16
April 2024
Learning Technologies Group
plc
FULL YEAR RESULTS
2023
Focus on execution with
financial performance in line with consensus
expectations
Resilient revenue
reflecting the strength of long-term contracts
Continued margin
progression and record operating cash flow
generation
Learning Technologies Group plc, a
global market leader in digital learning and talent management,
announces results for the year ended 31 December 2023.
Focus on execution of our strategic agenda
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GP Strategies has more than
doubled profit since joining LTG in 2021, driven by margin
progression, a successful transformation plan and operational
improvements to GPLX in H2 2023.
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Renewed all major client contracts
>$10m and expanded revenue in LatAm and Middle East.
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Actively managed our portfolio
including the sale of Lorien Engineering Solutions which completed
in January 2024.
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Further streamlined and
strengthened the commercial operation by integrating Watershed into
Rustici, LEO into GP Strategies and Reflektive into
Bridge.
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Established Group wide AI task
force launching several AI enhanced software products in 2024 and
leading on educating our Fortune 500 client base on a "Human + AI"
future.
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Achieved significant impact by
providing learning to over 200 million people during the
year.
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Resilient financial performance with record operating cash
flow generation
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Revenue of £562.3 million and
adjusted EBIT of £98.5 million in line with consensus expectations,
reflecting a slight decline (2)% in constant currency revenue and
(1)% adjusted EBIT.
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Statutory profit before tax
increased 13% to £45.6 million.
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Resilient revenue performance in
the context of the macroeconomic climate - with 73% of revenue
underpinned by durable SaaS and long-term contracts.
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Adjusted EBIT margin increased to
17.5% in FY23 from 17% in FY22.
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GP Strategies' EBIT margin c.15%
in H2 and exit run-rate c. 17% in line with previous
guidance.
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Record net cashflow from
operations during the year of £79.5m driving swift deleveraging to
0.7x prior to incorporating proceeds from disposal of Lorien
received in 2024, with continued good cash generation in Q1
2024.
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Dividend
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The Board is committed to a
progressive dividend policy and is pleased to propose a final
dividend of 1.21 pence per share (2022: 1.15p), an increase of 5%,
subject to shareholder approval at the AGM.
|
Current Trading and 2024 Outlook
The Board maintains a cautious
stance for 2024 due to the macroeconomic uncertainty. Consequently,
we expect 2024 revenues will be in line with 2023 (after
disposals), while continuing to drive growth in Adjusted
EBIT. We remain reassured by the strong foundations we have
built, our effective Go-to-Market strategy, ongoing product
innovation, coupled with the active management of our extensive
portfolio. These efforts are geared towards driving further
efficiencies and supports our confidence in restoring underlying
revenue growth as the macroeconomic environment
recovers.
Medium Term Targets Update
Given the temporary pause on
bolt-on acquisitions in FY22 that continued into FY23 as we focused
on the transformation of GP Strategies, de-leveraging and active
portfolio management in a subdued macroeconomic environment, the
Board has concluded the 2025 goal to achieve run-rate revenues of
£850 million and £175 million run-rate adjusted EBIT is no longer
appropriate.
Our continued strong cash
generation and balance sheet strength give the Board confidence in
returning to value-accretive acquisitions in 2024 and beyond.
Furthermore, this is supported by an expectation that we will
return to organic growth as the economy improves.
Jonathan Satchell, Chief Executive Officer of Learning
Technologies Group, said:
"LTG has delivered a resilient performance in 2023 against
the macroeconomic backdrop. This demonstrates the benefit of our
global client footprint and diversification, the durable nature of
our SaaS and long-term revenues and our focus on efficiency and
cash flow.
Looking ahead, we remain confident in the outlook over the
medium term as the structural drivers of the learning and
development industry remain intact with LTG offering one of the
most comprehensive ranges of learning and talent services and
technologies within our sector. I am also excited about our AI
innovations which will enhance our productivity and create
additional revenue opportunities with our clients. Given the
strength of our balance sheet, we will return to acquisitions that
align with our strategic objectives."
Financial summary:
£m unless otherwise
stated
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2023
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2022*
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Change
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Revenue*
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562.3
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588.6
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(4%)
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Constant currency
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(2)%
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3%
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Software & Platforms
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(4)%
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5%
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Content & Services
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(1)%
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(7%)
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SaaS & long-term
contracts
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73%
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71%
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Adjusted EBIT*
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98.5
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99.9
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(1%)
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Adjusted EBIT margin*
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17.5%
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17%
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+50bps
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Statutory PBT*
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45.6
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40.5
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+13%
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Adj. Diluted EPS (pence)*
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7.803
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7.996
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(2)%
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Basic EPS (pence)
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3.724
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3.857
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(3)%
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Net
Debt
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78.6
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119.8
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(34)%
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Final Dividend (pence)
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1.21
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1.15
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5%
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Adjusted Operating Cash
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86.3
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83.2
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4%
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Net
cashflow from operations
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79.5
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71.9
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10%
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* 2022 continuing
operations.
Analyst and investor presentation:
LTG will host a hybrid presentation
for analysts and institutional investors at 09:00 today, 16th April
2024. To join the briefing virtually, please register via the
link below:
https://www.investormeetcompany.com/learning-technologies-group-plc/register-investor
Enquiries:
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Learning Technologies Group plc
Jonathan Satchell, Chief
Executive
Kath Kearney-Croft, Chief
Financial Officer
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+44
(0)20 7832 3440
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Deutsche Numis (NOMAD and Corporate
Broker)
Nick Westlake, Ben Stoop,
Tejas Padalkar
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+44
(0)20 7260 1000
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Goldman Sachs International (Joint Corporate
Broker)
Bertie Whitehead,
Adam Laikin
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+44
(0)20 7774 1000
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FTI
Consulting (Public Relations Adviser)
Jamie Ricketts, Emma Hall, Lucy
Highland. Jemima Gurney
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+44
(0)20 3727 1000
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About LTG
Learning Technologies Group
plc (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 software 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, South
America and Asia-Pacific.
Annual Report - Chief Executive's Review
"Our resilience shows the benefit
of our SaaS and long-term contracts - representing 73% of revenues
- and laser-focus on margin."
Market-leader in workplace learning and talent
management
LTG is a leader in workplace
learning and talent management, helping more than 6,000
organisations address a fast-evolving business landscape. The
group is a portfolio of profitable software and services businesses
in talent management and learning with a common go-to-market
strategy.
Our comprehensive suite of
products and services integrate with our customers, bridging the
skills gap between the present and the future workforce and
delivering tangible outcomes. When appropriate, we offer
solutions and services from more than one of our businesses,
leveraging our combined go-to-market strategy to reinforce our
current global market presence and drive growth.
As part of our ongoing active
portfolio management, where businesses do not fully align with our
strategy we look to recycle the capital towards our core focus on
talent management and learning, as we have done with the disposals
of non-core Lorien Engineering Solutions and a carve-out of the
external staffing business of TTi Global in recent
months.
Resilient performance with strong margin progression and cash
generation
LTG delivered a resilient
performance in 2023. Revenues and adjusted EBIT from
continuing operations were in line with consensus expectations,
falling marginally by 2% on a constant currency basis and 1%
respectively. Revenues were £562.3 million and adjusted EBIT
from continuing operations was £98.5 million including the impact
of a slight FX headwind. Margin progression to 17.5% (FY22:
17.0%) was driven by our focus on profitability and a significant
improvement within GPLX in H2.
Our performance in a challenging
macro backdrop shows the strength of our SaaS and long-term
contracts - representing 73% of revenues - and a laser-focus on
margin. This meant we were able to absorb the impact of lower
transactional and project-based revenues linked to the challenging
macroeconomic backdrop. The restructuring
programme we implemented cost £2.5 million with an ongoing annual
benefit of £9.5 million. With these proactive measures, we are
well-positioned to maintain our resilient performance in uncertain
markets and benefit from more favourable conditions as they
arise.
We continued our strong track
record of cash generation with adjusted operating cash flow
conversion of 88%. Because of our excellent cash generation,
we are able to make substantial investments in innovation -
including AI - to support our customers' learning and talent
management needs.
GP Strategies commercial transformation complete and
supporting our market leadership
In the period following the
transformational acquisition of GP Strategies in 2021 - which added
significant strength and depth to our market leadership in learning
and talent development - GP Strategies has more than doubled in
profit. LEO Learning and PDT Global
were integrated into GP Strategies in January 2023, which caused
some challenges which were successfully addressed in H2. The
combination has significantly bolstered our market offering as one
of the world's largest and most creative custom content and
learning experience design offering, alongside our leadership in
talent transformation. The continued
commercial improvement in GP Strategies, with exit margins at c17%
in line with our previous guidance and margins of c.15% in H2,
reflects our focus on operational improvement. This
underlines our track record of improving the profitability and
operating model of businesses we acquire.
Active portfolio management
LTG accelerated the active
management of its portfolio in 2023, making two non-core disposals
- Lorien Engineering Solutions for $21.4 million on a cash and debt
free basis (subject to customer adjustments and completed in 2024),
and the external staffing business of TTi Global for $0.8 million.
These businesses were part of GP Strategies when it was acquired by
LTG in 2021 but did not fit with our strategic focus on learning
and talent management. Proceeds from the disposals have
further strengthened our balance sheet and supported our swift
deleveraging. Our balance sheet and excellent cash generation
underpin our intent to return to being acquisitive in 2024.
As previously indicated, our focus is on acquiring profitable
software companies that fit with our strategic focus on learning
and talent management. Where appropriate, we will continue to
recycle capital from businesses that do not fully align with that
strategic focus.
Given the temporary pause on
bolt-on acquisitions in FY22 and FY23 during the transformation of
GP Strategies, and focus on deleveraging and active portfolio
management in a lower organic growth environment, the Board has
concluded the 2025 goal to achieve run-rate revenues of £850
million and £175 million run-rate adjusted EBIT is no longer
appropriate.
Large addressable market opportunity
We are strategically positioned to
capitalise on a substantial and expansive global learning and
talent market estimated to be worth approximately $396 billion in
20241. The products and services we offer cater to a
diverse array of industries and sectors, tapping into a broad and
growing demand for innovative solutions. This market comprises
internal, external and tuition markets, and with
our go-to-market and integrated businesses, we
have a powerful combined offering that can address the >$100
billion external corporate training segment of this
market.
We are well placed to capitalise
on the ongoing evolution of workforce dynamics fuelled by
demographic shifts, technological advances and the ever-changing
nature of skills required in the modern workplace. With change a
constant, the demand for sophisticated learning and talent
solutions is growing on a global scale. At LTG, we provide
businesses with the tools to align strategic objectives with
workforce learning and development across all facets of the
employee lifecycle. Our suite of analytics tools also enables us to
monitor the performance of these solutions, providing customers
with transparent insights into the efficacy and return on
investment of our services and software.
Our approach not only enhances
operational efficiency but also positions us at the forefront of
driving value to our customers through unified and effective
solutions rather than fragmented systems. Our teams are working
hard to strategically position ourselves to address the diverse
needs of this expansive market, staying ahead of the ever changing
landscape of global learning and talent management.
1 Training
Industry, Inc.
Research Data 2023 estimated totals as of January 18,
2024
Investment case
Our demonstrated track record in
value creation highlights our aptitude in both organic growth over
the medium term and margin enhancement. Additionally, our strategic
pursuit of acquisitions has not only expanded our capabilities and
market reach but has consistently contributed to accretive
earnings. This has resulted in robust cash flow generation,
underpinning swift deleveraging and a progressive dividend
policy.
The main drivers that have enabled
us to deliver a robust financial performance over a sustained
period are as follows:
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Our strategic positioning provides
considerable access to the expanding digital training markets,
representing the future landscape of learning and development.
These markets are experiencing good growth, positioning us to
capitalise on profitable opportunities. In parallel, our commitment
to supporting learning is fortified by robust data analytics,
empowering our customers to quantifiably measure the effectiveness
of their initiatives.
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Our portfolio of businesses has products
that bring best-in-class specialist expertise, including learning,
performance, learning analytics, succession, compensation, vendor
management, recruitment and immersive virtual, augmented and mixed
reality experiences, complemented by expert advisory and consulting
through cross-selling. This makes us well-placed to help customers
'join up' their learning and talent management activities. We are
regarded as a thought leader in a fast-paced and evolving
market.
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Our highly skilled workforce comprises
seasoned professionals adept at providing LTG's diverse range of
product offerings. This expertise enables us to provide seamlessly
integrated solutions incorporating our products and services
tailored to meet our customers' talent transformation
requirements.
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Our expansive global presence with 5,000
employees in 36 countries enables us to both attract new customers
and enhance relationships with existing ones. Through our local
presence, we deliver training programmes finely tuned to align with
regional cultures and specific needs, ensuring optimal results.
This dual approach not only broadens our market reach but also
demonstrates our commitment to meeting our clients where they are
in their learning and talent transformation journey.
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Our longstanding partnerships and extensive
expertise in industries marked by rigorous regulations and
high-stakes implications. These markets are challenging to enter
and the training needs within them are intricate, mandatory and
critical for success. These include automotive, financial and
insurance, defence, aerospace and technology markets.
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Our investments to drive innovation in
learning through software solutions. Our commitment to continuous
improvement underscores our dedication to optimising
performance.
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Our proven ability to drive operational improvement - both in
our pre-existing businesses and those we acquire - and maintain
close control of costs supports margin progression over the
long-term.
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The demand for our services and
software is intensifying as the imperative for training and
development becomes increasingly critical across various
industries. This is delivered through a high proportion of
predictable and recurring revenue streams, comprising SaaS
subscriptions and long-term service contracts.
Creating value through AI and investment in
innovation
Harnessing AI to support customer
needs
LTG has good capabilities in AI
and is investing more to ensure we are in the optimal position to
work with clients as they train their own workforces.
We firmly believe the future
workforce will be 'human + AI' to give our customers innovative
solutions, drive efficiency and enhance their overall experience.
Our AI innovations aim to optimise processes and create value,
ultimately contributing to increased client engagement and
satisfaction.
In many areas across the business,
we are trialling AI solutions in collaboration with customers to
ensure a more adaptive, targeted and personalised approach to
learning and talent management. Specifically, from a services
perspective, GP Strategies is investing in R&D innovation (eg
Content AIQ1) and educating customers. For example:
'Human+AI - Practical Learning for Learning Leaders'2,
first run in 2023 and then Human+AI was the subject of a Customer
Forum hosted at the MetLife building in New York in March 2024 with
several Fortune 500 companies attending3. Meanwhile our
Software & Platforms businesses are bringing AI enhanced
products to market throughout 2024 such as Rustici Software which
provides AI innovation to the 500+ learning applications and
content publishers that it serves worldwide.
Investment in
Innovation
Dedicating resources to innovation
is a top priority in our capital allocation strategy, and our track
record speaks to our ability to generate value in this area. A key
element of our investment strategy involves leveraging value from
complementary technologies obtained through strategic mergers and
acquisitions. Our approach allows us to deliver distinctive and
comprehensive capabilities to our customers. We adhere to a
cautious, lower-risk strategy in innovation by applying our
existing technologies to markets whenever possible.
During 2023, we continued to make
investments consistent with our strategy. Examples
include:
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Continued integration between
Bridge, Gomo and Instilled to enhance and sell Bridge Advanced
Authoring and Bridge Advanced Video.
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Major investments in enterprise
LMS functionality by way of GP iLearn.
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Reflektive market and adoption
information drove enhancements, such as peer feedback, new
recognition features and the ability to sell as a standalone
module, to Bridge performance tool capabilities.
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Building out Bridge with Patheer
technology to develop Skills+, leveraging
3rd party data and AI to match employees to skills, job titles to
skills, and skills to content within the learning management
system. The combined technology of Bridge and Patheer
supercharges the connections with features that are in high demand
in the market, taking advantage of recent advances in scalable AI
web services.
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Investment and focus on AI with a
task force dedicated to understanding the transformative
capabilities that exist and how we can practically apply this to
our offerings to meet the needs of our clients. In 2024, we
will:
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Increase our upskilling efforts
for our internal teams
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Launch AI enablement and adoption
tools for our customers including Content IQ
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Build out our IP offerings on AI
for customers focusing on upskilling the L&D team as well as
offerings for employees across the organisation
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Expand our partnerships with
leaders in the AI space to bring exciting new AI services, tools
and specialised teams
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There has been considerable effort
in implementing our go-to-market strategy, with new combined
product and service offerings in:
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Learning experience
design
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Enhanced managed learning
services
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A combined consulting and
measurement approach
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Our capacity to seamlessly blend
our offerings allows us to provide comprehensive solutions and
cross-selling opportunities to our customers. We remain committed
to strategic investments in our products, aimed at enhancing our
offerings to meet the evolving needs of our customers.
1 https://www.gpstrategies.com/solutions/consulting/artificial-intelligence-consulting-solutions/learning-content-aiq/
2https://www.gpstrategies.com/solutions/consulting/artificial-intelligence-consulting-solutions/human-plus-ai-training-program/
3https://www.gpstrategies.com/2024-client-forum/
Non-core assets
In December 2022 we disclosed that
a non-core asset had been identified for disposal. We are pleased
to report that we signed a definitive agreement on 5 December 2023
to sell our Lorien division, based within GP Strategies, to NIRAS,
a Danish engineering consultancy headquartered in Denmark. The sale
of this business subsequently closed on January 2, 2024.
We also confirmed in December 2023
we had completed a carve-out of the external staffing business
of TTi Global, part of GP Strategies,
for a cash consideration of approximately $0.8
million. A number of client staffing contracts
(for high quality engineering and technical roles) and people were
transferred to Premier Staffing Solution in October
2023.
People
Our people stand as our most
valuable asset, and it is their unwavering dedication that propels
our success. In 2023, we implemented several HR initiatives with
the goal of enriching the employee experience, boosting morale and
achieving our organisational goals. We re-launched an
enterprise-wide engagement survey and implemented a comprehensive
action planning process, enabling us to seamlessly incorporate
feedback received into our priorities and planning during the
second half of the year. This led to a more enhanced onboarding
programme for new employees, a new in-house designed People Leader
Essentials programme, an improved performance management programme
and a leader conversation series that provided our colleagues with
access to leadership from around the business on a variety of
topics that they expressed interest in hearing more about. We
undertook a restructuring in late 2023 as part of our ongoing
commitment to drive operational improvement and margin progression
while retaining our breadth and depth of skills and IP.
Environmental, Social and Governance
ESG initiatives remain at the
forefront of our business process and strategy, enabling our
customers to manage and develop their human capital and is
therefore fully aligned with ESG principles. As we continued
to focus on our own performance, we report on our scope 1, 2 and 3
Greenhouse Gas (GHG) emissions and there was a 11% decrease in our
total GHG emissions in 2023 driven primarily by rationalised office
usage and a reduction in business and commuting travel. We
made further progress in our targets including launching a
Group-wide sustainable procurement policy, closed our largest
in-house physical data centre making further progress to reduce
scope 3 emissions and continued to make progress in GHG emission
assessments including developing long-term net zero
projections.
During 2024 the Board has approved
participation in, and we have submitted a signatory letter to, the
UN Global Compact Group. We will continue to work to further
progress our sustainability journey and provide an update in our
2024 results.
Outlook
LTG delivered a resilient
performance in 2023 despite a challenging macroeconomic
backdrop. This shows the benefit of our SaaS and long-term
contracts - representing 73% of revenues - and laser-focus on
margin. We are seeing the benefits of the full integration of
our transformational acquisition of GP Strategies, which has
strengthened our market leadership in learning and talent
management.
Our subscription and long-term
contracted revenue supports our expectation of delivering a
resilient performance again this year in a macroeconomic backdrop
which continues to be challenging. 2024 revenues are
therefore expected to be line with 2023 (after disposals) while
continuing to drive growth in Adjusted EBIT. Given the
strength of our balance sheet, we are poised for a return to
earnings accretive acquisitions in 2024 that fit with our strategy,
as part of our active portfolio management. Longer term, our
market leadership in workplace learning and talent management
supports our confidence of igniting underlying revenue growth as
the macroeconomic backdrop recovers.
Jonathan Satchell
Chief Executive
15 April 2024
Chief Financial Officer's Review:
Financial results
Revenue
Group revenue from continuing
operations decreased by 2% on a constant currency basis to £562.3
million (2022: £588.6 million), a resilient performance in the face
of a challenging macroeconomic backdrop affecting transactional and
project-based work. Discontinued operations reflect the
non-core UK Apprenticeship business following its closure as
announced in December 2022.
As of 2023 interim
reporting, reporting divisions have been
updated to reflect internal reporting on a business unit basis, and
the revised format is consistent with that used by the Chief
Operating Decision Maker. Following the reorganisation and
integration of LEO and PDT into GP Strategies, the Content &
Services division now includes all three businesses in addition to
Affirmity and PRELOADED. The Software & Platforms
division reflects the results for the Product companies. The
categorisation of the companies under the division heading is
outlined below. Note 3 to the accounts includes a restatement of the prior year's
comparative results.
Our Content & Services
division revenue (74% of Group revenue) marginally declined by 1%
on a constant currency basis with strong growth in PRELOADED and
Affirmity. The growth in these two brands was more than
offset by GP Strategies decline of 2% on a constant currency basis,
due to the temporary H1 integration challenges in GPLX, and the
macroeconomic climate slowing sales cycles and project-based
revenues.
There was 4% constant currency
revenue decline in the Software & Platforms division (26% of
Group revenue). This comprised of expected lower revenue in
PeopleFluent, and Reflektive due to softness in technology sector
customers and the strategy to migrate customers to a version of
Reflektive within Bridge. In addition, there was a softening
in revenues in VectorVMS, a contingent workforce management
business, and Breezy, a leading-edge talent acquisition platform
business. Rustici continued to deliver strong growth and
there was good growth in Bridge, a learning and performance
management solutions business.
As a proportion of Group revenue,
SaaS-based subscription and long-term contract revenue increased
to 73% (2022:
71%).
Adjusted Earnings Before Interest and Tax
(EBIT) and operating profit
Adjusted EBIT from continuing
operations decreased marginally by 1% to £98.5 million (2022: £99.9
million) which included a small full year foreign exchange
headwind. The Group's Adjusted EBIT margin was higher at 17.5% (2022:
17.0%) driven primarily by a combination
of operational leverage in the Software & Platforms division
and supported by higher exit margins in GP Strategies following a
successful continuation of the commercial transformation strategy
despite the temporary H1 challenges in GPLX.
Included within adjusted EBIT was
a share-based payment charge of £4.4 million (2022: £6.7 million,
excluding £0.5 million acquisition related charge), lower than the
prior year due to lapsed options related to senior leavers and
performance criteria not being met.
Also included within adjusted EBIT
was an amortisation charge for internally generated development
costs which increased to £8.8 million (2022: £7.5 million), as set
out in Note 9. As relevant projects are completed, they are
amortised over their useful economic lives, with the increase in
the amortisation charge reflecting the increased investment in
capitalised development costs as we innovate additional product
features in the Product Companies. The Group does not include
£11.1 million (2022: £12.0 million) of amortisation of acquired
software and IP within adjusted EBIT due to an expectation that the
quantum exceeds that which would have been incurred if internally
developed, and therefore is not representative of a true ongoing
cost of the business.
The Group's statutory operating profit was £58.7 million (2022:
£50.5 million), including the sale of our Brazil joint venture, the
external staffing business of TTi Global and other adjusting items
of £39.8 million (2022: £49.4 million), discussed
in more detail in note 4.
Divisional Review
Content & Services
Content & Services comprises
GP Strategies, PRELOADED and Affirmity. GP Strategies
is a global
workforce transformation provider of organisational and technical
performance learning solutions. PRELOADED is a BAFTA-winning
immersive games studio. Affirmity provides a portfolio
of software, consulting services and blended learning solutions to
help US-based enterprise and mid-market companies measure
diversity, build inclusive workforces and operate effective
DE&I and affirmative action programmes.
In January 2023, LEO and PDT
Global were integrated with GP Strategies. PRELOADED and Affirmity
have not been integrated and will remain separate brands within the
Content & Services reporting segment.
Content & Services comprised
74% (2022: 74%) of 2023 Group revenue. In 2023, 65% (2022: 62%)) of
the revenue in Content & Services was related to long-term
contracts, reported within SaaS & long-term contracts in
segment analysis (note 3).
Revenue decreased to £418.0
million (2022: £434.4 million) reflecting the slowdown in spending
in transaction and project-based work due to the macroeconomic
climate, and integration challenges in GPLX in the GP Strategies
business in the first half of the year. This was partially
offset by strong revenue growth in PRELOADED due to key
relationships with major global Technology and Entertainment brands
unlocking more significant engagements in 2023, and Affirmity
delivering a continued strong performance through the year.
Adjusted EBIT also decreased to
£56.5 million (2022: £59.9 million), driven by the temporary
challenges in GPLX in the first half of 2023. The adjusted
EBIT margin was 13.5% (2022: 13.8%).
Statutory profit before tax was
£25.9 million (2022: £25.0
million) after deducting adjusting items
including amortisation of acquired
intangibles, transaction costs relating to
asset held for sale, integration costs,
earn-out charges, loss on disposal of right-of-use assets, profit
on sale of joint venture, restructuring costs and finance
expenses.
Software & Platforms
The Software & Platforms
division comprises of SaaS and on-premise solutions as well as
hosting, support and maintenance services. PeopleFluent provides
cloud-based talent management solutions and services to
large-enterprise clients that require recruiting, performance,
succession, compensation, learning and organisation charting
capabilities beyond what is available within their current HR
systems. Breezy provides a largely self-service SaaS talent
acquisition solution aimed at small and medium-sized
businesses. Bridge is an employee-focused learning and performance
platform operating in the higher growth, mid-market with proven
potential to move into sectors of the enterprise market.
Rustici Software is a global expert in e-learning interoperability
software. Open LMS provides the largest scale capability in
the global open-source Moodle™ services market. VectorVMS is
a market-leading SaaS-based technology for the contingent
workforce.
Software & Platforms comprised
26% (2022: 26%) of 2023 Group revenue. In 2023, 96% (2022:
95%) of the revenue in Software & Platforms was related to
SaaS-based subscriptions and long-term
contracts.
Revenue decreased to £144.3
million (2022: £154.2 million) with a constant currency decline of
4% driven by the expected decline in PeopleFluent, a
reduction in Reflektive revenue due to a combination of softness in
technology sector customers and the strategy to migrate customers
to a version of Reflektive within Bridge, weaker demand in
VectorVMS due to reduced contract labour usage and lower healthcare
rates, and softness in Breezy as transactional business related to
the SME US labour market remained subdued. These challenges were
partially offset by continued strong growth in Rustici and good
growth in Bridge.
The PeopleFluent product line,
which has good functionality and is highly configurable, continues
to be well-embedded with its larger and more complex corporate
customers.
It is expected that customers requiring its more complex
functionality will continue to use the product. In 2023,
opportunities to upsell and cross sell additional products in
performance, compensation and succession solutions, increased
long-term contract revenue made possible due to the expertise of
the team, the relationships built with customers, and our ability
to support their goal of doing more with our products.
Breezy provides a largely
self-service SaaS talent acquisition solution aimed at small and
medium-sized businesses. As the business dealt with 44% lower
transactional demand than 2022, significant efforts were made to
control costs and avoid the effect of operational deleverage,
resulting in similar EBIT margins despite the lower revenue.
The macro impact on Breezy's transactional revenues masks 4%
underlying growth in Platform hosting revenue for the full
year.
Open LMS performance was muted as
educational establishments realigned their requirements in a
post-Covid environment. However, despite this, recurring
revenue by year end increased by c.1% with new sales and expansions
expected to benefit growth into 2024.
Rustici, the e-learning standards
business, continued to enjoy strong growth. On-premise renewals,
new customers and continued demand for Content Controller
and Rustici Engine contributed to the
strong performance.
Adjusted EBIT improved in the year
to £42.1 million (2022: £40.0 million) as operational leverage and
reduced central costs, particularly reduced facility costs,
benefitted this reporting segment. Adjusted EBIT margin improved to
29.2% (2022: 25.9%).
Statutory profit before tax
increased to £19.7 million (2022: £15.5 million) after deducting adjusting items including amortisation
of acquired intangibles,
integration costs, earn-out charges, loss on disposal of
right-of-use assets, restructuring costs and finance
expenses.
Statutory operating profit
The Group's statutory operating
profit was £58.7 million (2022: £50.5
million), including adjusting items of £39.8 million (2022:
£49.4 million), as set out in note 4, comprised of:
●
|
An amortisation charge for
acquired intangibles of £32.7 million (2022: £35.7 million);
|
Amortisation of acquired intangible costs, including acquired
software and IP, are excluded from the adjusted results of the
Group since the costs are non-cash charges arising from investing
activities. As such, they are not considered reflective of
the core trading performance of the Group.
●
|
Impairment of goodwill and
intangibles of nil (2022: £8.0 million);
|
Impairment of goodwill and
intangibles are excluded from the adjusted results of the Group
since the costs are one-off, non-cash charges. The 2022 impairment
related to closure of the non-core UK Apprenticeship business in
early 2023 announced on 19th December 2022.
●
|
Integration costs of
£2.4 million (2022: £3.5
million);
|
The costs of acquiring and
integrating subsidiaries purchased in the year or in prior periods,
deemed to be incremental costs not part of the normal course of
business. In 2023, this includes £2.4 million of integration
costs related to the continued integration of GP Strategies. The
integration costs in 2022 included staff
related costs such as retention bonuses, severance and recruitment
costs as well as consulting
costs.
●
|
Restructuring costs and provision
of £2.5 million (2022:
nil);
|
Restructuring provision of £2.5
million relating to severance incurred, or the liability created by
year end are excluded from the adjusted results as they are
restructuring in nature and not part of the normal operating costs
of the ongoing Group. £1.7 million was paid in
2023.
●
|
Loss on disposal of right-of-use
assets £2.2 million
(2022: £0.2 million);
|
Impairment of right-of-use assets
are excluded from the adjusted results of the Group since the costs
are one-off, non-cash charges related to an abandoned lease that
cannot be sub-let.
●
|
Costs relating to asset held for
sale £0.5 million (2022:
nil);
|
On 2 January, the Group sold the
Lorien business for $21.4 million (£16.8 million) on a cash and
debt free basis (subject to customary adjustments) for an estimated
gain of $15.0 million (£11.8 million). The only impact
in these financial statements are costs in relation to the
sale.
●
|
Earn-out charges of
£0.2 million (2022: £3.3
million);
|
The cost of earn-out charges are
mechanisms included in the purchase agreements of business
combinations, primarily related to Learning Media Services Ltd and
Patheer in 2023, and Breezy and eCreators in 2022. The former
owners of each respective business are required to remain employed
by the Group and as such the earn-out is considered to be
post-combination remuneration, rather than contingent consideration
which would be included in the purchase consideration of each
respective acquisition.
●
|
£0.6 million other income (2022: £1.5 million);
|
Other income includes
amounts received in relation to the carve-out of
the external staffing business of TTi Global, part of GP
Strategies, for a cash consideration of approximately $0.8
million. A number of client staffing contracts (for high
quality engineering and technical roles) and people were
transferred to Premier Staffing Solutions in October
2023.
●
|
£0.4
million profit on sale of joint venture (2022:
£1.2 million);
|
On 5 September 2023, the Group
sold its 17% investment in Leo Brasil Tecnologia Educacional LTDA
three million Brazilian Real, realising a gain on sale of £0.4
million (see note 10). On 18th April 2022, the Group sold its 10%
investment in National Aerospace Solutions LLC for proceeds of
$3.0m (£2.3 million), realising a gain on sale of £1.2
million.
●
|
£0.3
million Cloud computing configuration and
customisation costs (2022: £0.7 million);
|
Cloud computing configuration and
customisation costs reflects the impact of a change in accounting
policy following review of IFRIC guidance issued in March 2021
relating to capitalisation of cloud computer software
implementation costs. Where there is no underlying intangible
asset over which we retain control, the Group recognises
configuration and customisation costs as an
expense.
Discontinued operations
Discontinued operations reflect
the results of the UK Apprenticeship business following the closure
announced in December 2022. The £3.1m loss on discontinued
operations, net of tax, reflects closure costs incurred which were
not provided for in the 2022 financial statements and which were
partially expected to be covered by contracted revenue (see
note 6).
Net Finance Charge and Profit Before
Tax
The net finance charge was £13.1
million (2022: £10.0 million), with the increase
driven by the higher rates and partially offset by the lower
average debt in the year.
After the profit on sale of joint
venture and net finance charge, adjusted profit before tax for
continuing operations was £85.7 million (2022: £89.9 million) and
statutory profit before tax for continuing operations was £45.6
million (2022: £40.5 million).
Taxation Charge
The adjusted tax charge was
£21.6 million (2022 £24.3 million), resulting in an effective tax rate of
25% (2022: 27%). The statutory tax
charge was £13.0 million (2022: £10.1
million).
In 2022 the Group completed a tax
study to confirm the availability of US federal losses and
recognised a deferred tax asset for losses of £5.5 million, of
which £2.6 million was utilised in 2022 and £2.9 million expected
to be utilised over the subsequent three-year period in line with
the forecast period prepared for the Group. In 2023 the Group has
continued to apply this principle and has recognised deferred tax
assets of £0.6 million representing an additional year of
availability in line with the forecast period. In 2023, the Group
similarly completed a tax study to confirm the availability of US
state losses in respect of these acquisitions and recognised a
deferred tax asset of £1.0 million for losses expected to be
utilised over the same subsequent three-year period. In subsequent
years, the Group will consider recognition of the further deferred
tax assets on the remaining losses on an annual basis.
The reduction in the effective tax
rate to 25% in 2023 from 27% in 2022 reflects the recognition of a
deferred tax asset related to the US state losses noted
above.
Foreign Exchange
The Group is exposed to a number
of currencies resulting from its geographical spread, with the
majority of exposure to the US Dollar. The weakening of the
US Dollar since December 2022 has resulted in a FX headwind for the
Group and £20.2 million (2022: £31.0 million gain) exchange
differences on translating foreign operations within other
comprehensive income largely due to retranslation of foreign
operations as well as £18.9 million of foreign currency loss
generated on goodwill and acquired intangibles (note
9). This is
largely due to a significant proportion of these items being
designated in USD.
Earnings per Share
Adjusted diluted EPS from
continuing operations decreased marginally to 7.803 pence (2022:
7.996 pence for continuing operations) driven by a marginal
decrease in adjusted EBIT and higher net finance expenses partially
offset by a lower adjusted effective tax rate and a lower number of
shares outstanding. Adjusted diluted EPS for total operations
is 7.427 pence (2022: 8.121 pence).
On a statutory basis, basic EPS
decreased to 3.724 pence (2022: 3.857
pence).
Cash Generation
As per the Consolidated Statement
of Cash Flows, cash generated from operations finished strongly at
£96.1 million (2022: £92.1 million) and net cash flows from
operating activities were £79.5 million (2022: £71.9
million).
There was a cash outflow from
working capital of £9.6 million (2022: £18.4 million cash outflow)
primarily driven by a c.£7 million reduction in the short-term
bonus accrual compared to 2022. Debtor days decreased
to 79 days (2022: 812 days) and combined debtor
work-in-progress and deferred income days (combined days) increased
to 45 days (2022: 41 days). The combined days metric benefits
from payments being received annually in advance for recurring
software licences.
Free cashflow1 was
£44.4 million (2022: £50.3 million), £5.9 million lower than
2022. Cash conversion1 was strong at 88% (2022:
82%2),
as set out below.
[1] Alternative performance
measures used by the Group are defined in the
Glossary
2 As
reported.
£m
|
FY23
|
FY222
|
Variance
|
|
|
|
|
Statutory operating
profit
|
58.7
|
50.5
|
8.2
|
Adjusting items
|
39.8
|
50.4
|
(10.6)
|
Adjusted EBIT1
|
98.5
|
100.9
|
(2.4)
|
Depreciation &
Amortisation
|
14.1
|
13.9
|
0.2
|
Share based payment
charges
|
4.4
|
6.7
|
(2.3)
|
Dec / (Inc) working
capital
|
(9.6)
|
(18.4)
|
8.8
|
Capital expenditure
|
(14.1)
|
(11.6)
|
(2.5)
|
Lease liabilities
|
(5.7)
|
(7.3)
|
1.6
|
Other
|
(1.3)
|
(1.0)
|
(0.3)
|
Adjusted operating cash flow1
|
86.3
|
83.2
|
3.1
|
Cash Conversion
|
88%
|
82%
|
6%pts
|
Net Interest paid
|
(15.7)
|
(4.3)
|
(11.4)
|
Tax paid
|
(16.6)
|
(20.2)
|
3.6
|
Restructuring cash costs
|
(1.7)
|
-
|
(1.7)
|
Integration costs
|
(2.4)
|
(3.8)
|
1.4
|
Earnout & contingent
consideration
|
(4.6)
|
(6.9)
|
2.3
|
Cash flow from discontinued
operations
|
(1.4)
|
-
|
(1.4)
|
Other income
|
0.6
|
-
|
0.6
|
Cash costs related to asset held for
sale
|
(0.5)
|
-
|
(0.5)
|
Proceeds from asset sale
|
0.4
|
2.3
|
(1.9)
|
Free cash flow1
|
44.4
|
50.3
|
(5.9)
|
Net interest paid increased to
£15.7 million (2022: £4.3 million) due to higher interest rates on
a lower average gross debt, and £4.5 million interest from 2022
paid in 2023 due to actions taken in 2022 to benefit from a fixed
interest rate at a time of increasing rates. £1.6 million in
interest expense relating to 2023 is payable in 2024.
Net corporation tax payments
decreased to £16.6 million (2022: £20.2 million) primarily due to
the timing of tax payments. Restructuring cash costs of £1.7
million related to resizing the organisation to a more challenging
macro environment, the reduction in transaction and project related
costs and structural decline in PeopleFluent. £2.4 million
(2022: £3.8 million) in integration costs related to the continued
integration in 2023 of GP into the Group, including moving LEO and
PDT into GP Strategies. Payments of acquisition-related
contingent consideration and earn-outs related to Breezy and
eCreators totalled £4.6 million in 2023, and £6.9 million related
to Breezy, Watershed, eCreators and eThink in 2022. Cash flow
from discontinued operations of £1.4 million related to the UK
Apprenticeship business, and cash costs related to asset held for
sale of £0.5 million for the Lorien
business.
There were cash outflows from
investment activities of £13.7 million (2022: £9.3 million)
comprising of £12.9 million (2022: £10.0 million) of outflows
relating to capitalised investment in internally generated IP, £1.2
million (2022: £1.6 million) from investment in property, plant and
equipment, and £0.4 million (2022: £2.3 million) cash inflow from
the sale of the investment in Leo Brasil Tecnologia Educacional
LTDA. The 2022 cash inflow of £2.3 million relates to the sale of
NAS joint venture in April 2022.
Net cash outflows from financing
activities were £84.9 million (2022: 58.8 million). This
includes £51.3 million repayment of bank loans, including $25
million voluntary additional payment in September
2023. In addition, net interest of
£15.7m (2022: £4.3 million) was paid and there were £0.5 million
(2022: £1.0 million) of proceeds from the issue of ordinary share
capital, net of share issue costs. There were also lease and lease
interest payments of £5.7 million (2022: £7.3 million), and
dividend payments of £12.7 million (2022: £9.1 million).
Capital Allocation, Funding Priorities and
Dividend
The Board remains committed to a
capital allocation policy that prioritises investment in the
business to drive growth, selectively acquiring value enhancing
businesses and return of cash to shareholders, primarily through a
progressive dividend policy.
The Board's progressive dividend
policy, while taking into account earnings cover, also considers
other factors such as the expected underlying growth of the
business, its capital and other investment requirements. The
strength of the Group's balance sheet and its ability to generate
cash are also considered.
The Group considers these factors
in the context of the Group's Principal Risks and the overall risk
profile of the Group.
Given the operational performance
during a challenging year and strong cash generation, the Board is
recommending a final dividend of 1.21 pence per share (2022: 1.15 pence). The total cash cost of
the final dividend is approximately £9.5 million.
Together with the interim dividend
of 0.45 pence (2022: 0.45
pence), this gives a total dividend for the year
of 1.66 pence, an increase of 4% on the prior
year.
If approved the final dividend
will be paid on 28th June
2024 to all shareholders on the register on
7th June 2024.
Net Debt and Gearing
At 31 December 2023, the Group's
net debt was £78.6 million (31 December 2022: £119.8 million),
excluding £11.3 million (31 December 2022: £14.9 million) of lease
liabilities. On a constant currency basis, net debt was £82.7
million on 31 December 2023 at the 2022
rate.
The Group's net debt comprised
£151.1 million of debt (31 December 2022: £214.7 million) and £72.5
million of cash (31 December 2022: £94.8
million).
The Group's debt is made up of a
term facility loan with an original commitment of $265.0 million is
available to the Group until October 2025. The facility also
includes a $50.0 million (£39.3 million at year end exchange rates)
Revolving Credit Facility and a $50 million (£39.3 million at year
end exchange rates) uncommitted accordion, both available to July
2025. The Revolving Credit Facility remained undrawn in both
2022 and 2023. For further details of the Group's debt
facility see note 16.
The Group's covenant basis net
debt / adjusted EBITDA ratio as at 31 December 2023 was 0.7 times (2022: 1.1
times).
Sale of Lorien Engineering
Solutions
On 2 January 2024, LTG
completed the disposal of non-core asset Lorien Engineering
Solutions for a cash consideration of $21.4 million on a
cash and debt free basis (subject to customary
adjustments) which further supports the Group's swift
deleveraging.
There have been no other
notifiable events between the 31 December 2023 and the date of this
Annual Report.
Balance Sheet
The Group has a strong balance
sheet with total shareholder equity of £427.2 million at 31
December 2023 (31 December 2022: £426.3 million). This is
equivalent to 54.0 pence per share (2022: 54.0 pence per
share). Key
movements on the balance sheet in 2023 include:
●
|
Intangible assets - intangible
fixed assets have decreased £52.2 million. This is largely
due to additions of £12.9 million offset by amortisation charge on
intangible assets of £41.6 million and net foreign exchange losses
of £23.5 million.
|
●
|
The Group has a substantially
reduced net debt position of c.£78.6 million (31 December 2022: net
debt £119.8 million), reflecting strong cash generation which has
contributed to the continued deleveraging of the balance
sheet.
|
Prior Year Adjustment
We have identified the need to
make a correction to the presentation of the 2022 and 2021 balance
sheets where goodwill and deferred tax of £15.8 million at 31
December 2022 and £14.1 million at 31 December 2021 should not have
been recognised under IAS 12 as the book basis and tax basis of
acquired intangible assets were equal for certain US acquisition in
2016, 2020 and 2021. The adjustment reflects the tax
efficient acquisition structure of the relevant acquisitions and
tax amortisation deductions were taken for tax years 2020-2022
based on acquired intangible assets recognised.
The Group has restated the
presentation of the balance sheet to reflect this correction.
For details of the presentational changes made, refer to
note 22.
The presentational changes made have no impact on reported revenue
or profit, or cash generation in the years and no material impact
on net assets.
Key Performance Indicators
(KPIs)
The Group's KPIs are revenue and
organic revenue growth, adjusted EBIT, cash conversion and adjusted
diluted EPS. A discussion of performance against each KPI is
contained within the narrative
above.
The profitability of the business,
which has a relatively low fixed-cost base, is managed primarily
via the divisional revenue review, with secondary measures
addressing employee utilisation and project margin reviews in
Content & Services.
Cash flow is reviewed at a Group
level, aided by rolling cash forecasts and monitoring cash
balances. There is a focus on working capital which is
reviewed primarily against debtor days and combined debtor, WIP and
deferred income days measures.
Adjusted diluted EPS, as well as
incorporating all the elements of the above KPI's, is additionally
impacted by the Group's treasury and taxation activities.
These activities are carried out within the Group's Finance Team
and seek to manage the Group's net finance and taxation
charge.
Kath Kearney-Croft
Chief Financial Officer
15th April 2024
Consolidated Statement of
Comprehensive Income
Year
ended 31 December 2023
|
|
|
|
Year ended 31
Dec
|
Year ended 31
Dec
|
|
|
|
2023
|
2022
|
|
Note
|
|
£'000
|
£'000
|
|
|
|
|
|
|
|
|
|
|
Revenue
|
3
|
|
562,305
|
588,587
|
Operating expenses
|
|
|
(499,642)
|
(532,743)
|
Share-based payment
charge
|
|
|
(4,381)
|
(6,693)
|
Profit on sale of joint
venture
|
10
|
|
425
|
1,242
|
Share of profit from equity
accounted investment
|
4
|
|
-
|
155
|
|
|
|
|
|
Operating profit
|
|
|
58,707
|
50,548
|
|
|
|
|
|
Analysed as:
|
|
|
|
|
Adjusted EBIT
|
|
|
98,539
|
99,925
|
Adjusting items included in
Operating profit
|
4
|
|
(39,832)
|
(49,377)
|
Operating profit
|
|
|
58,707
|
50,548
|
|
|
|
|
|
Finance expenses
|
|
|
(14,132)
|
(10,475)
|
Finance income
|
|
|
1,032
|
429
|
|
|
|
|
|
Profit before taxation from continuing
operations
|
|
|
45,607
|
40,502
|
|
|
|
|
|
Income tax charge
|
5
|
|
(13,015)
|
(10,075)
|
|
|
|
|
|
Profit after taxation from continuing
operations
|
|
|
32,592
|
30,427
|
|
|
|
|
|
Loss on discontinued operations, net
of tax
|
6
|
|
(3,138)
|
(21)
|
|
|
|
|
|
Profit for the year
|
|
|
29,454
|
30,406
|
|
|
|
|
|
Other comprehensive income:
|
|
|
|
|
Items that may be subsequently reclassified to profit or
loss
|
|
|
|
|
Exchange differences on
translating foreign operations
|
|
|
(20,169)
|
30,961
|
Total comprehensive income for the year attributable to
owners of the parent Company
|
|
|
9,285
|
61,367
|
|
|
|
|
|
Earnings per share from continuing
operations:
|
|
|
|
|
Basic (pence)
|
7
|
|
4.121
|
3.860
|
Diluted (pence)
|
7
|
|
3.985
|
3.712
|
Adjusted earnings per share from continuing
operations:
|
|
|
|
|
Basic (pence)
|
7
|
|
8.069
|
8.314
|
Diluted (pence)
|
7
|
|
7.803
|
7.996
|
|
|
|
|
|
Earnings per share from continuing and discontinued
operations:
|
|
|
|
|
Basic (pence)
|
7
|
|
3.724
|
3.857
|
Diluted (pence)
|
7
|
|
3.601
|
3.710
|
Adjusted earnings per share from continuing and discontinued
operations:
|
|
|
|
|
Basic (pence)
|
7
|
|
7.680
|
8.443
|
Diluted (pence)
|
7
|
|
7.427
|
8.121
|
Consolidated Statement of Financial
Position
|
|
31 Dec
2023
£'000
|
Restated
31 Dec
2022
£'000
|
|
Note
|
Non-current assets
|
|
|
|
Property, plant and
equipment
|
8
|
2,217
|
2,857
|
Right-of-use assets
|
8
|
6,812
|
11,808
|
Intangible assets
|
9
|
493,016
|
545,214
|
Deferred tax assets
|
13
|
6,147
|
4,077
|
Other receivables, deposits and
prepayments
|
12
|
2,093
|
1,874
|
Investments accounted for under the
equity method
|
10
|
-
|
-
|
Amounts recoverable on
contracts
|
|
-
|
1,303
|
|
|
510,285
|
567,133
|
|
|
|
|
Current assets
|
|
|
|
Trade receivables
|
11
|
107,962
|
136,025
|
Other receivables, deposits and
prepayments
|
12
|
14,374
|
16,765
|
Amounts recoverable on
contracts
|
|
25,757
|
33,221
|
Inventory
|
|
1,260
|
2,432
|
Corporation tax
receivable
|
|
5,155
|
-
|
Amount owing from related
parties
|
|
-
|
59
|
Cash and bank balances
|
|
72,522
|
94,847
|
Restricted cash balances
|
|
2,389
|
2,608
|
|
|
229,419
|
285,957
|
|
|
|
|
Assets in disposal groups classified
as held for sale
|
20
|
8,007
|
8,369
|
|
|
|
|
Total assets
|
|
747,711
|
861,459
|
|
|
|
|
Current liabilities
|
|
|
|
Lease liabilities
|
17
|
4,423
|
5,082
|
Trade and other
payables
|
14
|
133,950
|
180,634
|
Borrowings
|
16
|
30,091
|
36,714
|
Provisions
|
18
|
2,026
|
1,602
|
Corporation tax payable
|
|
8,237
|
602
|
ESPP scheme liability
|
|
995
|
500
|
|
|
179,722
|
225,134
|
|
|
|
|
Non-current liabilities
|
|
|
|
Lease liabilities
|
17
|
6,913
|
9,792
|
Deferred tax
liabilities
|
13
|
5,744
|
11,500
|
Other long-term
liabilities
|
15
|
405
|
3,517
|
Borrowings
|
16
|
120,984
|
177,944
|
Corporation tax payable
|
5
|
756
|
1,431
|
Provisions
|
18
|
621
|
1,857
|
|
|
135,423
|
206,041
|
|
|
|
|
Liabilities directly associated with
assets in disposal groups classified as held for sale
|
20
|
5,335
|
3,984
|
|
|
|
|
Total liabilities
|
|
320,480
|
435,159
|
|
|
|
|
Net assets
|
|
427,231
|
426,300
|
|
|
|
|
Equity
|
|
|
|
Share capital
|
|
2,967
|
2,962
|
Share premium account
|
|
318,698
|
318,183
|
Merger reserve
|
|
31,983
|
31,983
|
Reverse acquisition
reserve
|
|
(22,933)
|
(22,933)
|
Share-based payment
reserve
|
|
18,974
|
14,714
|
Foreign exchange translation
reserve
|
|
5,560
|
25,729
|
Retained earnings
|
|
71,982
|
55,662
|
Total equity
|
|
427,231
|
426,300
|
|
|
|
|
Consolidated Statement of Changes
in Equity
Year
ended 31 December 2023
|
|
Share
capital
|
Share
Premium
|
Merger
reserve
|
Reverse acquisition
reserve
|
Share-based
payments
reserve
|
Translation
reserve
|
Retained
earnings
|
Total
equity
|
|
Note
|
£'000
|
£'000
|
£'000
|
£'000
|
£'000
|
£'000
|
£'000
|
£'000
|
Balance at 1 January
2022
|
|
3,034
|
317,114
|
31,983
|
(22,933)
|
11,148
|
(5,232)
|
36,224
|
371,338
|
Profit
for the period
|
|
-
|
-
|
-
|
-
|
-
|
-
|
30,406
|
30,406
|
Exchange
differences on translating foreign operations
|
|
-
|
-
|
-
|
-
|
-
|
30,961
|
-
|
30,961
|
Total comprehensive profit
for the period
|
|
-
|
-
|
-
|
-
|
-
|
30,961
|
30,406
|
61,367
|
Issue of
shares net of share issue costs
|
|
8
|
1,029
|
-
|
-
|
-
|
-
|
-
|
1,037
|
Reserve
transfer
|
|
(80)
|
40
|
-
|
-
|
-
|
-
|
40
|
-
|
Credit to
equity for equity settled share-based
payments
|
|
-
|
-
|
-
|
-
|
6,693
|
-
|
-
|
6,693
|
Credit to
equity treated as consideration for equity
settled
share-based payments
|
|
-
|
-
|
-
|
-
|
542
|
-
|
-
|
542
|
Tax
charge on share options
|
|
-
|
-
|
-
|
-
|
-
|
-
|
(1,946)
|
(1,946)
|
Distributions in respect of cancelled options
|
|
-
|
-
|
-
|
-
|
(3,669)
|
-
|
-
|
(3,669)
|
Dividends
paid
|
|
-
|
-
|
-
|
-
|
-
|
-
|
(9,062)
|
(9,062)
|
Transactions with
owners
|
|
(72)
|
1,069
|
-
|
-
|
3,566
|
-
|
(10,968)
|
(6,405)
|
Balance at 31 December
2022
|
|
2,962
|
318,183
|
31,983
|
(22,933)
|
14,714
|
25,729
|
55,662
|
426,300
|
Profit
for the period
|
|
-
|
-
|
-
|
-
|
-
|
-
|
29,454
|
29,454
|
Exchange
differences on translating foreign operations
|
|
-
|
-
|
-
|
-
|
-
|
(20,169)
|
-
|
(20,169)
|
Total comprehensive profit
for the period
|
|
-
|
-
|
-
|
-
|
-
|
(20,169)
|
29,454
|
9,285
|
Issue of
shares net of share issue costs
|
|
5
|
515
|
-
|
-
|
-
|
-
|
-
|
520
|
Credit to
equity for equity settled share-based
payments
|
|
-
|
-
|
-
|
-
|
4,381
|
-
|
-
|
4,381
|
Tax
charge on share options
|
|
-
|
-
|
-
|
-
|
-
|
-
|
(520)
|
(520)
|
Distributions in respect of cancelled options
|
|
-
|
-
|
-
|
-
|
(121)
|
-
|
-
|
(121)
|
Exercise
of share options through trust
|
|
-
|
-
|
-
|
-
|
-
|
-
|
38
|
38
|
Dividends
paid
|
19
|
-
|
-
|
-
|
-
|
-
|
-
|
(12,652)
|
(12,652)
|
Transactions with
owners
|
|
5
|
515
|
-
|
-
|
4,260
|
-
|
(13,134)
|
(8,354)
|
Balance at 31 December
2023
|
|
2,967
|
318,698
|
31,983
|
(22,933)
|
18,974
|
5,560
|
71,982
|
427,231
|
Consolidated Statement of Cash
Flows
|
|
Year ended
31 Dec
|
Year
ended
31
Dec
|
|
|
2023
|
2022
|
|
Note
|
£'000
|
£'000
|
|
|
|
|
Cash flows from operating activities
|
|
|
|
Profit before taxation from
continuing operations
|
|
45,607
|
40,502
|
Loss before taxation from
discontinued operations
|
6
|
(3,488)
|
(26)
|
Adjustments for:
|
|
|
|
Loss on disposal of PPE and
right-of-use assets
|
|
2,163
|
230
|
Share-based payment
charge
|
|
4,381
|
7,235
|
Amortisation of intangible
assets
|
9
|
41,551
|
43,183
|
Depreciation of plant and
equipment
|
8
|
1,492
|
2,141
|
Depreciation of right-of-use
assets
|
8
|
3,741
|
4,343
|
|
|
|
|
Impairment of goodwill and
acquired intangibles
|
9
|
-
|
7,958
|
Finance expense (including IFRS 16
finance charge)
|
|
518
|
573
|
Interest on borrowings
|
|
13,614
|
9,102
|
|
|
|
|
Acquisition-related contingent
consideration and earn-outs
|
4
|
224
|
3,273
|
Fair value movement on contingent
consideration
|
4
|
-
|
(21)
|
Payment of acquisition-related
contingent consideration and earn-outs
|
|
(4,636)
|
(6,139)
|
Profit on sale of joint
venture
|
10
|
(425)
|
(1,242)
|
Share of profit in equity
accounted investment
|
10
|
-
|
(155)
|
Interest income
|
|
(1,032)
|
(429)
|
Other non-cash items
|
|
2,000
|
-
|
Operating cash flows before working capital
changes
|
|
105,710
|
110,528
|
Decrease / (Increase) in trade and
other receivables
|
|
21,692
|
(6,521)
|
Decrease / (Increase) in
inventory
|
|
1,052
|
(1,210)
|
Decrease in amount recoverable on
contracts
|
|
8,269
|
3,647
|
Decrease in payables
|
|
(40,581)
|
(14,317)
|
Cash generated from operations
|
|
96,142
|
92,127
|
Income tax paid
|
|
(16,649)
|
(20,180)
|
Net
cash flows from operating activities
|
|
79,493
|
71,947
|
|
|
|
|
Cash flows used in investing activities
|
|
|
|
Purchase of property, plant and
equipment
|
8
|
(1,192)
|
(1,641)
|
Development of intangible
assets
|
9
|
(12,883)
|
(9,966)
|
Sale of Investment in associates and
joint ventures
|
10
|
425
|
2,300
|
Net
cash flows used in investing activities
|
|
(13,650)
|
(9,307)
|
|
|
|
|
Cash flows used in financing activities
|
|
|
|
Dividends paid
|
19
|
(12,652)
|
(9,062)
|
|
|
|
|
Repayment of bank loans
|
16
|
(51,315)
|
(38,458)
|
Interest paid
|
|
(16,714)
|
(4,609)
|
Interest received
|
|
1,032
|
352
|
Issue of ordinary share capital net
of share issue costs
|
|
520
|
1,037
|
Contingent consideration payments in
the period
|
|
-
|
(705)
|
Interest paid on lease
liabilities
|
17
|
(546)
|
(614)
|
Payments for lease
liabilities
|
17
|
(5,192)
|
(6,719)
|
Net
cash flows used in financing activities
|
|
(84,867)
|
(58,778)
|
|
|
|
|
Net
(decrease) / increase in cash and cash
equivalents
|
|
(19,024)
|
3,862
|
Cash and cash equivalents at
beginning of the year
|
|
94,847
|
83,850
|
Exchange movements on
cash
|
|
(3,301)
|
7,135
|
Cash and cash equivalents at end of the
year
|
|
72,522
|
94,847
|
1. General information
The financial information for the
year ended 31 December 2023 and the year ended 31 December 2022
does not constitute the company's statutory accounts for those
years.
Statutory accounts for the year
ended 31 December 2022 have been delivered to the Registrar of
Companies. The statutory accounts for the year ended 31 December
2023 will be delivered to the Registrar of Companies in due
course.
The auditors' reports on the
accounts for 31 December 2023 and 31 December 2022 were
unqualified, did not draw attention to any matters by way of
emphasis, and did not contain a statement under 498(2) or 498(3) of
the Companies Act 2006.
Learning Technologies Group plc
('the Company') and its subsidiaries (together, 'the Group')
provide a range of talent and learning solutions, content, services
and digital platforms, to corporate and government 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 3 New
Street Square, London, England, EC4A 3BF. The registered number of
the Company is 07176993.
2. Summary of material
accounting policies
The material accounting policies
applied in the preparation of these Consolidated Financial
Statements are set out below. These policies have been consistently
applied unless otherwise stated.
a Basis of preparation
The consolidated financial
statements have been prepared in accordance with UK adopted
international accounting standards and with the requirements of the
Companies Act 2006 as applicable to companies reporting under those
standards.
Going concern
The Directors report that the
going concern basis is appropriate for a period of at least 12
months from the approval of these financial statements. 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 $50.0 million
revolving credit facility (RCF) and an uncommitted $50.0 million
accordion facility, which are available until 2025.
The Group has a debt facility
dated 15 July 2021 with HSBC UK Bank PLC, HSBC Innovation Bank
Limited, Barclays Bank PLC, Fifth Third Bank NA and The Governor
and Company of the Bank of Ireland.
This facility comprises of a Term
Facility A committed facility, with an original commitment of
$265.0 million available to the Group until October 2025, a $50.0
million committed Revolving Credit Facility (£39.3 million at the
year-end exchange rate) and a $50.0 million uncommitted accordion
facility (£39.3 million at the year-end exchange rate), both
available until July 2025. The term facility attracts
variable interest based on LIBOR plus a margin of between 1.5% and
2.75% per annum, based on the Group's leverage to December 2022,
following this it attracts SOFR plus the margin discussed above and
an adjusted credit spread until repaid.
In addition, a 12 month extension
request is available to the Group for Term Facility A and the
RCF.
Term Facility A is repayable with
quarterly instalments, starting December 2022, of $9.6 million (c
£7.5 million at the year-end exchange rate) with the balance
repayable on the expiry of the loan in October 2025.
On 29 September 2023 the Group
made a voluntary additional repayment of $25.0m on the term
loan.
The Group continues to hold a
strong liquidity position overall at 31 December 2023, with gross
cash and cash equivalents of £72.5 million and net debt of £78.6
million (see note 16) (31 December 2022: gross cash was £94.8 million and net
debt of £119.8 million). Whilst there are a number of risks
to the Group's trading performance, 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, business acquisitions, and borrowing
facilities. The Group's forecasts demonstrate it will generate
profits and cash in the going concern period, which runs to 30 June
2025. In addition, the Group continues to have 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.
The Group has also assessed a
range of downside scenarios to assess if there is 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:
i. 10% and 25%
reductions in revenues;
ii. increasing
customer payment days (DSO) by 15 days;
iii. combining 10%
reduction in revenues and increasing DSO by 15 days;
iv. increasing costs
by 8% from H1 2024; and
v. modelling high cost
inflation above that in (IV) above to determine the level where a
covenant breach could occur.
The Directors have concluded that
it is appropriate to adopt the going concern basis of accounting in
preparing the Annual Report, having undertaken a review of the
detailed forecasts for the going concern period 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.
Changes in accounting policies
(i) New standards,
interpretations and amendments adopted from 1 January
2023
New standards impacting the Group
that have been adopted in the annual financial statements for the
year ended 31 December 2023 are:
Amendments to IAS 7
|
Demand deposits with restrictions
on use arising from a contract with a third party
|
Amendments to IAS 12
|
International tax reform - pillar
two model rules
|
Amendments to IFRS15
|
Principal vs Agent: Software
reseller
|
Amendments to IAS 37
|
Negative low emissions vehicle
credits
|
Amendments to IAS 32
|
Special Purpose Acquisition
Companies (SPAC): Classification of public shares as financial
liabilities or equity
|
Amendments to IFRS 17
|
Transfer of insurance coverage
under a group of annuity contracts
|
Amendments to IFRS 17 and IAS
21
|
Multi-currency groups of insurance
contracts
|
Amendments to IFRS 9 and IFRS
16
|
Lessor forgiveness of lease
payments
|
The Group has considered the above
new standards and amendments and has concluded that, they are
either not relevant to the Group or they do not have a significant
impact on the Group's consolidated financial statements.
(ii) New standards,
interpretations and amendments not yet effective
At the date of authorisation of
these consolidated Group financial statements, the following
standards and interpretations, which have not been applied in these
financial statements, were in issue but not yet effective (and in
some cases had not yet been adopted by the UK). Management
are currently assessing the impact of these new standards on the
group.
Amendments to IAS 1
|
Classification of non-current
liabilities with covenants and information provided relating to
liabilities subject to these conditions.
|
|
Amendments to IAS 7 and IFRS
7
|
Disclosures to enhance the
transparency of supplier finance arrangements and their effect on
the company's liabilities, cash flows and exposure to liquidity
risk.
|
|
Amendments to IAS 21
|
Lack of exchangeability relating
to foreign currency transactions and operations.
|
|
Amendments to IFRS 16
|
Leases in sale and
leaseback
|
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, total equity
per share 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 and are discussed
further in the Glossary.
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 (refer to
note 4) 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 share-based payments charges, contingent
consideration and earn-outs, cloud computing configuration and
customisation costs, the share of profit in equity accounted
investments, profit on the sale of a joint venture and fixed asset
or right-of-use asset disposal gains or losses.
b Basis of consolidation
A subsidiary is defined as an
entity over which the Group has control. The Group controls an
entity when the Group is exposed to, or has rights to, variable
returns from its involvement with the entity and has the ability to
affect those returns through its power over the entity.
Subsidiaries are fully consolidated from the date on which control
is transferred to the Group. They are deconsolidated from the date
that control ceases.
Business combinations accounted
for under the acquisition method and merger relief has been taken
on recognising the shares issued on acquisition, where
applicable.
Under the acquisition method, the
results of the subsidiaries acquired or disposed of are included
from the date of acquisition or up to the date of disposal. At the
date of acquisition, the fair values of the subsidiaries' net
assets are determined and these values are reflected in the
Consolidated Financial Statements. The cost of acquisition is
measured at the aggregate of the fair values at the date of
exchange, of assets given, liabilities incurred or assumed, and
equity instruments issued by the Group in exchange for control of
the acquiree. Any excess of the purchase consideration of the
business combination over the fair value of the identifiable assets
and liabilities acquired is recognised as goodwill. Goodwill, if
any, is not amortised but reviewed for impairment at least
annually. If the consideration is less than the fair value of
assets and liabilities acquired, the difference is recognised
directly in the statement of comprehensive income.
Acquisition-related costs are expensed as incurred.
Intra-group transactions, balances
and unrealised gains on transactions are eliminated. Intragroup
losses may indicate an impairment which may require recognition in
the consolidated financial statements. Where necessary, adjustments
are made to the Financial Statements of subsidiaries to ensure
consistency of accounting policies with those of
the Group.
3. Segment analysis
IFRS 8 requires operating segments
to be identified on the basis of internal reports about components
of the Group that
are regularly reviewed by the Chief Operating Decision maker (which
takes the form of the Board of Directors of the Company), in order
to allocate resources to the segment and to assess its
performance.
The Directors of the Company
consider there to be two reportable segments, being the Content
& Services division and the Software & Platforms
division. A majority of sales were generated by the
operations in North America in the year ended 31 December 2023 and
in the year ended 31 December 2022.
For income and expenses relating
to the Group's
administrative functions that are not directly attributable to a
reporting segment, these are apportioned based on
revenue.
SaaS, long-term contract and
transactional revenue is defined in the Glossary.
Geographical information
The Group's revenue from external
customers and non-current assets by geographical location are
detailed below:
|
UK
|
Mainland
Europe
|
North
America
|
Asia
Pacific
|
Rest of the
world
|
Total
|
|
£'000
|
£'000
|
£'000
|
£'000
|
£'000
|
£'000
|
31
Dec 2023
|
|
|
|
|
|
|
Revenue from continuing
operations
|
67,826
|
73,804
|
374,279
|
21,064
|
25,332
|
562,305
|
Revenue from discontinued
operations
|
34
|
-
|
-
|
-
|
-
|
34
|
Total Revenue
|
67,860
|
73,804
|
374,279
|
21,064
|
25,332
|
562,339
|
|
|
|
|
|
|
|
Non-current assets
|
36,132
|
709
|
450,479
|
16,472
|
346
|
504,138
|
|
|
|
|
|
|
|
31
Dec 2022
|
|
|
|
|
|
|
Revenue from continuing
operations
|
58,679
|
71,637
|
407,343
|
21,824
|
29,104
|
588,587
|
Revenue from discontinued
operations
|
8,315
|
-
|
-
|
-
|
-
|
8,315
|
Total Revenue
|
66,994
|
71,637
|
407,343
|
21,824
|
29,104
|
596,902
|
|
|
|
|
|
|
|
Non-current assets (restated)
|
31,017
|
569
|
511,876
|
19,177
|
417
|
563,056
|
The total non-current assets
figure is exclusive of deferred tax assets in each of the periods
above, with the 2022 balances being restated as described in
note 22.
Information about reported segment revenue, profit or loss
from continuing operations and total assets
31
December 2023
|
Content &
Services
|
Software &
Platforms
|
Total
|
|
Global
Services
|
Regional
Services
|
Other
Technical
|
Total
|
On-premise Software
Licences
|
Hosting &
SaaS
|
Platforms Professional
Services & Other
|
Support &
Maintenance
|
Total
|
|
|
£'000
|
£'000
|
£'000
|
£'000
|
£'000
|
£'000
|
£'000
|
£'000
|
£'000
|
£'000
|
|
|
|
|
|
|
|
|
|
|
|
SaaS and long-term contracts
|
87,220
|
179,783
|
2,825
|
269,828
|
30,684
|
100,212
|
3,925
|
3,429
|
138,250
|
408,078
|
Transactional
|
21,529
|
98,520
|
28,131
|
148,180
|
-
|
58
|
5,989
|
-
|
6,047
|
154,227
|
Total Revenue
|
108,749
|
278,303
|
30,956
|
418,008
|
30,684
|
100,270
|
9,914
|
3,429
|
144,297
|
562,305
|
Depreciation &
amortisation
|
|
|
|
(5,516)
|
|
|
|
|
(8,562)
|
(14,078)
|
Adjusted EBIT
|
|
|
|
56,416
|
|
|
|
|
42,123
|
98,539
|
Amortisation of acquired
intangibles
|
|
|
|
(15,065)
|
|
|
|
|
(17,641)
|
(32,706)
|
Acquisition related adjusting
items
|
|
|
|
(2,395)
|
|
|
|
|
(239)
|
(2,634)
|
Other adjusting items
|
|
|
|
(3,330)
|
|
|
|
|
(1,162)
|
(4,492)
|
Finance expenses
|
|
|
|
(9,736)
|
|
|
|
|
(3,364)
|
(13,100)
|
Profit before tax
|
|
|
|
25,890
|
|
|
|
|
19,717
|
45,607
|
|
|
|
|
|
|
|
|
|
|
|
Additions to intangible
assets
|
|
|
|
-
|
|
|
|
|
12,883
|
12,883
|
Total Assets
|
|
|
|
555,836
|
|
|
|
|
191,875
|
747,711
|
31
December 2022
|
Content &
Services
|
Software &
Platforms
|
Total
|
|
Global
Services
|
Regional
Services
|
Other
Technical
|
Total
|
On-premise Software
Licences
|
Hosting &
SaaS
|
Platforms Professional
Services & Other
|
Support &
Maintenance
|
Total
|
|
|
£'000
|
£'000
|
£'000
|
£'000
|
£'000
|
£'000
|
£'000
|
£'000
|
£'000
|
£'000
|
|
|
|
|
|
|
|
|
|
|
|
SaaS and long-term contracts
|
89,405
|
175,359
|
5,395
|
270,159
|
29,925
|
108,909
|
4,106
|
3,952
|
146,892
|
417,051
|
Transactional
|
29,530
|
99,105
|
35,557
|
164,192
|
-
|
85
|
7,259
|
-
|
7,344
|
171,536
|
Total Revenue
|
118,935
|
274,464
|
40,952
|
434,351
|
29,925
|
108,994
|
11,365
|
3,952
|
154,236
|
588,587
|
Depreciation &
amortisation
|
|
|
|
(6,544)
|
|
|
|
|
(7,400)
|
(13,944)
|
Adjusted EBIT
|
|
|
|
59,902
|
|
|
|
|
40,023
|
99,925
|
Amortisation of acquired
intangibles
|
|
|
|
(15,833)
|
|
|
|
|
(19,890)
|
(35,723)
|
Acquisition related adjusting
items
|
|
|
|
(4,619)
|
|
|
|
|
(2,991)
|
(7,610)
|
Other adjusting items
|
|
|
|
(7,023)
|
|
|
|
|
979
|
(6,044)
|
Finance expenses
|
|
|
|
(7,414)
|
|
|
|
|
(2,632)
|
(10,046)
|
Profit before tax
|
|
|
|
25,013
|
|
|
|
|
15,489
|
40,502
|
|
|
|
|
|
|
|
|
|
|
|
Additions to intangible
assets
|
|
|
|
445
|
|
|
|
|
9,521
|
9,966
|
Total Assets (restated)
|
|
|
|
635,718
|
|
|
|
|
225,741
|
861,459
|
Effective within this report,
there are changes to the grouping of businesses within the
reportable segments, as well as a consolidation of the reporting
segments themselves. This was performed following internal
reorganisation and is consistent with the format of the internal
reporting used by the Chief Operating Decision Maker. The
prior year's comparative results have been represented to align
under this updated presentation.
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, with the 2022 balances being
restated as described in note 22.
Information about major customers
In the year ended 31 December 2023
and the year ended 31 December 2022, no customer accounted for more
than 10 per cent of reported revenues.
4. 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 in note
2.
|
|
31 Dec
|
31
Dec
|
|
|
2023
|
2022
|
|
Note
|
£'000
|
£'000
|
Adjusting items included in Operating
profit:
|
|
|
|
Acquisition related costs:
|
|
|
|
Amortisation of acquired
intangibles
|
|
32,706
|
35,723
|
Acquisition-related contingent
consideration and earn-outs
|
|
224
|
3,273
|
Acquisition-related share-based
payment charge
|
|
-
|
542
|
Fair value movement on contingent
consideration
|
|
-
|
(21)
|
Transaction costs
|
|
-
|
304
|
Integration costs
|
|
2,410
|
3,512
|
Total acquisition related costs
|
|
35,340
|
43,333
|
|
|
|
|
Other adjusting items:
|
|
|
|
Impairment of goodwill and
intangibles
|
|
-
|
7,958
|
Loss on disposal of fixed
assets
|
|
124
|
5
|
Loss on disposal of right-of-use
assets
|
|
2,039
|
228
|
Share of profit of equity accounted
investments
|
|
-
|
(155)
|
Profit on sale of joint
venture
|
10
|
(425)
|
(1,242)
|
Cloud computing configuration and
customisation costs
|
|
292
|
719
|
Restructuring costs
|
|
2,537
|
-
|
Costs relating to asset held for
sale
|
20
|
529
|
-
|
Other income
|
|
(604)
|
(1,469)
|
Total other adjusting items
|
|
4,492
|
6,044
|
|
|
|
|
Total adjusting items
|
|
39,832
|
49,377
|
|
|
|
|
As outlined above, the material
adjustments are made in respect of:
-
Amortisation of acquired intangibles - the cost of £32.7 million
(2022: £35.7 million) is 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.
-
Impairment of goodwill and intangibles- these costs were excluded
from the adjusted results of the Group in 2022 as the costs were
one-off charges related to closure of the non-core UK
apprenticeship business in early 2023, as announced in
2022.
-
Restructuring costs relate to the resizing
of the organisation aligning to a more challenging macro
environment.
-
Acquisition-related share-based payments, 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 also not considered part of the
core trading performance of the Group.
- Fair
value movement on contingent consideration - similar to the above,
any adjustments to contingent consideration through profit or loss
are excluded from adjusted results on the basis that it is non-cash
non-operational income or costs.
-
Transaction and integration costs - the costs of acquiring and
integrating subsidiaries purchased. These 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.
Included within the £2.4 million integration costs is £1.2 million
incremental labour cost and £1.2 million relating to various system
integrations, insurances and legal and professional
fees.
- Other
income in 2023 relates a carve-out of the external staffing
business of TTi Global, part of GP Strategies, for a cash
consideration of approximately $800k. In 2022 the income
related to amounts received in relation to a contract. In
both cases, these are considered adjusting items due to the quantum
and non-recurring nature.
- Cloud
computing configuration and customisation costs reflects the impact
of a change in accounting policy following review of IFRIC guidance
issued in March 2021 relating to capitalisation of cloud computing software implementation
costs. Where there is no underlying intangible asset over which we
retain control, the Group recognises configuration and
customisation costs as an expense.
5. Income tax
Of the total income tax expense as
set out in the table below, £13,015,000 relates to taxation on
continuing operations (2022: expense £10,075,000) and £350,000
relates to tax credit on discontinuing operations (2022: credit
£5,000).
|
31 Dec
|
31
Dec
|
|
2023
|
2022
|
|
£'000
|
£'000
|
Current tax expense:
|
|
|
- UK current tax on profits for
the year
|
5,502
|
(282)
|
- Adjustments in respect to prior
years
|
(1,029)
|
2,522
|
- Foreign current tax on profits
for the year
|
16,441
|
19,193
|
Total current tax
|
20,914
|
21,433
|
Deferred tax (note 13):
|
|
|
- Origination and reversal of
temporary differences
|
(12,158)
|
(7,459)
|
- Adjustments in respect to prior
years
|
2,129
|
(3,597)
|
- Change in deferred tax
rate
|
1,780
|
(307)
|
Total deferred tax
|
(8,249)
|
(11,363)
|
|
|
|
Income tax expense
|
12,665
|
10,070
|
The increases in UK current tax
primarily relate to the increase in intercompany interest income
between the UK and US arising from changes in interest rates which
were on average 6.7%, increased from the prior year average of
3.4%
The 'changes in tax rate' reflect
the remeasuring of temporary differences. This primarily arises as
a result of adjustments to the deferred tax rate applied to the
amortisation of acquired intangibles deferred tax liabilities
recognised at the consolidated level of £2.1 million and favourable
impact from US of £0.3 million due to the change in the blended tax
rate derived from state income apportionment as well as
fluctuations in state tax rates.
In 2022 the Group completed a tax
study to confirm the availability of US federal losses acquired
with the PeopleFluent and Reflektive acquisitions and determined
that tax effected losses amounting to £24.7 million were available
for recognition, consisting of £12.9 million for the period
2022-2038 and £11.8 million to be carried forward indefinitely. The
Group considered both positive and negative evidence available and
recognised a deferred tax asset for losses of £5.5 million, of
which £2.6 million was utilised in 2022 and £2.9 million expected
to be utilised over the subsequent three-year period in line with
the forecast period prepared for the Group. In 2023 the Group has
continued to apply this principle and has recognised deferred tax
assets of £0.6 million representing an additional year of
availability in line with the forecast period. In 2023, the Group
similarly completed a tax study to confirm the availability of US
state losses in respect of these acquisitions and recognised a
deferred tax asset of £1.0m for losses expected to be
utilised over the same subsequent three-year period.
The Group has identified and
reflected adjustments in respect to prior years deferred tax
expense amounting to £2.1 million, primarily arising in the US
in respect of recognition of deferred tax liabilities of amount
£1.9 million related to goodwill and intangibles, and other prior
year adjustments of net amount £0.2 million.
The current year deferred tax
credit of £12.2 million, arising from the origination and reversal
of temporary differences, primarily relates to the deferred tax
liability release associated with acquired intangible amortisation
and impairments amounting to £8.8 million, net deferred tax assets
arising in the US of amount £3.0 million and other net timing
differences of £0.4 million. The temporary
differences arising in the US
consist of deferred tax assets in respect of provisions amounting
to £4.3 million, the deferred tax asset in respect of capitalised
R&D of amount £2.5 million, offset by utilisation of deferred
tax losses of £1.6 million, accelerated tax depreciation of amount
£2.2 million, deferred revenue £1.1 million and other net timing
differences of £0.1 million.
The £0.8 million non-current
corporation tax liability is in relation to amounts payable over
eight years by GP Strategies Corporation and TTi Global, Inc. in
relation to 2017 US tax reform, decreased from the prior year
amount payable of £1.4 million. This will be fully settled by
2025.
A reconciliation of income tax
expense applicable to the profit before taxation at the statutory
tax rate to the income tax expense at the effective tax rate of the
Group is as follows:
|
|
31 Dec
|
31
Dec
|
|
|
2023
|
2022
|
|
|
£'000
|
£'000
|
|
|
|
|
Profit before taxation from
continuing and discontinued operations
|
|
42,119
|
40,476
|
|
|
|
|
Tax calculated at the domestic tax
rate of 23.50% (2022: 19.00%):
|
|
9,898
|
7,690
|
|
|
|
|
Tax effects of: -
|
|
|
|
Expenses not deductible for tax
purposes
|
|
1,896
|
2,147
|
Adjustments to corporation tax in
respect to prior years
|
|
(1,029)
|
2,522
|
Adjustments to deferred tax in
respect to prior years
|
|
2,129
|
(3,597)
|
Recognition of previously
unrecognised losses
|
|
(1,000)
|
-
|
Effect of differences in tax
rates
|
|
771
|
1,308
|
|
|
12,665
|
10,070
|
The aggregate current and deferred
tax directly charged to equity amounted to £520,000 (2022: charge
£1,946,000).
6. Loss on discontinued operations, net
of tax
The table below show the results
of the discontinued operations which are included in the Group
Income Statement and Group Statement of Cash Flows
respectively.
The discontinued operations relate
to the closure of non-core operations. Prior to 31 December
2022, management announced that it planned to exit the UK
apprenticeship business which then ceased trading on 31 March
2023.
|
|
31 Dec
2023
|
31 Dec
2022
|
|
|
£'000
|
£'000
|
Revenue
|
|
34
|
8,315
|
Operating expenses
|
|
(3,522)
|
(8,341)
|
|
|
|
|
Operating loss
|
|
(3,488)
|
(26)
|
|
|
|
|
Adjusted EBIT
|
|
(3,425)
|
1,018
|
Adjusting items included in
Operating loss
|
|
|
|
(Loss) / profit on disposal of fixed
assets
|
|
(3)
|
3
|
Closure costs
|
|
(60)
|
(1,047)
|
Operating loss
|
|
(3,488)
|
(26)
|
|
|
|
|
Loss before taxation
|
|
(3,488)
|
(26)
|
|
|
|
|
Taxation
|
|
350
|
5
|
|
|
|
|
Loss after taxation
|
|
(3,138)
|
(21)
|
|
|
31 Dec
2023
|
31 Dec
2022
|
|
|
£'000
|
£'000
|
Cash flow from operating activities
|
|
|
|
Loss before taxation
|
|
(3,488)
|
(26)
|
Adjustments for:
|
|
|
|
Loss / (profit) on disposal of PPE,
right-of-use assets and lease liabilities
|
|
3
|
(3)
|
Other non-cash items
|
|
2,000
|
-
|
Net
cash used in operating activities
|
|
(1,485)
|
(29)
|
|
|
|
|
Net cash (used in) / from investing
activities
|
|
(3)
|
3
|
|
|
|
|
Net
cash used in discontinued operations
|
|
(1,488)
|
(26)
|
|
|
|
|
7. Earnings per share
|
31 December
2023
|
31 December
2022
|
|
Continuing
operations
|
Total
operations
|
Continuing
operations
|
Total
operations
|
|
Pence
|
Pence
|
Pence
|
Pence
|
|
|
|
|
|
Basic earnings per share
|
4.121
|
3.724
|
3.860
|
3.857
|
|
|
|
|
|
Diluted earnings per
share
|
3.985
|
3.601
|
3.712
|
3.710
|
|
|
|
|
|
|
|
|
|
|
Adjusted basic earnings per
share
|
8.069
|
7.680
|
8.314
|
8.443
|
|
|
|
|
|
Adjusted diluted earnings per
share
|
7.803
|
7.427
|
7.996
|
8.121
|
|
|
|
|
|
Basic earnings per share is
calculated by dividing the profit/loss after tax attributable to
the equity holders of the Group by the weighted average number of
shares in issue during the year.
Diluted earnings per share is
calculated by adjusting the weighted average number of shares
outstanding to assume conversion of all potential dilutive shares,
namely share options or deferred consideration payable in shares
where the contingent conditions have been met.
In order to give a better
understanding of the underlying operating performance of the Group,
an adjusted earnings per share 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. Adjusted diluted earnings per share has
been calculated to also include the contingent shares payable as
deferred consideration on acquisitions where the future conditions
have not yet been met, as shown below.
Adjusted earnings per share is
stated after the impact of the adjusting items disclosed in
note 4.
The adjusted measures 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.
The calculation of earnings per
share from continuing and discontinued operations is based on the
following earnings and number of shares.
|
2023
|
2022
|
|
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
|
|
Basic earnings per ordinary
share attributable to the owners of the parent
|
29,454
|
790,920
|
3.724
|
30,406
|
788,295
|
3.857
|
|
|
|
|
|
|
|
Effect of
adjustments:
|
|
|
|
|
|
|
Total
adjusting items (see note 4)
|
39,895
|
|
|
50,421
|
|
|
Income
tax expense
|
12,665
|
|
|
10,070
|
|
|
Effect of
adjustments
|
52,560
|
|
6.645
|
60,491
|
|
7.674
|
Adjusted profit before
tax
|
82,014
|
|
|
90,897
|
|
|
Tax
impact after adjustments
|
(21,272)
|
|
(2.690)
|
(24,338)
|
|
(3.087)
|
Adjusted basic earnings per
ordinary share
|
60,742
|
790,920
|
7.680
|
66,559
|
788,295
|
8.443
|
|
|
|
|
|
|
|
Effect of
dilutive potential ordinary shares:
|
|
|
|
|
|
|
Share
options
|
|
26,947
|
(0.253)
|
|
31,310
|
(0.322)
|
Adjusted diluted earnings
per ordinary share
|
60,742
|
817,867
|
7.427
|
66,559
|
819,605
|
8.121
|
Diluted earnings per
ordinary share attributable to the owners of the
parent
|
29,454
|
817,867
|
3.601
|
30,406
|
819,605
|
3.710
|
The calculation of earnings per
share from continuing operations is based on the following earnings
and number of shares.
|
2023
|
2022
|
|
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
|
|
Basic earnings per ordinary
share attributable to the owners of the parent
|
32,592
|
790,920
|
4.121
|
30,427
|
788,295
|
3.860
|
|
|
|
|
|
|
|
Effect of
adjustments:
|
|
|
|
|
|
|
Total
adjusting items (see note 4)
|
39,832
|
|
|
49,377
|
|
|
Income
tax expense / (credit)
|
13,015
|
|
|
10,075
|
|
|
Effect of
adjustments
|
52,847
|
|
6.682
|
59,452
|
|
7.542
|
Adjusted profit before
tax
|
85,439
|
|
|
88,879
|
|
|
Tax
impact after adjustments
|
(21,622)
|
|
(2.734)
|
(24,343)
|
|
(3.088)
|
Adjusted basic earnings per
ordinary share
|
63,817
|
790,920
|
8.069
|
65,536
|
788,295
|
8.314
|
|
|
|
|
|
|
|
Effect of
dilutive potential ordinary shares:
|
|
|
|
|
|
|
Share
options
|
|
26,947
|
(0.266)
|
|
31,310
|
(0.320)
|
Adjusted diluted earnings
per ordinary share
|
63,817
|
817,867
|
7.803
|
65,536
|
819,605
|
7.996
|
Diluted earnings per
ordinary share attributable to the owners of the
parent
|
32,592
|
817,867
|
3.985
|
30,427
|
819,605
|
3.712
|
8. Property, plant,
equipment and right-of-use assets
|
|
|
|
|
Right-of-use
assets
|
|
Computer
equipment
|
Fixtures
and
fittings
|
Leasehold
Improvements
|
Total
|
Computer
equipment
|
Property
|
Motor
vehicles
|
Total
|
|
£'000
|
£'000
|
£'000
|
£'000
|
£'000
|
£'000
|
£'000
|
£'000
|
Cost
|
|
|
|
|
|
|
|
|
At 1 January 2022
|
1,804
|
438
|
1,617
|
3,859
|
559
|
23,347
|
134
|
24,040
|
Reclassification
|
1,134
|
140
|
(1,274)
|
-
|
-
|
-
|
-
|
-
|
Additions
|
1,515
|
103
|
23
|
1,641
|
-
|
2,062
|
-
|
2,062
|
Foreign exchange
differences
|
2,042
|
(26)
|
229
|
2,245
|
12
|
199
|
-
|
211
|
Reclassified as assets held for
sale
|
(236)
|
(48)
|
(43)
|
(327)
|
-
|
(278)
|
-
|
(278)
|
Disposals
|
(591)
|
(233)
|
(159)
|
(983)
|
(101)
|
(4,065)
|
(57)
|
(4,223)
|
|
|
|
|
|
|
|
|
|
At 31 December 2022
|
5,668
|
374
|
393
|
6,435
|
470
|
21,265
|
77
|
21,812
|
Additions
|
1,111
|
12
|
69
|
1,192
|
102
|
3,044
|
-
|
3,146
|
Foreign exchange
differences
|
(314)
|
262
|
(180)
|
(232)
|
(1)
|
204
|
-
|
203
|
Reclassified as assets held for
sale
|
-
|
-
|
-
|
-
|
-
|
74
|
-
|
74
|
Disposals
|
(1,799)
|
(28)
|
(139)
|
(1,966)
|
-
|
(7,109)
|
-
|
(7,109)
|
|
|
|
|
|
|
|
|
|
At 31 December 2023
|
4,666
|
620
|
143
|
5,429
|
571
|
17,478
|
77
|
18,126
|
Accumulated Depreciation
|
|
At 1 January 2022
|
281
|
124
|
222
|
627
|
186
|
6,596
|
13
|
6,795
|
Charge for the year
|
1,619
|
270
|
252
|
2,141
|
161
|
4,129
|
53
|
4,343
|
Reclassification
|
129
|
-
|
(129)
|
-
|
-
|
-
|
-
|
-
|
Reclassified as assets held for
sale
|
(178)
|
(47)
|
(43)
|
(268)
|
-
|
(105)
|
-
|
(105)
|
Disposals
|
(480)
|
(221)
|
(148)
|
(849)
|
(20)
|
(987)
|
(22)
|
(1,029)
|
Foreign exchange
differences
|
1,765
|
(10)
|
172
|
1,927
|
-
|
-
|
-
|
-
|
|
|
|
|
|
|
|
|
|
At 31 December 2022
|
3,136
|
116
|
326
|
3,578
|
327
|
9,633
|
44
|
10,004
|
Charge for the year
|
1,189
|
137
|
166
|
1,492
|
131
|
3,584
|
26
|
3,741
|
Reclassified as assets held for
sale
|
-
|
-
|
-
|
-
|
-
|
1
|
-
|
1
|
Disposals
|
(1,711)
|
(27)
|
(103)
|
(1,841)
|
-
|
(2,432)
|
-
|
(2,432)
|
Foreign exchange
differences
|
(25)
|
254
|
(246)
|
(17)
|
-
|
-
|
-
|
-
|
|
|
|
|
|
|
|
|
|
At 31 December 2023
|
2,589
|
480
|
143
|
3,212
|
458
|
10,786
|
70
|
11,314
|
|
|
|
|
|
|
|
|
|
Net book value
|
|
|
|
|
|
|
|
|
At 31 December 2022
|
2,532
|
258
|
67
|
2,857
|
143
|
11,632
|
33
|
11,808
|
|
|
|
|
|
|
|
|
|
At 31 December 2023
|
2,077
|
140
|
-
|
2,217
|
113
|
6,692
|
7
|
6,812
|
|
|
|
|
|
|
|
|
|
The above property, plant and
equipment and right-of-use assets includes items held as security
as part of the fixed and floating charge over the assets of the
Group, refer to note 16 for further details of the Group's borrowings.
The reclassifications in the prior
year relate to misclassification of assets acquired as part of a
business combination in 2021.
9. Intangible assets
|
|
Goodwill
|
Customer contracts and
relationships
|
Branding
|
Acquired software and
Intellectual Property
|
Internal Software
Development
|
Total
|
|
|
£'000
|
£'000
|
£'000
|
£'000
|
£'000
|
£'000
|
|
|
|
|
|
|
|
|
Cost
|
|
|
|
|
|
|
|
At 1 January 2022 (restated)
|
|
323,624
|
188,860
|
15,277
|
90,314
|
26,199
|
644,274
|
Additions
|
|
-
|
-
|
-
|
-
|
9,966
|
9,966
|
Adjustment related to cloud computing costs
|
|
-
|
-
|
-
|
-
|
(640)
|
(640)
|
Reclassified as assets held for
sale
|
|
(501)
|
(1,095)
|
(450)
|
(28)
|
-
|
(2,074)
|
Impairment
|
|
(5,401)
|
(2,581)
|
(497)
|
(59)
|
-
|
(8,538)
|
Foreign
exchange differences
|
|
33,789
|
13,937
|
2,448
|
9,345
|
2,291
|
61,810
|
At 31 December 2022 (restated)
|
|
351,511
|
199,121
|
16,778
|
99,572
|
37,816
|
704,798
|
Additions
|
|
-
|
-
|
-
|
-
|
12,883
|
12,883
|
Disposals
|
|
-
|
-
|
-
|
-
|
(124)
|
(124)
|
Foreign
exchange differences
|
|
(16,019)
|
(4,999)
|
(794)
|
(4,606)
|
(1,825)
|
(28,243)
|
At 31 December 2023
|
|
335,492
|
194,122
|
15,984
|
94,966
|
48,750
|
689,314
|
|
|
|
|
|
|
|
|
Accumulated
amortisation
|
At 1 January 2022
|
|
-
|
70,947
|
2,068
|
23,179
|
14,838
|
111,032
|
Amortisation charged in
year
|
|
-
|
20,651
|
3,056
|
12,016
|
7,460
|
43,183
|
Reclassified as assets held for
sale
|
|
-
|
(182)
|
(105)
|
(7)
|
-
|
(294)
|
Impairment
|
|
-
|
(446)
|
(120)
|
(14)
|
-
|
(580)
|
Foreign exchange
differences
|
|
-
|
2,703
|
981
|
1,944
|
615
|
6,243
|
At 31 December 2022
|
|
-
|
93,673
|
5,880
|
37,118
|
22,913
|
159,584
|
Amortisation charged in
year
|
|
-
|
18,736
|
2,822
|
11,148
|
8,845
|
41,551
|
Disposals
|
|
-
|
-
|
-
|
-
|
(115)
|
(115)
|
Foreign exchange
differences
|
|
-
|
(1,766)
|
(289)
|
(1,763)
|
(904)
|
(4,722)
|
At 31 December 2023
|
|
-
|
110,643
|
8,413
|
46,503
|
30,739
|
196,298
|
|
|
|
|
|
|
|
|
Carrying amount
|
|
|
|
|
|
|
|
At 31 December 2022
(restated)
|
|
351,511
|
105,448
|
10,898
|
62,454
|
14,903
|
545,214
|
At 31 December 2023
|
|
335,492
|
83,479
|
7,571
|
48,463
|
18,011
|
493,016
|
|
|
|
|
|
|
|
| |
The Goodwill balances have been
restated as at 1 January and 31 December 2022 relating to a prior
period adjustment as described in note 22.
The above intangible assets are
held as security as part of the fixed and floating charge over the
assets of the Group, refer to note 16 for further details of the Group's
borrowings.
Goodwill and acquisition-related
intangible assets recognised have arisen from acquisitions.
Internal software development reflects the recognition of
development work undertaken in-house.
The amortisation charge for the
year of £41.6 million (2022: £43.2 million) includes £32.7 million
(2022: £35.7 million) relating to acquired intangibles.
Amortisation is included within operating expenses in the Statement
of Comprehensive Income.
The goodwill acquired in each of
the acquisitions is not expected to be deductible for tax
purposes except where arising in the US as an acquisition of a
single member limited liability company, this is treated as an
asset purchase for tax purposes and hence tax
deductible.
Annual impairment review
Goodwill acquired in a business
combination is allocated, at acquisition, to the cash generating
units ('CGUs') that are expected to benefit from that business
combination. Following a change in the aggregation of cash inflow
and assets for identifying CGUs discussed above, the Group has
eight (2022: nine) CGUs. The carrying amount of goodwill has
been allocated as follows:
CGU
|
Goodwill
|
Growth
rate for years 2 to 5
|
Post-tax discount rate
|
|
2023
|
2022
(restated)
|
2023
|
2022
|
2023
|
2022
|
|
£'000
|
£'000
|
%
|
%
|
%
|
%
|
Content
& learning services
|
2,180
|
12,712
|
7%
|
2%
|
10.8%
|
10.7%
|
Diversity
& inclusion
|
19,434
|
28,020
|
5%
|
6%
|
10.3%
|
10.6%
|
Software
solutions
|
143,568
|
150,612
|
2%
|
4%
|
10.8%
|
10.6%
|
GP
Strategies - Global Services
|
66,586
|
35,839
|
4%
|
5%
|
10.3%
|
10.2%
|
GP
Strategies - Americas
|
87,175
|
106,894
|
4%
|
5%
|
10.3%
|
10.1%
|
GP
Strategies - Europe
|
1,839
|
2,933
|
4%
|
4%
|
12.0%
|
10.2%
|
GP
Strategies - AMEA
|
3,443
|
2,623
|
5%
|
5%
|
11.2%
|
10.2%
|
GP
Strategies - Effective People
|
11,768
|
12,379
|
6%
|
8%
|
12.0%
|
10.2%
|
GP
Strategies - SFA
|
-
|
-
|
-%
|
-%
|
-
|
16.8%
|
|
335,993
|
352,012
|
|
|
|
|
During the year GP Strategies
reorganised its BPO business from Americas CGU to Global Services
CGU and comparatives for 2022 have been restated accordingly, in
order to align to how the business is managed and monitored, but
also due to product and service offerings becoming increasingly
interrelated.
The Content & Services and
Diversity & Inclusion CGUs have been amended in 2023 to reflect
the transfer of trade and assets relating to Leo Learning and PDT
to GP Strategies with effect from January 2023.
The difference between the net book
value of the Goodwill generated on acquisitions as at 31 December
2023 of £335,492,000 and the £335,993,000 stated above relates to
£501,000 of Goodwill relating to assets classified as held for sale
(see note 20).
The Group tests goodwill annually
for impairment or more frequently if there are indications that
goodwill might be impaired. The recoverable amounts of the CGUs are
determined from value in use calculations. The key assumptions for
the value in use calculations are those regarding the discount
rates (being the companies cost of capital), growth rates (based on
Board approved forecasts and estimated growth rates in years 2 to
5) and future EBIT margins (which are based on past experience).
The Group monitors its pre-tax Weighted
Average Cost of Capital and those of its competitors using market
data. In considering the discount rates applying to CGUs, the
Directors have considered the relative sizes, risks and
the
inter-dependencies of its
CGUs. The impairment reviews use a discount rate adjusted for
post-tax cash flows.
The Group prepares cash flow
forecasts derived from the 2024 financial plan approved by the
Board and extrapolates revenues, net margins and cash flows for the
following four years based on forecast growth
rates of the CGUs. Cash flows
beyond this five-year period are also considered in assessing the
need for any impairment provisions. The growth rates are based on
internal growth forecasts of between 2% and 7% for the first five
years. The terminal rate used for the value in use calculation
thereafter is 2.0%.
All CGUs have substantial headroom
between the calculated value-in-use and the net book value except
for the GP Strategies - SFA CGU which has been fully impaired
following the Board's announcement in December 2022 regarding
closure of the UK apprenticeship business in early 2023.
Approximately 80% of operations within the GP Strategies -
SFA CGU are being discontinued. The remaining contracts within the
CGU are of uncertain longevity and management are not targeting
further investment in this area. The resultant impairment
charge for 2022 was £8.0 million.
Sensitivity analysis
A reduction to 0% for the terminal
rate applied to the cash flows (with other assumptions remaining
constant) would not result in an impairment to any CGU.
A 10% decrease in the 2024 cash
flows used in the discounted cash flow model for the value-in-use
calculation (with other assumptions remaining constant) would not
result in an impairment to any CGU.
A 250bps increase in discount rates
used in the discounted cash flow model for the value-in-use
calculation (with other assumptions remaining constant) would not
result in an impairment to any CGU.
A 10% decrease in the 2024 cash
flows and a 250bps increase in the discount rates used in the
discounted cash flow model for the value-in-use calculation (with
other assumptions remaining constant) would not result in an
impairment to any CGU. Our sensitivity analysis has concluded that
these changes would not result in an impairment to any other
CGU.
Management do not consider that any
reasonably possible changes in the assumptions for the above CGUs
would result in an impairment.
The forecast cash flows used within
the impairment model are based on assumptions which are sources of
estimation uncertainty and it is possible that significant changes
to these assumptions could lead to an impairment of goodwill and
acquired intangibles. Given the uncertainty surrounding the
macroeconomic factors, geopolitical uncertainties and inflationary
pressures on the Group's operations and on the global economy,
management have considered a range of sensitivities on each of the
key assumptions, with other variables held constant.
The sensitivities which
were each assessed in isolation include
applying a 10 per cent reduction in the revenue assumption in the
next financial year from the base cash flow projections, increasing
the discount rate by 1% and reducing the long-term growth rates to
0%. Under these severe scenarios, the
estimated recoverable amount of goodwill and acquired intangibles
still exceeded the carrying value of all CGUs.
The sensitivity analysis showed
that no reasonably possible change in assumptions would lead to an
impairment.
Customer contracts, relationships, branding and Acquired
IP
These intangible assets include
the Group's aggregate amounts spent on the acquisition of
industry-specific knowledge, software technology, branding and
customer relationships. These assets arose from acquisition as part
of business combinations.
The fair value of these assets is
determined by discounting estimated future net cash flows generated
by the asset where no active market for the assets
exists.
The cost of these intangible assets
is amortised over the estimated useful life of each separate asset
of between two and twelve years.
Internal software development
Internal software development costs
principally comprise expenditure incurred on major software
development projects and the production of generic e-learning
content where it is reasonably anticipated that the costs will be
recovered through future commercial activity.
Acquired software and Intellectual
Property is amortised over the estimated useful life of between two
and ten years.
10.
Investments accounted for using the equity method
Joint ventures
The joint venture has share
capital consisting solely of ordinary shares, which are held
directly by the Group. The nature of the investments is listed
below.
|
|
|
Percentage of ordinary
shares held by Group
|
Name of entity
|
Country of Registration or Incorporation
|
Principal activity
|
31 December
2023
|
31 December
2022
|
LEO Brasil Tecnologia Educacional
Ltda (formerly Epic Brasil TecnologiaEducacional Ltda)
|
Brazil
|
Bespoke e-learning
|
-
|
17%
|
LEO Brasil Tecnologia Educacional Ltda
Since 31 December 2021 the Group's
proportional ownership in LEO Brasil Tecnologia Educacional Ltda
(formerly Epic Brasil Tecnologia Educacional Ltda) has been
17%.
On 5 September 2023, the Group
sold its 17% investment for proceeds of R$3 million (£0.4 million),
realising a gain on sale of £0.4 million.
There is no other impact on these
financial statements as the investment held had been fully
impaired.
National Aerospace Solutions, LLC
|
|
Share of joint venture's net
assets
|
Share of
joint venture's net assets
|
|
|
2023
|
2022
|
|
|
£'000
|
£'000
|
|
|
|
|
Cost
|
|
|
|
At 1 January
|
|
-
|
1,018
|
Additions from
acquisitions
|
|
-
|
-
|
Share of profit after
tax
|
|
-
|
155
|
Disposals
|
|
-
|
(1,173)
|
Disbursements
|
|
-
|
-
|
Foreign exchange
differences
|
|
-
|
-
|
At 31 December
|
|
-
|
-
|
The joint venture was acquired
through the acquisition of GP Strategies and represents the Group's
investment in National Aerospace Solutions, LLC, which has a Test
Operations and Sustainment (TOS) Contract for the management and
operations of the Arnold Engineering Development Complex in
Tullahoma, Tennessee.
On 18th April 2022, the Group sold
its 10% investment in National Aerospace Solutions LLC for proceeds
of $3.0m (£2.3 million), realising a gain on sale of £1.2
million.
11. Trade
receivables
|
|
31 Dec
|
31
Dec
|
|
|
2023
|
2022
|
|
|
£'000
|
£'000
|
|
|
|
|
Trade receivables
|
|
113,080
|
140,951
|
Allowance for impairment
losses
|
|
(5,118)
|
(4,926)
|
|
|
107,962
|
136,025
|
The Group's normal trade credit
term is 30-60 days. Other credit terms are assessed and approved on
a case-by-case basis.
The fair value of trade
receivables approximates their carrying amount, as the impact of
discounting is not significant. No interest has been charged to
date on overdue receivables.
In accordance with IFRS 15, the
Group has disclosed trade receivable balances net of the associated
contract liabilities, as outlined below. These balances will
be shown net until the earlier of either the date the payment
becomes due and a receivable is recognised or the date that the
services are delivered and an associated contract asset is
recognised.
|
|
2023
|
2022
|
|
|
£'000
|
£'000
|
|
|
|
|
Contract liabilities offset within
trade receivables above
|
|
13,099
|
6,639
|
The Group applies the IFRS 9
simplified approach to measuring expected credit losses which uses
a lifetime expected loss allowance for all trade receivables.
To measure expected credit losses, trade receivables have been
grouped based on shared credit risk characteristics and
aging. The amounts receivables on contacts have similar risk
characteristics to the trade receivables for similar types of
contracts.
The expected loss rates are based
on the Group's historical credit losses experienced in the previous
period and then adjusted for current and forward-looking
information on macroeconomic factors affecting the Group's
customers.
The expected credit loss rate and
the aged gross trade receivables and aged loss allowance as at 31
December are as follows:
31
December 2023
|
|
Expected Loss
rate
|
Gross Trade
receivable
|
Allowance for impairment
losses
|
|
|
|
£'000
|
£'000
|
|
|
|
|
|
Not past due
|
|
-%
|
97,988
|
297
|
|
|
|
|
|
Past due:
|
|
|
|
|
- Less than three months
|
|
8%
|
5,512
|
422
|
- Three to six months
|
|
31%
|
1,713
|
524
|
- Past six months
|
|
49%
|
7,867
|
3,875
|
Gross amount
|
|
|
113,080
|
5,118
|
31
December 2022
|
|
Expected Loss
rate
|
Gross Trade
receivable
|
Allowance for impairment
losses
|
|
|
|
£'000
|
£'000
|
|
|
|
|
|
Not past due
|
|
1%
|
117,464
|
1,608
|
|
|
|
|
|
Past due:
|
|
|
|
|
- Less than three months
|
|
5%
|
12,143
|
619
|
- Three to six months
|
|
7%
|
2,637
|
184
|
- Past six months
|
|
29%
|
8,707
|
2,515
|
Gross amount
|
|
|
140,951
|
4,926
|
The movement in the allowance for
expected credit loss is as below:
|
|
2023
|
2022
|
|
|
£'000
|
£'000
|
|
|
|
|
At
1 January
|
|
4,926
|
2,543
|
Reclassified as assets held for
sale
|
|
-
|
11
|
Additions
|
|
763
|
1,949
|
Release
|
|
(401)
|
-
|
Foreign exchange
|
|
(170)
|
423
|
At
31 December
|
|
5,118
|
4,926
|
As at 31 December 2023 trade
receivables of £1,192,000 (2022: £1,091,000) had lifetime expected
credit losses of the full value of the receivables. The
receivables due at the end of the financial year relate to 59
customers (2022: 51 customers) and have been fully provided based
on the aged profile of the debt or public information available to
management indicating the customers may be unable to settle the
debt.
12.
Other receivables and prepayments
Current assets
|
|
|
|
|
|
31 Dec
|
31
Dec
|
|
|
2023
|
2022
|
|
|
£'000
|
£'000
|
|
|
|
|
Sundry receivables
|
|
5,179
|
6,767
|
Prepayments
|
|
9,195
|
9,998
|
|
|
14,374
|
16,765
|
Non-current assets
|
|
|
|
|
|
31 Dec
|
31
Dec
|
|
|
2023
|
2022
|
|
|
£'000
|
£'000
|
|
|
|
|
Sundry receivables
|
|
2,093
|
1,874
|
|
|
2,093
|
1,874
|
Sundry receivables include rent
deposits and other sundry receivables.
13.
Deferred tax assets/(liabilities)
The deferred tax balances relate
to temporary differences arising between the tax bases of assets
and liabilities and their carrying amounts in the Financial
Statements. Deferred tax assets are recognised to the extent that
it is probable that the future taxable profits will allow the
deferred tax assets to be recovered.
The balances as at 1 January and
31 December 2022 have been restated as per note 22.
The movements in deferred tax
assets and liabilities prior to offsetting are shown
below:
|
Share
options
|
Tax losses
|
Short-term timing
differences
|
Intangibles
|
Total
|
Deferred tax assets
|
£'000
|
£'000
|
£'000
|
£'000
|
£'000
|
|
|
|
|
|
|
At
1 January 2022 (restated)
|
5,660
|
1,781
|
9,880
|
10,268
|
27,589
|
Deferred tax (charge)/credit
directly to the income statement
|
(566)
|
3,469
|
1,868
|
(663)
|
4,108
|
Deferred tax charged directly to
equity
|
(1,946)
|
-
|
-
|
-
|
(1,946)
|
Exchange rate differences, charged
directly to OCI
|
188
|
144
|
962
|
1,242
|
2,536
|
Changes in tax rate, credited to the
income statement
|
286
|
(146)
|
104
|
10
|
254
|
At
31 December 2022 (restated)
|
3,622
|
5,248
|
12,814
|
10,857
|
32,541
|
Deferred tax (charge)/credit
directly to the income statement
|
(281)
|
(226)
|
7,141
|
(17)
|
6,617
|
Deferred tax charged directly to
equity
|
(520)
|
-
|
-
|
-
|
(520)
|
Exchange rate differences, charged
directly to OCI
|
2
|
(151)
|
308
|
(531)
|
(372)
|
Changes in tax rate, credited to the
income statement
|
4
|
-
|
307
|
(414)
|
(103)
|
At
31 December 2023
|
2,827
|
4,871
|
20,570
|
9,895
|
38,163
|
|
|
Accelerated
tax
|
Short-term
timing
|
|
|
Intangibles
|
depreciation
|
differences
|
Total
|
Deferred tax liabilities
|
£'000
|
£'000
|
£'000
|
£'000
|
|
|
|
|
|
At
1 January 2022 (restated)
|
41,474
|
788
|
472
|
42,734
|
Deferred tax credit/(charge)
directly to the income statement
|
(7,762)
|
(1,292)
|
2,106
|
(6,948)
|
Exchange rate differences, charged
directly to OCI
|
4,097
|
125
|
9
|
4,231
|
Changes in tax rate, charged to the
income statement
|
(70)
|
(44)
|
61
|
(53)
|
At
31 December 2022 (restated)
|
37,739
|
(423)
|
2,648
|
39,964
|
Deferred tax credit/(charge)
directly to the income statement
|
(3,958)
|
587
|
(41)
|
(3,412)
|
Exchange rate differences, charged
directly to OCI
|
(1,362)
|
17
|
876
|
(469)
|
Changes in tax rate, charged to the
income statement
|
1,667
|
(1)
|
11
|
1,677
|
At
31 December 2023
|
34,086
|
180
|
3,494
|
37,760
|
|
|
|
|
|
| |
The total deferred tax assets and
liabilities subject to offsetting are presented below:
|
Total Deferred tax
assets
|
Total Deferred tax
liabilities
|
|
31 Dec
2023
£'000
|
Restated
31 Dec
2022
£'000
|
31 Dec
2023
£'000
|
Restated
31 Dec
2022
£'000
|
|
|
|
|
|
At 31 December prior to
offsetting
|
38,163
|
32,541
|
37,760
|
39,964
|
Offset of tax
|
(32,016)
|
(28,464)
|
(32,016)
|
(28,464)
|
At 31 December after
offsetting
|
6,147
|
4,077
|
5,744
|
11,500
|
The Group has recognised £4.9
million (2022: £5.2 million) of deferred tax assets relating to
carried forward tax losses, including those arising in the US of
amount £3.1 million. These losses have been recognised as it
is probable that future taxable profits will allow these deferred
tax assets to be recovered. The Group has performed a continuing
evaluation of its ability to recognise deferred tax assets on an
annual basis to estimate whether sufficient future taxable income
will be generated to permit their use.
Deferred tax assets of £24.6
million, relating primarily to trading losses carried forward
arising in the US totalling £86.2 million (2022: £91.9 million),
consisting of £31.7 million available for utilisation for the
period 2027-38 and £54.5 million to be carried forward
indefinitely, continue to be unrecognised. The Group has completed
a US federal tax study in 2022 and US state tax study in 2023 that
confirms the availability of these losses. The Group has
utilised approximately £7.5 million of trading losses (2022: £12.3
million) and recognised deferred tax assets of amount £3.1 million
relating to trading losses of £20.9 million that are expected to be
utilised in the period 2024-2026.
14.
Trade and other payables
|
|
|
|
31 Dec
|
31
Dec
|
|
2023
|
2022
|
|
£'000
|
£'000
|
|
|
|
Trade payables
|
24,979
|
31,813
|
Contract liabilities
|
63,398
|
99,303
|
Tax and social security
|
15,158
|
22,300
|
Contingent consideration
|
20
|
21
|
Acquisition-related contingent
consideration and earn-outs
|
145
|
4,876
|
Accruals
|
30,250
|
22,321
|
|
133,950
|
180,634
|
The contract liabilities balance
relates mainly to the Group's right to access licences, support and
maintenance and hosting contracts which are recognised over the
contract term as the customer receives and consumes the benefits of
the service. All of the current liability contract liabilities
balance at 31 December 2022 was recognised as revenue in 2023 and
the current contract liabilities balance at 31 December 2023 is
expected to be recognised as revenue in 2024.
The acquisition-related contingent
consideration and earn-outs balance in 2023 relates to the
acquisition of Learning Media Services and Patheer. The 2022
balance relates to the acquisition of PDT Global, eCreators, eThink
and BreezyHR Inc ('Breezy') and were financial instruments held at
fair value within the scope of IFRS 9 and were repaid during 2023.
The 2023 and 2022 contingent consideration balance relates to
Moodle News.
The Group has netted off £13.1
million (2022: £6.6 million) of contract liabilities against its
trade receivables balances as outlined in note 11.
15.
Other long-term liabilities
|
31 Dec
|
31
Dec
|
|
2023
|
2022
|
|
£'000
|
£'000
|
|
|
|
Contract liabilities
|
405
|
3,517
|
|
405
|
3,517
|
The non-current contract
liabilities balance relates mainly to the Group's right to access
licences, support and maintenance and hosting contracts which are
recognised over the contract term as the customer receives and
consumes the benefits of the service. The non-current contract
liabilities balance at 31 December 2023 is expected to be
recognised during 2025.
16.
Borrowings
The Group has a debt facility
dated 15 July 2021 with HSBC UK Bank PLC, HSBC Innovation Bank
Limited, Barclays Bank PLC, Fifth Third Bank NA and The Governor
and Company of the Bank of Ireland.
In March 2023, HSBC UK bank plc
("HSBC") acquired Silicon Valley Bank UK Limited ("SVB UK"). SVB
UK, now known as HSBC Innovation Bank Limited, a direct
wholly-owned subsidiary of HSBC, and which remains as the facility
agent and security agent for the debt facility.
The facility comprises of a Term
Facility A committed facility, with an original commitment of
$265.0 million available to the Group until October 2025, a $50.0
million committed Revolving Credit Facility (£39.3 million at the
year-end exchange rate) and a $50.0 million uncommitted accordion
facility (£39.3 million at the year-end exchange rate), both
available until July 2025. In addition, a 12 month extension
request is available to the Group for Term Facility A and the
RCF.
The term facility attracts
variable interest based on LIBOR plus a margin of between 1.50% and
2.75% per annum, based on the Group's leverage to December 2022,
following this it attracts SOFR plus the margin discussed above and
an adjusted credit spread until repaid.
Term Facility A is repayable with
quarterly instalments, starting December 2022, of $9.6 million (c
£7.5 million at the year-end exchange rate) with the balance
repayable on the expiry of the loan in October 2025. During the
year the Group also made a voluntary additional repayment of $25
million (c £20.5 million). There were no utilisations of the
Revolving Credit Facility or uncommitted accordion facility in
either of the years ended 2023 or 2022.
The bank loan is secured by a
fixed and floating charge over the assets of the Group and is
subject to financial covenants that are tested quarterly based on a
calendar year.
The financial covenants are that
the Group must ensure that its interest cover ratio is at least 4.0
times and its leverage ratio does not exceed 3.0 times. The
interest 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 interest cover ratio is the
ratio of adjusted EBITDA, as defined in the agreement, to Finance
Charges. The leverage ratio is total net debt on the last day of
the relevant period to adjusted EBITDA for that relevant period.
Both numerator and denominator in each calculation comprise several
adjustments as defined in the debt facility agreement and as such
are not directly calculable from the financial
statements.
The Group was compliant with all
financial covenants throughout the year and as at 31 December 2023,
the Group's interest cover was 8.34 (2022: 12.90) and its leverage
ratio was 0.71 (2022: 1.08).
The lease liabilities have arisen
on adoption of IFRS 16 and are secured by the related underlying
assets.
|
31 Dec
|
31
Dec
|
|
2023
|
2022
|
|
£'000
|
£'000
|
|
|
|
Current
interest-bearing loans and borrowings
|
30,091
|
36,714
|
Non-current interest-bearing loans and borrowings
|
120,984
|
177,944
|
Current
lease liabilities
|
4,423
|
5,082
|
Non-current lease liabilities
|
6,913
|
9,792
|
|
162,411
|
229,532
|
Net debt reconciliation
Net debt, which excludes lease
liabilities, can be analysed as follows:
|
31 Dec
2023
|
31 Dec
2022
|
|
£'000
|
£'000
|
|
|
|
Cash and cash
equivalents
|
72,522
|
94,847
|
Borrowings:
|
|
|
-
Revolving credit facility
|
-
|
-
|
- Term
loan
|
(151,075)
|
(214,658)
|
Net debt
|
(78,553)
|
(119,811)
|
17.
Lease liabilities
This note provides information for
leases where the group is a lessee.
|
2023
|
2022
|
|
£'000
|
£'000
|
|
|
|
At 1 January
|
14,874
|
21,845
|
Additions
|
4,346
|
1,948
|
Interest
expense
|
546
|
614
|
Lease payments
(principal and interest)
|
(5,738)
|
(7,333)
|
Disposals
|
(3,204)
|
(2,367)
|
Liabilities in disposal group held
for sale
|
(76)
|
(175)
|
Foreign exchange
movements
|
588
|
342
|
At 31 December
|
11,336
|
14,874
|
The split of the lease liabilities
due in less than and greater than one year is presented in
note 16.
Additional profits or losses and cash flow
information
|
31 Dec
2023
|
31
Dec
2022
|
|
£'000
|
£'000
|
|
|
|
Income from subleasing office
premises
|
3
|
256
|
Total cash outflow in respect of
leases in the year
|
(5,738)
|
(7,333)
|
Expense related to
short term leases not accounted for under IFRS 16
|
(217)
|
(594)
|
Additions to
right-of-use assets
|
3,147
|
2,062
|
18.
Provisions
|
|
|
|
|
|
|
Property
provisions1
|
Litigation and regulation
provisions2
|
Onerous contract
provisions3
|
Closure and restructuring
provisions4
|
Total
|
|
£'000
|
£'000
|
£'000
|
£'000
|
£'000
|
|
|
|
|
|
|
At
1 January 2022
|
1,075
|
6,489
|
1,024
|
-
|
8,588
|
Released to the income
statement
|
(34)
|
(3,769)
|
(643)
|
-
|
(4,446)
|
Paid in the year
|
(143)
|
(2,260)
|
-
|
-
|
(2,403)
|
Additions
|
204
|
-
|
-
|
1,047
|
1,251
|
Foreign exchange
movements
|
(99)
|
461
|
107
|
-
|
469
|
At
31 December 2022
|
1,003
|
921
|
488
|
1,047
|
3,459
|
Released to the income
statement
|
(87)
|
(320)
|
(475)
|
-
|
(882)
|
Paid in the year
|
(37)
|
-
|
-
|
(1,733)
|
(1,770)
|
Additions
|
6
|
208
|
-
|
1,792
|
2,006
|
Foreign exchange
movements
|
(65)
|
(43)
|
(13)
|
(45)
|
(166)
|
At
31 December 2023
|
820
|
766
|
-
|
1,061
|
2,647
|
Current
|
199
|
766
|
-
|
1,061
|
2,026
|
Non-current
|
621
|
-
|
-
|
-
|
621
|
Total provisions
|
820
|
766
|
-
|
1,061
|
2,647
|
1. The Group is party to a number
of leasehold property contracts. Provision has been made for the
unavoidable non-rent costs on those leases where the property is
now vacant. As a result of the implementation of IFRS 16 the
rental elements of certain property provisions are now included
within lease liabilities. In addition, the Group has provided
for dilapidation costs expected to be incurred at the end of
property leases.
2. Litigation and regulation
provisions relate to estimates for potential liabilities which may
arise in the Group as a result of client claims and past practices.
Whilst the nature of legal claims means that the timing of
settlement can be uncertain, we expect all claims to be settled in
the next 1 to 2 years Whilst the provisions are based on
management's best estimate of the likely liability for obligations
that exist at the year end date, the maximum potential exposure
could be materially higher than the provisions made as there is a
range of potential outcomes.
3. Onerous contract provisions
relate to provisions made for certain software contracts where the
unavoidable costs of meeting the obligation under the contract,
exceed the economic benefits expected to be received under the
contract.
4. Closure and restructuring
provisions relate to redundancy costs and facility obligations in
relation to the closure of the UK apprenticeship business,
announced prior to 31 December 2022, given the nature of the
customer relationships and quality of the offering in the business
do not match the high standards elsewhere in the Group. The
UK apprenticeship business ceased trading on 31 March
2023.
In 2023, the redundancy provisions
relate to resizing the organisation due to a more challenging macro
economic environment.
19.
Dividends paid
|
|
|
|
31 Dec
|
31
Dec
|
|
2023
|
2022
|
|
£'000
|
£'000
|
|
|
|
Final dividend paid
|
9,094
|
5,515
|
Interim dividend paid
|
3,558
|
3,547
|
|
12,652
|
9,062
|
On 27 October 2023 the Company
paid an interim dividend of 0.45 pence per share (2022: 0.45 pence
per share) amounting to a total dividend payment of £3.6
million. The Directors propose to pay a final dividend of
1.21 pence per share for the year ended 31 December 2023, equating
to a total payment in respect of the year of 1.66 pence per share
(2022: 1.60 pence per share).
The proposed final dividend of
1.21 pence per share, amounting to a final dividend of c. £9.5m, is
not included as a liability in these financial statements and,
subject to shareholder approval, will be paid on 28 June 2024 to
shareholders on the register at the close of business on 7 June
2024. The final dividend will be paid gross.
20.
Assets and liabilities
classified as held for sale
In December 2022, the Group
decided to dispose the non-core Lorien Engineering business as soon
as practicable and communicated this decision internally and to
investors on 19 December 2022. This business was acquired as
part of the GP Strategies acquisition in October 2021.
Following its classification as
held for sale the asset group is held at the lower of fair value
less costs to sell and net book value.
Effect of the assets and associated liabilities on financial
position of the Group
|
|
31 Dec
|
31
Dec
|
|
|
|
2023
|
2022
|
|
|
|
£'000
|
£'000
|
|
Non-current assets
|
|
|
|
Goodwill
|
|
501
|
501
|
Intangible assets
|
|
1,279
|
1,279
|
|
Property, plant and
equipment
|
|
66
|
58
|
|
Right-of-use assets
|
|
97
|
173
|
|
|
|
1,943
|
2,011
|
|
Current assets
|
|
|
|
|
Trade receivables
|
|
5,079
|
5,299
|
|
Other
receivables, deposits and prepayments
|
|
136
|
82
|
|
Amounts recoverable on
contracts
|
|
849
|
977
|
|
|
|
6,064
|
6,358
|
|
|
|
|
|
|
Assets in disposal groups classified
as held for sale
|
|
8,007
|
8,369
|
|
|
|
|
|
|
Current liabilities
|
|
|
|
|
Lease liabilities
|
|
-
|
77
|
|
Trade and other
payables
|
|
5,238
|
3,809
|
|
|
|
5,238
|
3,886
|
|
Non-current liabilities
|
|
|
|
|
Lease liabilities
|
|
97
|
98
|
|
|
|
|
|
|
Liabilities directly associated with
assets in disposal groups classified as held for sale
|
|
5,335
|
3,984
|
|
|
|
|
| |
The net assets of the Lorien
Engineering business held for sale as at 31 December 2023 exclude
deferred tax assets of £25,000 (2022: £39,000) and current tax
liabilities of £659,000 (2022: £412,000) which remain within the
Group tax position.
The Group recovered greater than
the net book value from the eventual sale which occurred on 2
January (note 21).
21.
Events since the reporting date
Sale of Lorien
On 2 January 2024, the Group sold
the Lorien business for a cash consideration of $21.4 million
(£16.8 million) on a cash and debt free basis. The net
proceeds after customary adjustments are expected to be $19.7
million (£15.5 million) resulting in an estimated gain of
$15.0 million (£11.8 million).
The only impact in these financial
statements are costs in relation to the sale of £529,000
(note 4).
These balances are subject to finalisation of the completion
accounts.
There have been no other
notifiable events between the 31 December 2023 and the date of this
Annual Report.
22. Prior
period adjustment
The Company has identified the need to make a correction to the
2022 and 2021 balance sheets where deferred tax liabilities and
goodwill amounting to £15.8 million as at 31 December 2022 and
£14.1 million as at 31 December 2021 should not have been
recognised under IAS 12 as the book basis and tax basis of acquired
intangible assets were equal for certain US acquisitions in 2016,
2020 and 2021. The adjustment reflects the tax efficient structure of the
relevant acquisitions and tax amortisation deductions were taken
for tax years 2020-2022 based on acquired intangible assets
recognised.
The Group has restated the balance
sheet and associated note disclosures as at 31 December 2022 and as
outlined below. There is no material impact on
the cash flow statements or net assets.
Statement of financial position adjustments
|
31 December
2022
|
Adjustments
|
Restated
31 December
2022
|
|
£'000
|
£'000
|
£'000
|
Non-current assets
|
|
|
|
Property, plant and
equipment
|
2,857
|
-
|
2,857
|
Right-of-use assets
|
11,808
|
-
|
11,808
|
Intangible assets
|
560,972
|
(15,758)
|
545,214
|
Deferred tax assets
|
4,084
|
(7)
|
4,077
|
Other receivables, deposits and
prepayments
|
1,874
|
-
|
1,874
|
Investments accounted for under the
equity method
|
-
|
-
|
-
|
Amounts recoverable on
contracts
|
1,303
|
-
|
1,303
|
|
582,898
|
(15,765)
|
567,133
|
|
|
|
|
|
|
|
|
Non-current liabilities
|
|
|
|
Lease liabilities
|
9,792
|
-
|
9,792
|
Deferred tax
liabilities
|
27,265
|
(15,765)
|
11,500
|
Other long-term
liabilities
|
3,517
|
-
|
3,517
|
Borrowings
|
177,944
|
-
|
177,944
|
Corporation tax payable
|
1,431
|
-
|
1,431
|
Provisions
|
1,857
|
-
|
1,857
|
|
221,806
|
(15,765)
|
206,041
|
Changes to associated note disclosures
Note 9 - Intangible
assets
|
31 December
2022
|
Adjustments
|
Restated
31 December
2022
|
|
£'000
|
£'000
|
£'000
|
Goodwill - cost
|
|
|
|
At 1 January 2022
|
337,754
|
(14,130)
|
323,624
|
Reclassified as assets held for
sale
|
(501)
|
-
|
(501)
|
Impairment
|
(5,401)
|
-
|
(5,401)
|
Foreign exchange
differences
|
35,417
|
(1,628)
|
33,789
|
At 31 December 2022
|
367,269
|
(15,758)
|
351,511
|
|
|
|
|
Note 13
- Deferred tax
assets
|
Share
options
|
Tax losses
|
Short-term timing
differences
|
Intangibles
|
Total
|
|
£'000
|
£'000
|
£'000
|
£'000
|
£'000
|
|
|
|
|
|
|
At
1 January 2022
|
5,660
|
1,781
|
9,880
|
5,237
|
22,558
|
Deferred tax (charge)/credit
directly to the income statement
|
(566)
|
3,469
|
1,868
|
(923)
|
3,848
|
Deferred tax charged directly to
equity
|
(1,946)
|
-
|
-
|
-
|
(1,946)
|
Exchange rate differences, charged
directly to OCI
|
188
|
144
|
962
|
650
|
1,944
|
Changes in tax rate, credited to the
income statement
|
286
|
(146)
|
104
|
(25)
|
219
|
At
31 December 2022
|
3,622
|
5,248
|
12,814
|
4,939
|
26,623
|
Adjustments to deferred tax assets
|
Share
options
|
Tax losses
|
Short-term timing
differences
|
Intangibles
|
Total
|
|
£'000
|
£'000
|
£'000
|
£'000
|
£'000
|
|
|
|
|
|
|
At
1 January 2022
|
-
|
-
|
-
|
5,031
|
5,031
|
Deferred tax (charge)/credit
directly to the income statement
|
-
|
-
|
-
|
260
|
260
|
Deferred tax charged directly to
equity
|
-
|
-
|
-
|
-
|
-
|
Exchange rate differences, charged
directly to OCI
|
-
|
-
|
-
|
592
|
592
|
Changes in tax rate, credited to the
income statement
|
-
|
-
|
-
|
35
|
35
|
At
31 December 2022
|
-
|
-
|
-
|
5,918
|
5,918
|
Restated Deferred Tax Assets
|
Share
options
|
Tax losses
|
Short-term timing
differences
|
Intangibles
|
Total
|
|
£'000
|
£'000
|
£'000
|
£'000
|
£'000
|
|
|
|
|
|
|
At
1 January 2022 (restated)
|
5,660
|
1,781
|
9,880
|
10,268
|
27,589
|
Deferred tax (charge)/credit
directly to the income statement
|
(566)
|
3,469
|
1,868
|
(663)
|
4,108
|
Deferred tax charged directly to
equity
|
(1,946)
|
-
|
-
|
-
|
(1,946)
|
Exercise of share options
|
-
|
-
|
-
|
-
|
-
|
Exchange rate differences, charged
directly to OCI
|
188
|
144
|
962
|
1,242
|
2,536
|
Changes in tax rate, credited to the
income statement
|
286
|
(146)
|
104
|
10
|
254
|
At
31 December 2022 (restated)
|
3,622
|
5,248
|
12,814
|
10,857
|
32,541
|
Note 13
- Deferred tax
liabilities
|
|
Accelerated
tax
|
Short-term
timing
|
|
|
Intangibles
|
depreciation
|
differences
|
Total
|
|
£'000
|
£'000
|
£'000
|
£'000
|
|
|
|
|
|
At
1 January 2022
|
51,235
|
127
|
472
|
51,834
|
Deferred tax credit/(charge)
directly to the income statement
|
(9,900)
|
585
|
2,106
|
(7,209)
|
Exchange rate differences, charged
directly to OCI
|
5,206
|
51
|
9
|
5,266
|
Changes in tax rate, charged to the
income statement
|
-
|
(148)
|
61
|
(87)
|
At
31 December 2022
|
46,541
|
615
|
2,648
|
49,804
|
Adjustments to deferred tax liabilities
|
|
Accelerated
tax
|
Short-term
timing
|
|
|
Intangibles
|
depreciation
|
differences
|
Total
|
|
£'000
|
£'000
|
£'000
|
£'000
|
|
|
|
|
|
At
1 January 2022
|
(9,761)
|
661
|
-
|
(9,100)
|
Deferred tax credit/(charge)
directly to the income statement
|
2,138
|
(1,877)
|
-
|
261
|
Exchange rate differences, charged
directly to OCI
|
(1,109)
|
74
|
-
|
(1,035)
|
Changes in tax rate, charged to the
income statement
|
(70)
|
104
|
-
|
34
|
At
31 December 2022
|
(8,802)
|
(1,038)
|
-
|
(9,840)
|
Restated Deferred Tax Liabilities
|
|
Accelerated
tax
|
Short-term
timing
|
|
|
Intangibles
|
depreciation
|
differences
|
Total
|
|
£'000
|
£'000
|
£'000
|
£'000
|
|
|
|
|
|
At
1 January 2022 (restated)
|
41,474
|
788
|
472
|
42,734
|
Deferred tax credit/(charge)
directly to the income statement
|
(7,762)
|
(1,292)
|
2,106
|
(6,948)
|
Exchange rate differences, charged
directly to OCI
|
4,097
|
125
|
9
|
4,231
|
Changes in tax rate, charged to the
income statement
|
(70)
|
(44)
|
61
|
(53)
|
At
31 December 2022 (restated)
|
37,739
|
(423)
|
2,648
|
39,964
|
The impact on the 31 December 2021
balance sheet is to reduce Goodwill by £14.1 million (note
9), reduce deferred tax
liabilities prior to offsetting £9.1 million and increase deferred
tax asset of £5.0 million prior to offsetting (note
13). After
offsetting, the increase in deferred tax assets was £14.1m with no
corresponding change in the deferred tax liability. There is
no material impact on net assets, cash flow or reserves in
2021.
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.
|
Closest equivalent IFRS measure
|
Reconciling items to IFRS measure
|
Definition and purpose
|
Income Statement Measures
|
Adjusted EBIT
|
Operating profit
|
Adjusting items
|
Adjusted EBIT excludes adjusting
items. A reconciliation from Adjusted EBIT to Operating
profit is provided in the Consolidated statement of comprehensive
income.
|
Adjusting items
|
None
|
Refer to definition
|
Items which are not considered 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 4 to the
financial statements.
|
SaaS and long-term
contracts
|
Revenue
|
Refer to note 3
|
Recurring revenue is defined as the
revenue streams of the Group that are predictable and expected to
continue into the future upon customer renewal.
|
Transactional
|
Revenue
|
Refer to note 3
|
Non-recurring revenue is defined 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 or debt
|
None
|
Refer to note 16
|
Net cash / debt is defined as Cash
and cash equivalents and short-term deposits, less Bank overdrafts
and other current and non-current borrowings. Lease
liabilities are excluded from net debt. A reconciliation is
provided in note 16 to the financial statements.
|
Total Equity per share
|
None
|
Refer to definition
|
Calculated as Total Equity at the
end of the period/year divided by the number of shares on issue at
the end of the period/year, The shares on issue at 31 December 2022
were 789,824,841 and 791,160,022 at 31 December 2023.
|
Cash Flow Measures
|
Adjusted operating cash
flow
|
None
|
Refer to definition
|
Cash flow in the period after
accounting for operating activities and capital
expenditure.
|
Cash conversion
|
None
|
Refer to definition
|
Adjusted operating cash flow as a
percentage of Adjusted EBIT.
|
Free cash flow
|
None
|
Refer to definition
|
Cash flow in the period after
accounting for operating activities, investing activities, lease
payments, interest and tax.
|