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Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
---|---|---|---|---|---|
Learning Technologies Group Plc | AQSE:LTG.GB | Aquis Stock Exchange | Ordinary Share | GB00B4T7HX10 | Ordinary Shares 375p |
Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|---|---|
0.00 | 0.00% | 75.00 | 70.00 | 80.00 | 75.00 | 75.00 | 75.00 | 0.00 | 07:01:06 |
Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
---|---|---|---|---|---|
0 | 0 | N/A | 0 |
TIDMLTG
RNS Number : 0116J
Learning Technologies Group PLC
06 September 2016
6 September 2016
Learning Technologies Group plc
(AIM: LTG)
Interim Results 2016
Learning Technologies Group plc ("LTG" or the "Group"), the global integrated e-learning technology and services business, is pleased to announce interim results for the six months ended 30 June 2016, which demonstrate substantial profit and earnings growth in line with the Board's expectations.
Financial highlights:
-- Revenue increased to GBP12.8 million (H1 2015: GBP8.4 million) - up 52%
- The proportion of recurring revenues is now 25% (H1 2015: 8%)
-- Adjusted EBITDA* more than doubled at GBP3.2 million (H1 2015: GBP1.3 million) - up 145% -- Adjusted EBITDA* margin improved by ten percentage points to 25.4% (H1 2015: 15.8%) -- Adjusted diluted earnings per share of 0.483p (H1 2015: 0.232p per share) - up 108%
-- Operating cash flows strong, despite significant investment in CSL project and IP development
-- Interim dividend of 0.07p per share (H1 2015: 0.05p) - up 40%
Operational highlights:
-- Focus on extending and deepening best working practices across the Group has improved margins
-- Acquisition of Rustici, places LTG at the heart of global e-learning interoperability standards
- Delivers substantial recurring revenues and already performing ahead of Board's expectations
-- Strategic investment in ground-breaking Watershed business - USD3 million for 27% equity stake
- Analytic tools which show the impact and effectiveness of learning programmes
-- Good progress in LEO's landmark UK Civil Service Learning (CSL) project in partnership with KPMG LLP
- Significant upfront investment being funded from operating cash flows
- Revenues expected to accrue in Q4 2016 and accelerate substantially in 2017
-- Further acquisition opportunities being evaluated and pursued, particularly in the US and UK
Andrew Brode, Chairman of LTG, said:
"The Group continues to make strong progress in its strategic ambition to build a diversified international business with revenues of GBP50 million. The acquisition of Rustici and investment in Watershed bring exciting new capabilities to the Group, which will enable us to take learning to the heart of the business strategy at Board level. Our ability to deliver a truly blended learning experience to large organisations has been confirmed by the CSL project win with our partner KPMG. We will continue to capitalise on our existing strengths to deliver further profitable organic growth, whilst seeking new acquisition opportunities to extend the Group's reach and scale."
*Adjusted EBITDA excludes the amortisation of acquisition-related intangibles assets, the amortisation of internal capitalised development costs, depreciation, share of losses on associates, acquisition earnout charges, share based payment charges and other exceptional items.
Enquiries:
Learning Technologies Group plc Jonathan Satchell, Chief Executive Officer Neil Elton, Group Finance +44 (0)20 Director 7402 1554 Numis Securities Limited Stuart Skinner/Michael Wharton (Nominated Adviser) +44 (0)20 Ben Stoop (Corporate Broker) 7260 1000 Hudson Sandler Limited +44 (0)20 Cat Valentine 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.
It is LTG's aim to create a broad capability, international learning technologies business with revenues in excess of GBP50m, which it will achieve through organic growth complemented by strategic acquisitions.
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
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. Most recently, Rustici brings the global leader in the support and development of the universal technical standards for the entire e-learning industry into the Group.
Chairman's Statement
Introduction
LTG performed well in the first half, delivering substantial growth in revenue and profit and making excellent progress in its strategic ambition to build a diversified international business of scale, with revenues in excess of GBP50 million, through organic growth and acquisition. Margins continued to strengthen across our businesses and I am pleased to report that the Group's profit and earnings for H1 were in line with the Board's expectations.
In December 2015, we announced that LTG had won a landmark contract, alongside our strategic partner KPMG UK LLP, to design and deliver blended courses that incorporate a combination of digital, informal and classroom components for the UK Civil Service ('CSL'). A substantial number of learning components were created by LTG in H1 and the entire library will be delivered by the year-end. Revenues from this material contract will begin to accrue in Q4 2016 with the majority of returns expected in 2017 and 2018.
In January 2016, we announced the acquisition of Rustici Software LLC ('Rustici') in the US, the acknowledged global leader in digital learning interoperability, which enables online learning content and management systems to communicate and work together. The initial upfront acquisition cost of USD23.6 million was part funded by a USD20 million loan. Rustici has substantial recurring revenues and has performed ahead of the Board's expectations in the period under review.
At the same time, the Group acquired 27% of Watershed Systems Inc ('Watershed') for USD3 million. Watershed is developing a SaaS-based learning analytics capability, which evaluates the impact and effectiveness of learning programmes. Although this is in the early stages of development, Watershed is making tangible progress, signing up a number of global customers and generating compelling and objective insights into the effectiveness of e-learning interventions.
Results
In the six months ended 30 June 2016, revenues increased by 52% to GBP12.8 million (H1 2015: GBP8.4 million) and adjusted EBITDA grew by 145% to GBP3.2 million (H1 2015: GBP1.3 million), reflecting a 10 percentage point increase in adjusted EBITDA margins from 15.8% to 25.4%.
The increase in the adjusted EBITDA margin is a result of increased economies of scale, improved working practices, a favourable movement in currency exchange rates in H1 2016, equivalent to GBP96,000, and a change in the revenue mix of the Group towards higher margin licence revenues following the acquisition of Rustici. This margin improvement demonstrates LTG's ability to drive operational synergies in acquired businesses and we believe that these margin improvements are sustainable. Recurring licence fee and support contract revenues increased from 8% in H1 2015 to 25% in H1 2016.
Operating profit of GBP0.6 million (H1 2015: GBP0.3 million) is stated after amortisation of acquired intangibles, depreciation, various acquisition earnout charges, unrealised foreign exchange differences on borrowings, share based payments, share of losses on investments and integration costs. Following the acquisitions of Eukleia Training Limited ('Eukleia') and Rustici, amortisation of acquired intangibles increased to GBP1.5 million (H1 2015: GBP0.4 million). The net charge for the unrealised foreign exchange loss on the USD20 million loan taken out in January 2016 was GBP0.1 million (H1 2015: GBPnil).
A net tax credit of GBP0.5 million (H1 2015: GBP0.1 million) includes a release of deferred tax liabilities, created from acquired intangibles.
The Group reported a net profit of GBP0.4 million for the six months ended 30 June 2016 (H1 2015: GBP0.4 million).
The basic earnings per share in H1 2016 were 0.094 pence (H1 2015: 0.099 pence). Adjusted diluted earnings per share as set out in Note 5 increased by 108% to 0.483 pence (H1 2015: 0.232 pence).
LTG maintained strong operating cash flows in the period. Operating cash outflows of GBP0.7 million (H1 2015: inflows of GBP0.5 million) are stated after the payment of the transaction bonus to Rustici employees of USD2.0 million (see Note 12) and upfront costs related to the CSL project.
As part of the financing of the Rustici acquisition the Group entered into a USD20 million term loan. The loan is amortised over five years and repayable in quarterly instalments with a final bullet payment in January 2019. Interest is payable based on USD LIBOR, plus a 2.0% margin and the loan is subject to various financial covenants.
Approximately 32% 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 and Euros. Net USD cash inflows are used as an approximate internal hedge against the USD loan capital and interest repayments; therefore the business' overall exposure to exchange rate volatility is limited. At 30 June 2016 gross cash was GBP4.3 million and net debt was GBP9.9 million (31 December 2015: gross and net cash of GBP7.3 million).
Overall net assets increased to GBP31.1 million at 30 June 2016 (31 December 2015: GBP25.5 million) and shareholders' funds increased from 6.3 pence per share to 7.4 pence per share.
Operational Review
LTG has built on the operational successes of 2015 in the first half of the year by extending and deepening best working practices across the Group. Our aim is to deliver a first class experience to our customers every time, ensuring that our staff are optimally trained and work effectively. This focus on best practice has also improved margins across our businesses because we deliver the majority of our projects 'right first time', avoiding costly rework.
In LEO Learning ('LEO'), we have developed a greater focus on account management and market sector expertise; we are beginning to see the benefits of this approach, as we extend and strengthen our relationships with customers and move towards the delivery of a complete end-to-end solution. At Jaguar Land Rover, for example, LEO is working across multiple departments, including global dealer training, marketing, manufacturing, brand experience, and HR. Calling on the expertise of other LTG businesses when required, LEO is delivering a wide range of products and services, including electronic pocket guides, systems analysis, consulting, project leadership, video production, blended learning, virtual reality and even augmented reality. We are finding that this single account management strategy works especially well with a number of our key customers, who are aiming to reduce the number of their suppliers whilst retaining a broad range of capability and innovation.
LEO has invested substantially in developing the blended learning modules for the CSL project in the first half of the year. The size of the LEO contractor workforce has been increased rapidly and the management's initial focus on this landmark project has impacted moderately on the new business win rate elsewhere in LEO in H1 2016.
As the project moved out of the initiation phase into production during Q2, we were able to apply more management resource to developing the sales pipeline and are already seeing renewed sales momentum in H2 2016. We anticipate that the production phase, and associated upfront investment, will be completed by the end of 2016. Revenues from the CSL project will begin to accrue in Q4 2016 before escalating from 2017 onwards.
In the US, we opened a production office in Bloomington, Indiana. The LEO US business had a slow start to the year but, alongside the appointment of a new Senior VP, LEO US has won some significant contracts and the prospects for H2 2016 are significantly improved.
Our joint venture, LEO Brazil, has made steady progress in H1 2016, despite the turbulence in the Brazilian economy. Other LTG companies are working alongside LEO Brazil to deliver high volume, high quality content for our international customers.
Preloaded, LTG's 'games with purpose' developer, has had a strong first half in 2016. This talented team has been greatly enhanced by the recruitment of a new MD and Technical Director. Their high quality work has been well received, which is affirmed by the further contracts we have already won in H2 2016. Later this month Penguin Random House will launch an interactive app, developed by Preloaded, that re-imagines Stephen Hawking's book A Brief History of Time, bringing its complex ideas and concepts to life for a new generation. This prestigious project demonstrates LTG's ability to take complex subject matters and convert them into compelling learning interactions for a wide range of users.
Eukleia, the Group's specialist governance, risk and compliance ('GRC') business, was fully integrated into the Group in 2015. Whilst EBITDA increased during the first half of 2016, revenues were down on the comparative prior period, as regulatory initiatives in the City of London abated in the run up to the EU Referendum. While we continue to assess the impact of the Brexit vote on the GRC environment, we are encouraged by the take-up of training initiatives since the vote. Developments such as the implementation of the Market Abuse Regulations are good examples of the constant regulatory changes affecting the financial sector and the imperative of delivering up to date training. Eukleia continues to extend its success to contiguous corporate market sectors and we are also launching a New York office for this business before the end of the year.
gomo Learning, which delivers a SaaS based tool for creating, hosting and tracking multi-device learning content for mobile workforces, had an excellent start to the year. Having won the prestigious 2015 Gold Award for the Brandon Hall Best Advance in Content Authoring Technology, the business proceeded to add to its already enviable roster of blue-chip customers, achieving particular success in the US market. It is our continued investment in the gomo platform which ensures that gomo remains the leading SaaS authoring tool on the market. A number of gomo customers have gone on to buy services from other LTG business units.
The acquisition of Rustici and its subsequent integration has been achieved successfully. We relocated the team to new offices in Nashville in May and the business has performed ahead of our expectations in H1 2016. Rustici gives LTG a unique software product offering that underpins the global e-learning market, as well as recurring revenues with high retention rates. Further details of this acquisition are included in Note 12.
Alongside the acquisition of Rustici, the Group invested USD3 million in a 27% share of the tech start-up Watershed. It has made good progress in its development of analytic tools that enable customers to track and assess the effectiveness of their learning programmes through the interrogation of 'big data'. These insights will help LTG in its ambition to 'move learning to the heart of business strategy' by enabling business managers to objectively understand the return on their investment in learning programmes within the corporate and government workplace. Our share of losses in Watershed in H1 2016 was GBP0.1 million.
Dividend
On 4 July 2016, the Company paid a final dividend of 0.10 pence per share, giving a total dividend for 2015 of 0.15 pence per share. This represented a 50% increase on the dividend paid compared to 2014. Given its confidence in the continuing success of the Group, the Board is pleased to announce that it has approved an interim dividend of 0.07 pence per share (2015: 0.05 pence per share). This will be paid on 28 October 2016 to shareholders on the register at 7 October 2016.
Current Trading and outlook
The Board is pleased with the progress that the Group has made in the first half of 2016, in particular the strengthening of margins through best working practices and increased scale, as well as the successful of integration of Rustici.
While it is too early to identify any potential implications from the UK's likely exit from the European Union, we are confident that our strategic ambitions and proven track record in acquiring, integrating and growing businesses, both in the UK and abroad, will ensure the Group's continued progress.
LTG continues to pursue acquisition opportunities particularly in the US and UK and the Directors look forward to delivering significant profitable growth in the underlying operating businesses during the remainder of 2016.
Andrew Brode, Chairman
6 September 2016
Consolidated statement of comprehensive income Six months Year Six months to to to 30 June 31 Dec 30 June 2016 2015 2015 (unaudited) (audited) (unaudited) Note GBP'000 GBP'000 GBP'000 Revenue 3 12,785 19,905 8,390 Operating expense (12,199) (18,137) (8,073) ------------------- ------------------ ------------------ Operating profit* 586 1,768 317 Adjusted EBITDA 3,247 4,338 1,328 Amortisation of intangibles (1,700) (1,419) (480) Depreciation (146) (214) (90) Acquisition earnout (215) - - Net foreign exchange differences on borrowings (134) - - Share of losses on associates/joint ventures 7,8 (102) (62) (41) Share based payment costs (300) (776) (400) Integration costs (64) (99) - --------------------------------- ----- --- ------------------- ------------------ ------------------ Operating profit* 586 1,768 317 --------------------------------- ----- --- ------------------- ------------------ ------------------ Fair value movement on contingent consideration - 198 - Costs of acquisition (104) (234) - Finance expenses: Charge on contingent consideration (392) (195) (115)
Interest on borrowings (155) - - Interest receivable - 12 7 ------------------- ------------------ ------------------ (Loss)/profit before taxation (65) 1,549 209 Income tax credit/(expense) 4 453 (120) 144 ------------------- ------------------ ------------------ Profit for the period/year attributable to the owners of the parent 388 1,429 353 Earnings per share attributable to owners of the parent: Basic, (pence) 5 0.094 0.382 0.099 =================== ================== ================== Diluted, (pence) 5 0.087 0.357 0.093 =================== ================== ================== Other comprehensive income: Exchange differences on translating foreign operations 491 33 8 Total comprehensive income for the period 879 1,462 361 =================== ================== ================== Consolidated statement of financial position 31 Dec 2015 30 June 30 June 2016 (unaudited) (audited) 2015 (unaudited) Note GBP'000 GBP'000 GBP'000 ASSETS NON-CURRENT ASSETS Property, plant and equipment 796 543 331 Intangible assets 6 46,496 19,803 11,025 Deferred tax assets 1,094 1,029 825 Investments 7,8 1,993 - - ------------------- ------------------ ------------------ 50,379 21,375 12,181 CURRENT ASSETS Trade receivables 4,177 4,201 3,201 Other receivables, deposits and prepayments 9 2,194 554 470 Amounts recoverable on contracts 2,914 1,853 2,469 Amounts due from related parties 45 - - Cash and bank balances 10 4,257 7,305 2,958 ------------------- ------------------ ------------------ 13,587 13,913 9,098 TOTAL ASSETS 63,966 35,288 21,279 =================== ================== ================== CURRENT LIABILITIES Trade and other payables 11 9,323 5,835 5,560 Borrowings 2,907 - - Corporation tax 162 309 226 Amounts owing to related parties - 2 - 12,392 6,146 5,786 NON CURRENT LIABILITIES Deferred tax liabilities 4,046 1,182 360 Other long term liabilities 5,151 2,382 - Borrowings 11,145 - - Provisions 99 99 30 ------------------- ------------------ ------------------ 20,441 3,663 390 TOTAL LIABILITIES 32,833 9,809 6,176 =================== ================== ================== NET ASSETS 31,133 25,479 15,103 =================== ================== ================== EQUITY Share capital 1,570 1,506 1,334 Share premium account 26,635 21,839 13,125 Merger relief reserve 22,269 22,269 22,269 Reverse acquisition reserve (22,933) (22,933) (22,933) Share-based payment reserve 2,483 2,273 1,742 Foreign exchange translation reserve 541 50 25 Accumulated retained earnings/(losses) 568 475 (459) =================== ================== ================== TOTAL EQUITY ATTRIBUTABLE TO THE OWNERS OF THE PARENT 31,133 25,479 15,103 =================== ================== ==================
Consolidated statement of changes in equity
(GBP'000)
Share Share Merger Reverse Share Foreign Retained Total capital Premium relief acquisition based exchange profits/(losses) equity reserve reserve payments reserve reserve Balance at 1 January 2015 1,329 13,098 22,269 (22,933) 1,203 17 (574) 14,409 ---------- --------- --------- ------------ --------- --------- ----------------- -------- Profit for period - - - - - - 353 353 Exchange differences on translating foreign operations - - - - - 8 - 8 ---------- --------- --------- ------------ --------- --------- ----------------- -------- Total comprehensive income for the period - - - - - 8 353 361 Issue of shares 5 27 - - - - - 32 Share based payment charge / credited to equity - - - - 400 - - 400 Deferred tax credit on share options - - - - 149 - - 149 Transfer on exercise and lapse of options - - - - (10) - 10 - Dividends paid - - - - - - (248) (248) Balance at 30 June 2015 1,334 13,125 22,269 (22,933) 1,742 25 (459) 15,103 Profit for period - - - - - - 1,076 1,076 Exchange differences on translating foreign operations - - - - - 25 - 25 ---------- --------- --------- ------------ --------- --------- ----------------- -------- Total comprehensive income for the period - - - - - 25 1,076 1,101 Issue of shares 172 8,931 - - - - - 9,103 Cost of issuing shares - (257) - - - - - (257) Sale of treasury shares - 40 - - - - - 40 Share based payment charge /
credited to equity - - - - 376 - - 376 Deferred tax credit on share options - - - - 213 - - 213 Transfer on exercise and lapse of options - - - - (58) - 58 - Dividends paid - - - - - - (200) (200) Balance at 31 December 2015 1,506 21,839 22,269 (22,933) 2,273 50 475 25,479 ---------- --------- --------- ------------ --------- --------- ----------------- -------- Profit for period - - - - - - 388 388 Exchange differences on translating foreign operations - - - - - 491 - 491 ---------- --------- --------- ------------ --------- --------- ----------------- -------- Total comprehensive income for the period - - - - - 491 388 879 Issue of shares 64 4,796 - - - - - 4,860 Share based payment charge / credited to equity - - - - 300 - - 300 Deferred tax credit on share options - - - - 33 - - 33 Transfer on exercise and lapse of options - - - - (123) - 123 - Dividends payable - - - - - - (418) (418) Balance at 30 June 2016 1,570 26,635 22,269 (22,933) 2,483 541 568 31,133 ========== ========= ========= ============ ========= ========= ================= ========
Consolidated statement of cash flows
Note Six months Six months to Year to to 30 June 31 Dec 30 June 2016 2015 2015 (unaudited) (audited) (unaudited) GBP'000 GBP'000 GBP'000 Cash flow from operating activities (Loss)/profit before taxation (65) 1,549 209 Adjustments for:- Share option charge 300 776 400 Cash costs of acquisition 104 234 - Amortisation of intangible assets 1,700 1,419 480 Depreciation of plant and equipment 146 214 90 Share of losses of investments 102 62 41 Finance expense 392 195 115 Finance interest on borrowings 155 - - Fair value movement on contingent consideration - (198) - Interest received - (12) (7) ------------- ----------- ------------- Operating cash flow before working capital changes 2,834 4,239 1,328 (Increase)/decrease in trade and other receivables (883) (49) (572) (Increase) in amount recoverable on contracts (1,061) (62) (663) (Decrease)/increase in payables (1,602) 607 417 ------------- ----------- ------------- (712) 4,735 510 ------------- ----------- ------------- Interest paid (157) - - Interest received - 12 7 Income tax paid (151) (483) (127) ------------- ----------- ------------- Net cash flow from operating activities (1,020) 4,264 390 ------------- ----------- ------------- Cash flow used in investing activities Purchase of property, plant and equipment (382) (232) (79) Development of intangible assets (378) (310) (141) Acquisition of subsidiaries, net of cash acquired (12,389) (5,617) - Cash costs of acquisition (104) (234) - Investment in associates 7,8 (2,095) (46) (25) ------------- ----------- ------------- Net cash flow used in investing activities (15,348) (6,439) (245) ------------- ----------- ------------- Cash flow used in financing activities Dividends paid - (448) (248) Cash generated from issue of shares, net of share issue costs 72 7,379 32 Proceed from borrowings 13,909 - - Repayment of bank loans (683) - - Sale of treasury shares - 40 Contingent consideration payments in the period - (1,882) (1,337) ------------- ----------- ------------- Net cash flow from/(used in) in financing activities 13,298 5,089 (1,553) ------------- ----------- ------------- Net (decrease)/increase in cash and cash equivalents (3,070) 2,914 (1,408) Cash and cash equivalents at beginning of the year 7,305 4,358 4,358 Effects of foreign exchange rate changes 22 33 8 ----------- ------------- Cash and cash equivalents at end of the year 10 4,257 7,305 2,958 ============= =========== =============
Notes to the consolidated financial statements for the six months to 30 June 2016
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 2016 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 2015 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
All revenues of the Group are derived from its principal activity, the production of interactive multimedia programmes. The Group's revenue from external customers and non-current assets by geographical location are detailed below.
UK Europe America Other Total GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 30 June 2016 (unaudited) Revenue 8,669 492 3,077 547 12,785 -------- -------- -------- -------- -------- Non-current assets 24,389 - 25,990 - 50,379 -------- -------- -------- -------- -------- 31 December 2015 (audited) Revenue 17,528 559 1,638 180 19,905 -------- -------- -------- -------- -------- Non-current assets 21,354 - 21 - 21,375 -------- -------- -------- -------- -------- 30 June 2015 (unaudited) Revenue 7,184 618 570 18 8,390 -------- -------- -------- -------- -------- Non-current assets 12,174 - 7 - 12,181 -------- -------- -------- -------- --------
Information about major customers
In the six months to 30 June 2016, the year ended 31 December 2015 and the six months to 30 June 2015, no customer accounted for more than 10 percent of reported revenues.
4. Taxation
Taxation for the six months to 30 June 2016 has been calculated by applying the estimated tax rate for the current financial year ending 31 December 2016 to an estimated tax adjusted profit figure.
5. Earnings per share 30 June 31 Dec 30 June 2016 2015 2015 (unaudited) (audited) (unaudited) GBP'000 GBP'000 GBP'000 Profit after tax attributable to owners of the Group : 388 1,429 353 Weighted average number of shares: Basic 413,821,957 373,505,000 355,129,516 Diluted 444,317,045 399,911,000 381,350,644 Basic earnings per share (pence) 0.094 0.382 0.099 Diluted earnings per share (pence) 0.087 0.357 0.093 Adjusted diluted earnings per share (pence) 0.483 0.756 0.232
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 2015 30 June 2015 2016 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 388 413,822 0.094 1,429 373,505 0.382 353 355,130 0.099 --------- --------- --------- --------- --------- --------- --------- --------- ---------- Effect of adjustments: Amortisation of acquired intangibles 1,536 - - 1,203 - - 407 - - Share based payment costs 300 - - 776 - - 400 - - Integration costs 64 - - 99 - - - - - Cost of acquisitions 104 - - 234 - - - - - Acquisition earnout 215 - - - - - - - - Net foreign exchange differences on borrowings 134 - - - - - - - - Fair value movement on contingent consideration - - - (198) - - - - - Interest receivable - - - (12) - - (7) - - Finance expense 392 - - 195 - - 115 - - Income tax (credit)/expense (453) - - 120 - - (144) - - --------- --------- --------- --------- --------- --------- --------- --------- ---------- Effect of adjustments 2,292 - 0.554 2,417 - 0.647 771 - 0.217 --------- --------- --------- --------- --------- --------- --------- --------- ---------- Adjusted profit before tax 2,680 - - 3,846 - - 1,124 - - --------- --------- --------- --------- --------- --------- --------- --------- ---------- Adjusted weighted tax charge 20% (21.43%) (536) - (0.130) (824) - (0.220) (241) - (0.067) --------- --------- --------- Adjusted basic earnings per ordinary share 2,144 413,822 0.518 3,022 373,505 0.809 883 355,130 0.249 Effect of dilutive potential ordinary shares: Share options - 30,495 (0.035) - 26,406 (0.053) - 26,221 (0.017) Adjusted diluted earnings per ordinary share 2,144 444,317 0.483 3,022 399,911 0.756 883 381,351 0.232 6. Intangible assets Goodwill Customer Branding IP and Total contracts Software and relationships development GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 Cost At 1 January 2015 9,615 1,880 180 565 12,240 Additions - - - 141 141 --------- ------------------- --------- ------------- --------- At 30 June 2015 (unaudited) 9,615 1,880 180 706 12,381 Additions on acquisition 4,637 4,411 248 252 9,548 Additions - - - 169 169 --------- ------------------- --------- ------------- --------- At 31 December 2015 (audited) 14,252 6,291 428 1,127 22,098 Additions on acquisition 17,288 8,584 256 249 26,377 Additions - - - 378 378 Foreign exchange differences 1,085 455 98 - 1,638 --------- ------------------- --------- ------------- --------- At 30 June 2016 (unaudited) 32,625 15,330 782 1,754 50,491 Accumulated amortisation At 1 January 2015 - 546 24 306 876 Amortisation charged in period - 389 18 73 480 --------- ------------------- --------- ------------- --------- At 30 June 2015 (unaudited) - 935 42 379 1,356 Amortisation charged in period - 674 122 143 939 --------- ------------------- --------- ------------- --------- At 31 December 2015 (audited) - 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 Carrying amount At 30 June 2015 (unaudited) 9,615 945 138 327 11,025
========= =================== ========= ============= ========= At 31 December 2015 14,252 4,682 264 605 19,803 ========= =================== ========= ============= ========= At 30 June 2016 (unaudited) 32,625 12,250 553 1,068 46,496 ========= =================== ========= ============= ========= 7. Investments accounted for using the equity method - Joint ventures 30 June 31 Dec 30 June 2016 2015 2015 (unaudited) (audited) (unaudited) GBP'000 GBP'000 GBP'000 Cost of investments 274 274 253 Share of accumulated losses (271) (271) (250) Foreign exchange differences (3) (3) (3) ------------- ------------- ------------- - - - ============= ============= =============
The movements in investments are as follows:
Six months Six months to Year to to 30 June 31 Dec 30 June 2016 2015 2015 (unaudited) (audited) (unaudited) GBP'000 GBP'000 GBP'000 Balance at beginning of period - 16 16 Investment during the period - 46 25 Share of losses for the period - (62) (41) ------------ ------------ ------------- - - - =============================================== ============ =============
The Group holds a 50% interest in LEO Brasil Tecnologia Educaional Ltda ('LEO Brazil'); a joint venture. Where the Group's share of losses in a joint venture exceeds its interest in the joint venture the Group does not recognize further losses where it has no further obligations to make further payments. Such losses not recognized in the six months ended 30 June 2016 totaled GBP89,000.
8. Investments accounted for using the equity method - Associates 30 June 31 Dec 30 June 2016 2015 2015 (unaudited) (audited) (unaudited) GBP'000 GBP'000 GBP'000 Cost of investments 2,095 - - Share of accumulated (102) - - losses Foreign exchange - - - differences ------------- ------------- ------------- 1,993 - - ============= ============= =============
The movements in investments are as follows:
Six months Six months to Year to to 30 June 31 Dec 30 June 2016 2015 2015 (unaudited) (audited) (unaudited) GBP'000 GBP'000 GBP'000 Balance at beginning - - - of period Investment during 2,095 - - the period Share of losses for (102) - - the period ------------- ------------ ------------- 1,993 - - ============= ============ =============
The Group acquired a 27% interest in Watershed Inc ('Watershed') on 29 January 2016 for a total consideration of $3.0 million (GBP2.1 million). The Group's share of losses of Watershed in the period ending 30 June 2016 was GBP0.1 million.
9. Other receivables, deposits and prepayments 30 June 31 Dec 2015 30 June 2015 2016 (unaudited) (audited) (unaudited) GBP'000 GBP'000 GBP'000 Sundry receivables - 38 - Prepayments 825 516 470 Deferred costs 1,369 - - ------------------ ------------ ------------- 2,194 554 470 ================== ============ ============= 10. Cash and cash equivalents
For the purpose of the statement of cash flows, cash and cash equivalents comprise the following:-
30 June 31 Dec 2015 30 June 2015 2016 (unaudited) (audited) (unaudited) GBP'000 GBP'000 GBP'000 Cash and bank balances 4,257 7,305 2,958 ================== ============ ============= 11. Trade and other payables 30 June 31 Dec 30 June 2016 2015 2015 (unaudited) (audited) (unaudited) GBP'000 GBP'000 GBP'000 Trade payables 628 814 459 Payments received on account 2,921 1,858 1,793 Tax and social security 767 1,140 725 Contingent consideration 2,958 405 1,567 Accruals and others 2,049 1,618 1,016 ------------- ------------- ------------- 9,323 5,835 5,560 ============= ============= ============= 12. Acquisitions
On 29 January 2016 LTG acquired the entire issued share capital of Rustici Software LLC ("Rustici"), the global market leader in digital learning interoperability. Rustici was established in Nashville, USA in 2002 and has been instrumental in the support and development of the universal technical standards for the e-learning software industry. It is the acknowledged global leader in SCORM (Sharable Content Object Reference Model) conformance. SCORM is the de facto industry standard for e-learning interoperability, allowing online learning content and learning management systems to communicate and work together.
Rustici is also the co-creator of the next generation of learning interoperability standards, Tin Can API, or xAPI. This global standard was created to capture rich data on every aspect of learning experiences.
The consideration for Rustici comprised an initial payment of USD23.6 million of which USD18 million was paid in cash and USD5.6 million in new LTG shares to the vendors (issued at a price of 30.25 pence per share). Cash consideration was adjusted to take account of surplus cash in Rustici at completion.
Further performance based payments, capped at USD11 million, are payable to the Rustici vendors and key employees based on ambitious revenue growth targets in each of the years ending 31 December 2016, 2017 and 2018, payable with up to 25% in new LTG shares at the option of the Company, and the remainder in cash. This capped contingent deferred consideration has been discounted using a discount factor of 10% and is held as a liability on the balance sheet. Of this contingent deferred consideration up to USD2 million may be payable to Rustici staff and will be recognised directly in the income statement as it does not meet the conditions to be recognised in the balance sheet under IFRS 3.
None of the goodwill recognised is expected to be deductible for income tax purposes.
The following table summarises the consideration paid for Rustici, the fair value of assets acquired and liabilities assumed at the acquisition date.
Consideration at 29 January Fair 2016 Value GBP'000 --------------------------------------------- --------- --------- Cash 12,999 Equity instruments (12,930,374 ordinary shares) 3,911 Contingent consideration due in 2017 1,860 Contingent consideration due in 2018 1,684 Contingent consideration due in 2019 1,525 --------------------------------------------- --------- --------- Total consideration 21,979 --------------------------------------------- --------- --------- Recognised amounts of identifiable Book Fair assets acquired and liabilities value value assumed GBP'000 GBP'000 --------------------------------------------- --------- --------- Cash and cash equivalents 610 610 Property, plant and equipment 17 17 Internally generated intangible assets 249 249 Trade and other receivables 732 732 Trade and other payables (2,663) (2,663) Deferred tax liabilities on acquisition - (3,094) Intangible assets identified on acquisition - 8,840 Total identifiable net (liabilities)/assets (1,055) 4,691 --------------------------------------------- --------- --------- Goodwill 17,288 Total 21,979 --------------------------------------------- --------- ---------
The fair value of the acquired intangible assets and deferred tax liabilities of GBP8,840,000 and GBP3,094,000 respectively, is provisional pending receipt of the final valuations for those assets and liabilities.
Trade and other payables acquired on acquisition included a GBP1,826,000 (USD2.6 million) transaction bonus liability due to employees of Rustici, payable on completion. Of this amount USD2.0 million was paid in cash and USD0.6 million in new LTG shares.
Rustici contributed GBP2.6 million of revenue for the period between the date of acquisition and the balance sheet date and GBP1.4 million of profit before tax. Had the acquisition of Rustici had been completed on the first day of the financial year Group revenues would have been GBP0.5 million higher and group profit attributable to equity holders of the parent would have been GBP0.2 million higher.
Glossary of Terms
Augmented Reality A technology that superimposes a computer-generated image on a user's view of the real world. Authoring tool Computer software which allows its user to create multimedia applications capable of manipulating one or more multimedia objects allowing a non-programmer to easily create software with programming features. Blended learning A solution which combines multiple delivery methods, including e-learning, face-to-face training, resources, video and any other type of learning technology. Civil Service Provides learning and development Learning ('CSL') for all civil servants. Cloud-based e-learning authoring that is free authoring from the constraints of typical desktop solutions. Users access authoring software over the Internet via a secure, affordable hosted system with no worries about software set-up, IT configurations, desktop installs, or missing software licenses. e-learning The use of electronic media and information and communication technologies in education and includes all forms of educational technology in learning and teaching. e-learning interoperability Interoperability is the ability standards of different information technology systems and software applications to communicate, exchange data, and use the information that has been exchanged. Gamification The application of typical elements of game playing (e.g. point scoring, competition with others, rules of play) to other areas of activity, typically as an online marketing technique to encourage engagement with a product or service. GRC Governance, risk and compliance. Learning Management A learning management system is System a software application for the administration, documentation, tracking, reporting and delivery of electronic educational technology (also called e-learning) courses or training programme. Learning Record A data store system that serves Store as a repository for learning records of individual learners. This includes formal and informal learning such as activity and social learning. Learning technologies The broad range of communication, information and related technologies that can be used to support learning, teaching, and assessment. Moodle An open-source Learning Management System used across private, public and not-for-profit organisations to deliver and track their learning. Highly customisable and benefits from the contributions of the open source community. EPIC and LINE 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. Big Data Collecting vast amounts of information to predict the movements of market segments. Rich data Collecting vast amounts of information to predict consumer behaviour. SaaS Software as a Service, sometimes referred to as "software on demand" is software that is deployed over the internet and/or is deployed to run behind a firewall on a local area network or personal computer. SCORM The de facto industry standard for e-learning interoperability, which enables online learning content and management systems to communicate and work together. Tin Can API The Experience API (xAPI), also known as the Tin Can API, is a software specification that allows learning content and learning systems to speak to each other to record and track learning experiences. xAPI As above; increasingly used as the official name of this new standard.
This information is provided by RNS
The company news service from the London Stock Exchange
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