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LTG Learning Technologies Group Plc

85.40
1.10 (1.30%)
28 Mar 2024 - Closed
Delayed by 15 minutes
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
  1.10 1.30% 85.40 85.60 85.95 86.25 82.80 84.30 968,489 16:35:22
Industry Sector Turnover Profit EPS - Basic PE Ratio Market Cap
Real Estate Agents & Mgrs 596.9M 30.41M 0.0384 22.29 677.23M

Learning Technologies Group PLC HALF YEAR RESULTS 2021 (3810M)

21/09/2021 7:00am

UK Regulatory


Learning Technologies (LSE:LTG)
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From Mar 2021 to Mar 2024

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TIDMLTG

RNS Number : 3810M

Learning Technologies Group PLC

21 September 2021

Learning Technologies Group plc

HALF YEAR RESULTS 2021

7% organic revenue growth; delivering on strategy

In line with expectations for full year performance

Learning Technologies Group plc ("LTG" or the "Company"), the provider of services and technologies for digital learning and talent management, announces half year results for the six months ended 30 June 2021.

Strategic highlights

   --     Successful integration of Q1 acquisitions Reflektive, PDT Global and Bridge 

o Refle ktive and Bridge swiftly moved to profit

o PDT Global achieving high margins and complements LTG's D&I solutions offering

   --     Software & Platforms: functionality enhanced and go-to-market strategy embedded 

-- Announcement in July 2021 of proposed acquisition of GP Strategies for $394 million; will create a global business with more than 5,000 employees and proforma revenues of c.GBP500m

o The strategically compelling combination will create a leading, global workforce transformation business focused on learning and talent management

o LTG has identified significant margin enhancement potential and cross-sell opportunities and expects the

transaction to be significantly EPS accretive   from 2022 

Financial highlights

-- Revenue up 29% to GBP82.6m (H1 2020: GBP64.1m) including first time contributions from Reflektive, PDT Global and Bridge

   --     Organic revenue growth* rate of 7% includes strong recovery in professional services 

o Software & Platforms : 5% organic growth; particularly strong growth at Rustici and Breezy

o Content & Services : 14% organic growth; on track to return to 2019 levels as expected

   --     Recurring revenues at 77% (H1 2020: 81%) as C&S revenues recover 
   --     Adjusted EBIT increased 20% to GBP22.0m (H1 2020: GBP18.4m) 

-- EBIT margin down to 26.7% (H1 2020: 28.7%) primarily due to currency headwinds and short-term losses from Reflektive and Bridge following acquisition in Q1 2021; expect to return to guided margin levels for FY 2021

   --     Operating cash conversion at 79% (H1 2020: 100%; FY 2020: 85%) 

-- Net cash of GBP24.9 million (FY 2020 GBP70.2 million) after deployment of GBP52.1 million for the three acquisitions made during the first half

Dividend

-- The Board is committed to a progressive dividend policy and is pleased to approve an interim dividend of 0.30 pence per share (H1 2020 0.25 pence per share) representing a 20% increase.

-- Interim dividend will be paid on 29(th) October 2021 to all shareholders on the register as at 8(th) October 2021.

Current trading and outlook

   --     Good start to second half reflecting strong order book growth during the first half 
   --     Content & Services on track to return to 2019 revenue levels for the full year 

-- Robust organic and acquired growth across Software & Platforms division; market offering positioned to leverage opportunities in the small and mid-market sectors

-- Acquisition of GP Strategies on track to complete in Q4 2021, funded by the GBP85m equity placing and $305m debt refinancing completed in July 2021

-- LTG remains on target to deliver on market expectations for the full year despite continuing currency headwinds

Jonathan Satchell, CEO of LTG, said:

"LTG's swift return to organic revenue growth reflects a strong and well-integrated business with class-leading multi-product solutions for the growing global learning and talent management market. Delivering 7% organic revenue growth has been an exceptional achievement by our employees who have adapted well to an evolving and more flexible working environment.

Following this excellent first half performance, including the integration of our three most recent acquisitions, we are excited about the potential to generate further substantial shareholder value from the addition of GP Strategies, which is expected to complete in Q4 2021. The enlarged business provides a platform for further organic growth in a marketplace that is increasingly receptive to solutions that help organisations efficiently recruit, train, motivate and retain their people."

Financial summary:

 
 GBPm unless otherwise stated            H1 2021   H1 2020   Change 
-------------------------------------- 
 Revenue                                  82.6      64.1      +29% 
                                        --------  --------  ------- 
    Organic growth*                        7%        -7% 
                                        --------  --------  ------- 
    Software & Platforms organic 
     growth                                5%        -1% 
                                        --------  --------  ------- 
    Content & Services organic growth     1 4%      -20% 
                                        --------  --------  ------- 
     Recurring Revenue                     77%       81% 
                                        --------  --------  ------- 
 Adjusted EBIT                            22.0      18.4      +20% 
                                        --------  --------  ------- 
 Adjusted EBIT margin                     26.7%     28.7% 
                                        --------  --------  ------- 
 Statutory PBT                             4.6       4.1      +11% 
                                        --------  --------  ------- 
 Basic EPS (pence)                        0.705     0.710     -1% 
                                        --------  --------  ------- 
 Adj. Diluted EPS (pence)                 2.310     2.251     +3% 
                                        --------  --------  ------- 
 Net Cash                                 24.9      77.8 
                                        --------  --------  ------- 
 

* Organic growth is stated on a constant currency basis and excludes 2021 acquisitions Reflektive, PDT Global and Bridge. It includes acquisitions made in 2020 restated as if they had been owned for the full comparative period.

Analyst and investor presentation:

LTG will host an analyst and investor webcast at 09:00 today, Tuesday 21 September 2021.

The registration link can be found here:

https://attendee.gotowebinar.com/register/853539199442689035

Telephone audio is available +44 20 3713 5012 or via international dial-in:

https://attendee.gotowebinar.com/audio/853539199442689035

Webinar ID: 626-546-723

Enquiries :

 
 Learning Technologies Group plc 
  Jonathan Satchell, Chief Executive              +44 (0)20 7402 
  Neil Elton, Chief Financial Officer                       1554 
 Numis Securities Limited (NOMAD and Corporate 
  Broker)                                         +44 (0)20 7260 
  Stuart Skinner, Nick Westlake, Ben Stoop                  1000 
 Goldman Sachs International (Joint Corporate 
  Broker)                                         +44 (0)20 7774 
  Bertie Whitehead, Adam Laikin                             1000 
 FTI Consulting (Public Relations Adviser)        +44 (0)20 3727 
  Rob Mindell, Jamie Ricketts, Jamille Smith                1000 
 

About LTG:

LTG is a leader in the growing workplace digital learning and talent management market. The Group offers end-to-end learning and talent solutions ranging from strategic consultancy, through a range of content and platform solutions to analytical insights that enable corporate and government clients to close the gap between current and future workforce capability.

LTG is listed on the London Stock Exchange's Alternative Investment Market (LTG.L) and headquartered in London. The Group has offices in Europe, North America, LATAM and Asia-Pacific.

Chairman's Statement

Introduction

The Board is delighted to report that Learning Technologies Group plc ('LTG') has delivered a robust performance in the first half of 2021, in line with management expectations at the start of the year, and against a backdrop of significant currency headwinds. As expected, our Content & Services division has bounced back strongly as, following the upheaval created by COVID-19, clients restarted postponed projects and reassessed how to deliver effective workforce transformation solutions in a more digital, flexible and fast-paced corporate environment. Our Software & Platforms division has also demonstrated robust growth and has been substantially augmented through a number of strategic bolt-on acquisitions over the past year.

The COVID-19 pandemic has accelerated the trends that we have witnessed for several years and it is these trends that define our strategy. Demand for workforce transformation solutions is growing as organisations increasingly see themselves not only as profit generators, but as developers of talent and creators of meaningful and rewarding careers. Recruiting, developing and retaining employees is now understood to be a more effective and profitable way of growing than to 'buy-in' skills that have been learned elsewhere. By developing their own talent, organisations are finding more effective and profitable ways to create winning and sustainable cultures.

LTG has combined solid organic revenue growth with a number of strategic acquisitions. In 2020 we completed five acquisitions, most notably the integration of three businesses to form Open LMS, creating the global leader in the open-source Moodle(TM) market. In the first quarter of 2021 we acquired Bridge and Reflektive, two strategically important SaaS-based talent platforms, and PDT Global, a specialist D&I consultancy that complements our Affirmity business. The combined cash outflow (net of cash acquired) for these first half acquisitions was GBP52.1 million. All three businesses are performing well and generating profits, although margins at Bridge and Reflektive are currently below the Group average and expected to improve by the year end.

In July, LTG announced the proposed acquisition of GP Strategies, a leading provider of managed learning services and workforce transformation, for $394 million. The strategically compelling combination will create a leading global workforce transformation business focused on learning and talent. LTG has identified significant margin enhancement and cross-sell opportunities, with the proposed transaction expected to be significantly EPS

accretive   in the first year following completion. 

Results

In the six months ended 30(th) June 2021, revenues increased by 28.9% to GBP82.6 million (H1 2020: GBP64.1 million) reflecting the contribution from acquired business and like-for-like constant currency organic growth of c.7% compared with a decline of c.8% in 2020.

Revenue in Software & Platforms increased 26% to GBP60.9 million (H1 2020: GBP48.5 million) with the division now representing 74% of overall revenue. On a like-for-like constant currency basis the Software & Platforms division grew by c.5% (2020: 0%) with large increases from Rustici and Breezy in particular, offset as expected, by a decline in PeopleFluent where COVID-19 has delayed large enterprise procurement processes. Acquired businesses including Open LMS and Bridge made a substantial contribution to the year-on-year increase and are both demonstrating strong top line growth.

Revenue in Content & Services ('C&S') increased 39% to GBP21.6 million (H1 2020: GBP15.6 million) with the division now accounting for 26% of overall revenue. On a like-for-like constant currency basis the Content & Services division grew by c. 14% (2020: -24%). This strong recovery has been led by LEO and we expect to see this continue into the second half of the year. PRELOADED's sales recovery started in Q2 and has accelerated in the last few months which we expect will result in a very strong H2 performance. C&S is firmly underpinned by a strong order book and sales pipeline which shows no signs of diminishing.

Recurring revenues as a proportion of total revenue reduced from 81% in H1 2020 to 77% in the first half of 2021, reflecting the strong growth seen in Content & Services, partly offset by the change in business mix due to the predominantly SaaS businesses acquired over the past 12 months.

Adjusted EBIT(1) increased 19.8% to GBP22.0 million (H1 2020: GBP18.4 million). The resulting EBIT margin of 26.7% was down from 28.7% in H1 2020, driven primarily by currency headwinds. Software & Platforms margins reduced from 31.5% in H1 2020 to 26.7% in H1 2021. This was partly due to the temporary impact of the post-acquisition contributions from Reflektive and Bridge which have both been rapidly turned to profit following their integration; these businesses will deliver improved margins in the second half of the year. The three businesses comprising Open LMS acquired during 2020 also deliver lower margins than other parts of the Software & Platforms division and this has changed the margin mix. It is anticipated that underlying margins will improve over the medium term as the division sees the benefits of operational leverage.

Adjusted EBIT margins have increased substantially in the Content & Services division from 19.7% in H1 2020 to 26.4% in the first half of 2021. This is primarily as a result of improved margins in the LEO business as well as the incorporation of the higher margin PDT Global business into the Group.

Group reported operating profit of GBP5.1 million (H1 2020: GBP5.1 million) is stated after amortisation of acquired intangibles, various acquisition earn-out charges, and acquisition transaction and integration costs. Amortisation of acquired intangibles increased to GBP11.7 million (H1 2020: GBP10.9 million). Acquisition transaction costs increased to GBP1.6 million (H1 2020: GBP0.4 million) and integration costs to GBP0.9 million (H1 2020: GBP0.2 million) and were primarily related to the first quarter acquisitions of Reflektive, PDT Global and Bridge. The acquisition related contingent consideration charge increased from GBP0.9 million in H1 2020 to GBP2.4 million. Contingent consideration arrangements are in place for Breezy, eThink, eCreators and PDT and are all contingent on challenging incremental revenue growth targets. There were no net foreign exchange gains or losses arising as a result of business acquisitions during the period (H1 2020: GBP1.1 million).

Finance expenses of GBP0.5 million (H1 2020: GBP0.9 million) include interest on borrowings of GBP0.3 million (H1 2020: GBP0.6 million) and GBP0.2 million (H1 2020: GBP0.2 million) relating to the Group's leases under IFRS 16.

The Group reported a profit before tax of GBP4.6 million for the six months ended 30th June 2021 (H1 2020: GBP4.1 million). The tax credit of GBP0.6 million (H1 2020: tax credit of GBP0.8 million) primarily results from taxes on UK and international profits, offset by the anticipated utilisation of brought forward tax losses and the change in the UK deferred tax rate from 19 to 25 per cent (see Note 5.)

Basic earnings per share in H1 2021 was 0.705 pence (H1 2020: 0.710 pence). Adjusted diluted earnings per share as set out in Note 9 was 3% up on the prior year at 2.310 pence (H1 2020: 2.251 pence) reflecting the strong growth in underlying earnings offset by an increase in the effective tax rate, the impact of the May 2020 share placing and the potential dilutive impact of share options.

Gross cash of GBP39.3 million and net cash(1) of GBP24.9 million at 30(th) June 2021 compares with gross cash of GBP88.6 million and net cash of GBP70.2 million at 31(st) December 2020. LTG continued to show good operating cash conversion of 79% (H1 2020: 100%; FY 2020: 85%). Net interest payments reduced from GBP0.8 million to GBP0.2 million and tax payments increased to GBP4.3 million (H1 2020: GBP1.8 million). Net cash outflows due to the acquisition of subsidiaries of GBP52.1 million (H1 2020: GBP22.5 million) relate to the acquisition of Bridge, Reflektive and PDT Global. Spend on development of intangible assets increased from GBP3.1 million to GBP3.6 million.

At 30(th) June LTG had a debt facility with Silicon Valley Bank ('SVB') and Barclays Bank for $63.0 million. The facility comprised a $42.0 million term loan and a committed $21.0 million revolving credit facility ('RCF') available for five years. As part of the refinancing for the proposed acquisition of GP Strategies the loan facility was settled in full on 13 July 2021. It has been replaced by a new debt facility with SVB, Barclays Bank, HSBC, Fifth Third Bank and the Bank of Ireland. This new facility comprises a term loan for $265.0 million, a bridging facility for $40.0 million and a $50.0 million committed RCF. At this date the facilities remain undrawn.

Net assets increased to GBP271.8 million at 30th June 2021 (31st December 2020: GBP269.1 million) and shareholders' funds(1) increased from 36.4 pence per share to 36.6 pence per share.

 
 (1)   Denotes first instance of an Alternative Performance Measure 
        (APM) term defined and explained in the Glossary 
 

Operational Review

Software & Platforms

The Software & Platforms division comprises SaaS and on-premise licenced product solutions as well as hosting, support and maintenance services. The acquisition of Bridge in Q1 now enables LTG to address the three main segments in the talent development market.

PeopleFluent provides connectable, fully customisable talent development products for the complex organisational needs of large enterprises.

Our new offering, Bridge, is an employee-focused talent development platform. This modern and popular learning and talent management suite operates in the high growth, mid-market segment of the market but also has potential, we believe, to move into certain sectors of the enterprise market.

Breezy provides the largely self-service, out-of-the-box capabilities demanded at the smaller company end of the market and is currently focused on the talent acquisition market.

Other proprietary products such as Reflektive (performance management), Gomo (authoring), Instilled (learning experience platform - LXP) and Watershed (analytics) have been or will be integrated as appropriate with each of the above main market solutions. They also operate as stand-alone products or can be integrated with third party solutions.

Open LMS, eCreators and eThink (together 'Open LMS'), all acquired during 2020, have given LTG a large-scale capability in the open-source Moodle(TM) market. Already with a strong position in the education and government sectors, during the first half of 2021 Open LMS has successfully grown the proportion of corporate clients and has worked alongside other LTG businesses including LEO and Watershed and integrated Instilled into its solutions.

The Software & Platforms division also comprises VectorVMS, a contractor management product and Rustici, the leading global expert in e-learning interoperability software.

Content & Services

The primary business in the Content & Services division is LEO, the Group's innovative digital learning specialist which delivers organisational transformation through world-class consultancy and strategic learning blend design, and creative content generation. As expected LEO has seen strong demand throughout the second half of 2020 and into 2021 as corporates reassess their requirements for digital and blended learning solutions as the trend towards flexible and remote workforces accelerates and the competence of extended enterprises becomes ever more critical.

PRELOADED, LTG's highly regarded games studio, has seen a slower start to the year but sales have picked up markedly towards the end of Q2 and into Q3. In the first half of the year the PRELOADED management team joined LEO and both businesses are now working ever more closely and successfully to bring blended learning and gamified solutions to their clients.

PDT Global is a leading provider of D&I training solutions, acquired in February. It is now working alongside Affirmity, LTG's existing affirmative action provider, enabling clients to objectively measure and track their D&I performance and then implement the tools, processes and actions to make appropriate changes. Both businesses have demonstrated substantial growth during the first half of the year.

Acquisitions

LTG acquired Reflektive, Bridge and PDT Global in the first half of 2021. All businesses have been successfully integrated and Reflektive and Bridge, which were substantially loss making prior to acquisition have been quickly turned to profit. Further details of the acquisitions are provided in Note 16.

Strategic update and proposed acquisition of GP Strategies

Our purpose is to help companies keep up with changing workforce requirements. We aim to ensure that organisations hire the best people, put them in the right roles, develop the appropriate skills, and then retain their employees so that winning cultures can first be created and then nurtured.

The accelerating pace of change required from all organisations is causing re-skilling demands that cannot be met through recruitment alone. Organisations are realising that they need to become learning enablers, achieved through a combination of learning provision, performance measurement and talent management. This will help them to create the motivational and productive learning environments that they require to maximise employee satisfaction, enjoyment, and performance so that they remain competitive and relevant. LTG is rapidly building a global business to satisfy this growing demand by helping customers to develop their workforces at scale through integration, customisation, and contextualisation. Management believes such workforce transformation can only be achieved through a unique combination of front-end consulting, deep organisational integration, cross-border communication and the application of technology to create complete and embedded solutions.

LTG seeks to achieve these objectives through a combination of organic growth and strategic acquisitions.

On 15th July LTG announced the proposed acquisition of GP Strategies, a global provider of workforce performance solutions, for $394 million. The acquisition of GP Strategies will create the world's largest specialist workforce transformation business, focused entirely on workforce learning and development. LTG shares a vision with GP Strategies that to deliver the integration, customisation and contextualisation needed to develop workforces efficiently and effectively, a special type of offering is required. We believe that to develop effective learning organisations that will thrive in today's business environment, we must provide a unique blend of sector-specific technology and services expertise that is intermeshed with products to produce insights across complex businesses and sectors, and a range of skills and experience that can enhance the customer journey.

GP Strategies' strengths include long-standing client relationships, recurring multi-year revenues with high customer satisfaction, deep industry expertise, global market presence and a proven process for cross-selling. The acquisition will provide a platform for continued organic growth aided by strength in the APAC market, deep client relationships with established account management to enable cross-selling of LTG solutions, and specialist expertise in technology, automotive and finance sectors. GP Strategies also brings significant offshoring capabilities and vendor management services that create vertical integration opportunities for LTG's existing products and services. LTG is bringing together some of the brightest talents in the industry in order to deliver the tools and solutions that can help our customers build the workforce capabilities that they require to prosper.

The acquisition of GP Strategies represents a transformational leap in the creation of the complete solution that we envisage incorporating - a combination of award-winning technology, leading talent development skills and a global delivery capability. This will help our customers become the 'learning organisations' that they need to be to drive up productivity and profitability in a world of increasing complexity and rapid change, including people's changing relationship with the workplace.

The combined business will generate pro-forma revenue of c.GBP500 million, operate in more than 80 countries and, with over 5,000 employees, will give LTG a truly global presence. We have identified significant margin enhancement and cross-sell opportunities and may consider divesting some non-core assets. The transaction will be financed by an GBP85 million share placing and $305 million of debt financing, both completed in mid-July. The Company has converted GBP80 million of the placing proceeds into US Dollars at an effective rate of 1.38 and does not anticipate drawing down on the debt facility until the transaction closes. Debt leverage is anticipated to peak at c1.7x before dropping to less than 1.0x by the end of 2022. Completion of the acquisition is expected to take place in Q4 2021, and is subject to regulatory and GP Strategies' shareholder approval.

An extensive and forensic research effort has been ongoing over recent months with the assistance of GP Strategies' management. Findings to date support LTG's thesis regarding the level of margin improvement that can be achieved. Additionally, there are positive indications that further upside can be delivered thereafter as improved sales and delivery methodologies are embedded and onerous long-term contracts with external vendors come to an end. The transaction is expected to be significantly earnings enhancing from 2022.

The Group will continue to selectively evaluate a limited number of additional bolt-on acquisition opportunities as the year progresses.

Corporate Governance

During 2020, LTG further enhanced its ESG initiatives and reported more fully on measures in place. We have continued on this journey during the first half of 2021 but more importantly, we are empowering our customers to achieve their own ESG priorities. As a business that helps companies to manage and develop their human capital, our technology and services are helping to directly improve the talent development of more than 200 million people around the world.

Our staff have shown incredible dedication and professionalism over the past 18 months as they have worked from home. With appropriate support from management, we have demonstrated that we are able to deliver effectively for our clients and care for our people. As part of a new policy that will continue after the impact of COVID-19 we have embraced a flexible working environment, combining face-to-face activities where it is appropriate and required, but also empowering our staff as much as possible to decide whether they wish to work from home or the office.

Dividend

The Board is committed to a progressive dividend policy. On 25 June 2021, the Company paid a final dividend of 0.50 pence per share, giving a total dividend for 2020 of 0.75 pence per share, in line with the prior year. Given its confidence in the continuing success of the Group, the Board is pleased to announce it has approved an interim dividend of 0.30 pence per share (2020: 0.25 pence per share), representing a 20% increase. This dividend will be paid on 29th October 2021 to all shareholders on the register as at 8th October 2021.

Current trading and outlook

We are making solid progress in our ambition to serve small, mid-size and enterprise tier clients with our targeted, multi-product solutions. We are excited by opportunities to enhance our global offering through the successful integration of GP Strategies. The appreciation by corporates of the necessity, appropriateness and effectiveness of digital learning and talent management solutions will, in the Board's view, continue to drive demand for our solutions and lead to continued strong levels of performance in the second half of 2021.

At the time of the share placing in May 2020, LTG announced a new strategic financial objective to achieve run-rate revenues of circa GBP230 million and run-rate adjusted EBIT of circa GBP66 million by the end of 2022 through a combination of organic growth, strategic bolt-on acquisitions and with no further dilution to shareholders. The Board has successfully executed that plan over the past year. In addition to this the transformational acquisition of GP Strategies will propel the Group well past the 2022 financial targets by the end of 2021. The Board will review the progress of the GP Strategies acquisition and will report to shareholders on renewed strategic financial objectives later in 2022.

The Board is delighted with the strong organic revenue growth delivered during the first half of the year, the Group's resilient recovery from the impact of the COVID-19 pandemic and the successful integration of our most recent acquisitions. We have created a strong base, capable of meaningful rates of organic revenue growth whilst delivering industry-leading profit margins and cash generation, which will enable us to realise the significant opportunities that we believe lie ahead in the second half year and beyond. We are confident that we can continue to profitably build on these strong foundations as we remain on target, despite currency headwinds, to deliver on market expectations for the full year.

Andrew Brode

Chairman

21 September 2021

 
 Consolidated statement of 
  comprehensive income                            Six months       Six months 
                                                          to               to        Year to 
                                                30 June 2021     30 June 2020    31 Dec 2020 
                                        Note         GBP'000          GBP'000        GBP'000 
 Revenue                                 4            82,573           64,082        132,324 
 
 Operating expenses                                 (75,420)         (57,207)      (114,130) 
 
 Share based payment charge                          (2,090)          (1,815)        (3,340) 
                                              --------------  ---------------  ------------- 
 Operating profit                                      5,063            5,060         14,854 
 
 Adjusted EBIT                                        22,037           18,397         40,348 
 Adjusting items included in 
  Operating profit                       6          (16,974)         (13,337)       (25,494) 
 Operating profit                                      5,063            5,060         14,854 
-------------------------------------  -----  --------------  --------------- 
 
 Net finance expenses                    7             (454)            (924)        (1,385) 
                                              --------------  ---------------  ------------- 
 
 Profit before taxation                                4,609            4,136         13,469 
 
 Income tax credit/(expense)             5               613              780          3,935 
 
 Profit for the period/year                            5,222            4,916         17,404 
 
 Other comprehensive income: 
 Exchange differences on translating 
  foreign operations                                 (4,616)            9,843        (6,616) 
                                              --------------  ---------------  ------------- 
 Total comprehensive profit 
  for the period                                         606           14,759         10,788 
                                              ==============  ===============  ============= 
 
 
   Earnings per share 
 Basic, (pence)                          9             0.705            0.710          2.450 
 
 Diluted, (pence)                        9             0.688            0.696          2.382 
 
 Adjusted earnings per share 
 Basic, (pence)                          9             2.367            2.295          4.417 
 
 Diluted, (pence)                        9             2.310            2.251          4.294 
-------------------------------------  -----  --------------  ---------------  ------------- 
 
 
 Consolidated statement 
  of financial position                    30 June 
                                              2021        30 June 2020   31 Dec 2020 
                                  Note     GBP'000             GBP'000       GBP'000 
                                                            (Restated) 
   NON-CURRENT ASSETS 
 Property, plant and equipment                 903               1,366         1,025 
 Right of use assets               11        7,013              10,470         8,806 
 Intangible assets                 10      313,044             262,599       256,284 
 Deferred tax assets                         9,894               4,000         7,614 
 Other receivables, deposits 
  and prepayments                                -                   -            76 
 Amounts recoverable on 
  contracts                                    849                 759           624 
                                        ----------  ------------------  ------------ 
                                           331,703             279,194       274,429 
 CURRENT ASSETS 
 Trade receivables                          36,457              22,450        32,984 
 Other receivables, deposits 
  and prepayments                  12        7,395               4,177         4,219 
 Amounts recoverable on 
  contracts                                  8,788               3,917         3,879 
 Amounts due from related 
  parties                                        -                   -            54 
 Cash and cash equivalents         13       39,322              68,045        88,614 
 Short-term deposits               13            -              30,000             - 
 Restricted cash balances          13        1,567                 602           682 
                                            93,529             129,191       130,432 
 
 TOTAL ASSETS                              425,232             408,385       404,861 
                                        ----------  ------------------  ------------ 
 
 CURRENT LIABILITIES 
 Lease liabilities                 15        3,774               2,804         2,536 
 Trade and other payables          14       87,142              64,245        68,015 
 Amounts due to related 
  parties                                       84                  82             - 
 Net restricted cash from                        -                  78             - 
  the consolidation invoice 
  process (CIP) 
 Borrowings                        15        7,197               6,738         7,339 
 Corporation tax                             2,513               3,403         4,591 
 ESPP scheme liability                         801                 381           562 
                                        ----------  ------------------  ------------ 
                                           101,511              77,731        83,043 
 NON-CURRENT LIABILITIES 
 Lease liabilities                 15        7,111               9,538         7,722 
 Deferred tax liabilities                   33,035              26,180        25,617 
 Other long-term liabilities                 4,388               5,468         7,635 
 Borrowings                        15        7,260              13,476        11,073 
 Provisions                                    122                 827           701 
                                        ----------  ------------------  ------------ 
                                            51,916              55,489        52,748 
 
 TOTAL LIABILITIES                         153,427             133,220       135,791 
                                        ----------  ------------------  ------------ 
 NET ASSETS                                271,805             275,165       269,070 
                                        ==========  ==================  ============ 
 
 EQUITY 
 Share capital                               2,865               2,847         2,853 
 Share premium account                     233,779             231,229       231,671 
 Merger relief reserve                      31,983              31,983        31,983 
 Reverse acquisition reserve              (22,933)            (22,933)      (22,933) 
 Share based payment reserve                 8,096               5,914         7,439 
 Foreign exchange translation 
  reserve                                 (11,584)               9,491       (6,968) 
 Accumulated retained earnings              29,599              16,634        25,025 
                                        ----------  ------------------  ------------ 
 TOTAL EQUITY                              271,805             275,165       269,070 
                                        ==========  ==================  ============ 
 

Consolidated statement of changes in equity

 
                         Share      Share     Merger       Reverse        Share     Foreign    Retained        Total 
                       capital    Premium     relief   acquisition        based    exchange    earnings       equity 
                                             reserve       reserve     payments     reserve 
                                                                        reserve 
                       GBP'000    GBP'000    GBP'000       GBP'000      GBP'000     GBP'000     GBP'000      GBP'000 
 Balance at 1 
  January 2020           2,509    148,216     31,983      (22,933)        4,413       (352)      10,153      173,989 
 Restatement due 
  to IFRS 15 
  Rustici 
  application 
  change                     -          -          -             -            -           -       1,554        1,554 
 Profit 
  for 
  period                                -          -             -            -           -       4,916        4,916 
 Exchange 
  differences 
  on 
  translating 
  foreign 
  operations                 -          -          -             -            -       9,843           -        9,843 
                   -----------  ---------  ---------  ------------  -----------  ----------  ----------  ----------- 
 Total 
  comprehensive 
  income 
  for 
  the 
  period                     -          -          -             -            -       9,843       4,916       14,759 
 Issue 
  of 
  shares 
  net 
  of 
  share 
  issue 
  costs                    338     83,013          -             -            -           -           -       83,351 
 Share 
  based 
  payment 
  charge 
  / credited 
  to 
  equity                     -          -          -             -        1,815           -           -        1,815 
 Tax 
  credit 
  on 
  share 
  options                    -          -          -             -            -           -       (303)        (303) 
 Transfer 
  on 
  exercise 
  and 
  lapse 
  of 
  options                    -          -          -             -        (314)           -         314            - 
 Dividends                   -          -          -             -            -           -           -            - 
  payable 
 Balance 
  at 
  30 
  June 
  2020                   2,847    231,229     31,983      (22,933)        5,914       9,491      16,634      275,165 
 Profit 
  for 
  period                     -          -          -             -            -           -      12,488       12,488 
 Exchange 
  differences 
  on 
  translating 
  foreign 
  operations                 -          -          -             -            -    (16,459)           -     (16,459) 
                   -----------  ---------  ---------  ------------  -----------  ----------  ----------  ----------- 
 Total 
  comprehensive 
  income 
  for 
  the 
  period                     -          -          -             -            -    (16,459)      12,488      (3,971) 
 Issue 
  of 
  shares 
  net 
  of 
  share 
  issue 
  costs                      6        442          -             -            -           -           -          448 
 Share 
  based 
  payment 
  charge 
  / credited 
  to 
  equity                     -          -          -             -        1,525           -           -        1,525 
 Tax 
  credit 
  on 
  share 
  options                    -          -          -             -            -           -       1,440        1,440 
 Transfer                    -          -          -             -            -           -           -            - 
  on 
  exercise 
  and 
  lapse 
  of 
  options 
 Dividends 
  paid                       -          -          -             -            -           -     (5,537)      (5,537) 
 
   Balance 
   at 
   31 
   December 
   2020                  2,853    231,671     31,983      (22,933)        7,439     (6,968)      25,025      269,070 
 Profit 
  for 
  period                     -          -          -             -            -           -       5,222        5,222 
 Exchange 
  differences 
  on 
  translating 
  foreign 
  operations                 -          -          -             -            -     (4,616)           -      (4,616) 
                   -----------  ---------  ---------  ------------  -----------  ----------  ----------  ----------- 
 Total 
  comprehensive 
  income 
  for 
  the 
  period                     -          -          -             -            -     (4,616)       5,222          606 
 Issue 
  of 
  shares 
  net 
  of 
  share 
  issue 
  costs 
  (refer 
  to 
  reconciliation 
  in 
  Note 
  17)                       12      2,108          -             -            -           -           -        2,120 
 Share 
  based 
  payment 
  charge 
  / credited 
  to 
  equity                     -          -          -             -        2,090           -           -        2,090 
 Tax 
  credit 
  on 
  share 
  options                    -          -          -             -            -           -       1,624        1,624 
 Transfer 
  on 
  exercise 
  and 
  lapse 
  of 
  options                    -          -          -             -      (1,433)           -       1,433            - 
 Dividends 
  paid                       -          -          -             -            -           -     (3,705)      (3,705) 
 Balance 
  at 
  30 
  June 
  2021                   2,865    233,779     31,983      (22,933)        8,096    (11,584)      29,599      271,805 
                   -----------  ---------  ---------  ------------  -----------  ----------  ----------  ----------- 
 

Consolidated statement of cash flows

 
                                        Note      Six months   Six months        Year to 
                                                          to           to    31 Dec 2020 
                                                30 June 2021      30 June        GBP'000 
                                                     GBP'000         2020 
                                                                  GBP'000 
 Cash flow from operating activities 
 Profit before taxation                                4,609        4,136         13,469 
 Adjustments for:- 
 (Gain)/loss on disposal of 
  PPE and right-of-use assets                            378        (142)          (122) 
 Share based payment charge                            2,090        1,815          3,340 
 Amortisation of intangible 
  assets                                              14,173       12,845         25,639 
 Depreciation of plant and 
  equipment and right-of-use 
  assets                                               1,380        1,723          3,245 
 Finance expense (including 
  IFRS 16 charge)                                        226          332            614 
 Interest on borrowings                                  261          598            911 
 Acquisition-related contingent 
  consideration and earn-outs                          2,442          890          3,511 
 Fair value movement on contingent 
  consideration                                            -            -        (1,357) 
 Payment of acquisition-related 
  contingent consideration and 
  earn-outs                                          (1,180)        (978)        (1,006) 
 Interest income                                        (33)          (6)          (140) 
                                              --------------  -----------  ------------- 
 Operating cash flow before 
  working capital changes                             24,346       21,213         48,104 
 Decrease in trade and other 
  receivables                                            462        7,391        (4,736) 
 Decrease/(increase) in amount 
  recoverable on contracts                           (5,894)          895        (3,427) 
 Increase/(decrease) in payables                         976      (6,782)          3,883 
                                                      19,890       22,717         43,824 
                                              --------------  -----------  ------------- 
 Interest paid                                         (203)        (781)          (750) 
 Interest received                                        33            6            140 
 Income tax paid                                     (4,272)      (1,829)        (3,359) 
                                              --------------  -----------  ------------- 
 Net cash flow from operating 
  activities                                          15,448       20,113         39,855 
                                              --------------  -----------  ------------- 
 
 Cash flow used in investing 
  activities 
 Purchase of property, plant 
  and equipment                                        (223)         (53)          (114) 
 Development of intangible 
  assets                                             (3,628)      (3,106)        (6,115) 
 Investment in short-term deposits                         -     (30,000)              - 
 Acquisition of subsidiaries, 
  net of cash acquired                   16         (52,089)     (22,486)       (38,988) 
 
   Net cash flow used in investing 
   activities                                       (55,940)     (55,645)       (45,217) 
                                              --------------  -----------  ------------- 
 
 Cash flow used in financing 
  activities 
 Dividends paid                          8           (3,705)            -        (5,537) 
 Cash generated from issue 
  of shares, net of share issue 
  costs                                                2,120       80,208         80,581 
 Proceeds from borrowings                                  -       18,182         18,182 
 Repayment of bank loans                             (3,653)     (36,596)       (36,640) 
 Contingent consideration payments 
  in the period                                        (520)        (121)          (121) 
 Cash payments for the principal 
  portion of lease liabilities                       (2,011)      (1,510)        (3,317) 
 Net cash flow from/(used 
  in) financing 
 activities                                          (7,769)       60,163         53,148 
                                              --------------  -----------  ------------- 
 
 Net increase/(decrease) in 
  cash and cash equivalents                         (48,261)       24,631         47,786 
 Cash and cash equivalents 
  at beginning of the period/year                     88,614       42,032         42,032 
 Effects of foreign exchange 
  rate changes                                       (1,031)        1,382        (1,204) 
                                                              -----------  ------------- 
 Cash and cash equivalents 
  at end of the period/year              13           39,322       68,045         88,614 
                                              ==============  ===========  ============= 
 

Notes to the consolidated financial statements for the six months to 30 June 2021

   1.       General information 

Learning Technologies Group plc ("the Company") and its subsidiaries (together, "the Group") provide a range of learning and talent software and services to corporate customers. The principal activity of the Company is that of a holding company for the Group, as well as performing all administrative, corporate finance, strategic and governance functions of the Group.

The Company is a public limited company, which is listed on the AIM Market of the London Stock Exchange and domiciled in England and incorporated and registered in England and Wales. The address of its registered office is 15 Fetter Lane, London, England, EC4A 1BW. The registered number of the Company is 07176993.

   2.      Basis of preparation 

The unaudited condensed consolidated interim financial information has been prepared in accordance with IAS 34 Interim Financial Reporting. They do not include all disclosures that would otherwise be required in a complete set of financial statements and should be read in conjunction with the 2020 annual report.

The interim results for the six months to 30(th) June 2021 are unaudited and do not therefore constitute statutory accounts in accordance with Section 434 of the Companies Act 2006.

Statutory accounts for the year ended 31(st) December 2020 have been filed with the Registrar of Companies and the auditor's report was unqualified, did not contain any statement under Section 498(2) or 498(3) of the Companies Act 2006 and did not contain any matters to which the auditors drew attention without qualifying their report.

The accounting policies used in preparing the interim results are the same as those applied to the latest audited annual financial statements.

Going concern

The Group meets its day-to-day working capital requirements from the positive cash flows generated by its trading activities and its available cash resources. These are supplemented when required by additional drawings under the Group's committed $21.0 million revolving credit bank loan facilities (RCF) and an uncommitted $28.0 million accordion facility , which were available until 2023. In July, the term loan was repaid in full, new debt facilities were agreed and an equity placing successfully raised gross proceeds of GBP85.0 million; refer to Note 17 for further details.

The Group continues to hold a strong liquidity position at 30(th) June 2021, with gross cash and cash equivalents of GBP39.3 million (Note 13) and net cash of GBP24.9 million (Note 15) (31(st) December 2020: gross cash was GBP88.6 million and net cash GBP70.2 million). Whilst there are a number of risks to the Group's trading performance, including from the COVID-19 pandemic and its impact on the global economy, as summarised in the 'Principal risks and uncertainties' section on pages 25 - 26 within the 2020 Annual Report, the Group is confident of its ability to continue to access sources of funding in the medium term.

The directors report that they have re-assessed the principal risks, reviewed current performance and forecasts, combined with expenditure commitments, including capital expenditure, and borrowing facilities. The Group's forecasts demonstrate it will generate profits and cash in the year ending 31(st) December 2021 and beyond and that the Group has sufficient cash reserves to enable it to meet its obligations as they fall due, as well as operate within its banking covenants, for a period of at least 12 months from the date of signing of these financial statements.

Going concern (continued)

The Group has also assessed a range of downside scenarios to assess if there was a significant risk to the Group's liquidity position. The forecasts and scenarios prepared consider our trading experience to date and we have modelled downside scenarios such as varying degrees of reductions in revenues and extended customer payment days. The Directors have concluded that it is appropriate to adopt the going concern basis of accounting in preparing the interim financial information, having undertaken a review of a detailed reforecast for 2021 and the impact this forecast has on the Group's gross cash, net debt and ability to meet bank covenants under the existing facilities agreement.

Alternative performance measures

The Group has identified certain alternative performance measures ("APMs") that it believes will assist the understanding of the performance of the business. The Group believes that Adjusted EBIT, adjusting items, recurring and non-recurring revenue, Shareholders' funds and net cash / debt provide useful information to users of the financial statements. The terms are not defined terms under IFRS and may therefore not be comparable with similarly titled measures reported by other companies. They are not intended to be a substitute for, or superior to, IFRS measures.

Adjusting items

The Group has chosen to present an adjusted measure of profit and earnings per share, which excludes certain items which are separately disclosed due to their size, nature or incidence, and are not considered to be part of the normal operating costs of the Group. These costs may include the financial effect of adjusting items such as, inter alia, restructuring costs, impairment charges, amortisation of acquired intangibles, costs relating to business combinations, one-off foreign exchange gains or losses, integration costs, acquisition related contingent consideration and earn-outs, joint venture profits and losses and fixed asset and right-of-use asset disposal gains or losses.

   3.      Prior year adjustment 

Following a review of the IFRS 15 revenue recognition policy applied in the Rustici CGU as part of the 2020 annual financial reporting process, the Group has concluded that Rustici contracts include an additional distinct performance obligation, for which the revenue should be recognised at a point in time on delivery, rather than all over time as the more conservative policy previously applied. As a result of this correction in the accounting, the Group has restated the balance sheet at 30(th) June 2020 as outlined below. There has been no impact on the income statement for the periods ended 31(st) December 2019 or 2020.

 
                                                  30 Jun   Adjustments        30 Jun 
 
                                                    2020                        2020 
                                                 GBP'000                     GBP'000 
                                                                          (Restated) 
 Non-current assets 
 Property, plant and equipment                     1,366             -         1,366 
 Right of use assets                              10,470                      10,470 
 Intangible assets                               262,599             -       262,599 
 Deferred tax assets                               4,546         (546)         4,000 
 Other receivables, deposits and prepayments           -             -             - 
 Amounts recoverable on contracts                    759             -           759 
                                                                        ------------ 
                                                 279,740         (546)       279,194 
 Current assets 
 Trade receivables                                22,450             -        22,450 
 Other receivables, deposits                       4,177             -         4,177 
 and prepayments                                                     - 
 Amounts recoverable on contracts                  3,917             -         3,917 
 Amount owing from related parties                     -             -             - 
 Cash and bank balances                           68,045             -        68,045 
 Short-term deposits                              30,000                      30,000 
 Restricted cash balances                            602             -           602 
                                               ---------  ------------  ------------ 
                                                 129,191             -       129,191 
 
 Total assets                                    408,931         (546)       408,385 
 
 Current liabilities 
 Lease Liabilities                                 2,804                       2,804 
 Trade and other payables                         64,245             -        64,245 
 Amounts due to related parties                       82                          82 
 Net restricted cash from the consolidation 
  invoice process (CIP)                               78                          78 
 Borrowings                                        6,738             -         6,738 
 Corporation tax                                   3,403             -         3,403 
 ESPP scheme liability                               381             -           381 
                                                  77,731             -        77,731 
 Non-current liabilities 
 Lease Liabilities                                 9,538                       9,538 
 Deferred tax liabilities                         26,180             -        26,180 
 Other long-term liabilities                       7,568       (2,100)         5,468 
 Borrowings                                       13,476             -        13,476 
 Provisions                                          827             -           827 
                                                                        ------------ 
                                                  57,589       (2,100)        55,489 
 
 Total liabilities                               135,320       (2,100)       133,220 
 
 Net assets                                      273,611         1,554       275,165 
                                               =========  ============  ============ 
 
 Shareholders' equity 
 Share capital                                     2,847                       2,847 
 Share premium account                           231,229                     231,229 
 Merger reserve                                   31,983                      31,983 
 Reverse acquisition reserve                    (22,933)                    (22,933) 
 Share-based payment reserve                       5,914                       5,914 
 Foreign exchange translation reserve              9,491                       9,491 
 Accumulated profits/(losses)                     15,080         1,554        16,634 
                                               ---------  ------------  ------------ 
 Total equity attributable to the owners 
  of the parent                                  273,611         1,554       275,165 
                                               =========  ============  ============ 
 
   4.      Segment analysis 

Geographical information

The Group's revenue from external customers and non-current assets by geographical location are detailed below.

 
 
                                               United       Asia                  Rest 
                             UK      Europe    States    Pacific    Canada    of world         Total 
                        GBP'000     GBP'000   GBP'000    GBP'000   GBP'000     GBP'000       GBP'000 
 
 Six months to 30 
  June 2021 
 Revenue                 10,864       4,302    57,865      4,088     2,481       2,973        82,573 
                       --------  ----------  --------  ---------  --------  ----------  ------------ 
 
 Non-current assets      29,371           -   277,239     15,171        18          10       321,809 
                       --------  ----------  --------  ---------  --------  ----------  ------------ 
 
 
 Six months to 30 
  June 2020 
 Revenue                 11,590       2,815    44,512        887     2,212       2,066        64,082 
                       --------  ----------  --------  ---------  --------  ----------  ------------ 
 
 Non-current assets      29,480           -   231,569     14,114        31           -       275,194 
                       --------  ----------  --------  ---------  --------  ----------  ------------ 
 
 
 Year to 31 December 
  2020 
 Revenue                 21,501       6,184    92,281      3,508     4,344       4,506       132,324 
                       --------  ----------  --------  ---------  --------  ----------  ------------ 
 
 Non-current assets      28,206           -   223,310     15,267        24           8       266,815 
                       --------  ----------  --------  ---------  --------  ----------  ------------ 
 

The total non-current assets figure is exclusive of deferred tax assets in each of the periods above.

Information about reported segment revenue, profit or loss and assets

 
                              Software & Platforms                             Content & Services                 Other 
                  On-premise                 Support 
                    Software   Hosting           and                           Platform   Consulting               Rental      Grand 
                    Licenses    & SaaS   Maintenance      Total   Content   development    and other      Total    Income      Total 
                     GBP'000   GBP'000       GBP'000    GBP'000   GBP'000       GBP'000      GBP'000    GBP'000   GBP'000    GBP'000 
 Six months to 30 June 2021 
 Recurring 
  revenue             10,825    46,106         1,731     58,662         -           163        4,430      4,593        72     63,327 
 Non-recurring 
  revenue                422     1,136           668      2,226     8,960         2,153        5,907     17,020         -     19,246 
                 -----------  --------  ------------  ---------  --------  ------------  -----------  ---------  --------  --------- 
 Revenue              11,247    47,242         2,399     60,888     8,960         2,316       10,337     21,613        72     82,573 
                 -----------  --------  ------------  ---------  --------  ------------  -----------  ---------  --------  --------- 
 Depreciation 
  and 
  amortisation                                          (2,852)                                         (1,012)         -    (3,864) 
 Adjusted 
  EBIT                                                   16,270                                           5,695        72     22,037 
 Amortisation 
  of acquired 
  intangibles                                           (9,808)                                         (1,881)         -   (11,689) 
 Other 
  adjusting 
  items                                                 (5,163)                                           (122)         -    (5,285) 
 Finance 
  expenses                                                (347)                                           (107)         -      (454) 
 Profit before 
  tax                                                       952                                           3,585        72      4,609 
 Additions 
  to intangible 
  Assets                                                 59,998                                          12,172         -     72,170 
 Total assets                                           340,109                                          85,123         -    425,232 
 
 Six months to 30 June 2020 
 Recurring 
  revenue             10,285    34,241         1,840     46,366         -           569        4,637      5,206        50     51,622 
 Non-recurring 
  revenue              1,204       425           463      2,092     6,460         2,362        1,546     10,368         -     12,460 
                 -----------  --------  ------------  ---------  --------  ------------  -----------  ---------  --------  --------- 
 Revenue              11,489    34,666         2,303     48,458     6,460         2,931        6,183     15,574        50     64,082 
                 -----------  --------  ------------  ---------  --------  ------------  -----------  ---------  --------  --------- 
 Depreciation 
  and 
  amortisation                                          (3,163)                                           (476)         -    (3,639) 
 Adjusted 
  EBIT                                                   15,277                                           3,070        50     18,397 
 Amortisation 
  of acquired 
  intangibles                                           (8,957)                                         (1,972)         -   (10,929) 
 Other 
  adjusting 
  items                                                 (2,443)                                              35         -    (2,408) 
 Finance 
  expenses                                                (726)                                           (198)         -      (924) 
 Profit before 
  tax                                                     3,151                                             935        50      4,136 
 Additions 
  to intangible 
  Assets                                                 34,946                                               -         -     34,946 
 Total assets                                           348,978                                          59,407         -    408,385 
 
 Year to 31 December 2020 
 Recurring 
  revenue             16,643    76,345         3,817     96,805         -         1,021        9,212     10,233        98    107,136 
 Non-recurring 
  revenue              1,129     1,033         1,053      3,215    12,906         3,541        5,526     21,973         -     25,188 
                 -----------  --------  ------------  ---------  --------  ------------  -----------  ---------  --------  --------- 
 Revenue              17,772    77,378         4,870    100,020    12,906         4,562       14,738     32,206        98    132,324 
                 -----------  --------  ------------  ---------  --------  ------------  -----------  ---------  --------  --------- 
 Depreciation 
  and 
  amortisation                                          (5,626)                                         (1,811)         -    (7,437) 
 Adjusted 
  EBIT                                                   32,224                                           8,026        98     40,348 
 Amortisation 
  of acquired 
  intangibles                                          (18,132)                                         (3,315)         -   (21,447) 
 Other 
  adjusting 
  items                                                 (4,077)                                              30         -    (4,047) 
 Finance 
  expenses                                              (1,095)                                           (290)         -    (1,385) 
 Profit before 
  tax                                                     8,920                                           4,451        98     13,469 
 Additions 
  to intangible 
  Assets                                                 62,433                                               -         -     62,433 
 Total assets                                           342,941                                          61,920         -    404,861 
 

Adjusted EBIT is the main measure of profit reviewed by the Chief Operating Decision Maker.

The total assets figure is inclusive of deferred tax assets in each of the periods above.

Information about major customers

In the six months to 30(th) June 2021 no customer accounted for more than 10 percent of reported revenues (H1 2020: no customer accounted for more than 10 percent of reported revenues).

   5.         Taxation 

Current and deferred tax for the six months to 30(th) June 2021 has been calculated by preparing tax reconciliations incorporating permanent and temporary differences on an entity-by-entity basis to derive the Group's total income tax expense/(credit). This is allocated to current and deferred tax as outlined below.

 
                                          Six months     Six months       Year to 
                                                  to             to 
                                        30 June 2021   30 June 2020   31 Dec 2020 
                                             GBP'000        GBP'000       GBP'000 
 Current tax: 
 Tax on profits for the period/year            2,688          3,147         4,713 
 Adjustments in respect of 
  prior years                                      -              -           376 
 Total current tax                             2,688          3,147         5,089 
 
 Deferred tax: 
 Origination and reversal 
  of temporary differences                   (3,254)        (3,587)       (4,703) 
 Adjustments in respect of 
  prior years                                    323          (340)       (4,025) 
 Change in deferred tax rate                   (370)              -         (296) 
                                       -------------  -------------  ------------ 
 Total deferred tax                          (3,301)        (3,927)       (9,024) 
 
 Income tax (credit)/expense                   (613)          (780)       (3,935) 
                                       =============  =============  ============ 
 
   6.      Adjusting items 

These items are included in normal operating costs of the business, but are significant cash and non-cash expenses that are separately disclosed because of their size, nature or incidence. It is the Group's view that excluding them from Operating Profit gives a better representation of the underlying performance of the business in the period. Further details of the adjusting items are included below.

 
                                            Six months     Six months       Year to 
                                                    to             to 
                                          30 June 2021   30 June 2020   31 Dec 2020 
                                               GBP'000        GBP'000       GBP'000 
 Adjusting items included 
  in Operating profit: 
 Amortisation of acquired 
  intangibles                                   11,689         10,929        21,447 
 Loss on disposal of fixed 
  assets                                           197              1            21 
 (Profit)/loss on disposal 
  of right-of-use assets                           181          (143)         (143) 
 Acquisition-related contingent 
  consideration and earn-outs                    2,442            890         3,511 
 Fair value movement on contingent 
  consideration                                      -              -       (1,357) 
 Net foreign exchange loss 
  arising due to business acquisition                -          1,070         1,070 
 Acquisition costs                               1,581            383           715 
 Integration costs                                 884            207           230 
                                         -------------  -------------  ------------ 
 Total adjusting items                          16,974         13,337        25,494 
                                         =============  =============  ============ 
 
 
   6.   Adjusting items (continued) 

As outlined above, the material adjustments during the period are made in respect of:

 
               -   Amortisation of acquired intangibles - these costs 
                    are excluded from the adjusted results of the 
                    Group since the costs are non-cash charges arising 
                    from investment activities. As such, they are 
                    not considered reflective of the core trading 
                    performance of the Group. 
               -   Acquisition-related contingent consideration and 
                    earn-outs - these costs are excluded from the 
                    adjusted results since these costs are also associated 
                    with business acquisitions and represent post-combination 
                    remuneration, which is not included in the calculation 
                    of goodwill and not considered part of the core 
                    trading performance of the Group. 
               -   Costs of acquisition and integration - costs associated 
                    with completed acquisitions are excluded from 
                    the adjusted results on the basis they are directly 
                    attributable to investment activities, rather 
                    than the core trading activities of the Group. 
 
   7.      Finance expenses 
 
                                          Six months     Six months       Year to 
                                                  to             to 
                                        30 June 2021   30 June 2020   31 Dec 2020 
                                             GBP'000        GBP'000       GBP'000 
 Charge on contingent consideration               46            110           196 
 Interest on borrowings                          261            598           911 
 Interest on IFRS 16 lease 
  liabilities                                    180            222           418 
                                       -------------  -------------  ------------ 
                                                 487            930         1,525 
 Interest receivable                            (33)            (6)         (140) 
                                       -------------  -------------  ------------ 
                                                 454            924         1,385 
                                       =============  =============  ============ 
 
   8.      Dividends paid 
 
                             Six months     Six months       Year to 
                                     to             to 
                           30 June 2021   30 June 2020   31 Dec 2020 
                                GBP'000        GBP'000       GBP'000 
 Final dividends paid             3,705              -             - 
 Interim dividend paid                -              -         5,537 
                                  3,705              -         5,537 
                          =============  =============  ============ 
 

The proposed interim dividend of 0.30 pence per share, amounting to a total dividend payment of GBP2.4 million, is not included as a liability in these financial statements and will be paid on 29(th) October 2021 to shareholders on the register at the close of business on 8(th) October 2021.

   9.      E arnings per share 
 
                                     Six months     Six months         Year to 
                                             to             to 
                                   30 June 2021   30 June 2020     31 Dec 2020 
                                        GBP'000        GBP'000         GBP'000 
 
 Profit after tax attributable 
  to owners of the Group :                5,222          4,916          17,404 
 
 Weighted average number of 
  shares: 
  Basic                             740,599,837    692,823,974     710,348,462 
 Diluted                            759,140,001    706,492,868     730,619,530 
 
 Basic earnings per share 
  (pence)                                 0.705          0.710           2.450 
 
 Diluted earnings per share 
  (pence)                                 0.688          0.696           2.382 
 
 Adjusted basic earnings per 
  share (pence)                           2.367          2.295           4.417 
 
   Adjusted diluted earnings 
   per share (pence)                      2.310          2.251           4.294 
 

Diluted earnings per share is calculated by adjusting the weighted average number of ordinary shares outstanding to assume conversion of all dilutive potential ordinary shares. The Company has share options that are dilutive potential ordinary shares.

In order to give a better understanding of the underlying operating performance of the Group, an adjusted earnings per share comparative has been included. Adjusted earnings per share is stated after adjusting the profit after tax attributable to equity holders of the Group for certain charges as set out in the table below.

 
                       Six months to 30 June 2021       Six months to 30 June 2020           Year to 31 Dec 2020 
                       Profit   Weighted      Pence     Profit   Weighted      Pence     Profit   Weighted   Pence per 
                        after    average        per      after    average        per      after    average       share 
                          tax     number      share        tax     number      share        tax     number 
                                      of                               of                               of 
                                  shares                           shares                           shares 
                      GBP'000       '000               GBP'000       '000               GBP'000       '000 
 
 Basic earnings 
  per ordinary 
  share                 5,222    740,600      0.705      4,916    692,824      0.710     17,404    710,348       2.450 
                    ---------  ---------  ---------  ---------  ---------  ---------  ---------  ---------  ---------- 
 Effect of 
 adjustments: 
 Amortisation of 
  acquired 
  intangibles          11,689                           10,929                           21,447 
 Integration costs        884                              207                              230 
 Acquisition costs      1,581                              383                              715 
 Fair value 
  movement on 
  contingent 
  consideration             -                                -                          (1,357) 
 Acquisition 
  earn-out              2,442                              890                            3,511 
 Net foreign 
  exchange 
  differences on 
  business 
  acquisitions              -                            1,070                            1,070 
 Interest 
  receivable             (33)                              (6)                            (140) 
 Finance expense 
  on contingent 
  consideration            46                              110                              196 
 Finance expense 
  on lease 
  liabilities 
  (IFRS 16)               180                              222                              418 
 Income tax 
  (credit)/expense      (613)                            (780)                          (3,935) 
                    ---------  ---------  ---------  ---------  ---------  ---------  ---------  ---------  ---------- 
 Effect of 
  adjustments          16,176          -      2.184     13,025          -      1.880     22,155          -       3.119 
                    ---------  ---------  ---------  ---------  ---------  ---------  ---------  ---------  ---------- 
 Adjusted profit 
  before tax           21,398          -          -     17,941          -          -     39,559          -           - 
                    ---------  ---------  ---------  ---------  ---------  ---------  ---------  ---------  ---------- 
 Tax impact after 
  adjustments         (3,865)          -    (0.522)    (2,040)          -    (0.295)    (8,183)          -     (1.152) 
                    ---------  ---------  ---------  ---------  ---------  ---------  ---------  ---------  ---------- 
 Adjusted basic 
  earnings per 
  ordinary share       17,553    740,600      2.367     15,901    692,824      2.295     31,376    710,348       4.417 
 Effect of 
 dilutive 
 potential 
 ordinary shares: 
 Share options              -     18,540    (0.057)          -     13,669    (0.044)          -     20,271     (0.123) 
 Deferred                   -          -          -          -          -          -          -          -           - 
 consideration 
 payable 
 (conditions met) 
 Deferred                   -          -          -          -          -          -          -          -           - 
 consideration 
 payable 
 (contingent) 
 
 Adjusted diluted 
  earnings per 
  ordinary share       17,533    759,140      2.310     15,901    706,493      2.251     31,376    730,619       4.294 
 
   10.     Intangible assets 
 
                                  Goodwill             Customer   Branding   Acquired       Internal      Total 
                                                      contracts                    IP       software 
                                              and relationships                          development 
                                   GBP'000              GBP'000    GBP'000    GBP'000        GBP'000    GBP'000 
 Cost 
 At 1 January 2020                 134,985               92,532      2,524     39,680         12,289    282,010 
 Additions on acquisition           18,105               10,221          -      3,514              -     31,840 
 Additions                               -                    -          -          -          3,106      3,106 
 Foreign exchange differences        6,854                2,793         96      1,834            453     12,030 
 At 30 June 2020                   159,944              105,546      2,620     45,028         15,848    328,986 
 Additions on acquisition            9,285                8,533          -      6,660              -     24,478 
 Additions                               -                    -          -          -          3,009      3,009 
 Foreign exchange differences     (12,369)              (4,764)      (135)    (2,986)          (754)   (21,008) 
                                 ---------  -------------------  ---------  ---------  -------------  --------- 
 At 31 December 2020               156,860              109,315      2,485     48,702         18,103    335,465 
 Additions on acquisition 
  (see note 15)                     33,065               14,417      1,413     23,275              -     72,170 
 Measurement period 
  adjustments                           76                    -          -          -              -         76 
 Additions                               -                    -          -          -          3,628      3,628 
 Foreign exchange differences      (2,684)              (1,445)       (23)      (681)          (108)    (4,941) 
                                 ---------  -------------------  ---------  ---------  -------------  --------- 
 At 30 June 2021                   187,317              122,287      3,875     71,296         21,623    406,398 
 
 Accumulated 
  amortisation 
 
 At 1 January 2020                       -               38,894        968      8,703          4,977     53,542 
 Amortisation charged 
  in period                              -                7,913        145      2,871          1,916     12,845 
                                 ---------  -------------------  ---------  ---------  -------------  --------- 
 At 30 June 2020                         -               46,807      1,113     11,574          6,893     66,387 
 Amortisation charged 
  in period                              -                7,547        115      2,856          2,276     12,794 
 At 31 December 2020                     -               54,354      1,228     14,430          9,169     79,181 
 Amortisation charged 
  in period                              -                7,507        200      3,982          2,484     14,173 
                                 ---------  -------------------  ---------  ---------  -------------  --------- 
 At 30 June 2021                         -               61,861      1,428     18,412         11,653     93,354 
 
 Carrying amount 
 At 30 June 2020                   159,944               58,739      1,507     33,454          8,955    262,599 
                                 =========  ===================  =========  =========  =============  ========= 
 At 31 December 2020               156,860               54,961      1,257     34,272          8,934    256,284 
                                 =========  ===================  =========  =========  =============  ========= 
 At 30 June 2021                   187,317               60,426      2,447     52,884          9,970    313,044 
                                 =========  ===================  =========  =========  =============  ========= 
 
 
   11.     Right-of-use assets 
 
                                 Computer 
                                equipment   Property     Total 
                                  GBP'000    GBP'000   GBP'000 
 Cost 
 At 1 January 2020                     83     12,255    12,338 
 Additions on acquisitions              -          -         - 
 Additions                              -      2,219     2,219 
 Foreign exchange 
  differences                           -        370       370 
                                             (1,002) 
 Disposals                              -        (1)   (1,002) 
                              -----------  ---------  -------- 
 At 30 June 2020                       83     13,842    13,925 
 Additions on acquisitions              -         36        36 
 Additions                              -          -         - 
 Foreign exchange 
  differences                           -      (491)     (491) 
 Disposals                              -          -         - 
 At 31 December 2020                   83     13,387    13,470 
 Additions on acquisitions              -          -         - 
 Additions                            271         79       350 
 Foreign exchange 
  differences                         (5)      (188)     (193) 
                                             (1,335) 
 Disposals                              -        (2)   (1,335) 
                              -----------  --------- 
 
 At 30 June 2021                      349     11,943    12,292 
                              ===========  =========  ======== 
 
   Accumulated Depreciation 
 
   At 1 January 2020                   60      2,414     2,474 
 Charge for the year                   23      1,244     1,267 
 Disposals                              -      (286)     (286) 
                              -----------  ---------  -------- 
 At 30 June 2020                       83      3,372     3,455 
 Charge for the year                    -      1,209     1,209 
 Disposals                              -          -         - 
                                           ---------  -------- 
 At 31 December 2020                   83      4,581     4,664 
 Charge for the year                   37      1,089     1,126 
 Disposals                              -      (511)     (511) 
                              -----------  ---------  -------- 
 
 At 30 June 2021                      120      5,159     5,279 
                              ===========  =========  ======== 
 
 Net book value 
 At 30 June 2020                        -     10,470    10,470 
                              ===========  =========  ======== 
 
 At 31 December 2020                    -      8,806     8,806 
                              ===========  =========  ======== 
 
 At 30 June 2021                      229      6,784     7,013 
                              ===========  =========  ======== 
 
 
 
 (1)   2020 disposal relates to a sub-lease amendment whereby the 
        Rustici business agreed to consolidate two separate leases 
        part of which was held by Watershed. 
 (2)   2021 disposal relates to the sub-lease of the Waltham property 
        within PeopleFluent. The right-of-use asset was disposed 
        and a corresponding finance lease receivable has been recognised 
        within Sundry receivables in Note 12. 
 
   12.     Other receivables, deposits and prepayments 
 
                       30 June 2021   30 June 2020   31 Dec 2020 
                            GBP'000        GBP'000       GBP'000 
 Sundry receivables           2,080            145           371 
 Prepayments                  5,315          4,032         3,848 
                              7,395          4,177         4,219 
                      =============  =============  ============ 
 
   13.     Cash and cash equivalents, restricted cash and short-term deposits 

For the purpose of the statement of cash flows, cash and cash equivalents comprise cash held by the Group and short-term bank deposits with an original maturity of three months or less:

 
                              30 June 2021   30 June 2020   31 Dec 2020 
                                   GBP'000        GBP'000       GBP'000 
 
 Cash and cash equivalents          39,322         68,045        88,614 
                             =============  =============  ============ 
 

Restricted cash balances comprise amounts held on behalf of third parties and employees as part of the Employee Stock Purchase Plan ('ESPP'):

 
                    30 June 2021   30 June 2020   31 Dec 2020 
                         GBP'000        GBP'000       GBP'000 
 
 Restricted cash           1,567            602           682 
                   =============  =============  ============ 
 

Short-term deposits comprise term deposits with an original maturity greater than three months:

 
                       30 June 2021   30 June 2020   31 Dec 2020 
                            GBP'000        GBP'000       GBP'000 
 
 Short-term deposits              -         30,000             - 
                      =============  =============  ============ 
 
   14.     Trade and other payables 
 
 
                                   30 June 2021   30 June 2020     31 Dec 2020 
                                        GBP'000        GBP'000         GBP'000 
  Trade payables                          3,221          3,127           2,335 
  Contract liabilities                   63,269         49,409          51,679 
  Tax and social security                 1,132            982           1,687 
  Contingent consideration 
   and earn-outs payable                  4,425            965           1,698 
  Accruals and other payables            15,095          9,762          10,616 
                                  -------------  -------------  -------------- 
                                         87,142         64,245          68,015 
                                  =============  =============  ============== 
 
   15.     Borrowings 

As at 30 June 2021 the Group had in place a $63 million debt facility with Silicon Valley Bank and Barclays Bank. This facility comprised a committed $42 million multicurrency term loan and a committed $21 million multicurrency revolving credit facility, both available to the Group until April 2023. The facility attracted variable interest between 1.6% and 2.1%, based on the Group's leverage, above LIBOR for the currency of the loan. The term loan was repayable with quarterly instalments of $2.5 million with the balance repayable on the expiry of the loan in April 2023.

The bank loan was secured by a fixed and floating charge over the assets of the Group and was subject to various financial covenants that were tested quarterly. The financial covenants were that the Group must ensure that its cash flow cover ratio was at least 1.1 times and its leverage ratio did not exceed 2.75. The cash flow cover and leverage ratio is not a statutory measure and so its basis and composition may differ from other leverage measures published by other companies.

The Group was compliant with all financial covenants throughout the period as at 30(th) June 2021. At that date the Group's cash flow cover was 3.60 and its leverage ratio was -0.70.

The term loan balance was repaid in full in July 2021 and new debt facility agreed. Refer to Note 17 for further details.

 
                                                        30 June              30 June               31 Dec 
                                                           2021                 2020                 2020 
                                                        GBP'000              GBP'000              GBP'000 
            Current interest-bearing 
             loans and borrowings                         7,197                6,738                7,339 
            Non-current interest-bearing 
             loans and borrowings                         7,260               13,476               11,073 
            Current lease liabilities                     3,774                2,804                2,536 
            Non-current lease liabilities                 7,111                9,538                7,722 
                                            -------------------  -------------------  ------------------- 
                                                         25,342               32,556               28,670 
                                            ===================  ===================  =================== 
 

Net debt / cash reconciliation

Net debt / cash can be analysed as follows:

 
                                                     30 June               30 June                31 Dec 
                                                        2021                  2020                  2020 
                                                     GBP'000               GBP'000               GBP'000 
            Cash and cash equivalents                 39,322                68,045                88,614 
            Short-term deposits                            -                30,000                     - 
            Borrowings: 
                                                           -                     -                     - 
   *    Revolving credit facility 
 
   *    Term loan                                   (14,457)              (20,214)              (18,412) 
            Net cash / (debt)                         24,865                77,831                70,202 
                                        ====================  ====================  ==================== 
 
   16.     Acquisitions 

In the period, the Group acquired three businesses - Reflektive, PDT Global and Bridge. We have outlined below a summary of the consideration paid, the provisional fair value of acquired intangible assets, the fair value of other acquired assets and liabilities assumed at the acquisition date and the resulting goodwill for each acquisition in the period, with further detail provided for each acquisition below.

 
 Acquisition    Goodwill   Acquired        Acquired   Acquired   Acquired      Fair           Consideration   Cash       Net 
                           customer        software    brand     deferred      value           paid           acquired   cash 
                           relationships   and                   tax           of other                                  outflow 
                                           IP                    liabilities   identifiable 
                                                                               assets 
                                                                               and 
                                                                               liabilities 
                 GBP'000         GBP'000    GBP'000    GBP'000       GBP'000        GBP'000         GBP'000    GBP'000   GBP'000 
 Reflektive        4,280           3,051      4,497          -       (2,035)            191           9,984      3,322     6,662 
 PDT Global        7,512           4,060        430        170         (932)          2,177          13,417      2,148    11,269 
 Bridge           21,273           7,306     18,348      1,243       (7,263)        (6,749)          34,158          -    34,158 
               ---------  --------------  ---------  ---------  ------------  -------------  --------------  ---------  -------- 
 Total            33,065          14,417     23,275      1,413      (10,230)        (4,381)          57,559      5,470    52,089 
               =========  ==============  =========  =========  ============  =============  ==============  =========  ======== 
 

Reflektive

On 1 February 2021, Learning Technologies Group Plc completed the acquisition of Reflektive Inc ("Reflektive"), a leading performance management software provider, from a group of institutional investors for cash consideration of $13.7 million (c.GBP10.0 million), funded from LTG's cash resources.

Headquartered in San Francisco, Reflektive specialises in engagement and analytics tools. It offers a collaborative goal setting, continuous feedback and analytics platform used by corporate teams and individuals to provide measurable results for boosting productivity, engagement, and retention. Reflektive has joined LTG's PeopleFluent business, integrating its solution with the existing PeopleFluent talent management portfolio. The combination with LTG's other software solutions provides opportunities for cross-sell and upsell-led growth.

The following table summarises the consideration paid for Reflektive, the fair value of assets acquired and liabilities assumed at the acquisition date.

 
                        Consideration                                                                 Fair Value 
                                                                                                         GBP'000 
----------------------------------------------------------------------------  ---------------------------------- 
                        Cash paid                                                                          5,840 
                        Adjustments and hold backs                                                         (513) 
                        Payment for cash acquired                                                          4,657 
                        Total consideration                                                                9,984 
----------------------------------------------------------------------------  ---------------------------------- 
 
 
                        Recognised amounts of identifiable assets acquired                              Fair value 
                         and liabilities assumed                                                           GBP'000 
----------------------------------------------------------------------------  ------------------------------------ 
                        Cash and cash equivalents                                                            3,322 
                        Restricted cash                                                                      1,168 
                        Property, plant and equipment                                                           59 
                        Trade and other receivables                                                          2,954 
                        Trade and other payables                                                           (5,192) 
                        Net IFRS 16 liability                                                              (2,120) 
                        Deferred tax liabilities on acquisition                                            (2,035) 
                        Customer relationships identified on acquisition                                     3,051 
                        Software and intellectual property identified 
                         on acquisition                                                                      4,497 
                        Total identifiable net assets                                                        5,704 
----------------------------------------------------------------------------  ------------------------------------ 
 
                        Goodwill                                                                           4,280 
 
                        Total                                                                              9,984 
----------------------------------------------------------------------------  ---------------------------------- 
 
 
   16.     Acquisitions (continued) 

The total consideration and fair value adjustments to the assets and liabilities assumed are provisional and are management's best estimates at this time. These estimates may be refined in the second half of the financial year.

Acquisition-related intangible assets of GBP3.1 million relate to the valuation of the customer relationships which are amortised over a period of eight years, and GBP4.5 million relates to the value of the acquired intellectual property and software development which is amortised over ten years.

Acquisition costs of GBP0.2 million have been charged to the statement of comprehensive income in the year relating to the acquisition of Reflektive.

Reflektive contributed GBP4.3 million of revenue for the period between the date of acquisition and the balance sheet date and GBP0.7 million of profit before tax attributable to equity holders of the parent. As a preliminary assessment, had the acquisition of Reflektive been completed on the first day of the period Group revenues would have been approximately GBP0.9 million higher and group profit before tax attributable to equity holders of the parent would have been approximately GBP0.5 million lower.

PDT Global

On 5 February 2021, Learning Technologies Group Plc acquired UK-based The People Development Team Limited ('PDT Global'), a leading provider of online Diversity and Inclusion (D&I) training solutions, for cash consideration of GBP13.4 million funded from LTG's cash resources.

Further performance based payments, capped at GBP6.1 million are payable in cash to the PDT Global sellers based on ambitious revenue growth targets in each of the years ending 31 December 2021, 2022 and 2023. These payments are linked to continuous employment so are excluded from the acquisition consideration and instead are recognised as an expense over the service period within the Statement of Comprehensive Income.

The following table summarises the consideration paid for PDT Global, the fair value of assets acquired and liabilities assumed at the acquisition date.

 
                        Consideration                                                                 Fair Value 
                                                                                                         GBP'000 
----------------------------------------------------------------------------  ---------------------------------- 
                        Cash paid                                                                         13,417 
                        Total consideration                                                               13,417 
----------------------------------------------------------------------------  ---------------------------------- 
 
 
                        Recognised amounts of identifiable assets acquired                              Fair value 
                         and liabilities assumed                                                           GBP'000 
----------------------------------------------------------------------------  ------------------------------------ 
                        Cash and cash equivalents                                                            2,148 
                        Property, plant and equipment                                                           30 
                        Trade and other receivables                                                          1,862 
                        Trade and other payables                                                           (1,863) 
                        Net deferred tax assets/liabilities on acquisition                                   (932) 
                        Customer relationships identified on acquisition                                     4,060 
                        Intellectual property identified on acquisition                                        430 
                        Brand name identified on acquisition                                                   170 
                        Total identifiable net assets                                                        5,905 
----------------------------------------------------------------------------  ------------------------------------ 
 
                        Goodwill                                                                           7,512 
 
                        Total                                                                             13,417 
----------------------------------------------------------------------------  ---------------------------------- 
 
 
   16.     Acquisitions (continued) 

The total consideration and fair value adjustments to the assets and liabilities assumed are provisional and are management's best estimates at this time. These estimates may be refined in the second half of the financial year.

Acquisition-related intangible assets of GBP4.1 million relate to the valuation of the customer relationships which are amortised over a period of four years, GBP0.4 million relates to the value of the acquired intellectual property which is amortised over five years and GBP0.2 million relates to the value of the acquired PDT Global brand, which is amortised over two years.

Acquisition costs of GBP0.1 million have been charged to the statement of comprehensive income in the year relating to the acquisition of PDT Global.

PDT Global contributed GBP2.2 million of revenue for the period between the date of acquisition and the balance sheet date and GBP0.9 million of profit before tax attributable to equity holders of the parent. As a preliminary assessment, had the acquisition of PDT Global been completed on the first day of the financial period Group revenues would have been approximately GBP0.4 million higher and group profit before tax attributable to equity holders of the parent would have been approximately GBP0.2 million higher.

Bridge

On 1 March 2021, Learning Technologies Group plc, acquired getBridge LLC and related assets ("Bridge"), a leading learning and talent development software provider, from Instructure Inc for a cash consideration of $47.5 million (c.GBP34.2 million), funded from LTG's existing cash resources.

Bridge is a learning, performance and skills development platform for mid-enterprise organisations, headquartered in the US with operations in the UK and Hungary. Bridge provides a learning management system in addition to performance, engagement and skills development products, on a single, easy-to-use, SaaS-based platform.

The acquisition of Bridge significantly extends LTG's mid-enterprise learning and talent offering. Bridge is highly complementary to PeopleFluent, which serves the large enterprise market, and BreezyHR, which serves the small and medium-sized business market. The acquisition is strategically important because it enables LTG to provide a holistic learning and talent development offering to meet the needs of small, mid-size and large enterprises, three distinct groups with varying requirements. The combination and integration of Bridge with LTG's other portfolio offerings, including the recently acquired Reflektive engagement and analytics platform, will create opportunities for cross-sell and upsell-led growth within the Group.

   16.     Acquisitions (continued) 

The following table summarises the consideration paid for Bridge, the fair value of assets acquired and liabilities assumed at the acquisition date.

 
                        Consideration                                                                 Fair Value 
                                                                                                         GBP'000 
----------------------------------------------------------------------------  ---------------------------------- 
                        Cash paid                                                                         33,764 
                        Adjustments and hold backs                                                           394 
                        Total consideration                                                               34,158 
----------------------------------------------------------------------------  ---------------------------------- 
 
 
                        Recognised amounts of identifiable assets acquired                              Fair value 
                         and liabilities assumed                                                           GBP'000 
----------------------------------------------------------------------------  ------------------------------------ 
                        Trade and other receivables                                                            796 
                        Trade and other payables                                                           (7,545) 
                        Net deferred tax assets/liabilities on acquisition                                 (7,263) 
                        Brand name identified on acquisition                                                 1,243 
                        Technology identified on acquisition                                                18,348 
                        Customer relationships identified on acquisition                                     7,306 
                        Total identifiable net assets                                                       12,885 
----------------------------------------------------------------------------  ------------------------------------ 
 
                        Goodwill                                                                          21,273 
 
                        Total                                                                             34,158 
----------------------------------------------------------------------------  ---------------------------------- 
 
 

The total consideration and fair value adjustments to the assets and liabilities assumed are provisional and are management's best estimates at this time. These estimates may be refined in the second half of the financial year.

Acquisition-related intangible assets of GBP7.3 million relate to the valuation of the customer relationships which are amortised over a period of eleven years, GBP18.3 million relates to the value of the acquired intellectual property and software development which is amortised over ten years and GBP1.2m relates to the value of the acquired Bridge brand which is amortised over five years.

Acquisition costs of GBP0.7 million have been charged to the statement of comprehensive income in the year relating to the acquisition of Bridge.

Bridge contributed GBP5.6 million of revenue for the period between the date of acquisition and the balance sheet date and GBP0.4 million of profit before tax attributable to equity holders of the parent. As a preliminary assessment, had the acquisition of Bridge been completed on the first day of the financial period Group revenues would have been approximately GBP2.8 million higher and group profit before tax attributable to equity holders of the parent would have been approximately GBP0.1 million higher.

Prior year acquisition measurement period adjustments

Outlined below are the retrospective adjustments to the provisional amounts recognised as goodwill in relation to the acquisitions that occurred in 2020. These adjustments have been made to reflect new information obtained about the circumstances that existed at each respective acquisition date and would have affected the measurement of goodwill at the time.

eCreators

 
                        Increase/(decrease) to                           Liabilities                          Goodwill 
                        recognised                                           assumed                           GBP'000 
                        amounts                                              GBP'000 
-----------------------------------------------  -----------------------------------  -------------------------------- 
                        Trade and other 
                         payables                                                272                               272 
 

eThink

 
                        Increase/(decrease) to                           Liabilities                          Goodwill 
                        recognised                                           assumed                           GBP'000 
                        amounts                                              GBP'000 
-----------------------------------------------  -----------------------------------  -------------------------------- 
                        Trade and other 
                         payables                                              (196)                             (196) 
 
   17.     Events since the reporting date 

Proposed acquisition of GP Strategies

On 15(th) July the Company announced it had agreed to acquire GP Strategies Corporation ('GP Strategies') a leading global workforce transformation provider with significant offerings in learning services, custom content and consulting for $20.85 per GP Strategies share, representing a market capitalisation of $394 million (GBP284 million) (the "Consideration") and an enterprise value of $343 million (GBP247 million).

The Consideration and transaction costs for the Acquisition are intended to be part-funded by a conditional underwritten placing of new ordinary shares outlined below, with the balance being part-funded by up to c.$305 million in incremental debt financing (of which $40 million is to be repaid from GP Strategies' cash shortly after the Acquisition) and out of existing cash resources.

Equity Placing

On 15(th) July the Company successfully placed a total of 44,300,000 new ordinary shares in the capital of the Company of 0.375 pence each at a price of 192 pence per Placing Share, raising gross proceeds of approximately GBP85.0 million (before expenses of c.GBP2.2 million).

Repayment of existing term loan and agreement of new debt facilities

On 13(th) July the Group repaid the outstanding balance of the existing term loan and associated accrued interest totalling $20.2 million (GBP14.6 million). T he Group has also agreed to a new multicurrency senior term and revolving facilities agreement. This new debt facility which is with Silicon Valley Bank ('SVB'), Barclays Bank, Fifth Third Bank, HSBC UK Bank and the Bank of Ireland, comprises two committed term loans, Term Facility A of $265.0 million, Term Facility B of $40.0 million, a $50.0 million committed RCF and a $50.0 million uncommitted accordion facility.

There have been no other significant events since the reporting date.

Glossary

Alternative Performance Measures

In reporting financial information, the Group presents alternative performance measures, "APMs", which are not defined or specified under the requirements of IFRS. The Group believes that these APMs, which are not considered to be a substitute for or superior to IFRS measures, provide stakeholders with additional useful information on the underlying trends, performance and position of the Group and are consistent with how business performance is measured internally. The alternative performance measures are not defined by IFRS and therefore may not be directly comparable with other companies' alternative performance measures. The key APMs that the Group uses are outlined below.

 
 APM             Closest         Reconciling items     Definition and purpose 
                  equivalent      to IFRS measure 
                  IFRS measure 
 Income Statement Measures 
 Adjusted        Operating       Adjusting items       Adjusted EBIT excludes adjusting 
  EBIT            profit                                items. A reconciliation from 
                                                        Adjusted EBIT to Operating profit 
                                                        is provided in the Consolidated 
                                                        statement of comprehensive income. 
                --------------  --------------------  --------------------------------------- 
 Adjusting       None            Refer to definition   Items which are not considered 
  items                                                 part of the normal operating 
                                                        costs of the business, are separately 
                                                        disclosed because of their size, 
                                                        nature or incidence are treated 
                                                        as adjusting. The Group believes 
                                                        the separate disclosure of these 
                                                        items provides additional useful 
                                                        information to users of the 
                                                        financial statements to enable 
                                                        a better understanding of the 
                                                        Group's underlying financial 
                                                        performance. An explanation 
                                                        of the nature of the items identified 
                                                        as adjusting is provided in 
                                                        Note 6 to the financial statements. 
                --------------  --------------------  --------------------------------------- 
 Recurring       Revenue         Refer to Note 4       Recurring revenue is defined 
  revenue                                               as the revenue streams of the 
                                                        Group that are predictable and 
                                                        expected to continue into the 
                                                        future upon customer renewal. 
                --------------  --------------------  --------------------------------------- 
 Non-recurring   Revenue         Refer to Note 4       Non-recurring revenue is defined 
  revenue                                               as the revenue streams of the 
                                                        Group that arise from one-off 
                                                        fees or services that may or 
                                                        may not happen again. 
                --------------  --------------------  --------------------------------------- 
 Balance Sheet Measures 
 Net cash        None            Refer to Note 15      Net cash / debt is defined as 
  or debt                                               Cash and cash equivalents and 
                                                        short-term deposits, less Bank 
                                                        overdrafts and other current 
                                                        and non-current borrowings. 
                                                        A reconciliation is provided 
                                                        in Note 15 to the financial 
                                                        statements. 
                --------------  --------------------  --------------------------------------- 
 Shareholders'   None            Refer to definition   Calculated as Total Equity at 
  funds                                                 the end of the period/year divided 
                                                        by the number of shares in issue 
                                                        at the end of the period/year, 
                                                        The shares in issue at 31(st) 
                                                        December 2020 were 739,297,410 
                                                        (based on Note 27 of the 2020 
                                                        Annual report) and 742,515,875 
                                                        at 30(th) June 2021. 
                --------------  --------------------  --------------------------------------- 
 

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