TIDMLTG
RNS Number : 9642Q
Learning Technologies Group PLC
18 September 2017
18 September 2017
Learning Technologies Group plc
(AIM: LTG)
Interim Results 2017
"Successfully delivering on LTG's strategic ambitions"
Learning Technologies Group plc ("LTG" or the "Company"), a
market-leader in the fast growing learning technologies sector, is
pleased to announce interim results for the six months ended 30
June 2017.
Financial highlights:
-- Revenue increased to GBP21.5 million (H1
2016: GBP12.8 million) - up 68%
-- Organic revenue grew to GBP17.6 million -
up 33%
-- Recurring revenues increased to 37% (H1 2016:
24%) - up 153%
-- Revenues generated outside of the UK increased
to 46% (H1 2016: 32%) - up 140%
-- Adjusted EBIT increased to GBP4.1 million
(H1 2016: GBP2.9 million) - up 41%
-- Adjusted EBIT margin of 19.2% (H1 2017: 23.0%)
- down 380bp due to NetDimensions
-- Adjusted diluted earnings per share of 0.523
pence (H1 2016: 0.597 pence per share) -
down 7% due to NetDimensions
-- Proposed interim dividend of 0.09 pence per
share (H1 2016: 0.07 pence) - up 29%
-- Successful debt refinancing provides LTG
with GBP20 million facility for five years
-- Strong balance sheet with adjusted net debt
of GBP9.8 million - c1.1x Net Debt/LTM EBITDA
Operational highlights:
-- Excellent progress in delivering on LTG's
strategic ambition to build an international
full-service digital learning offering for
corporate and government clients
-- Successful acquisition in March 2017 of NetDimensions
brings to the Group a leading proprietary
Learning Management System and adds the final
key technical capability to LTG's service
offering
-- Integration of NetDimensions completed on
time and to plan in Q2 2017; the majority
of the annualised incremental EBIT benefits
of c$8 million (cGBP6.2 million), as stated
at the time of the acquisition being announced,
have been realised and the remainder will
be realised in Q4 2017
-- Civil Service Learning ('CSL') project being
delivered in line with expectations
-- Strong start to H2 2017 with trading ahead
of management's expectations and order book
significantly ahead of the prior year on
a like for like basis
Commenting, Jonathan Satchell, Chief Executive of LTG, said:
"The skills, motivation and knowledge of our staff are the keys
to these exceptional results as they partner our clients to place
learning at the heart of their business strategies. We are
achieving excellent trading momentum into the second half giving us
confidence in the outlook for the rest of the year. Furthermore,
the transformation of NetDimensions is well on track and we
therefore look forward to achieving our significant growth in 2018
with confidence."
Commenting, Andrew Brode, Chairman of LTG, said:
"The Group has made excellent progress delivering on its
strategic ambition of building an international business with
annual revenues in excess of GBP50 million and strong operating
margins. LTG has demonstrated strong organic revenue growth across
all businesses and has continued to expand its client base and
international reach whilst at the same time increasing its
recurring revenue base.
The acquisition of NetDimensions completes the final key
technical capability that will allow the Group to offer its
corporate and government clients a truly comprehensive service. The
ambitious integration of NetDimensions has been completed on time
and the Board is confident that this will result in a strong margin
performance in the second half of the year.
The Board continues to look at acquisition opportunities where
the Group will be able to leverage its established technical
capabilities and working practices in domain specific market
sectors, supported by its industry leading employees.
The Board is therefore confident in the Group's prospects and
expects to report enhanced progress during the remainder of
2017."
Learning Technologies Group will be hosting a Capital Markets
Day on Tuesday 3rd October for investors and analysts. Please email
Bertie Berger at Hudson Sandler on bberger@hudsonsandler.com for
further information.
Enquiries:
Learning Technologies Group
plc
Jonathan Satchell, Chief
Executive
Neil Elton, Group Finance +44(0)207
Director 402 1554
Numis Securities Limited
Stuart Skinner/Michael Wharton
(Nominated Adviser) +44 (0)20
Ben Stoop (Corporate Broker) 7260 1000
Hudson Sandler LLP +44 (0)20
Andrew Hayes/Bertie Berger 7796 4133
Notes to Editors
LTG was created with the purpose of building a market-leading
business of substance and scale within the exciting and
fast-growing learning technologies sector and the Group's
award-winning businesses are at the forefront of innovation and
best practice in this sector.
Since LTG listed on AIM in November 2013, it has made a number
of strategic acquisitions to grow its business:
April 2014 LINE
May 2014 Preloaded
July 2015 Eukleia
January 2016 Rustici and 27% equity stake in Watershed
March 2017 NetDimensions
LINE was merged with the original business, Epic, to form LEO, a
market-leading learning technologies firm with unrivalled
capability to provide custom solutions to its corporate and
government clients. It is joined by BAFTA award-winning applied
games studio Preloaded, who bring learning games specialism to the
Group and by Eukleia, experts in governance, risk and compliance
(GRC) in the financial services sector. Rustici brings the global
leader in the support and development of the universal technical
standards for the entire e-learning industry into the Group and
most recently NetDimensions brings to the Group a leading
proprietary Learning Management System.
www.ltgplc.com
Chairman's Statement
Introduction
The Board is delighted to report that Learning Technologies
Group plc ('LTG') has made excellent progress over the period
delivering on its strategic ambition of building an international
business with annualised revenues in excess of GBP50 million and
strong operating margins. LTG acquired NetDimensions Holdings
Limited ('NetDimensions') in March 2017 and has successfully
integrated the business on time and to plan as we extend and
enhance our full service learning technology offer. This strategic
progress has been accompanied by strong underlying organic growth
as we harness and integrate these technologies to deliver improved
outcomes for our clients.
Results
In the six months ended 30 June 2017, revenues increased by 68%
to GBP21.5 million (H1 2016: GBP12.8 million) with like-for-like
revenues (excluding the post-acquisition contribution of
NetDimensions and restating Rustici as if it had been owned for 6
months in both periods) increasing by 33% to GBP17.6 million.
Partly as a result of the acquisition of NetDimensions, but also as
a result of the strong organic growth in the Group's other software
licencing businesses, recurring licence fee and support contract
revenues increased from 24% in H1 2016 to 37% in H1 2017.
Adjusted EBIT* grew by 41% to GBP4.1 million (H1 2016: GBP2.9
million). The reduction in EBIT margins from 23.0% in H1 2016 to
19.2% in H1 2017 is as a result of the impact of the
post-acquisition contribution of NetDimensions. Following the
integration initiatives undertaken during the second quarter we
anticipate that the resulting synergies will improve margins
substantially in H2 2017.
Operating loss of GBP0.5 million (H1 2016: loss of GBP0.4
million) is stated after amortisation of acquired intangibles,
various acquisition earnout charges, share based payments, and
integration costs. Following the acquisition of NetDimensions,
amortisation of acquired intangibles increased to GBP3.0 million
(H1 2016: GBP1.5 million). Acquisition related deferred
consideration and earnout charges decreased to GBP0.7 million (H1
2016: GBP1.4 million) and relate primarily to the anticipated
earnout resulting from Rustici's incremental revenue growth during
the second year of their three year earnout agreement. Integration
charges of GBP0.7 million relate to NetDimensions and are in line
with management's expectations.
A net tax charge of GBP0.1 million (H1 2016: tax credit of
GBP0.4 million) includes a release of deferred tax liabilities,
created from acquired intangibles.
The Group reported a net loss of GBP1.9 million for the six
months ended 30 June 2017 attributable to the owners of the parent
company (H1 2016: loss of GBP0.5 million).
The basic earnings per share in H1 2017 were a loss of 0.392
pence (H1 2016: loss of 0.129 pence). Adjusted diluted earnings per
share as set out in Note 5 decreased by 7% to 0.523 pence (H1 2016:
0. 597 pence) primarily as a result of movements in deferred
taxation in H1 2016.
At the time of the acquisition of NetDimensions, LTG entered
into a new debt facility with Silicon Valley Bank ('SVB') for GBP20
million. The facility comprises a GBP10 million term loan repayable
in quarterly instalments of GBP0.5 million, and a GBP10 million
revolving credit facility, both available for five years. The new
SVB debt facility replaced LTG's previous $16 million debt facility
with Barclays Bank PLC. The term loan and majority of the revolving
credit facility were drawn down in USD. The facility is subject to
various financial covenants and interest is charged at between 160
and 210 basis points above LIBOR based on the covenant results. The
net charge for the unrealised foreign exchange loss on the loan was
GBPnil (H1 2016: GBP0.1 million).
LTG maintained strong operating cash flows in the period. Net
cash flow from operating activities (excluding deferred
consideration payments relating to 2016) was GBP3.3 million (H1
2016: outflows of GBP0.9 million). GBP44.9 million net of share
issue costs was raised through a placing with a further GBP1.8
million resulting from the exercise of employee share options.
GBP44.2m was invested in NetDimensions (net of cash acquired); a
further GBP1.5 million is held and due to non-controlling
shareholders in NetDimensions. The compulsory acquisition of those
non-controlling shareholders' interests was completed in July
2017.
On a pro forma basis approximately 46% of LTG's business is
undertaken for customers outside of the UK and a growing percentage
of the Group's revenues are denominated in USD. Net USD cash
inflows are used as an internal hedge against the USD loan capital
and interest repayments helping to reduce the business' overall
exposure to exchange rate volatility. At 30 June 2017 gross cash
was GBP11.5 million and net debt was GBP6.1million (31 December
2016: gross cash was GBP5.3 million and net debt was GBP8.5
million). After adjusting for funds due to remaining NetDimensions'
shareholders and net payments due as a result of the exercise of
share options just prior to the end of the period, adjusted net
debt was GBP9.8 million at 30 June 2017.
Overall net assets increased to GBP73.8 million at 30 June 2017
(31 December 2016: GBP30.7 million) and shareholders' funds
increased from 7.3 pence per share to 12.8 pence per share.
The results for H1 2016 have been restated to take into account
the adjustments made to deferred consideration, tax on share
options and merger relief as set out in the 2016 Annual Report.
This has resulted in a reduction in profit after tax of GBP0.9
million and a reduction in net assets of GBP1.2 million. Further
details on the adjustments are provided in Note 31 of the 2016
Annual Report.
Acquisition and integration of NetDimensions
On 20 March 2017, LTG declared its all-cash offer for
NetDimensions, the integrated enterprise learning management
software platform provider, unconditional in all respects.
NetDimensions is a leading global enterprise solutions provider,
headquartered in Hong Kong, with operations in the US, Europe and
APAC. The business is a strategic fit to LTG and is complementary
to its other companies which allows LTG to offer a full suite of
services to its customers. The company has approximately 70%
recurring revenues through its SaaS and on-premise licence
solutions, reseller programs and support services, and has a
particular focus on highly regulated industries where compliance
and operational requirements are particularly complex.
Of the total consideration of GBP53.6 million for NetDimensions,
as at 30 June 2017 GBP52.1 million had been paid to the 97.2% of
shareholders in NetDimensions who had accepted the offer. With
effect from July 2017 the non-controlling shareholders' interests
in NetDimensions have been acquired by LTG. There are no deferred
consideration obligations.
The offer was financed by way of a placing of 124 million LTG
shares issued at 37.5 pence per share and a new debt finance
facility, details of which are set out below. Further details are
provided in Note 10.
At the time of the offer LTG set out an ambitious integration
plan to realise substantial synergies and improve working practices
to increase efficiencies and the Board is pleased to report that
the integration of NetDimensions into the Group has been
successfully completed on time. The transformation program will
continue during the second half of 2017, with the full-year
synergies and settled cost base being completely realised during Q4
2017. Amongst the measures taken NetDimensions' customer support
teams have been relocated to the geographical territories that they
serve, hosting services are being migrated to our expert team in
Nashville, and we are investing in our core technology team to
continue to be at the forefront of innovation in the learning
technology sector. We appointed a new Global Head of Sales in April
who has already improved the new contract win rate, and we are
investing in the development of NetDimensions' reseller network, as
well as leveraging Group central services such as marketing, HR and
IT support.
Operational Review
The acquisition of NetDimensions brings to LTG a proprietary
Learning Management System ('LMS') offering and represents the
final key technical capability that enables the Group to offer a
comprehensive learning solution to its customers. Ranging from
strategic consultancy, domain specific expertise, through a range
of tailored content solutions including bespoke e-learning
programmes, 'games with purpose', video, virtual and augmented
reality solutions, the Group also offers a range of delivery
platforms including a multi-device authoring tool, open-source
systems and now an industry leading LMS. Through its investment in
Watershed LTG is also at the forefront of developing data analytic
tools that are increasingly allowing corporates and governments to
monitor the effectiveness of their learning programmes.
LEO is the primary LTG business through which our clients are
able to buy the full range of the Group's products and services. In
2016 we implemented a key account management approach and in H1
2017 we have begun to see the benefits as we broaden and deepen our
relationships with clients. Although at an early stage, we are
beginning to see the compelling opportunities that the Group's
combined offering brings to our clients. For example, the gomo
multi-device self-authoring and distribution platform is
increasingly being used to underpin several of LEO's solution
implementations. This includes the recent contract to deliver
interactive point-of-sale information systems to a major automotive
business, that enables the company and its local dealership network
to update information on the vehicles in their showrooms in
real-time.
The Civil Service Learning ('CSL') contract, being delivered
alongside our strategic partner KPMG UK LLP is progressing well and
in line with expectations. The roll-out of the core-curriculum for
over 400,000 UK civil servants was completed in 2016 and CSL has
extended the contract by an additional year into 2019. LEO is also
working on a number of other government projects.
During H1 2017, LEO's UK and US operations were brought under
one management team to allow for improved efficiency and oversight.
NetDimensions' e-learning content business in the US has been
successfully merged with LEO North America and we have already seen
an improvement in margins resulting from LEO's proven working
practices.
Preloaded, our 'games with purpose' division, has performed
strongly and we are encouraged by the diversification of the client
base and the growing reputation that the business is building for
creating compelling and innovative learning games. Preloaded has
rolled-out a global multi-franchise learning games application for
an international restaurant group and has worked with a number of
world-leading museums and galleries to showcase the effectiveness
of VR learning simulations including for the Science Museum and the
V&A Museum. Preloaded has also been selected to develop the VR
experience for the forthcoming Modigliani exhibition at Tate Modern
which commences in November and we look forward to updating
shareholders on other exciting high profile projects that are in
progress.
Eukleia, the specialist governance, risk and compliance ('GRC')
training consultancy in the financial services sector has performed
well in the first half of the year. The company set up an office in
New York in 2016 and we are seeing an encouraging pipeline of
opportunities in the North American market as well as an increase
in demand with the introduction of MiFID II regulations. Eukleia
has been able to leverage off the expertise of other group
companies, including the Zero Threat cyber security game
co-developed with Preloaded, which won the Silver Medal at the 2017
International Serious Play Awards, and with LEO in creating video
and animation awareness programs on subjects as diverse as MiFID II
and competition law.
Our software businesses are performing particularly strongly.
gomo, has won a number of key enterprise contracts with its
industry leading cloud-based multi-device authoring tool including
Boots, L'Oreal, EE and the NHS. The business continues to invest in
the product which features improved collaboration, offline use, and
inbuilt analytics capabilities.
Rustici, based in Nashville and acquired in January 2016, is the
expert in software that supports the e-learning interoperability
standards which connect content and platforms. The company has
delivered strong top-line growth and continuing high customer
retention rates. Content Controller, launched in H2 2016 is proving
a successful addition to the Rustici product suite.
As part of the Group's development roadmap we are incorporating
other LTG products and services into the NetDimensions talent
suite. These include integrating the gomo authoring and
distribution platform and enabling the system to tag analytical
data using xAPI; a protocol in which LTG is an industry leader.
Dividend
On 7 July 2017, the Company paid a final dividend of 0.14 pence
per share, giving a total dividend for 2016 of 0.21 pence per
share. This represented a 40% increase on the dividend paid
compared to 2015. Given its confidence in the continuing success of
the Group, the Board is pleased to announce that it has approved an
interim dividend of 0.09 pence per share (2016: 0.07 pence per
share). This will be paid on 27 October 2017 to shareholders on the
register at 6 October 2017.
Current Trading and outlook
The Board is delighted with the progress that the Group has made
in the first half of 2017, in particular the strong organic revenue
growth seen in all of its businesses as well as the successful
integration of NetDimensions in the second quarter. We are
delivering this excellent trading momentum, and increased recurring
revenues, into the second half giving us confidence in the outlook
for the rest of the year and of achieving further significant
growth in 2018.
On a pro forma basis the Group has achieved the strategic
objectives that it set out when it came to the market in November
2013 of delivering annualised revenues in excess of GBP50 million
and operating margins in excess of 20%. Through M&A and
selective investment in R&D the Board believes that LTG now has
all the major technical capabilities that allow it to offer a
comprehensive end-to-end service to its global customers. The Board
continues to pursue acquisition opportunities particularly in the
US and in sectors that will extend LTG's domain specific expertise,
and in extending its scale in the advisory and content creation
capabilities in the large North American market.
The Directors look forward to updating shareholders on progress
towards these goals at the end of the year and delivering
significant profitable growth in the underlying operating
businesses during the remainder of 2017.
Andrew Brode, Chairman
18 September 2017
* 'Adjusted EBIT' is defined as the Group profit or loss before
tax, excluding the amortisation of acquisition-related intangible
assets, share-based payment charges, acquisition related deferred
consideration and earn-outs, finance expenses, the Group's share of
profits or losses in associates and joint ventures and other
specific items.
Consolidated statement
of comprehensive
income
Six months Six months
to Year to to
30 June 31 Dec 30 June
2017 2016 2016
(unaudited) (audited) (unaudited)
Note GBP'000 GBP'000 GBP'000
Revenue 3 21,472 28,263 12,785
Operating expenses
(excluding acquisition-related
deferred consideration
and earn-outs) (21,308) (25,194) (11,748)
Operating profit
(before acquisition-related
deferred consideration
and earn-outs) 164 3,069 1,037
Acquisition-related
deferred consideration
and earn-outs (683) (3,211) (1,434)
Operating (loss) (519) (142) (397)
Adjusted EBIT 4,127 6,952 2,937
Amortisation of acquired
intangibles (3,042) (3,205) (1,536)
Acquisition-related
deferred consideration
and earn-outs (683) (3,211) (1,434)
Share based payment
costs (218) (605) (300)
Integration costs (703) (73) (64)
Operating (loss) (519) (142) (397)
---------------------------------- ----- --- ------------------- ------------------ ----------------------
Costs of acquisition (958) (99) (105)
Share of losses of
associates/joint
ventures (80) (205) (102)
Finance expenses:
Charge on contingent
consideration (24) (57) (42)
Interest on borrowings (343) (358) (155)
Net foreign exchange
differences on borrowings 22 (333) (134)
Interest receivable 4 1 -
(Loss) before taxation (1,898) (1,193) (935)
Income tax credit/(expense) 4 (77) (133) 400
(Loss) after taxation (1,975) (1,326) (535)
(Loss) for the period/year
attributable to the
owners of the parent (1,925) (1,326) (535)
(Loss) for the period/year (50) - -
attributable to non-controlling
interests
Earnings per share
attributable to owners
of the parent:
Basic, (pence) 5 (0.392) (0.317) (0.129)
Diluted, (pence) 5 (0.392) (0.317) (0.129)
Other comprehensive
income:
Exchange differences
on translating foreign
operations (2,094) 1,183 455
Total comprehensive
(loss) for the period (4,069) (143) (80)
Attributable to:
The owners of the
parent (3,968) (143) (80)
Non-controlling interests (101) - -
Consolidated statement of financial position
31 Dec
2016
30 June 30 June
2017 (unaudited) (audited) 2016 (unaudited)
Note GBP'000 GBP'000 GBP'000
ASSETS
NON-CURRENT ASSETS
Property, plant and
equipment 815 708 796
Intangible assets 6 87,492 39,950 39,237
Deferred tax assets 920 1,717 1,094
Investments accounted
for under the equity
method 1,809 1,890 1,993
Other receivables,
deposits and prepayments 497 1,293 -
91,533 45,558 43,120
CURRENT ASSETS
Trade receivables 8,454 4,229 4,177
Other receivables,
deposits
and prepayments 7 5,584 1,995 2,194
Amounts recoverable
on contracts 4,744 2,642 2,914
Amounts due from
related parties - - 45
Cash and bank balances 8 11,498 5,348 4,257
30,280 14,214 13,587
TOTAL ASSETS 121,813 59,772 56,707
------------------- ------------------ ------------------
CURRENT LIABILITIES
Trade and other payables 9 20,744 9,215 8,153
Borrowings 1,922 3,252 2,907
Corporation tax 1,072 546 162
Amounts owing to - 45 -
related parties
23,738 13,058 11,222
NON CURRENT LIABILITIES
Deferred tax liabilities 8,235 3,897 4,046
Other long term liabilities 185 1,426 303
Borrowings 15,663 10,582 11,145
Provisions 224 99 99
24,307 16,004 15,593
TOTAL LIABILITIES 48,045 29,062 26,815
------------------- ------------------ ------------------
NET ASSETS 73,768 30,710 29,892
------- ------- -------
EQUITY
Share capital 2,133 1,580 1,570
Share premium account 63,839 17,044 16,921
Merger relief reserve 31,983 31,983 31,983
Reverse acquisition
reserve (22,933) (22,933) (22,933)
Share-based payment
reserve 1,698 3,245 2,483
Foreign exchange
translation reserve (810) 1,233 505
Accumulated retained
earnings/(losses) (2,952) (1,442) (637)
--------- --------- ---------
TOTAL EQUITY ATTRIBUTABLE
TO THE OWNERS OF
THE PARENT 72,958 30,710 29,892
--------- --------- ---------
Non-controlling interests 810 - -
--------- --------- ---------
TOTAL EQUITY 73,768 30,710 29,892
--------- --------- ---------
Consolidated statement of changes in equity
(GBP'000)
Share Share Merger Reverse Share Foreign Retained Total Non-controlling Total
capital Premium relief acquisition based exchange profits interest equity
reserve reserve payments reserve /
reserve (losses)
Balance at 1
January 2016 1,506 15,988 28,120 (22,933) 2,273 50 140 25,144 - 25,144
-------- -------- -------- ------------ --------- --------- --------- -------- ---------------- --------
Profit for
period - - - - - - (535) (535) - (535)
Exchange
differences on
translating
foreign
operations - - - - - 455 - 455 - 455
-------- -------- -------- ------------ --------- --------- --------- -------- ---------------- --------
Total
comprehensive
income for
the
period - - - - - 455 (535) (80) - (80)
Issue of shares
net of share
issue
costs 64 933 3,863 - - - - 4,860 - 4,860
Share based
payment charge
/ credited
to equity - - - - 300 - - 300 - 300
Deferred tax on
share options - - - - 33 - - 33 - 33
Transfer on
exercise and
lapse of
options - - - - (123) - 123 - - -
Tax deduction
on exercise of
share
options
recognised
directly in
equity - - - - - - 53 53 - 53
Dividends paid - - - - - - (418) (418) - (418)
Balance at 30
June 2016 1,570 16,921 31,983 (22,933) 2,483 505 (637) 29,892 - 29,892
Profit for
period - - - - - - (791) (791) - (791)
Exchange
differences on
translating
foreign
operations - - - - - 728 - 728 - 728
-------- -------- -------- ------------ --------- --------- --------- -------- ---------------- --------
Total
comprehensive
income for the
period - - - - - 728 (791) (63) - (63)
Issue of shares
net of share
issue
costs 10 123 - - - - - 133 - 133
Share based
payment charge
/ credited
to equity - - - - 305 - - 305 - 305
Deferred tax on
share options - - - - 615 - - 615 - 615
Transfer on
exercise and
lapse of
options - - - - (158) - 158 - - -
Tax deduction
on exercise of
share
options
recognised
directly in
equity - - - - - - 122 122 - 122
Dividends paid - - - - - - (294) (294) - (294)
Balance at 31
December 2016 1,580 17,044 31,983 (22,933) 3,245 1,233 (1,442) 30,710 - 30,710
-------- -------- -------- ------------ --------- --------- --------- -------- ---------------- --------
Profit for
period - - - - - - (1,925) (1,925) (50) (1,975)
Exchange
differences on
translating
foreign
operations - - - - - (2,043) - (2,043) (51) (2,094)
-------- -------- -------- ------------ --------- --------- --------- -------- ---------------- --------
Total
comprehensive
income for
the
period - - - - - (2,043) (1,925) (3,968) (101) (4,069)
Issue of shares
net of share
issue
costs 553 46,795 - - - - - 47,348 - 47,348
Share based
payment charge
/ credited
to equity - - - - 218 - - 218 - 218
Deferred tax on
share options - - - - (584) - - (584) - (584)
Transfer on
exercise and
lapse of
options - - - - (1,181) - 1,181 - - -
Additions on
acquisition - - - - - - - - 911 911
Dividends
payable - - - - - - (766) (766) - (766)
Balance at 30
June 2017 2,133 63,839 31,983 (22,933) 1,698 (810) (2,952) 72,958 810 73,768
-------- -------- -------- ------------ --------- --------- --------- -------- ---------------- --------
Consolidated statement of cash flows
Note Six months Year to Six months
to to
30 June 31 Dec 30 June
2017 2016 2016
(unaudited) (audited) (unaudited)
GBP'000 GBP'000 GBP'000
Cash flow from operating
activities
(Loss)/profit before
taxation (1,898) (1,193) (935)
Adjustments for:-
Share option charge 218 605 300
Cash costs of acquisition 958 99 105
Amortisation of intangible
assets 3,322 3,605 1,700
Depreciation of plant
and equipment 205 320 146
Share of losses of investments 80 205 102
Finance expense 24 57 42
Finance interest on
borrowings 343 358 155
Net foreign exchange
difference on borrowings (22) 333 134
Acquisition-related
deferred consideration
and earn-outs 683 3,211 1,434
Interest income (4) (1) -
------------- ----------- -------------
Operating cash flow
before working capital
changes 3,909 7,599 3,183
(Increase)/decrease
in trade and other receivables 1,807 (2,030) (883)
(Increase) in amount
recoverable on contracts (2,103) (788) (1,061)
(Decrease)/increase
in payables 666 (1,760) (1,816)
Payment of acquisition-related (2,211) - -
deferred consideration
and earn-outs
------------- ----------- -------------
2,068 3,021 (577)
------------- ----------- -------------
Interest paid (255) (275) (157)
Interest received 4 1 -
Income tax paid (684) (645) (151)
------------- ----------- -------------
Net cash flow from operating
activities 1,133 2,102 (885)
------------- ----------- -------------
Cash flow used in investing
activities
Purchase of property,
plant and equipment (115) (422) (382)
Disposal of property, 2 - -
plant and equipment
Development of intangible
assets (667) (796) (378)
Acquisition of subsidiaries,
net of cash acquired (44,222) (12,389) (12,389)
Payment of deferred (59) - -
consideration
Cash costs of acquisition (958) (99) (105)
Investment in associates - (2,095) (2,095)
------------- ----------- -------------
Net cash flow used in
investing activities (46,019) (15,801) (15,348)
------------- ----------- -------------
Cash flow used in financing
activities
Dividends paid - (712) -
Cash generated from
issue of shares, net
of share issue costs 46,720 647 72
Proceeds from borrowings 18,000 13,909 13,909
Repayment of bank loans (13,578) (2,278) (683)
Net cash flow from/(used
in) in financing
activities 51,142 11,566 13,298
------------- ----------- -------------
Net (decrease)/increase
in cash and cash equivalents 6,256 (2,133) (2,935)
Cash and cash equivalents
at beginning of the
year 5,348 7,305 7,305
Effects of foreign exchange
rate changes (106) 176 (113)
----------- -------------
Cash and cash equivalents
at end of the year 8 11,498 5,348 4,257
============= =========== =============
Notes to the consolidated financial statements for the six
months to 30 June 2017
1. General information
Learning Technologies Group plc ("the Company") and its
subsidiaries (together, "the Group") provide a range of e-learning
services and technologies 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 Sherborne House, 119-121 Cannon Street,
London, EC4N 5AT. The registered number of the Company is
07176993.
2. Basis of preparation
The unaudited consolidated interim financial information has
been prepared in accordance with International Financial Reporting
Standards as adopted by the European Union (IFRSs as adopted by the
EU).
The interim results for the six months to 30 June 2017 are
neither audited nor reviewed by our auditors and the accounts in
this interim report do not therefore constitute statutory accounts
in accordance with Section 434 of the Companies Act 2006.
Statutory accounts for the year ended 31 December 2016 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.
3. Segment analysis
Geographical information
The Group's revenue from external customers and non-current
assets by geographical location are detailed below.
United Asia
UK Europe States Pacific Other Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
30 June 2017
(unaudited)
Revenue 11,575 1,361 7,210 545 781 21,472
-------- ---------- -------- --------- -------- ------------
Non-current
assets 69,144 3 21,675 361 - 91,183
-------- ---------- -------- --------- -------- ------------
31 December
2016 (audited)
Revenue 18,205 1,368 7,736 253 701 28,263
-------- ---------- -------- --------- -------- ------------
Non-current
assets 45,270 - 288 - - 45,558
-------- ---------- -------- --------- -------- ------------
30 June 2016
(unaudited)
Revenue 8,669 492 3,077 140 407 12,785
-------- ---------- -------- --------- -------- ------------
Non-current
assets 22,516 - 20,604 - - 43,120
-------- ---------- -------- --------- -------- ------------
Revenue by nature
The Group's revenue by nature is analysed as follows:
Hosting Support
Software and SaaS and Consul- Platform
Content Licences Licences Mainte-nance ting develop-ment Other Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
30 June 2017 (unaudited)
e-Learning
recurring - 4,798 2,878 179 - - - 7,855
e-Learning
non-recurring 9,935 598 5 258 472 1,406 322 12,996
Non-
e-Learning - - - - - - 621 621
-------- ---------- ---------- -------------- -------- -------------- -------- --------
9,935 5,396 2,883 437 472 1,406 943 21,472
31 December 2016
(audited)
e-Learning
recurring - 6,630 689 - - - - 7,319
e-Learning
non-recurring 14,118 949 8 574 853 1,419 1,147 19,068
Non-
e-Learning - - - - - - 1,876 1,876
-------- ---------- ---------- -------------- -------- -------------- -------- --------
14,118 7,579 697 574 853 1,419 3,023 28,263
30 June 2016 (unaudited)
e-Learning
recurring - 2,792 309 - - - - 3,101
e-Learning
non-recurring 6,109 487 - 330 440 572 856 8,794
Non-
e-Learning - - - - - - 890 890
-------- ---------- ---------- -------------- -------- -------------- -------- --------
6,109 3,279 309 330 440 572 1,746 12,785
Information about major customers
In the six months to 30 June 2017, the Group's customer Civil
Service Learning accounted for 11.8 percent of reported revenues.
For the year ended 31 December 2016 and the six months to 30 June
2016, no customer accounted for more than 10 percent of reported
revenues.
4. Taxation
Taxation for the six months to 30 June 2017 has been calculated
by applying the estimated tax rate for the current financial year
ending 31 December 2017 to an estimated tax adjusted profit
figure.
5. Earnings per share
30 June 31 Dec 30 June
2017 2016 2016
(unaudited) (audited) (unaudited)
GBP'000 GBP'000 GBP'000
Profit after tax attributable
to owners of the Group
: (1,914) (1,326) (535)
Weighted average number
of shares:
Basic 491,485,506 418,619,004 413,821,957
Diluted 523,025,550 454,881,150 444,317,045
Basic earnings per
share (pence) (0.392) (0.317) (0.129)
Diluted earnings per
share (pence) (0.392) (0.317) (0.129)
Adjusted diluted earnings
per share (pence) 0.523 1.184 0.597
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:
30 June 31 Dec 2016 30 June 2016
2017
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 (1,925) 491,486 (0.392) (1,326) 418,619 (0.317) (535) 413,822 (0.129)
--------- --------- --------- --------- --------- --------- --------- --------- ----------
Effect of
adjustments:
Amortisation of
acquired
intangibles 3,042 - - 3,200 - - 1,536 - -
Share based
payment costs 218 - - 605 - - 300 - -
Integration costs 703 - - 73 - - 64 - -
Cost of
acquisitions 958 - - 99 - - 105 - -
Acquisition
earnout 683 - - 3,211 - - 1,434 - -
Net foreign
exchange
differences on
borrowings (22) - - 333 - - 134 - -
Interest
receivable (4) - - (1) - - - - -
Finance expense
on contingent
consideration 24 - - 57 - - 42 - -
Income tax
(credit)/expense 77 - - 133 - - (400) - -
--------- --------- --------- --------- --------- --------- --------- --------- ----------
Effect of
adjustments 5,679 - 1.155 7,710 - 1.842 3,215 - 0.777
--------- --------- --------- --------- --------- --------- --------- --------- ----------
Adjusted profit
before tax 3,754 - - 6,384 - - 2,680 - -
--------- --------- --------- --------- --------- --------- --------- --------- ----------
Tax impact after
adjustments (1,019) - (0.207) (1,000) - (0.239) (28) - (0.007)
--------- --------- ---------
Adjusted basic
earnings per
ordinary share 2,735 491,486 0.556 5,384 418,619 1.286 2,652 413,822 0.641
Effect of
dilutive
potential
ordinary shares:
Share options - 28,207 (0.030) - 30,031 (0.086) - 30,495 (0.044)
Deferred
consideration
payable
(conditions met) - 1,819 (0.005)
Deferred
consideration
payable
(contingent) 3,333 (0.003) 4,412 (0.011)
Adjusted diluted
earnings per
ordinary share 2,735 523,026 0.523 5,384 454,881 1.184 2,652 444,317 0.597
6. Intangible assets
Goodwill Customer Branding Acquired Internally Total
contracts IP and generated
and relationships Software IP and
development Software
development
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Cost
At 1 January
2016 12,379 6,291 428 - 1,127 20,225
Additions on
acquisition 12,233 8,584 256 - 249 21,322
Additions - - - - 378 378
Foreign exchange
differences 754 455 98 - - 1,307
At 30 June 2016
(unaudited) 25,366 15,330 782 - 1,754 43,232
Additions - 418 418
Foreign exchange
differences 1,242 862 27 - 69 2,200
--------- ------------------- --------- ------------- ------------- ---------
At 31 December
2016 (audited) 26,608 16,192 809 - 2,241 45,850
Additions on
acquisition 20,967 30,059 1,069 1,432 - 53,527
Additions - - - - 667 667
Foreign exchange (1,
differences 544) (1,612) (65) (71) (38) (3,330)
--------- ------------------- --------- ------------- ------------- ---------
At 30 June 2017
(unaudited) 46,031 44,639 1,813 1,361 2,870 96,714
Accumulated
amortisation
At 1 January
2016 - 1,609 164 - 522 2,295
Amortisation
charged in period - 1,471 65 - 164 1,700
--------- ------------------- --------- ------------- ------------- ---------
At 30 June 2016
(unaudited) - 3,080 229 - 686 3,995
Amortisation -
charged in period - 1,589 75 - 241 1,905
--------- ------------------- --------- ------------- ------------- ---------
At 31 December
2016 (audited) - 4,669 304 - 927 5,900
Amortisation -
charged in period - 2,809 120 113 280 3,322
--------- ------------------- --------- ------------- ------------- ---------
At 30 June 2017
(unaudited) - 7,478 424 113 1,207 9,222
Carrying amount
At 30 June 2016
(unaudited) 25,366 12,250 553 - 1,068 39,237
========= =================== ========= ============= ============= =========
At 31 December
2016 26,608 11,523 505 - 1,314 39,950
========= =================== ========= ============= ============= =========
At 30 June 2017
(unaudited) 46,031 37,161 1,389 1,248 1,663 87,492
========= =================== ========= ============= ============= =========
7. Other receivables, deposits and prepayments
30 June 31 Dec 30 June
2017 (unaudited) 2016 (audited) 2016 (unaudited)
GBP'000 GBP'000 GBP'000
Sundry receivables 633 238 -
Prepayments 4,951 1,757 2,194
5,584 1,995 2,194
================== ================ ==================
8. Cash and cash equivalents
For the purpose of the statement of cash flows, cash and cash
equivalents comprise the following:-
30 June 31 Dec 30 June
2017 (unaudited) 2016 (audited) 2016 (unaudited)
GBP'000 GBP'000 GBP'000
Cash and bank balances 11,498 5,348 4,257
================== ================ ==================
9. Trade and other payables
30 June 31 Dec 30 June
2017 2016 2016
(unaudited) (audited) (unaudited)
GBP'000 GBP'000 GBP'000
Trade payables 854 871 628
Payments received
on account 9,478 2,711 2,921
Tax and social security 5,041 1,002 767
Contingent consideration 216 59 -
Acquisition-related
deferred consideration
and earn-outs 985 2,824 1,173
Accruals and others 4,170 1,748 2,664
------------- ------------- -------------
20,744 9,215 8,153
============= ============= =============
10. Acquisitions
On 3 February 2017 LTG announced an all cash Offer for the
issued and to be issued share capital of NetDimensions (Holdings)
Limited ('NetDimensions') for GBP53.6 million (GBP1 per share and
share option).
NetDimensions is a leading global enterprise solutions provider
of talent and learning management systems, headquartered in Hong
Kong and with operations in the USA, UK, Germany, Australia and the
Philippines.
On 9 February 2017, the Group announced the purchase of
1,000,000 ordinary shares in NetDimensions (representing 1.95%) for
total consideration of GBP0.984 million. On 20 March 2017, the
Offer was declared unconditional in all respects; this is the date
that the Group obtained control and is the date used for the
acquisition accounting. At this date and at the balance sheet date
the Group had a 97.16% holding of NetDimensions.
At the balance sheet date 2.84% of NetDimensions' shares had not
been acquired by LTG, equivalent to GBP1.5 million at the Offer
price; this represents the reconciling difference between the
GBP52.1 million total consideration shown in the table below and
the GBP53.6 million cash Offer. The compulsory acquisition of those
non-controlling shareholders' interests was completed in July 2017.
The non-controlling interest has been measured on the proportionate
basis of net assets acquired.
None of the goodwill recognised is expected to be deductible for
income tax purposes.
The following table summarises the consideration paid for
NetDimensions, the fair value of assets acquired and liabilities
assumed at the acquisition date.
10. Acquisition (continued)
Consideration Fair Value
GBP'000
--------------------------------------------- --------- -----------
Cash paid to NetDimensions shareholders 49,793
Cash paid to NetDimensions share
options holders 2,311
Total consideration 52,104
--------------------------------------------- --------- -----------
Non-controlling interest on acquisition 911
--------------------------------------------- --------- -----------
53,015
--------------------------------------------- --------- -----------
Recognised amounts of identifiable Book Fair value
assets acquired and liabilities value GBP'000
assumed GBP'000
--------------------------------------------- --------- -----------
Cash and cash equivalents 7,881 7,881
Property, plant and equipment 198 198
Trade and other receivables 8,825 8,825
Trade and other payables (11,375) (11,972)
Deferred tax liabilities on
acquisition (5,444)
Intangible assets identified
on acquisition 32,560
Total identifiable net (liabilities)/assets 5,529 32,048
--------------------------------------------- --------- -----------
Goodwill 20,967
Total 53,015
--------------------------------------------- --------- -----------
The fair value adjustments to the assets and liabilities assumed
are provisional and are management's best estimates at this
time.
NetDimensions contributed GBP3.9 million of revenue for the
period between the date of acquisition and the balance sheet date
and GBP0.3 million of loss before tax attributable to equity
holders of the parent. Had the acquisition of NetDimensions had
been completed on the first day of the financial year Group
revenues would have been GBP3.4 million higher and group profit
before tax attributable to equity holders of the parent would have
been GBP1.4 million lower.
Company information
Directors
Andrew Brode, Non-Executive Chairman
Harry Hill, Non-Executive Deputy Chairman
Jonathan Satchell, Chief Executive Officer
Neil Elton, Group Finance Director and Company Secretary
Piers Lea, Chief Strategy Officer
Dale Solomon, Chief Operating Officer
Leslie-Ann Reed, Non-Executive Director
Company number
07176993
Registered address
Sherborne House
119-121 Cannon Street
London
EC4N 5AT
Independent auditors
Crowe Clark Whitehill LLP
Chartered Accountants and Statutory Auditors
St Bride's House
10 Salisbury Square
London
EC4Y 8EH
Nominated adviser and broker
Numis Securities Limited
10 Paternoster Square
London
EC4M 7LT
Legal advisers
DWF LLP
Bridgewater Place
Water Lane
Leeds
LS11 5DY
Principal Bankers
Silicon Valley Bank
Alphabeta
14-18 Finsbury Square
London
EC2A 1BR
Registrars
Computershare Investor Services plc
The Pavilions
Bridgewater Road
Bristol
BS13 8AE
Communications consultancy
Hudson Sandler Limited
29 Cloth Fair
London
EC1A 7NN
This information is provided by RNS
The company news service from the London Stock Exchange
END
IR LRMPTMBABBRR
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