08:00 Mon 18 Sep 2017
Learning Tech Gp PLC - Interim Results 2017
18 September 2017
(AIM: LTG)
Interim Results 2017
"Successfully delivering on LTG's strategic ambitions"
Financial highlights:
· |
Revenue increased to £21.5 million (H1 2016: £12.8 million) - up 68%
|
· |
Organic revenue grew to £17.6 million - up 33% |
· |
Recurring revenues increased to 37% (H1 2016: 24%) - up 153% |
· |
Revenues generated outside of the |
· |
Adjusted EBIT increased to £4.1 million (H1 2016: £2.9 million) - up 41% |
· |
Adjusted EBIT margin of 19.2% (H1 2017: 23.0%) - down 380bp due to NetDimensions |
· |
Adjusted diluted earnings per share of 0.523 pence (H1 2016: 0.597 pence per share) - down 7% due to NetDimensions
|
· |
Proposed interim dividend of 0.09 pence per share (H1 2016: 0.07 pence) - up 29% |
· |
Successful debt refinancing provides LTG with £20 million facility for five years |
· |
Strong balance sheet with adjusted net debt of £9.8 million - c1.1x Net Debt/LTM EBITDA |
Operational highlights:
· |
Excellent progress in delivering on LTG's strategic ambition to build an international full-service digital learning offering for corporate and government clients
|
· |
Successful acquisition in March 2017 of NetDimensions brings to the Group a leading proprietary Learning Management System and adds the final key technical capability to LTG's service offering
|
· |
Integration of NetDimensions completed on time and to plan in Q2 2017; the majority of the annualised incremental EBIT benefits of c$8 million (c£6.2 million), as stated at the time of the acquisition being announced, have been realised and the remainder will be realised in Q4 2017
|
· |
Civil Service Learning ('CSL') project being delivered in line with expectations |
· |
Strong start to H2 2017 with trading ahead of management's expectations and order book significantly ahead of the prior year on a like for like basis |
Commenting,
"The skills, motivation and knowledge of our staff are the keys to these exceptional results as they partner our clients to place learning at the heart of their business strategies. We are achieving excellent trading momentum into the second half giving us confidence in the outlook for the rest of the year. Furthermore, the transformation of NetDimensions is well on track and we therefore look forward to achieving our significant growth in 2018 with confidence."
Commenting,
"The Group has made excellent progress delivering on its strategic ambition of building an international business with annual revenues in excess of £50 million and strong operating margins. LTG has demonstrated strong organic revenue growth across all businesses and has continued to expand its client base and international reach whilst at the same time increasing its recurring revenue base.
The acquisition of NetDimensions completes the final key technical capability that will allow the Group to offer its corporate and government clients a truly comprehensive service. The ambitious integration of NetDimensions has been completed on time and the Board is confident that this will result in a strong margin performance in the second half of the year.
The Board continues to look at acquisition opportunities where the Group will be able to leverage its established technical capabilities and working practices in domain specific market sectors, supported by its industry leading employees.
The Board is therefore confident in the Group's prospects and expects to report enhanced progress during the remainder of 2017."
Enquiries:
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+44(0)207 402 1554 |
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+44 (0)20 7260 1000 |
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Hudson Sandler LLP |
+44 (0)20 7796 4133 |
Notes to Editors
LTG was created with the purpose of building a market-leading business of substance and scale within the exciting and fast-growing learning technologies sector and the Group's award-winning businesses are at the forefront of innovation and best practice in this sector.
Since LTG listed on AIM in November 2013, it has made a number of strategic acquisitions to grow its business:
April 2014 LINE
May 2014 Preloaded
July 2015 Eukleia
January 2016 Rustici and 27% equity stake in Watershed
March 2017 NetDimensions
LINE was merged with the original business, Epic, to form LEO, a market-leading learning technologies firm with unrivalled capability to provide custom solutions to its corporate and government clients. It is joined by BAFTA award-winning applied games studio Preloaded, who bring learning games specialism to the Group and by Eukleia, experts in governance, risk and compliance (GRC) in the financial services sector. Rustici brings the global leader in the support and development of the universal technical standards for the entire e-learning industry into the Group and most recently NetDimensions brings to the Group a leading proprietary Learning Management System.
www.ltgplc.com
Chairman's Statement
Introduction
The Board is delighted to report that
Results
In the six months ended 30 June 2017, revenues increased by 68% to £21.5 million (H1 2016: £12.8 million) with like-for-like revenues (excluding the post-acquisition contribution of NetDimensions and restating Rustici as if it had been owned for 6 months in both periods) increasing by 33% to £17.6 million. Partly as a result of the acquisition of NetDimensions, but also as a result of the strong organic growth in the Group's other software licencing businesses, recurring licence fee and support contract revenues increased from 24% in H1 2016 to 37% in H1 2017.
Adjusted EBIT* grew by 41% to £4.1 million (H1 2016: £2.9 million). The reduction in EBIT margins from 23.0% in H1 2016 to 19.2% in H1 2017 is as a result of the impact of the post-acquisition contribution of NetDimensions. Following the integration initiatives undertaken during the second quarter we anticipate that the resulting synergies will improve margins substantially in H2 2017.
Operating loss of £0.5 million (H1 2016: loss of £0.4 million) is stated after amortisation of acquired intangibles, various acquisition earnout charges, share based payments, and integration costs. Following the acquisition of NetDimensions, amortisation of acquired intangibles increased to £3.0 million (H1 2016: £1.5 million). Acquisition related deferred consideration and earnout charges decreased to £0.7 million (H1 2016: £1.4 million) and relate primarily to the anticipated earnout resulting from Rustici's incremental revenue growth during the second year of their three year earnout agreement. Integration charges of £0.7 million relate to NetDimensions and are in line with management's expectations.
A net tax charge of £0.1 million (H1 2016: tax credit of £0.4 million) includes a release of deferred tax liabilities, created from acquired intangibles.
The Group reported a net loss of £1.9 million for the six months ended 30 June 2017 attributable to the owners of the parent company (H1 2016: loss of £0.5 million).
The basic earnings per share in H1 2017 were a loss of 0.392 pence (H1 2016: loss of 0.129 pence). Adjusted diluted earnings per share as set out in Note 5 decreased by 7% to 0.523 pence (H1 2016: 0. 597 pence) primarily as a result of movements in deferred taxation in H1 2016.
At the time of the acquisition of NetDimensions, LTG entered into a new debt facility with
LTG maintained strong operating cash flows in the period. Net cash flow from operating activities (excluding deferred consideration payments relating to 2016) was £3.3 million (H1 2016: outflows of £0.9 million). £44.9 million net of share issue costs was raised through a placing with a further £1.8 million resulting from the exercise of employee share options. £44.2m was invested in NetDimensions (net of cash acquired); a further £1.5 million is held and due to non-controlling shareholders in NetDimensions. The compulsory acquisition of those non-controlling shareholders' interests was completed in July 2017.
On a pro forma basis approximately 46% of LTG's business is undertaken for customers outside of the
Overall net assets increased to £73.8 million at 30 June 2017 (31 December 2016: £30.7 million) and shareholders' funds increased from 7.3 pence per share to 12.8 pence per share.
The results for H1 2016 have been restated to take into account the adjustments made to deferred consideration, tax on share options and merger relief as set out in the 2016 Annual Report. This has resulted in a reduction in profit after tax of £0.9 million and a reduction in net assets of £1.2 million. Further details on the adjustments are provided in Note 31 of the 2016 Annual Report.
Acquisition and integration of NetDimensions
On 20 March 2017, LTG declared its all-cash offer for NetDimensions, the integrated enterprise learning management software platform provider, unconditional in all respects. NetDimensions is a leading global enterprise solutions provider, headquartered in
Of the total consideration of £53.6 million for NetDimensions, as at 30 June 2017 £52.1 million had been paid to the 97.2% of shareholders in NetDimensions who had accepted the offer. With effect from July 2017 the non-controlling shareholders' interests in NetDimensions have been acquired by LTG. There are no deferred consideration obligations.
The offer was financed by way of a placing of 124 million LTG shares issued at 37.5 pence per share and a new debt finance facility, details of which are set out below. Further details are provided in Note 10.
At the time of the offer LTG set out an ambitious integration plan to realise substantial synergies and improve working practices to increase efficiencies and the Board is pleased to report that the integration of NetDimensions into the Group has been successfully completed on time. The transformation program will continue during the second half of 2017, with the full-year synergies and settled cost base being completely realised during Q4 2017. Amongst the measures taken NetDimensions' customer support teams have been relocated to the geographical territories that they serve, hosting services are being migrated to our expert team in
Operational Review
The acquisition of NetDimensions brings to LTG a proprietary Learning Management System ('LMS') offering and represents the final key technical capability that enables the Group to offer a comprehensive learning solution to its customers. Ranging from strategic consultancy, domain specific expertise, through a range of tailored content solutions including bespoke e-learning programmes, 'games with purpose', video, virtual and augmented reality solutions, the Group also offers a range of delivery platforms including a multi-device authoring tool, open-source systems and now an industry leading LMS. Through its investment in Watershed LTG is also at the forefront of developing data analytic tools that are increasingly allowing corporates and governments to monitor the effectiveness of their learning programmes.
LEO is the primary LTG business through which our clients are able to buy the full range of the Group's products and services. In 2016 we implemented a key account management approach and in H1 2017 we have begun to see the benefits as we broaden and deepen our relationships with clients. Although at an early stage, we are beginning to see the compelling opportunities that the Group's combined offering brings to our clients. For example, the gomo multi-device self-authoring and distribution platform is increasingly being used to underpin several of LEO's solution implementations. This includes the recent contract to deliver interactive point-of-sale information systems to a major automotive business, that enables the company and its local dealership network to update information on the vehicles in their showrooms in real-time.
The Civil Service Learning ('CSL') contract, being delivered alongside our strategic partner KPMG
During H1 2017, LEO's
Preloaded, our 'games with purpose' division, has performed strongly and we are encouraged by the diversification of the client base and the growing reputation that the business is building for creating compelling and innovative learning games. Preloaded has rolled-out a global multi-franchise learning games application for an international restaurant group and has worked with a number of world-leading museums and galleries to showcase the effectiveness of VR learning simulations including for the Science Museum and the V&A Museum. Preloaded has also been selected to develop the VR experience for the forthcoming Modigliani exhibition at
Eukleia, the specialist governance, risk and compliance ('GRC') training consultancy in the financial services sector has performed well in the first half of the year. The company set up an office in
Our software businesses are performing particularly strongly. gomo, has won a number of key enterprise contracts with its industry leading cloud-based multi-device authoring tool including Boots, L'Oreal, EE and the
Rustici, based in
As part of the Group's development roadmap we are incorporating other LTG products and services into the NetDimensions talent suite. These include integrating the gomo authoring and distribution platform and enabling the system to tag analytical data using xAPI; a protocol in which LTG is an industry leader.
Dividend
On 7 July 2017, the Company paid a final dividend of 0.14 pence per share, giving a total dividend for 2016 of 0.21 pence per share. This represented a 40% increase on the dividend paid compared to 2015. Given its confidence in the continuing success of the Group, the Board is pleased to announce that it has approved an interim dividend of 0.09 pence per share (2016: 0.07 pence per share). This will be paid on 27 October 2017 to shareholders on the register at 6 October 2017.
Current Trading and outlook
The Board is delighted with the progress that the Group has made in the first half of 2017, in particular the strong organic revenue growth seen in all of its businesses as well as the successful integration of NetDimensions in the second quarter. We are delivering this excellent trading momentum, and increased recurring revenues, into the second half giving us confidence in the outlook for the rest of the year and of achieving further significant growth in 2018.
On a pro forma basis the Group has achieved the strategic objectives that it set out when it came to the market in November 2013 of delivering annualised revenues in excess of £50 million and operating margins in excess of 20%. Through M&A and selective investment in R&D the Board believes that LTG now has all the major technical capabilities that allow it to offer a comprehensive end-to-end service to its global customers. The Board continues to pursue acquisition opportunities particularly in the US and in sectors that will extend LTG's domain specific expertise, and in extending its scale in the advisory and content creation capabilities in the large North American market.
The Directors look forward to updating shareholders on progress towards these goals at the end of the year and delivering significant profitable growth in the underlying operating businesses during the remainder of 2017.
18 September 2017
* 'Adjusted EBIT' is defined as the Group profit or loss before tax, excluding the amortisation of acquisition-related intangible assets, share-based payment charges, acquisition related deferred consideration and earn-outs, finance expenses, the Group's share of profits or losses in associates and joint ventures and other specific items.
Consolidated statement of comprehensive income |
|
|
Six months to 30 June 2017 (unaudited) |
Year to 31 Dec 2016 (audited) |
Six months to 30 June 2016 (unaudited) |
|||
|
Note |
|
£'000 |
£'000 |
£'000 |
|||
Revenue |
3 |
|
21,472 |
28,263 |
12,785 |
|||
|
|
|
|
|
|
|||
Operating expenses (excluding acquisition-related deferred consideration and earn-outs) |
|
|
(21,308) |
(25,194) |
(11,748) |
|||
|
|
|
|
|
|
|||
Operating profit (before acquisition-related deferred consideration and earn-outs) |
|
|
164 |
3,069 |
1,037 |
|||
|
|
|
|
|
|
|||
Acquisition-related deferred consideration and earn-outs |
|
|
(683) |
(3,211) |
(1,434) |
|||
|
|
|
|
|
|
|||
Operating (loss) |
|
|
(519) |
(142) |
(397) |
|||
|
|
|
|
|
|
|||
Adjusted EBIT |
|
|
4,127 |
6,952 |
2,937 |
|||
Amortisation of acquired intangibles |
|
|
(3,042) |
(3,205) |
(1,536) |
|||
Acquisition-related deferred consideration and earn-outs |
|
|
(683) |
(3,211) |
(1,434) |
|||
Share based payment costs |
|
|
(218) |
(605) |
(300) |
|||
Integration costs |
|
|
(703) |
(73) |
(64) |
|||
Operating (loss) |
|
|
(519) |
(142) |
(397) |
|||
|
|
|
|
|
|
|||
Costs of acquisition |
|
|
(958) |
(99) |
(105) |
|||
Share of losses of associates/joint ventures |
|
|
(80) |
(205) |
(102) |
|||
Finance expenses: |
|
|
|
|
|
|||
Charge on contingent consideration |
|
|
(24) |
(57) |
(42) |
|||
Interest on borrowings |
|
|
(343) |
(358) |
(155) |
|||
Net foreign exchange differences on borrowings |
|
|
22 |
(333) |
(134) |
|||
Interest receivable |
|
|
4 |
1 |
- |
|||
|
|
|
|
|
|
|||
(Loss) before taxation |
|
|
(1,898) |
(1,193) |
(935) |
|||
|
|
|
|
|
|
|||
Income tax credit/(expense) |
4 |
|
(77) |
(133) |
400 |
|||
|
|
|
|
|
|
|||
(Loss) after taxation |
|
|
(1,975) |
(1,326) |
(535) |
|||
|
|
|
|
|
|
|||
(Loss) for the period/year attributable to the owners of the parent |
|
|
(1,925) |
(1,326) |
(535) |
|||
(Loss) for the period/year attributable to non-controlling interests |
|
|
(50) |
- |
- |
|||
Earnings per share attributable to owners of the parent:
|
|
|
|
|
|
|||
Basic, (pence) |
5 |
|
(0.392) |
(0.317) |
(0.129) |
|||
|
|
|
|
|
|
|||
Diluted, (pence) |
5 |
|
(0.392) |
(0.317) |
(0.129) |
|||
Other comprehensive income: |
|
|
|
|
|
|||
Exchange differences on translating foreign operations |
|
|
(2,094) |
1,183 |
455 |
|||
Total comprehensive (loss) for the period |
|
|
(4,069) |
(143) |
(80) |
|||
Attributable to: |
|
|
|
|
|
|||
The owners of the parent |
|
|
(3,968) |
(143) |
(80) |
|||
Non-controlling interests |
|
|
(101) |
- |
- |
|||
Consolidated statement of financial position |
|
|||||||
|
Note |
30 June 2017 (unaudited) £'000 |
31 Dec 2016 (audited) £'000 |
30 June 2016 (unaudited) £'000 |
|
|||
ASSETS |
|
|
|
|
|
|||
|
|
|
|
|
|
|||
NON-CURRENT ASSETS |
|
|
|
|
|
|||
Property, plant and equipment |
|
815 |
708 |
796 |
|
|||
Intangible assets |
6 |
87,492 |
39,950 |
39,237 |
|
|||
Deferred tax assets |
|
920 |
1,717 |
1,094 |
|
|||
Investments accounted for under the equity method |
|
1,809 |
1,890 |
1,993 |
|
|||
Other receivables, deposits and prepayments |
|
497 |
1,293 |
- |
|
|||
|
|
91,533 |
45,558 |
43,120 |
|
|||
|
|
|
|
|
|
|||
CURRENT ASSETS |
|
|
|
|
|
|||
Trade receivables |
|
8,454 |
4,229 |
4,177 |
|
|||
Other receivables, deposits |
|
|
|
|
|
|||
and prepayments |
7 |
5,584 |
1,995 |
2,194 |
|
|||
Amounts recoverable on contracts |
|
4,744 |
2,642 |
2,914 |
|
|||
Amounts due from related parties |
|
- |
- |
45 |
|
|||
Cash and bank balances |
8 |
11,498 |
5,348 |
4,257 |
|
|||
|
|
30,280 |
14,214 |
13,587 |
|
|||
|
|
|
|
|
|
|||
TOTAL ASSETS |
|
121,813 |
59,772 |
56,707 |
|
|||
|
|
|
|
|
|
|||
CURRENT LIABILITIES |
|
|
|
|
|
|||
Trade and other payables |
9 |
20,744 |
9,215 |
8,153 |
|
|||
Borrowings |
|
1,922 |
3,252 |
2,907 |
|
|||
Corporation tax |
|
1,072 |
546 |
162 |
|
|||
Amounts owing to related parties |
|
- |
45 |
- |
|
|||
|
|
23,738 |
13,058 |
11,222 |
|
|||
|
|
|
|
|
|
|||
NON CURRENT LIABILITIES |
|
|
|
|
|
|||
Deferred tax liabilities |
|
8,235 |
3,897 |
4,046 |
|
|||
Other long term liabilities |
|
185 |
1,426 |
303 |
|
|||
Borrowings |
|
15,663 |
10,582 |
11,145 |
|
|||
Provisions |
|
224 |
99 |
99 |
|
|||
|
|
24,307 |
16,004 |
15,593 |
|
|||
|
|
|
|
|
|
|||
TOTAL LIABILITIES |
|
48,045 |
29,062 |
26,815 |
|
|||
NET ASSETS |
|
73,768 |
30,710 |
29,892 |
EQUITY |
|
|
|
|
Share capital |
|
2,133 |
1,580 |
1,570 |
Share premium account |
|
63,839 |
17,044 |
16,921 |
Merger relief reserve |
|
31,983 |
31,983 |
31,983 |
Reverse acquisition reserve |
|
(22,933) |
(22,933) |
(22,933) |
Share-based payment reserve |
|
1,698 |
3,245 |
2,483 |
Foreign exchange translation reserve |
|
(810) |
1,233 |
505 |
Accumulated retained earnings/(losses) |
|
(2,952) |
(1,442) |
(637) |
TOTAL EQUITY ATTRIBUTABLE TO THE OWNERS OF THE PARENT |
|
72,958 |
30,710 |
29,892
|
Non-controlling interests |
|
810 |
- |
- |
TOTAL EQUITY |
|
73,768 |
30,710 |
29,892 |
Consolidated statement of changes in equity
(£'000)
|
Share capital |
Share Premium |
Merger relief reserve |
Reverse acquisition reserve |
Share based payments reserve |
Foreign exchange reserve |
Retained profits / (losses) |
Total
|
Non-controlling interest |
Total equity |
|
|
|
|
|
|
|
|
|
|
|
Balance at 1 January 2016
|
1,506 |
15,988 |
28,120 |
(22,933) |
2,273 |
50 |
140 |
25,144 |
- |
25,144 |
Profit for period |
- |
- |
- |
- |
- |
- |
(535) |
(535) |
- |
(535) |
Exchange differences on translating foreign operations |
- |
- |
- |
- |
- |
455 |
- |
455 |
- |
455 |
Total comprehensive income for the period |
- |
- |
- |
- |
- |
455 |
(535) |
(80) |
- |
(80) |
Issue of shares net of share issue costs |
64 |
933 |
3,863 |
- |
- |
- |
- |
4,860 |
- |
4,860 |
Share based payment charge / credited to equity |
- |
- |
- |
- |
300 |
- |
- |
300 |
- |
300 |
Deferred tax on share options |
- |
- |
- |
- |
33 |
- |
- |
33 |
- |
33 |
Transfer on exercise and lapse of options |
- |
- |
- |
- |
(123) |
- |
123 |
- |
- |
- |
Tax deduction on exercise of share options recognised directly in equity |
- |
- |
- |
- |
- |
- |
53 |
53 |
- |
53 |
Dividends paid |
- |
- |
- |
- |
- |
- |
(418) |
(418) |
- |
(418) |
Balance at 30 June 2016 |
1,570 |
16,921 |
31,983 |
(22,933) |
2,483 |
505 |
(637) |
29,892 |
- |
29,892 |
Profit for period |
- |
- |
- |
- |
- |
- |
(791) |
(791) |
- |
(791) |
Exchange differences on translating foreign operations |
- |
- |
- |
- |
- |
728 |
- |
728 |
- |
728 |
Total comprehensive income for the period |
- |
- |
- |
- |
- |
728 |
(791) |
(63) |
- |
(63) |
Issue of shares net of share issue costs |
10 |
123 |
- |
- |
- |
- |
- |
133 |
- |
133 |
Share based payment charge / credited to equity |
- |
- |
- |
- |
305 |
- |
- |
305 |
- |
305 |
Deferred tax on share options |
- |
- |
- |
- |
615 |
- |
- |
615 |
- |
615 |
Transfer on exercise and lapse of options |
- |
- |
- |
- |
(158) |
- |
158 |
- |
- |
- |
Tax deduction on exercise of share options recognised directly in equity |
- |
- |
- |
- |
- |
- |
122 |
122
|
- |
122 |
Dividends paid |
- |
- |
- |
- |
- |
- |
(294) |
(294) |
- |
(294) |
Balance at 31 December 2016
|
1,580 |
17,044 |
31,983 |
(22,933) |
3,245 |
1,233 |
(1,442) |
30,710 |
- |
30,710 |
Profit for period |
- |
- |
- |
- |
- |
- |
(1,925) |
(1,925) |
(50) |
(1,975) |
Exchange differences on translating foreign operations |
- |
- |
- |
- |
- |
(2,043) |
- |
(2,043) |
(51) |
(2,094) |
Total comprehensive income for the period |
- |
- |
- |
- |
- |
(2,043) |
(1,925) |
(3,968) |
(101) |
(4,069) |
Issue of shares net of share issue costs |
553 |
46,795 |
- |
- |
- |
- |
- |
47,348 |
- |
47,348 |
Share based payment charge / credited to equity |
- |
- |
- |
- |
218 |
- |
- |
218 |
- |
218 |
Deferred tax on share options |
- |
- |
- |
- |
(584) |
- |
- |
(584) |
- |
(584) |
Transfer on exercise and lapse of options |
- |
- |
- |
- |
(1,181) |
- |
1,181 |
- |
- |
- |
Additions on acquisition |
- |
- |
- |
- |
- |
- |
- |
- |
911 |
911 |
Dividends payable |
- |
- |
- |
- |
- |
- |
(766) |
(766) |
- |
(766) |
Balance at 30 June 2017 |
2,133 |
63,839 |
31,983 |
(22,933) |
1,698 |
(810) |
(2,952) |
72,958 |
810 |
73,768
|
Consolidated statement of cash flows
|
Note |
Six months to 30 June 2017 (unaudited) |
Year to 31 Dec 2016 (audited) |
Six months to 30 June 2016 (unaudited) |
|
|
£'000 |
£'000 |
£'000 |
Cash flow from operating activities |
|
|
|
|
(Loss)/profit before taxation |
|
(1,898) |
(1,193) |
(935) |
Adjustments for:- |
|
|
|
|
Share option charge |
|
218 |
605 |
300 |
Cash costs of acquisition |
|
958 |
99 |
105 |
Amortisation of intangible assets |
|
3,322 |
3,605 |
1,700 |
Depreciation of plant and equipment |
|
205 |
320 |
146 |
Share of losses of investments |
|
80 |
205 |
102 |
Finance expense |
|
24 |
57 |
42 |
Finance interest on borrowings |
|
343 |
358 |
155 |
Net foreign exchange difference on borrowings |
|
(22) |
333 |
134 |
Acquisition-related deferred consideration and earn-outs |
|
683 |
3,211 |
1,434 |
Interest income |
|
(4) |
(1) |
- |
Operating cash flow before working capital changes |
|
3,909 |
7,599 |
3,183 |
(Increase)/decrease in trade and other receivables |
|
1,807 |
(2,030) |
(883) |
(Increase) in amount recoverable on contracts |
|
(2,103) |
(788) |
(1,061) |
(Decrease)/increase in payables |
|
666 |
(1,760) |
(1,816) |
Payment of acquisition-related deferred consideration and earn-outs |
|
(2,211) |
- |
- |
|
|
2,068 |
3,021 |
(577) |
Interest paid |
|
(255) |
(275) |
(157) |
Interest received |
|
4 |
1 |
- |
Income tax paid |
|
(684) |
(645) |
(151) |
|
|
|
|
|
Net cash flow from operating activities |
|
1,133 |
2,102 |
(885) |
|
|
|
|
|
Cash flow used in investing activities |
|
|
|
|
Purchase of property, plant and equipment |
|
(115) |
(422) |
(382) |
Disposal of property, plant and equipment |
|
2 |
- |
- |
Development of intangible assets |
|
(667) |
(796) |
(378) |
Acquisition of subsidiaries, net of cash acquired |
|
(44,222) |
(12,389) |
(12,389) |
Payment of deferred consideration |
|
(59) |
- |
- |
Cash costs of acquisition |
|
(958) |
(99) |
(105) |
Investment in associates |
|
- |
(2,095) |
(2,095) |
Net cash flow used in investing activities |
|
(46,019) |
(15,801) |
(15,348) |
|
|
|
|
|
Cash flow used in financing activities |
|
|
|
|
Dividends paid |
|
- |
(712) |
- |
Cash generated from issue of shares, net of share issue costs |
|
46,720 |
647 |
72 |
Proceeds from borrowings |
|
18,000 |
13,909 |
13,909 |
Repayment of bank loans |
|
(13,578) |
(2,278) |
(683) |
Net cash flow from/(used in) in financing |
|
|
|
|
activities |
|
51,142 |
11,566 |
13,298
|
|
|
|
|
|
|
|
|
|
|
Net (decrease)/increase in cash and cash equivalents |
|
6,256 |
(2,133) |
(2,935) |
Cash and cash equivalents at beginning of the year |
|
5,348 |
7,305 |
7,305 |
Effects of foreign exchange rate changes |
|
(106) |
176 |
(113) |
Cash and cash equivalents at end of the year |
8 |
11,498 |
5,348 |
4,257 |
Notes to the consolidated financial statements for the six months to 30 June 2017
1. General information
The Company is a public limited company, which is listed on the AIM Market of the London Stock Exchange and domiciled in
2. Basis of preparation
The unaudited consolidated interim financial information has been prepared in accordance with International Financial Reporting Standards as adopted by the
The interim results for the six months to 30 June 2017 are neither audited nor reviewed by our auditors and the accounts in this interim report do not therefore constitute statutory accounts in accordance with Section 434 of the Companies Act 2006.
Statutory accounts for the year ended 31 December 2016 have been filed with the Registrar of Companies and the auditor's report was unqualified, did not contain any statement under Section 498(2) or 498(3) of the Companies Act 2006 and did not contain any matters to which the auditors drew attention without qualifying their report.
The accounting policies used in preparing the interim results are the same as those applied to the latest audited annual financial statements.
3. Segment analysis
Geographical information
The Group's revenue from external customers and non-current assets by geographical location are detailed below.
|
|
|
|
|
|
|
|
|
|
|
|
Other |
Total |
|
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
|
|
|
|
|
|
|
30 June 2017 (unaudited) |
|
|
|
|
|
|
Revenue |
11,575 |
1,361 |
7,210 |
545 |
781 |
21,472 |
|
|
|
|
|
|
|
Non-current assets |
69,144 |
3 |
21,675 |
361 |
- |
91,183 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
31 December 2016 (audited) |
|
|
|
|
|
|
Revenue |
18,205 |
1,368 |
7,736 |
253 |
701 |
28,263 |
|
|
|
|
|
|
|
Non-current assets |
45,270 |
- |
288 |
- |
- |
45,558 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
30 June 2016 (unaudited) |
|
|
|
|
|
|
Revenue |
8,669 |
492 |
3,077 |
140 |
407 |
12,785 |
|
|
|
|
|
|
|
Non-current assets |
22,516 |
- |
20,604 |
- |
- |
43,120 |
Revenue by nature
The Group's revenue by nature is analysed as follows:
|
Content |
Software Licences |
Hosting and SaaS Licences |
Support and Mainte-nance |
Consul- ting |
Platform develop-ment |
Other |
Total |
|
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
30 June 2017 (unaudited) |
|
|
|
|
|
|
||
e-Learning recurring |
- |
4,798 |
2,878 |
179 |
- |
- |
- |
7,855 |
e-Learning non-recurring |
9,935 |
598 |
5 |
258 |
472 |
1,406 |
322 |
12,996 |
Non- e-Learning |
- |
- |
- |
- |
- |
- |
621 |
621 |
|
9,935 |
5,396 |
2,883 |
437 |
472 |
1,406 |
943 |
21,472 |
31 December 2016 (audited) |
|
|
|
|
|
|
||
e-Learning recurring |
- |
6,630 |
689 |
- |
- |
- |
- |
7,319 |
e-Learning non-recurring |
14,118 |
949 |
8 |
574 |
853 |
1,419 |
1,147 |
19,068 |
Non- e-Learning |
- |
- |
- |
- |
- |
- |
1,876 |
1,876 |
|
14,118 |
7,579 |
697 |
574 |
853 |
1,419 |
3,023 |
28,263 |
30 June 2016 (unaudited) |
|
|
|
|
|
|
||
e-Learning recurring |
- |
2,792 |
309 |
- |
- |
- |
- |
3,101 |
e-Learning non-recurring |
6,109 |
487 |
- |
330 |
440 |
572 |
856 |
8,794 |
Non- e-Learning |
- |
- |
- |
- |
- |
- |
890 |
890 |
|
6,109 |
3,279 |
309 |
330 |
440 |
572 |
1,746 |
12,785 |
Information about major customers
In the six months to 30 June 2017, the Group's customer Civil Service Learning accounted for 11.8 percent of reported revenues. For the year ended 31 December 2016 and the six months to 30 June 2016, no customer accounted for more than 10 percent of reported revenues.
4. Taxation
Taxation for the six months to 30 June 2017 has been calculated by applying the estimated tax rate for the current financial year ending 31 December 2017 to an estimated tax adjusted profit figure.
5. Earnings per share
|
|
30 June 2017 |
31 Dec 2016 |
30 June 2016 |
|
|
(unaudited) |
(audited) |
(unaudited) |
|
|
£'000 |
£'000 |
£'000 |
|
|
|
|
|
Profit after tax attributable to owners of the Group : |
|
(1,914) |
(1,326) |
(535) |
|
|
|
|
|
Weighted average number of shares: Basic |
|
491,485,506 |
418,619,004 |
413,821,957 |
Diluted |
|
523,025,550 |
454,881,150 |
444,317,045 |
|
|
|
|
|
Basic earnings per share (pence) |
|
(0.392) |
(0.317) |
(0.129) |
|
|
|
|
|
Diluted earnings per share (pence) |
|
(0.392) |
(0.317) |
(0.129) |
Adjusted diluted earnings per share (pence) |
|
0.523 |
1.184 |
0.597 |
Diluted earnings per share is calculated by adjusting the weighted average number of ordinary shares outstanding to assume conversion of all dilutive potential ordinary shares. The Company has share options that are dilutive potential ordinary shares.
In order to give a better understanding of the underlying operating performance of the Group, an adjusted earnings per share comparative has been included. Adjusted earnings per share is stated after adjusting the profit after tax attributable to equity holders of the Group for certain charges as set out in the table below:
|
|
30 June 2017 |
|
31 Dec 2016 |
30 June 2016 |
||||
|
Profit after tax |
Weighted average number of shares |
Pence per share |
Profit after tax |
Weighted average number of shares |
Pence per share |
Profit after tax |
Weighted average number of shares |
Pence per share |
|
£'000 |
'000 |
|
£'000 |
'000 |
|
£'000 |
'000 |
|
|
|
|
|
|
|
|
|
|
|
Basic earnings per ordinary share |
(1,925) |
491,486 |
(0.392) |
(1,326) |
418,619 |
(0.317) |
(535) |
413,822 |
(0.129) |
Effect of adjustments: |
|
|
|
|
|
|
|
|
|
Amortisation of acquired intangibles |
3,042 |
- |
- |
3,200 |
- |
- |
1,536 |
- |
- |
Share based payment costs |
218 |
- |
- |
605 |
- |
- |
300 |
- |
- |
Integration costs |
703 |
- |
- |
73 |
- |
- |
64 |
- |
- |
Cost of acquisitions |
958 |
- |
- |
99 |
- |
- |
105 |
- |
- |
Acquisition earnout |
683 |
- |
- |
3,211 |
- |
- |
1,434 |
- |
- |
Net foreign exchange differences on borrowings |
(22) |
- |
- |
333 |
- |
- |
134 |
- |
- |
Interest receivable |
(4) |
- |
- |
(1) |
- |
- |
- |
- |
- |
Finance expense on contingent consideration |
24 |
- |
- |
57 |
- |
- |
42 |
- |
- |
Income tax (credit)/expense |
77 |
- |
- |
133 |
- |
- |
(400) |
- |
- |
Effect of adjustments |
5,679 |
- |
1.155 |
7,710 |
- |
1.842 |
3,215 |
- |
0.777 |
Adjusted profit before tax |
3,754 |
- |
- |
6,384 |
- |
- |
2,680 |
- |
- |
Tax impact after adjustments |
(1,019) |
- |
(0.207) |
(1,000) |
- |
(0.239) |
(28) |
- |
(0.007) |
Adjusted basic earnings per ordinary share |
2,735 |
491,486 |
0.556 |
5,384 |
418,619
|
1.286 |
2,652 |
413,822 |
0.641 |
Effect of dilutive potential ordinary shares: |
|
|
|
|
|
|
|
|
|
Share options |
- |
28,207 |
(0.030) |
- |
30,031 |
(0.086) |
- |
30,495 |
(0.044) |
Deferred consideration payable (conditions met) |
|
- |
|
|
1,819 |
(0.005) |
|
|
|
Deferred consideration payable (contingent) |
|
3,333 |
(0.003) |
|
4,412 |
(0.011) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted diluted earnings per ordinary share |
2,735 |
523,026 |
0.523 |
5,384 |
454,881 |
1.184 |
2,652 |
444,317 |
0.597 |
6. Intangible assets
|
|
|
Customer contracts and relationships |
Branding |
Acquired IP and Software development |
Internally generated IP and Software development |
Total |
|
|
|
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
|
Cost |
|
|
|
|
|
|
|
|
At 1 January 2016 |
|
12,379 |
6,291 |
428 |
- |
1,127 |
20,225 |
|
Additions on acquisition |
|
12,233 |
8,584 |
256 |
- |
249 |
21,322 |
|
Additions |
|
- |
- |
- |
- |
378 |
378 |
|
Foreign exchange differences |
|
754 |
455 |
98 |
- |
- |
1,307 |
|
At 30 June 2016 (unaudited) |
|
25,366 |
15,330 |
782 |
- |
1,754 |
43,232 |
|
Additions |
|
|
|
|
- |
418 |
418 |
|
Foreign exchange differences |
|
1,242 |
862 |
27 |
- |
69 |
2,200 |
|
At 31 December 2016 (audited) |
|
26,608 |
16,192 |
809 |
- |
2,241 |
45,850 |
|
Additions on acquisition |
|
20,967 |
30,059 |
1,069 |
1,432 |
- |
53,527 |
|
Additions |
|
- |
- |
- |
- |
667 |
667 |
|
Foreign exchange differences |
|
(1, 544) |
(1,612) |
(65) |
(71) |
(38) |
(3,330) |
|
At 30 June 2017 (unaudited) |
|
46,031 |
44,639 |
1,813 |
1,361 |
2,870 |
96,714 |
|
|
|
|
|
|
|
|
|
|
Accumulated amortisation |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At 1 January 2016 |
|
- |
1,609 |
164 |
- |
522 |
2,295 |
|
Amortisation charged in period |
|
- |
1,471 |
65 |
- |
164 |
1,700 |
|
At 30 June 2016 (unaudited) |
|
- |
3,080 |
229 |
- |
686 |
3,995 |
|
Amortisation charged in period |
|
- - |
1,589 |
75 |
- |
241 |
1,905 |
|
At 31 December 2016 (audited) |
|
- |
4,669 |
304 |
- |
927 |
5,900 |
|
Amortisation charged in period |
|
- - |
2,809 |
120 |
113 |
280 |
3,322 |
|
At 30 June 2017 (unaudited) |
|
- |
7,478 |
424 |
113 |
1,207 |
9,222 |
|
|
|
|
|
|
|
|
|
|
Carrying amount |
|
|
|
|
|
|
|
|
At 30 June 2016 (unaudited) |
|
25,366 |
12,250 |
553 |
- |
1,068 |
39,237 |
|
At 31 December 2016 |
|
26,608 |
11,523 |
505 |
- |
1,314 |
39,950 |
|
At 30 June 2017 (unaudited) |
|
46,031 |
37,161 |
1,389 |
1,248 |
1,663 |
87,492 |
|
7. Other receivables, deposits and prepayments
|
30 June 2017 (unaudited) |
31 Dec 2016 (audited) |
30 June 2016 (unaudited) |
|
£'000 |
£'000 |
£'000 |
Sundry receivables |
633 |
238 |
- |
Prepayments |
4,951 |
1,757 |
2,194 |
|
5,584 |
1,995 |
2,194 |
8. Cash and cash equivalents
For the purpose of the statement of cash flows, cash and cash equivalents comprise the following:-
|
30 June 2017 (unaudited) |
31 Dec 2016 (audited) |
30 June 2016 (unaudited) |
|
£'000 |
£'000 |
£'000 |
|
|
|
|
Cash and bank balances |
11,498 |
5,348 |
4,257 |
9. Trade and other payables
|
|
|
30 June 2017 (unaudited) |
31 Dec 2016 (audited) |
30 June 2016 (unaudited) |
|
|
|
£'000 |
£'000 |
£'000 |
Trade payables |
|
|
854
|
871 |
628 |
Payments received on account |
|
|
9,478 |
2,711 |
2,921 |
Tax and social security |
|
|
5,041 |
1,002 |
767 |
Contingent consideration |
|
|
216 |
59 |
- |
Acquisition-related deferred consideration and earn-outs |
|
|
985 |
2,824 |
1,173 |
Accruals and others |
|
|
4,170 |
1,748 |
2,664 |
|
|
|
20,744 |
9,215 |
8,153 |
10. Acquisitions
On 3 February 2017 LTG announced an all cash Offer for the issued and to be issued share capital of NetDimensions (Holdings) Limited ('NetDimensions') for £53.6 million (£1 per share and share option).
NetDimensions is a leading global enterprise solutions provider of talent and learning management systems, headquartered in
On 9 February 2017, the Group announced the purchase of 1,000,000 ordinary shares in NetDimensions (representing 1.95%) for total consideration of £0.984 million. On 20 March 2017, the Offer was declared unconditional in all respects; this is the date that the Group obtained control and is the date used for the acquisition accounting. At this date and at the balance sheet date the Group had a 97.16% holding of NetDimensions.
At the balance sheet date 2.84% of NetDimensions' shares had not been acquired by LTG, equivalent to £1.5 million at the Offer price; this represents the reconciling difference between the £52.1 million total consideration shown in the table below and the £53.6 million cash Offer. The compulsory acquisition of those non-controlling shareholders' interests was completed in July 2017. The non-controlling interest has been measured on the proportionate basis of net assets acquired.
None of the goodwill recognised is expected to be deductible for income tax purposes.
The following table summarises the consideration paid for NetDimensions, the fair value of assets acquired and liabilities assumed at the acquisition date.
10. Acquisition (continued)
Consideration |
|
Fair Value £'000 |
|
Cash paid to NetDimensions shareholders |
|
49,793 |
|
Cash paid to NetDimensions share options holders |
|
2,311 |
|
Total consideration |
|
52,104 |
|
|
|
|
|
Non-controlling interest on acquisition |
|
911 |
|
|
|
53,015 |
|
|
|
|
|
Recognised amounts of identifiable assets acquired and liabilities assumed |
Book value £'000 |
Fair value £'000 |
|
Cash and cash equivalents |
7,881 |
7,881 |
|
Property, plant and equipment |
198 |
198 |
|
Trade and other receivables |
8,825 |
8,825 |
|
Trade and other payables |
(11,375) |
(11,972) |
|
Deferred tax liabilities on acquisition |
|
(5,444) |
|
Intangible assets identified on acquisition |
|
32,560 |
|
Total identifiable net (liabilities)/assets |
5,529 |
32,048 |
|
|
|
|
|
|
|
20,967 |
|
|
|
|
|
Total |
|
53,015 |
|
The fair value adjustments to the assets and liabilities assumed are provisional and are management's best estimates at this time.
NetDimensions contributed £3.9 million of revenue for the period between the date of acquisition and the balance sheet date and £0.3 million of loss before tax attributable to equity holders of the parent. Had the acquisition of NetDimensions had been completed on the first day of the financial year Group revenues would have been £3.4 million higher and group profit before tax attributable to equity holders of the parent would have been £1.4 million lower.
Company information
Directors
Company number
07176993
Registered address
119-121 Cannon Street
EC4N 5AT
Independent auditors
Chartered Accountants and Statutory Auditors
St Bride's House
10 Salisbury Square
EC4Y 8EH
Nominated adviser and broker
10 Paternoster Square
EC4M 7LT
Legal advisers
Water Lane
LS11 5DY
Principal Bankers
Alphabeta
14-18 Finsbury Square
EC2A 1BR
Registrars
Computershare Investor Services plc
The Pavilions
Bridgewater Road
BS13 8AE
Communications consultancy
Hudson Sandler Limited
29 Cloth Fair
EC1A 7NN
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