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Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
---|---|---|---|---|---|
Learning Technologies Group Plc | LSE:LTG | London | Ordinary Share | GB00B4T7HX10 | ORD 0.375P |
Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|---|---|
-2.20 | -2.88% | 74.30 | 74.70 | 75.10 | 76.70 | 73.40 | 76.70 | 2,367,973 | 16:35:23 |
Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
---|---|---|---|---|---|
Real Estate Agents & Mgrs | 562.34M | 29.45M | 0.0372 | 20.19 | 594.16M |
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
(END) Dow Jones Newswires
September 18, 2017 02:01 ET (06:01 GMT)
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