Learning Technol.Grp - Half Year Results 2024
17/09/2024 07:00
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RNS Number : 4170E Learning Technologies Group PLC 17 September 2024
17 September 2024
Learning Technologies Group plc
HALF YEAR RESULTS 2024
Healthy profit growth and strong cash generation
Continued challenging macro backdrop
Learning Technologies Group plc, a global market leader in digital learning
and talent management, announces half year results for the six months ended 30
June 2024. All figures relate to that period unless otherwise stated.
Strategic and operational highlights
● Resilient performance in a tough macroeconomic environment.
● SaaS and long-term contracts account for 76% of total revenues (H1 2023:
72%)(1).
● All major clients above $5 million annual revenue that were up for renewal in
H1 2024 were successfully renewed and strong growth in LATAM and Leadership
divisions of GP Strategies.
● GP Strategies profits more than doubled in the three years since acquisition,
reflecting margin progression and operational improvement actions.
● Completed the sale of VectorVMS ("Vector") for $50 million as part of ongoing
initiatives to simplify our portfolio and sharpen focus on learning and talent
development.
● Increased investment in AI product innovation including GP's Content AIQ
Learning Platform, Human+ AI Learning Series, Rustici Generator and Bridge
Learn and Develop. Early signs of customer uptake are encouraging.
Financial highlights
● Organic constant currency revenue down 3.8% to £250.3 million, with the
subdued macro backdrop affecting overall spending on learning and talent
development activities, particularly in transactional and project work and
softness in SaaS subscriptions:
○ Content & Services down 2.9%;
○ Software and Platforms down 5.9%.
● Continued growth in profits and margin progression on a like-for-like
basis(2):
○ Adjusted EBIT up 5% to £43.3 million.
○ Adjusted EBIT margin increased to 17.3% (H1 2023: 15.3%) as the Group benefits
from the successful commercial transformation of GP Strategies and focus on
cost optimisation.
○ Statutory operating profit increased 65% to £38.3 million.
● Strong cash performance with cash conversion of 70%(3) (H1: 65%).
● Robust balance sheet with net debt as at 30 June of £57.5 million, reduced to
c.£1 million at 30 August 2024 following the disposal of Vector.
● Voluntary debt repayment of $25 million in July 2024.
US regulatory update
● GP Strategies continues to be in constant dialogue with DCSA (Defense
Counterintelligence and Security Agency), and is making good progress on
resolving the issues pertaining to certain approvals, however there is more
work to be done.
● A new subsidiary, solely focused on all forms of US Government contracts, is
in the process of being established. It is expected to become operational in
H1 2025 and has applied to be eligible to work on new classified contracts.
● No existing classified contracts are due for renewal imminently and the value
of the contracts is not material in the context of total Group revenue and
profit.
Dividend
● The Board is pleased to declare an interim dividend of 0.45 pence per share
(H1 2023: 0.45 pence).
Current trading and outlook
● The Group previously expected revenue to be in the range of £480
million to £500 million and adjusted EBIT to be in the range
of £88 to £93 million for FY 2024 (adjusting for the completion of the
sale of Vector on 1 July). This range was based on an average GBP:USD rate of
1.26 for H2 2024.
● Based on an average GBP:USD rate of 1.31 for H2, the ranges adjust to £473 to
£493 million of revenues and adjusted EBIT of £86 to £91 million for FY
2024 (adjusting for the completion of the sale of Vector on 1 July).
● The Board expects the Group to be towards the bottom of the range given
current trading, in particular at GP Strategies.
● The Board is focused on continuing to drive efficiencies whilst actively
managing the portfolio to support a return to organic growth once market
conditions improve.
Jonathan Satchell, Chief Executive Officer of Learning Technologies Group,
said:
"LTG has delivered a resilient performance, with growth in adjusted EBIT of 5%
on a like for like basis, and strong cash performance in a macroeconomic
backdrop which remains challenging.
Whilst the lack of revenue growth is disappointing, the structural drivers of
the learning and talent development market remain intact and support our
belief that LTG will return to growth when market conditions improve."
Financial summary:
Continuing
£m unless otherwise stated H1 2024 H1 2023 Change
Revenue 250.3 284.6 (12)%
Revenue like-for-like(4) 250.3 268.2 (7)%
Organic constant currency (3.8)% 0.1%
Software & Platforms constant currency (5.9)% (4.7)%
Content & Services organic constant currency (2.9)% 1.8%
SaaS & long-term contracts 76% 72%
Adjusted EBIT 43.3 43.1 0.5%
Adjusted EBIT margin 17.3% 15.1% +220bps
Adjusted EBIT like-for-like(2) 43.3 41.1 +5%
Adjusted EBIT margin like-for-like(2) 17.3% 15.3% +200bps
Statutory operating profit 38.3 23.2 +65%
Statutory PBT 34.0 16.5 106%
Adj. Diluted EPS (pence) 3.496 3.293 6%
Basic EPS (pence) - continuing & discontinued 3.363 1.376 144%
Net Debt / (Cash) 57.5 108.4 (47)%
Dividend (pence) 0.45 0.45 0%
NOTES
1. Proportion of total revenues that are SaaS or long-term contracts increased
to 76% although there was a slight decline in revenue in absolute terms to
£191.4 million.
2. Excluding TTI Global Staffing contracts and Lorien Engineering disposed of
in 2023 & 2 Jan 2024 respectively, at 1.23 average H1 2023 USD/GBP FX.
3. Adjusted operating cash flow as a percentage of adjusted EBIT. Adjusted
operating cashflow is cashflow in the period after accounting for operating
activities and capital expenditure.
4. Excluding TTI Global Staffing contracts and Lorien Engineering disposed of
in 2023 & 2 Jan 2024 respectively, and reclassification of pass-through
revenue, at 1.23 average H1 2023 USD/GBP FX.
Analyst and investor presentation:
LTG will host an analyst and investor webcast at 09:30 today, 17 September
2024. The registration link can be found below:
https://attendee.gotowebinar.com/register/7598785774527469662
(https://attendee.gotowebinar.com/register/7598785774527469662)
Enquiries:
Learning Technologies Group plc +44 (0)20 7832 3440
Jonathan Satchell, Chief Executive
Kath Kearney-Croft, Chief Financial Officer
Deutsche Numis (NOMAD and Corporate Broker) +44 (0)20 7260 1000
Nick Westlake, Ben Stoop, Tejas Padalkar
Goldman Sachs International (Joint Corporate Broker) +44 (0)20 7774 1000
Bertie Whitehead, Adam Laikin
FTI Consulting (Public Relations Adviser) +44 (0)20 3727 1000
Jamie Ricketts, Emma Hall, Lucy Highland, Jemima Gurney
About LTG
Learning Technologies Group plc (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 software 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, South America and Asia-Pacific.
Chief Executive Review
Introduction
Learning Technologies Group plc is a global market leader in learning and
talent technologies and services. Our purpose is helping organisations to
transform through their people.
Our portfolio is diversified including businesses that provide services,
content, software and platforms to the learning and talent development market.
Our clients include large, medium and small corporates as well as educational
institutions, with a concentration in North America where we derive the
majority of our revenue. We believe our people, scale, diversification and
holistic offering are differentiating features within an industry that is both
large and fragmented.
Our strategy has three core pillars including (i) grow and strengthen our
existing businesses, (ii) operate more efficiently and (iii) actively manage
our portfolio.
Our industry has experienced softness in growth over the last two years driven
by inflation resulting in lower budgets, declining global growth and the
emergence of AI causing corporations to revisit historical ways of working.
However, the structural drivers of the industry remain strong as there is
significant ongoing business transformation requiring training, and companies
are focused on aligning skills with organisational objectives through training
and technology. AI is evolving at a rapid pace, creating growing needs for
training, and employee trends are towards moving jobs more frequently creating
a demand for onboarding and upskilling.
Despite the revenue softness, LTG continues to deliver profit growth and
healthy cash flow. We continue to concentrate on simplifying our portfolio,
thus sharpening our focus on learning and talent development. As part of our
strategy we recently closed the divestiture of Vector for a cash consideration
of $50 million on a cash and debt free basis (net proceeds c.$35m after tax
and costs) which alongside a voluntary debt repayment resulted in an
approximately neutral net debt position as at 30 August 2024.
Notwithstanding the current challenges, we believe that LTG will return to
growth driven by a combination of heightened focus on execution to take
advantage of long-term structural drivers, portfolio management, acquisitions
and an improvement in market conditions.
H1 2024 Performance Highlights
Revenues for the six months to June 2024 declined by 3.8% on a constant
currency organic basis. The decline in revenue was driven by continued lower
transactional and project revenues in our Content & Services division,
PeopleFluent declines within Software and Platforms and a subdued macro
backdrop impacting overall spending on learning and talent development
activities.
Group adjusted EBIT for the first half grew by 5% year over year and group
adjusted margin in the first half of the year was 17.3% versus 15.3% in H1
2023 (all on a like-for-like basis). The margin progression was driven
primarily by continued execution of GP Strategies' commercial transformation
and efficiencies across the group.
LTG is a highly cash generative business and is also delivering incremental
proceeds through disposals. Net debt as at 30 August 2024 was £1 million,
following the disposal of Vector and a voluntary additional debt repayment of
$25 million. Net debt as at 30 June 2024, was £57.5 million (FY 2023: £78.6
million) before accounting for the Vector proceeds.
Our long-term services and SaaS contracts accounted for 76% of revenues in H1
2024 and provide a strong base and durability in earnings.
Operational Review
The Content and Services division includes GP Strategies, Affirmity and
PRELOADED and comprised 73% of revenue and 60% of Adjusted EBIT in H1 2024.
The Software and Platforms division reflects the results of our software
companies including Rustici, Bridge, Breezy, OpenLMS, and PeopleFluent. The
Software and Platforms divisions comprised 27% of revenue and 40% of Adjusted
EBIT in H1 2024
Content & Services
Revenue decreased by 2.9% on an organic constant currency basis.
GP Strategies experienced strong growth in Leadership & Advisory and in
Latin America which was offset by softness in Managed Learning Services,
Learning Experience and Government divisions driven by lower activity from our
existing client base and a softer pipeline. Their strategic focus remains on
driving more cross-selling within divisions, gaining market share in emerging
markets and sectors requiring business transformation, and AI enabling the
entire business to be more productive for customers.
With regard to AI initiatives, client uptake of GP Strategies new ContentAIQ
platform has exceeded expectations and their leading Human + AI training
program remains one of the pre-eminent programs for leadership across the
Fortune 500 client base. Third parties continue to recognise GP Strategies'
leading expertise and capabilities, with the firm winning 30 Brandon Hall HCM
Excellence Awards in the last 12 months.
PRELOADED experienced lower activity in the first half including a delay in a
large contract, however clients are starting to become more active. Affirmity
delivered healthy revenue growth during the period driven by continued new
client wins and upselling.
Software and Platforms
Revenue decreased by 5.9% on an organic constant currency basis. Individual
business performances were as follows:
● Rustici: Continued strong performance in H1 2024 with a number of new AI
enabled products coming to market including Rustici Generator (AI driven
content processing service).
● Bridge: Incurred higher than expected renewals churn in H1 driven by temporary
factors including restructuring of sales teams and spend scrutiny. The new
Bridge 'Learn and Develop' solution which brings Skills-focused, AI enabled
technology derived from the Patheer acquisition, is landing very well with
existing customers and new prospects.
● Breezy: The macro impact of small medium business (SMB) hiring weakness
continues to impact the business in 2024.
● OLMS: There were lower than expected new customer bookings in H1 however
underlying ARR grew in Q2. The new leadership team has conducted a thorough
review resulting in a full understanding of the challenges and is initiating
many positive strategic changes.
● PeopleFluent: Renewals churn was higher than expectations. They are launching
a new product enhancement on Skills and AI called Stories which will address
key perceived deficiencies in the Learning Product and we expect this to have
a positive effect on retention.
Corporate Governance
As previously announced, Simon Boddie was appointed as Senior Independent
Director with effect from 8 July 2024. I thank him for his continued support
to me and the executive team.
GP Strategies Regulatory Update
As a US company that performs work for the US Government, GP Strategies
requires certain approvals and is subject to restrictions intended to protect
classified information.
In July 2024, LTG was notified by GP Strategies of the invalidation
("temporary suspension") of the eligibility for GP to work on new classified
contracts. The GP executive team continues to be in constant dialogue with the
DCSA (Defense Counterintelligence and Security Agency) and is making good
progress on resolving the issues pertaining to certain approvals, with full
resolution our key objective.
A new subsidiary, solely focused on all forms of federal US Government
contracts, is in the process of being established. It is expected to become
operational in H1 2025 and has applied to be eligible to work on new
classified contracts.
GP Strategies continues to work on existing classified contracts, however one
customer has paused their contract which has a revenue impact of c.$200k in
2024. No other contracts are due for renewal imminently, and the value of the
contracts is not material in the context of total Group revenue and profit.
Dividend
On the 28th of June 2024, the Company paid a final dividend of 1.21 per share,
giving a total dividend for 2023 of 1.66 pence per share, up 3.8% over 2022.
The Board is pleased to declare an interim dividend of 0.45 pence per share
(H1 2023: 0.45 pence per share). This dividend will be paid by 28 October 2024
to all shareholders on the register as at 4 October 2024.
Current Trading and Outlook
The Group previously expected revenue to be in the range of £480 to £500
million and adjusted EBIT to be in the range of £88 to £93 million for FY
2024 (adjusting for the completion of the sale of Vector on 1 July). This
range was based on an average GBP:USD rate of 1.26 for H2 2024. Based on an
average GBP:USD rate of 1.31 for H2, the ranges adjust to £473 to £493
million of revenue and adjusted EBIT of £86 to £91 million for FY 2024
(adjusting for the completion of the sale of Vector on 1 July). The Board
expects the Group to be towards the bottom of the range given current trading,
in particular at GP Strategies. The Board is focused on continuing to drive
efficiencies whilst actively managing the portfolio to support a return to
organic growth once market conditions improve.
Jonathan Satchell
Chief Executive
17 September 2024
Chief Financial Officer's Review
In the six months ended 30 June 2024, in a challenging macroeconomic climate
with a weaker US dollar, revenues for continuing operations were £250.3
million, reflecting a 3.8% organic constant currency decline. On a reported
basis, revenue from continuing operations decreased 12% from £284.6 million.
The Group has experienced resilience in SaaS and long-term contracts versus
project-related and transactional revenue with the proportion of this category
reflecting 76% of Group revenue from 72% in H1 2023.
Revenue in Content & Services decreased 5.9% to £183.7 million on a
like-for-like basis(1) and 13% on a reported basis (H1 2023: £211.5 million),
with the division now accounting for 73% of Group revenue (H1 2023: 74%).
Organic constant currency revenue declined by 2.9% (H1 2023: 1.8% growth),
originating in GP Strategies and PRELOADED, which was partially offset by
growth in Affirmity. Long-term contracts accounted for 70% of the division's
revenue, an increase from 65% in H1 2023. GP Strategies H1 performance
reflects continued softness in transactional and project-related work,
alongside a lower number of learners in some Managed Learning Service
contracts, partially offset by strong growth in LATAM and Leadership
divisions. GP Strategies also continued to benefit from the commercial
transformation strategy with year on year margin improvements. PRELOADED
revenue experienced slower than expected sales conversion, and Affirmity
revenue benefitted from growth predominately in long-term contacts.
Revenue in Software & Platforms decreased 9% to £66.6 million (H1 2023:
£73.1 million) with the division representing 27% of Group revenue (H1 2023:
26%). On a constant currency basis Software & Platforms declined 5.9% (H1
2023: 4.7% decline) driven by the structural decline in PeopleFluent, lower
revenue in OpenLMS due to fewer large services deals with partners and
business migrations, the continued reduction in Reflektive revenue driven by
primarily technology sector customer churn, and some slightly higher churn and
lagging renewals within Bridge. In Breezy, we continue to see stability in
SaaS revenues, but challenges remain in transactional revenues. These
challenges were partially offset by continued strong growth in Rustici due to
higher utilisation of its products.
Adjusted EBIT on a like-for-like basis increased 5% to £43.3 million from
£41.1 million with a resulting adjusted EBIT margin of 17.3% up from 15.3% in
H1 2023 driven primarily by cost control and continued focus on the successful
commercial transformation programme within GP Strategies, offset by lower
revenue as outlined above. Reported adjusted EBIT for continuing operations
was broadly in line with prior year of £43.1 million.
Adjusted EBIT margin for continuing operations in the Content & Services
division at 14.2% (H1 2023: 11.7%) was driven by the benefits of GP's
commercialisation strategy supplemented by the release of prior year
share-based payment costs resulting from leavers and prior year performance
criteria not being met. Software & Platforms adjusted EBIT margin
increased from 25.1% in H1 2023 to 25.8% due to cost reduction and lower
share-based payment costs.
The Group reported a 65% increase in statutory operating profit of £38.3
million (H1 2023: £23.2 million) which is stated after amortisation of
acquired intangibles, various transaction costs and earn-out charges, profit
or loss on disposal of fixed and non-core assets, cloud computing and
integration costs. Amortisation of acquired intangibles decreased to £15.9
million (H1 2023: £16.6 million). Acquisition earn-out charges decreased to
£0.2 million (H1 2023: £1.1 million). Contingent consideration arrangements
are in place for eCreators & PDT and are dependent on challenging
incremental revenue growth targets. Net profit on disposal of fixed assets was
£0.1 million (H1 2023 loss: £0.9 million). Profit on disposal of non-core
asset was £12.3 million (H1 2023: nil), relating to the sale of the Lorien
business on 2 January 2024. Cloud computing costs were £0.2 million (H1
2023: £0.1 million). Costs of integration decreased to £0.4 million (H1
2023: £1.2 million) related to the final stages of the integration of GP
Strategies including legal costs related to the US regulatory issue. Disposal
costs for H1 were £0.8 million (H1 2023: £0.1 million) related to the
disposal of Vector completed 1 July and active portfolio management. For
further details of the items excluded from statutory operating profit see note
6.
Net finance expenses of £4.3 million (H1 2023: £6.7 million) include
interest on borrowings of £5.7 million (H1 2023: £7.0 million), £0.2
million (H1 2023: £0.3 million) relating to the Group's leases under IFRS 16,
and £1.6 million interest receivable (H1 2023: £0.5 million).
The Group reported a profit before tax of £34.0 million for the six months
ended 30 June 2024 (H1 2023: £16.5 million). The tax charge of £7.4 million
(H1 2023: £4.5 million) is primarily driven by applying UK and international
tax rates to associated results after adjustments for non-taxable disposals,
as well as the derecognition of deferred tax assets related to prior year
losses in Puerto Rico due to declining operations in this territory (note
4).
Basic earnings per share for continuing and discontinued operations in H1 2024
was 3.363 pence (H1 2023: 1.376 pence). Adjusted diluted earnings per share
for continuing operations as set out in Note 9 was 6% up on the prior year at
3.496 pence (H1 2023: 3.293 pence) reflecting slightly higher adjusted
operating profit, lower net interest costs and slightly higher number of
shares including the potential dilutive impact of share options.
Gross cash of £78.5 million and net debt of £57.5 million excluding £8.8
million of lease liabilities, at 30 June 2024 compares with gross cash of
£72.5 million and net debt of £78.6 million, excluding £11.3 million of
lease liabilities, at 31 December 2023. The covenant net debt / adjusted
EBITDA ratio was 0.5x in June 2024 (0.7x in December 2023). A further
voluntary repayment of $25.0 million (£19.5 million) was paid on 10 July
using part of the Vector sale proceeds (note 17).
Cash generated from operations was strong at £37.7 million (H1 2023: £32.6
million) as we continue to manage working capital and reduce property leases,
and net cash flow from operating activities was £27.1 million (H1 2023:
£26.7 million).
Free cash flow(3) was £29.9 million (H1 2023: £5.6 million) as set out
below.
£m H1 2024 H1 2023 Variance
Statutory operating profit 38.2 23.2 15.0
Adjusting items 5.1 19.9 (14.8)
Adjusted EBIT 43.3 43.1 0.2
Depreciation & Amortisation 6.9 7.1 (0.2)
Share-based payment charges 0.9 3.1 (2.2)
Dec / (Inc) in working capital(2) (12.1) (13.3) 1.2
Capital expenditure (6.3) (7.2) 0.9
Lease liabilities (2.3) (3.2) 0.9
Other (0.1) (1.6) 1.5
Adjusted operating cash flow(3) 30.3 28.0 2.3
Cash Conversion(3) 70% 65% 5% pts
Interest paid (6.5) (11.1) 4.6
Interest received 1.6 0.5 1.1
Tax paid (10.6) (5.9) (4.7)
Integration & disposal costs (1.1) (1.2) 0.1
Earnout & contingent consideration (0.1) (4.7) 4.6
Proceeds from asset sale 16.3 - 16.3
Free cash flow(3) 29.9 5.6 24.3
(1) Excluding Lorien and TTI contracts disposed of in 2023, and
reclassification of pass-through revenue, at 1.23 average H1 2023 USD/GBP FX.
(2) Excludes integration & transaction costs
(3) Alternative Performance Measure (APM) term defined and explained in the
Glossary
Adjusted operating cash flow was £2.3 million higher than H1 2023 primarily
reflecting lower working capital, capital expenditure and lease payments,
offset by lower share-based payment charges. Cash conversion was 70%, an
improvement from 65% in H1 2023.
Net interest payments decreased to £4.9 million from £10.6 million,
following £4.5m paid in H1 2023 related to interest costs from 2022 payable
in January 2023 as the loan was rolled for 6 months to mitigate interest rate
rises in H2 2022. Tax payments increased to £10.6 million (H1 2023: £5.9
million) including a £3.6 million 2023 catch-up. Integration costs relate to
the GP Strategies acquisition as we enter into the final stages of this
process. £0.1m earnout payment relates to Learning Media Services in H1 2024
(H1 2023: Breezy and eCreators). Proceeds from asset sale were £16.3 million
in H1 2024 (H1 2023: £nil), from the disposal of Lorien Engineering
Solutions.
Net assets increased to £443.7 million at 30 June 2024 (31 December 2023:
£427.2 million) and total equity per share(3) increased from 54.0 pence per
share to 56.1 pence per share.
On 1 July 2024, Learning Technologies Group plc successfully completed on
the sale of Vector to PIXID Group for a cash consideration of $50
million on a cash and debt free basis (note 22). Vector is a leading vendor
management platform for contingent labour with operations predominantly
in North America and also in the UK. By way of background, Vector was
acquired as part of the $150 million PeopleFluent acquisition in 2018. For
the full year ended 31 December 2023, Vector generated revenue and Adjusted
EBIT of $11.4m and $7.1 million respectively.
The sale of Vector is part of LTG's announced strategy to actively manage the
portfolio, sharpening our focus on learning and talent development. The sale
of Vector follows the completed disposals of TTi Global staffing contracts in
2023 and Lorien Engineering Solutions in January 2024.
Kath Kearney-Croft
CFO
17 September 2024
Consolidated statement of comprehensive income Six months to Six months to Year to
30 June 2024 30 June 2023 31 Dec 2023
Note £'000 £'000 £'000
Revenue 3 250,328 284,582 562,305
Operating expenses (211,164) (258,320) (499,642)
Share-based payment charge (906) (3,081) (4,381)
Profit on sale of joint venture - - 425
Operating profit 38,258 23,181 58,707
Adjusted EBIT 43,347 43,115 98,539
Adjusting items included in Operating profit 6 (5,089) (19,934) (39,832)
Operating profit 38,258 23,181 58,707
Finance expenses 7 (5,927) (7,243) (14,132)
Finance income 7 1,644 539 1,032
Profit before taxation from continuing operations 33,975 16,477 45,607
Income tax charge 4 (7,366) (4,472) (13,015)
Profit after taxation from continuing operations 26,609 12,005 32,592
Loss on discontinued operations, net of tax 5 - (1,125) (3,138)
Profit for the period/year 26,609 10,880 29,454
Profit for the period/year attributable to the owners of the parent 26,609 10,880 29,454
Other comprehensive income:
Exchange differences on translating foreign operations (1,489) (11,920) (20,169)
Total comprehensive profit / (loss) for the period/year (1,040) 9,285
25,120
Earnings per share from continuing operations
Basic (pence) 9 3.363 1.518 4.121
Diluted (pence) 9 3.260 1.476 3.985
Adjusted earnings per share
Basic (pence) 9 3.607 3.387 8.069
Diluted (pence) 9 3.496 3.293 7.803
Earnings per share from continuing and discontinued operations
Basic (pence) 9 3.363 1.376 3.724
Diluted (pence) 9 3.260 1.338 3.601
Adjusted earnings per share
Basic (pence) 9 3.607 3.253 7.680
Diluted (pence) 9 3.496 3.163 7.427
Consolidated statement of financial position Note 30 June 2024 30 June 2023 (restated) £'000 31 Dec 2023
£'000 £'000
NON-CURRENT ASSETS
Property, plant and equipment 11 2,013 2,433 2,217
Right-of-use assets 11 5,414 10,449 6,812
Intangible assets 10 461,098 512,059 493,016
Deferred tax assets 15 8,116 7,335 6,147
Other receivables, deposits and prepayments 1,601 2,145 2,093
478,242 534,421 510,285
CURRENT ASSETS
Trade receivables 12 92,751 105,768 107,962
Other receivables, deposits and prepayments 13 15,092 14,620 14,374
Amounts recoverable on contracts 30,746 39,349 25,757
Inventory 1,313 2,403 1,260
Corporation tax 2,863 - 5,155
Cash and cash equivalents 14 78,503 78,132 72,522
Restricted cash balances 14 2,672 2,303 2,389
223,940 242,575 229,419
Assets in disposal groups classified as held for sale 19 22,259 6,695 8,007
TOTAL ASSETS 724,441 783,691 747,711
CURRENT LIABILITIES
Lease liabilities 2,686 4,162 4,423
Trade and other payables 16 120,317 141,582 133,950
Borrowings 17 30,115 31,220 30,091
Provisions 18 1,038 1,621 2,026
Corporation tax 7,856 5,468 8,237
ESPP scheme liability 991 881 995
163,003 184,934 179,722
NON-CURRENT LIABILITIES
Lease liabilities 6,152 8,486 6,913
Deferred tax liabilities 15 4,647 8,436 5,744
Other long-term liabilities 80 1,466 405
Borrowings 17 105,912 155,289 120,984
Corporation tax payable - 763 756
Provisions 18 491 534 621
117,282 174,974 135,423
Liabilities directly associated with assets in disposal groups classified as 413 4,137 5,335
held for sale
19
TOTAL LIABILITIES 280,698 364,045 320,480
NET ASSETS 443,743 419,646 427,231
EQUITY
Share capital 2,967 2,967 2,967
Share premium account 318,698 318,698 318,698
Merger relief reserve 31,983 31,983 31,983
Reverse acquisition reserve (22,933) (22,933) (22,933)
Share based payment reserve 19,777 17,674 18,974
Foreign exchange translation reserve 4,071 13,809 5,560
Accumulated retained earnings 89,180 57,448 71,982
TOTAL EQUITY 443,743 419,646 427,231
Consolidated statement of changes in equity
Share Share Merger relief reserve Reverse acquisition reserve Share based Foreign Retained earnings Total equity
capital Premium payments exchange
reserve reserve
£'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000
Balance at 1 January 2023 2,962 318,183 31,983 (22,933) 14,714 25,729 55,662 426,300
- - - - - - - -
Profit for period - - - - - - 10,880 10,880
Exchange differences on translating foreign operations - - - - - (11,920) - (11,920)
Total comprehensive income for the period - - - - - (11,920) 10,880 (1,040)
Issue of shares net of share issue costs 5 515 - - - - - 520
Share based payment charge / credited to equity - - - - 3,081 - - 3,081
Distributions in respect of cancelled share options - - - - (121) - - (121)
Tax credit on share options - - - - - - - -
Transfer on exercise and lapse of options - - - - - - - -
Dividends paid - - - - - - (9,094) (9,094)
Transactions with owners 5 515 - - 2,960 (9,094) (5,614)
Balance at 30 June 2023 2,967 318,698 31,983 (22,933) 17,674 13,809 57,448 419,646
Profit for period - - - - - - 18,574 18,574
Exchange differences on translating foreign operations - - - - - (8,249) - (8,249)
Total comprehensive income for the period - - - - - (8,249) 18,574 10,325
Issue of shares net of share issue costs - - - - - - - -
Reserves transfer - - - - - - - -
Share based payment charge / credited to equity - - - - 1,300 - - 1,300
Tax credit on share options - - - - - - (520) (520)
Transfer on exercise and lapse of options - - - - - - - -
Exercise of share options through trust 38 38
Dividends paid - - - - - - (3,558) (3,558)
Transactions with owners - - 1,300 - (4,040) (2,740)
2,967 318,698 31,983 (22,933) 18,974 5,560 71,982 427,231
Balance at 31 December 2023
Profit for period - - - - - - 26,609 26,609
Exchange differences on translating foreign operations - - - - - (1,489) - (1,489)
Total comprehensive (expense) / income for - - - - - (1,489) 26,609 25,120
the period
Share based payment charge / credited to equity - - - - 906 - - 906
Distributions in respect of cancelled share options - - - - (103) - - (103)
Tax credit on share options - - - - - - 158 158
Dividends paid - - - - - - (9,569) (9,569)
Transactions with owners - - - - 803 - (9,411) (8,608)
Balance at 30 June 2024 2,967 318,698 31,983 (22,933) 19,777 4,071 89,180 443,743
Consolidated statement of cash flows
Note Six months to Six months to Year to
30 June 2024 30 June 2023 31 Dec 2023
£'000 £'000 £'000
Cash flow from operating activities
Profit before taxation 33,975 16,477 45,607
Loss before taxation from discontinued operations 5 - (1,452) (3,488)
Adjustments for:-
Loss on disposal of PPE and right-of-use assets (55) 893 2,163
Gain on sale of non-core business 20 (12,279) - -
Share based payment charge 906 3,081 4,381
Amortisation of intangible assets 20,685 20,880 41,551
Depreciation of plant and equipment 11 628 745 1,492
Depreciation of right-of-use assets 11 1,458 2,128 3,741
Finance expense 7 188 257 518
Interest on borrowings 7 5,739 6,986 13,614
Acquisition-related contingent consideration and earn-outs 6 239 1,088 224
Payment of acquisition-related contingent consideration and earn-outs - (4,726) (4,636)
Profit on sale of joint venture - - (425)
Interest income 7 (1,644) (539) (1,032)
Other non-cash items - - 2,000
Operating cash flow before working capital changes 49,840 45,818 105,710
Decrease in trade and other receivables 14,159 24,189 21,692
(Increase)/decrease in inventory (53) (70) 1,052
(Increase)/decrease in amount recoverable on contracts (3,903) (6,187) 8,269
Decrease in payables (22,330) (31,190) (40,581)
Cash generated from operations 37,713 32,560 96,142
Income tax paid (10,572) (5,904) (16,649)
Net cash flow from operating activities 27,141 26,656 79,493
Cash flow used in investing activities
Purchase of property, plant and equipment (589) (490) (1,192)
Development of intangible assets (5,671) (6,707) (12,883)
Sale of Investment in associates or joint ventures 16,290 - 425
Net cash flow used in investing activities 10,030 (7,197) (13,650)
Cash flow (used in)/from financing activities
Dividends paid 8 (9,569) - (12,652)
Repayment of bank loans (15,259) (15,409) (51,315)
Interest paid (6,544) (11,147) (16,714)
Interest received 1,644 539 1,032
Issue of ordinary share capital net of share issue costs - 521 520
Contingent consideration payments in the period (83) - -
Interest paid on lease liabilities (209) (261) (546)
Cash payments for the principal portion of lease liabilities (2,088) (2,977) (5,192)
Net cash flow (used in)/from financing
activities (32,108) (28,734) (84,867)
Net increase / (decrease) in cash and cash equivalents 5,063 (9,275) (19,024)
Cash and cash equivalents at beginning of the period/year 72,522 94,847 94,847
Effects of foreign exchange rate changes 918 (7,440) (3,301)
Cash and cash equivalents at end of the period/year 14 78,503 78,132 72,522
Notes to the consolidated financial statements for the six months to 30 June 2024
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 3 New
Street Square, London, England, EC4A 3BF. 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 2023 annual
report.
The interim results for the six months to 30 June 2024 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 December 2023 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 may be supplemented, if required, by additional drawings
under the Group's committed $50.0 million revolving credit facility (RCF)
which is available until October 2025; refer to note 17 for further details.
The Group continues to hold a strong liquidity position as at 30 June 2024,
with gross cash and cash equivalents of £78.5 million exclusive of cash
classified as held for sale (note 14). Net debt of £57.5 million includes a
fully drawn $265.0 million term loan which is repayable in quarterly
instalments of $9.6 million commencing in December 2022 (note 17) (31 December
2023: gross cash was £72.5 million and net debt was £78.6 million). Whilst
there are a number of risks to the Group's trading performance, as summarised
in the 'Principal risks and uncertainties' section on pages 25-26 within the
2023 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 December
2024 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 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 reforecast for 2024 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, SaaS and
long-term contracts, transactional revenue, total equity per share 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 share-based payment charges, contingent consideration and
earn-outs, cloud computing configuration and customisation costs, joint
venture profits, profit on sale of a joint venture and fixed asset and
right-of-use asset disposal gains or losses.
3. Segment analysis
Geographical information
The Group's revenue from external customers and non-current assets by
geographical location are detailed below.
UK Europe North America Asia Pacific Rest of world Total
£'000 £'000 £'000 £'000 £'000 £'000
Six months to 30 June 2024
Revenue from continuing operations 24,074 20,351 175,900 17,498 12,505 250,328
Revenue from discontinued operations - - - - - -
Total Revenue 24,074 20,351 175,900 17,498 12,505 250,328
Non-current assets 35,992 548 417,335 15,922 329 470,126
Six months to 30 June 2023
Revenue from continuing operations 33,023 26,916 194,875 17,637 12,131 284,582
Revenue from discontinued operations - - - - - -
Total Revenue 33,023 26,916 194,875 17,637 12,131 284,582
Non-current assets (restated) 29,653 900 478,812 17,270 451 527,086
Year to 31 December 2023
Revenue from continuing operations 67,826 73,804 374,279 21,064 25,332 562,305
Revenue from discontinued operations 34 - - - - 34
Total Revenue 67,860 73,804 374,279 21,064 25,332 562,339
Non-current assets 36,132 709 450,479 16,472 346 504,138
The total non-current assets figure is exclusive of deferred tax assets in each of the periods above.
The non-current assets for June 2023 have been restated due to a prior period adjustment (note 21).
Information about reported segment revenue, profit or loss from continuing
operations and total assets
30 June 2024 Content & Services Software & Platforms Total
Global Services Regional Services Other Technical Total On-premise Software Licences Hosting & SaaS Platforms Professional Services & Other Support & Maintenance Total
£'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000
SaaS and long-term contracts 58,889 67,644 1,540 128,073 17,192 43,160 1,407 1,608 63,367 191,440
Transactional 10,468 31,017 14,124 55,609 6 30 3,243 - 3,279 58,888
Total Revenue 69,357 98,661 15,664 183,682 17,198 43,190 4,650 1,608 66,646 250,328
Depreciation & amortisation (1,874) (4,474) (6,348)
Adjusted EBIT 26,146 17,201 43,347
Amortisation of acquired intangibles (7,432) (8,427) (15,859)
Acquisition related adjusting items (261) (334) (595)
Other adjusting items 12,101 (736) 11,365
Finance expenses (3,160) (1,123) (4,283)
Profit before tax 27,394 6,581 33,975
Additions to intangible assets 534 5,137 5,671
Total Assets 531,569 192,872 724,441
30 June 2023 (restated) Content & Services Software & Platforms Total
Global Services Regional Services Other Technical Total On-premise Software Licences Hosting & SaaS Platforms Professional Services & Other Support & Maintenance Total
£'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000
SaaS and long-term contracts 63,853 71,275 1,507 136,635 15,191 50,249 2,246 1,958 69,644 206,279
Transactional 10,850 49,865 14,171 74,886 - 31 3,386 - 3,417 78,303
Total Revenue 74,703 121,140 15,678 211,521 15,191 50,280 5,632 1,958 73,061 284,582
Depreciation & amortisation (2,391) (3,978) (6,369)
Adjusted EBIT 24,794 18,321 43,115
Amortisation of acquired intangibles (7,581) (8,995) (16,576)
Acquisition related adjusting items (1,192) (1,046) (2,238)
Other adjusting items (832) (288) (1,120)
Finance expenses (4,983) (1,721) (6,704)
Profit before tax 10,206 6,271 16,477
Additions to intangible assets 4,985 1,722 6,707
Total Assets 582,492 201,199 783,691
31 December 2023 Content & Services Software & Platforms Total
Global Services Regional Services Other Technical Total On-premise Software Licences Hosting & SaaS Platforms Professional Services & Other Support & Maintenance Total
£'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000
SaaS and long-term contracts 87,220 179,783 2,825 269,828 30,684 100,212 3,925 3,429 138,250 408,078
Transactional 21,529 98,520 28,131 148,180 - 58 5,989 - 6,047 154,227
Total Revenue 108,749 278,303 30,956 418,008 30,684 100,270 9,914 3,429 144,297 562,305
Depreciation & amortisation (5,516) (8,562) (14,078)
Adjusted EBIT 56,416 42,123 98,539
Amortisation of acquired intangibles (15,065) (17,641) (32,706)
Acquisition related adjusting items (2,395) (239) (2,634)
Other adjusting items (3,330) (1,162) (4,492)
Finance expenses (9,736) (3,364) (13,100)
Profit before tax 25,890 19,717 45,607
Additions to intangible assets - 12,883 12,883
Total Assets 555,836 191,875 747,711
During the year ended 31 December there were changes to the grouping of
businesses within the reportable segments, as well as a consolidation of the
reporting segments themselves. This was performed following internal
reorganisation and is consistent with the format of the internal reporting
used by the Chief Operating Decision Maker. The comparative results for the
period ended 30 June 2023 have been represented to align under this updated
presentation.
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 June 2024 one customer within the regional services
SaaS and long-term contracts under content and services accounted for
£25,843,000 of reported revenues (Six months to 30 June 2023: no customer
accounted for more than 10 per cent of reported revenues).
4. Taxation
Current and deferred tax for the six months to 30 June 2024 has been
calculated by applying the jurisdictional statutory rates on an entity by
entity basis, after adjustments for non-taxable intra-group dividend income
and non-taxable disposals, to derive the Group's total income tax expense/
(credit). This is allocated to current and deferred tax as outlined below:
Six months to Six months to Year to
30 June 2024 30 June 2023 31 Dec 2023
£'000 £'000 £'000
Current tax:
Tax on profits for the period/year 4,692 - 5,502
Adjustments in respect of prior periods / years (80) 1,449 (1,029)
Foreign current tax on profits for the period / year 5,713 9,034 16,441
Total current tax 10,325 10,483 20,914
Deferred tax:
Origination and reversal of temporary differences (4,028) (5,836) (12,158)
Adjustments in respect of prior periods / years 1,147 (359) 2,129
Change in deferred tax rate (78) (143) 1,780
Total deferred tax (2,959) (6,338) (8,249)
Income tax expense 7,366 4,145 12,665
Of the total income tax expense, £7,366,000 relates to taxation on continuing
operations (six months to June 2023 expense £4,472,000 and year to 31
December 2023 expense £13,015,000).
5. (Loss) / Profit on discontinued operations, net of tax
In the prior periods, the discontinued operations related to the closure of
non-core operations with the table below showing the results which qualified
as discontinued operations and which are included in the Group Income
Statement and Group Statement of Cash Flows respectively.
There is no impact of the Income Statement and statement of cash flows in
respect of the current period ended 30 June 2024.
Six months to Six months to Year to
30 June 2024 30 June 2023 31 Dec 2023
£'000 £'000 £'000
Revenue - - 34
Operating expenses - (1,452) (3,522)
Share based payment charge - - -
Operating loss - (1,452) (3,488)
Adjusted EBIT - (1,389) (3,425)
Adjusting items included in Operating loss
Loss on disposal of fixed assets - (1) (1)
Closure costs - (62) (62)
Impairment of assets held for sale - - -
Operating loss - (1,452) (3,488)
Loss before taxation - (1,452) (3,488)
Taxation - 327 350
Loss after taxation - (1,125) (3,138)
Six months to Six months to Year to
30 June 2024 30 June 2023 31 Dec 2023
Cash flow from operating activities - (1,452) (3,488)
Share based payment charges - - -
Loss/(profit) on disposal of PPE, right-of-use assets and lease liabilities - - 3
Impairment of assets held for sale - - -
Other - - 2,000
Decrease/(increase)in trade and other receivables - - -
(Decrease/increase in payables - - -
Net cash (used in) / from operating activities - (1,452) (1,485)
Net cash from investing activities - - (3)
Net cash flows from financing activities - - -
Net cash inflow / (outflows) from discontinued operations - (1,452) (1,488)
6. Adjusting items
These items are included in the 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 to Six months to Year to
30 June 2024 30 June 2023 31 Dec 2023
£'000 £'000 £'000
Adjusting items included in Operating profit:
Acquisition related costs:
Amortisation of acquired intangibles 15,859 16,576 32,706
Acquisition-related contingent consideration and earn-outs 239 1,088 224
Integration costs 356 1,150 2,410
Total acquisition related costs 16,454 18,814 35,340
Other adjusting items:
(Profit) / Loss on disposal of fixed assets (109) 41 124
Loss on disposal of right-of-use assets 54 852 2,039
Profit on disposal of non-core asset (12,279) - -
Profit on sale of joint venture - - (425)
Cloud computing configuration and customization costs 214 122 292
Restructuring costs - - 2,537
Costs related to asset held for sale - - 529
Disposal costs 755 105 -
Other income - - (604)
Total other adjusting items (11,365) 1,120 4,492
Total adjusting items 5,089 19,934 39,832
As outlined above, the material adjustments during the period are made in
respect of:
- Amortisation of acquired intangibles - the cost of £15.9 million (2023:
£16.6 million) is 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 also not considered part of
the core trading performance of the Group.
- Disposal costs relate to the fees incurred for the sale of Vector in July 2024
(note 22) and a non-core asset during 2023 (see note 20).
- Integration costs - the costs of integrating acquired subsidiaries purchased.
These 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. Included
within the £0.3 million integration costs are legal and professional fees of
£0.1 million, an allocation of internal labour for employees who have worked
on integration activities during the year of £0.2 million.
- Other in the year ended 31 December 2023 relates to a carve out of the
external staffing business of TTI Global, part of GP Strategies, for a cash
consideration of approximately $800k. This is an adjusting item due to its
quantum and non-recurring nature.
- Cloud computing configuration and customisation costs reflects the impact of a
change in accounting policy following review of IFRIC guidance issued in March
2021 relating to capitalisation of cloud computing software implementation
costs. Where there is no underlying intangible asset over which we retain
control, the Group recognises configuration and customisation costs as an
expense.
7. Finance expenses
Six months to Six months to Year to
30 June 2024 30 June 2023 31 Dec 2023
£'000 £'000 £'000
Interest on borrowings 5,739 6,986 13,614
IFRS 16 finance expense 188 257 518
Finance expense 5,927 7,243 14,132
Interest receivable (1,644) (539) (1,032)
Finance income (1,644) (539) (1,032)
Net finance expense 4,283 6,704 13,100
8. Dividends paid
Six months to Six months to Year to
30 June 2024 30 June 2023 31 Dec 2023
£'000 £'000 £'000
Final dividends paid 9,569 9,094 9,094
Interim dividend paid - - 3,558
9,569 9,094 12,652
The declared interim dividend of 0.45 pence per share, amounting to a total
dividend payment of £3.6 million, is not included as a liability in these
financial statements and will be paid on 28 October 2024 to shareholders on
the register at the close of business on 4 October 2024.
9. Earnings per share
Six months to Six months to Year to
30 June 2024 30 June 2023 31 Dec 2023
£'000 £'000 £'000
Continuing operations
Basic earnings per share (pence) 3.363 1.518 4.121
Diluted earnings per share (pence) 3.260 1.476 3.985
Adjusted basic earnings per share (pence) 3.607 3.387 8.069
Adjusted diluted earnings per share (pence) 3.496 3.293 7.803
Continuing and discontinued operations
Basic earnings per share (pence) 3.363 1.376 3.724
Diluted earnings per share (pence) 3.260 1.338 3.601
Adjusted basic earnings per share (pence) 3.607 3.253 7.680
Adjusted diluted earnings per share (pence) 3.496 3.163 7.427
Basic earnings per share is calculated by dividing the profit/loss after tax
attributable to the equity holders of the Group by the weighted average number
of shares in issue during the period.
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 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.
Adjusted earnings per share is stated after the impact of the adjusting items
disclosed in note 6. The adjusted measures 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.
The calculation of earnings per share from continuing operations is based on
the following earnings and number of shares.
Six months to 30 June 2024 Six months to 30 June 2023 Year to 31 December 2023
Profit after tax Weighted average number of shares Pence per share Profit after tax Weighted average number of shares Pence per share Profit after tax Weighted average number of shares Pence per share
£'000 '000 £'000 '000 £'000 '000
Basic earnings per ordinary share 26,609 791,160 3.363 12,005 790,677 1.518 32,592 790,920 4.121
Effect of adjustments:
Total adjusting items (see note 6) 5,089 19,934 39,832
Income tax (credit)/expense 7,366 4,472 13,015
Effect of adjustments 12,455 1.574 24,406 3.087 52,847 - 6.682
Adjusted profit before tax 39,064 36,411 85,439 - -
Tax impact after adjustments (10,528) (1.331) (9,632) (1.218) (21,622) - (2.734)
Adjusted basic earnings per ordinary share 28,536 791,160 3.607 26,779 790,677 3.387 63,817 790,920 8.069
Effect of dilutive potential ordinary shares:
Share options - 25,097 (0.111) - 22,509 (0.094) - 26,947 (0.266)
Adjusted diluted earnings per ordinary share 28,536 816,257 3.496 26,779 813,186 3.293 63,817 817,867 7.803
Diluted earnings per ordinary share attributable to the owners of the parent 26,609 816,257 3.260 12,005 813,186 1.476 32,592 817,867 3.985
The calculation of earnings per share from continuing and discontinued
operations is based on the following earnings and number of shares.
Six months to 30 June 2024 Six months to 30 June 2023 Year to 31 December 2023
Profit after tax Weighted average number of shares Pence per share Profit after tax Weighted average number of shares Pence per share Profit after tax Weighted average number of shares Pence per share
£'000 '000 £'000 '000 £'000 '000
Basic earnings per ordinary share 26,609 791,160 3.363 10,880 790,677 1.376 29,454 790,920 3.724
Effect of adjustments:
Total adjusting items (see note 6) 5,089 19,997 39,895 - -
Income tax (credit)/expense 7,366 4,145 12,665 - -
Effect of adjustments 12,455 1.574 24,142 - 3.053 52,560 - 6.645
Adjusted profit before tax 39,064 35,022 - - 82,014 - -
Tax impact after adjustments (10,528) (1.331) (9,305) - (1.177) (21,272) - (2,690)
Adjusted basic earnings per ordinary share 28,536 791,160 3.607 25,717 790,677 3.253 60,742 790,920 7.680
Effect of dilutive potential ordinary shares:
Share options - 25,097 (0.111) - 22,509 (0.090) - 26,947 (0.253)
Adjusted diluted earnings per ordinary share 28,536 816,257 3.496 25,717 813,186 3.163 60,742 817,867 7.427
Diluted earnings per ordinary share attributable to the owners of the parent 26,609 816,257 3.260 10,880 813,186 1.338 29,454 817,867 3.601
10. Intangible assets
Goodwill Customer contracts and relationships Branding Acquired IP Internal software develop-ment Total
£'000 £'000 £'000 £'000 £'000 £'000
Cost
At 1 January 2023 (restated) 351,511 199,121 16,778 99,572 37,816 704,798
Additions - - - - 6,707 6,707
Foreign exchange differences (13,381) (4,354) (595) (3,883) (1,101) (23,314)
At 30 June 2023 (restated) 338,130 194,767 16,183 95,689 43,422 688,191
Additions - - - - 6,176 6,176
Disposal - - - - (124) (124)
Foreign exchange differences (2,638) (645) (199) (723) (724) (4,929)
At 31 December 2023 335,492 194,122 15,984 94,966 48,750 689,314
Additions - - - - 5,671 5,671
Reclassification of assets held for sale (13,181) (26,601) - (1,986) (2,972) (44,740)
Foreign exchange differences 2,211 1,163 78 621 349 4,422
At 30 June 2024 324,522 168,684 16,062 93,601 51,798 654,667
Accumulated amortisation
At 1 January 2023 - 93,673 5,880 37,118 22,913 159,584
Amortisation charged in period - 9,367 1,424 5,785 4,304 20,880
Foreign exchange differences - (2,080) (196) (1,474) (582) (4,332)
At 30 June 2023 - 100,960 7,108 41,429 26,635 176,132
Amortisation charged in period - 9,369 1,398 5,363 4,541 20,671
Disposal - - - - (115) (115)
Foreign exchange differences - 314 (93) (289) (322) (390)
At 31 December 2023 - 110,643 8,413 46,503 30,739 196,298
Amortisation charged in period - 9,147 1,387 5,323 4,828 20,685
Reclassified as assets held for sale - (20,505) - (1,986) (1,978) (24,469)
Foreign exchange differences - 564 11 304 176 1,055
At 30 June 2024 - 99,849 9,811 50,144 33,765 193,569
Carrying amount
At 30 June 2023 (restated) 338,130 93,807 9,075 54,260 16,787 512,059
At 31 December 2023 335,492 83,479 7,571 48,463 18,011 493,016
At 30 June 2024 324,522 68,835 6,251 43,457 18,033 461,098
The Goodwill balances have been restated as at 1 January 2023 and 30 June 2023
relating to a prior period adjustment as described in note 21.
11. Property, Plant, equipment and right-of-use assets
Right of Use Assets
Computer equipment Fixtures and fittings Total Computer equipment Property Total
Leasehold Improvement Motor vehicles
£'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000
Cost
At 1 January 2023 5,668 374 393 6,435 470 21,265 77 21,812
Additions 415 12 63 490 - 1,316 - 1,316
Foreign exchange differences (154) 262 (121) (13) (2) (232) - (234)
Disposals (1,706) (23) (142) (1,871) - (313) - (313)
At 30 June 2023 4,223 625 193 5,041 468 22,036 77 22,581
Additions 696 - 6 702 102 1,728 - 1,830
Foreign exchange differences (160) (1) (58) (219) 1 436 - 437
Disposals (93) (4) 2 (95) - (6,722) - (6,722)
At 31 December 2023 4,666 620 143 5,429 571 17,478 77 18,126
Additions 588 1 - 589 - 240 91 331
Foreign exchange differences (36) 4 (3) (35) - 106 - 106
Disposals (336) (177) (140) (653) - - - -
At 30 June 2024 4,882 448 - 5,330 571 17,824 168 18,563
Accumulated Depreciation
At 1 January 2023 3,136 116 326 3,578 327 9,633 44 10,004
Charge for the period 559 97 90 746 58 2,055 15 2,128
Disposals (1,704) (23) (105) (1,832) - - - -
Foreign exchange difference (19) 253 (118) 116 - - - -
At 30 June 2023 1,972 443 193 2,608 385 11,688 59 12,132
Charge for the period 630 40 77 747 73 1,529 11 1,613
Disposals (7) (4) 2 (9) - (2,432) - (2,432)
Reclassified as assets held for sale - - - - - 1 - 1
Foreign exchange differences (6) 1 (129) (134) - - - -
At 31 December 2023 2,589 480 143 3,212 458 10,786 70 11,314
Charge for the period 597 31 - 628 24 1,428 6 1,458
Disposals (314) (177) (140) (631) 12 365 - 377
Foreign exchange differences 109 2 (3) 108 - - - -
At 30 June 2024 2,981 336 - 3,317 494 12,579 76 13,149
Net book value
At 30 June 2023 2,251 182 - 2,433 83 10,348 18 10,449
At 31 December 2023 2,077 140 - 2,217 113 6,692 7 6,812
At 30 June 2024 1,901 112 - 2,013 77 5,245 92 5,414
(
)
( )
12. Trade receivables
30 June 2024 30 June 2023 31 Dec 2023
£'000 £'000 £'000
Trade receivables 98,147 109,890 113,080
Allowance for impairment losses (5,396) (4,122) (5,118)
92,751 105,768 107,962
The Group's normal trade credit term is 30-60 days. Other credit terms are
assessed and approved on a case-by-case basis.
The fair value of trade receivables approximates their carrying amount, as the
impact of discounting is not significant. No interest has been charged to date
on overdue receivables.
In accordance with IFRS 15, the Group has disclosed trade receivable balances
net of the associated contract liabilities, as outlined below. These balances
will be shown net until the earlier of either the date the payment becomes due
and a receivable is recognized or the date that the services are delivered and
an associated contract asset is recognized.
30 June 2024 30 June 2023 31 Dec 2023
£'000 £'000 £'000
Contract liabilities offset within trade receivables above 5,321 3,981 13,099
13. Other receivables, deposits and prepayments
30 June 2024 30 June 2023 31 Dec 2023
£'000 £'000 £'000
Sundry receivables 4,854 6,742 5,179
Prepayments 10,238 7,878 9,195
15,092 14,620 14,374
Sundry receivables include rent deposits and other sundry receivables.
14. 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 2024 30 June 2023 31 Dec 2023
£'000 £'000 £'000
Cash and cash equivalents 78,503 78,132 72,522
Restricted cash balances comprise amounts held on behalf of third parties and
employees as part of the Employee Stock Purchase Plan ('ESPP'):
30 June 2024 30 June 2023 31 Dec 2023
£'000 £'000 £'000
Restricted cash 2,672 2,303 2,389
15. Deferred tax assets / liabilities
The balances as at 1 January 2023 and 30 June 2023 have been restated as per
note 21.
The movement in deferred tax assets and liabilities prior to offsetting are
shown below:
Deferred Tax Assets Share options Tax losses Short-term timing differences Intangibles Total
£'000 £'000 £'000 £'000 £'000
At 1 January 2023 (restated) 3,622 5,248 12,814 10,857 32,541
Deferred tax charged directly to the income statement - 1,920 1,058 636 3,614
Exchange rate differences (48) (166) (507) (451) (1,172)
Changes in tax rate - 124 36 - 160
At 30 June 2023 (restated) 3,574 7,126 13,401 11,042 35,143
Deferred tax charged directly to the income statement (281) (2,146) 6,083 (653) 3,003
Deferred tax charged directly to equity (520) - - - (520)
Exchange rate differences 50 15 815 (80) 800
Changes in tax rate 4 (124) 271 (414) (263)
At 31 December 2023 2,827 4,871 20,570 9,895 38,163
Deferred tax charged directly to the income statement - (486) (757) 650 (593)
Deferred tax charged directly to equity 158 - - - 158
Exchange rate differences 6 41 (27) 67 87
Changes in tax rate - 83 (11) - 72
At 30 June 2024 2,991 4,509 19,775 10,612 37,887
Deferred Tax Liabilities Intangibles Accelerated tax deprecation Short-term timing differences Total
£'000 £'000 £'000 £'000
At 1 January 2023 (restated) 37,739 (423) 2,648 39,964
Deferred tax charged directly to the income statement (3,648) (9) 1,075 (2,582)
Exchange rate differences (1,054) 16 (118) (1,156)
Changes in tax rate - - 18 18
At 30 June 2023 (restated) 33,037 (416) 3,623 36,244
Deferred tax charged directly to the income statement (310) 596 (1,116) (830)
Exchange rate differences (308) 1 994 687
Changes in tax rate 1,667 (1) (7) 1,659
At 31 December 2023 34,086 180 3,494 37,760
Deferred tax charged directly to the income statement (3,631) (6) 163 (3,474)
Exchange rate differences 224 5 (90) 139
Changes in tax rate - 2 (9) (7)
At 30 June 2024 30,679 181 3,558 34,418
The total deferred tax assets and liabilities subject to offsetting are
presented below:
Total Deferred tax assets Total Deferred tax liabilities
30 June 30 June 2023 (restated) 31 Dec 30 June 30 June 2023 (restated) 31 Dec
2024 £'000 2023 2024 £'000 2023
£'000 £'000 £'000 £'000
Prior to offsetting 37,887 35,143 38,163 34,418 36,244 37,760
Offset of tax (29,771) (27,808) (32,016) (29,771) (27,808) (32,016)
After offsetting 8,116 7,335 6,147 4,647 8,436 5,744
16. Trade and other payables
30 June 2024 30 June 2023 31 Dec 2023
£'000 £'000 £'000
Trade payables 17,809 15,056 24,979
Contract liabilities 56,084 74,292 63,398
Tax and social security 14,632 11,574 15,158
Contingent consideration 13 - 20
Acquisition-related contingent consideration and earn-outs 306 1,610 145
Accruals and other payables 31,473 39,050 30,250
120,317 141,582 133,950
The contract liabilities balance relates mainly to the Group's right to access
licences, support and maintenance and hosting contracts which are recognised
over the contract term as the customer receives and consumes the benefits of
the service. All of the current liability contract liabilities balance at 31
December 2023 was recognised as revenue in 2024 and the current contract
liabilities balance at 30 June 2024 is expected to be recognised as revenue in
2024 and 2025.
The acquisition-related contingent consideration and earn-outs balance in 2024
relates to the acquisition of eCreators and Patheer. The 2023 balances relate
to the acquisition of Learning Media Services and Patheer, and were financial
instruments held at fair value within the scope of IFRS 9 and were repaid
during 2024. The 2024 and 2023 contingent consideration balance relates to
Moodle News.
17. Borrowings
The Group has a debt facility dated 15 July 2021 with HSBC UK Bank PLC, HSBC
Innovation Bank Limited, Barclays Bank PLC, Fifth Third Bank NA and The
Governor and Company of the Bank of Ireland.
The facility comprises of a Term Facility A committed facility, with an
original commitment of $265.0 million available to the Group until October
2025, a $50.0 million committed Revolving Credit Facility (£39.5 million at
the period-end exchange rate) and a $50.0 million uncommitted accordion
facility (£39.5 million at the period-end exchange rate), both available
until July 2025. In addition, a 12 month extension request is available to
the Group for Term Facility A and the RCF.
The term facility attracts variable interest based on LIBOR plus a margin of
between 1.50% and 2.75% per annum, based on the Group's leverage to December
2022, following this it attracts SOFR plus the margin discussed above and an
adjusted credit spread until repaid.
Term Facility A is repayable with quarterly instalments, starting December
2022, of $9.6 million (c £7.5 million at the year-end exchange rate) with the
balance repayable on the expiry of the loan in October 2025. During 2023, the
Group also made an voluntary additional repayment of $25 million (c £20.5
million). There were no utilisations of the Revolving Credit Facility or
uncommitted accordion facility in either of the years ended 2024 or 2023.
On 10 July 2024 a voluntary additional debt repayment of $25.0 million (£19.5
million) was made on the term loan using the proceeds from the sale of Vector
(note 22).
The bank loan is secured by a fixed and floating charge over the assets of the
Group and is subject to financial covenants that are tested quarterly based on
a calendar year.
The financial covenants are that the Group must ensure that its interest cover
ratio is at least 4.0 times and its leverage ratio does not exceed 3.0 times.
The interest 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 interest cover ratio is the ratio of adjusted EBITDA, as defined in the
agreement, to Finance Charges. The leverage ratio is total net debt on the
last day of the relevant period to adjusted EBITDA for that relevant period.
Both numerator and denominator in each calculation comprise several
adjustments as defined in the debt facility agreement and as such are not
directly calculable from the financial statements.
The Group was compliant with all financial covenants throughout the year and
as at 30 June 2024, the Group's interest cover was 9.01 and its leverage ratio
was 0.51.
The lease liabilities have arisen on adoption of IFRS 16 and are secured by
the related underlying assets.
30 June 2024 30 June 2023 31 Dec 2023
£'000 £'000 £'000
Current interest-bearing loans and borrowings 30,115 31,220 30,091
Non-current interest-bearing loans and borrowings 105,912 155,289 120,984
Current lease liabilities 2,531 4,162 4,423
Non-current lease liabilities 5,669 8,486 6,913
144,227 199,157 162,411
Net debt reconciliation
Net debt can be analyzed as follows:
30 June 2024 30 June 31 Dec
2023 2023
£'000 £'000 £'000
Cash and cash equivalents 78,503 78,132 72,522
Borrowings:
- Term loan (136,027) (186,509) (151,075)
Net debt (57,524) (108,377) (78,553)
18. Provisions
Property provisions Litigation and regulation provisions Onerous contract provisions Closure provisions Total
(1) (2) (3) (4)
£'000 £'000 £'000 £'000 £'000
At 1 January 2023 1,003 921 488 1,047 3,459
Released to the income statement - - (319) (62) (381)
Paid in the period (86) (11) - (718) (815)
Additions 6 - - - 6
Foreign exchange movement (64) (37) (13) - (114)
At 30 June 2023 859 873 156 267 2,155
Charged / (released) to the income statement (87) (320) (156) 62 (501)
Paid in the period 49 11 - (1,015) (955)
Additions - 208 - 1,792 2,000
Foreign exchange movements (1) (6) - (45) (52)
At 31 December 2023 820 766 - 1,061 2,647
Released to the income statement (68) - - - (68)
Paid in the period (83) (5) - (974) (1,062)
Additions 3 - - - 3
Foreign exchange movements (1) 10 - - 9
At 30 June 2024 671 771 - 87 1,529
Current 180 771 - 87 1,038
Non-current 491 - - - 491
At 30 June 2024 671 771 - 87 1,529
1. The Group is party to a number of leasehold property contracts. Provision has
been made for the unavoidable non-rent costs on those leases where the
property is now vacant. As a result of the implementation of IFRS 16 the
rental elements of certain property provisions are now included within lease
liabilities. In addition, the Group has provided for dilapidation costs
expected to be incurred at the end of property leases.
2. Litigation and regulation provisions relate to estimates for potential
liabilities which may arise in the Group as a result of client claims and past
practices. Whilst the nature of legal claims means that the timing of
settlement can be uncertain, we expect all claims to be settled in the next 1
to 2 years. Whilst the provisions are based on management's best estimate of
the likely liability for obligations that exist at the year-end date, the
maximum potential exposure could be materially higher than the provisions made
as there is a range of potential outcomes.
3. Onerous contract provisions relate to provisions made for certain software
contracts where the unavoidable costs of meeting the obligation under the
contract, exceed the economic benefits expected to be received under the
contract.
4. Closure and restructuring provisions relate to redundancy costs and facility
obligations in relation to the closure of the UK apprenticeship business,
announced prior to 31 December 2022, given the nature of the customer
relationships and quality of the offering in the business do not match the
high standards elsewhere in the Group. The UK apprenticeship business ceased
trading on 31 March 2023. In 2023, the redundancy provisions relate to
resizing the organization due to a more challenging macro-economic
environment.
19. Assets and liabilities classified as held for sale
On 2 January 2024, the Group sold its investment Lorien Engineering,
previously presented as assets and associated liabilities held for sale. See
note 20.
During the period, the Group decided to dispose of Vector VMS and as at 30
June 2024 is classified as held for sale, with the assets and liabilities held
of the lower of fair value less costs to sell and the net book value.
Effect of the assets and associated liabilities on financial position of the
Group
30 June 2024
£'000
Non-current assets
Goodwill 13,181
Intangible assets 7,090
20,271
Current assets
Trade receivables 605
Other receivables, deposits and prepayments 46
Amounts due from related parties 585
Cash and bank balances 384
Restricted cash balances 368
1,988
Assets in disposal groups classified as held for sale 22,259
Current liabilities
Trade and other payables 413
Liabilities directly associated with assets in disposal groups classified as 413
held for sale
20. Disposal of non-core business
On 2 January 2024, the Group sold the Lorien business for a cash consideration
of $21.4 million (£16.8 million) on a cash and debt free basis. The net
proceeds after customary adjustments were $20.7 million (£16.3 million)
resulting in gain on disposal of $18.3 million (£12.3 million, see note 6).
There were no other impacts on financial performance or cash flows other than
the gain on sale in relation to Lorien during the period ended 30 June 2024.
The carrying amount of the assets and liabilities sold as at the date of
disposal were as follows:
30 June 2024
£'000
Non-current assets
Goodwill 501
Intangible assets 1,279
Property, plant and equipment 66
Right of use assets 97
1,943
Current assets
Trade receivables 5,740
Other receivables, deposits and prepayments 135
Amounts recoverable on contracts 691
6,566
Total Assets 8,509
Current liabilities
Lease liabilities 97
Trade and other payables 4,401
4,498
Total Liabilities 4,498
Net Assets 4,011
21. Prior period adjustments
During the year ended 31 December 2023, the Company identified the need to
make a correction to the 2022 and 2021 balance sheets where deferred tax
liabilities and goodwill amounting to £15.8 million as at 31 December 2022
and £14.1 million as at 31 December 2021 should not have been recognised
under IAS 12 as the book basis and tax basis of acquired
intangible assets were equal for certain US acquisitions in 2016, 2020,
2021. The adjustment reflects the tax efficient structure of the relevant
acquisitions and tax amortisation deductions were taken for tax years
2020-2022 based on acquired intangible assets recognised.
The Group has restated the balance sheet and associated note disclosures as at
30 June 2023 and as outlined below. There is no material impact on the
cash flow statements or net assets.
Statement of financial position adjustments Restated
31 December 2022 Adjustments 31 December 2022
£'000 £'000 £'000
Non-current assets
Property, plant and equipment 2,857 - 2,857
Right-of-use assets 11,808 - 11,808
Intangible assets 560,972 (15,758) 545,214
Deferred tax assets 4,084 (7) 4,077
Other receivables, deposits and prepayments 1,874 - 1,874
Investments accounted for under the equity method - - -
Amounts recoverable on contracts 1,303 - 1,303
582,898 (15,765) 567,133
Non-current liabilities
Lease liabilities 9,792 - 9,792
Deferred tax liabilities 27,265 (15,765) 11,500
Other long-term liabilities 3,517 - 3,517
Borrowings 177,944 - 177,944
Corporation tax payable 1,431 - 1,431
Provisions 1,857 - 1,857
221,806 (15,765) 206,041
Impact on note 15
Deferred tax assets prior to adjustment Share options Tax losses Short-term timing differences Intangibles Total
£'000 £'000 £'000 £'000 £'000
At 1 January 2022 5,660 1,781 9,880 5,237 22,558
Deferred tax (charge)/credit directly to the income statement (566) 3,469 1,868 (923) 3,848
Deferred tax charged directly to equity (1,946) - - - (1,946)
Exchange rate differences, charged directly to OCI 188 144 962 650 1,944
Changes in tax rate, credited to the income statement 286 (146) 104 (25) 219
At 31 December 2022 3,622 5,248 12,814 4,939 26,623
Adjustments to deferred tax assets Share options Tax losses Short-term timing differences Intangibles Total
£'000 £'000 £'000 £'000 £'000
At 1 January 2022 - - - 5,031 5,031
Deferred tax (charge)/credit directly to the income statement - - - 260 260
Deferred tax charged directly to equity - - - - -
Exchange rate differences, charged directly to OCI - - - 592 592
Changes in tax rate, credited to the income statement - - - 35 35
At 31 December 2022 - - - 5,918 5,918
Restated Deferred Tax Assets Share options Tax losses Short-term timing differences Intangibles Total
£'000 £'000 £'000 £'000 £'000
At 1 January 2022 (restated) 5,660 1,781 9,880 10,268 27,589
Deferred tax (charge)/credit directly to the income statement (566) 3,469 1,868 (663) 4,108
Deferred tax charged directly to equity (1,946) - - - (1,946)
Exercise of share options - - - - -
Exchange rate differences, charged directly to OCI 188 144 962 1,242 2,536
Changes in tax rate, credited to the income statement 286 (146) 104 10 254
At 31 December 2022 (restated) 3,622 5,248 12,814 10,857 32,541
Deferred tax liabilities prior to adjustment Accelerated tax Short-term timing
Intangibles depreciation differences Total
£'000 £'000 £'000 £'000
At 1 January 2022 51,235 127 472 51,834
Deferred tax credit/(charge) directly to the income statement (9,900) 585 2,106 (7,209)
Exchange rate differences, charged directly to OCI 5,206 51 9 5,266
Changes in tax rate, charged to the income statement - (148) 61 (87)
At 31 December 2022 46,541 615 2,648 49,804
Adjustments to deferred tax liabilities Accelerated tax Short-term timing
Intangibles depreciation differences Total
£'000 £'000 £'000 £'000
At 1 January 2022 (9,761) 661 - (9,100)
Deferred tax credit/(charge) directly to the income statement 2,138 (1,877) - 261
Exchange rate differences, charged directly to OCI (1,109) 74 - (1,035)
Changes in tax rate, charged to the income statement (70) 104 - 34
At 31 December 2022 (8,802) (1,038) - (9,840)
Restated Deferred Tax Liabilities Accelerated tax Short-term timing
Intangibles depreciation differences Total
£'000 £'000 £'000 £'000
At 1 January 2022 (restated) 41,474 788 472 42,734
Deferred tax credit/(charge) directly to the income statement (7,762) (1,292) 2,106 (6,948)
Exchange rate differences, charged directly to OCI 4,097 125 9 4,231
Changes in tax rate, charged to the income statement (70) (44) 61 (53)
At 31 December 2022 (restated) 37,739 (423) 2,648 39,964
The impact on the 31 December 2021 balance sheet is to reduce Goodwill by
£14.1 million (note 10), reduce deferred tax liabilities prior to offsetting
£9.1 million and increase deferred tax asset of £5.0 million prior to
offsetting (note 15). After offsetting, the increase in deferred tax assets
was £14.1m with no corresponding change in the deferred tax liability.
22. Events since the reporting date
Sale of Vector
On 1 July 2024, the Group sold Vector for a cash consideration of $50 million
(£39.5 million) on a cash and debt free basis. The expected gain on sale is
estimated to be £6.1 million.
The only impact in these financial statements in relation to the continuing
operations are costs in relation to the sale of £680,000 included within
costs of acquisition (note 6). These balances are subject to finalisation of
the completion accounts.
Voluntary additional debt repayment
On 10 July 2024 a voluntary additional debt repayment of $25.0 million (£19.5
million) was made on the term loan using the proceeds from the sale of Vector.
US regulatory update
As a US company that performs work for the US Government, GP Strategies
requires certain approvals and is subject to restrictions intended to protect
classified information.
Subsequent to the period end, LTG has been notified by GP Strategies of the
invalidation ("temporary suspension") of the eligibility for GP Strategies to
work on new classified contracts. The suspension will remain in effect until
GP Strategies returns to compliance with the applicable operating
requirements. The temporary suspension is a serious matter and GP Strategies
is working tirelessly to resolve all relevant issues to the satisfaction of
the US Government.
GP Strategies continues to work on existing classified contracts, however one
customer has paused their contract which has a revenue impact of c.$200k in
2024. No other contracts are due for renewal imminently, and the value of the
contracts is not material in the context of total Group revenue and profit.
There have been no other notifiable events between 30 June 2024 and the date
of this report.
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.
Closest equivalent IFRS measure Reconciling items to IFRS measure Definition and purpose
Income Statement Measures
Adjusted EBIT Operating profit Adjusting items Adjusted EBIT excludes adjusting items. A reconciliation from Adjusted EBIT to
Operating profit is provided in the Consolidated statement of comprehensive
income.
Adjusting items None Refer to definition Items which are not considered 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.
Saas and long-term contracts Revenue Refer to Note 3 Saas and long-term contracts revenue is defined as the revenue streams of the
Group that are predictable and expected to continue into the future upon
customer renewal.
Transactional Revenue Refer to Note 3 Transactional revenue is defined 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 or debt None Refer to Note 17 Net cash / debt is defined as Cash and cash equivalents and short-term
deposits, less Bank overdrafts and other current and non-current borrowings. A
reconciliation is provided in Note 17 to the financial statements.
Total equity per share None Refer to definition Calculated as Total Equity at the end of the period/year divided by the number
of shares on issue at the end of the period/year, The shares on issue at 31
December 2023 were 791,160,022 (based on Note 26 of the 2023 Annual report)
and 791,160,022 at 30 June 2024.
Cash Flow Measures
Adjusted operating cash flow None Refer to definition Cash flow in the period after accounting for operating activities and capital
expenditure.
Cash conversion None Refer to definition Adjusted operating cash flow as a percentage of Adjusted EBIT.
Free cash flow None Refer to definition Cash flow in the period after accounting for operating activities, investing
activities, lease payments, interest and tax.
Company information
Directors Registrar
Andrew Brode, Non-Executive Chairman Computershare Investor Services plc
Jonathan Satchell, Chief Executive Officer The Pavilions
Kath Kearney-Croft, Chief Financial Officer Bridgewater Road
Piers Lea, Chief Strategy Officer Bristol
Simon Boddie, Senior Independent Director BS13 8AE
Aimie Chapple, Independent Non-Executive Director
Leslie-Ann Reed, Independent Non-Executive Director Principal Bankers
HSBC UK Bank plc
Company Secretary 71 Queen Victoria Street,
Claire Walsh London, EC4V 4AL, UK
Company number HSBC Innovation Bank Limited
07176993 Alphabeta, 14-18 Finsbury Square,
London, EC2A 1BR, UK
Registered address
3 New Street Square Fifth Third Bank NA
London 142 W 57(th) Street,
EC4A 3BF Suite 1600,
New York, NY 10019, USA
Independent auditors Barclays Bank plc
BDO LLP 1 Churchill Place,
Chartered Accountants and Statutory Auditors London, E14 5HP, UK
55 Baker Street
London The Governor and Company of the Bank of Ireland
W1U 7EU 4(th) Floor, Bow Bells House,
1 Bread Street,
Nominated adviser and joint broker London, EC4M 9BE, UK
Deutsche Numis
45 Gresham Street
London Communications consultancy
EC2V 7BF FTI Consulting LLP
200 Aldersgate
Joint broker Aldersgate Street
Goldman Sachs London
Plumtree Court EC1A 4HD
25 Shoe Lane
London
EC4A 4AU
Legal advisers
DLA Piper U.K LLP
160 Aldersgate Street
London
EC1A 4HT
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