FULL YEAR RESULTS 2021

RNS Number : 9792J

Learning Technologies Group PLC

03 May 2022

Learning Technologies Group plc

Strong organic revenue growth

Transformational GP Strategies acquisition progressing ahead of plan

Learning Technologies Group plc ("LTG" or the "Company"), a market leader in digital learning and talent management, announces full year results for the twelve months ended 31 December 2021.

Strategic and operational highlights

·	Sustained momentum and organic growth across the business, with high quality earnings from SaaS and long-term contracts
·	Transformational GP Strategies acquisition significantly broadens scale, offering and cross-selling opportunities - delivering earlier than anticipated with EBIT margin expected to be 12% in FY 2022
·	New go-to-market strategy to support greater breadth and depth of offering and geographical reach and faster growing markets
·	Q1 2021 acquisitions (Reflektive, PDT Global and Bridge) fully integrated and achieving substantially improved profit margins

Financial highlights and summary

·	Strong organic revenue growth, up 8%
	o	Content & Services recovered strongly, organic growth of 25%, and now back to 2019 levels, as expected
	o	Software & Platforms organic growth of 2% and 17% excluding PeopleFluent, continuing its track record of high-margin growth; PeopleFluent decline more than offset by organic growth in the remainder of the segment including strong contributions from Rustici and Breezy
·	Excellent profit growth, as a result of strong organic revenue growth, contribution from recent acquisitions and a continued focus on EBIT margin improvement as the Group expands
·	As expected, Group margins have reduced driven by a change in revenue mix from acquisitions
·	Net debt of £141.4m and good cash generation; on target for leverage c.1.0x by FY2022
·	17% increase in adjusted diluted EPS driven by organic growth and contribution from acquisitions
·	The Board is proposing a final dividend of 0.7p, an increase of 40%, leading to a full year dividend of 1.0p, an increase of 33%

£m unless otherwise stated	2021	2020	Change

Revenue	258.2	132.3	+95%
Adjusted EBIT	54.8	40.3	+36%
Adjusted EBIT margin	21.2%	30.5%
Adjusted diluted EPS (pence)	5.01	4.29	+17%
Proposed final dividend per share (pence)	0.7	0.5	+40%
Net debt/(cash)	141.4	(70.2)

Statutory results
Profit before tax	9.3	13.5
Basic EPS (pence)	1.96	2.45

Current trading and outlook

·	Current trading in Q1 2022 is strong, in line with management expectations
·	Upgrade to FY 2022 margin expectations following progress ahead of plan with GP Strategies' integration
·	Following the transformational GP Strategies acquisition, LTG has:
	o	Opportunities for significant margin enhancement and cross-selling, as a global business
	o	Increased reach in the c.$100bn addressable market in digital learning and talent management
·	While mindful of the current macro environment, strong business momentum continuing into the new financial year and a robust balance sheet that supports further software company acquisitions in due course, underpinning the Board's confidence of significant progress in FY 2022.

Jonathan Satchell, Chief Executive of LTG, said:

"2021 was another exciting and successful year for LTG. Our strong organic revenue growth reflects the pressing and growing need for organisations to recruit, train, motivate and retain talent and LTG's ability to meet these demands. We have also continued our track record of improving the operating model and performance of businesses we acquire.

Our transformational GP Strategies' acquisition is progressing ahead of plan and enables us to upgrade our margin expectation for FY 2022. The enlarged Group provides a platform to capture a greater proportion of the circa $100 billion and growing addressable market in digital learning and talent management. Following the acquisition we have a deeper offering to serve a global customer base facing greater complexity and change, creating further margin enhancement and cross-sell opportunities for LTG.

While mindful of the current macro environment, strong business momentum has continued into the new financial year and we have a robust balance sheet that will support further software company acquisitions in due course, underpinning the Board's confidence of significant progress in FY 2022."

Analyst and investor presentation:

LTG will host an analyst and investor webcast at 09.30 BST today, Tuesday 3 May 2022.

To join the call, please pre-register using the following link:

https://attendee.gotowebinar.com/register/6688990460749452557

After registering, you will receive a confirmation email containing information about joining the webinar.

If you prefer to use your phone, you must select "Use Telephone" after joining the webinar and call in using the numbers below:

United Kingdom: +44 20 3713 5012

Access Code: 398-823-358

Audio PIN: Shown after joining the webinar

Enquiries :

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

About LTG:

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

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

Chief Executive's Review

Introduction

We have seen sustained business momentum through 2021 and this has helped us deliver strong Group organic revenue growth of 8% in the year, with both the Software & Platforms and Content & Services divisions contributing. We have also seen a significant increase in adjusted EBIT and adjusted diluted Earnings per Share, supported by the contribution of acquisitions in 2021.

For many of our customers, COVID-19 has resulted in increased remote and home working and there is a reduced appetite for business travel. As a result, we believe the long-term, favourable trends in our markets which define our strategy - namely a long-term shift towards digital learning, blended with expert facilitation - are accelerating to our benefit.

In addition to our excellent operational performance in the year, we have made significant strategic progress. We acquired Bridge, Reflektive and PDT Global in the first quarter of 2021 and integrated them during the year. They are now meaningful contributors to Group adjusted EBIT.

We completed the transformational acquisition of US-listed GP Strategies in October 2021, which is progressing ahead of plan. GP Strategies adds new blue-chip commercial and government customers, new and deepened customer verticals, expanded capabilities and given us a global reach, and it has brought embedded customer relationships underpinned by long-term contracts. On a pro forma basis, 71% of 2021 Group revenue is related to Software as a Service (SaaS)-based subscriptions and long-term contracts.

We have an excellent track record of delivering value from acquisitions and after the first months of ownership of GP Strategies, we are very confident that it will create significant shareholder value. It provides an outstanding margin enhancement opportunity and rich cross-selling prospects, some of which are already starting to show results. We continue to expect the combination to be significantly earnings accretive and there has been a swifter than anticipated improvement in GP Strategies' margins. The task of integrating and unlocking its growth potential remains our primary focus for 2022.

These acquisitions offer added strength and resilience to our business model, continuing the evolution we've seen over the last several years.

As a result of the significant strategic and operational progress we made in 2021, we have exceeded our 2022 strategic financial goals, previously set in 2020. These were c.£230 million of run-rate revenue and c.£66 million run-rate adjusted EBIT.

Results and Operations

The Group generated revenue of £258.2 million (2020: £132.3 million). This included organic revenue growth of 8% and the initial contribution from our 2021 acquisitions. Both divisions contributed to the organic growth with Software & Platforms delivering 2% growth - 17% excluding PeopleFluent - and 25% in Content and Services.

Adjusted EBIT increased by 36% to £54.8 million (2020: £40.3 million), driven by the contribution from acquisitions and organic revenue growth. Statutory operating profit was £11.7 million (2020: £14.9 million), including adjusting items of £43.1 million (2020: £25.5 million).

We have a strong track record of cash generation, and this remains a top priority for us with net cash generated from operating activities of £37.5 million (2020: £39.9 million), equivalent to an adjusted operating cash flow conversion rate of 76% (2020: 85%).

After acquisitions, and partially offset by cash generated, net debt was £141.4 million (31 December 2020: £70.2 million - net cash) at 31 December 2021, excluding £21.8 million (31 December 2020: £10.3 million) of lease liabilities. The covenant net debt/adjusted EBITDA ratio was 1.8 times (2020: n/a). We remain confident in achieving our target of a net debt/adjusted EBITDA ratio of circa 1.0x by 31 December 2022, excluding the impact of any potential acquisitions.

Market Opportunity

We operate within a very large global learning and talent market, estimated to be worth approximately $378 billion in 2021¹. This market comprises internal, external and tuition markets although we are primarily focused on the estimated circa $100 billion external corporate training segment of this market.

We also operate in the smaller, complementary talent management market. This is the future evolution of learning and development, encompassing software applications that enable all facets of the employee 'life-cycle' to be brought together in one place. It includes recruitment, performance management, learning and development, diversity and inclusion and compensation management. It represents a logical progression from the disparate systems and processes that prevent businesses from aligning strategy with workforce learning and development.

Our main focus overall is on the faster-growing digital training and development segment. As a result of the range of services and software products available to us, we are able to offer comprehensive learning and development solutions. We partner with our corporate and government customers in a way that others cannot, in what remains a fragmented market. Our suite of analytic tools enable us to track the performance of our learning and development solutions, demonstrating to customers the cost effectiveness of the services and software we provide. We are able to selectively bolt-on technology capabilities, additional geographic reach or differentiated service offerings to further enhance our customer proposition. The Learning Services market is forecast to grow between 5-6% in 2022².

We continue to believe that there are five forces that are rapidly evolving our marketplace, underpinning its attractiveness by increasing the need for the range of learning and development solutions we provide. These five forces are driving the need for corporates and governments to continually reskill and transform their workforces, as follows.

· The growing complexity of business and work

Work and business are becoming more complicated with regulations, specialisms and other complexity increasing. For example, the US Code of Federal Regulations has expanded from 21,000 pages in 1962 to over 180,000 pages in 2019 ³ . Corporates need to train their employees to remain compliant with this list of rules and regulations to avoid penalties, comply with accounting and tax policies and recruit and successfully manage talent. Technical and professional specialisms have also increased alongside the complexity of the tools used to perform our work.

· The pace of change

The pace of change in work is accelerating, in part driven by the revolution in technology, including digitalisation and automation. A recent survey⁴ concluded that skills required for a single job are increasing 10% per annum. Furthermore, over 30% of the skills needed three years ago will soon be irrelevant ⁴ . For employees to remain productive and effective, employers need to provide training so they can keep pace with changing roles.

· Unprecedented demographic shifts

As populations get older, the pool of talent available is contracting - a pattern that is expected to accelerate, leaving an estimated deficit of 85 million workers globally ⁵ . As a result, there will be intense competition to hire and retain employees, a dynamic which has proven to be particularly prevalent since COVID-19. A business has to make itself an employer of choice, and development and progression opportunities offered by training are vital.

· The need to compete through productivity

Labour shortages and an ageing population mean that around 90% of future growth will have to come from productivity improvements⁶. Technology is needed to drive productivity, and learning is needed to develop and maintain human expertise. Steps needed to address global warming and other societal pressures mean business travel for face-to-face training is becoming gradually less acceptable, with more digital training and consolidation in face-to-face training provision.

· The changing relationship to work

Younger workers want meaningful work and autonomy. For this to happen, they need training to understand what they do and what the organisation needs⁷. COVID-19 has shifted the relationship between home and work. The expectation is of a hybrid work-world and, in this context, how we support learning and development is important, with the onus on employers to help employees thrive in this remote-working world.

We continue to be excited by our markets and the huge opportunities they provide.

¹	Training Industry, Inc. Research Data 2021 estimated totals.
²	Training Industry, Inc. Learning Services Market 2021.
³	George Washington University Regulatory Studies Center. (June 2019).
⁴	Baker, M. (Aug 2020). Stop Training Employees in Skills They'll Never Use. Gartner.
⁵	Korn Ferry Institute. (May 2018). The $8.5 Trillion Talent Shortage.
⁶	Bughin, J., Dimson, J., Hunt, V., et al. (Sep 2018). Solving the United Kingdom's productivity puzzle in a digital age. McKinsey Global Institute.
7	O h, J. (Jan 2020). Three rules for engaging millennial and Gen Z talent in the workplace. World Economic Forum.

Creating Value Through Investment in Innovation

Investment in innovation is a high capital allocation priority, and we have a strong track record of creating value in this area. We make our investments in partnership with customers, informed by a known customer need.

Part of our investment strategy is to leverage value from complementary technologies acquired through our selective M&A programme. We invest to consolidate products to provide integrated and cohesive solutions. In this way, our investment is aligned to the strategy of providing differentiated and comprehensive capabilities to customers. Where possible, we adopt a lower-risk approach to innovation by applying our existing technology to different markets.

During 2021, we have continued to make investments consistent with our strategy. Examples include:

·	In our Rustici business, we delivered a test suite representing a significant step forward in the provision of the tools and resources needed to continue modernising standards across industry and government. This supports the development of more advanced approaches to learning and training, including simulation and extended reality.

·	We have integrated our Open LMS technology with that of eCreators and eThink to create a shared code base, with the consolidation of the technology and hosting services enabling more efficient customer service.

·	We have integrated the Reflektive product line with PeopleFluent's enterprise talent management and talent marketplace to create modern performance management and engagement capabilities. In addition, we have integrated streamlined performance capabilities in the fast-growing Breezy HR brand, as well as an enhanced user experience.

·	Within PeopleFluent, we have worked closely with customers to enhance its function-rich capabilities. These include people analytics, calibration, skills ontology, inclusion and bias filtering for recruitment, and content management for extended enterprise learning providers.

Our ability to integrate our offerings enables us to offer holistic solutions and cross-sell to customers. We have had a particularly notable success providing a learning eco-system for the partners, distributors and third-party audiences of a global energy business. This involved services and integrated software provision from six of our businesses, working together in close collaboration.

Creating Value Through Acquisitions - GP Strategies

Alongside organic growth, we create value from acquisitions to help build our position as a global market leader in the growing digital learning and talent management sector. These bring quality software or services offerings, enabling us to provide holistic learning and development solutions to our global customer base. We also invest in businesses with strong underlying assets where we can significantly improve the business model. To drive value, we integrate our core capabilities, manage costs, including IT systems and back-office, and increase staff utilisation. These actions improve execution and delivery and increase operating margins and cash generation.

Consistent with our strategy, in October 2021 we completed the transformational acquisition of US-listed GP Strategies. This is a global provider of organisational and technical performance solutions which transforms organisational effectiveness through innovative and superior training, consulting and business improvement services.

Total consideration for GP Strategies was $392 million (£288 million), representing an enterprise value on completion of $370 million (£271 million), including lease liabilities. The acquisition was partially funded by a mix of debt and an equity placing with gross proceeds of approximately £85 million (44.3 million shares). The acquisition is financially compelling and brings many strategic and customer benefits, including new and complementary capabilities; expertise in target customer markets in highly-regulated, complex industries; an expanded geographic footprint including in the US and faster growing Asian markets; and an outstanding reputation servicing 125 of the US Fortune 500 and 121 of Global 500 constituents. Almost three-quarters of its revenue is from customers of more than 10 years standing.

GP Strategies offers a significant opportunity to cross-sell products and services to a combined base of over 6,100 customers. We continue to work towards - and are confident we will achieve - our target of launching our combined strategic customer offer by the second half of 2022.

With limited areas of service overlap, the cross-selling focus is primarily a means by which we can combine GP Strategies' compelling services offerings with LTG's software platforms, to provide a value-add solution to customers of both businesses. We have seen encouraging early customer interest in our combined service and software offerings. There are also some early cross-selling successes including a significant multi-year contract with a major US professional association in the financial services industry who delivers learning and accreditation services to more than 400,000 members worldwide. Neither business would have been able to provide the suite of services won, had it not been for the combined services and software within the Group.

We have an excellent track record of enhancing our margin over many years, including from acquisitions. The near-term priority for GP Strategies management has been to deliver cost efficiencies and savings from a range of actions, including improved commercial governance and enhanced procurement controls, shared procurement efficiencies and a reduction of spend on third-party subcontractors.

Since the acquisition completed, listing costs have been eliminated and other corporate overheads reduced. GP Strategies' management has put in place new commercial and supplier approvals and controls, and it has made substantial progress on the rationalisation of the supplier base, achieving significant supplier cost efficiencies.

Billable utilisation of customer-facing employees is also a focus, with work previously carried out by subcontractors now being done increasingly in-house. There is also a greater focus on winning higher value-add business. This includes, for example, a focus on work requiring more creative content and technical services.

In late 2021 there was a senior management reorganisation, and, in January 2022, there was a planned reduction in staff, impacting 45 employees across GP Strategies. This has removed a layer of management and reduced back-office costs and underutilised staff. The reduction has helped efficiency without impacting the ability to serve customers.

Overall, we have seen a swifter-than-anticipated improvement in operational performance, with excellent progress being made. It is important to acknowledge the collegiate and co-operative approach of our GP Strategies' colleagues in this crucial commercial initiative. As a result, we expect a GP Strategies' adjusted EBIT margin of 12% in 2022. We remain confident there is further margin improvement potential for the business beyond this, such that we expect the run rate adjusted EBIT margin at the end of 2022 to be in the mid-teens.

During the year, GP Strategies incurred non-recurring costs of £2.9 million. This includes costs relating to the senior management reorganisation in late 2021, as well as legal, insurance and audit costs related to the transaction.

As a result of the acquisition of GP Strategies, LTG owned a 10% stake in National Aerospace Solutions LLC ("NAS"). Among other activities, NAS supports US Air Force test facilities at Arnold Engineering Development Complex, which operates 28 aerodynamic and propulsion wind tunnels and rocket and turbine engine test units. This shareholding was not considered core and on 18 April 2022 we divested it for $3.0 million proceeds. The GP Strategies' employees supporting this business have transferred to NAS and, as such, LTG no longer holds an interest in NAS and its employees no longer support it.

Creating Value Through Acquisitions - Reflektive, PDT Global and Bridge

As well as GP Strategies, and the small acquisition of Moodle News in August 2021, we announced the Reflektive, PDT and Bridge acquisitions in the first quarter of 2021. These bring complementary software products as well as training and consulting in Diversity & Inclusion, enabling us to expand our offering to customers as follows:

·	Reflektive completed in January 2021 for a cash consideration of $13.7 million (c.£10.0 million)

Reflektive brings agile performance management software, including engagement and analytics tools to the Group. It enables collaborative goal setting, continuous feedback and analytics, providing measurable results for boosting productivity, engagement and improving employee retention. It serves the mid-market corporate customer base, complementing Bridge (see below).

·	PDT Global completed in February 2021 for an initial cash consideration of £13.4 million, with further performance payments of up to £6.1 million payable in the three years to 2023

PDT Global brings Diversity & Inclusion offerings and is managed alongside our existing Affirmity brand, which offers affirmitive action planning in the US. The two businesses' highly complementary offerings enable customers to objectively measure and track their performance and implement the tools, processes and learning required to drive appropriate change.

·	getBridge LLC (Bridge) also completed in February 2021 for a cash consideration of $47.5 million (c.£34.2 million)

Bridge is a learning, performance and skills development platform for mid-enterprise organisations which operates on a single, easy-to-use, SaaS-based platform. It complements our PeopleFluent learning and talent platform for the large enterprise market. The addition of Bridge enables us to cover a broader corporate market and creates opportunities for further cross-selling across our customer base.

We have removed overheads across our acquisitions as appropriate and implemented LTG's well-tested, rigorous commercial and operational processes. As a result of our actions, we have moved Reflektive and Bridge, which were significantly loss-making at the time of acquisition, quickly and sustainably into profit. There has also been initial success with our cross-selling strategy. We are pleased to be creating value from these acquisitions in the first year of ownership.

During 2022, our primary focus will continue to be on the successful transformation of GP Strategies, ahead of its integration into LTG. The Group will continue to look for additional bolt-on acquisition opportunities with an emphasis on the Software & Platforms division.

People

Kath Kearney-Croft joined us as Chief Financial Officer and Board member on 1 December 2021, replacing Neil Elton after seven years in the role. Kath brings extensive public company experience in senior finance roles across a range of industries with operations in international markets.

The acquisition of GP Strategies brought 4,000 new colleagues, alongside LTG's 1,100 people. Given the scale of this cultural integration, we decided to hire a new Chief People Officer with large, global company experience. Liz Freedman will join us on 23 May 2022, arriving from IHG Hotels & Resorts where she was

Head of Global Talent. Prior to IHG, she held regional and global leadership roles at The Coca-Cola Company and Procter & Gamble.

Liz brings a unique combination of sales and customer marketing, operations, human capital management and large-scale transformational change experience with some of the world's largest multinational companies. I look forward to welcoming her to LTG's Executive Team.

Environmental, Social and Governance (ESG)

What we provide to our customers enables them to manage and develop their human capital and is therefore fully aligned with ESG principles. We also focus on our own performance, including environmental sustainability. We report on our scope 1, 2 and 3 Greenhouse Gas (GHG) emissions and there was a 17% decrease in our total GHG emissions in 2021. In part, this was due to the mitigating actions taken, as well as the impact of reduced office use during COVID-19. While our GHG emissions will increase in the short term, due to our significantly increased scale following the acquisition of GP Strategies, we have now committed to an ambition of Net Zero by 2050, or sooner. During 2022, we will be developing actions to support this ambition and we will provide an update in our 2022 results.

Update on Russia

Thankfully, LTG has no staff or contractors based in Russia or Ukraine and we do minimal business in either market. In response to the conflict, we have decided not to conduct business with any customer which is Russian domiciled or predominantly Russian owned.

Outlook

2021 was another exciting and successful year for LTG. Our strong organic revenue growth reflects the pressing and growing need for organisations to recruit, train, motivate and retain talent and LTG's ability to meet these demands. We have also continued our track record of improving the operating model and performance of businesses we acquire.

Current trading in Q1 2022 is strong, in line with management expectations. While mindful of the current macro environment, strong business momentum has continued into the new financial year and we have a robust balance sheet that will support further software company acquisitions in due course, underpinning the Board's confidence of significant progress in FY 2022.

Jonathan Satchell

Chief Executive

29 April 2022

Chief Financial Officer's Review

Revenue

The Group's revenue increased by 95% to £258.2 million (2020: £132.3 million). This included organic revenue growth of 8% and the initial contributions from Bridge, Reflektive, PDT Global, Moodle News and GP Strategies, which were acquired during the year. These favourable impacts were partially offset by adverse currency translation of £8.8 million.

There was 2% organic revenue growth in the Software & Platforms division. This comprised the expected lower revenue in the more mature PeopleFluent talent management product line, which is focused on large and complex corporate customers, being more than offset by continued strong growth from the Rustici e-learning standards business, growth in Open LMS, a combination of three open-source software companies acquired in 2020 and strong growth in Breezy HR, a leading edge talent acquisition platform .

Organic revenue growth in the Content and Services division was strong at 25%, driven by a recovery in demand through the year with revenue now back at 2019 levels, as expected. All businesses in the division delivered organic growth with a particularly strong performance from LEO and PRELOADED, the Group's digital learning specialists with content and design capabilities. Affirmity, the US-market leader in affirmative action planning, also delivered strong organic growth. This included the benefit from a renewed focus on retaining existing customers, as well as new client wins, and there have been some encouraging cross-selling wins with PDT Global, which was acquired in the first quarter of 2021.

SaaS-based subscription and long-term contract revenue was 75% (2020: 81%) of total Group revenue, reflecting a change in revenue mix primarily from GP strategies.

Adjusted Earnings Before Interest and Tax (EBIT) and Operating Profit

Adjusted EBIT⁸ increased by 36% to £54.8 million (2020: £40.3 million), driven by the contribution from acquisitions and organic revenue growth. The Group's adjusted EBIT margin was lower as anticipated at 21.2% (2020: 30.5%), including the initial contribution from GP Strategies, a service-related business, which has a lower adjusted EBIT margin . In addition, the 2021 Bridge and Reflektive acquisitions were loss-making when acquired and there was an overall lower margin portfolio mix resulting from varying growth rates across the business.

In the short term, there will be an adverse impact from the lower GP Strategies' margin with an expected gradual improvement, in part driven by efficiencies and synergies and from incremental returns due to operational leverage. We intend to continue to invest in the business on an organic basis to drive revenue and adjusted EBIT with the aim of delivering Group adjusted EBIT margins of around twenty per cent in the medium term.

Included within adjusted EBIT was a share-based payment charge which increased to £5.2 million (2020: £3.3 million), of which £1.2 million relates to the grant of new options to Executive Directors, and the remainder as a result of new, unapproved options issued during the year.

Also included within adjusted EBIT was an amortisation charge for internally generated development costs which increased to £5.6 million (2020: £4.2 million), as set out in Note 10. 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 in prior years.

The Group's statutory operating profit was £11.7 million (2020: £14.9 million), with adjusting items of £43.1 million (2020: £25.5 million), which included:

·	An amortisation charge for acquisition-related intangible assets of £26.2 million (2020: £21.4 million);

Goodwill and other intangible assets arising on business combinations are recognised as a result of the purchase price allocation on acquisition of subsidiaries. While goodwill is not amortised, other intangible assets acquired are amortised over their useful economic lives. The increased amortisation charge was driven by increased acquired intangible assets, comprising software and IP, customer contracts and relationships and branding assets.

·	Acquisition and integration costs of £10.1 million (2020: £0.9 million);

The costs of acquiring and integrating subsidiaries purchased in the year or in prior periods. In 2021, this includes £6.1 million costs of acquisition and £4.0 million of integration costs, primarily related to acquisitions completed in the year. Within integration costs was £2.9 million relating to GP Strategies, which includes costs relating to the senior management reorganisation in late 2021, as well as legal, insurance and audit costs related to the transaction.

·	Acquisition-related contingent consideration, share based payments and earn-out charges of £5.4 million (2020: £3.5 million) relating to;

The cost of contingent earn-out mechanisms included in the purchase agreements of business combinations in the year, relating to eThink, eCreators, PDT Global and Breezy HR, which are awarded based on the achievement of substantial incremental revenue growth. 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. In 2020, this charge related primarily to Breezy HR.

·	A £0.7 million net foreign exchange gain (2020: £1.1 million charge);

The net foreign exchange gain arose from the movement in the USD/GBP exchange rate relating to cash held specifically for the GP Strategies acquisition. In 2020 the net foreign exchange loss was related to the acquisition of Open LMS, reflecting the movement in the USD/GBP exchange rate between the revolving credit facility being drawn and completion of the acquisition.

·	A £2.1 million (2020: nil) impairment of right-of-use assets;

The impairment charge relates to an onerous lease inherited from the acquisition of Reflektive in 2021. On acquisition, the Group was required to measure the right-of-use asset arising from the lease as an amount equal to the lease liability. As the office space has been vacated, with the Group unable to successfully sub-let it, it has immediately impaired the right-of-use asset.

For details of the items excluded from statutory operating profit, see Note 5.

⁸	Alternative performance measures used by the Group are defined in the Glossary.

Divisional Review

Following the acquisition of GP Strategies, we have disclosed this entity as a separate division within the business.

Software & Platforms

The Software & Platforms division comprises SaaS and on-premises solutions as well as hosting, support and maintenance services.

£ million	2021	2020	Change
Revenue	130.5	100.0	31%
Adjusted EBIT	36.4	32.2	13%
Adjusted EBIT margin	27.9%	32.2%	(4.3%) pts.

Software & Platforms comprised 51% (2020: 76%) of 2021 Group revenue. On a proforma basis, assuming a full year revenue contribution from Bridge, Reflektive and GP Strategies, Software & Platforms would represent 25% of Group revenue .

Revenue increased to £130.5 million (2020: £100.0 million) largely reflecting organic growth of 2% and the initial contributions from Bridge and Reflektive, which were purchased in the first quarter of 2021. Excluding the more mature PeopleFluent, organic growth was 17%. In addition, this division was impacted by adverse currency translation of £7.2 million.

The organic result was driven by continued strong growth from Breezy HR, the division's cloud-based software product for talent acquisition for small and mid-size customers. In addition, there was also continued strong organic growth from the Rustici e-learning standards business, as it continued to benefit from increasing demand for digital learning tools from new customers and from existing customers purchasing extra functionality. The Open LMS business, a combination of three companies acquired in 2020, also delivered growth with customers continuing to benefit from its open-source software. This uses a platform that is customisable to specific needs with customers including universities and educational establishments.

Partially offsetting this, revenue in the more mature PeopleFluent talent management product line, an integral part of the Group's differentiated software offering, was lower as expected. The product, 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 while those with less complex needs will migrate over the coming years to the division's fast-growing talent management solutions, including Bridge. Accordingly, we are bringing together our complementary talent related brands, including PeopleFluent, Bridge, Breezy, Reflektive, Gomo and Instilled, to form a new Talent Solutions division, enabling an enhanced go-to-market strategy.

In 2021, 97% (2020: 97%) of the revenue in Software & Platforms was related to SaaS-based subscriptions and long-term contracts.

Adjusted EBIT increased in the year to £36.4 million (2020: £32.2 million) driven by the 2021 acquisitions of Reflektive and Bridge and the full year contribution from Open LMS, which was acquired in 2020. Underpinning this was a strong performance from Breezy HR and Rustici which was partially offset by the lower performance in PeopleFluent. The adjusted EBIT Margin was 27.9% (2020: 32.2%) driven by a combination of lower EBIT margins from Bridge and Reflektive due to being loss making upon acquisition, and now profitable, and a lower margin portfolio mix as new and growing businesses are partially offset by PeopleFluent.

Statutory profit before tax was £5.8 million (2020: £8.9 million) after deducting adjusting items including amortisation of acquisition-related intangible assets , a cquisition and integration costs, acquisition-related contingent consideration and earn-out charges and impairment of right-of-use assets.

Demonstrating PeopleFluent's continuing customer relevance, an existing customer, a global technology company based in the US, expanded its use of the PeopleFluent compensation system. Using PeopleFluent, it paid salary, bonus and other variable compensation remuneration to its global employee population for the first time, disbursing some $5 billion in total.

We successfully deployed in 2021 our Reflektive performance product to a global investment bank with some 40,000 employees worldwide, representing a highly successful large enterprise deployment of this product line.

During 2021 and following a rigorous tender process, Open LMS along with partner Seidor, was selected to provide the learning management system for the Universidad Nacional de Educacion a Distancia. This is the largest university in Spain and second largest in Europe, with more than 200,000 students. It continues Open LMS' growth in Spain, where customers include University of Barcelona, University Pompeu Fabra, and Universidad Pontifica Comillas.

Content & Services

The Content & Services division includes LEO and PRELOADED. LEO is the Group's innovative digital learning consultancy, strategy, and content generation specialist, whereas PRELOADED is LTG's highly-regarded games studio. The division also includes PDT Global, a leading provider of diversity and inclusion training solutions, which operates alongside Affirmity, LTG's affirmative action specialist .

£ million	2021	2020	Change
Revenue	44.8	32.2	39%
Adjusted EBIT	10.6	8.0	33%
Adjusted EBIT margin	23.7%	24.9%	(1.3%) pts.

Content & Services comprised 17% (2020: 24%) of 2021 Group revenue. On a proforma basis, assuming a full year revenue contribution from PDT Global and GP Strategies, Content & Services would represent 8% of Group revenue.

Revenue increased to £44.8 million (2020: £32.2 million) largely reflecting organic growth of 25% and the initial contribution from PDT Global, which was purchased in the first quarter of 2021. There was growth from all businesses in the division, with a particularly strong performance from LEO and PRELOADED. These were partially offset by adverse currency translation of £1.6 million.

LEO's strong organic result was driven by a recovery in demand through the year. Within the organic result LEO benefited from significant increases in work for a blue-chip, international bank and, following an initial contract award in 2020, from a well-known international consultancy practice.

Adjusted EBIT also increased to £10.6 million (2020: £8.0 million), driven by the contribution from increased revenue and the initial contribution from PDT Global. The adjusted EBIT margin was 23.7% (2020: 24.9%) reflecting a change in portfolio mix.

Statutory profit before tax was £5.0 million (2020: £4.5 million), after deducting adjusting items including amortisation of acquisition-related intangible assets , a cquisition and integration costs and acquisition-related contingent consideration and earn-out charges.

LEO's market is anticipated to benefit from the ongoing move to on-line learning over the medium term, following COVID-19, as large corporates look to advance their talent development programmes in an environment where employees increasingly work remotely. The market is also expected to benefit as traditional face-to-face training models, involving business travel, are impacted by environmental and sustainability issues.

Affirmity, the US-market leader for affirmative action planning, also delivered strong organic growth. This included the benefit from a new focus on existing customers, new client wins and cross-selling wins from PDT Global, which as a leading international provider of diversity and inclusion training solutions, brings complementary offerings to Affirmity.

GP Strategies

GP Strategies is a global workforce transformation provider of organisational and technical performance solutions. It improves the effectiveness of organisations by delivering innovative and superior training, consulting, and business improvement services, customised to meet the specific needs of its clients. Clients include Fortune 500 companies, automotive, financial services, technology, aerospace and defence industries, and other commercial and government customers.

£ million	2021*	2020	Change
Revenue	82.9	-	n/a
Adjusted EBIT	7.7	-	n/a
Adjusted EBIT margin	9.2%	-	n/a

*Acquired 14 October 2021.

GP Strategies comprised 32% (2020: nil) of 2021 Group revenue. On a proforma basis, assuming a full year revenue contribution from all acquisitions made in 2021 GP Strategies would represent 67% of revenue.

The acquisition of GP Strategies completed on 14 October 2021 and post-completion revenue was £82.9 million (2020: £nil). The strength of its global business model was demonstrated with significant, new post-acquisition awards from blue-chip customers in Asia, the Middle East and South America.

In 2021, 68% (2020: n/a) of the revenue in GP Strategies was from long-term contracts.

Post-acquisition adjusted EBIT was £7.7 million (2020: £nil), resulting in an adjusted EBIT margin of 9.2% (2020: n/a). The expected post-acquisition margin increase is ahead of schedule, driven by the swifter than anticipated improvement in operational performance as management actions, including enhancing controls, reducing costs, and increasing staff utilisation rates, show early results. Work is ongoing, and we remain confident GP Strategies will achieve a low double-digit adjusted EBIT margin in FY 2022, with the run rate adjusted EBIT margin at the end of 2022 expected to be in the mid-teens per cent.

The statutory loss before tax was £1.6 million (2020: nil) after adjusting items including amortisation of acquisition-related intangible assets , a cquisition and integration costs and a net foreign exchange gain.

The quality of the customer service provided by GP Strategies within its embedded relationships is demonstrated, with the business being awarded Supplier of the Year by General Motors in the US for a fifth consecutive year. This is a significant achievement, being one of only 125 companies chosen out of 20,000 of its suppliers. Feedback indicates that satisfaction levels from other major customers also continues to be high.

We are encouraged by this early progress and GP Strategies' management remains on track to deliver against initial targets. These include embedding new ways of working and supplier rationalisation by the end of H1 2022 and the launch of a combined customer offer by the end of H2 2022.

As a result of the acquisition of GPS, LTG owned a 10% stake in National Aerospace Solutions LLC (NAS). This shareholding was not considered to be core. Consequently, on 18 April 2022 we disposed of it for $3.0 million proceeds. The GPS employees supporting this business have transferred to NAS as part of the transaction.

Net Finance Charge and Profit Before Tax

The net finance charge was £2.3 million (2020: £1.4 million), with the increase driven by the higher average level of debt in the year, due to acquisition-related cash outflows.

After the net finance charge, adjusted profit before tax was £52.4 million (2020: £38.9 million) and statutory profit before tax was £9.3 million (2020: £13.5 million).

Taxation Charge

The adjusted tax charge was £12.7 million (2020: £8.2 million), resulting in a tax rate of 24% (2020: 21%). The statutory tax credit was £5.6 million (2020: £3.9 million credit).

Previously the Group had adopted a prudent approach by placing valuation allowances against deferred tax assets arising in the US. The Group did not recognise these assets in 2020 but subsequently finalised computations with allocation of losses and other timing differences that enabled amounts to be claimed in respect of 2020. It is now clear that the Group will make sufficient profits to enable it to further utilise these assets in 2021 and future periods, resulting in credits to prior years corporation tax and deferred tax of £4.7m and £7.6 million respectively.

The Group has recognised the balance of net deferred tax assets carried forward, other than losses, of £4.7 million, but continues to adopt a prudent approach in respect of the balance of losses carried forward of £25.4 million. The losses remain with valuation allowances applied pending completion of a tax study to confirm their availability in future, hence these losses have not been recognised as an asset at this stage. The Group anticipates completion of the study prior to the filing of the 2021 tax return during 2022. Further details are provided in Notes 6 and 14.

The tax impact of the adjusted basic earnings per share is stated primarily after adjusting for deferred tax on the amortisation of acquired intangibles, earnouts, integration costs, tax deductible goodwill and recognition of prior year deferred tax assets.

Earnings per Share

Adjusted diluted EPS increased to 5.010 pence (2020: 4.294 pence), driven by the increase in adjusted EBIT. This was partially offset by the higher average number of shares outstanding, following the equity placings in May 2020 and July 2021.

On a statutory basis, basic EPS decreased to 1.959 pence (2020: 2.450 pence). In addition to the factors set out above for adjusted EPS, this also reflected the increase in adjusting items.

Cash Generation

Net cash flows from operating activities were £37.5 million (2020: £39.9 million). This is equivalent to an adjusted operating cash flow conversion rate of 76% (2020: 85%). The adjusted operating cash flow is net operating cash flows after adjusting for acquisition-related contingent consideration and earn-out payments, transaction and integration costs, interest and tax paid and payments of lease liabilities, expressed as a proportion of adjusted EBITDA.

There was a cash outflow of 11.6 million (2020: £4.3 million) from working capital with increased trade and other receivables and amounts recoverable on contracts, partially offset by increased payables in the year. Driving this, debtor days increased marginally to 91 days (2020: 87 days) and combined debtor work-in-progress and deferred income days (combined days) increased to 57 days (2020: minus 48 days), reflecting the change in portfolio mix following the acquisition of GP Strategies. The combined days metric benefits from payments being received annually in advance for recurring software licences.

Net corporation tax payments increased to £9.4 million (2020: £3.4 million), with net finance payments of £0.3 million (2020: £0.6 million).

There were cash outflows from investment activities of £320.2 million (2020: £45.2 million). These primarily comprised payments, net of cash acquired in 2021 relating to the acquisitions of Bridge, Reflektive, PDT Global, Moodle News and GP Strategies of £311.2 million (2020: £39.0 million). In 2020, acquisitions comprised Open LMS, eCreators, eThink, Patheer and JCA. In addition, there was £8.4 million (2020: £6.1 million) of outflows relating to capitalised investment in internally generated IP, as well as £0.6 million (2020: £0.1 million) from investment in property, plant and equipment.

The 2021 cash outflow of £311.2 million relating to acquisitions, is stated net of cash acquired of £34.2 million and other closing adjustments. Included in the acquisition-related cash outflows were intangible assets of £309.4 million, including goodwill of £176.5 million, as well as other net assets and liabilities of £36.0 million at fair value. Further details are set out in note 9.

Net cash inflows from financing activities were £277.6 million (2020: £53.2 million). This was driven by net proceeds from borrowings of £203.7 million (2020: net payment £18.5 million), comprising £221.8 million (2020: £18.1 million) proceeds from borrowings, net of £18.1 million (2020: £36.6 million) repayment of bank loans. The proceeds from borrowings relate to the acquisition of GP Strategies, which was partly funded by $305 million of incremental debt financing, with further details on the Group's current debt facilities within 'Net Debt and Gearing' below.

In addition, there were £85.6 million (2020: £80.6 million) of proceeds from the i ssue of ordinary share capital, net of share issue costs. This was primarily the equity placing in July 2021 which part funded the acquisition of GP Strategies, as well as the exercise of employee stock options. In 2020, this related to the May equity placing and the exercise of employee stock options.

Offsetting these items, there were also payments for lease liabilities of £4.4 million (2020: £2.9 million), interest of £0.7 million (2020: £0.4 million), as well as deferred contingent consideration of £0.5 million (2020: £0.1 million) relating to the Breezy HR and Watershed acquisitions, and dividends of £6.1 million (2020: £5.5 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, a progressive dividend policy, and selectively acquiring value-enhancing businesses.

The Board's progressive dividend policy, while taking into account earnings cover, also takes into account 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.

Given the robust operational performance during the year, the Board is recommending a final dividend of 0.7 pence per share (2020: 0.5 pence). The total cash cost of the final dividend is approximately £5.5 million.

Together with the interim dividend of 0.3 pence, this gives a total dividend for the year of 1.0 pence, an increase of 33% on the prior year.

If approved, the final dividend will be paid on 21 July 2022 to all shareholders on the register at 1 July 2022.

Net Debt and Gearing

At 31 December 2021, the Group's net debt was £141.4 million (31 December 2020: £70.2 million - net cash), excluding £21.8 million (31 December 2020: £10.3 million) of lease liabilities.

The Group's net debt comprised £225.3 million of debt (31 December 2020: £18.4 million) and £83.9 million of cash (31 December 2020: £88.6 million).

On the acquisition of GP Strategies, the existing debt facility with Silicon Valley Bank ('SVB') was repaid and a new facility with SVB, Barclays Bank, Fifth Third Bank, HSBC UK Bank, and the Bank of Ireland was entered into. This is made up of two variable rate committed term loans. The Term Facility A of $265.0 million (£196.3 million at the year-end exchange rate) is available to the Group until October 2025 with the Term Facility B of $40.0 million (£29.6 million at year-end exchange rates) available to the Group until April 2022. The Term Facility B was repaid in March 2022. The facilities also include a $50.0 million (£37.0 million at year end exchange rates) Revolving Credit Facility and a $50.0 million (£37.0 million at year-end exchange rates) uncommitted accordion, both available to July 2025. For further details of the Group's debt facility see Note 17.

The Group's covenant basis net debt/adjusted EBITDA ratio was 1.8 times (2020: n/a).

Prior Year Adjustment

We have identified the need to make a correction to the presentation of the 2020 and 2019 balance sheets where trade receivables and contract liabilities (deferred income) of £6.2 million at 31 December 2020 and £7.4 million at 31 December 2019 had been presented 'gross' but should have been presented 'net,' in accordance with IFRS15. This relates to the timing of recognition of trade receivable balances which are not due for payment until the following year and revenue recognition has not commenced.

The Group has restated the presentation of the balance sheet and cash flow statement for the year, to reflect this requirement. For details of the presentational changes made, refer to note 3.

The presentational changes made have no impact on reported revenue, profit, net assets or cash generation in the year.

Balance Sheet

The Group has a strong balance sheet with total shareholder equity of £371.3 million at 31 December 2021 (31 December 2020: £269.1 million), reflecting the acquisition of GP Strategies and the other 2021 acquisitions. This is equivalent to 47.1 pence per share (2020: 26.2 pence per share).

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 and in GP Strategies.

Cash flow is reviewed at a Group level, aided by rolling cash forecasts. 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

29 April 2022

Consolidated Statement of Comprehensive Income Year ended 31 December 2021
		Year ended 31 Dec	Year ended 31 Dec
		2021	2020
	Note	£'000	£'000


Revenue	4	258,226	132,324

Operating expenses		(241,443)	(114,130)

Share based payment charge		(5,244)	(3,340)

Share of profit from equity accounted investment	5	124	-


Operating profit		11,663	14,854

Analysed as:
Adjusted EBIT		54,754	40,348
Adjusting items included in Operating profit	5	(43,091)	(25,494)
Operating profit		11,663	14,854

Finance expense		(2,582)	(1,525)
Finance income		253	140

Profit before taxation		9,334	13,469

Income tax credit	6	5,586	3,935

Profit for the year		14,920	17,404

Other comprehensive income:
Items that may be subsequently reclassified to profit or loss
Exchange differences on translating foreign operations		1,736	(6,616)
Total comprehensive income for the year attributable to owners of the parent Company		16,656	10,788

Earnings per share attributable to owners of the parent:
Basic (pence)	7	1.959	2.450

Diluted (pence)	7	1.878	2.382

Adjusted earnings per share:
Basic (pence)	7	5.226	4.417

Diluted (pence)	7	5.010	4.294

Consolidated Statement of Financial Position As at 31 December 2021
		31 Dec 2021 £'000	31 Dec 2020 £'000
	Note	31 Dec 2021 £'000	31 Dec 2020 £'000
			(Restated)
Non-current assets
Property, plant and equipment	8	3,232	1,025
Right of use assets	8	17,245	8,806
Intangible assets	10	546,237	256,284
Deferred tax assets	14	22,558	7,614
Other receivables, deposits and prepayments	13	3,541	76
Investments accounted for under the equity method	11	1,018	-
Amounts recoverable on contracts		1,200	624
		595,031	274,429

Current assets
Trade receivables	12	122,844	26,805
Other receivables, deposits and prepayments	13	15,242	4,219
Amounts recoverable on contracts		31,604	3,879
Inventory		1,096	-
Corporation tax receivable		2,392	-
Amount owing from related parties		241	54
Cash and bank balances		83,850	88,614
Restricted cash balances		2,987	682
		260,256	124,253

Total assets		855,287	398,682

Current liabilities
Lease liabilities	18	6,755	2,536
Trade and other payables	15	172,982	61,836
Borrowings	17	37,503	7,339
Provisions	19	4,855	-
Corporation tax payable		-	4,591
ESPP scheme liability		507	562
		222,602	76,864
Non-current liabilities
Lease liabilities	18	15,090	7,722
Deferred tax liabilities	14	52,336	25,617
Other long-term liabilities	16	2,940	7,635
Borrowings	17	187,759	11,073
Corporation tax payable	6	1,711	-
Provisions	19	1,511	701
		261,347	52,748

Total liabilities		483,949	129,612

Net assets		371,338	269,070

Shareholders' equity
Share capital		3,034	2,853
Share premium account		317,114	231,671
Merger reserve		31,983	31,983
Reverse acquisition reserve		(22,933)	(22,933)
Share-based payment reserve		11,148	7,439
Foreign exchange translation reserve		(5,232)	(6,968)
Retained earnings		36,224	25,025
Total equity attributable to the owners of the parent		371,338	269,070

Consolidated Statement of Changes in Equity

Year ended 31 December 2021

		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 2020		2,509	148,216	31,983	(22,933)	4,413	(352)	11,707	175,543
Profit for the period		-	-	-	-	-	-	17,404	17,404
Exchange differences on translating foreign operations		-	-	-	-	-	(6,616)	-	(6,616)
Total comprehensive profit for the period		-	-	-	-	-	(6,616)	17,404	10,788
Issue of shares net of share issue costs		344	83,455	-	-	-	-	-	83,799
Share-based payment charge credited to equity		-	-	-	-	3,340	-	-	3,340
Tax credit on share options		-	-	-	-	-	-	1,137	1,137
Transfer on exercise and lapse of options		-	-	-	-	(314)	-	314	-
Dividends paid		-	-	-	-	-	-	(5,537)	(5,537)
Transactions with owners		344	83,455	-	-	3,026	-	(4,086)	82,739
Balance at 31 December 2020		2,853	231,671	31,983	(22,933)	7,439	(6,968)	25,025	269,070
Profit for the period		-	-	-	-	-	-	14,920	14,920
Exchange differences on translating foreign operations		-	-	-	-	-	1,736	-	1,736
Total comprehensive profit for the period		-	-	-	-	-	1,736	14,920	16,656
Issue of shares net of share issue costs		181	85,443	-	-	-	-	-	85,624
Share-based payment charge credited to equity		-	-	-	-	5,244	-	-	5,244
Share-based payment charge treated as consideration, credited to equity		-	-	-	-	120	-	-	120
Tax credit on share options		-	-	-	-	-	-	689	689
Transfer on exercise and lapse of options		-	-	-	-	(1,655)	-	1,655	-
Dividends paid	20	-	-	-	-	-	-	(6,065)	(6,065)
Transactions with owners		181	85,443	-	-	3,709	-	(3,721)	85,612
Balance at 31 December 2021		3,034	317,114	31,983	(22,933)	11,148	(5,232)	36,224	371,338

Consolidated Statement of Cash Flows Year ended 31 December 2021
		Year ended 31 Dec	Year ended 31 Dec
		2021	2020
	Note	£'000	£'000
			(Restated)
Cash flows from operating activities
Profit before taxation		9,334	13,469
Adjustments for:
Loss/(gain) on disposal of PPE and right-of-use assets		202	(122)
Share-based payment charge		5,244	3,340
Amortisation of intangible assets	10	31,787	25,639
Depreciation of plant and equipment	8	780	769
Depreciation of right-of-use assets	8	2,829	2,476
Impairment of right-of-use assets	8	2,120	-
Finance expense (including IFRS 16 finance charge)		517	614
Interest on borrowings		2,065	911
Net foreign exchange (gain)/loss on borrowings		(246)	-
Acquisition-related contingent consideration and earn-outs	5	5,207	3,511
Fair value movement on contingent consideration	5	22	(1,357)
Payment of acquisition-related contingent consideration and earn-outs		(1,180)	(1,006)
Share of (profit)/loss in equity accounted investment		(124)	-
Interest income		(7)	(140)
Operating cash flows before working capital changes		58,550	48,104
(Increase)/decrease in trade and other receivables		(18,377)	1,443
Increase in inventory		(64)	-
Increase in amount recoverable on contracts		(169)	(3,427)
Increase/(decrease) in payables		6,988	(2,296)
		46,928	43,824
Interest paid		-	(750)
Interest received		-	140
Income tax paid		(9,403)	(3,359)
Net cash flows from operating activities		37,525	39,855

Cash flows used in investing activities
Purchase of property, plant and equipment	8	(572)	(114)
Development of intangible assets	10	(8,390)	(6,115)
Acquisition of subsidiaries, net of cash acquired	9	(311,234)	(38,988)
Net cash flows used in investing activities		(320,196)	(45,217)

Cash flows from financing activities
Dividends paid	20	(6,065)	(5,537)
Proceeds from borrowings	17	221,853	18,182
Repayment of bank loans	17	(18,143)	(36,640)
Interest paid¹		(316)	-
Interest received¹		7	-
Issue of ordinary share capital net of share issue costs		85,624	80,581
Contingent consideration payments in the period		(520)	(121)
Interest paid on lease liabilities¹	18	(434)	(418)
Payments for lease liabilities	18	(4,420)	(2,899)
Net cash flows from financing activities		277,586	53,148

Net (decrease)/increase in cash and cash equivalents		(5,085)	47,786
Cash and cash equivalents at beginning of the year		88,614	42,032
Exchange gains/(losses) on cash		321	(1,204)
Cash and cash equivalents at end of the year		83,850	88,614

¹	In 2021, interest paid and received on financial assets and liabilities has been presented within financing activities, whereas in the prior year it was shown partly within operating activities and partly within financing activities.

1. General information

The financial information for the year ended 31 December 2021 and the year ended 31 December 2020 does not constitute the company's statutory accounts for those years.

Statutory accounts for the year ended 31 December 2020 have been delivered to the Registrar of Companies. The statutory accounts for the year ended 31 December 2021 will be delivered to the Registrar of Companies in due course.

The auditors' reports on the accounts for 31 December 2021 and 31 December 2020 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 15 Fetter Lane, London, EC4A 1BW. The registered number of the Company is 07176993.

2. Summary of significant accounting policies

The principal 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.

On 31 December 2020, IFRS as adopted by the European Union at that date was brought into the UK law and became UK-adopted international accounting standards, with future changes being subject to endorsement by the UK Endorsement Board. The group transitioned to UK-adopted international accounting standards in its consolidated financial statements on 1 January 2021. There was no impact or changes in accounting from the transition.

Going concern

The Directors report that the going concern basis is appropriate from 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. In July 2021, the Group repaid the outstanding balance of the existing term loan and associated accrued interest totalling $20.2 million (£14.6 million) in July. The Group has also agreed to a new multicurrency senior term and revolving facilities agreement. This new debt facility which is with Silicon Valley Bank ('SVB'), Barclays Bank, Fifth Third Bank, HSBC UK Bank and the Bank of Ireland, comprises two committed term loans, Term Facility A of $265.0 million (£196.3 million at the year-end exchange rate), Term Facility B of $40.0 million (£29.6 million at the year-end exchange rate), a $50.0 million (£37.0 million at the year-end exchange rate) committed RCF and a $50.0 million (£37.0 million at the year-end exchange rate) uncommitted accordion facility. Term Facility B was fully repaid in March 2022 and Term Facility A is repayable by quarterly instalments of $9.6 million from December 2022 until October 2025, with the remaining balance payable therein. In addition, a 12 month extension request is available to the Group for Term Facility A and the RCF.

The Group continues to hold a strong liquidity position overall at 31 December 2021, with gross cash and cash equivalents of £83.9 million and net debt of £141.4 million (see Note 17 ) (31^st December 2020: gross cash was £88.6 million and net funds £70.2 million). Whilst there are a number of risks to the Group's trading performance, including from the COVID-19 pandemic and its impact on the global economy, 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 year ending 31^st December 2022 and beyond. In addition, following the completion of the acquisition of GP Strategies (refer to Note 9 ) in October 2021 for a total of £287.6 million, 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.	customer payment days (DSO) of 100 days;
III.	combining 10% reduction in revenues and DSO of 100 days;
IV.	increasing staff costs by 7% and other costs by 8% from H1 2022; 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 a detailed forecast for 2022 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 2021

New standards impacting the Group that have been adopted in the annual financial statements for the year ended 31 December 2021 are:

Amendments to IFRS 9, IAS 39 and IFRS 7

Interest Rate Benchmark Reform - Phase 2

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 EU). Management are currently assessing the impact of these new standards on the group.

Amendments to IAS 37	Onerous Contracts - Cost of Fulfilling a Contract
Amendments to IAS 16	Property, Plant and Equipment: Proceeds before Intended Use
Amendments to IFRS 3	References to Conceptual Framework
Amendments to IFRS 1, 9, 16 and 41	Annual Improvements to IFRS Standards 2018-2020

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, Shareholders' funds and net cash / debt provide useful information to users of the financial statements. The terms are not defined terms under IFRS and may therefore not be comparable with similarly titled measures reported by other companies. They are not intended to be a substitute for, or superior to, IFRS measures 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 5 ) 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, joint venture profits and losses 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 other than the share for share acquisition of Epic Group Limited by In-Deed Online plc in 2013 are 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. Prior year adjustment

The Company has identified the need to make a correction to the 2020 and 2019 balance sheets where trade receivables and contract liabilities (deferred income) amounting to £6.2 million as at 31 December 2020 and £7.4 million as at 31 December 2019 should have been presented net in accordance with the requirements of IFRS15 but had been presented gross. This relates to non-cancellable trade receivable balances at each year end which are not due for payment until after year end.

To correct the presentation of these balances in the prior year, the Group has restated the balance sheet and associated note disclosures as at 31 December 2020 and cash flow statement for the year then ended as outlined below.

Statement of financial position adjustments	31 Dec 2020 £'000	Adjustments	31 Dec 2020 £'000 (Restated)
			31 Dec 2020 £'000 (Restated)

Current assets
Trade receivables	32,984	(6,179)	26,805
Other receivables, deposits and prepayments	4,219		4,219
Amounts recoverable on contracts	3,879		3,879
Inventory	-		-
Corporation tax receivable	-		-
Amount owing from related parties	54		54
Cash and bank balances	88,614		88,614
Restricted cash balances	682		682
	130,432	(6,179)	124,253

Total assets	404,861	(6,179)	398,682

Current liabilities
Lease liabilities	2,536		2,536
Trade and other payables	68,015	(6,179)	61,836
Borrowings	7,339		7,339
Provisions	-		-
Corporation tax payable	4,591		4,591
ESPP scheme liability	562		562
	83,043	(6,179)	76,864

Total liabilities	135,791	(6,179)	129,612

Net assets	269,070	-	269,070

Statement of cash flows adjustments	31 Dec 2020 £'000	Adjustments	31 Dec 2020 £'000 (Restated)
			31 Dec 2020 £'000 (Restated)

(Increase)/decrease in trade and other receivables	(4,736)	6,179	1,443
(Decrease)/increase in payables	3,883	(6,179)	(2,296)
Cash and cash equivalents at end of the year	88,614	-	88,614

Changes to associated note disclosures	31 Dec 2020 £'000	Adjustments	31 Dec 2020 £'000 (Restated)
			31 Dec 2020 £'000 (Restated)

Note 4 - Segment analysis
Software & Platforms - Total assets	342,941	(6,179)	336,762
Group - Total assets	404,861	(6,179)	398,682

Note 12 - Trade receivables
Trade receivables	34,479	(6,179)	28,300
Allowance for impairment loses	(1,495)	-	(1,495)
	32,984	(6,179)	26,805

Changes to associated note disclosures	31 Dec 2020 £'000	Adjustments	31 Dec 2020 £'000 (Restated)
Note 15 - Trade and other payables
Trade payables	2,335		2,335
Contract liabilities	51,679	(6,179)	45,500
Tax and social security	1,687		1,687
Contingent consideration	493		493
Acquisition-related contingent consideration and earn-outs	1,205		1,205
Accruals	10,616		10,616
	68,015	(6,179)	61,836

Financial Instruments

Credit risk exposure

United Kingdom	3,510		3,510
North America	22,892		22,892
Europe	3,443		3,443
Asia Pacific	2,393		2,393
Middle East and Africa	755		755
South and Central America	1,486		1,486
Allowance for impairment losses	(1,495)		(1,495)
Contract liabilities netted off (see Note 12)	-	(6,179)	(6,179)
	32,984		26,805

Ageing analysis

Not past due	21,229	(6,179)	15,050

Past due:
- Less than three months	6,333		6,333
- Three to six months	4,241		4,241
- Past six months	2,676		2,676
Gross amount	34,479	(6,179)	28,300

Classification of financial instruments

Financial assets at amortised cost
Trade receivables	32,984	(6,179)	26,805
Amounts recoverable on contracts	4,503		4,503
Amount owing by related parties	54		54
Cash and bank balances	88,614		88,614
	126,155	(6,179)	119,976

The impact on the 31 December 2019 balance sheet is to reduce trade receivables and total assets by £7.4 million and trade and other payables (contract liabilities) and total liabilities by £7.4 million. There is no impact on net assets, cash flow or reserves in 2019.

4. 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 four reportable segments, being the Software & Platforms division, the Content & Services division, the GP Strategies segment and an Other segment which includes rental income. A majority of sales were generated by the operations in the United States in the year ended 31 December 2021 and in the year ended 31 December 2020. The additional reportable segment of GP Strategies arose as a result of the acquisition occurring in October 2021 and the fact that the GP Strategies business is yet to be fully integrated operationally.

Income and expenses relating to the Group's administrative functions have been apportioned to the operating segments identified based on revenue.

SaaS, long term contract and transactional revenue is defined in the 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	United States	Canada	Asia Pacific	Rest of the world	Total
	£'000	£'000	£'000	£'000	£'000	£'000	£'000

31 Dec 2021
Revenue	32,493	18,779	175,102	17,026	5,636	9,190	258,226

Non-current assets	46,638	439	504,689	153	20,442	112	572,473

31 Dec 2020
Revenue	21,501	6,184	92,281	4,344	3,508	4,506	132,324

Non-current assets	28,206	-	223,310	24	15,267	8	266,815

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

Revenue by nature

The Group's revenue by nature is analysed as follows:

	Software & Platforms				Content & Services				GP Strategies				Other
	On-premise Software Licences	Hosting & SaaS	Support & Maintenance	Total	Content	Platform Development	Consulting & Other	Total	Global services	Regional services	Other technical	Total	Rental Income	Total
	£'000	£'000	£'000	£'000	£'000	£'000	£'000	£'000	£'000	£'000	£'000	£'000	£'000	£'000
31 December 2021
SaaS and long term contracts	21,441	101,348	3,293	126,082	-	1,039	9,687	10,726	17,627	35,268	3,234	56,129	143	193,080
Transactional	1,046	1,979	1,367	4,392	19,151	4,916	9,962	34,029	1,742	18,324	6,659	26,725	-	65,146
	22,487	103,327	4,660	130,474	19,151	5,955	19,649	44,755	19,369	53,592	9,893	82,854	143	258,226
Depreciation & amortisation				(6,169)				(2,117)				(928)	-	(9,214)
Adjusted EBIT				36,365				10,591				7,655	143	54,754
Amortisation of acquired intangibles				(20,126)				(3,823)				(2,233)		(26,182)
Acquisition related adjusting items				(6,220)				(1,078)				(8,158)	-	(15,456)
Other adjusting items				(2,322)				-				869	-	(1,453)
Finance expenses				(1,938)				(637)				246	-	(2,329)
Profit / (Loss) before tax				5,759				5,053				(1,621)	143	9,334

Additions to intangible assets*				65,175				12,549				240,066	-	317,790
Total Assets				348,741				75,665				430,881		855,287
*Includes additions from business combinations, refer to Note 10 .

	Software & Platforms				Content & Services				Other
	On-premise Software Licences	Hosting & SaaS	Support & Maintenance	Total	Content	Platform Development	Consulting & Other	Total	Rental Income	Total
	£'000	£'000	£'000	£'000	£'000	£'000	£'000	£'000
31 December 2020
SaaS and long term contracts	16,643	76,345	3,817	96,805	-	1,021	9,212	10,233	98	107,136
Transactional	1,129	1,033	1,053	3,215	12,906	3,541	5,526	21,973	-	25,188
	17,772	77,378	4,870	100,020	12,906	4,562	14,738	32,206	98	132,324
Depreciation & amortisation				(5,626)				(1,811)	-	(7,437)
Adjusted EBIT				32,224				8,026	98	40,348
Amortisation of acquired intangibles				(18,132)				(3,315)		(21,447)
Acquisition related adjusting items				(3,099)				-	-	(3,099)
Other adjusting items				(978)				30	-	(948)
Finance expenses				(1,095)				(290)	-	(1,385)
Profit / (Loss) before tax				8,920				4,451	98	13,469

Additions to intangible assets*				62,433				-	-	62,433
Total Assets (Restated)				336,762				61,920	-	398,682
*Includes additions from business combinations, refer to Note 10 .

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. Total liabilities by Operating Segment are not regularly review by the Chief Operating Decision Maker and as such, are not included in the table above.

Information about major customers

In the year ended 31 December 2021 and the year ended 31 December 2020, no customer accounted for more than 10 per cent of reported revenues.

5. 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
	2021	2020
	£'000	£'000
Adjusting items included in Operating profit:
Acquisition related costs:
Amortisation of acquired intangibles	26,182	21,447
Acquisition-related contingent consideration and earn-outs	5,207	3,511
Acquisition-related share based payment charge	123	-
Fair value movement on contingent consideration	22	(1,357)
Acquisition costs	6,067	715
Integration costs	4,037	230
Total acquisition related costs	41,638	24,546

Other adjusting items:
Impairment of right-of-use assets	2,120	-
Loss on disposal of fixed assets	272	21
Loss/(profit) on disposal of right-of-use assets	(70)	(143)
Net foreign exchange (gain)/loss arising due to business acquisition	(745)	1,070
Share of (profit)/loss of joint venture	(124)	-
Total other adjusting items	1,453	948

Total adjusting items	43,091	25,494

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

-	Amortisation of acquired intangibles - these costs are excluded from the adjusted results of the Group since the costs are non-cash charges arising from investment activities. As such, they are not considered reflective of the core trading performance of the Group.
-	Impairment of right-of-use assets - these costs 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.
-	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.
-	Foreign exchange (gains) or losses associated with business acquisitions - excluded from the adjusted results of the Group since these costs relate to investment activities and occur irregularly.
-	Costs of acquisition and integration - the costs of acquiring and integrating subsidiaries purchased in the year. 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.

6. Income tax


	31 Dec	31 Dec
	2021	2020
	£'000	£'000
Current tax expense:
- UK current tax on profits for the year	926	626
- Adjustments in respect to prior years	(4,678)	376
- Foreign current tax on profits for the year	9,598	4,087
Total current tax	5,846	5,089
Deferred tax (Note 14 ):
- Origination and reversal of temporary differences	(3,711)	(4,703)
- Adjustments in respect to prior years	(7,611)	(4,025)
Change in deferred tax rate	(110)	(296)
Total deferred tax	(11,432)	(9,024)

Income tax (credit)/expense	(5,586)	(3,935)

In 2021 UK Government budget it was announced the UK corporation tax rate would increase to 25% from 1 April 2023.

The Group has adopted a prudent approach in prior years regarding the recognition of deferred tax assets and has made valuation allowances against the majority of the assets. The Group has released the valuation allowances except for those relating to trading losses as disclosed in Note 14 as it is now clear the Group has made profits and should continue to make profits which can utilise these assets. This has resulted in a credit to prior years corporation tax and deferred tax of £4.7 million and £7.6 million respectively.

The Group continues to apply a valuation allowance against losses acquired with the PeopleFluent acquisition until a further tax study has been completed to confirm their availability. £10.2 million of the losses have been claimed in the 2020 US corporate tax returns and it is estimated that a further £10.4 million of the losses will be utilised in the 2021 returns. The tax effect of claiming these losses is reflected in the credit to prior years.

The current year deferred tax credit of £3.7 million arises from the origination and reversal of temporary differences and primarily relates to the deferred tax liability release associated with acquired intangible amortisation and other temporary differences such as accelerated depreciation, share based payments, provisions and deferred revenue.

The £1.7 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 US tax reform.

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
	2021	2020
	£'000	£'000

Profit before taxation	9,334	13,469

Tax calculated at the domestic tax rate of 19.00% (2020: 19.00%):	1,774	2,559

Tax effects of: -
Income not subject to tax	310	(482)
Expenses not deductible for tax purposes	3,968	872
Joint venture/associate results reported net of tax	29	-
Tax deductions not recognised as an expense	(429)	(353)
Tax losses in the year for which no deferred tax is recognised	(640)	(269)
Difference between deferred and current tax rate	378	(246)
Reversal of prior year deferred tax short term timing difference	(12,289)	(4,324)
Adjustment to unrecognised deferred tax assets	-	(1,549)
Difference in foreign exchange rates	-	-
Effect of different international tax rates	1,338	152
Changes in deferred tax rate	(25)	(295)
	(5,586)	(3,935)

The aggregate current and deferred tax directly credited to equity amounted to £689,000 (2020: £1,137,000).

7. Earnings per share


	31 Dec	31 Dec
	2021	2020
	Pence	Pence

Basic earnings per share	1.959	2.450
Diluted earnings per share	1.878	2.382
Adjusted basic earnings per share	5.226	4.417
Adjusted diluted earnings per share	5.010	4.294

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 comparative has been included. Adjusted earnings per share is stated after adjusting the profit after tax attributable to equity holders of the Group for certain charges as set out in the table below. 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 5, excluding profit or losses on disposal of fixed assets and right-of-use assets and additional non-cash finance expenses and non-operational interest income. This is to reflect the underlying operational performance of the Group, and exclude interest income earned from cash reserves held by the Group.

The calculation of earnings per share is based on the following earnings and number of shares.

	2021			2020
	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	14,920	761,627	1.959	17,404	710,348	2.450

Effect of adjustments:
Amortisation of acquired intangibles	26,182			21,447
Impairment of right-of-use assets	2,120			-
Integration costs	4,037			230
Cost of acquisitions	6,067			715
Fair value movement on contingent consideration	22			(1,357)
Contingent consideration and earn-outs from acquisitions	5,207			3,511
Shared based payment charge from acquisitions	123			-
Net foreign exchange differences on business acquisitions	(745)			1,070
Interest receivable	(7)			(140)
Net foreign exchange gain on borrowings	(246)			-
Finance expense on contingent consideration	82			196
Finance expense on lease liabilities (IFRS 16)	435			418
Income tax expense	(5,586)			(3,935)
Effect of adjustments	37,691	-	4.949	22,155	-	3.119
Adjusted profit before tax	52,611	-	-	39,559	-	-
Tax impact after adjustments	(12,811)	-	(1.682)	(8,183)	-	(1.152)
Adjusted basic earnings per ordinary share	39,800	761,627	5.226	31,376	710,348	4.417

Effect of dilutive potential ordinary shares:
Share options	-	32,804	(0.216)	-	20,271	(0.123)
Adjusted diluted earnings per ordinary share	39,800	794,431	5.010	31,376	730,619	4.294
Diluted earnings per ordinary share attributable to the owners of the parent	14,920	794,431	1.878	17,404	730,619	2.382

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 2020	2,590	846	290	3,726	83	12,255	-	12,338
Additions on acquisitions	4	-	5	9	-	36	-	36
Additions	102	12	-	114	-	2,219	-	2,219
Foreign exchange differences	(9)	29	(15)	5	-	(121)	-	(121)
Disposals	(485)	(30)	(66)	(581)	-	(1,002)	-	(1,002)
At 31 December 2020	2,202	857	214	3,273	83	13,387	-	13,470
Additions on acquisitions	657	224	1,713	2,594	181	12,429	134	12,744
Additions	278	28	266	572	315	982	-	1,297
Foreign exchange differences	12	(4)	21	29	(20)	36	-	16
Impairments	-	-	-	-	-	(2,120)	-	(2,120)
Disposals	(1,345)	(667)	(597)	(2,609)	-	(1,367)	-	(1,367)
At 31 December 2021	1,804	438	1,617	3,859	559	23,347	134	24,040
Accumulated Depreciation
At 1 January 2020	1,658	374	7	2,039	60	2,414	-	2,474
Charge for the year	539	167	63	769	23	2,453	-	2,476
Disposals	(491)	-	(69)	(560)	-	(286)	-	(286)

At 31 December 2020	1,706	541	1	2,248	83	4,581	-	4,664
Charge for the year	397	142	241	780	103	2,713	13	2,829
Transfers out	(64)	-	-	(64)	-	-	-	-
Disposals	(1,758)	(559)	(20)	(2,337)	-	(698)	-	(698)

At 31 December 2021	281	124	222	627	186	6,596	13	6,795

Net book value
At 31 December 2020	496	316	213	1,025	-	8,806	-	8,806

At 31 December 2021	1,523	314	1,395	3,232	373	16,751	121	17,245

The above property, plant and equipment and right-of-use assets are held as security as part of the fixed and floating charge over the assets of the Group, refer to Note 17 for further details of the Group's borrowings.

9. Acquisitions

We have outlined below a summary of the consideration paid, the provisional fair value of acquired intangible assets, the provisional fair value of other acquired assets and liabilities assumed at the acquisition date and the resulting goodwill for each acquisition, with further detail provided for each acquisition below.

Acquisition	Goodwill	Acquired customer relationships	Acquired software and IP	Acquired brand	Acquired deferred tax liabilities	Fair value of other identifiable assets and liabilities	Consideration	Cash acquired	Non-cash elements	Net cash outflow
	£'000	£'000	£'000	£'000	£'000	£'000	£'000	£'000	£'000	£'000
Reflektive	1,431	3,051	4,497	-	(1,052)	2,057	9,984	3,322		6,662
PDT Global	7,577	4,060	430	170	(932)	2,112	13,417	2,148		11,269
Bridge	21,122	7,306	18,348	1,243	(7,112)	(6,749)	34,158	-		34,158
Moodle News	-	69	10	20	(27)	-	72	-	36	36
GP Strategies	146,411	64,882	17,562	11,211	(23,591)	71,270	287,745	28,516	120	259,109
Total	176,541	79,368	40,847	12,644	(32,714)	68,690	345,376	33,986	156	311,234

Reflektive

On 1 February 2021, Learning Technologies Group Plc completed the acquisition of Reflektive Inc ("Reflektive"), a leading performance management software provider, from a group of institutional investors for cash consideration of $13.7 million (c.£10.0 million), funded from LTG's cash resources.

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

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

The right-of-use asset in relation to the acquired lease was recognised on acquisition, as required by IFRS 3. Following this, the right-of-use asset was immediately impaired as it related to an office space that was completely abandoned at acquisition date and the Group was not able to sublet it, see Note 5 for further details.

Consideration		Fair Value £'000
Cash paid		5,840
Adjustments and hold backs		(513)
Payment for cash acquired		4,657
Total consideration		9,984

Recognised amounts of identifiable assets acquired and liabilities assumed		Fair value £'000
Cash and cash equivalents		3,322
Restricted cash		1,216
Property, plant and equipment		59
Right-of-use assets		2,120
Lease liabilities		(2,120)
Trade and other receivables		2,954
Trade and other payables		(5,065)
Provision		(429)
Deferred tax assets		983
Deferred tax liabilities		(2,035)
Customer relationships		3,051
Software and intellectual property		4,497
Total identifiable net assets		8,553

Goodwill		1,431

Total		9,984

The purchase price adjustments were for customary working capital adjustments.

The total consideration and fair value adjustments to the assets and liabilities assumed are provisional and are management's best estimates at this time.

The goodwill arising is attributable to the acquired workforce, anticipated future profit from expansion opportunities and synergies of the business. The goodwill arising from the acquisition has been allocated to the Software Solutions CGU. Fair value adjustments have been recognised for acquisition-related intangible assets and related deferred tax as well as future liabilities which are in alignment with accounting policies.

Acquisition-related intangible assets of £3.1 million relate to the valuation of the customer relationships which are amortised over a period of eight years, and £4.5 million relates to the value of the acquired intellectual property and software development which is amortised over ten years.

Provisions of £429,000 noted above are presented within additions arising from acquisitions in Note 19.

Acquisition costs of £0.2 million have been charged to the statement of comprehensive income in the year relating to the acquisition of Reflektive.

A deferred tax liability of £2.0 million in respect of the acquisition-related intangible assets was established on acquisition (refer to Note 14).

Reflektive contributed £9.0 million of revenue for the period between the date of acquisition and the balance sheet date and £3.3 million of profit before tax attributable to equity holders of the parent. As a preliminary assessment, had the acquisition of Reflektive been completed on the first day of the period Group revenues would have been approximately £0.9 million higher and group profit before tax attributable to equity holders of the parent would have been approximately £0.5 million lower.

PDT Global

On 5 February 2021, Learning Technologies Group Plc acquired UK-based The People Development Team Limited ('PDT Global'), a leading provider of online Diversity and Inclusion (D&I) training solutions, for cash consideration of £13.4 million funded from LTG's cash resources.

Further performance based payments, capped at £6.1 million are payable in cash to the PDT Global sellers based on ambitious revenue growth targets in each of the years ending 31 December 2021, 2022 and 2023. These payments are linked to continuous employment so are excluded from the acquisition consideration and instead are recognised as an expense over the service period within the Statement of Comprehensive Income.

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

Consideration		Fair Value £'000
Cash paid		13,417
Total consideration		13,417


Recognised amounts of identifiable assets acquired and liabilities assumed		Fair value £'000
Cash and cash equivalents		2,148
Property, plant and equipment		30
Trade and other receivables		1,797
Trade and other payables		(1,863)
Deferred tax liabilities		(932)
Customer relationships		4,060
Intellectual property		430
Brand name		170
Total identifiable net assets		5,840

Goodwill		7,577

Total		13,417

The total consideration and fair value adjustments to the assets and liabilities assumed are provisional and are management's best estimates at this time.

The goodwill arising is attributable to the acquired workforce, anticipated future profit from expansion opportunities and synergies of the business. The goodwill arising from the acquisition has been allocated to the Diversity and Inclusion CGU. Fair value adjustments have been recognised for acquisition-related intangible assets and related deferred tax as well as future liabilities which are in alignment with accounting policies.

Acquisition-related intangible assets of £4.1 million relate to the valuation of the customer relationships which are amortised over a period of four years, £0.4 million relates to the value of the acquired intellectual property which is amortised over five years and £0.2 million relates to the value of the acquired PDT Global brand, which is amortised over two years.

Acquisition costs of £0.1 million have been charged to the statement of comprehensive income in the year relating to the acquisition of PDT Global.

A deferred tax liability of £0.9 million in respect of the acquisition-related intangible assets was established on acquisition (refer to Note 14).

PDT Global contributed £4.9 million of revenue for the period between the date of acquisition and the balance sheet date and £2.2 million of profit before tax attributable to equity holders of the parent. As a preliminary assessment, had the acquisition of PDT Global been completed on the first day of the financial period Group revenues would have been approximately £0.4 million higher and group profit before tax attributable to equity holders of the parent would have been approximately £0.2 million higher.

Bridge

On 1 March 2021, Learning Technologies Group plc, acquired getBridge LLC and related assets ("Bridge"), a leading learning and talent development software provider, from Instructure Inc for a cash consideration of $47.5 million (c.£34.2 million), funded from LTG's existing cash resources.

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

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

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

Consideration	Fair Value £'000
Cash paid	33,764
Adjustments and hold backs	394
Total consideration	34,158

Recognised amounts of identifiable assets acquired and liabilities assumed	Fair value £'000
Trade and other receivables	796
Trade and other payables	(7,545)
Deferred tax assets	151
Deferred tax liabilities	(7,263)
Brand name	1,243
Software	18,348
Customer relationships	7,306
Total identifiable net assets	13,036

Goodwill	21,122

Total	34,158

The adjustments to the purchase price were for customary working capital adjustments.

The total consideration and fair value adjustments to the assets and liabilities assumed are provisional and are management's best estimates at this time.

Acquisition-related intangible assets of £7.3 million relate to the valuation of the customer relationships which are amortised over a period of eleven years, £18.3 million relates to the value of the acquired intellectual property and software development which is amortised over ten years and £1.2m relates to the value of the acquired Bridge brand which is amortised over five years.

Acquisition costs of £0.3 million have been charged to the statement of comprehensive income in the year relating to the acquisition of Bridge.

A deferred tax liability of £7.2 million in respect of the acquisition-related intangible assets was established on acquisition (refer to Note 14).

Bridge contributed £14.5 million of revenue for the period between the date of acquisition and the balance sheet date and £2.5 million of profit before tax attributable to equity holders of the parent. As a preliminary assessment, had the acquisition of Bridge been completed on the first day of the financial period Group revenues would have been approximately £2.8 million higher and group profit before tax attributable to equity holders of the parent would have been approximately £0.1 million higher.

Moodle News

On 3 August 2021, Learning Technologies Group plc, completed the acquisition of the business and assets of Moodle News LLC ("Moodle News") for cash consideration of USD $50,000 (£36,000) funded by the Group's existing cash. Further performance based payments, capped at USD $50,000 are payable in cash to the sellers based on growth targets in attendees at the eLearning Success summit and annual organic website visitors in the two years following the acquisition. These payments are not linked to continuous employment and are included in the acquisition consideration.

Moodle News is an online news outlet based in Colorado that provides discussions, reviews and tutorials about the technologies that make up successful e-learning systems, as well as hosting the E-Learning Success Summit.

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

Consideration	Fair Value £'000
Cash paid	36
Contingent consideration	36
Total consideration	72


Recognised amounts of identifiable assets acquired and liabilities assumed	Fair value £'000
Deferred tax liabilities	(27)
Brand name	20
Software	10
Customer relationships	69
Total identifiable net assets	72

Goodwill	-

Total	72

All acquisition-related intangible assets of Moodle News are amortised over one year.

GP Strategies

On 14 October 2021, Learning Technologies Group plc, acquired GP Strategies Corporation ('GP Strategies') a leading global workforce transformation provider with significant offerings in learning services, custom content and consulting for a cash consideration of $392.0 million (c.£287.7 million), part funded from the equity placing in July and incremental debt financing of $305 million.

The addition of GP Strategies enables expansion of LTG's international footprint, blue-chip client base and cross-sell strategy. GP Strategies will also provide deep industry expertise, including targeted expansion sectors (such as pharma, aerospace and automotive) and capabilities (such as leadership development and technical training).

GP Strategies represents a transformational acquisition for the Group. It creates a combination of award-winning technology, leading talent development skills and a global delivery capability. As an enlarged business, the Group will be well placed to enable a broadened array of corporate clients to recruit, train, motivate and retain their people in a world of increasing complexity and a rapidly changing relationship between talent and the workplace

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

Consideration	Fair Value £'000
Cash paid	287,625
Replacement share options issued	120
Total consideration	287,745


Recognised amounts of identifiable assets acquired and liabilities assumed	Fair value £'000
Cash and cash equivalents	28,516
Property, plant and equipment	2,506
Right-of-use assets	10,606
Deferred tax assets	8,923
Trade and other receivables	111,169
Inventory	1,032
Investments accounted for under the equity method	1,162
Trade and other payables	(86,575)
Provisions	(6,069)
Deferred tax liabilities	(23,591)
Brand name	11,211
Software and intellectual property	17,562
Customer relationships	64,882
Total identifiable net assets	141,334

Goodwill	146,411

Total	287,745

The total consideration and fair value adjustments to the assets and liabilities assumed are provisional and are management's best estimates at this time.

The Group has recognised a fair value adjustment on acquisition of GP Strategies as outlined below. Trade and other receivables have been reduced by £3.6 million to recognise a provision for 100 per cent of certain trade receivable balances, where litigation has commenced for recovery proceedings. The outcome of this litigation is expected during 2022.

Provisions of £6,069,000 noted above are presented within additions arising on acquisitions in Note 19.

The goodwill arising is attributable to the acquired workforce, anticipated future profit from expansion opportunities and synergies of the business. The goodwill arising from the acquisition has been allocated to six CGUs (Global Services, Americas, EMEA, APAC, Human Capital Technology ('HCT') and Skills Funding Apprenticeships ('SFA')). Fair value adjustments have been recognised for acquisition-related intangible assets and related deferred tax as well as future liabilities which are in alignment with accounting policies.

Acquisition-related intangible assets of £64.9 million relate to the valuation of the customer relationships, £17.6 million relates to the value of the acquired intellectual property and software development and £11.2m relates to the value of the acquired GP Strategies brand. The useful economic lives of each of these acquisition related intangible assets is outlined in the table below.

	Useful economic lives in years by CGU
	Global services	Americas	EMEA	APAC	HCT	SFA
Customer relationships	8	8	7	8	8	7
Acquired IP	-	7	-	-	-	-
Acquired software	5	5	5	5	5	5
Brand name	5	5	5	5	5	5

Acquisition costs of £5.0 million have been charged to the statement of comprehensive income in the year relating to the acquisition of GP Strategies.

A deferred tax liability of £23.6 million in respect of the acquisition-related intangible assets was established on acquisition (refer to Note 14).

GP Strategies contributed £82.9 million of revenue for the period between the date of acquisition and the balance sheet date, £7.7 million of adjusted EBIT and £1.6 million of a loss before tax attributable to equity holders of the parent. As a preliminary assessment, had the acquisition of GP Strategies been completed on the first day of the financial period Group revenues would have been approximately an additional £280.8 million higher, adjusted EBIT would have been approximately an additional £14.2 million higher and group profit before tax would have been approximately £3.4 million higher.

Prior year acquisition measurement period adjustments

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

eCreators

Increase/(decrease) to recognised amounts	Assets acquired and liabilities assumed £'000	Goodwill £'000
Cash and cash equivalents	6	(6)
Trade and other receivables	(19)	19
Trade and other payables	177	177

eThink

Increase/(decrease) to recognised amounts

Assets acquired and liabilities assumed

£'000

Goodwill

£'000

Trade and other payables

(45)

Details regarding the strategic decisions to acquire each of the above can be found in the Strategic Report.

10. Intangible assets

	Goodwill	Customer contracts and relationships	Branding	Acquired software and IP	Internal Software Development		Total
	£'000	£'000	£'000	£'000	£'000	£'000

Cost
At 1 January 2020	134,985	92,532	2,524	39,680	12,289	282,010
Additions on acquisitions	27,390	18,754	-	10,174	-	56,318
Additions	-	-	-	-	6,115	6,115
Foreign exchange differences	(5,515)	(1,971)	(39)	(1,152)	(301)	(8,978)
At 31 December 2020	156,860	109,315	2,485	48,702	18,103	335,465
Additions on acquisition	176,541	79,368	12,644	40,847	-	309,400
Additions	-	-	-	-	8,390	8,390
Measurement period adjustments	145	-	-	-	-	145
Foreign exchange differences	3,073	177	148	765	(294)	3,869
At 31 December 2021	336,619	188,860	15,277	90,314	26,199	657,269

Accumulated amortisation
At 1 January 2020	-	38,894	968	8,703	4,977	53,542
Amortisation charged in year	-	15,460	260	5,727	4,192	25,639
At 31 December 2020	-	54,354	1,228	14,430	9,169	79,181
Amortisation charged in year	-	16,593	840	8,749	5,605	31,787
Transfers in	-	-	-	-	64	64
At 31 December 2021	-	70,947	2,068	23,179	14,838	111,032

Carrying amount
At 31 December 2020	156,860	54,961	1,257	34,272	8,934	256,284
At 31 December 2021	336,619	117,913	13,209	67,135	11,361	546,237

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 17 for further details of the Group's borrowings.

Goodwill and acquisition-related intangible assets recognised have arisen from acquisitions. Refer to Note 9 for further details of acquisitions undertaken during the year. Internal software development reflects the recognition of development work undertaken in-house.

The amortisation charge for the year of £31.8 million includes £26.2 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.

Change of cash generating units identified by the Group

During the year, the Group has changed the methodology used to aggregate cash inflows and assets for the purpose of identifying CGUs, this is as a result of a fundamental shift in the Group's go-to-market strategy in recent years as well as the significant acquisition of GP Strategies.

The Group used to identify and add CGUs based on each product or service offered by businesses, as they were acquired. This was not reflective of the underlying Group strategy to integrate businesses and cross-sell services and products. The CGUs that were in existence in 2020 (i.e. the Group excluding newly acquired GP Strategies CGUs) are now aggregated based on the overarching types of services offered, which we have outlined in the table below:

Operating segments	Content & services		Software & Platforms
Service Offering	Learning services & Content design	Diversity, equity and inclusion services	Talent solutions, learning management systems and add-ons
2021 CGUs	Content & learning services	Diversity & inclusion	Software solutions
2020 CGUs	LEO Preloaded	Affirmity	VectorVMS Rustici PeopleFluent Watershed BreezyHR Open LMS

In determining the above CGUs, Senior Management assessed the independence of revenue and assets of each CGU taking into consideration areas such as joint projects, existing cross-selling and combined go-to-market strategies, shared workforce usage, shared software delivery infrastructure and overlapping market presence. Based on this assessment, it was concluded that the above CGUs reflect aggregated assets that generate largely independent cash inflows from distinct asset bases whilst also reflecting the gradual shift in strategy where the focus is on cross selling to create holistic service and product offerings to address the Human Capital Management sector.

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 nine (2020: nine) CGUs. The carrying amount of goodwill has been allocated as follows, with 2020 being restated to be comparable:

CGU	Goodwill		Growth rate for years 2 to 5		Post-tax discount rate
	2021	2020	2021	2020	2021	2020
	£'000	£'000	%	%	%	%
Content & learning services	12,676	12,676	4%	4%	9.5%	12.0%
Diversity & inclusion	25,908	18,223	5%	4%	10.4%	12.3%
Software solutions	150,185	125,961	4%	6%	9.7%	12.0%
GP Strategies - Global Services	31,602	-	5%	-	11.2%	-
GP Strategies - Americas	95,256	-	5%	-	10.3%	-
GP Strategies - EMEA	3,341	-	5%	-	13.0%	-
GP Strategies - APAC	1,921	-	5%	-	13.0%	-
GP Strategies - HCT	10,906	-	6%	-	13.0%	-
GP Strategies - SFA	4,824	-	6%	-	13.0%	-
	336,619	156,860

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. 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 for 2022 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 2022 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 4% and 6% for the first five years. The terminal rate used for the value in use calculation thereafter is 2.5%.

For all CGUs there is substantial headroom between the calculated value-in-use and the net book value.

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 2022 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 2022 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 result in an impairment in the Americas CGU of c. £4.2 million. Our sensitivity analysis has concluded that, with the exception of the Americas CGU, 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.

As disclosed in Note 2, Accounting policies, 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 including the impact of COVID-19, 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, representing a slower recovery from the impact of COVID-19; increases in the discount rate by 1 per cent and reductions in the long-term growth rates to 0 per cent. 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.

Capitalised development costs are amortised over the estimated useful life of between two and ten years.

11. 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 investment at 31 December 2020 and 31 December 2021 is listed below.

Name of entity

Country of Registration or Incorporation

Principal activity

Percentage of ordinary shares held by Group

LEO Brasil Tecnologia Educacional Ltda (formerly Epic Brasil TecnologiaEducacional Ltda)

Brazil

Bespoke e-learning

17%

National Aerospace Solutions, LLC

United States

Engineering services

10%

LEO Brasil Tecnologia Educacional Ltda

On 27 August 2019, the Group entered into a debt for equity swap agreement whereby Epic Group Limited and the other 50% investor agreed to convert debts due from Leo Brasil Tecnologia Educacional Ltda ('LEO Brazil') to equity in the proportion to amounts owed at that date. Epic Group Limited had a total of $268,000 (equivalent to approximately £200,000) converted to equity and, following such conversion, its shareholding was reduced from 50% to 38%. A further reduction of the proportionate ownership was made during the year ended 31 December 2020 by a debt/equity conversion reducing the Group's proportional ownership to 19%. During the year ended 31 December 2021, an additional investor was acquired by issuing further equity into the joint venture, which reduced the Group's proportional ownership to 17%. As all amounts receivable from the investee had been written off by the Group, there was no financial impact, either on the carrying value of the investment or the results for the year.

LEO Brazil is a private company and there is no quoted market price available for its shares.

The accounting reference date of LEO Brazil is coterminous with that of the Company.

There are no contingent liabilities or commitments relating to the Group's interest in LEO Brazil.

Where the Group's share of losses in LEO Brazil exceeds its interests in the company, the Group does not recognise further losses as it has no further obligation to make payments on behalf of the company.

No further disclosures are provided on the grounds of materiality.

National Aerospace Solutions, LLC

	Share of joint venture's net assets	Share of joint venture's net assets
	2021	2020
	£'000	£'000

Cost
At 1 January	-	-
Additions from acquisitions	1,162	-
Additions	-	-
Share of profit after tax	124	-
Disbursements	(305)	-
Foreign exchange differences	37	-
At 31 December	1,018	-

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.

The accounting reference date of National Aerospace Solutions is coterminous with that of the Group.

There are no contingent liabilities or commitments relating to the Group's interest in National Aerospace Solutions.

On 18th April 2022, the Group sold its 10% investment in National Aerospace Solutions, see Note 21 for further details.

12. Trade receivables

	31 Dec	31 Dec
	2021	2020
	£'000	£'000
		(Restated))

Trade receivables	125,387	28,300
Allowance for impairment losses	(2,543)	(1,495)
	122,844	26,805

Impairment losses:

	2021	2020
	£'000	£'000
At 1 January	1,495	904
Additions on acquisition	-	43
Additions/(disposals)	1,017	576
Foreign exchange	31	(28)
At 31 December	2,543	1,495

The Group's normal trade credit term is 30 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.

	2021	2020
	£'000	£'000
Contract liabilities offset within trade receivables above	6,257	6,179

Disclosure of the expected credit losses tables are not included as they are not material.

13. Other receivables and prepayments

Current assets
	31 Dec	31 Dec
	2021	2020
	£'000	£'000

Sundry receivables	4,287	371
Prepayments	10,955	3,848
	15,242	4,219
Non-current assets
	31 Dec	31 Dec
	2021	2020
	£'000	£'000

Sundry receivables	3,541	76
	3,541	76

Sundry receivables includes rent deposits and other sundry receivables.

14. 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.

	Share options	Tax losses	Short-term timing differences	Intangibles	Total
Deferred tax assets	£'000	£'000	£'000	£'000	£'000

At 1 January 2020	2,340	1,635	240	-	4,215
Deferred tax (charge)/credit directly to the income statement	870	557	1,171	-	2,598
Deferred tax charged directly to equity	646	-	-	-	646
Exercise of share options, charged directly to the income statement	(66)	-	-	-	(66)
Exchange rate differences, charged directly to OCI	(36)	(19)	(32)	-	(87)
Changes in tax rate, credited to the income statement	240	66	2	-	308
At 31 December 2020	3,994	2,239	1,381	-	7,614

	Share options	Tax losses	Short-term timing differences	Intangibles	Total
At 1 January 2021	3,994	2,239	1,381	-	7,614
Deferred tax recognised on acquisition	23	396	6,155	5,414	11,988
Deferred tax (charge)/credit directly to the income statement	1,127	(887)	2,447	(177)	2,510
Deferred tax charged directly to equity	689	-	-	-	689
Exercise of share options	(411)	-	-	-	(411)
Exchange rate differences, charged directly to OCI	-	1	164	-	165
Changes in tax rate, credited to the income statement	238	32	(267)	-	3
At 31 December 2021	5,660	1,781	9,880	5,237	22,558


		Accelerated tax	Short-term timing
	Intangibles	depreciation	differences	Total
Deferred tax liabilities	£'000	£'000	£'000	£'000

At 1 January 2020	(20,983)	(2,028)	(2,246)	(25,257)
Deferred tax on acquired intangibles and via acquisition	(7,864)	-	-	(7,864)
Deferred tax (credit)/charge directly to the income statement	4,533	(195)	1,857	6,195
Exchange rate differences, charged directly to OCI	1,142	92	86	1,320
Changes in tax rate, charged to the income statement	-	(11)	-	(11)
At 31 December 2020	(23,172)	(2,142)	(303)	(25,617)
Deferred tax on acquired intangibles and via acquisition	(33,850)	(598)	(1,331)	(35,779)
Deferred tax credit/(charge) directly to the income statement	6,063	1,744	1,419	9,226
Exchange rate differences, charged directly to OCI	(285)	(3)	18	(270)
Changes in tax rate, charged to the income statement	-	110	(6)	104
At 31 December 2021	(51,244)	(889)	(203)	(52,336)

An increase in the UK corporation tax rate from 19% to 25% (effective 1 April 2023) was substantively enacted on 24 May 2021. As a result, the relevant deferred tax balances have been re-measured except for the acquired entities within GP Strategies, where 19% has been applied. If 25% instead of 19% has been applied, the impact would have been to increase the deferred tax asset by £145,000. The US corporate tax rate is unchanged at 21% plus state and local taxes at 4-5% which varies by jurisdiction.

The Group has recognised £1.8 million (2020: £2.2 million) of deferred tax assets relating to carried forward tax losses. 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 deferred tax asset valuation allowance on an annual basis to estimate whether sufficient future taxable income will be generated to permit use of the existing deferred tax assets.

Deferred tax assets, relating primarily to trading losses carried forward arising in the US, totalling £25.4 million (2020: £34.0 million) continue to be matched by a valuation allowance. The Group has utilised approximately £20.6 million of the trading losses, £10.2 million in 2020 and £10.4 million in 2021, and is adopting a prudent approach regarding the balance of losses carried forward of £25.4 million (equivalent $34.3 million), pending completion of a further tax study which should confirm their availability.

15. Trade and other payables


	31 Dec	31 Dec
	2021	2020
	£'000	£'000
		(Restated)

Trade payables	43,216	2,335
Contract liabilities	70,154	45,500
Tax and social security	21,931	1,687
Contingent consideration	749	493
Acquisition-related contingent consideration and earn-outs	6,427	1,205
Accruals	30,505	10,616
	172,982	61,836

The acquisition-related contingent consideration and earn-outs balance in 2021 relates to the acquisition of PDT Global, eCreators, eThink, BreezyHR Inc ('BreezyHR') and Watershed Systems Inc ('Watershed'), the balance in 2020 relates partly to the acquisition of Watershed and partly to the acquisition of BreezyHR. This is treated as post-combination remuneration and is accrued over the service period. The contingent consideration balance in 2020 relates wholly to the acquisition of Watershed. In 2021, the contingent consideration balances relates to the acquisition of Watershed and Moodle News and is a financial instrument held at fair value within the scope of IFRS 9 repayable during 2022.

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 2020 was recognised as revenue in 2021 and the current contract liabilities balance at 31 December 2021 is expected to be recognised as revenue in 2022.

The Group acquired £20.0 million of contract liabilities balances as part of the business acquisitions discussed in Note 9. These balances were partly recognised as revenue in 2021 with the remaining balance being expected to be recognised as revenue in 2022.

The Group has netted off £6.3 million (2020: £6.2 million) of contract liabilities against its trade receivables balances as outlined in Note 12 above.

16. Other long-term liabilities


	31 Dec	31 Dec
	2021	2020
	£'000	£'000


Acquisition-related contingent consideration and earn-outs	1,090	1,597
Contingent consideration	19	662
Contract liabilities	1,831	4,778
Other long-term liabilities	-	598
	2,940	7,635

The acquisition-related contingent consideration and earn-outs balance in 2021 relates to the acquisitions of PDT Global, BreezyHR, eCreators, and eThink. The contingent consideration balances relates to the acquisition of Moodle News, repayable in 2023.

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 2021 is expected to be recognised during 2022 and 2023.

17. Borrowings

On the acquisition of GP Strategies in October 2021 the existing debt facility with Silicon Valley Bank ('SVB') was repaid in full for £18.1 million and extinguished. A new debt facility with SVB, Barclays Bank, Fifth Third Bank, HSBC UK Bank and the Bank of Ireland was entered into for a total of $405.0 million.

This is made up of two committed term loans, Term Facility A of $265.0 million (£196.3 million at the year-end exchange rate) available to the Group until October 2025 and Term Facility B of $40.0 million (£29.6 million at the year-end exchange rate) available to the Group until April 2022. These two facilities were fully drawn down in October 2021. The facilities available also include a $50.0 million committed (£37.0 million at the year-end exchange rate) RCF and a $50.0 million uncommitted accordion facility (£37.0 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 1.25% and 2.00% 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.

The Term Facility A is repayable with quarterly instalments of $9.6 million (c £7.1 million) with the balance repayable on the expiry of the loan in October 2025. The Term Facility B is repayable in full in April 2022 and was fully repaid in March 2022.

The bank loan is secured by a fixed and floating charge over the assets of the Group and is subject to various 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 Group was compliant with all financial covenants throughout the year and as at 31 December 2021, the Group's interest cover was 31.76 and its leverage ratio was 1.77.

The lease liabilities have arisen on adoption of IFRS 16 and are secured by the related underlying assets.

	31 Dec	31 Dec
	2021	2020
	£'000	£'000
Current interest-bearing loans and borrowings	37,503	7,339
Non-current interest-bearing loans and borrowings	187,759	11,073
Current lease liabilities	6,755	2,536
Non-current lease liabilities	15,090	7,722
	247,107	28,670

Net debt / cash reconciliation

Net debt / cash, which excludes lease liabilities, can be analysed as follows:

	31 Dec 2021	31 Dec 2020
	£'000	£'000
Cash and cash equivalents	83,850	88,614
Borrowings:
- Revolving credit facility	-	-
- Term loan	(225,262)	(18,412)
Net (debt) / cash	(141,412)	70,202

18. Lease liabilities

This note provides information for leases where the group is a lessee.

	2021	2020
	£'000	£'000
At 1 January	10,258	11,957
Additions	1,210	2,219
Additions on acquisitions	14,586	21
Interest expense	434	418
Lease payments (principal and interest)	(4,854)	(3,317)
Disposals	-	(889)
Foreign exchange movements	211	(151)
At 31 December	21,845	10,258

Additional profit or loss and cash flow information

	31 Dec 2021	31 Dec 2020
	£'000	£'000
Income from subleasing office premises	245	230
Total cash outflow in respect of leases in the year	(4,854)	(3,317)
Expense related to short term leases not accounted for under IFRS 16	(487)	(81)
Additions to right of use assets	14,041	2,255

The Group's accounting policy for leases is set out in Note 2. The right-of-use asset categories on which depreciation is incurred are presented in Note 8.

19. Provisions


	Property provisions¹	Litigation and regulation provisions²	Onerous contract provisions³	Total
	£'000	£'000	£'000	£'000

At 1 January 2020	273	580	-	853
Released to the income statement	(152)	-	-	(152)
Paid in the year	-	-	-	-
Addition	-	-	-	-
At 31 December 2020	121	580	-	701
Additions arising from acquisitions	1,139	4,225	1,134	6,498
Released to the income statement	-	(580)	(121)	(701)
Paid in the year	(284)	-	-	(284)
Additions	90	-	-	90
Foreign exchange movements	9	42	11	62
At 31 December 2021	1,075	4,267	1,024	6,366
Current	-	4,267	588	4,855
Non-current	1,075	-	436	1,511
Total provisions	1,075	4,267	1,024	6,366

1. The Group is party to a number of leasehold property contracts. Provision has been made against 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 or lower than the provisions made as there is a range of potential outcomes. The acquired balance of £4.2 million includes a £3.5 million provision for potential penalties for health and safety claims arising in a subsidiary of GP Strategies prior to acquisition, as well as associated legal costs. The range of possible outcomes are £Nil to £6.0 million (excluding legal costs) and are dependent on the harm category and level of culpability assessed.

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.

20. Dividends paid


	31 Dec	31 Dec
	2021	2020
	£'000	£'000

Final dividend paid	3,705	-
Interim dividend paid	2,360	5,537
	6,065	5,537

On 29 October 2021 the Company paid an interim dividend of 0.30 pence per share (2020: 0.25 pence per share) amounting to a total dividend payment of £2.4 million. Given the robust performance of the Group during the past year the Directors propose to pay a final dividend of 0.70 pence per share for the year ended 31 December 2021, equating to a total payment in respect of the year of 1.00 pence per share (2020: 0.75 pence per share).

The proposed final dividend of 0.70 pence per share, amounting to a final dividend of c. £5.5m, is not included as a liability in these financial statements and, subject to shareholder approval, will be paid on 21 July 2022 to shareholders on the register at the close of business on 1 July 2022. The final dividend will be paid gross.

21. Events since the reporting date

Repayment of Term Facility B

On 14^th March 2022, the Group repaid the outstanding balance of Term Facility B of $40.0 million. The total repayment including interest was $40.5 million (£31.1 million).

Sale of investment in Joint Venture

On 18th April 2022, the Group sold its 10% investment in National Aerospace Solutions LLC for proceeds of $3.0 million (£2.3 million).

There have been no other notifiable events between the 31 December 2021 and the date of this Annual Report.

Glossary

Alternative Performance Measures

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

APM	Closest 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 5 to the financial statements.
SaaS and long term contracts	Revenue	Refer Note 4	SaaS and long term contract 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 Note 4	Transactional 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		Net cash / debt is defined as Cash and cash equivalents and short-term deposits, less Bank overdrafts and other current and non-current borrowings.
Shareholders' funds	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^st December 2020 were 739,297,410 and 787,642,975 at 31^st December 2021.

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