised
a $42.0 million term loan and a committed $21.0 million revolving
credit facility ('RCF') available for five years. As part of the
refinancing for the proposed acquisition of GP Strategies the loan
facility was settled in full on 13 July 2021. It has been replaced
by a new debt facility with SVB, Barclays Bank, HSBC, Fifth Third
Bank and the Bank of Ireland. This new facility comprises a term
loan for $265.0 million, a bridging facility for $40.0 million and
a $50.0 million committed RCF. At this date the facilities remain
undrawn.
Net assets increased to GBP271.8 million at 30th June 2021 (31st
December 2020: GBP269.1 million) and shareholders' funds(1)
increased from 36.4 pence per share to 36.6 pence per share.
(1) Denotes first instance of an Alternative Performance Measure
(APM) term defined and explained in the Glossary
Operational Review
Software & Platforms
The Software & Platforms division comprises SaaS and
on-premise licenced product solutions as well as hosting, support
and maintenance services. The acquisition of Bridge in Q1 now
enables LTG to address the three main segments in the talent
development market.
PeopleFluent provides connectable, fully customisable talent
development products for the complex organisational needs of large
enterprises.
Our new offering, Bridge, is an employee-focused talent
development platform. This modern and popular learning and talent
management suite operates in the high growth, mid-market segment of
the market but also has potential, we believe, to move into certain
sectors of the enterprise market.
Breezy provides the largely self-service, out-of-the-box
capabilities demanded at the smaller company end of the market and
is currently focused on the talent acquisition market.
Other proprietary products such as Reflektive (performance
management), Gomo (authoring), Instilled (learning experience
platform - LXP) and Watershed (analytics) have been or will be
integrated as appropriate with each of the above main market
solutions. They also operate as stand-alone products or can be
integrated with third party solutions.
Open LMS, eCreators and eThink (together 'Open LMS'), all
acquired during 2020, have given LTG a large-scale capability in
the open-source Moodle(TM) market. Already with a strong position
in the education and government sectors, during the first half of
2021 Open LMS has successfully grown the proportion of corporate
clients and has worked alongside other LTG businesses including LEO
and Watershed and integrated Instilled into its solutions.
The Software & Platforms division also comprises VectorVMS,
a contractor management product and Rustici, the leading global
expert in e-learning interoperability software.
Content & Services
The primary business in the Content & Services division is
LEO, the Group's innovative digital learning specialist which
delivers organisational transformation through world-class
consultancy and strategic learning blend design, and creative
content generation. As expected LEO has seen strong demand
throughout the second half of 2020 and into 2021 as corporates
reassess their requirements for digital and blended learning
solutions as the trend towards flexible and remote workforces
accelerates and the competence of extended enterprises becomes ever
more critical.
PRELOADED, LTG's highly regarded games studio, has seen a slower
start to the year but sales have picked up markedly towards the end
of Q2 and into Q3. In the first half of the year the PRELOADED
management team joined LEO and both businesses are now working ever
more closely and successfully to bring blended learning and
gamified solutions to their clients.
PDT Global is a leading provider of D&I training solutions,
acquired in February. It is now working alongside Affirmity, LTG's
existing affirmative action provider, enabling clients to
objectively measure and track their D&I performance and then
implement the tools, processes and actions to make appropriate
changes. Both businesses have demonstrated substantial growth
during the first half of the year.
Acquisitions
LTG acquired Reflektive, Bridge and PDT Global in the first half
of 2021. All businesses have been successfully integrated and
Reflektive and Bridge, which were substantially loss making prior
to acquisition have been quickly turned to profit. Further details
of the acquisitions are provided in Note 16.
Strategic update and proposed acquisition of GP Strategies
Our purpose is to help companies keep up with changing workforce
requirements. We aim to ensure that organisations hire the best
people, put them in the right roles, develop the appropriate
skills, and then retain their employees so that winning cultures
can first be created and then nurtured.
The accelerating pace of change required from all organisations
is causing re-skilling demands that cannot be met through
recruitment alone. Organisations are realising that they need to
become learning enablers, achieved through a combination of
learning provision, performance measurement and talent management.
This will help them to create the motivational and productive
learning environments that they require to maximise employee
satisfaction, enjoyment, and performance so that they remain
competitive and relevant. LTG is rapidly building a global business
to satisfy this growing demand by helping customers to develop
their workforces at scale through integration, customisation, and
contextualisation. Management believes such workforce
transformation can only be achieved through a unique combination of
front-end consulting, deep organisational integration, cross-border
communication and the application of technology to create complete
and embedded solutions.
LTG seeks to achieve these objectives through a combination of
organic growth and strategic acquisitions.
On 15th July LTG announced the proposed acquisition of GP
Strategies, a global provider of workforce performance solutions,
for $394 million. The acquisition of GP Strategies will create the
world's largest specialist workforce transformation business,
focused entirely on workforce learning and development. LTG shares
a vision with GP Strategies that to deliver the integration,
customisation and contextualisation needed to develop workforces
efficiently and effectively, a special type of offering is
required. We believe that to develop effective learning
organisations that will thrive in today's business environment, we
must provide a unique blend of sector-specific technology and
services expertise that is intermeshed with products to produce
insights across complex businesses and sectors, and a range of
skills and experience that can enhance the customer journey.
GP Strategies' strengths include long-standing client
relationships, recurring multi-year revenues with high customer
satisfaction, deep industry expertise, global market presence and a
proven process for cross-selling. The acquisition will provide a
platform for continued organic growth aided by strength in the APAC
market, deep client relationships with established account
management to enable cross-selling of LTG solutions, and specialist
expertise in technology, automotive and finance sectors. GP
Strategies also brings significant offshoring capabilities and
vendor management services that create vertical integration
opportunities for LTG's existing products and services. LTG is
bringing together some of the brightest talents in the industry in
order to deliver the tools and solutions that can help our
customers build the workforce capabilities that they require to
prosper.
The acquisition of GP Strategies represents a transformational
leap in the creation of the complete solution that we envisage
incorporating - a combination of award-winning technology, leading
talent development skills and a global delivery capability. This
will help our customers become the 'learning organisations' that
they need to be to drive up productivity and profitability in a
world of increasing complexity and rapid change, including people's
changing relationship with the workplace.
The combined business will generate pro-forma revenue of
c.GBP500 million, operate in more than 80 countries and, with over
5,000 employees, will give LTG a truly global presence. We have
identified significant margin enhancement and cross-sell
opportunities and may consider divesting some non-core assets. The
transaction will be financed by an GBP85 million share placing and
$305 million of debt financing, both completed in mid-July. The
Company has converted GBP80 million of the placing proceeds into US
Dollars at an effective rate of 1.38 and does not anticipate
drawing down on the debt facility until the transaction closes.
Debt leverage is anticipated to peak at c1.7x before dropping to
less than 1.0x by the end of 2022. Completion of the acquisition is
expected to take place in Q4 2021, and is subject to regulatory and
GP Strategies' shareholder approval.
An extensive and forensic research effort has been ongoing over
recent months with the assistance of GP Strategies' management.
Findings to date support LTG's thesis regarding the level of margin
improvement that can be achieved. Additionally, there are positive
indications that further upside can be delivered thereafter as
improved sales and delivery methodologies are embedded and onerous
long-term contracts with external vendors come to an end. The
transaction is expected to be significantly earnings enhancing from
2022.
The Group will continue to selectively evaluate a limited number
of additional bolt-on acquisition opportunities as the year
progresses.
Corporate Governance
During 2020, LTG further enhanced its ESG initiatives and
reported more fully on measures in place. We have continued on this
journey during the first half of 2021 but more importantly, we are
empowering our customers to achieve their own ESG priorities. As a
business that helps companies to manage and develop their human
capital, our technology and services are helping to directly
improve the talent development of more than 200 million people
around the world.
Our staff have shown incredible dedication and professionalism
over the past 18 months as they have worked from home. With
appropriate support from management, we have demonstrated that we
are able to deliver effectively for our clients and care for our
people. As part of a new policy that will continue after the impact
of COVID-19 we have embraced a flexible working environment,
combining face-to-face activities where it is appropriate and
required, but also empowering our staff as much as possible to
decide whether they wish to work from home or the office.
Dividend
The Board is committed to a progressive dividend policy. On 25
June 2021, the Company paid a final dividend of 0.50 pence per
share, giving a total dividend for 2020 of 0.75 pence per share, in
line with the prior year. Given its confidence in the continuing
success of the Group, the Board is pleased to announce it has
approved an interim dividend of 0.30 pence per share (2020: 0.25
pence per share), representing a 20% increase. This dividend will
be paid on 29th October 2021 to all shareholders on the register as
at 8th October 2021.
Current trading and outlook
We are making solid progress in our ambition to serve small,
mid-size and enterprise tier clients with our targeted,
multi-product solutions. We are excited by opportunities to enhance
our global offering through the successful integration of GP
Strategies. The appreciation by corporates of the necessity,
appropriateness and effectiveness of digital learning and talent
management solutions will, in the Board's view, continue to drive
demand for our solutions and lead to continued strong levels of
performance in the second half of 2021.
At the time of the share placing in May 2020, LTG announced a
new strategic financial objective to achieve run-rate revenues of
circa GBP230 million and run-rate adjusted EBIT of circa GBP66
million by the end of 2022 through a combination of organic growth,
strategic bolt-on acquisitions and with no further dilution to
shareholders. The Board has successfully executed that plan over
the past year. In addition to this the transformational acquisition
of GP Strategies will propel the Group well past the 2022 financial
targets by the end of 2021. The Board will review the progress of
the GP Strategies acquisition and will report to shareholders on
renewed strategic financial objectives later in 2022.
The Board is delighted with the strong organic revenue growth
delivered during the first half of the year, the Group's resilient
recovery from the impact of the COVID-19 pandemic and the
successful integration of our most recent acquisitions. We have
created a strong base, capable of meaningful rates of organic
revenue growth whilst delivering industry-leading profit margins
and cash generation, which will enable us to realise the
significant opportunities that we believe lie ahead in the second
half year and beyond. We are confident that we can continue to
profitably build on these strong foundations as we remain on
target, despite currency headwinds, to deliver on market
expectations for the full year.
Andrew Brode
Chairman
21 September 2021
Consolidated statement of
comprehensive income Six months Six months
to to Year to
30 June 2021 30 June 2020 31 Dec 2020
Note GBP'000 GBP'000 GBP'000
Revenue 4 82,573 64,082 132,324
Operating expenses (75,420) (57,207) (114,130)
Share based payment charge (2,090) (1,815) (3,340)
-------------- --------------- -------------
Operating profit 5,063 5,060 14,854
Adjusted EBIT 22,037 18,397 40,348
Adjusting items included in
Operating profit 6 (16,974) (13,337) (25,494)
Operating profit 5,063 5,060 14,854
------------------------------------- ----- -------------- ---------------
Net finance expenses 7 (454) (924) (1,385)
-------------- --------------- -------------
Profit before taxation 4,609 4,136 13,469
Income tax credit/(expense) 5 613 780 3,935
Profit for the period/year 5,222 4,916 17,404
Other comprehensive income:
Exchange differences on translating
foreign operations (4,616) 9,843 (6,616)
-------------- --------------- -------------
Total comprehensive profit
for the period 606 14,759 10,788
============== =============== =============
Earnings per share
Basic, (pence) 9 0.705 0.710 2.450
Diluted, (pence) 9 0.688 0.696 2.382
Adjusted earnings per share
Basic, (pence) 9 2.367 2.295 4.417
Diluted, (pence) 9 2.310 2.251 4.294
------------------------------------- ----- -------------- --------------- -------------
Consolidated statement
of financial position 30 June
2021 30 June 2020 31 Dec 2020
Note GBP'000 GBP'000 GBP'000
(Restated)
NON-CURRENT ASSETS
Property, plant and equipment 903 1,366 1,025
Right of use assets 11 7,013 10,470 8,806
Intangible assets 10 313,044 262,599 256,284
Deferred tax assets 9,894 4,000 7,614
Other receivables, deposits
and prepayments - - 76
Amounts recoverable on
contracts 849 759 624
---------- ------------------ ------------
331,703 279,194 274,429
CURRENT ASSETS
Trade receivables 36,457 22,450 32,984
Other receivables, deposits
and prepayments 12 7,395 4,177 4,219
Amounts recoverable on
contracts 8,788 3,917 3,879
Amounts due from related
parties - - 54
Cash and cash equivalents 13 39,322 68,045 88,614
Short-term deposits 13 - 30,000 -
Restricted cash balances 13 1,567 602 682
93,529 129,191 130,432
TOTAL ASSETS 425,232 408,385 404,861
---------- ------------------ ------------
CURRENT LIABILITIES
Lease liabilities 15 3,774 2,804 2,536
Trade and other payables 14 87,142 64,245 68,015
Amounts due to related
parties 84 82 -
Net restricted cash from - 78 -
the consolidation invoice
process (CIP)
Borrowings 15 7,197 6,738 7,339
Corporation tax 2,513 3,403 4,591
ESPP scheme liability 801 381 562
---------- ------------------ ------------
101,511 77,731 83,043
NON-CURRENT LIABILITIES
Lease liabilities 15 7,111 9,538 7,722
Deferred tax liabilities 33,035 26,180 25,617
Other long-term liabilities 4,388 5,468 7,635
Borrowings 15 7,260 13,476 11,073
Provisions 122 827 701
---------- ------------------ ------------
51,916 55,489 52,748
TOTAL LIABILITIES 153,427 133,220 135,791
---------- ------------------ ------------
NET ASSETS 271,805 275,165 269,070
========== ================== ============
EQUITY
Share capital 2,865 2,847 2,853
Share premium account 233,779 231,229 231,671
Merger relief reserve 31,983 31,983 31,983
Reverse acquisition reserve (22,933) (22,933) (22,933)
Share based payment reserve 8,096 5,914 7,439
Foreign exchange translation
reserve (11,584) 9,491 (6,968)
Accumulated retained earnings 29,599 16,634 25,025
---------- ------------------ ------------
TOTAL EQUITY 271,805 275,165 269,070
========== ================== ============
Consolidated statement of changes in equity
Share Share Merger Reverse Share Foreign Retained Total
capital Premium relief acquisition based exchange earnings equity
reserve reserve payments reserve
reserve
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Balance at 1
January 2020 2,509 148,216 31,983 (22,933) 4,413 (352) 10,153 173,989
Restatement due
to IFRS 15
Rustici
application
change - - - - - - 1,554 1,554
Profit
for
period - - - - - 4,916 4,916
Exchange
differences
on
translating
foreign
operations - - - - - 9,843 - 9,843
----------- --------- --------- ------------ ----------- ---------- ---------- -----------
Total
comprehensive
income
for
the
period - - - - - 9,843 4,916 14,759
Issue
of
shares
net
of
share
issue
costs 338 83,013 - - - - - 83,351
Share
based
payment
charge
/ credited
to
equity - - - - 1,815 - - 1,815
Tax
credit
on
share
options - - - - - - (303) (303)
Transfer
on
exercise
and
lapse
of
options - - - - (314) - 314 -
Dividends - - - - - - - -
payable
Balance
at
30
June
2020 2,847 231,229 31,983 (22,933) 5,914 9,491 16,634 275,165
Profit
for
period - - - - - - 12,488 12,488
Exchange
differences
on
translating
foreign
operations - - - - - (16,459) - (16,459)
----------- --------- --------- ------------ ----------- ---------- ---------- -----------
Total
comprehensive
income
for
the
period - - - - - (16,459) 12,488 (3,971)
Issue
of
shares
net
of
share
issue
costs 6 442 - - - - - 448
Share
based
payment
charge
/ credited
to
equity - - - - 1,525 - - 1,525
Tax
credit
on
share
options - - - - - - 1,440 1,440
Transfer - - - - - - - -
on
exercise
and
lapse
of
options
Dividends
paid - - - - - - (5,537) (5,537)
Balance
at
31
December
2020 2,853 231,671 31,983 (22,933) 7,439 (6,968) 25,025 269,070
Profit
for
period - - - - - - 5,222 5,222
Exchange
differences
on
translating
foreign
operations - - - - - (4,616) - (4,616)
----------- --------- --------- ------------ ----------- ---------- ---------- -----------
Total
comprehensive
income
for
the
period - - - - - (4,616) 5,222 606
Issue
of
shares
net
of
share
issue
costs
(refer
to
reconciliation
in
Note
17) 12 2,108 - - - - - 2,120
Share
based
payment
charge
/ credited
to
equity - - - - 2,090 - - 2,090
Tax
credit
on
share
options - - - - - - 1,624 1,624
Transfer
on
exercise
and
lapse
of
options - - - - (1,433) - 1,433 -
Dividends
paid - - - - - - (3,705) (3,705)
Balance
at
30
June
2021 2,865 233,779 31,983 (22,933) 8,096 (11,584) 29,599 271,805
----------- --------- --------- ------------ ----------- ---------- ---------- -----------
Consolidated statement of cash flows
Note Six months Six months Year to
to to 31 Dec 2020
30 June 2021 30 June GBP'000
GBP'000 2020
GBP'000
Cash flow from operating activities
Profit before taxation 4,609 4,136 13,469
Adjustments for:-
(Gain)/loss on disposal of
PPE and right-of-use assets 378 (142) (122)
Share based payment charge 2,090 1,815 3,340
Amortisation of intangible
assets 14,173 12,845 25,639
Depreciation of plant and
equipment and right-of-use
assets 1,380 1,723 3,245
Finance expense (including
IFRS 16 charge) 226 332 614
Interest on borrowings 261 598 911
Acquisition-related contingent
consideration and earn-outs 2,442 890 3,511
Fair value movement on contingent
consideration - - (1,357)
Payment of acquisition-related
contingent consideration and
earn-outs (1,180) (978) (1,006)
Interest income (33) (6) (140)
-------------- ----------- -------------
Operating cash flow before
working capital changes 24,346 21,213 48,104
Decrease in trade and other
receivables 462 7,391 (4,736)
Decrease/(increase) in amount
recoverable on contracts (5,894) 895 (3,427)
Increase/(decrease) in payables 976 (6,782) 3,883
19,890 22,717 43,824
-------------- ----------- -------------
Interest paid (203) (781) (750)
Interest received 33 6 140
Income tax paid (4,272) (1,829) (3,359)
-------------- ----------- -------------
Net cash flow from operating
activities 15,448 20,113 39,855
-------------- ----------- -------------
Cash flow used in investing
activities
Purchase of property, plant
and equipment (223) (53) (114)
Development of intangible
assets (3,628) (3,106) (6,115)
Investment in short-term deposits - (30,000) -
Acquisition of subsidiaries,
net of cash acquired 16 (52,089) (22,486) (38,988)
Net cash flow used in investing
activities (55,940) (55,645) (45,217)
-------------- ----------- -------------
Cash flow used in financing
activities
Dividends paid 8 (3,705) - (5,537)
Cash generated from issue
of shares, net of share issue
costs 2,120 80,208 80,581
Proceeds from borrowings - 18,182 18,182
Repayment of bank loans (3,653) (36,596) (36,640)
Contingent consideration payments
in the period (520) (121) (121)
Cash payments for the principal
portion of lease liabilities (2,011) (1,510) (3,317)
Net cash flow from/(used
in) financing
activities (7,769) 60,163 53,148
-------------- ----------- -------------
Net increase/(decrease) in
cash and cash equivalents (48,261) 24,631 47,786
Cash and cash equivalents
at beginning of the period/year 88,614 42,032 42,032
Effects of foreign exchange
rate changes (1,031) 1,382 (1,204)
----------- -------------
Cash and cash equivalents
at end of the period/year 13 39,322 68,045 88,614
============== =========== =============
Notes to the consolidated financial statements for the six
months to 30 June 2021
1. General information
Learning Technologies Group plc ("the Company") and its
subsidiaries (together, "the Group") provide a range of learning
and talent software and services to corporate customers. The
principal activity of the Company is that of a holding company for
the Group, as well as performing all administrative, corporate
finance, strategic and governance functions of the Group.
The Company is a public limited company, which is listed on the
AIM Market of the London Stock Exchange and domiciled in England
and incorporated and registered in England and Wales. The address
of its registered office is 15 Fetter Lane, London, England, EC4A
1BW. The registered number of the Company is 07176993.
2. Basis of preparation
The unaudited condensed consolidated interim financial
information has been prepared in accordance with IAS 34 Interim
Financial Reporting. They do not include all disclosures that would
otherwise be required in a complete set of financial statements and
should be read in conjunction with the 2020 annual report.
The interim results for the six months to 30(th) June 2021 are
unaudited and do not therefore constitute statutory accounts in
accordance with Section 434 of the Companies Act 2006.
Statutory accounts for the year ended 31(st) December 2020 have
been filed with the Registrar of Companies and the auditor's report
was unqualified, did not contain any statement under Section 498(2)
or 498(3) of the Companies Act 2006 and did not contain any matters
to which the auditors drew attention without qualifying their
report.
The accounting policies used in preparing the interim results
are the same as those applied to the latest audited annual
financial statements.
Going concern
The Group meets its day-to-day working capital requirements from
the positive cash flows generated by its trading activities and its
available cash resources. These are supplemented when required by
additional drawings under the Group's committed $21.0 million
revolving credit bank loan facilities (RCF) and an uncommitted
$28.0 million accordion facility , which were available until 2023.
In July, the term loan was repaid in full, new debt facilities were
agreed and an equity placing successfully raised gross proceeds of
GBP85.0 million; refer to Note 17 for further details.
The Group continues to hold a strong liquidity position at
30(th) June 2021, with gross cash and cash equivalents of GBP39.3
million (Note 13) and net cash of GBP24.9 million (Note 15) (31(st)
December 2020: gross cash was GBP88.6 million and net cash GBP70.2
million). Whilst there are a number of risks to the Group's trading
performance, including from the COVID-19 pandemic and its impact on
the global economy, as summarised in the 'Principal risks and
uncertainties' section on pages 25 - 26 within the 2020 Annual
Report, the Group is confident of its ability to continue to access
sources of funding in the medium term.
The directors report that they have re-assessed the principal
risks, reviewed current performance and forecasts, combined with
expenditure commitments, including capital expenditure, and
borrowing facilities. The Group's forecasts demonstrate it will
generate profits and cash in the year ending 31(st) December 2021
and beyond and that the Group has sufficient cash reserves to
enable it to meet its obligations as they fall due, as well as
operate within its banking covenants, for a period of at least 12
months from the date of signing of these financial statements.
Going concern (continued)
The Group has also assessed a range of downside scenarios to
assess if there was a significant risk to the Group's liquidity
position. The forecasts and scenarios prepared consider our trading
experience to date and we have modelled downside scenarios such as
varying degrees of reductions in revenues and extended customer
payment days. The Directors have concluded that it is appropriate
to adopt the going concern basis of accounting in preparing the
interim financial information, having undertaken a review of a
detailed reforecast for 2021 and the impact this forecast has on
the Group's gross cash, net debt and ability to meet bank covenants
under the existing facilities agreement.
Alternative performance measures
The Group has identified certain alternative performance
measures ("APMs") that it believes will assist the understanding of
the performance of the business. The Group believes that Adjusted
EBIT, adjusting items, recurring and non-recurring revenue,
Shareholders' funds and net cash / debt provide useful information
to users of the financial statements. The terms are not defined
terms under IFRS and may therefore not be comparable with similarly
titled measures reported by other companies. They are not intended
to be a substitute for, or superior to, IFRS measures.
Adjusting items
The Group has chosen to present an adjusted measure of profit
and earnings per share, which excludes certain items which are
separately disclosed due to their size, nature or incidence, and
are not considered to be part of the normal operating costs of the
Group. These costs may include the financial effect of adjusting
items such as, inter alia, restructuring costs, impairment charges,
amortisation of acquired intangibles, costs relating to business
combinations, one-off foreign exchange gains or losses, integration
costs, acquisition related contingent consideration and earn-outs,
joint venture profits and losses and fixed asset and right-of-use
asset disposal gains or losses.
3. Prior year adjustment
Following a review of the IFRS 15 revenue recognition policy
applied in the Rustici CGU as part of the 2020 annual financial
reporting process, the Group has concluded that Rustici contracts
include an additional distinct performance obligation, for which
the revenue should be recognised at a point in time on delivery,
rather than all over time as the more conservative policy
previously applied. As a result of this correction in the
accounting, the Group has restated the balance sheet at 30(th) June
2020 as outlined below. There has been no impact on the income
statement for the periods ended 31(st) December 2019 or 2020.
30 Jun Adjustments 30 Jun
2020 2020
GBP'000 GBP'000
(Restated)
Non-current assets
Property, plant and equipment 1,366 - 1,366
Right of use assets 10,470 10,470
Intangible assets 262,599 - 262,599
Deferred tax assets 4,546 (546) 4,000
Other receivables, deposits and prepayments - - -
Amounts recoverable on contracts 759 - 759
------------
279,740 (546) 279,194
Current assets
Trade receivables 22,450 - 22,450
Other receivables, deposits 4,177 - 4,177
and prepayments -
Amounts recoverable on contracts 3,917 - 3,917
Amount owing from related parties - - -
Cash and bank balances 68,045 - 68,045
Short-term deposits 30,000 30,000
Restricted cash balances 602 - 602
--------- ------------ ------------
129,191 - 129,191
Total assets 408,931 (546) 408,385
Current liabilities
Lease Liabilities 2,804 2,804
Trade and other payables 64,245 - 64,245
Amounts due to related parties 82 82
Net restricted cash from the consolidation
invoice process (CIP) 78 78
Borrowings 6,738 - 6,738
Corporation tax 3,403 - 3,403
ESPP scheme liability 381 - 381
77,731 - 77,731
Non-current liabilities
Lease Liabilities 9,538 9,538
Deferred tax liabilities 26,180 - 26,180
Other long-term liabilities 7,568 (2,100) 5,468
Borrowings 13,476 - 13,476
Provisions 827 - 827
------------
57,589 (2,100) 55,489
Total liabilities 135,320 (2,100) 133,220
Net assets 273,611 1,554 275,165
========= ============ ============
Shareholders' equity
Share capital 2,847 2,847
Share premium account 231,229 231,229
Merger reserve 31,983 31,983
Reverse acquisition reserve (22,933) (22,933)
Share-based payment reserve 5,914 5,914
Foreign exchange translation reserve 9,491 9,491
Accumulated profits/(losses) 15,080 1,554 16,634
--------- ------------ ------------
Total equity attributable to the owners
of the parent 273,611 1,554 275,165
========= ============ ============
4. Segment analysis
Geographical information
The Group's revenue from external customers and non-current
assets by geographical location are detailed below.
United Asia Rest
UK Europe States Pacific Canada of world Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Six months to 30
June 2021
Revenue 10,864 4,302 57,865 4,088 2,481 2,973 82,573
-------- ---------- -------- --------- -------- ---------- ------------
Non-current assets 29,371 - 277,239 15,171 18 10 321,809
-------- ---------- -------- --------- -------- ---------- ------------
Six months to 30
June 2020
Revenue 11,590 2,815 44,512 887 2,212 2,066 64,082
-------- ---------- -------- --------- -------- ---------- ------------
Non-current assets 29,480 - 231,569 14,114 31 - 275,194
-------- ---------- -------- --------- -------- ---------- ------------
Year to 31 December
2020
Revenue 21,501 6,184 92,281 3,508 4,344 4,506 132,324
-------- ---------- -------- --------- -------- ---------- ------------
Non-current assets 28,206 - 223,310 15,267 24 8 266,815
-------- ---------- -------- --------- -------- ---------- ------------
The total non-current assets figure is exclusive of deferred tax
assets in each of the periods above.
Information about reported segment revenue, profit or loss and
assets
Software & Platforms Content & Services Other
On-premise Support
Software Hosting and Platform Consulting Rental Grand
Licenses & SaaS Maintenance Total Content development and other Total Income Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Six months to 30 June 2021
Recurring
revenue 10,825 46,106 1,731 58,662 - 163 4,430 4,593 72 63,327
Non-recurring
revenue 422 1,136 668 2,226 8,960 2,153 5,907 17,020 - 19,246
----------- -------- ------------ --------- -------- ------------ ----------- --------- -------- ---------
Revenue 11,247 47,242 2,399 60,888 8,960 2,316 10,337 21,613 72 82,573
----------- -------- ------------ --------- -------- ------------ ----------- --------- -------- ---------
Depreciation
and
amortisation (2,852) (1,012) - (3,864)
Adjusted
EBIT 16,270 5,695 72 22,037
Amortisation
of acquired
intangibles (9,808) (1,881) - (11,689)
Other
adjusting
items (5,163) (122) - (5,285)
Finance
expenses (347) (107) - (454)
Profit before
tax 952 3,585 72 4,609
Additions
to intangible
Assets 59,998 12,172 - 72,170
Total assets 340,109 85,123 - 425,232
Six months to 30 June 2020
Recurring
revenue 10,285 34,241 1,840 46,366 - 569 4,637 5,206 50 51,622
Non-recurring
revenue 1,204 425 463 2,092 6,460 2,362 1,546 10,368 - 12,460
----------- -------- ------------ --------- -------- ------------ ----------- --------- -------- ---------
Revenue 11,489 34,666 2,303 48,458 6,460 2,931 6,183 15,574 50 64,082
----------- -------- ------------ --------- -------- ------------ ----------- --------- -------- ---------
Depreciation
and
amortisation (3,163) (476) - (3,639)
Adjusted
EBIT 15,277 3,070 50 18,397
Amortisation
of acquired
intangibles (8,957) (1,972) - (10,929)
Other
adjusting
items (2,443) 35 - (2,408)
Finance
expenses (726) (198) - (924)
Profit before
tax 3,151 935 50 4,136
Additions
to intangible
Assets 34,946 - - 34,946
Total assets 348,978 59,407 - 408,385
Year to 31 December 2020
Recurring
revenue 16,643 76,345 3,817 96,805 - 1,021 9,212 10,233 98 107,136
Non-recurring
revenue 1,129 1,033 1,053 3,215 12,906 3,541 5,526 21,973 - 25,188
----------- -------- ------------ --------- -------- ------------ ----------- --------- -------- ---------
Revenue 17,772 77,378 4,870 100,020 12,906 4,562 14,738 32,206 98 132,324
----------- -------- ------------ --------- -------- ------------ ----------- --------- -------- ---------
Depreciation
and
amortisation (5,626) (1,811) - (7,437)
Adjusted
EBIT 32,224 8,026 98 40,348
Amortisation
of acquired
intangibles (18,132) (3,315) - (21,447)
Other
adjusting
items (4,077) 30 - (4,047)
Finance
expenses (1,095) (290) - (1,385)
Profit before
tax 8,920 4,451 98 13,469
Additions
to intangible
Assets 62,433 - - 62,433
Total assets 342,941 61,920 - 404,861
Adjusted EBIT is the main measure of profit reviewed by the
Chief Operating Decision Maker.
The total assets figure is inclusive of deferred tax assets in
each of the periods above.
Information about major customers
In the six months to 30(th) June 2021 no customer accounted for
more than 10 percent of reported revenues (H1 2020: no customer
accounted for more than 10 percent of reported revenues).
5. Taxation
Current and deferred tax for the six months to 30(th) June 2021
has been calculated by preparing tax reconciliations incorporating
permanent and temporary differences on an entity-by-entity basis to
derive the Group's total income tax expense/(credit). This is
allocated to current and deferred tax as outlined below.
Six months Six months Year to
to to
30 June 2021 30 June 2020 31 Dec 2020
GBP'000 GBP'000 GBP'000
Current tax:
Tax on profits for the period/year 2,688 3,147 4,713
Adjustments in respect of
prior years - - 376
Total current tax 2,688 3,147 5,089
Deferred tax:
Origination and reversal
of temporary differences (3,254) (3,587) (4,703)
Adjustments in respect of
prior years 323 (340) (4,025)
Change in deferred tax rate (370) - (296)
------------- ------------- ------------
Total deferred tax (3,301) (3,927) (9,024)
Income tax (credit)/expense (613) (780) (3,935)
============= ============= ============
6. Adjusting items
These items are included in normal operating costs of the
business, but are significant cash and non-cash expenses that are
separately disclosed because of their size, nature or incidence. It
is the Group's view that excluding them from Operating Profit gives
a better representation of the underlying performance of the
business in the period. Further details of the adjusting items are
included below.
Six months Six months Year to
to to
30 June 2021 30 June 2020 31 Dec 2020
GBP'000 GBP'000 GBP'000
Adjusting items included
in Operating profit:
Amortisation of acquired
intangibles 11,689 10,929 21,447
Loss on disposal of fixed
assets 197 1 21
(Profit)/loss on disposal
of right-of-use assets 181 (143) (143)
Acquisition-related contingent
consideration and earn-outs 2,442 890 3,511
Fair value movement on contingent
consideration - - (1,357)
Net foreign exchange loss
arising due to business acquisition - 1,070 1,070
Acquisition costs 1,581 383 715
Integration costs 884 207 230
------------- ------------- ------------
Total adjusting items 16,974 13,337 25,494
============= ============= ============
6. Adjusting items (continued)
As outlined above, the material adjustments during the period
are made in respect of:
- Amortisation of acquired intangibles - these costs
are excluded from the adjusted results of the
Group since the costs are non-cash charges arising
from investment activities. As such, they are
not considered reflective of the core trading
performance of the Group.
- Acquisition-related contingent consideration and
earn-outs - these costs are excluded from the
adjusted results since these costs are also associated
with business acquisitions and represent post-combination
remuneration, which is not included in the calculation
of goodwill and not considered part of the core
trading performance of the Group.
- Costs of acquisition and integration - costs associated
with completed acquisitions are excluded from
the adjusted results on the basis they are directly
attributable to investment activities, rather
than the core trading activities of the Group.
7. Finance expenses
Six months Six months Year to
to to
30 June 2021 30 June 2020 31 Dec 2020
GBP'000 GBP'000 GBP'000
Charge on contingent consideration 46 110 196
Interest on borrowings 261 598 911
Interest on IFRS 16 lease
liabilities 180 222 418
------------- ------------- ------------
487 930 1,525
Interest receivable (33) (6) (140)
------------- ------------- ------------
454 924 1,385
============= ============= ============
8. Dividends paid
Six months Six months Year to
to to
30 June 2021 30 June 2020 31 Dec 2020
GBP'000 GBP'000 GBP'000
Final dividends paid 3,705 - -
Interim dividend paid - - 5,537
3,705 - 5,537
============= ============= ============
The proposed interim dividend of 0.30 pence per share, amounting
to a total dividend payment of GBP2.4 million, is not included as a
liability in these financial statements and will be paid on 29(th)
October 2021 to shareholders on the register at the close of
business on 8(th) October 2021.
9. E arnings per share
Six months Six months Year to
to to
30 June 2021 30 June 2020 31 Dec 2020
GBP'000 GBP'000 GBP'000
Profit after tax attributable
to owners of the Group : 5,222 4,916 17,404
Weighted average number of
shares:
Basic 740,599,837 692,823,974 710,348,462
Diluted 759,140,001 706,492,868 730,619,530
Basic earnings per share
(pence) 0.705 0.710 2.450
Diluted earnings per share
(pence) 0.688 0.696 2.382
Adjusted basic earnings per
share (pence) 2.367 2.295 4.417
Adjusted diluted earnings
per share (pence) 2.310 2.251 4.294
Diluted earnings per share is calculated by adjusting the
weighted average number of ordinary shares outstanding to assume
conversion of all dilutive potential ordinary shares. The Company
has share options that are dilutive potential ordinary shares.
In order to give a better understanding of the underlying
operating performance of the Group, an adjusted earnings per share
comparative has been included. Adjusted earnings per share is
stated after adjusting the profit after tax attributable to equity
holders of the Group for certain charges as set out in the table
below.
Six months to 30 June 2021 Six months to 30 June 2020 Year to 31 Dec 2020
Profit Weighted Pence Profit Weighted Pence Profit Weighted Pence per
after average per after average per after average share
tax number share tax number share tax number
of of of
shares shares shares
GBP'000 '000 GBP'000 '000 GBP'000 '000
Basic earnings
per ordinary
share 5,222 740,600 0.705 4,916 692,824 0.710 17,404 710,348 2.450
--------- --------- --------- --------- --------- --------- --------- --------- ----------
Effect of
adjustments:
Amortisation of
acquired
intangibles 11,689 10,929 21,447
Integration costs 884 207 230
Acquisition costs 1,581 383 715
Fair value
movement on
contingent
consideration - - (1,357)
Acquisition
earn-out 2,442 890 3,511
Net foreign
exchange
differences on
business
acquisitions - 1,070 1,070
Interest
receivable (33) (6) (140)
Finance expense
on contingent
consideration 46 110 196
Finance expense
on lease
liabilities
(IFRS 16) 180 222 418
Income tax
(credit)/expense (613) (780) (3,935)
--------- --------- --------- --------- --------- --------- --------- --------- ----------
Effect of
adjustments 16,176 - 2.184 13,025 - 1.880 22,155 - 3.119
--------- --------- --------- --------- --------- --------- --------- --------- ----------
Adjusted profit
before tax 21,398 - - 17,941 - - 39,559 - -
--------- --------- --------- --------- --------- --------- --------- --------- ----------
Tax impact after
adjustments (3,865) - (0.522) (2,040) - (0.295) (8,183) - (1.152)
--------- --------- --------- --------- --------- --------- --------- --------- ----------
Adjusted basic
earnings per
ordinary share 17,553 740,600 2.367 15,901 692,824 2.295 31,376 710,348 4.417
Effect of
dilutive
potential
ordinary shares:
Share options - 18,540 (0.057) - 13,669 (0.044) - 20,271 (0.123)
Deferred - - - - - - - - -
consideration
payable
(conditions met)
Deferred - - - - - - - - -
consideration
payable
(contingent)
Adjusted diluted
earnings per
ordinary share 17,533 759,140 2.310 15,901 706,493 2.251 31,376 730,619 4.294
10. Intangible assets
Goodwill Customer Branding Acquired Internal Total
contracts IP software
and relationships development
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Cost
At 1 January 2020 134,985 92,532 2,524 39,680 12,289 282,010
Additions on acquisition 18,105 10,221 - 3,514 - 31,840
Additions - - - - 3,106 3,106
Foreign exchange differences 6,854 2,793 96 1,834 453 12,030
At 30 June 2020 159,944 105,546 2,620 45,028 15,848 328,986
Additions on acquisition 9,285 8,533 - 6,660 - 24,478
Additions - - - - 3,009 3,009
Foreign exchange differences (12,369) (4,764) (135) (2,986) (754) (21,008)
--------- ------------------- --------- --------- ------------- ---------
At 31 December 2020 156,860 109,315 2,485 48,702 18,103 335,465
Additions on acquisition
(see note 15) 33,065 14,417 1,413 23,275 - 72,170
Measurement period
adjustments 76 - - - - 76
Additions - - - - 3,628 3,628
Foreign exchange differences (2,684) (1,445) (23) (681) (108) (4,941)
--------- ------------------- --------- --------- ------------- ---------
At 30 June 2021 187,317 122,287 3,875 71,296 21,623 406,398
Accumulated
amortisation
At 1 January 2020 - 38,894 968 8,703 4,977 53,542
Amortisation charged
in period - 7,913 145 2,871 1,916 12,845
--------- ------------------- --------- --------- ------------- ---------
At 30 June 2020 - 46,807 1,113 11,574 6,893 66,387
Amortisation charged
in period - 7,547 115 2,856 2,276 12,794
At 31 December 2020 - 54,354 1,228 14,430 9,169 79,181
Amortisation charged
in period - 7,507 200 3,982 2,484 14,173
--------- ------------------- --------- --------- ------------- ---------
At 30 June 2021 - 61,861 1,428 18,412 11,653 93,354
Carrying amount
At 30 June 2020 159,944 58,739 1,507 33,454 8,955 262,599
========= =================== ========= ========= ============= =========
At 31 December 2020 156,860 54,961 1,257 34,272 8,934 256,284
========= =================== ========= ========= ============= =========
At 30 June 2021 187,317 60,426 2,447 52,884 9,970 313,044
========= =================== ========= ========= ============= =========
11. Right-of-use assets
Computer
equipment Property Total
GBP'000 GBP'000 GBP'000
Cost
At 1 January 2020 83 12,255 12,338
Additions on acquisitions - - -
Additions - 2,219 2,219
Foreign exchange
differences - 370 370
(1,002)
Disposals - (1) (1,002)
----------- --------- --------
At 30 June 2020 83 13,842 13,925
Additions on acquisitions - 36 36
Additions - - -
Foreign exchange
differences - (491) (491)
Disposals - - -
At 31 December 2020 83 13,387 13,470
Additions on acquisitions - - -
Additions 271 79 350
Foreign exchange
differences (5) (188) (193)
(1,335)
Disposals - (2) (1,335)
----------- ---------
At 30 June 2021 349 11,943 12,292
=========== ========= ========
Accumulated Depreciation
At 1 January 2020 60 2,414 2,474
Charge for the year 23 1,244 1,267
Disposals - (286) (286)
----------- --------- --------
At 30 June 2020 83 3,372 3,455
Charge for the year - 1,209 1,209
Disposals - - -
--------- --------
At 31 December 2020 83 4,581 4,664
Charge for the year 37 1,089 1,126
Disposals - (511) (511)
----------- --------- --------
At 30 June 2021 120 5,159 5,279
=========== ========= ========
Net book value
At 30 June 2020 - 10,470 10,470
=========== ========= ========
At 31 December 2020 - 8,806 8,806
=========== ========= ========
At 30 June 2021 229 6,784 7,013
=========== ========= ========
(1) 2020 disposal relates to a sub-lease amendment whereby the
Rustici business agreed to consolidate two separate leases
part of which was held by Watershed.
(2) 2021 disposal relates to the sub-lease of the Waltham property
within PeopleFluent. The right-of-use asset was disposed
and a corresponding finance lease receivable has been recognised
within Sundry receivables in Note 12.
12. Other receivables, deposits and prepayments
30 June 2021 30 June 2020 31 Dec 2020
GBP'000 GBP'000 GBP'000
Sundry receivables 2,080 145 371
Prepayments 5,315 4,032 3,848
7,395 4,177 4,219
============= ============= ============
13. Cash and cash equivalents, restricted cash and short-term deposits
For the purpose of the statement of cash flows, cash and cash
equivalents comprise cash held by the Group and short-term bank
deposits with an original maturity of three months or less:
30 June 2021 30 June 2020 31 Dec 2020
GBP'000 GBP'000 GBP'000
Cash and cash equivalents 39,322 68,045 88,614
============= ============= ============
Restricted cash balances comprise amounts held on behalf of
third parties and employees as part of the Employee Stock Purchase
Plan ('ESPP'):
30 June 2021 30 June 2020 31 Dec 2020
GBP'000 GBP'000 GBP'000
Restricted cash 1,567 602 682
============= ============= ============
Short-term deposits comprise term deposits with an original
maturity greater than three months:
30 June 2021 30 June 2020 31 Dec 2020
GBP'000 GBP'000 GBP'000
Short-term deposits - 30,000 -
============= ============= ============
14. Trade and other payables
30 June 2021 30 June 2020 31 Dec 2020
GBP'000 GBP'000 GBP'000
Trade payables 3,221 3,127 2,335
Contract liabilities 63,269 49,409 51,679
Tax and social security 1,132 982 1,687
Contingent consideration
and earn-outs payable 4,425 965 1,698
Accruals and other payables 15,095 9,762 10,616
------------- ------------- --------------
87,142 64,245 68,015
============= ============= ==============
15. Borrowings
As at 30 June 2021 the Group had in place a $63 million debt
facility with Silicon Valley Bank and Barclays Bank. This facility
comprised a committed $42 million multicurrency term loan and a
committed $21 million multicurrency revolving credit facility, both
available to the Group until April 2023. The facility attracted
variable interest between 1.6% and 2.1%, based on the Group's
leverage, above LIBOR for the currency of the loan. The term loan
was repayable with quarterly instalments of $2.5 million with the
balance repayable on the expiry of the loan in April 2023.
The bank loan was secured by a fixed and floating charge over
the assets of the Group and was subject to various financial
covenants that were tested quarterly. The financial covenants were
that the Group must ensure that its cash flow cover ratio was at
least 1.1 times and its leverage ratio did not exceed 2.75. The
cash flow cover and leverage ratio is not a statutory measure and
so its basis and composition may differ from other leverage
measures published by other companies.
The Group was compliant with all financial covenants throughout
the period as at 30(th) June 2021. At that date the Group's cash
flow cover was 3.60 and its leverage ratio was -0.70.
The term loan balance was repaid in full in July 2021 and new
debt facility agreed. Refer to Note 17 for further details.
30 June 30 June 31 Dec
2021 2020 2020
GBP'000 GBP'000 GBP'000
Current interest-bearing
loans and borrowings 7,197 6,738 7,339
Non-current interest-bearing
loans and borrowings 7,260 13,476 11,073
Current lease liabilities 3,774 2,804 2,536
Non-current lease liabilities 7,111 9,538 7,722
------------------- ------------------- -------------------
25,342 32,556 28,670
=================== =================== ===================
Net debt / cash reconciliation
Net debt / cash can be analysed as follows:
30 June 30 June 31 Dec
2021 2020 2020
GBP'000 GBP'000 GBP'000
Cash and cash equivalents 39,322 68,045 88,614
Short-term deposits - 30,000 -
Borrowings:
- - -
* Revolving credit facility
* Term loan (14,457) (20,214) (18,412)
Net cash / (debt) 24,865 77,831 70,202
==================== ==================== ====================
16. Acquisitions
In the period, the Group acquired three businesses - Reflektive,
PDT Global and Bridge. We have outlined below a summary of the
consideration paid, the provisional fair value of acquired
intangible assets, the fair value of other acquired assets and
liabilities assumed at the acquisition date and the resulting
goodwill for each acquisition in the period, with further detail
provided for each acquisition below.
Acquisition Goodwill Acquired Acquired Acquired Acquired Fair Consideration Cash Net
customer software brand deferred value paid acquired cash
relationships and tax of other outflow
IP liabilities identifiable
assets
and
liabilities
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Reflektive 4,280 3,051 4,497 - (2,035) 191 9,984 3,322 6,662
PDT Global 7,512 4,060 430 170 (932) 2,177 13,417 2,148 11,269
Bridge 21,273 7,306 18,348 1,243 (7,263) (6,749) 34,158 - 34,158
--------- -------------- --------- --------- ------------ ------------- -------------- --------- --------
Total 33,065 14,417 23,275 1,413 (10,230) (4,381) 57,559 5,470 52,089
========= ============== ========= ========= ============ ============= ============== ========= ========
Reflektive
On 1 February 2021, Learning Technologies Group Plc completed
the acquisition of Reflektive Inc ("Reflektive"), a leading
performance management software provider, from a group of
institutional investors for cash consideration of $13.7 million
(c.GBP10.0 million), funded from LTG's cash resources.
Headquartered in San Francisco, Reflektive specialises in
engagement and analytics tools. It offers a collaborative goal
setting, continuous feedback and analytics platform used by
corporate teams and individuals to provide measurable results for
boosting productivity, engagement, and retention. Reflektive has
joined LTG's PeopleFluent business, integrating its solution with
the existing PeopleFluent talent management portfolio. The
combination with LTG's other software solutions provides
opportunities for cross-sell and upsell-led growth.
The following table summarises the consideration paid for
Reflektive, the fair value of assets acquired and liabilities
assumed at the acquisition date.
Consideration Fair Value
GBP'000
---------------------------------------------------------------------------- ----------------------------------
Cash paid 5,840
Adjustments and hold backs (513)
Payment for cash acquired 4,657
Total consideration 9,984
---------------------------------------------------------------------------- ----------------------------------
Recognised amounts of identifiable assets acquired Fair value
and liabilities assumed GBP'000
---------------------------------------------------------------------------- ------------------------------------
Cash and cash equivalents 3,322
Restricted cash 1,168
Property, plant and equipment 59
Trade and other receivables 2,954
Trade and other payables (5,192)
Net IFRS 16 liability (2,120)
Deferred tax liabilities on acquisition (2,035)
Customer relationships identified on acquisition 3,051
Software and intellectual property identified
on acquisition 4,497
Total identifiable net assets 5,704
---------------------------------------------------------------------------- ------------------------------------
Goodwill 4,280
Total 9,984
---------------------------------------------------------------------------- ----------------------------------
16. Acquisitions (continued)
The total consideration and fair value adjustments to the assets
and liabilities assumed are provisional and are management's best
estimates at this time. These estimates may be refined in the
second half of the financial year.
Acquisition-related intangible assets of GBP3.1 million relate
to the valuation of the customer relationships which are amortised
over a period of eight years, and GBP4.5 million relates to the
value of the acquired intellectual property and software
development which is amortised over ten years.
Acquisition costs of GBP0.2 million have been charged to the
statement of comprehensive income in the year relating to the
acquisition of Reflektive.
Reflektive contributed GBP4.3 million of revenue for the period
between the date of acquisition and the balance sheet date and
GBP0.7 million of profit before tax attributable to equity holders
of the parent. As a preliminary assessment, had the acquisition of
Reflektive been completed on the first day of the period Group
revenues would have been approximately GBP0.9 million higher and
group profit before tax attributable to equity holders of the
parent would have been approximately GBP0.5 million lower.
PDT Global
On 5 February 2021, Learning Technologies Group Plc acquired
UK-based The People Development Team Limited ('PDT Global'), a
leading provider of online Diversity and Inclusion (D&I)
training solutions, for cash consideration of GBP13.4 million
funded from LTG's cash resources.
Further performance based payments, capped at GBP6.1 million are
payable in cash to the PDT Global sellers based on ambitious
revenue growth targets in each of the years ending 31 December
2021, 2022 and 2023. These payments are linked to continuous
employment so are excluded from the acquisition consideration and
instead are recognised as an expense over the service period within
the Statement of Comprehensive Income.
The following table summarises the consideration paid for PDT
Global, the fair value of assets acquired and liabilities assumed
at the acquisition date.
Consideration Fair Value
GBP'000
---------------------------------------------------------------------------- ----------------------------------
Cash paid 13,417
Total consideration 13,417
---------------------------------------------------------------------------- ----------------------------------
Recognised amounts of identifiable assets acquired Fair value
and liabilities assumed GBP'000
---------------------------------------------------------------------------- ------------------------------------
Cash and cash equivalents 2,148
Property, plant and equipment 30
Trade and other receivables 1,862
Trade and other payables (1,863)
Net deferred tax assets/liabilities on acquisition (932)
Customer relationships identified on acquisition 4,060
Intellectual property identified on acquisition 430
Brand name identified on acquisition 170
Total identifiable net assets 5,905
---------------------------------------------------------------------------- ------------------------------------
Goodwill 7,512
Total 13,417
---------------------------------------------------------------------------- ----------------------------------
16. Acquisitions (continued)
The total consideration and fair value adjustments to the assets
and liabilities assumed are provisional and are management's best
estimates at this time. These estimates may be refined in the
second half of the financial year.
Acquisition-related intangible assets of GBP4.1 million relate
to the valuation of the customer relationships which are amortised
over a period of four years, GBP0.4 million relates to the value of
the acquired intellectual property which is amortised over five
years and GBP0.2 million relates to the value of the acquired PDT
Global brand, which is amortised over two years.
Acquisition costs of GBP0.1 million have been charged to the
statement of comprehensive income in the year relating to the
acquisition of PDT Global.
PDT Global contributed GBP2.2 million of revenue for the period
between the date of acquisition and the balance sheet date and
GBP0.9 million of profit before tax attributable to equity holders
of the parent. As a preliminary assessment, had the acquisition of
PDT Global been completed on the first day of the financial period
Group revenues would have been approximately GBP0.4 million higher
and group profit before tax attributable to equity holders of the
parent would have been approximately GBP0.2 million higher.
Bridge
On 1 March 2021, Learning Technologies Group plc, acquired
getBridge LLC and related assets ("Bridge"), a leading learning and
talent development software provider, from Instructure Inc for a
cash consideration of $47.5 million (c.GBP34.2 million), funded
from LTG's existing cash resources.
Bridge is a learning, performance and skills development
platform for mid-enterprise organisations, headquartered in the US
with operations in the UK and Hungary. Bridge provides a learning
management system in addition to performance, engagement and skills
development products, on a single, easy-to-use, SaaS-based
platform.
The acquisition of Bridge significantly extends LTG's
mid-enterprise learning and talent offering. Bridge is highly
complementary to PeopleFluent, which serves the large enterprise
market, and BreezyHR, which serves the small and medium-sized
business market. The acquisition is strategically important because
it enables LTG to provide a holistic learning and talent
development offering to meet the needs of small, mid-size and large
enterprises, three distinct groups with varying requirements. The
combination and integration of Bridge with LTG's other portfolio
offerings, including the recently acquired Reflektive engagement
and analytics platform, will create opportunities for cross-sell
and upsell-led growth within the Group.
16. Acquisitions (continued)
The following table summarises the consideration paid for
Bridge, the fair value of assets acquired and liabilities assumed
at the acquisition date.
Consideration Fair Value
GBP'000
---------------------------------------------------------------------------- ----------------------------------
Cash paid 33,764
Adjustments and hold backs 394
Total consideration 34,158
---------------------------------------------------------------------------- ----------------------------------
Recognised amounts of identifiable assets acquired Fair value
and liabilities assumed GBP'000
---------------------------------------------------------------------------- ------------------------------------
Trade and other receivables 796
Trade and other payables (7,545)
Net deferred tax assets/liabilities on acquisition (7,263)
Brand name identified on acquisition 1,243
Technology identified on acquisition 18,348
Customer relationships identified on acquisition 7,306
Total identifiable net assets 12,885
---------------------------------------------------------------------------- ------------------------------------
Goodwill 21,273
Total 34,158
---------------------------------------------------------------------------- ----------------------------------
The total consideration and fair value adjustments to the assets
and liabilities assumed are provisional and are management's best
estimates at this time. These estimates may be refined in the
second half of the financial year.
Acquisition-related intangible assets of GBP7.3 million relate
to the valuation of the customer relationships which are amortised
over a period of eleven years, GBP18.3 million relates to the value
of the acquired intellectual property and software development
which is amortised over ten years and GBP1.2m relates to the value
of the acquired Bridge brand which is amortised over five
years.
Acquisition costs of GBP0.7 million have been charged to the
statement of comprehensive income in the year relating to the
acquisition of Bridge.
Bridge contributed GBP5.6 million of revenue for the period
between the date of acquisition and the balance sheet date and
GBP0.4 million of profit before tax attributable to equity holders
of the parent. As a preliminary assessment, had the acquisition of
Bridge been completed on the first day of the financial period
Group revenues would have been approximately GBP2.8 million higher
and group profit before tax attributable to equity holders of the
parent would have been approximately GBP0.1 million higher.
Prior year acquisition measurement period adjustments
Outlined below are the retrospective adjustments to the
provisional amounts recognised as goodwill in relation to the
acquisitions that occurred in 2020. These adjustments have been
made to reflect new information obtained about the circumstances
that existed at each respective acquisition date and would have
affected the measurement of goodwill at the time.
eCreators
Increase/(decrease) to Liabilities Goodwill
recognised assumed GBP'000
amounts GBP'000
----------------------------------------------- ----------------------------------- --------------------------------
Trade and other
payables 272 272
eThink
Increase/(decrease) to Liabilities Goodwill
recognised assumed GBP'000
amounts GBP'000
----------------------------------------------- ----------------------------------- --------------------------------
Trade and other
payables (196) (196)
17. Events since the reporting date
Proposed acquisition of GP Strategies
On 15(th) July the Company announced it had agreed to acquire GP
Strategies Corporation ('GP Strategies') a leading global workforce
transformation provider with significant offerings in learning
services, custom content and consulting for $20.85 per GP
Strategies share, representing a market capitalisation of $394
million (GBP284 million) (the "Consideration") and an enterprise
value of $343 million (GBP247 million).
The Consideration and transaction costs for the Acquisition are
intended to be part-funded by a conditional underwritten placing of
new ordinary shares outlined below, with the balance being
part-funded by up to c.$305 million in incremental debt financing
(of which $40 million is to be repaid from GP Strategies' cash
shortly after the Acquisition) and out of existing cash
resources.
Equity Placing
On 15(th) July the Company successfully placed a total of
44,300,000 new ordinary shares in the capital of the Company of
0.375 pence each at a price of 192 pence per Placing Share, raising
gross proceeds of approximately GBP85.0 million (before expenses of
c.GBP2.2 million).
Repayment of existing term loan and agreement of new debt
facilities
On 13(th) July the Group repaid the outstanding balance of the
existing term loan and associated accrued interest totalling $20.2
million (GBP14.6 million). T he Group has also agreed to a new
multicurrency senior term and revolving facilities agreement. This
new debt facility which is with Silicon Valley Bank ('SVB'),
Barclays Bank, Fifth Third Bank, HSBC UK Bank and the Bank of
Ireland, comprises two committed term loans, Term Facility A of
$265.0 million, Term Facility B of $40.0 million, a $50.0 million
committed RCF and a $50.0 million uncommitted accordion
facility.
There have been no other significant events since the reporting
date.
Glossary
Alternative Performance Measures
In reporting financial information, the Group presents
alternative performance measures, "APMs", which are not defined or
specified under the requirements of IFRS. The Group believes that
these APMs, which are not considered to be a substitute for or
superior to IFRS measures, provide stakeholders with additional
useful information on the underlying trends, performance and
position of the Group and are consistent with how business
performance is measured internally. The alternative performance
measures are not defined by IFRS and therefore may not be directly
comparable with other companies' alternative performance measures.
The key APMs that the Group uses are outlined below.
APM Closest Reconciling items Definition and purpose
equivalent to IFRS measure
IFRS measure
Income Statement Measures
Adjusted Operating Adjusting items Adjusted EBIT excludes adjusting
EBIT profit items. A reconciliation from
Adjusted EBIT to Operating profit
is provided in the Consolidated
statement of comprehensive income.
-------------- -------------------- ---------------------------------------
Adjusting None Refer to definition Items which are not considered
items part of the normal operating
costs of the business, are separately
disclosed because of their size,
nature or incidence are treated
as adjusting. The Group believes
the separate disclosure of these
items provides additional useful
information to users of the
financial statements to enable
a better understanding of the
Group's underlying financial
performance. An explanation
of the nature of the items identified
as adjusting is provided in
Note 6 to the financial statements.
-------------- -------------------- ---------------------------------------
Recurring Revenue Refer to Note 4 Recurring revenue is defined
revenue as the revenue streams of the
Group that are predictable and
expected to continue into the
future upon customer renewal.
-------------- -------------------- ---------------------------------------
Non-recurring Revenue Refer to Note 4 Non-recurring revenue is defined
revenue as the revenue streams of the
Group that arise from one-off
fees or services that may or
may not happen again.
-------------- -------------------- ---------------------------------------
Balance Sheet Measures
Net cash None Refer to Note 15 Net cash / debt is defined as
or debt Cash and cash equivalents and
short-term deposits, less Bank
overdrafts and other current
and non-current borrowings.
A reconciliation is provided
in Note 15 to the financial
statements.
-------------- -------------------- ---------------------------------------
Shareholders' None Refer to definition Calculated as Total Equity at
funds the end of the period/year divided
by the number of shares in issue
at the end of the period/year,
The shares in issue at 31(st)
December 2020 were 739,297,410
(based on Note 27 of the 2020
Annual report) and 742,515,875
at 30(th) June 2021.
-------------- -------------------- ---------------------------------------
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