Full Year Results 2023

Learning Technologies Group PLC

16 April 2024

Learning Technologies Group plc

FULL YEAR RESULTS 2023

Focus on execution with financial performance in line with consensus expectations

Resilient revenue reflecting the strength of long-term contracts

Continued margin progression and record operating cash flow generation

Learning Technologies Group plc, a global market leader in digital learning and talent management, announces results for the year ended 31 December 2023.

Focus on execution of our strategic agenda

●	GP Strategies has more than doubled profit since joining LTG in 2021, driven by margin progression, a successful transformation plan and operational improvements to GPLX in H2 2023.
●	Renewed all major client contracts >$10m and expanded revenue in LatAm and Middle East.
●	Actively managed our portfolio including the sale of Lorien Engineering Solutions which completed in January 2024.
●	Further streamlined and strengthened the commercial operation by integrating Watershed into Rustici, LEO into GP Strategies and Reflektive into Bridge.
●	Established Group wide AI task force launching several AI enhanced software products in 2024 and leading on educating our Fortune 500 client base on a "Human + AI" future.
●	Achieved significant impact by providing learning to over 200 million people during the year.

Resilient financial performance with record operating cash flow generation

●	Revenue of £562.3 million and adjusted EBIT of £98.5 million in line with consensus expectations, reflecting a slight decline (2)% in constant currency revenue and (1)% adjusted EBIT.
●	Statutory profit before tax increased 13% to £45.6 million.
●	Resilient revenue performance in the context of the macroeconomic climate - with 73% of revenue underpinned by durable SaaS and long-term contracts.
●	Adjusted EBIT margin increased to 17.5% in FY23 from 17% in FY22.
●	GP Strategies' EBIT margin c.15% in H2 and exit run-rate c. 17% in line with previous guidance.
●	Record net cashflow from operations during the year of £79.5m driving swift deleveraging to 0.7x prior to incorporating proceeds from disposal of Lorien received in 2024, with continued good cash generation in Q1 2024.

Dividend

●	The Board is committed to a progressive dividend policy and is pleased to propose a final dividend of 1.21 pence per share (2022: 1.15p), an increase of 5%, subject to shareholder approval at the AGM.

Current Trading and 2024 Outlook

The Board maintains a cautious stance for 2024 due to the macroeconomic uncertainty. Consequently, we expect 2024 revenues will be in line with 2023 (after disposals), while continuing to drive growth in Adjusted EBIT. We remain reassured by the strong foundations we have built, our effective Go-to-Market strategy, ongoing product innovation, coupled with the active management of our extensive portfolio. These efforts are geared towards driving further efficiencies and supports our confidence in restoring underlying revenue growth as the macroeconomic environment recovers.

Medium Term Targets Update

Given the temporary pause on bolt-on acquisitions in FY22 that continued into FY23 as we focused on the transformation of GP Strategies, de-leveraging and active portfolio management in a subdued macroeconomic environment, the Board has concluded the 2025 goal to achieve run-rate revenues of £850 million and £175 million run-rate adjusted EBIT is no longer appropriate.

Our continued strong cash generation and balance sheet strength give the Board confidence in returning to value-accretive acquisitions in 2024 and beyond. Furthermore, this is supported by an expectation that we will return to organic growth as the economy improves.

Jonathan Satchell, Chief Executive Officer of Learning Technologies Group, said:

"LTG has delivered a resilient performance in 2023 against the macroeconomic backdrop. This demonstrates the benefit of our global client footprint and diversification, the durable nature of our SaaS and long-term revenues and our focus on efficiency and cash flow.

Looking ahead, we remain confident in the outlook over the medium term as the structural drivers of the learning and development industry remain intact with LTG offering one of the most comprehensive ranges of learning and talent services and technologies within our sector. I am also excited about our AI innovations which will enhance our productivity and create additional revenue opportunities with our clients. Given the strength of our balance sheet, we will return to acquisitions that align with our strategic objectives."

Financial summary:

£m unless otherwise stated	2023	2022*	Change
Revenue*	562.3	588.6	(4%)
Constant currency	(2)%	3%
Software & Platforms	(4)%	5%
Content & Services	(1)%	(7%)
SaaS & long-term contracts	73%	71%
Adjusted EBIT*	98.5	99.9	(1%)
Adjusted EBIT margin*	17.5%	17%	+50bps
Statutory PBT*	45.6	40.5	+13%
Adj. Diluted EPS (pence)*	7.803	7.996	(2)%
Basic EPS (pence)	3.724	3.857	(3)%
Net Debt	78.6	119.8	(34)%
Final Dividend (pence)	1.21	1.15	5%
Adjusted Operating Cash	86.3	83.2	4%
Net cashflow from operations	79.5	71.9	10%

* 2022 continuing operations.

Analyst and investor presentation:

LTG will host a hybrid presentation for analysts and institutional investors at 09:00 today, 16th April 2024. To join the briefing virtually, please register via the link below:

https://www.investormeetcompany.com/learning-technologies-group-plc/register-investor

Enquiries:
Learning Technologies Group plc Jonathan Satchell, Chief Executive Kath Kearney-Croft, Chief Financial Officer	+44 (0)20 7832 3440
Deutsche Numis (NOMAD and Corporate Broker) Nick Westlake, Ben Stoop, Tejas Padalkar	+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) Jamie Ricketts, Emma Hall, Lucy Highland. Jemima Gurney	+44 (0)20 3727 1000

About LTG

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

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

Annual Report - Chief Executive's Review

"Our resilience shows the benefit of our SaaS and long-term contracts - representing 73% of revenues - and laser-focus on margin."

Market-leader in workplace learning and talent management

LTG is a leader in workplace learning and talent management, helping more than 6,000 organisations address a fast-evolving business landscape. The group is a portfolio of profitable software and services businesses in talent management and learning with a common go-to-market strategy.

Our comprehensive suite of products and services integrate with our customers, bridging the skills gap between the present and the future workforce and delivering tangible outcomes. When appropriate, we offer solutions and services from more than one of our businesses, leveraging our combined go-to-market strategy to reinforce our current global market presence and drive growth.

As part of our ongoing active portfolio management, where businesses do not fully align with our strategy we look to recycle the capital towards our core focus on talent management and learning, as we have done with the disposals of non-core Lorien Engineering Solutions and a carve-out of the external staffing business of TTi Global in recent months.

Resilient performance with strong margin progression and cash generation

LTG delivered a resilient performance in 2023. Revenues and adjusted EBIT from continuing operations were in line with consensus expectations, falling marginally by 2% on a constant currency basis and 1% respectively. Revenues were £562.3 million and adjusted EBIT from continuing operations was £98.5 million including the impact of a slight FX headwind. Margin progression to 17.5% (FY22: 17.0%) was driven by our focus on profitability and a significant improvement within GPLX in H2.

Our performance in a challenging macro backdrop shows the strength of our SaaS and long-term contracts - representing 73% of revenues - and a laser-focus on margin. This meant we were able to absorb the impact of lower transactional and project-based revenues linked to the challenging macroeconomic backdrop. The restructuring programme we implemented cost £2.5 million with an ongoing annual benefit of £9.5 million. With these proactive measures, we are well-positioned to maintain our resilient performance in uncertain markets and benefit from more favourable conditions as they arise.

We continued our strong track record of cash generation with adjusted operating cash flow conversion of 88%. Because of our excellent cash generation, we are able to make substantial investments in innovation - including AI - to support our customers' learning and talent management needs.

GP Strategies commercial transformation complete and supporting our market leadership

In the period following the transformational acquisition of GP Strategies in 2021 - which added significant strength and depth to our market leadership in learning and talent development - GP Strategies has more than doubled in profit. LEO Learning and PDT Global were integrated into GP Strategies in January 2023, which caused some challenges which were successfully addressed in H2. The combination has significantly bolstered our market offering as one of the world's largest and most creative custom content and learning experience design offering, alongside our leadership in talent transformation. The continued commercial improvement in GP Strategies, with exit margins at c17% in line with our previous guidance and margins of c.15% in H2, reflects our focus on operational improvement. This underlines our track record of improving the profitability and operating model of businesses we acquire.

Active portfolio management

LTG accelerated the active management of its portfolio in 2023, making two non-core disposals - Lorien Engineering Solutions for $21.4 million on a cash and debt free basis (subject to customer adjustments and completed in 2024), and the external staffing business of TTi Global for $0.8 million. These businesses were part of GP Strategies when it was acquired by LTG in 2021 but did not fit with our strategic focus on learning and talent management. Proceeds from the disposals have further strengthened our balance sheet and supported our swift deleveraging. Our balance sheet and excellent cash generation underpin our intent to return to being acquisitive in 2024. As previously indicated, our focus is on acquiring profitable software companies that fit with our strategic focus on learning and talent management. Where appropriate, we will continue to recycle capital from businesses that do not fully align with that strategic focus.

Given the temporary pause on bolt-on acquisitions in FY22 and FY23 during the transformation of GP Strategies, and focus on deleveraging and active portfolio management in a lower organic growth environment, the Board has concluded the 2025 goal to achieve run-rate revenues of £850 million and £175 million run-rate adjusted EBIT is no longer appropriate.

Large addressable market opportunity

We are strategically positioned to capitalise on a substantial and expansive global learning and talent market estimated to be worth approximately $396 billion in 2024¹. The products and services we offer cater to a diverse array of industries and sectors, tapping into a broad and growing demand for innovative solutions. This market comprises internal, external and tuition markets, and with our go-to-market and integrated businesses, we have a powerful combined offering that can address the >$100 billion external corporate training segment of this market.

We are well placed to capitalise on the ongoing evolution of workforce dynamics fuelled by demographic shifts, technological advances and the ever-changing nature of skills required in the modern workplace. With change a constant, the demand for sophisticated learning and talent solutions is growing on a global scale. At LTG, we provide businesses with the tools to align strategic objectives with workforce learning and development across all facets of the employee lifecycle. Our suite of analytics tools also enables us to monitor the performance of these solutions, providing customers with transparent insights into the efficacy and return on investment of our services and software.

Our approach not only enhances operational efficiency but also positions us at the forefront of driving value to our customers through unified and effective solutions rather than fragmented systems. Our teams are working hard to strategically position ourselves to address the diverse needs of this expansive market, staying ahead of the ever changing landscape of global learning and talent management.

¹ Training Industry, Inc. Research Data 2023 estimated totals as of January 18, 2024

Investment case

Our demonstrated track record in value creation highlights our aptitude in both organic growth over the medium term and margin enhancement. Additionally, our strategic pursuit of acquisitions has not only expanded our capabilities and market reach but has consistently contributed to accretive earnings. This has resulted in robust cash flow generation, underpinning swift deleveraging and a progressive dividend policy.

The main drivers that have enabled us to deliver a robust financial performance over a sustained period are as follows:

●	Our strategic positioning provides considerable access to the expanding digital training markets, representing the future landscape of learning and development. These markets are experiencing good growth, positioning us to capitalise on profitable opportunities. In parallel, our commitment to supporting learning is fortified by robust data analytics, empowering our customers to quantifiably measure the effectiveness of their initiatives.

●	Our portfolio of businesses has products that bring best-in-class specialist expertise, including learning, performance, learning analytics, succession, compensation, vendor management, recruitment and immersive virtual, augmented and mixed reality experiences, complemented by expert advisory and consulting through cross-selling. This makes us well-placed to help customers 'join up' their learning and talent management activities. We are regarded as a thought leader in a fast-paced and evolving market.

●	Our highly skilled workforce comprises seasoned professionals adept at providing LTG's diverse range of product offerings. This expertise enables us to provide seamlessly integrated solutions incorporating our products and services tailored to meet our customers' talent transformation requirements.

●	Our expansive global presence with 5,000 employees in 36 countries enables us to both attract new customers and enhance relationships with existing ones. Through our local presence, we deliver training programmes finely tuned to align with regional cultures and specific needs, ensuring optimal results. This dual approach not only broadens our market reach but also demonstrates our commitment to meeting our clients where they are in their learning and talent transformation journey.

●	Our longstanding partnerships and extensive expertise in industries marked by rigorous regulations and high-stakes implications. These markets are challenging to enter and the training needs within them are intricate, mandatory and critical for success. These include automotive, financial and insurance, defence, aerospace and technology markets.

●	Our investments to drive innovation in learning through software solutions. Our commitment to continuous improvement underscores our dedication to optimising performance.

●	Our proven ability to drive operational improvement - both in our pre-existing businesses and those we acquire - and maintain close control of costs supports margin progression over the long-term.

The demand for our services and software is intensifying as the imperative for training and development becomes increasingly critical across various industries. This is delivered through a high proportion of predictable and recurring revenue streams, comprising SaaS subscriptions and long-term service contracts.

Creating value through AI and investment in innovation

Harnessing AI to support customer needs

LTG has good capabilities in AI and is investing more to ensure we are in the optimal position to work with clients as they train their own workforces.

We firmly believe the future workforce will be 'human + AI' to give our customers innovative solutions, drive efficiency and enhance their overall experience. Our AI innovations aim to optimise processes and create value, ultimately contributing to increased client engagement and satisfaction.

In many areas across the business, we are trialling AI solutions in collaboration with customers to ensure a more adaptive, targeted and personalised approach to learning and talent management. Specifically, from a services perspective, GP Strategies is investing in R&D innovation (eg Content AIQ¹) and educating customers. For example: 'Human+AI - Practical Learning for Learning Leaders'², first run in 2023 and then Human+AI was the subject of a Customer Forum hosted at the MetLife building in New York in March 2024 with several Fortune 500 companies attending³. Meanwhile our Software & Platforms businesses are bringing AI enhanced products to market throughout 2024 such as Rustici Software which provides AI innovation to the 500+ learning applications and content publishers that it serves worldwide.

Investment in Innovation

Dedicating resources to innovation is a top priority in our capital allocation strategy, and our track record speaks to our ability to generate value in this area. A key element of our investment strategy involves leveraging value from complementary technologies obtained through strategic mergers and acquisitions. Our approach allows us to deliver distinctive and comprehensive capabilities to our customers. We adhere to a cautious, lower-risk strategy in innovation by applying our existing technologies to markets whenever possible.

During 2023, we continued to make investments consistent with our strategy. Examples include:

●	Continued integration between Bridge, Gomo and Instilled to enhance and sell Bridge Advanced Authoring and Bridge Advanced Video.
●	Major investments in enterprise LMS functionality by way of GP iLearn.
●	Reflektive market and adoption information drove enhancements, such as peer feedback, new recognition features and the ability to sell as a standalone module, to Bridge performance tool capabilities.
●	Building out Bridge with Patheer technology to develop Skills+, leveraging 3rd party data and AI to match employees to skills, job titles to skills, and skills to content within the learning management system. The combined technology of Bridge and Patheer supercharges the connections with features that are in high demand in the market, taking advantage of recent advances in scalable AI web services.
●	Investment and focus on AI with a task force dedicated to understanding the transformative capabilities that exist and how we can practically apply this to our offerings to meet the needs of our clients. In 2024, we will:
	○	Increase our upskilling efforts for our internal teams
	○	Launch AI enablement and adoption tools for our customers including Content IQ
	○	Build out our IP offerings on AI for customers focusing on upskilling the L&D team as well as offerings for employees across the organisation
	○	Expand our partnerships with leaders in the AI space to bring exciting new AI services, tools and specialised teams
●	There has been considerable effort in implementing our go-to-market strategy, with new combined product and service offerings in:
	○	Learning experience design
	○	Enhanced managed learning services
	○	A combined consulting and measurement approach

Our capacity to seamlessly blend our offerings allows us to provide comprehensive solutions and cross-selling opportunities to our customers. We remain committed to strategic investments in our products, aimed at enhancing our offerings to meet the evolving needs of our customers.

¹ https://www.gpstrategies.com/solutions/consulting/artificial-intelligence-consulting-solutions/learning-content-aiq/

²https://www.gpstrategies.com/solutions/consulting/artificial-intelligence-consulting-solutions/human-plus-ai-training-program/

³https://www.gpstrategies.com/2024-client-forum/

Non-core assets

In December 2022 we disclosed that a non-core asset had been identified for disposal. We are pleased to report that we signed a definitive agreement on 5 December 2023 to sell our Lorien division, based within GP Strategies, to NIRAS, a Danish engineering consultancy headquartered in Denmark. The sale of this business subsequently closed on January 2, 2024.

We also confirmed in December 2023 we had completed a carve-out of the external staffing business of TTi Global, part of GP Strategies, for a cash consideration of approximately $0.8 million. A number of client staffing contracts (for high quality engineering and technical roles) and people were transferred to Premier Staffing Solution in October 2023.

People

Our people stand as our most valuable asset, and it is their unwavering dedication that propels our success. In 2023, we implemented several HR initiatives with the goal of enriching the employee experience, boosting morale and achieving our organisational goals. We re-launched an enterprise-wide engagement survey and implemented a comprehensive action planning process, enabling us to seamlessly incorporate feedback received into our priorities and planning during the second half of the year. This led to a more enhanced onboarding programme for new employees, a new in-house designed People Leader Essentials programme, an improved performance management programme and a leader conversation series that provided our colleagues with access to leadership from around the business on a variety of topics that they expressed interest in hearing more about. We undertook a restructuring in late 2023 as part of our ongoing commitment to drive operational improvement and margin progression while retaining our breadth and depth of skills and IP.

Environmental, Social and Governance

ESG initiatives remain at the forefront of our business process and strategy, enabling our customers to manage and develop their human capital and is therefore fully aligned with ESG principles. As we continued to focus on our own performance, we report on our scope 1, 2 and 3 Greenhouse Gas (GHG) emissions and there was a 11% decrease in our total GHG emissions in 2023 driven primarily by rationalised office usage and a reduction in business and commuting travel. We made further progress in our targets including launching a Group-wide sustainable procurement policy, closed our largest in-house physical data centre making further progress to reduce scope 3 emissions and continued to make progress in GHG emission assessments including developing long-term net zero projections.

During 2024 the Board has approved participation in, and we have submitted a signatory letter to, the UN Global Compact Group. We will continue to work to further progress our sustainability journey and provide an update in our 2024 results.

Outlook

LTG delivered a resilient performance in 2023 despite a challenging macroeconomic backdrop. This shows the benefit of our SaaS and long-term contracts - representing 73% of revenues - and laser-focus on margin. We are seeing the benefits of the full integration of our transformational acquisition of GP Strategies, which has strengthened our market leadership in learning and talent management.

Our subscription and long-term contracted revenue supports our expectation of delivering a resilient performance again this year in a macroeconomic backdrop which continues to be challenging. 2024 revenues are therefore expected to be line with 2023 (after disposals) while continuing to drive growth in Adjusted EBIT. Given the strength of our balance sheet, we are poised for a return to earnings accretive acquisitions in 2024 that fit with our strategy, as part of our active portfolio management. Longer term, our market leadership in workplace learning and talent management supports our confidence of igniting underlying revenue growth as the macroeconomic backdrop recovers.

Jonathan Satchell

Chief Executive

15 April 2024

Chief Financial Officer's Review:

Financial results

Revenue

Group revenue from continuing operations decreased by 2% on a constant currency basis to £562.3 million (2022: £588.6 million), a resilient performance in the face of a challenging macroeconomic backdrop affecting transactional and project-based work. Discontinued operations reflect the non-core UK Apprenticeship business following its closure as announced in December 2022.

As of 2023 interim reporting, reporting divisions have been updated to reflect internal reporting on a business unit basis, and the revised format is consistent with that used by the Chief Operating Decision Maker. Following the reorganisation and integration of LEO and PDT into GP Strategies, the Content & Services division now includes all three businesses in addition to Affirmity and PRELOADED. The Software & Platforms division reflects the results for the Product companies. The categorisation of the companies under the division heading is outlined below. Note 3 to the accounts includes a restatement of the prior year's comparative results.

Our Content & Services division revenue (74% of Group revenue) marginally declined by 1% on a constant currency basis with strong growth in PRELOADED and Affirmity. The growth in these two brands was more than offset by GP Strategies decline of 2% on a constant currency basis, due to the temporary H1 integration challenges in GPLX, and the macroeconomic climate slowing sales cycles and project-based revenues.

There was 4% constant currency revenue decline in the Software & Platforms division (26% of Group revenue). This comprised of expected lower revenue in PeopleFluent, and Reflektive due to softness in technology sector customers and the strategy to migrate customers to a version of Reflektive within Bridge. In addition, there was a softening in revenues in VectorVMS, a contingent workforce management business, and Breezy, a leading-edge talent acquisition platform business. Rustici continued to deliver strong growth and there was good growth in Bridge, a learning and performance management solutions business.

As a proportion of Group revenue, SaaS-based subscription and long-term contract revenue increased to 73% (2022: 71%).

Adjusted Earnings Before Interest and Tax (EBIT) and operating profit

Adjusted EBIT from continuing operations decreased marginally by 1% to £98.5 million (2022: £99.9 million) which included a small full year foreign exchange headwind. The Group's Adjusted EBIT margin was higher at 17.5% (2022: 17.0%) driven primarily by a combination of operational leverage in the Software & Platforms division and supported by higher exit margins in GP Strategies following a successful continuation of the commercial transformation strategy despite the temporary H1 challenges in GPLX.

Included within adjusted EBIT was a share-based payment charge of £4.4 million (2022: £6.7 million, excluding £0.5 million acquisition related charge), lower than the prior year due to lapsed options related to senior leavers and performance criteria not being met.

Also included within adjusted EBIT was an amortisation charge for internally generated development costs which increased to £8.8 million (2022: £7.5 million), as set out in Note 9. As relevant projects are completed, they are amortised over their useful economic lives, with the increase in the amortisation charge reflecting the increased investment in capitalised development costs as we innovate additional product features in the Product Companies. The Group does not include £11.1 million (2022: £12.0 million) of amortisation of acquired software and IP within adjusted EBIT due to an expectation that the quantum exceeds that which would have been incurred if internally developed, and therefore is not representative of a true ongoing cost of the business.

The Group's statutory operating profit was £58.7 million (2022: £50.5 million), including the sale of our Brazil joint venture, the external staffing business of TTi Global and other adjusting items of £39.8 million (2022: £49.4 million), discussed in more detail in note 4.

Divisional Review

Content & Services

Content & Services comprises GP Strategies, PRELOADED and Affirmity. GP Strategies is a global workforce transformation provider of organisational and technical performance learning solutions. PRELOADED is a BAFTA-winning immersive games studio. Affirmity provides a portfolio of software, consulting services and blended learning solutions to help US-based enterprise and mid-market companies measure diversity, build inclusive workforces and operate effective DE&I and affirmative action programmes.

In January 2023, LEO and PDT Global were integrated with GP Strategies. PRELOADED and Affirmity have not been integrated and will remain separate brands within the Content & Services reporting segment.

Content & Services comprised 74% (2022: 74%) of 2023 Group revenue. In 2023, 65% (2022: 62%)) of the revenue in Content & Services was related to long-term contracts, reported within SaaS & long-term contracts in segment analysis (note 3).

Revenue decreased to £418.0 million (2022: £434.4 million) reflecting the slowdown in spending in transaction and project-based work due to the macroeconomic climate, and integration challenges in GPLX in the GP Strategies business in the first half of the year. This was partially offset by strong revenue growth in PRELOADED due to key relationships with major global Technology and Entertainment brands unlocking more significant engagements in 2023, and Affirmity delivering a continued strong performance through the year.

Adjusted EBIT also decreased to £56.5 million (2022: £59.9 million), driven by the temporary challenges in GPLX in the first half of 2023. The adjusted EBIT margin was 13.5% (2022: 13.8%).

Statutory profit before tax was £25.9 million (2022: £25.0 million) after deducting adjusting items including amortisation of acquired intangibles, transaction costs relating to asset held for sale, integration costs, earn-out charges, loss on disposal of right-of-use assets, profit on sale of joint venture, restructuring costs and finance expenses.

Software & Platforms

The Software & Platforms division comprises of SaaS and on-premise solutions as well as hosting, support and maintenance services. PeopleFluent provides cloud-based talent management solutions and services to large-enterprise clients that require recruiting, performance, succession, compensation, learning and organisation charting capabilities beyond what is available within their current HR systems. Breezy provides a largely self-service SaaS talent acquisition solution aimed at small and medium-sized businesses. Bridge is an employee-focused learning and performance platform operating in the higher growth, mid-market with proven potential to move into sectors of the enterprise market. Rustici Software is a global expert in e-learning interoperability software. Open LMS provides the largest scale capability in the global open-source Moodle™ services market. VectorVMS is a market-leading SaaS-based technology for the contingent workforce.

Software & Platforms comprised 26% (2022: 26%) of 2023 Group revenue. In 2023, 96% (2022: 95%) of the revenue in Software & Platforms was related to SaaS-based subscriptions and long-term contracts.

Revenue decreased to £144.3 million (2022: £154.2 million) with a constant currency decline of 4% driven by the expected decline in PeopleFluent, a reduction in Reflektive revenue due to a combination of softness in technology sector customers and the strategy to migrate customers to a version of Reflektive within Bridge, weaker demand in VectorVMS due to reduced contract labour usage and lower healthcare rates, and softness in Breezy as transactional business related to the SME US labour market remained subdued. These challenges were partially offset by continued strong growth in Rustici and good growth in Bridge.

The PeopleFluent product line, which has good functionality and is highly configurable, continues to be well-embedded with its larger and more complex corporate customers. It is expected that customers requiring its more complex functionality will continue to use the product. In 2023, opportunities to upsell and cross sell additional products in performance, compensation and succession solutions, increased long-term contract revenue made possible due to the expertise of the team, the relationships built with customers, and our ability to support their goal of doing more with our products.

Breezy provides a largely self-service SaaS talent acquisition solution aimed at small and medium-sized businesses. As the business dealt with 44% lower transactional demand than 2022, significant efforts were made to control costs and avoid the effect of operational deleverage, resulting in similar EBIT margins despite the lower revenue. The macro impact on Breezy's transactional revenues masks 4% underlying growth in Platform hosting revenue for the full year.

Open LMS performance was muted as educational establishments realigned their requirements in a post-Covid environment. However, despite this, recurring revenue by year end increased by c.1% with new sales and expansions expected to benefit growth into 2024.

Rustici, the e-learning standards business, continued to enjoy strong growth. On-premise renewals, new customers and continued demand for Content Controller and Rustici Engine contributed to the strong performance.

Adjusted EBIT improved in the year to £42.1 million (2022: £40.0 million) as operational leverage and reduced central costs, particularly reduced facility costs, benefitted this reporting segment. Adjusted EBIT margin improved to 29.2% (2022: 25.9%).

Statutory profit before tax increased to £19.7 million (2022: £15.5 million) after deducting adjusting items including amortisation of acquired intangibles, integration costs, earn-out charges, loss on disposal of right-of-use assets, restructuring costs and finance expenses.

Statutory operating profit

The Group's statutory operating profit was £58.7 million (2022: £50.5 million), including adjusting items of £39.8 million (2022: £49.4 million), as set out in note 4, comprised of:

●	An amortisation charge for acquired intangibles of £32.7 million (2022: £35.7 million);

Amortisation of acquired intangible costs, including acquired software and IP, are excluded from the adjusted results of the Group since the costs are non-cash charges arising from investing activities. As such, they are not considered reflective of the core trading performance of the Group.

●	Impairment of goodwill and intangibles of nil (2022: £8.0 million);

Impairment of goodwill and intangibles are excluded from the adjusted results of the Group since the costs are one-off, non-cash charges. The 2022 impairment related to closure of the non-core UK Apprenticeship business in early 2023 announced on 19^th December 2022.

●	Integration costs of £2.4 million (2022: £3.5 million);

The costs of acquiring and integrating subsidiaries purchased in the year or in prior periods, deemed to be incremental costs not part of the normal course of business. In 2023, this includes £2.4 million of integration costs related to the continued integration of GP Strategies. The integration costs in 2022 included staff related costs such as retention bonuses, severance and recruitment costs as well as consulting costs.

●	Restructuring costs and provision of £2.5 million (2022: nil);

Restructuring provision of £2.5 million relating to severance incurred, or the liability created by year end are excluded from the adjusted results as they are restructuring in nature and not part of the normal operating costs of the ongoing Group. £1.7 million was paid in 2023.

●	Loss on disposal of right-of-use assets £2.2 million (2022: £0.2 million);

Impairment of right-of-use assets are excluded from the adjusted results of the Group since the costs are one-off, non-cash charges related to an abandoned lease that cannot be sub-let.

●	Costs relating to asset held for sale £0.5 million (2022: nil);

On 2 January, the Group sold the Lorien business for $21.4 million (£16.8 million) on a cash and debt free basis (subject to customary adjustments) for an estimated gain of $15.0 million (£11.8 million). The only impact in these financial statements are costs in relation to the sale.

●	Earn-out charges of £0.2 million (2022: £3.3 million);

The cost of earn-out charges are mechanisms included in the purchase agreements of business combinations, primarily related to Learning Media Services Ltd and Patheer in 2023, and Breezy and eCreators in 2022. The former owners of each respective business are required to remain employed by the Group and as such the earn-out is considered to be post-combination remuneration, rather than contingent consideration which would be included in the purchase consideration of each respective acquisition.

●	£0.6 million other income (2022: £1.5 million);

Other income includes amounts received in relation to the carve-out of the external staffing business of TTi Global, part of GP Strategies, for a cash consideration of approximately $0.8 million. A number of client staffing contracts (for high quality engineering and technical roles) and people were transferred to Premier Staffing Solutions in October 2023.

●	£0.4 million profit on sale of joint venture (2022: £1.2 million);

On 5 September 2023, the Group sold its 17% investment in Leo Brasil Tecnologia Educacional LTDA three million Brazilian Real, realising a gain on sale of £0.4 million (see note 10). On 18^th April 2022, the Group sold its 10% investment in National Aerospace Solutions LLC for proceeds of $3.0m (£2.3 million), realising a gain on sale of £1.2 million.

●	£0.3 million Cloud computing configuration and customisation costs (2022: £0.7 million);

Cloud computing configuration and customisation costs reflects the impact of a change in accounting policy following review of IFRIC guidance issued in March 2021 relating to capitalisation of cloud computer software implementation costs. Where there is no underlying intangible asset over which we retain control, the Group recognises configuration and customisation costs as an expense.

Discontinued operations

Discontinued operations reflect the results of the UK Apprenticeship business following the closure announced in December 2022. The £3.1m loss on discontinued operations, net of tax, reflects closure costs incurred which were not provided for in the 2022 financial statements and which were partially expected to be covered by contracted revenue (see note 6).

Net Finance Charge and Profit Before Tax

The net finance charge was £13.1 million (2022: £10.0 million), with the increase driven by the higher rates and partially offset by the lower average debt in the year.

After the profit on sale of joint venture and net finance charge, adjusted profit before tax for continuing operations was £85.7 million (2022: £89.9 million) and statutory profit before tax for continuing operations was £45.6 million (2022: £40.5 million).

Taxation Charge

The adjusted tax charge was £21.6 million (2022 £24.3 million), resulting in an effective tax rate of 25% (2022: 27%). The statutory tax charge was £13.0 million (2022: £10.1 million).

In 2022 the Group completed a tax study to confirm the availability of US federal losses and recognised a deferred tax asset for losses of £5.5 million, of which £2.6 million was utilised in 2022 and £2.9 million expected to be utilised over the subsequent three-year period in line with the forecast period prepared for the Group.  In 2023 the Group has continued to apply this principle and has recognised deferred tax assets of £0.6 million representing an additional year of availability in line with the forecast period. In 2023, the Group similarly completed a tax study to confirm the availability of US state losses in respect of these acquisitions and recognised a deferred tax asset of £1.0 million for losses expected to be utilised over the same subsequent three-year period. In subsequent years, the Group will consider recognition of the further deferred tax assets on the remaining losses on an annual basis.

The reduction in the effective tax rate to 25% in 2023 from 27% in 2022 reflects the recognition of a deferred tax asset related to the US state losses noted above.

Foreign Exchange

The Group is exposed to a number of currencies resulting from its geographical spread, with the majority of exposure to the US Dollar. The weakening of the US Dollar since December 2022 has resulted in a FX headwind for the Group and £20.2 million (2022: £31.0 million gain) exchange differences on translating foreign operations within other comprehensive income largely due to retranslation of foreign operations as well as £18.9 million of foreign currency loss generated on goodwill and acquired intangibles (note 9). This is largely due to a significant proportion of these items being designated in USD.

Earnings per Share

Adjusted diluted EPS from continuing operations decreased marginally to 7.803 pence (2022: 7.996 pence for continuing operations) driven by a marginal decrease in adjusted EBIT and higher net finance expenses partially offset by a lower adjusted effective tax rate and a lower number of shares outstanding. Adjusted diluted EPS for total operations is 7.427 pence (2022: 8.121 pence).

On a statutory basis, basic EPS decreased to 3.724 pence (2022: 3.857 pence).

Cash Generation

As per the Consolidated Statement of Cash Flows, cash generated from operations finished strongly at £96.1 million (2022: £92.1 million) and net cash flows from operating activities were £79.5 million (2022: £71.9 million).

There was a cash outflow from working capital of £9.6 million (2022: £18.4 million cash outflow) primarily driven by a c.£7 million reduction in the short-term bonus accrual compared to 2022. Debtor days decreased to 79 days (2022: 81² days) and combined debtor work-in-progress and deferred income days (combined days) increased to 45 days (2022: 41 days). The combined days metric benefits from payments being received annually in advance for recurring software licences.

Free cashflow¹ was £44.4 million (2022: £50.3 million), £5.9 million lower than 2022. Cash conversion¹ was strong at 88% (2022: 82%²), as set out below.

[1] Alternative performance measures used by the Group are defined in the Glossary

² As reported.

£m	FY23	FY22²	Variance

Statutory operating profit	58.7	50.5	8.2
Adjusting items	39.8	50.4	(10.6)
Adjusted EBIT¹	98.5	100.9	(2.4)
Depreciation & Amortisation	14.1	13.9	0.2
Share based payment charges	4.4	6.7	(2.3)
Dec / (Inc) working capital	(9.6)	(18.4)	8.8
Capital expenditure	(14.1)	(11.6)	(2.5)
Lease liabilities	(5.7)	(7.3)	1.6
Other	(1.3)	(1.0)	(0.3)
Adjusted operating cash flow¹	86.3	83.2	3.1
Cash Conversion	88%	82%	6%pts
Net Interest paid	(15.7)	(4.3)	(11.4)
Tax paid	(16.6)	(20.2)	3.6
Restructuring cash costs	(1.7)	-	(1.7)
Integration costs	(2.4)	(3.8)	1.4
Earnout & contingent consideration	(4.6)	(6.9)	2.3
Cash flow from discontinued operations	(1.4)	-	(1.4)
Other income	0.6	-	0.6
Cash costs related to asset held for sale	(0.5)	-	(0.5)
Proceeds from asset sale	0.4	2.3	(1.9)
Free cash flow¹	44.4	50.3	(5.9)

Net interest paid increased to £15.7 million (2022: £4.3 million) due to higher interest rates on a lower average gross debt, and £4.5 million interest from 2022 paid in 2023 due to actions taken in 2022 to benefit from a fixed interest rate at a time of increasing rates. £1.6 million in interest expense relating to 2023 is payable in 2024.

Net corporation tax payments decreased to £16.6 million (2022: £20.2 million) primarily due to the timing of tax payments. Restructuring cash costs of £1.7 million related to resizing the organisation to a more challenging macro environment, the reduction in transaction and project related costs and structural decline in PeopleFluent. £2.4 million (2022: £3.8 million) in integration costs related to the continued integration in 2023 of GP into the Group, including moving LEO and PDT into GP Strategies. Payments of acquisition-related contingent consideration and earn-outs related to Breezy and eCreators totalled £4.6 million in 2023, and £6.9 million related to Breezy, Watershed, eCreators and eThink in 2022. Cash flow from discontinued operations of £1.4 million related to the UK Apprenticeship business, and cash costs related to asset held for sale of £0.5 million for the Lorien business.

There were cash outflows from investment activities of £13.7 million (2022: £9.3 million) comprising of £12.9 million (2022: £10.0 million) of outflows relating to capitalised investment in internally generated IP, £1.2 million (2022: £1.6 million) from investment in property, plant and equipment, and £0.4 million (2022: £2.3 million) cash inflow from the sale of the investment in Leo Brasil Tecnologia Educacional LTDA. The 2022 cash inflow of £2.3 million relates to the sale of NAS joint venture in April 2022.

Net cash outflows from financing activities were £84.9 million (2022: 58.8 million). This includes £51.3 million repayment of bank loans, including $25 million voluntary additional payment in September 2023. In addition, net interest of £15.7m (2022: £4.3 million) was paid and there were £0.5 million (2022: £1.0 million) of proceeds from the issue of ordinary share capital, net of share issue costs. There were also lease and lease interest payments of £5.7 million (2022: £7.3 million), and dividend payments of £12.7 million (2022: £9.1 million).

Capital Allocation, Funding Priorities and Dividend

The Board remains committed to a capital allocation policy that prioritises investment in the business to drive growth, selectively acquiring value enhancing businesses and return of cash to shareholders, primarily through a progressive dividend policy.

The Board's progressive dividend policy, while taking into account earnings cover, also considers other factors such as the expected underlying growth of the business, its capital and other investment requirements. The strength of the Group's balance sheet and its ability to generate cash are also considered.

The Group considers these factors in the context of the Group's Principal Risks and the overall risk profile of the Group.

Given the operational performance during a challenging year and strong cash generation, the Board is recommending a final dividend of 1.21 pence per share (2022: 1.15 pence). The total cash cost of the final dividend is approximately £9.5 million.

Together with the interim dividend of 0.45 pence (2022: 0.45 pence), this gives a total dividend for the year of 1.66 pence, an increase of 4% on the prior year.

If approved the final dividend will be paid on 28^th June 2024 to all shareholders on the register on 7^th June 2024.

Net Debt and Gearing

At 31 December 2023, the Group's net debt was £78.6 million (31 December 2022: £119.8 million), excluding £11.3 million (31 December 2022: £14.9 million) of lease liabilities. On a constant currency basis, net debt was £82.7 million on 31 December 2023 at the 2022 rate.

The Group's net debt comprised £151.1 million of debt (31 December 2022: £214.7 million) and £72.5 million of cash (31 December 2022: £94.8 million).

The Group's debt is made up of a term facility loan with an original commitment of $265.0 million is available to the Group until October 2025. The facility also includes a $50.0 million (£39.3 million at year end exchange rates) Revolving Credit Facility and a $50 million (£39.3 million at year end exchange rates) uncommitted accordion, both available to July 2025. The Revolving Credit Facility remained undrawn in both 2022 and 2023. For further details of the Group's debt facility see note 16.

The Group's covenant basis net debt / adjusted EBITDA ratio as at 31 December 2023 was 0.7 times (2022: 1.1 times).

Sale of Lorien Engineering Solutions

On 2 January 2024, LTG completed the disposal of non-core asset Lorien Engineering Solutions for a cash consideration of $21.4 million on a cash and debt free basis (subject to customary adjustments) which further supports the Group's swift deleveraging.

There have been no other notifiable events between the 31 December 2023 and the date of this Annual Report.

Balance Sheet

The Group has a strong balance sheet with total shareholder equity of £427.2 million at 31 December 2023 (31 December 2022: £426.3 million). This is equivalent to 54.0 pence per share (2022: 54.0 pence per share). Key movements on the balance sheet in 2023 include:

●

Intangible assets - intangible fixed assets have decreased £52.2 million. This is largely due to additions of £12.9 million offset by amortisation charge on intangible assets of £41.6 million and net foreign exchange losses of £23.5 million.

●

The Group has a substantially reduced net debt position of c.£78.6 million (31 December 2022: net debt £119.8 million), reflecting strong cash generation which has contributed to the continued deleveraging of the balance sheet.

Prior Year Adjustment

We have identified the need to make a correction to the presentation of the 2022 and 2021 balance sheets where goodwill and deferred tax of £15.8 million at 31 December 2022 and £14.1 million at 31 December 2021 should not have been recognised under IAS 12 as the book basis and tax basis of acquired intangible assets were equal for certain US acquisition in 2016, 2020 and 2021. The adjustment reflects the tax efficient acquisition structure of the relevant acquisitions and tax amortisation deductions were taken for tax years 2020-2022 based on acquired intangible assets recognised.

The Group has restated the presentation of the balance sheet to reflect this correction. For details of the presentational changes made, refer to note 22. The presentational changes made have no impact on reported revenue or profit, or cash generation in the years and no material impact on net assets.

Key Performance Indicators (KPIs)

The Group's KPIs are revenue and organic revenue growth, adjusted EBIT, cash conversion and adjusted diluted EPS. A discussion of performance against each KPI is contained within the narrative above.

The profitability of the business, which has a relatively low fixed-cost base, is managed primarily via the divisional revenue review, with secondary measures addressing employee utilisation and project margin reviews in Content & Services.

Cash flow is reviewed at a Group level, aided by rolling cash forecasts and monitoring cash balances. There is a focus on working capital which is reviewed primarily against debtor days and combined debtor, WIP and deferred income days measures.

Adjusted diluted EPS, as well as incorporating all the elements of the above KPI's, is additionally impacted by the Group's treasury and taxation activities. These activities are carried out within the Group's Finance Team and seek to manage the Group's net finance and taxation charge.

Kath Kearney-Croft

Chief Financial Officer

15th April 2024

Consolidated Statement of Comprehensive Income Year ended 31 December 2023
		Year ended 31 Dec	Year ended 31 Dec
		2023	2022
	Note	£'000	£'000


Revenue	3	562,305	588,587
Operating expenses		(499,642)	(532,743)
Share-based payment charge		(4,381)	(6,693)
Profit on sale of joint venture	10	425	1,242
Share of profit from equity accounted investment	4	-	155

Operating profit		58,707	50,548

Analysed as:
Adjusted EBIT		98,539	99,925
Adjusting items included in Operating profit	4	(39,832)	(49,377)
Operating profit		58,707	50,548

Finance expenses		(14,132)	(10,475)
Finance income		1,032	429

Profit before taxation from continuing operations		45,607	40,502

Income tax charge	5	(13,015)	(10,075)

Profit after taxation from continuing operations		32,592	30,427

Loss on discontinued operations, net of tax	6	(3,138)	(21)

Profit for the year		29,454	30,406

Other comprehensive income:
Items that may be subsequently reclassified to profit or loss
Exchange differences on translating foreign operations		(20,169)	30,961
Total comprehensive income for the year attributable to owners of the parent Company		9,285	61,367

Earnings per share from continuing operations:
Basic (pence)	7	4.121	3.860
Diluted (pence)	7	3.985	3.712
Adjusted earnings per share from continuing operations:
Basic (pence)	7	8.069	8.314
Diluted (pence)	7	7.803	7.996

Earnings per share from continuing and discontinued operations:
Basic (pence)	7	3.724	3.857
Diluted (pence)	7	3.601	3.710
Adjusted earnings per share from continuing and discontinued operations:
Basic (pence)	7	7.680	8.443
Diluted (pence)	7	7.427	8.121

Consolidated Statement of Financial Position		31 Dec 2023 £'000	Restated 31 Dec 2022 £'000
	Note	31 Dec 2023 £'000	Restated 31 Dec 2022 £'000
Non-current assets
Property, plant and equipment	8	2,217	2,857
Right-of-use assets	8	6,812	11,808
Intangible assets	9	493,016	545,214
Deferred tax assets	13	6,147	4,077
Other receivables, deposits and prepayments	12	2,093	1,874
Investments accounted for under the equity method	10	-	-
Amounts recoverable on contracts		-	1,303
		510,285	567,133

Current assets
Trade receivables	11	107,962	136,025
Other receivables, deposits and prepayments	12	14,374	16,765
Amounts recoverable on contracts		25,757	33,221
Inventory		1,260	2,432
Corporation tax receivable		5,155	-
Amount owing from related parties		-	59
Cash and bank balances		72,522	94,847
Restricted cash balances		2,389	2,608
		229,419	285,957

Assets in disposal groups classified as held for sale	20	8,007	8,369

Total assets		747,711	861,459

Current liabilities
Lease liabilities	17	4,423	5,082
Trade and other payables	14	133,950	180,634
Borrowings	16	30,091	36,714
Provisions	18	2,026	1,602
Corporation tax payable		8,237	602
ESPP scheme liability		995	500
		179,722	225,134

Non-current liabilities
Lease liabilities	17	6,913	9,792
Deferred tax liabilities	13	5,744	11,500
Other long-term liabilities	15	405	3,517
Borrowings	16	120,984	177,944
Corporation tax payable	5	756	1,431
Provisions	18	621	1,857
		135,423	206,041

Liabilities directly associated with assets in disposal groups classified as held for sale	20	5,335	3,984

Total liabilities		320,480	435,159

Net assets		427,231	426,300

Equity
Share capital		2,967	2,962
Share premium account		318,698	318,183
Merger reserve		31,983	31,983
Reverse acquisition reserve		(22,933)	(22,933)
Share-based payment reserve		18,974	14,714
Foreign exchange translation reserve		5,560	25,729
Retained earnings		71,982	55,662
Total equity		427,231	426,300

Consolidated Statement of Changes in Equity

Year ended 31 December 2023

		Share capital	Share Premium	Merger reserve	Reverse acquisition reserve	Share-based payments reserve	Translation reserve	Retained earnings	Total equity
	Note	£'000	£'000	£'000	£'000	£'000	£'000	£'000	£'000
Balance at 1 January 2022		3,034	317,114	31,983	(22,933)	11,148	(5,232)	36,224	371,338
Profit for the period		-	-	-	-	-	-	30,406	30,406
Exchange differences on translating foreign operations		-	-	-	-	-	30,961	-	30,961
Total comprehensive profit for the period		-	-	-	-	-	30,961	30,406	61,367
Issue of shares net of share issue costs		8	1,029	-	-	-	-	-	1,037
Reserve transfer		(80)	40	-	-	-	-	40	-
Credit to equity for equity settled share-based payments		-	-	-	-	6,693	-	-	6,693
Credit to equity treated as consideration for equity settled share-based payments		-	-	-	-	542	-	-	542
Tax charge on share options		-	-	-	-	-	-	(1,946)	(1,946)
Distributions in respect of cancelled options		-	-	-	-	(3,669)	-	-	(3,669)
Dividends paid		-	-	-	-	-	-	(9,062)	(9,062)
Transactions with owners		(72)	1,069	-	-	3,566	-	(10,968)	(6,405)
Balance at 31 December 2022		2,962	318,183	31,983	(22,933)	14,714	25,729	55,662	426,300
Profit for the period		-	-	-	-	-	-	29,454	29,454
Exchange differences on translating foreign operations		-	-	-	-	-	(20,169)	-	(20,169)
Total comprehensive profit for the period		-	-	-	-	-	(20,169)	29,454	9,285
Issue of shares net of share issue costs		5	515	-	-	-	-	-	520
Credit to equity for equity settled share-based payments		-	-	-	-	4,381	-	-	4,381
Tax charge on share options		-	-	-	-	-	-	(520)	(520)
Distributions in respect of cancelled options		-	-	-	-	(121)	-	-	(121)
Exercise of share options through trust		-	-	-	-	-	-	38	38
Dividends paid	19	-	-	-	-	-	-	(12,652)	(12,652)
Transactions with owners		5	515	-	-	4,260	-	(13,134)	(8,354)
Balance at 31 December 2023		2,967	318,698	31,983	(22,933)	18,974	5,560	71,982	427,231

Consolidated Statement of Cash Flows		Year ended 31 Dec	Year ended 31 Dec
		2023	2022
	Note	£'000	£'000

Cash flows from operating activities
Profit before taxation from continuing operations		45,607	40,502
Loss before taxation from discontinued operations	6	(3,488)	(26)
Adjustments for:
Loss on disposal of PPE and right-of-use assets		2,163	230
Share-based payment charge		4,381	7,235
Amortisation of intangible assets	9	41,551	43,183
Depreciation of plant and equipment	8	1,492	2,141
Depreciation of right-of-use assets	8	3,741	4,343

Impairment of goodwill and acquired intangibles	9	-	7,958
Finance expense (including IFRS 16 finance charge)		518	573
Interest on borrowings		13,614	9,102

Acquisition-related contingent consideration and earn-outs	4	224	3,273
Fair value movement on contingent consideration	4	-	(21)
Payment of acquisition-related contingent consideration and earn-outs		(4,636)	(6,139)
Profit on sale of joint venture	10	(425)	(1,242)
Share of profit in equity accounted investment	10	-	(155)
Interest income		(1,032)	(429)
Other non-cash items		2,000	-
Operating cash flows before working capital changes		105,710	110,528
Decrease / (Increase) in trade and other receivables		21,692	(6,521)
Decrease / (Increase) in inventory		1,052	(1,210)
Decrease in amount recoverable on contracts		8,269	3,647
Decrease in payables		(40,581)	(14,317)
Cash generated from operations		96,142	92,127
Income tax paid		(16,649)	(20,180)
Net cash flows from operating activities		79,493	71,947

Cash flows used in investing activities
Purchase of property, plant and equipment	8	(1,192)	(1,641)
Development of intangible assets	9	(12,883)	(9,966)
Sale of Investment in associates and joint ventures	10	425	2,300
Net cash flows used in investing activities		(13,650)	(9,307)

Cash flows used in financing activities
Dividends paid	19	(12,652)	(9,062)

Repayment of bank loans	16	(51,315)	(38,458)
Interest paid		(16,714)	(4,609)
Interest received		1,032	352
Issue of ordinary share capital net of share issue costs		520	1,037
Contingent consideration payments in the period		-	(705)
Interest paid on lease liabilities	17	(546)	(614)
Payments for lease liabilities	17	(5,192)	(6,719)
Net cash flows used in financing activities		(84,867)	(58,778)

Net (decrease) / increase in cash and cash equivalents		(19,024)	3,862
Cash and cash equivalents at beginning of the year		94,847	83,850
Exchange movements on cash		(3,301)	7,135
Cash and cash equivalents at end of the year		72,522	94,847

1. General information

The financial information for the year ended 31 December 2023 and the year ended 31 December 2022 does not constitute the company's statutory accounts for those years.

Statutory accounts for the year ended 31 December 2022 have been delivered to the Registrar of Companies. The statutory accounts for the year ended 31 December 2023 will be delivered to the Registrar of Companies in due course.

The auditors' reports on the accounts for 31 December 2023 and 31 December 2022 were unqualified, did not draw attention to any matters by way of emphasis, and did not contain a statement under 498(2) or 498(3) of the Companies Act 2006.

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

The Company is a public limited company, which is listed on the AIM Market of the London Stock Exchange and domiciled in England and incorporated and registered in England and Wales. The address of its registered office is 3 New Street Square, London, England, EC4A 3BF. The registered number of the Company is 07176993.

2. Summary of material accounting policies

The material accounting policies applied in the preparation of these Consolidated Financial Statements are set out below. These policies have been consistently applied unless otherwise stated.

a Basis of preparation

The consolidated financial statements have been prepared in accordance with UK adopted international accounting standards and with the requirements of the Companies Act 2006 as applicable to companies reporting under those standards.

Going concern

The Directors report that the going concern basis is appropriate for a period of at least 12 months from the approval of these financial statements. The Group meets its day-to-day working capital requirements from the positive cash flows generated by its trading activities and its available cash resources. These are supplemented when required by additional drawings under the Group's committed $50.0 million revolving credit facility (RCF) and an uncommitted $50.0 million accordion facility, which are available until 2025.

The Group has a debt facility dated 15 July 2021 with HSBC UK Bank PLC, HSBC Innovation Bank Limited, Barclays Bank PLC, Fifth Third Bank NA and The Governor and Company of the Bank of Ireland.

This facility comprises of a Term Facility A committed facility, with an original commitment of $265.0 million available to the Group until October 2025, a $50.0 million committed Revolving Credit Facility (£39.3 million at the year-end exchange rate) and a $50.0 million uncommitted accordion facility (£39.3 million at the year-end exchange rate), both available until July 2025. The term facility attracts variable interest based on LIBOR plus a margin of between 1.5% and 2.75% per annum, based on the Group's leverage to December 2022, following this it attracts SOFR plus the margin discussed above and an adjusted credit spread until repaid.

In addition, a 12 month extension request is available to the Group for Term Facility A and the RCF.

On 29 September 2023 the Group made a voluntary additional repayment of $25.0m on the term loan.

The Group continues to hold a strong liquidity position overall at 31 December 2023, with gross cash and cash equivalents of £72.5 million and net debt of £78.6 million (see note 16) (31 December 2022: gross cash was £94.8 million and net debt of £119.8 million). Whilst there are a number of risks to the Group's trading performance, the Group is confident of its ability to continue to access sources of funding in the medium term.

The Directors report that they have re-assessed the principal risks, reviewed current performance and forecasts, combined with expenditure commitments, including capital expenditure, business acquisitions, and borrowing facilities. The Group's forecasts demonstrate it will generate profits and cash in the going concern period, which runs to 30 June 2025. In addition, the Group continues to have sufficient cash reserves to enable it to meet its obligations as they fall due, as well as operate within its banking covenants, for a period of at least 12 months from the date of signing of these financial statements.

The Group has also assessed a range of downside scenarios to assess if there is a significant risk to the Group's liquidity position. The forecasts and scenarios prepared consider our trading experience to date and we have modelled downside scenarios such as:

i. 10% and 25% reductions in revenues;

ii. increasing customer payment days (DSO) by 15 days;

iii. combining 10% reduction in revenues and increasing DSO by 15 days;

iv. increasing costs by 8% from H1 2024; and

v. modelling high cost inflation above that in (IV) above to determine the level where a covenant breach could occur.

The Directors have concluded that it is appropriate to adopt the going concern basis of accounting in preparing the Annual Report, having undertaken a review of the detailed forecasts for the going concern period and the impact this forecast has on the Group's gross cash, net debt and ability to meet bank covenants under the existing facilities agreement.

Changes in accounting policies

(i) New standards, interpretations and amendments adopted from 1 January 2023

New standards impacting the Group that have been adopted in the annual financial statements for the year ended 31 December 2023 are:

Amendments to IAS 7	Demand deposits with restrictions on use arising from a contract with a third party
Amendments to IAS 12	International tax reform - pillar two model rules
Amendments to IFRS15	Principal vs Agent: Software reseller
Amendments to IAS 37	Negative low emissions vehicle credits
Amendments to IAS 32	Special Purpose Acquisition Companies (SPAC): Classification of public shares as financial liabilities or equity
Amendments to IFRS 17	Transfer of insurance coverage under a group of annuity contracts
Amendments to IFRS 17 and IAS 21	Multi-currency groups of insurance contracts
Amendments to IFRS 9 and IFRS 16	Lessor forgiveness of lease payments

The Group has considered the above new standards and amendments and has concluded that, they are either not relevant to the Group or they do not have a significant impact on the Group's consolidated financial statements.

(ii) New standards, interpretations and amendments not yet effective

At the date of authorisation of these consolidated Group financial statements, the following standards and interpretations, which have not been applied in these financial statements, were in issue but not yet effective (and in some cases had not yet been adopted by the UK). Management are currently assessing the impact of these new standards on the group.

Amendments to IAS 1	Classification of non-current liabilities with covenants and information provided relating to liabilities subject to these conditions.
Amendments to IAS 7 and IFRS 7	Disclosures to enhance the transparency of supplier finance arrangements and their effect on the company's liabilities, cash flows and exposure to liquidity risk.
Amendments to IAS 21	Lack of exchangeability relating to foreign currency transactions and operations.
Amendments to IFRS 16	Leases in sale and leaseback

Alternative performance measures

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

Adjusting items

The Group has chosen to present an adjusted measure of profit and earnings per share, which excludes certain items which are separately disclosed due to their size, nature or incidence, and are not considered to be part of the normal operating costs of the Group. These costs (refer to note 4) may include the financial effect of adjusting items such as, inter alia, restructuring costs, impairment charges, amortisation of acquired intangibles, costs relating to business combinations, one-off foreign exchange gains or losses, integration costs, acquisition related share-based payments charges, contingent consideration and earn-outs, cloud computing configuration and customisation costs, the share of profit in equity accounted investments, profit on the sale of a joint venture and fixed asset or right-of-use asset disposal gains or losses.

b Basis of consolidation

A subsidiary is defined as an entity over which the Group has control. The Group controls an entity when the Group is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns through its power over the entity. Subsidiaries are fully consolidated from the date on which control is transferred to the Group. They are deconsolidated from the date that control ceases.

Business combinations accounted for under the acquisition method and merger relief has been taken on recognising the shares issued on acquisition, where applicable.

Under the acquisition method, the results of the subsidiaries acquired or disposed of are included from the date of acquisition or up to the date of disposal. At the date of acquisition, the fair values of the subsidiaries' net assets are determined and these values are reflected in the Consolidated Financial Statements. The cost of acquisition is measured at the aggregate of the fair values at the date of exchange, of assets given, liabilities incurred or assumed, and equity instruments issued by the Group in exchange for control of the acquiree. Any excess of the purchase consideration of the business combination over the fair value of the identifiable assets and liabilities acquired is recognised as goodwill. Goodwill, if any, is not amortised but reviewed for impairment at least annually. If the consideration is less than the fair value of assets and liabilities acquired, the difference is recognised directly in the statement of comprehensive income. Acquisition-related costs are expensed as incurred.

Intra-group transactions, balances and unrealised gains on transactions are eliminated. Intragroup losses may indicate an impairment which may require recognition in the consolidated financial statements. Where necessary, adjustments are made to the Financial Statements of subsidiaries to ensure consistency of accounting policies with those of the Group.

3. Segment analysis

IFRS 8 requires operating segments to be identified on the basis of internal reports about components of the Group that are regularly reviewed by the Chief Operating Decision maker (which takes the form of the Board of Directors of the Company), in order to allocate resources to the segment and to assess its performance.

The Directors of the Company consider there to be two reportable segments, being the Content & Services division and the Software & Platforms division. A majority of sales were generated by the operations in North America in the year ended 31 December 2023 and in the year ended 31 December 2022.

For income and expenses relating to the Group's administrative functions that are not directly attributable to a reporting segment, these are apportioned based on revenue.

SaaS, long-term contract and transactional revenue is defined in the Glossary.

Geographical information

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

	UK	Mainland Europe	North America	Asia Pacific	Rest of the world	Total
	£'000	£'000	£'000	£'000	£'000	£'000
31 Dec 2023
Revenue from continuing operations	67,826	73,804	374,279	21,064	25,332	562,305
Revenue from discontinued operations	34	-	-	-	-	34
Total Revenue	67,860	73,804	374,279	21,064	25,332	562,339

Non-current assets	36,132	709	450,479	16,472	346	504,138

31 Dec 2022
Revenue from continuing operations	58,679	71,637	407,343	21,824	29,104	588,587
Revenue from discontinued operations	8,315	-	-	-	-	8,315
Total Revenue	66,994	71,637	407,343	21,824	29,104	596,902

Non-current assets (restated)	31,017	569	511,876	19,177	417	563,056

The total non-current assets figure is exclusive of deferred tax assets in each of the periods above, with the 2022 balances being restated as described in note 22.

Information about reported segment revenue, profit or loss from continuing operations and total assets

31 December 2023	Content & Services				Software & Platforms					Total
	Global Services	Regional Services	Other Technical	Total	On-premise Software Licences	Hosting & SaaS	Platforms Professional Services & Other	Support & Maintenance	Total
	£'000	£'000	£'000	£'000	£'000	£'000	£'000	£'000	£'000	£'000

SaaS and long-term contracts	87,220	179,783	2,825	269,828	30,684	100,212	3,925	3,429	138,250	408,078
Transactional	21,529	98,520	28,131	148,180	-	58	5,989	-	6,047	154,227
Total Revenue	108,749	278,303	30,956	418,008	30,684	100,270	9,914	3,429	144,297	562,305
Depreciation & amortisation				(5,516)					(8,562)	(14,078)
Adjusted EBIT				56,416					42,123	98,539
Amortisation of acquired intangibles				(15,065)					(17,641)	(32,706)
Acquisition related adjusting items				(2,395)					(239)	(2,634)
Other adjusting items				(3,330)					(1,162)	(4,492)
Finance expenses				(9,736)					(3,364)	(13,100)
Profit before tax				25,890					19,717	45,607

Additions to intangible assets				-					12,883	12,883
Total Assets				555,836					191,875	747,711

31 December 2022	Content & Services				Software & Platforms					Total
	Global Services	Regional Services	Other Technical	Total	On-premise Software Licences	Hosting & SaaS	Platforms Professional Services & Other	Support & Maintenance	Total
	£'000	£'000	£'000	£'000	£'000	£'000	£'000	£'000	£'000	£'000

SaaS and long-term contracts	89,405	175,359	5,395	270,159	29,925	108,909	4,106	3,952	146,892	417,051
Transactional	29,530	99,105	35,557	164,192	-	85	7,259	-	7,344	171,536
Total Revenue	118,935	274,464	40,952	434,351	29,925	108,994	11,365	3,952	154,236	588,587
Depreciation & amortisation				(6,544)					(7,400)	(13,944)
Adjusted EBIT				59,902					40,023	99,925
Amortisation of acquired intangibles				(15,833)					(19,890)	(35,723)
Acquisition related adjusting items				(4,619)					(2,991)	(7,610)
Other adjusting items				(7,023)					979	(6,044)
Finance expenses				(7,414)					(2,632)	(10,046)
Profit before tax				25,013					15,489	40,502

Additions to intangible assets				445					9,521	9,966
Total Assets (restated)				635,718					225,741	861,459

Effective within this report, there are changes to the grouping of businesses within the reportable segments, as well as a consolidation of the reporting segments themselves. This was performed following internal reorganisation and is consistent with the format of the internal reporting used by the Chief Operating Decision Maker. The prior year's comparative results have been represented to align under this updated presentation.

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

The total assets figure is inclusive of deferred tax assets in each of the periods above, with the 2022 balances being restated as described in note 22.

Information about major customers

In the year ended 31 December 2023 and the year ended 31 December 2022, no customer accounted for more than 10 per cent of reported revenues.

4. Adjusting items

These items are included in normal operating costs of the business, but are significant cash and non cash expenses that are separately disclosed because of their size, nature or incidence. It is the Group's view that excluding them from Operating Profit gives a better representation of the underlying performance of the business in the period. Further details of the adjusting items are included in note 2.

		31 Dec	31 Dec
		2023	2022
	Note	£'000	£'000
Adjusting items included in Operating profit:
Acquisition related costs:
Amortisation of acquired intangibles		32,706	35,723
Acquisition-related contingent consideration and earn-outs		224	3,273
Acquisition-related share-based payment charge		-	542
Fair value movement on contingent consideration		-	(21)
Transaction costs		-	304
Integration costs		2,410	3,512
Total acquisition related costs		35,340	43,333

Other adjusting items:
Impairment of goodwill and intangibles		-	7,958
Loss on disposal of fixed assets		124	5
Loss on disposal of right-of-use assets		2,039	228
Share of profit of equity accounted investments		-	(155)
Profit on sale of joint venture	10	(425)	(1,242)
Cloud computing configuration and customisation costs		292	719
Restructuring costs		2,537	-
Costs relating to asset held for sale	20	529	-
Other income		(604)	(1,469)
Total other adjusting items		4,492	6,044

Total adjusting items		39,832	49,377

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

- Amortisation of acquired intangibles - the cost of £32.7 million (2022: £35.7 million) is excluded from the adjusted results of the Group since the costs are non-cash charges arising from investment activities. As such, they are not considered reflective of the core trading performance of the Group.

- Impairment of goodwill and intangibles- these costs were excluded from the adjusted results of the Group in 2022 as the costs were one-off charges related to closure of the non-core UK apprenticeship business in early 2023, as announced in 2022.

- Restructuring costs relate to the resizing of the organisation aligning to a more challenging macro environment.

- Acquisition-related share-based payments, contingent consideration and earn-outs - these costs are excluded from the adjusted results since these costs are also associated with business acquisitions and represent post-combination remuneration, which is not included in the calculation of goodwill and also not considered part of the core trading performance of the Group.

- Fair value movement on contingent consideration - similar to the above, any adjustments to contingent consideration through profit or loss are excluded from adjusted results on the basis that it is non-cash non-operational income or costs.

- Transaction and integration costs - the costs of acquiring and integrating subsidiaries purchased. These costs associated with completed acquisitions are excluded from the adjusted results on the basis they are directly attributable to investment activities, rather than the core trading activities of the Group. Included within the £2.4 million integration costs is £1.2 million incremental labour cost and £1.2 million relating to various system integrations, insurances and legal and professional fees.

- Other income in 2023 relates a carve-out of the external staffing business of TTi Global, part of GP Strategies, for a cash consideration of approximately $800k. In 2022 the income related to amounts received in relation to a contract. In both cases, these are considered adjusting items due to the quantum and non-recurring nature.

- Cloud computing configuration and customisation costs reflects the impact of a change in accounting policy following review of IFRIC guidance issued in March 2021 relating to capitalisation of cloud computing software implementation costs. Where there is no underlying intangible asset over which we retain control, the Group recognises configuration and customisation costs as an expense.

5. Income tax

Of the total income tax expense as set out in the table below, £13,015,000 relates to taxation on continuing operations (2022: expense £10,075,000) and £350,000 relates to tax credit on discontinuing operations (2022: credit £5,000).

	31 Dec	31 Dec
	2023	2022
	£'000	£'000
Current tax expense:
- UK current tax on profits for the year	5,502	(282)
- Adjustments in respect to prior years	(1,029)	2,522
- Foreign current tax on profits for the year	16,441	19,193
Total current tax	20,914	21,433
Deferred tax (note 13):
- Origination and reversal of temporary differences	(12,158)	(7,459)
- Adjustments in respect to prior years	2,129	(3,597)
- Change in deferred tax rate	1,780	(307)
Total deferred tax	(8,249)	(11,363)

Income tax expense	12,665	10,070

The increases in UK current tax primarily relate to the increase in intercompany interest income between the UK and US arising from changes in interest rates which were on average 6.7%, increased from the prior year average of 3.4%

The 'changes in tax rate' reflect the remeasuring of temporary differences. This primarily arises as a result of adjustments to the deferred tax rate applied to the amortisation of acquired intangibles deferred tax liabilities recognised at the consolidated level of £2.1 million and favourable impact from US of £0.3 million due to the change in the blended tax rate derived from state income apportionment as well as fluctuations in state tax rates.

In 2022 the Group completed a tax study to confirm the availability of US federal losses acquired with the PeopleFluent and Reflektive acquisitions and determined that tax effected losses amounting to £24.7 million were available for recognition, consisting of £12.9 million for the period 2022-2038 and £11.8 million to be carried forward indefinitely. The Group considered both positive and negative evidence available and recognised a deferred tax asset for losses of £5.5 million, of which £2.6 million was utilised in 2022 and £2.9 million expected to be utilised over the subsequent three-year period in line with the forecast period prepared for the Group.  In 2023 the Group has continued to apply this principle and has recognised deferred tax assets of £0.6 million representing an additional year of availability in line with the forecast period. In 2023, the Group similarly completed a tax study to confirm the availability of US state losses in respect of these acquisitions and recognised a deferred tax asset of £1.0m for losses expected to be utilised over the same subsequent three-year period.

The Group has identified and reflected adjustments in respect to prior years deferred tax expense amounting to £2.1 million, primarily arising in the US in respect of recognition of deferred tax liabilities of amount £1.9 million related to goodwill and intangibles, and other prior year adjustments of net amount £0.2 million.

The current year deferred tax credit of £12.2 million, arising from the origination and reversal of temporary differences, primarily relates to the deferred tax liability release associated with acquired intangible amortisation and impairments amounting to £8.8 million, net deferred tax assets arising in the US of amount £3.0 million and other net timing differences of £0.4 million. The temporary

differences arising in the US consist of deferred tax assets in respect of provisions amounting to £4.3 million, the deferred tax asset in respect of capitalised R&D of amount £2.5 million, offset by utilisation of deferred tax losses of £1.6 million, accelerated tax depreciation of amount £2.2 million, deferred revenue £1.1 million and other net timing differences of £0.1 million.

The £0.8 million non-current corporation tax liability is in relation to amounts payable over eight years by GP Strategies Corporation and TTi Global, Inc. in relation to 2017 US tax reform, decreased from the prior year amount payable of £1.4 million.  This will be fully settled by 2025.

A reconciliation of income tax expense applicable to the profit before taxation at the statutory tax rate to the income tax expense at the effective tax rate of the Group is as follows:

	31 Dec	31 Dec
	2023	2022
	£'000	£'000

Profit before taxation from continuing and discontinued operations	42,119	40,476

Tax calculated at the domestic tax rate of 23.50% (2022: 19.00%):	9,898	7,690

Tax effects of: -
Expenses not deductible for tax purposes	1,896	2,147
Adjustments to corporation tax in respect to prior years	(1,029)	2,522
Adjustments to deferred tax in respect to prior years	2,129	(3,597)
Recognition of previously unrecognised losses	(1,000)	-
Effect of differences in tax rates	771	1,308
	12,665	10,070

The aggregate current and deferred tax directly charged to equity amounted to £520,000 (2022: charge £1,946,000).

6. Loss on discontinued operations, net of tax

The table below show the results of the discontinued operations which are included in the Group Income Statement and Group Statement of Cash Flows respectively.

The discontinued operations relate to the closure of non-core operations. Prior to 31 December 2022, management announced that it planned to exit the UK apprenticeship business which then ceased trading on 31 March 2023.

	31 Dec 2023	31 Dec 2022
	£'000	£'000
Revenue	34	8,315
Operating expenses	(3,522)	(8,341)

Operating loss	(3,488)	(26)

Adjusted EBIT	(3,425)	1,018
Adjusting items included in Operating loss
(Loss) / profit on disposal of fixed assets	(3)	3
Closure costs	(60)	(1,047)
Operating loss	(3,488)	(26)

Loss before taxation	(3,488)	(26)

Taxation	350	5

Loss after taxation	(3,138)	(21)

	31 Dec 2023	31 Dec 2022
	£'000	£'000
Cash flow from operating activities
Loss before taxation	(3,488)	(26)
Adjustments for:
Loss / (profit) on disposal of PPE, right-of-use assets and lease liabilities	3	(3)
Other non-cash items	2,000	-
Net cash used in operating activities	(1,485)	(29)

Net cash (used in) / from investing activities	(3)	3

Net cash used in discontinued operations	(1,488)	(26)

7. Earnings per share

	31 December 2023		31 December 2022
	Continuing operations	Total operations	Continuing operations	Total operations
	Pence	Pence	Pence	Pence

Basic earnings per share	4.121	3.724	3.860	3.857

Diluted earnings per share	3.985	3.601	3.712	3.710


Adjusted basic earnings per share	8.069	7.680	8.314	8.443

Adjusted diluted earnings per share	7.803	7.427	7.996	8.121

Basic earnings per share is calculated by dividing the profit/loss after tax attributable to the equity holders of the Group by the weighted average number of shares in issue during the year.

Diluted earnings per share is calculated by adjusting the weighted average number of shares outstanding to assume conversion of all potential dilutive shares, namely share options or deferred consideration payable in shares where the contingent conditions have been met.

In order to give a better understanding of the underlying operating performance of the Group, an adjusted earnings per share has been included. Adjusted earnings per share is stated after adjusting the profit after tax attributable to equity holders of the Group for certain charges as set out in the table below. Adjusted diluted earnings per share has been calculated to also include the contingent shares payable as deferred consideration on acquisitions where the future conditions have not yet been met, as shown below.

Adjusted earnings per share is stated after the impact of the adjusting items disclosed in note 4. The adjusted measures are not defined terms under IFRS and may therefore not be comparable with similarly titled measures reported by other companies. They are not intended to be a substitute for, or superior to, IFRS measures.

The calculation of earnings per share from continuing and discontinued operations is based on the following earnings and number of shares.

	2023			2022
	Profit after tax	Weighted average number of shares	Pence per share	Profit after tax	Weighted average number of shares	Pence per share
	£'000	'000		£'000	'000
Basic earnings per ordinary share attributable to the owners of the parent	29,454	790,920	3.724	30,406	788,295	3.857

Effect of adjustments:
Total adjusting items (see note 4)	39,895			50,421
Income tax expense	12,665			10,070
Effect of adjustments	52,560		6.645	60,491		7.674
Adjusted profit before tax	82,014			90,897
Tax impact after adjustments	(21,272)		(2.690)	(24,338)		(3.087)
Adjusted basic earnings per ordinary share	60,742	790,920	7.680	66,559	788,295	8.443

Effect of dilutive potential ordinary shares:
Share options		26,947	(0.253)		31,310	(0.322)
Adjusted diluted earnings per ordinary share	60,742	817,867	7.427	66,559	819,605	8.121
Diluted earnings per ordinary share attributable to the owners of the parent	29,454	817,867	3.601	30,406	819,605	3.710

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

	2023			2022
	Profit after tax	Weighted average number of shares	Pence per share	Profit after tax	Weighted average number of shares	Pence per share
	£'000	'000		£'000	'000
Basic earnings per ordinary share attributable to the owners of the parent	32,592	790,920	4.121	30,427	788,295	3.860

Effect of adjustments:
Total adjusting items (see note 4)	39,832			49,377
Income tax expense / (credit)	13,015			10,075
Effect of adjustments	52,847		6.682	59,452		7.542
Adjusted profit before tax	85,439			88,879
Tax impact after adjustments	(21,622)		(2.734)	(24,343)		(3.088)
Adjusted basic earnings per ordinary share	63,817	790,920	8.069	65,536	788,295	8.314

Effect of dilutive potential ordinary shares:
Share options		26,947	(0.266)		31,310	(0.320)
Adjusted diluted earnings per ordinary share	63,817	817,867	7.803	65,536	819,605	7.996
Diluted earnings per ordinary share attributable to the owners of the parent	32,592	817,867	3.985	30,427	819,605	3.712

8. Property, plant, equipment and right-of-use assets

					Right-of-use assets
	Computer equipment	Fixtures and fittings	Leasehold Improvements	Total	Computer equipment	Property	Motor vehicles	Total
	£'000	£'000	£'000	£'000	£'000	£'000	£'000	£'000
Cost
At 1 January 2022	1,804	438	1,617	3,859	559	23,347	134	24,040
Reclassification	1,134	140	(1,274)	-	-	-	-	-
Additions	1,515	103	23	1,641	-	2,062	-	2,062
Foreign exchange differences	2,042	(26)	229	2,245	12	199	-	211
Reclassified as assets held for sale	(236)	(48)	(43)	(327)	-	(278)	-	(278)
Disposals	(591)	(233)	(159)	(983)	(101)	(4,065)	(57)	(4,223)

At 31 December 2022	5,668	374	393	6,435	470	21,265	77	21,812
Additions	1,111	12	69	1,192	102	3,044	-	3,146
Foreign exchange differences	(314)	262	(180)	(232)	(1)	204	-	203
Reclassified as assets held for sale	-	-	-	-	-	74	-	74
Disposals	(1,799)	(28)	(139)	(1,966)	-	(7,109)	-	(7,109)

At 31 December 2023	4,666	620	143	5,429	571	17,478	77	18,126
Accumulated Depreciation
At 1 January 2022	281	124	222	627	186	6,596	13	6,795
Charge for the year	1,619	270	252	2,141	161	4,129	53	4,343
Reclassification	129	-	(129)	-	-	-	-	-
Reclassified as assets held for sale	(178)	(47)	(43)	(268)	-	(105)	-	(105)
Disposals	(480)	(221)	(148)	(849)	(20)	(987)	(22)	(1,029)
Foreign exchange differences	1,765	(10)	172	1,927	-	-	-	-

At 31 December 2022	3,136	116	326	3,578	327	9,633	44	10,004
Charge for the year	1,189	137	166	1,492	131	3,584	26	3,741
Reclassified as assets held for sale	-	-	-	-	-	1	-	1
Disposals	(1,711)	(27)	(103)	(1,841)	-	(2,432)	-	(2,432)
Foreign exchange differences	(25)	254	(246)	(17)	-	-	-	-

At 31 December 2023	2,589	480	143	3,212	458	10,786	70	11,314

Net book value
At 31 December 2022	2,532	258	67	2,857	143	11,632	33	11,808

At 31 December 2023	2,077	140	-	2,217	113	6,692	7	6,812

The above property, plant and equipment and right-of-use assets includes items held as security as part of the fixed and floating charge over the assets of the Group, refer to note 16 for further details of the Group's borrowings.

The reclassifications in the prior year relate to misclassification of assets acquired as part of a business combination in 2021.

9. Intangible assets

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

Cost
At 1 January 2022 (restated)	323,624	188,860	15,277	90,314	26,199	644,274
Additions	-	-	-	-	9,966	9,966
Adjustment related to cloud computing costs	-	-	-	-	(640)	(640)
Reclassified as assets held for sale	(501)	(1,095)	(450)	(28)	-	(2,074)
Impairment	(5,401)	(2,581)	(497)	(59)	-	(8,538)
Foreign exchange differences	33,789	13,937	2,448	9,345	2,291	61,810
At 31 December 2022 (restated)	351,511	199,121	16,778	99,572	37,816	704,798
Additions	-	-	-	-	12,883	12,883
Disposals	-	-	-	-	(124)	(124)
Foreign exchange differences	(16,019)	(4,999)	(794)	(4,606)	(1,825)	(28,243)
At 31 December 2023	335,492	194,122	15,984	94,966	48,750	689,314

Accumulated amortisation
At 1 January 2022	-	70,947	2,068	23,179	14,838	111,032
Amortisation charged in year	-	20,651	3,056	12,016	7,460	43,183
Reclassified as assets held for sale	-	(182)	(105)	(7)	-	(294)
Impairment	-	(446)	(120)	(14)	-	(580)
Foreign exchange differences	-	2,703	981	1,944	615	6,243
At 31 December 2022	-	93,673	5,880	37,118	22,913	159,584
Amortisation charged in year	-	18,736	2,822	11,148	8,845	41,551
Disposals	-	-	-	-	(115)	(115)
Foreign exchange differences	-	(1,766)	(289)	(1,763)	(904)	(4,722)
At 31 December 2023	-	110,643	8,413	46,503	30,739	196,298

Carrying amount
At 31 December 2022 (restated)	351,511	105,448	10,898	62,454	14,903	545,214
At 31 December 2023	335,492	83,479	7,571	48,463	18,011	493,016

The Goodwill balances have been restated as at 1 January and 31 December 2022 relating to a prior period adjustment as described in note 22.

The above intangible assets are held as security as part of the fixed and floating charge over the assets of the Group, refer to note 16 for further details of the Group's borrowings.

Goodwill and acquisition-related intangible assets recognised have arisen from acquisitions. Internal software development reflects the recognition of development work undertaken in-house.

The amortisation charge for the year of £41.6 million (2022: £43.2 million) includes £32.7 million (2022: £35.7 million) relating to acquired intangibles. Amortisation is included within operating expenses in the Statement of Comprehensive Income.

The goodwill acquired in each of the acquisitions is not expected to be deductible for tax purposes except where arising in the US as an acquisition of a single member limited liability company, this is treated as an asset purchase for tax purposes and hence tax deductible.

Annual impairment review

Goodwill acquired in a business combination is allocated, at acquisition, to the cash generating units ('CGUs') that are expected to benefit from that business combination. Following a change in the aggregation of cash inflow and assets for identifying CGUs discussed above, the Group has eight (2022: nine) CGUs. The carrying amount of goodwill has been allocated as follows:

CGU	Goodwill		Growth rate for years 2 to 5		Post-tax discount rate
	2023	2022 (restated)	2023	2022	2023	2022
	£'000	£'000	%	%	%	%
Content & learning services	2,180	12,712	7%	2%	10.8%	10.7%
Diversity & inclusion	19,434	28,020	5%	6%	10.3%	10.6%
Software solutions	143,568	150,612	2%	4%	10.8%	10.6%
GP Strategies - Global Services	66,586	35,839	4%	5%	10.3%	10.2%
GP Strategies - Americas	87,175	106,894	4%	5%	10.3%	10.1%
GP Strategies - Europe	1,839	2,933	4%	4%	12.0%	10.2%
GP Strategies - AMEA	3,443	2,623	5%	5%	11.2%	10.2%
GP Strategies - Effective People	11,768	12,379	6%	8%	12.0%	10.2%
GP Strategies - SFA	-	-	-%	-%	-	16.8%
	335,993	352,012

During the year GP Strategies reorganised its BPO business from Americas CGU to Global Services CGU and comparatives for 2022 have been restated accordingly, in order to align to how the business is managed and monitored, but also due to product and service offerings becoming increasingly interrelated.

The Content & Services and Diversity & Inclusion CGUs have been amended in 2023 to reflect the transfer of trade and assets relating to Leo Learning and PDT to GP Strategies with effect from January 2023.

The difference between the net book value of the Goodwill generated on acquisitions as at 31 December 2023 of £335,492,000 and the £335,993,000 stated above relates to £501,000 of Goodwill relating to assets classified as held for sale (see note 20).

The Group tests goodwill annually for impairment or more frequently if there are indications that goodwill might be impaired. The recoverable amounts of the CGUs are determined from value in use calculations. The key assumptions for the value in use calculations are those regarding the discount rates (being the companies cost of capital), growth rates (based on Board approved forecasts and estimated growth rates in years 2 to 5) and future EBIT margins (which are based on past experience). The Group monitors its pre-tax Weighted Average Cost of Capital and those of its competitors using market data. In considering the discount rates applying to CGUs, the Directors have considered the relative sizes, risks and the
inter-dependencies of its CGUs. The impairment reviews use a discount rate adjusted for post-tax cash flows.

The Group prepares cash flow forecasts derived from the 2024 financial plan approved by the Board and extrapolates revenues, net margins and cash flows for the following four years based on forecast growth

rates of the CGUs. Cash flows beyond this five-year period are also considered in assessing the need for any impairment provisions. The growth rates are based on internal growth forecasts of between 2% and 7% for the first five years. The terminal rate used for the value in use calculation thereafter is 2.0%.

All CGUs have substantial headroom between the calculated value-in-use and the net book value except for the GP Strategies - SFA CGU which has been fully impaired following the Board's announcement in December 2022 regarding closure of the UK apprenticeship business in early 2023. Approximately 80% of operations within the GP Strategies - SFA CGU are being discontinued. The remaining contracts within the CGU are of uncertain longevity and management are not targeting further investment in this area. The resultant impairment charge for 2022 was £8.0 million.

Sensitivity analysis

A reduction to 0% for the terminal rate applied to the cash flows (with other assumptions remaining constant) would not result in an impairment to any CGU.

A 10% decrease in the 2024 cash flows used in the discounted cash flow model for the value-in-use calculation (with other assumptions remaining constant) would not result in an impairment to any CGU.

A 250bps increase in discount rates used in the discounted cash flow model for the value-in-use calculation (with other assumptions remaining constant) would not result in an impairment to any CGU.

A 10% decrease in the 2024 cash flows and a 250bps increase in the discount rates used in the discounted cash flow model for the value-in-use calculation (with other assumptions remaining constant) would not result in an impairment to any CGU. Our sensitivity analysis has concluded that these changes would not result in an impairment to any other CGU.

Management do not consider that any reasonably possible changes in the assumptions for the above CGUs would result in an impairment.

The forecast cash flows used within the impairment model are based on assumptions which are sources of estimation uncertainty and it is possible that significant changes to these assumptions could lead to an impairment of goodwill and acquired intangibles. Given the uncertainty surrounding the macroeconomic factors, geopolitical uncertainties and inflationary pressures on the Group's operations and on the global economy, management have considered a range of sensitivities on each of the key assumptions, with other variables held constant. The sensitivities which were each assessed in isolation include applying a 10 per cent reduction in the revenue assumption in the next financial year from the base cash flow projections, increasing the discount rate by 1% and reducing the long-term growth rates to 0%. Under these severe scenarios, the estimated recoverable amount of goodwill and acquired intangibles still exceeded the carrying value of all CGUs.

The sensitivity analysis showed that no reasonably possible change in assumptions would lead to an impairment.

Customer contracts, relationships, branding and Acquired IP

These intangible assets include the Group's aggregate amounts spent on the acquisition of industry-specific knowledge, software technology, branding and customer relationships. These assets arose from acquisition as part of business combinations.

The fair value of these assets is determined by discounting estimated future net cash flows generated by the asset where no active market for the assets exists.

The cost of these intangible assets is amortised over the estimated useful life of each separate asset of between two and twelve years.

Internal software development

Internal software development costs principally comprise expenditure incurred on major software development projects and the production of generic e-learning content where it is reasonably anticipated that the costs will be recovered through future commercial activity.

Acquired software and Intellectual Property is amortised over the estimated useful life of between two and ten years.

10. Investments accounted for using the equity method

Joint ventures

The joint venture has share capital consisting solely of ordinary shares, which are held directly by the Group. The nature of the investments is listed below.

Percentage of ordinary shares held by Group

Name of entity

Country of Registration or Incorporation

Principal activity

31 December 2023

31 December 2022

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

Brazil

Bespoke e-learning

17%

LEO Brasil Tecnologia Educacional Ltda

Since 31 December 2021 the Group's proportional ownership in LEO Brasil Tecnologia Educacional Ltda (formerly Epic Brasil Tecnologia Educacional Ltda) has been 17%.

On 5 September 2023, the Group sold its 17% investment for proceeds of R$3 million (£0.4 million), realising a gain on sale of £0.4 million.

There is no other impact on these financial statements as the investment held had been fully impaired.

National Aerospace Solutions, LLC

	Share of joint venture's net assets	Share of joint venture's net assets
	2023	2022
	£'000	£'000

Cost
At 1 January	-	1,018
Additions from acquisitions	-	-
Share of profit after tax	-	155
Disposals	-	(1,173)
Disbursements	-	-
Foreign exchange differences	-	-
At 31 December	-	-

The joint venture was acquired through the acquisition of GP Strategies and represents the Group's investment in National Aerospace Solutions, LLC, which has a Test Operations and Sustainment (TOS) Contract for the management and operations of the Arnold Engineering Development Complex in Tullahoma, Tennessee.

On 18th April 2022, the Group sold its 10% investment in National Aerospace Solutions LLC for proceeds of $3.0m (£2.3 million), realising a gain on sale of £1.2 million.

11. Trade receivables

	31 Dec	31 Dec
	2023	2022
	£'000	£'000

Trade receivables	113,080	140,951
Allowance for impairment losses	(5,118)	(4,926)
	107,962	136,025

The Group's normal trade credit term is 30-60 days. Other credit terms are assessed and approved on a case-by-case basis.

The fair value of trade receivables approximates their carrying amount, as the impact of discounting is not significant. No interest has been charged to date on overdue receivables.

In accordance with IFRS 15, the Group has disclosed trade receivable balances net of the associated contract liabilities, as outlined below. These balances will be shown net until the earlier of either the date the payment becomes due and a receivable is recognised or the date that the services are delivered and an associated contract asset is recognised.

	2023	2022
	£'000	£'000

Contract liabilities offset within trade receivables above	13,099	6,639

The Group applies the IFRS 9 simplified approach to measuring expected credit losses which uses a lifetime expected loss allowance for all trade receivables. To measure expected credit losses, trade receivables have been grouped based on shared credit risk characteristics and aging. The amounts receivables on contacts have similar risk characteristics to the trade receivables for similar types of contracts.

The expected loss rates are based on the Group's historical credit losses experienced in the previous period and then adjusted for current and forward-looking information on macroeconomic factors affecting the Group's customers.

The expected credit loss rate and the aged gross trade receivables and aged loss allowance as at 31 December are as follows:

31 December 2023	Expected Loss rate	Gross Trade receivable	Allowance for impairment losses
		£'000	£'000

Not past due	-%	97,988	297

Past due:
- Less than three months	8%	5,512	422
- Three to six months	31%	1,713	524
- Past six months	49%	7,867	3,875
Gross amount		113,080	5,118

31 December 2022	Expected Loss rate	Gross Trade receivable	Allowance for impairment losses
		£'000	£'000

Not past due	1%	117,464	1,608

Past due:
- Less than three months	5%	12,143	619
- Three to six months	7%	2,637	184
- Past six months	29%	8,707	2,515
Gross amount		140,951	4,926

The movement in the allowance for expected credit loss is as below:

	2023	2022
	£'000	£'000

At 1 January	4,926	2,543
Reclassified as assets held for sale	-	11
Additions	763	1,949
Release	(401)	-
Foreign exchange	(170)	423
At 31 December	5,118	4,926

As at 31 December 2023 trade receivables of £1,192,000 (2022: £1,091,000) had lifetime expected credit losses of the full value of the receivables. The receivables due at the end of the financial year relate to 59 customers (2022: 51 customers) and have been fully provided based on the aged profile of the debt or public information available to management indicating the customers may be unable to settle the debt.

12. Other receivables and prepayments

Current assets
	31 Dec	31 Dec
	2023	2022
	£'000	£'000

Sundry receivables	5,179	6,767
Prepayments	9,195	9,998
	14,374	16,765
Non-current assets
	31 Dec	31 Dec
	2023	2022
	£'000	£'000

Sundry receivables	2,093	1,874
	2,093	1,874

Sundry receivables include rent deposits and other sundry receivables.

13. Deferred tax assets/(liabilities)

The deferred tax balances relate to temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the Financial Statements. Deferred tax assets are recognised to the extent that it is probable that the future taxable profits will allow the deferred tax assets to be recovered.

The balances as at 1 January and 31 December 2022 have been restated as per note 22.

The movements in deferred tax assets and liabilities prior to offsetting are shown below:

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

At 1 January 2022 (restated)	5,660		1,781	9,880	10,268	27,589
Deferred tax (charge)/credit directly to the income statement	(566)		3,469	1,868	(663)	4,108
Deferred tax charged directly to equity	(1,946)		-	-	-	(1,946)
Exchange rate differences, charged directly to OCI	188		144	962	1,242	2,536
Changes in tax rate, credited to the income statement	286		(146)	104	10	254
At 31 December 2022 (restated)	3,622		5,248	12,814	10,857	32,541
Deferred tax (charge)/credit directly to the income statement	(281)		(226)	7,141	(17)	6,617
Deferred tax charged directly to equity	(520)		-	-	-	(520)
Exchange rate differences, charged directly to OCI	2		(151)	308	(531)	(372)
Changes in tax rate, credited to the income statement	4		-	307	(414)	(103)
At 31 December 2023	2,827		4,871	20,570	9,895	38,163
				Accelerated tax	Short-term timing
		Intangibles		depreciation	differences	Total
Deferred tax liabilities		£'000		£'000	£'000	£'000

At 1 January 2022 (restated)		41,474		788	472	42,734
Deferred tax credit/(charge) directly to the income statement		(7,762)		(1,292)	2,106	(6,948)
Exchange rate differences, charged directly to OCI		4,097		125	9	4,231
Changes in tax rate, charged to the income statement		(70)		(44)	61	(53)
At 31 December 2022 (restated)		37,739		(423)	2,648	39,964
Deferred tax credit/(charge) directly to the income statement		(3,958)		587	(41)	(3,412)
Exchange rate differences, charged directly to OCI		(1,362)		17	876	(469)
Changes in tax rate, charged to the income statement		1,667		(1)	11	1,677
At 31 December 2023		34,086		180	3,494	37,760

The total deferred tax assets and liabilities subject to offsetting are presented below:

	Total Deferred tax assets		Total Deferred tax liabilities
	31 Dec 2023 £'000	Restated 31 Dec 2022 £'000	31 Dec 2023 £'000	Restated 31 Dec 2022 £'000

At 31 December prior to offsetting	38,163	32,541	37,760	39,964
Offset of tax	(32,016)	(28,464)	(32,016)	(28,464)
At 31 December after offsetting	6,147	4,077	5,744	11,500

The Group has recognised £4.9 million (2022: £5.2 million) of deferred tax assets relating to carried forward tax losses, including those arising in the US of amount £3.1 million. These losses have been recognised as it is probable that future taxable profits will allow these deferred tax assets to be recovered. The Group has performed a continuing evaluation of its ability to recognise deferred tax assets on an annual basis to estimate whether sufficient future taxable income will be generated to permit their use.

Deferred tax assets of £24.6 million, relating primarily to trading losses carried forward arising in the US totalling £86.2 million (2022: £91.9 million), consisting of £31.7 million available for utilisation for the period 2027-38 and £54.5 million to be carried forward indefinitely, continue to be unrecognised. The Group has completed a US federal tax study in 2022 and US state tax study in 2023 that confirms the availability of these losses. The Group has utilised approximately £7.5 million of trading losses (2022: £12.3 million) and recognised deferred tax assets of amount £3.1 million relating to trading losses of £20.9 million that are expected to be utilised in the period 2024-2026.

14. Trade and other payables


	31 Dec	31 Dec
	2023	2022
	£'000	£'000

Trade payables	24,979	31,813
Contract liabilities	63,398	99,303
Tax and social security	15,158	22,300
Contingent consideration	20	21
Acquisition-related contingent consideration and earn-outs	145	4,876
Accruals	30,250	22,321
	133,950	180,634

The contract liabilities balance relates mainly to the Group's right to access licences, support and maintenance and hosting contracts which are recognised over the contract term as the customer receives and consumes the benefits of the service. All of the current liability contract liabilities balance at 31 December 2022 was recognised as revenue in 2023 and the current contract liabilities balance at 31 December 2023 is expected to be recognised as revenue in 2024.

The acquisition-related contingent consideration and earn-outs balance in 2023 relates to the acquisition of Learning Media Services and Patheer. The 2022 balance relates to the acquisition of PDT Global, eCreators, eThink and BreezyHR Inc ('Breezy') and were financial instruments held at fair value within the scope of IFRS 9 and were repaid during 2023. The 2023 and 2022 contingent consideration balance relates to Moodle News.

The Group has netted off £13.1 million (2022: £6.6 million) of contract liabilities against its trade receivables balances as outlined in note 11.

15. Other long-term liabilities

	31 Dec	31 Dec
	2023	2022
	£'000	£'000

Contract liabilities	405	3,517
	405	3,517

The non-current contract liabilities balance relates mainly to the Group's right to access licences, support and maintenance and hosting contracts which are recognised over the contract term as the customer receives and consumes the benefits of the service. The non-current contract liabilities balance at 31 December 2023 is expected to be recognised during 2025.

16. Borrowings

The Group has a debt facility dated 15 July 2021 with HSBC UK Bank PLC, HSBC Innovation Bank Limited, Barclays Bank PLC, Fifth Third Bank NA and The Governor and Company of the Bank of Ireland.

In March 2023, HSBC UK bank plc ("HSBC") acquired Silicon Valley Bank UK Limited ("SVB UK"). SVB UK, now known as HSBC Innovation Bank Limited, a direct wholly-owned subsidiary of HSBC, and which remains as the facility agent and security agent for the debt facility.

The facility comprises of a Term Facility A committed facility, with an original commitment of $265.0 million available to the Group until October 2025, a $50.0 million committed Revolving Credit Facility (£39.3 million at the year-end exchange rate) and a $50.0 million uncommitted accordion facility (£39.3 million at the year-end exchange rate), both available until July 2025. In addition, a 12 month extension request is available to the Group for Term Facility A and the RCF.

The term facility attracts variable interest based on LIBOR plus a margin of between 1.50% and 2.75% per annum, based on the Group's leverage to December 2022, following this it attracts SOFR plus the margin discussed above and an adjusted credit spread until repaid.

Term Facility A is repayable with quarterly instalments, starting December 2022, of $9.6 million (c £7.5 million at the year-end exchange rate) with the balance repayable on the expiry of the loan in October 2025. During the year the Group also made a voluntary additional repayment of $25 million (c £20.5 million). There were no utilisations of the Revolving Credit Facility or uncommitted accordion facility in either of the years ended 2023 or 2022.

The bank loan is secured by a fixed and floating charge over the assets of the Group and is subject to financial covenants that are tested quarterly based on a calendar year.

The financial covenants are that the Group must ensure that its interest cover ratio is at least 4.0 times and its leverage ratio does not exceed 3.0 times. The interest cover and leverage ratio is not a statutory measure and so its basis and composition may differ from other leverage measures published by other companies.

The interest cover ratio is the ratio of adjusted EBITDA, as defined in the agreement, to Finance Charges. The leverage ratio is total net debt on the last day of the relevant period to adjusted EBITDA for that relevant period. Both numerator and denominator in each calculation comprise several adjustments as defined in the debt facility agreement and as such are not directly calculable from the financial statements.

The Group was compliant with all financial covenants throughout the year and as at 31 December 2023, the Group's interest cover was 8.34 (2022: 12.90) and its leverage ratio was 0.71 (2022: 1.08).

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

	31 Dec	31 Dec
	2023	2022
	£'000	£'000

Current interest-bearing loans and borrowings	30,091	36,714
Non-current interest-bearing loans and borrowings	120,984	177,944
Current lease liabilities	4,423	5,082
Non-current lease liabilities	6,913	9,792
	162,411	229,532

Net debt reconciliation

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

	31 Dec 2023	31 Dec 2022
	£'000	£'000

Cash and cash equivalents	72,522	94,847
Borrowings:
- Revolving credit facility	-	-
- Term loan	(151,075)	(214,658)
Net debt	(78,553)	(119,811)

17. Lease liabilities

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

	2023	2022
	£'000	£'000

At 1 January	14,874	21,845
Additions	4,346	1,948
Interest expense	546	614
Lease payments (principal and interest)	(5,738)	(7,333)
Disposals	(3,204)	(2,367)
Liabilities in disposal group held for sale	(76)	(175)
Foreign exchange movements	588	342
At 31 December	11,336	14,874

The split of the lease liabilities due in less than and greater than one year is presented in note 16.

Additional profits or losses and cash flow information

	31 Dec 2023	31 Dec 2022
	£'000	£'000

Income from subleasing office premises	3	256
Total cash outflow in respect of leases in the year	(5,738)	(7,333)
Expense related to short term leases not accounted for under IFRS 16	(217)	(594)
Additions to right-of-use assets	3,147	2,062

18. Provisions


	Property provisions¹	Litigation and regulation provisions²	Onerous contract provisions³	Closure and restructuring provisions⁴	Total
	£'000	£'000	£'000	£'000	£'000

At 1 January 2022	1,075	6,489	1,024	-	8,588
Released to the income statement	(34)	(3,769)	(643)	-	(4,446)
Paid in the year	(143)	(2,260)	-	-	(2,403)
Additions	204	-	-	1,047	1,251
Foreign exchange movements	(99)	461	107	-	469
At 31 December 2022	1,003	921	488	1,047	3,459
Released to the income statement	(87)	(320)	(475)	-	(882)
Paid in the year	(37)	-	-	(1,733)	(1,770)
Additions	6	208	-	1,792	2,006
Foreign exchange movements	(65)	(43)	(13)	(45)	(166)
At 31 December 2023	820	766	-	1,061	2,647
Current	199	766	-	1,061	2,026
Non-current	621	-	-	-	621
Total provisions	820	766	-	1,061	2,647

1. The Group is party to a number of leasehold property contracts. Provision has been made for the unavoidable non-rent costs on those leases where the property is now vacant. As a result of the implementation of IFRS 16 the rental elements of certain property provisions are now included within lease liabilities. In addition, the Group has provided for dilapidation costs expected to be incurred at the end of property leases.

2. Litigation and regulation provisions relate to estimates for potential liabilities which may arise in the Group as a result of client claims and past practices. Whilst the nature of legal claims means that the timing of settlement can be uncertain, we expect all claims to be settled in the next 1 to 2 years Whilst the provisions are based on management's best estimate of the likely liability for obligations that exist at the year end date, the maximum potential exposure could be materially higher than the provisions made as there is a range of potential outcomes.

3. Onerous contract provisions relate to provisions made for certain software contracts where the unavoidable costs of meeting the obligation under the contract, exceed the economic benefits expected to be received under the contract.

4. Closure and restructuring provisions relate to redundancy costs and facility obligations in relation to the closure of the UK apprenticeship business, announced prior to 31 December 2022, given the nature of the customer relationships and quality of the offering in the business do not match the high standards elsewhere in the Group. The UK apprenticeship business ceased trading on 31 March 2023.

In 2023, the redundancy provisions relate to resizing the organisation due to a more challenging macro economic environment.

19. Dividends paid


	31 Dec	31 Dec
	2023	2022
	£'000	£'000

Final dividend paid	9,094	5,515
Interim dividend paid	3,558	3,547
	12,652	9,062

On 27 October 2023 the Company paid an interim dividend of 0.45 pence per share (2022: 0.45 pence per share) amounting to a total dividend payment of £3.6 million. The Directors propose to pay a final dividend of 1.21 pence per share for the year ended 31 December 2023, equating to a total payment in respect of the year of 1.66 pence per share (2022: 1.60 pence per share).

The proposed final dividend of 1.21 pence per share, amounting to a final dividend of c. £9.5m, is not included as a liability in these financial statements and, subject to shareholder approval, will be paid on 28 June 2024 to shareholders on the register at the close of business on 7 June 2024. The final dividend will be paid gross.

20. Assets and liabilities classified as held for sale

In December 2022, the Group decided to dispose the non-core Lorien Engineering business as soon as practicable and communicated this decision internally and to investors on 19 December 2022. This business was acquired as part of the GP Strategies acquisition in October 2021.

Following its classification as held for sale the asset group is held at the lower of fair value less costs to sell and net book value.

Effect of the assets and associated liabilities on financial position of the Group

		31 Dec	31 Dec
		2023	2022
		£'000	£'000
	Non-current assets
Goodwill		501	501
Intangible assets		1,279	1,279
	Property, plant and equipment	66	58
	Right-of-use assets	97	173
		1,943	2,011
	Current assets
	Trade receivables	5,079	5,299
	Other receivables, deposits and prepayments	136	82
	Amounts recoverable on contracts	849	977
		6,064	6,358

	Assets in disposal groups classified as held for sale	8,007	8,369

	Current liabilities
	Lease liabilities	-	77
	Trade and other payables	5,238	3,809
		5,238	3,886
	Non-current liabilities
	Lease liabilities	97	98

	Liabilities directly associated with assets in disposal groups classified as held for sale	5,335	3,984

The net assets of the Lorien Engineering business held for sale as at 31 December 2023 exclude deferred tax assets of £25,000 (2022: £39,000) and current tax liabilities of £659,000 (2022: £412,000) which remain within the Group tax position.

The Group recovered greater than the net book value from the eventual sale which occurred on 2 January (note 21).

21. Events since the reporting date

Sale of Lorien

On 2 January 2024, the Group sold the Lorien business for a cash consideration of $21.4 million (£16.8 million) on a cash and debt free basis. The net proceeds after customary adjustments are expected to be $19.7 million (£15.5 million) resulting in an estimated gain of $15.0 million (£11.8 million).

The only impact in these financial statements are costs in relation to the sale of £529,000 (note 4). These balances are subject to finalisation of the completion accounts.

There have been no other notifiable events between the 31 December 2023 and the date of this Annual Report.

22. Prior period adjustment

The Company has identified the need to make a correction to the 2022 and 2021 balance sheets where deferred tax liabilities and goodwill amounting to £15.8 million as at 31 December 2022 and £14.1 million as at 31 December 2021 should not have been recognised under IAS 12 as the book basis and tax basis of acquired intangible assets were equal for certain US acquisitions in 2016, 2020 and 2021. The adjustment reflects the tax efficient structure of the relevant acquisitions and tax amortisation deductions were taken for tax years 2020-2022 based on acquired intangible assets recognised.

The Group has restated the balance sheet and associated note disclosures as at 31 December 2022 and as outlined below. There is no material impact on the cash flow statements or net assets.

Statement of financial position adjustments	31 December 2022	Adjustments	Restated 31 December 2022
	£'000	£'000	£'000
Non-current assets
Property, plant and equipment	2,857	-	2,857
Right-of-use assets	11,808	-	11,808
Intangible assets	560,972	(15,758)	545,214
Deferred tax assets	4,084	(7)	4,077
Other receivables, deposits and prepayments	1,874	-	1,874
Investments accounted for under the equity method	-	-	-
Amounts recoverable on contracts	1,303	-	1,303
	582,898	(15,765)	567,133


Non-current liabilities
Lease liabilities	9,792	-	9,792
Deferred tax liabilities	27,265	(15,765)	11,500
Other long-term liabilities	3,517	-	3,517
Borrowings	177,944	-	177,944
Corporation tax payable	1,431	-	1,431
Provisions	1,857	-	1,857
	221,806	(15,765)	206,041

Changes to associated note disclosures

Note 9 - Intangible assets	31 December 2022	Adjustments	Restated 31 December 2022
	£'000	£'000	£'000
Goodwill - cost
At 1 January 2022	337,754	(14,130)	323,624
Reclassified as assets held for sale	(501)	-	(501)
Impairment	(5,401)	-	(5,401)
Foreign exchange differences	35,417	(1,628)	33,789
At 31 December 2022	367,269	(15,758)	351,511

Note 13 - Deferred tax assets	Share options	Tax losses	Short-term timing differences	Intangibles	Total
	£'000	£'000	£'000	£'000	£'000

At 1 January 2022	5,660	1,781	9,880	5,237	22,558
Deferred tax (charge)/credit directly to the income statement	(566)	3,469	1,868	(923)	3,848
Deferred tax charged directly to equity	(1,946)	-	-	-	(1,946)
Exchange rate differences, charged directly to OCI	188	144	962	650	1,944
Changes in tax rate, credited to the income statement	286	(146)	104	(25)	219
At 31 December 2022	3,622	5,248	12,814	4,939	26,623

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

At 1 January 2022	-	-	-	5,031	5,031
Deferred tax (charge)/credit directly to the income statement	-	-	-	260	260
Deferred tax charged directly to equity	-	-	-	-	-
Exchange rate differences, charged directly to OCI	-	-	-	592	592
Changes in tax rate, credited to the income statement	-	-	-	35	35
At 31 December 2022	-	-	-	5,918	5,918

Restated Deferred Tax Assets	Share options	Tax losses	Short-term timing differences	Intangibles	Total
	£'000	£'000	£'000	£'000	£'000

At 1 January 2022 (restated)	5,660	1,781	9,880	10,268	27,589
Deferred tax (charge)/credit directly to the income statement	(566)	3,469	1,868	(663)	4,108
Deferred tax charged directly to equity	(1,946)	-	-	-	(1,946)
Exercise of share options	-	-	-	-	-
Exchange rate differences, charged directly to OCI	188	144	962	1,242	2,536
Changes in tax rate, credited to the income statement	286	(146)	104	10	254
At 31 December 2022 (restated)	3,622	5,248	12,814	10,857	32,541

Note 13 - Deferred tax liabilities		Accelerated tax	Short-term timing
	Intangibles	depreciation	differences	Total
	£'000	£'000	£'000	£'000

At 1 January 2022	51,235	127	472	51,834
Deferred tax credit/(charge) directly to the income statement	(9,900)	585	2,106	(7,209)
Exchange rate differences, charged directly to OCI	5,206	51	9	5,266
Changes in tax rate, charged to the income statement	-	(148)	61	(87)
At 31 December 2022	46,541	615	2,648	49,804

Adjustments to deferred tax liabilities		Accelerated tax	Short-term timing
	Intangibles	depreciation	differences	Total
	£'000	£'000	£'000	£'000

At 1 January 2022	(9,761)	661	-	(9,100)
Deferred tax credit/(charge) directly to the income statement	2,138	(1,877)	-	261
Exchange rate differences, charged directly to OCI	(1,109)	74	-	(1,035)
Changes in tax rate, charged to the income statement	(70)	104	-	34
At 31 December 2022	(8,802)	(1,038)	-	(9,840)

Restated Deferred Tax Liabilities		Accelerated tax	Short-term timing
	Intangibles	depreciation	differences	Total
	£'000	£'000	£'000	£'000

At 1 January 2022 (restated)	41,474	788	472	42,734
Deferred tax credit/(charge) directly to the income statement	(7,762)	(1,292)	2,106	(6,948)
Exchange rate differences, charged directly to OCI	4,097	125	9	4,231
Changes in tax rate, charged to the income statement	(70)	(44)	61	(53)
At 31 December 2022 (restated)	37,739	(423)	2,648	39,964

The impact on the 31 December 2021 balance sheet is to reduce Goodwill by £14.1 million (note 9), reduce deferred tax liabilities prior to offsetting £9.1 million and increase deferred tax asset of £5.0 million prior to offsetting (note 13). After offsetting, the increase in deferred tax assets was £14.1m with no corresponding change in the deferred tax liability. There is no material impact on net assets, cash flow or reserves in 2021.

Glossary

Alternative Performance Measures

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

	Closest equivalent IFRS measure	Reconciling items to IFRS measure	Definition and purpose
Income Statement Measures
Adjusted EBIT	Operating profit	Adjusting items	Adjusted EBIT excludes adjusting items. A reconciliation from Adjusted EBIT to Operating profit is provided in the Consolidated statement of comprehensive income.
Adjusting items	None	Refer to definition	Items which are not considered part of the normal operating costs of the business, are separately disclosed because of their size, nature or incidence are treated as adjusting. The Group believes the separate disclosure of these items provides additional useful information to users of the financial statements to enable a better understanding of the Group's underlying financial performance. An explanation of the nature of the items identified as adjusting is provided in note 4 to the financial statements.
SaaS and long-term contracts	Revenue	Refer to note 3	Recurring revenue is defined as the revenue streams of the Group that are predictable and expected to continue into the future upon customer renewal.
Transactional	Revenue	Refer to note 3	Non-recurring revenue is defined as the revenue streams of the Group that arise from one-off fees or services that may or may not happen again.
Balance Sheet Measures
Net cash or debt	None	Refer to note 16	Net cash / debt is defined as Cash and cash equivalents and short-term deposits, less Bank overdrafts and other current and non-current borrowings. Lease liabilities are excluded from net debt. A reconciliation is provided in note 16 to the financial statements.
Total Equity per share	None	Refer to definition	Calculated as Total Equity at the end of the period/year divided by the number of shares on issue at the end of the period/year, The shares on issue at 31 December 2022 were 789,824,841 and 791,160,022 at 31 December 2023.
Cash Flow Measures
Adjusted operating cash flow	None	Refer to definition	Cash flow in the period after accounting for operating activities and capital expenditure.
Cash conversion	None	Refer to definition	Adjusted operating cash flow as a percentage of Adjusted EBIT.
Free cash flow	None	Refer to definition	Cash flow in the period after accounting for operating activities, investing activities, lease payments, interest and tax.

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