TIDMLTG
RNS Number : 4674A
Learning Technologies Group PLC
29 September 2015
Learning Technologies Group plc
("LTG," "the Group" or "the Company")
Interim results for the 6 months to 30 June 2015
Good progress, strong order book
Learning Technologies Group plc the leading e-learning company,
announces its interim results for the 6 months ended 30 June
2015.
Highlights
-- Revenue increased 29% to GBP8.4 million (H1 2014: GBP6.5m)
-- Adjusted EBITDA grew by 47% to GBP1.3m (H1 2014: GBP0.9m)
-- Cash balance at the end of the period of GBP3.0m
-- Merger of LINE and Epic in 2014, to form LEO, delivered projected synergies of GBP0.7m
-- Substantial contract win in partnership with KPMG
-- Successful launch of gomo 3.0, LTG's cloud based
self-authoring tool; strong sales growth in H1 and high renewal
rates
-- International: Brazil JV had exceptional sales period, enters
second half of the year reporting first monthly profit; US, slow
start to the year but new VP appointed and sales pipeline and order
book grown encouragingly
-- Interim dividend of 0.05 pence per share (2014: 0.03 pence per share)
-- Post period-end acquired Eukleia Training Limited, extending
the Group's service offering into Governance, Risk and Compliance,
funded by GBP7.5m equity raise
-- Current trading in-line with expectations
Andrew Brode, Chairman said:
"We set out to create a business of significant scale and are
making good progress through the merger of LINE and Epic to form
LEO and acquisitions that extend our capability, our sector
expertise and our geographic reach. We are now reaping the benefits
from the acquisitions we have made, providing us with scale and a
greater breadth of service offerings to a broader client base.
Preloaded and gomo are also performing well and proving a
complementary fit to this business.
We have a strong order book and an acquisition pipeline to
progress our strategy of becoming a GBP50m revenue business."
29 September 2015
Enquiries
Learning Technologies Group
plc +44 (0)1273 468 889
Jonathan Satchell, Chief
Executive
Neil Elton, Group Finance
Director
Numis Securities Limited +44 (0)20 7260 1000
Stuart Skinner/Michael Wharton
(Nominated Adviser)
James Serjeant (Corporate
Broker)
Instinctif Partners +44 (0)20 7457 2020
Matthew Smallwood
Chairman's Statement
Introduction
We have made good progress during the first half of 2015
delivering operational and financial synergies as a result of the
acquisitions made in 2014. I am pleased to report that profits are
in line with management expectations and that we have entered the
second half of the year with a strong order book.
LTG's strategy is to create a global e-learning business with
revenues in excess of GBP50 million through organic growth and
selective acquisition. In April 2014 LTG acquired LINE
Communications Holdings Limited ('LINE') and in May 2014 it
acquired Preloaded Limited ('Preloaded'). The comparative figures
included in this report for the first half of 2014 include the
post-acquisition results for these two businesses.
Results
Revenues increased by 29% to GBP8.4 million in the 6 months
ended 30 June 2015 (H1 2014: GBP6.5 million) and adjusted EBITDA
grew by 47% to GBP1.3 million (H1 2014: GBP0.9 million), reflecting
an increase in adjusted EBITDA margins from 13.4% to 15.3%. The
increase in EBITDA margin is a result of the realisation of the
planned GBP0.7 million annualised cost synergies that arose from
the integration of LINE and Epic Performance Improvement Limited
('Epic') in mid 2014.
Operating profit, stated after amortisation of acquired
intangibles, depreciation, share based payments and integration
costs, increased by 217% to GBP0.3 million (H1 2014: GBP0.1
million).
A net tax credit of GBP144,000 (H1 2014: charge of GBP42,000)
includes a release of deferred tax liabilities created from
acquired intangibles of GBP87,000 and the increase of deferred tax
assets created by share options of GBP57,000.
The Group reported a rise in net profit to GBP0.4 million (H1
2014: loss of GBP0.3 million) and basic earnings per share
increased to 0.099 pence (H1 2014: loss of 0.098 pence).
At the end of the half year LTG had a strong cash balance of
GBP3.0 million (31 December 2014: GBP4.4 million). The Group has no
debt.
Net cash flow from operating activities was GBP0.4 million, as
trade debtors increased to GBP3.2 million (31 December 2014: GBP2.8
million) and amounts recoverable on contracts increased to GBP2.5
million (31 December 2014: GBP1.8 million) as a result of a few
substantial projects. During the same period the Company elected to
settle GBP1.3 million of deferred consideration related to the
acquisition of Preloaded in cash and paid a final dividend of
GBP0.2 million.
Overall net assets increased to GBP15.1 million (31 December
2014: GBP13.8 million) and shareholders funds increased from 4.1
pence per share to 4.2 pence per share.
Group development
LEO Learning ('LEO') was formed from the merger of Epic and LINE
in July 2014. Over the past year we have seen the benefits of this
merger in terms of the scale of offering that we now provide to
clients, the increased access to specialist resources across our
network, the application of our industry leading thought
leadership, together with economies of scale, workflow management
and best practice in improving customer satisfaction and
margins.
We were particularly pleased to win a substantial contract in
partnership with KPMG to create an important capability assessment
solution for a central government department and we are heartened
to see LEO, time and time again, retain important clients often in
very competitive bids (for example with Civil Service Learning) and
extending and deepening our relationships with clients as we
partner with them to "Move learning to the heart of business
strategy", as we have done with clients such as Jaguar Land Rover
and Sky.
So far in H2 2015 we have restructured the business to focus on
offering key account management, client market sector specialism,
consultancy and strategic advice, as well as to give staff a
defined career route for progression within the business. The
integration of LTG's businesses now means that we are able to offer
our clients a more comprehensive and integrated range of solutions
to their learning needs across a wider geography, and our staff the
opportunity to apply their skills in different sectors and group
locations.
Preloaded has continued its success in the year-to-date. At the
beginning of the year it won a contract to deliver an innovative
learning games campaign for a global restaurant chain, and it has
now commenced the next phase of this work which extends into 2016.
Building on a successful project for the Science Museum, Preloaded
has won an educational project with the British Museum that will
encourage visitors to explore and engage with the museum through
phone and tablet devices. We continue to be excited by the pipeline
of opportunities Preloaded has in the 'games with purpose'
space.
In April 2015 we launched gomo 3.0, the latest version of our
cloud based self-authoring tool. This award winning product has
seen strong sales growth in H1 2015 and as we come to the end of
our first full year of roll-out I am pleased to report that we are
seeing high renewal rates, with many customers increasing the
number of licences that they order. Clients include Nike, Burberry,
Xerox and Santander. gomo also provides an effective platform
through which LEO can assist clients in furthering the quality of
their in-house offering and we are seeing encouraging trends in the
referral of work across the Group.
After an exceptional 2014, the US office had a slow start to
this year. However, under the guidance of our new VP for North
America, the sales pipeline and order book have grown encouragingly
over the past few months.
Our Brazilian joint venture had an exceptional sales period in
the first half of 2015 and production processes have been improved
such that as they enter the second half of the year they have moved
from a loss to reporting their first monthly profit. Our share of
reported losses in the first half of 2015 was GBP41,000 (H1 2014:
GBP22,000 loss).
We continue to invest in the business. At the beginning of July
2015 we moved Preloaded to a new studio in Finsbury Park and we are
in the middle of a year-long programme of investment in our ERP,
finance and HR systems which will allow us to streamline processes,
provide improved management information and create the platform for
increasing scale.
Dividend
I am delighted to announce that the Board has approved an
interim dividend of 0.05 pence per share (2014: 0.03 pence per
share) reflecting the progress that the Company has made and the
Board's confidence in the future. This will be paid on 30 October
2015 to shareholders on the register at 9 October 2015.
Post half year end acquisition and outlook
On 31 July 2015 the Group announced the acquisition of Eukleia
Training Limited ('Eukleia'). The acquisition is a continuation of
LTG's objective to acquire specialist businesses that extend the
Group's service offering and help move it into new markets. Eukleia
gives LTG a presence in the substantial growing market for
Governance, Risk and Compliance ('GRC') in the financial services
sector and significantly expands its scale and client base.
Eukleia's sector expertise is its key strength and LTG expects to
use its operational know-how to further enhance the business.
Eukleia will also take advantage of LTG's international presence to
access other GRC markets, in particular in the US.
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The initial consideration comprised GBP6.0 million cash, GBP1.5
million in LTG equity plus up to GBP3.5 million contingent deferred
consideration. At the same time as the acquisition LTG placed
35,714,286 new shares to raise GBP7.5m at 21 pence per share.
Further details are provided in Note 7.
In summary the Board is pleased with the progress that the Group
has made in the first half of 2015, the realisation of planned
operational synergies, the strengthened order book and the
acquisition of Eukleia at the beginning of the second half of the
year, which continues our commitment to build a global e-learning
business of scale. We continue to actively pursue acquisition
opportunities on both sides of the Atlantic.
We look forward to continuing to deliver significant profitable
progress during the remainder of 2015.
Andrew Brode, Chairman
28 September 2015
Consolidated statement of comprehensive income
Six months Six months
to Year to to
30 June 31 Dec 30 June
2015 2014 2014
(unaudited) (audited) (unaudited)
Note GBP'000 GBP'000 GBP'000
Revenue 3 8,390 14,920 6,504
Operating expense (8,032) (14,433) (6,382)
------------- ------------ -------------
358 487 122
Share of losses of
joint venture (41) (160) (22)
------------- ------------ -------------
Operating profit* 317 327 100
Adjusted EBITDA 1,287 2,065 874
Amortisation of intangibles (480) (659) (233)
Depreciation (90) (171) (69)
Share based payment
costs (400) (583) (355)
Integration costs - (325) (117)
------------------------------- ----- ------------- ------------ -------------
Operating profit* 317 327 100
------------------------------- ----- ------------- ------------ -------------
Costs of acquisition - (296) (294)
Finance expense (115) (162) (68)
Interest receivable 7 4 1
------------- ------------ -------------
Profit/(loss) before
taxation 209 (127) (261)
Income tax expense 4 144 (35) (42)
------------- ------------ -------------
Profit/(loss) for
the period/year attributable
to the owners of
the parent 353 (162) (303)
Earnings/(loss) per
share attributable
to owners of the
parent:
Basic, (pence) 5 0.099 (0.049) (0.098)
============= ============ =============
Diluted, (pence) 5 0.093 (0.049) (0.098)
============= ============ =============
Other comprehensive
income: 8 17 -
Total comprehensive
income/(loss) for
the period 361 (145) (303)
============= ============ =============
Consolidated statement of financial position
31 Dec 30 June
2014 2014
30 June
2015 (unaudited) (audited) (unaudited)
Note GBP'000 GBP'000 GBP'000
ASSETS
NON-CURRENT ASSETS
Property, plant and
equipment 331 339 382
Intangible assets 11,025 11,364 12,184
Deferred tax assets 825 618 -
Investments - 16 -
------------------ ------------------ --------------
12,181 12,337 12,566
CURRENT ASSETS
Trade receivables 3,201 2,762 2,535
Other receivables,
deposits
and prepayments 470 337 427
Amounts recoverable
on contracts 2,469 1,806 1,908
Cash and bank balances 6 2,958 4,358 3,815
------------------ ------------------ --------------
9,098 9,263 8,685
TOTAL ASSETS 21,279 21,600 21,251
================== ================== ==============
CURRENT LIABILITIES
Trade and other payables 5,560 4,832 5,422
Corporation tax 226 352 115
Provisions - - 30
5,786 5,184 5,567
NON CURRENT LIABILITIES
Deferred tax liabilities 360 446 398
Other long term liabilities - 1,512 1,523
Provisions 30 49 -
------------------ ------------------ --------------
390 2,007 1,921
TOTAL LIABILITIES 6,176 7,191 7,488
================== ================== ==============
NET ASSETS 15,103 14,409 13,763
======= ======= =======
EQUITY AND LIABILITIES
Share capital 1,334 1,329 1,327
Share premium account 13,125 13,098 13,089
Merger relief reserve 22,269 22,269 22,269
Reverse acquisition
reserve (22,933) (22,933) (22,933)
Share-based payment
reserve 1,742 1,203 894
Foreign exchange
translation reserve 25 17 -
Accumulated losses (459) (574) (883)
--------- --------- ---------
TOTAL EQUITY ATTRIBUTABLE
TO THE OWNERS OF
THE PARENT 15,103 14,409 13,763
Consolidated statement of changes in equity (GBP'000)
Share Share Merger Reverse Share Foreign Retained Total
capital Premium relief acquisition based exchange profits/(losses) equity
reserve reserve payments reserve
reserve
Balance at 1
January
2014 1,034 1,159 22,269 (22,933) 547 - (588) 1,488
---------- --------- --------- ------------ --------- --------- ----------------- --------
Loss for the
period - - - - - - (303) (303)
Other - - - - - - - -
comprehensive
loss
---------- --------- --------- ------------ --------- --------- ----------------- --------
Total
comprehensive
loss for the
period - - - - - - (303) (303)
Issue of shares 293 12,202 - - - - - 12,495
Costs of issuing
shares - (272) - - - - - (272)
Share based
payment
charge /
credited to
equity - - - - 355 - - 355
Transfer on
exercise
and lapse of
options - - - - (8) - 8 -
Balance at 30
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September 29, 2015 02:01 ET (06:01 GMT)
June 2014 1,327 13,089 22,269 (22,933) 894 - (883) 13,763
Profit for
period - - - - - - 141 141
Exchange
differences
on
translating
foreign
operations - - - - - 17 - 17
---------- --------- --------- ------------ --------- --------- ----------------- --------
Total
comprehensive
profit for the
period - - - - - 17 141 158
Issue of shares 2 9 - - - - - 11
Share based
payment
charge /
credited to
equity - - - - 228 - - 228
Deferred tax
credit
on share
options - - - - 356 - - 356
Transfer on
exercise
and lapse of
options - - - - (275) - 275 -
Dividends paid - - - - - - (107) (107)
Balance at 31
December
2014 1,329 13,098 22,269 (22,933) 1,203 17 (574) 14,409
---------- --------- --------- ------------ --------- --------- ----------------- --------
Profit for
period - - - - - - 353 353
Exchange
differences
on
translating
foreign
operations - - - - - 8 - 8
---------- --------- --------- ------------ --------- --------- ----------------- --------
Total
comprehensive
income for the
year - - - - - 8 353 361
Issue of shares 5 27 - - - - - 32
Share based
payment
charge /
credited to
equity - - - - 400 - - 400
Deferred tax
credit
on share
options - - - - 149 - - 149
Transfer on
exercise
and lapse of
options - - - - (10) - 10 -
Dividends paid - - - - - - (248) (248)
Balance at 30
June 2015 1,334 13,125 22,269 (22,933) 1,742 25 (459) 15,103
========== ========= ========= ============ ========= ========= ================= ========
Consolidated statement of cash flows
Six months Year to Six months
to to
30 June 31 Dec 30 June
2015 2014 2014
(unaudited) (audited) (unaudited)
GBP'000 GBP'000 GBP'000
Cash flow from operating
activities
Profit/(loss) before
taxation 209 (127) (261)
Adjustments for:-
Share option charge 400 583 355
Amortisation of intangible
assets 480 659 233
Depreciation of plant
and equipment 90 171 69
Share of loss of joint
venture 41 160 22
Finance expense 115 162 20
Interest received (7) (4) (1)
------------- ----------- -------------
Operating cash flow before
working capital changes 1,328 1,604 437
(Increase)/decrease in
trade and other receivables (572) 507 621
(Increase) in amount
recoverable on contracts (663) (668) (183)
Increase/(decrease) in
payables 417 (507) (2,038)
------------- ----------- -------------
510 936 (1,163)
------------- ----------- -------------
Interest received 7 4 1
Income tax (paid)/received (127) (32) 22
------------- ----------- -------------
Net cash flow from/(used
in) operating activities 390 908 (1,140)
------------- ----------- -------------
Cash flow used in investing
activities
Purchase of property,
plant and equipment (79) (123) (59)
Development of intangible
assets (141) (198) (47)
Acquisition of subsidiaries,
net of cash acquired - (4,407) (3,836)
Deferred consideration (1,337) - -
payments in the period
Investment in joint venture (25) (179) (26)
------------- ----------- -------------
Net cash flow used in
investing activities (1,582) (4,907) (3,968)
------------- ----------- -------------
Cash flow used in financing
activities
Dividends paid (248) (107) -
Cash generated from issue
of shares, net of share
issue costs 32 7,756 7,753
Repayment of bank loans - (465) -
------------- ----------- -------------
Net cash flow (used in)/from
in financing
activities (216) 7,184 7,753
------------- ----------- -------------
Net increase/(decrease)
in cash and cash equivalents (1,408) 3,185 2,645
Cash and cash equivalents
at beginning of the year 4,358 1,170 1,170
Effects of foreign exchange
rate changes 8 3 -
----------- -------------
Cash and cash equivalents
at end of the year 2,958 4,358 3,815
============= =========== =============
Notes to the consolidated financial statements for the six
months to 30 June 2015
1. General information
Learning Technologies Group plc ("the Company") and its
subsidiaries (together, "the Group") provide a range of e-learning
services and technologies to corporate clients. 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 52 Old Steine, Brighton, East Sussex,
BN11NH. The registered number of the Company is 07176993.
2. Basis of preparation
The unaudited consolidated interim financial information has
been prepared in accordance with International Financial Reporting
Standards as adopted by the European Union (IFRSs as adopted by the
EU).
The interim results for the six months to 30 June 2015 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 2014 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
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