LEARNING TECHNOLOGIES GROUP PLC

Earnings Release • Sep 17, 2024

National Storage Mechanism | Additional information RNS Number : 4170E Learning Technologies Group PLC 17 September 2024 17 September 2024 Learning Technologies Group plc HALF YEAR RESULTS 2024 Healthy profit growth and strong cash generation Continued challenging macro backdrop Learning Technologies Group plc, a global market leader in digital learning and talent management, announces half year results for the six months ended 30 June 2024. All figures relate to that period unless otherwise stated. Strategic and operational highlights ��� Resilient performance in a tough macroeconomic environment. ��� SaaS and long-term contracts account for 76% of total revenues (H1 2023: 72%)1. ��� All major clients above $5 million annual revenue that were up for renewal in H1 2024 were successfully renewed and strong growth in LATAM and Leadership divisions of GP Strategies. ��� GP Strategies profits more than doubled in the three years since acquisition, reflecting margin progression and operational improvement actions. ��� Completed the sale of VectorVMS ("Vector") for $50 million as part of ongoing initiatives to simplify our portfolio and sharpen focus on learning and talent development. ��� Increased investment in AI product innovation including GP's Content AIQ Learning Platform, Human+ AI Learning Series, Rustici Generator and Bridge Learn and Develop. Early signs of customer uptake are encouraging. Financial highlights ��� Organic constant currency revenue down 3.8% to ��250.3 million, with the subdued macro backdrop affecting overall spending on learning and talent development activities, particularly in transactional and project work and softness in SaaS subscriptions: ��� Content & Services down 2.9%; ��� Software and Platforms down 5.9%. ��� Continued growth in profits and margin progression on a like-for-like basis2: ��� Adjusted EBIT up 5% to ��43.3 million. ��� Adjusted EBIT margin increased to 17.3% (H1 2023: 15.3%) as the Group benefits from the successful commercial transformation of GP Strategies and focus on cost optimisation. ��� Statutory operating profit increased 65% to ��38.3 million. ��� Strong cash performance with cash conversion of 70%3 (H1: 65%). ��� Robust balance sheet with net debt as at 30 June of ��57.5 million, reduced to c.��1 million at 30 August 2024 following the disposal of Vector. ��� Voluntary debt repayment of $25 million in July 2024. US regulatory update ��� GP Strategies continues to be in constant dialogue with DCSA (Defense Counterintelligence and Security Agency), and is making good progress on resolving the issues pertaining to certain approvals, however there is more work to be done. ��� A new subsidiary, solely focused on all forms of US Government contracts, is in the process of being established. It is expected to become operational in H1 2025 and has applied to be eligible to work on new classified contracts. ��� No existing classified contracts are due for renewal imminently and the value of the contracts is not material in the context of total Group revenue and profit. Dividend ��� The Board is pleased to declare an interim dividend of 0.45 pence per share (H1 2023: 0.45 pence). Current trading and outlook ��� The Group previously expected revenue to be in the range of ��480 million to ��500 million and adjusted EBIT to be in the range of ��88 to ��93 million for FY 2024 (adjusting for the completion of the sale of Vector on 1 July). This range was based on an average GBP:USD rate of 1.26 for H2 2024. ��� Based on an average GBP:USD rate of 1.31 for H2, the ranges adjust to ��473 to ��493 million of revenues and adjusted EBIT of ��86 to ��91 million for FY 2024 (adjusting for the completion of the sale of Vector on 1 July). ��� The Board expects the Group to be towards the bottom of the range given current trading, in particular at GP Strategies. ��� The Board is focused on continuing to drive efficiencies whilst actively managing the portfolio to support a return to organic growth once market conditions improve. Jonathan Satchell, Chief Executive Officer of Learning Technologies Group, said: "LTG has delivered a resilient performance, with growth in adjusted EBIT of 5% on a like for like basis, and strong cash performance in a macroeconomic backdrop which remains challenging. Whilst the lack of revenue growth is disappointing, the structural drivers of the learning and talent development market remain intact and support our belief that LTG will return to growth when market conditions improve." Financial summary: Continuing ��m unless otherwise stated H1 2024 H1 2023 Change Revenue 250.3 284.6 (12)% Revenue like-for-like4 250.3 268.2 (7)% Organic constant currency (3.8)% 0.1% Software & Platforms constant currency (5.9)% (4.7)% Content & Services organic constant currency (2.9)% 1.8% SaaS & long-term contracts 76% 72% Adjusted EBIT 43.3 43.1 0.5% Adjusted EBIT margin 17.3% 15.1% +220bps Adjusted EBIT like-for-like2 43.3 41.1 +5% Adjusted EBIT margin like-for-like2 17.3% 15.3% +200bps Statutory operating profit 38.3 23.2 +65% Statutory PBT 34.0 16.5 106% Adj. Diluted EPS (pence) 3.496 3.293 6% Basic EPS (pence) - continuing & discontinued 3.363 1.376 144% Net Debt / (Cash) 57.5 108.4 (47)% Dividend (pence) 0.45 0.45 0% NOTES 1. Proportion of total revenues that are SaaS or long-term contracts increased to 76% although there was a slight decline in revenue in absolute terms to ��191.4 million. 2. Excluding TTI Global Staffing contracts and Lorien Engineering disposed of in 2023 & 2 Jan 2024 respectively, at 1.23 average H1 2023 USD/GBP FX. 3. Adjusted operating cash flow as a percentage of adjusted EBIT. Adjusted operating cashflow is cashflow in the period after accounting for operating activities and capital expenditure. 4. Excluding TTI Global Staffing contracts and Lorien Engineering disposed of in 2023 & 2 Jan 2024 respectively, and reclassification of pass-through revenue, at 1.23 average H1 2023 USD/GBP FX. Analyst and investor presentation: LTG will host an analyst and investor webcast at 09:30 today, 17 September 2024. The registration link can be found below: https://attendee.gotowebinar.com/register/7598785774527469662 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. Chief Executive Review Introduction Learning Technologies Group plc is a global market leader in learning and talent technologies and services. Our purpose is helping organisations to transform through their people. Our portfolio is diversified including businesses that provide services, content, software and platforms to the learning and talent development market. Our clients include large, medium and small corporates as well as educational institutions, with a concentration in North America where we derive the majority of our revenue. We believe our people, scale, diversification and holistic offering are differentiating features within an industry that is both large and fragmented. Our strategy has three core pillars including (i) grow and strengthen our existing businesses, (ii) operate more efficiently and (iii) actively manage our portfolio. Our industry has experienced softness in growth over the last two years driven by inflation resulting in lower budgets, declining global growth and the emergence of AI causing corporations to revisit historical ways of working. However, the structural drivers of the industry remain strong as there is significant ongoing business transformation requiring training, and companies are focused on aligning skills with organisational objectives through training and technology. AI is evolving at a rapid pace, creating growing needs for training, and employee trends are towards moving jobs more frequently creating a demand for onboarding and upskilling. Despite the revenue softness, LTG continues to deliver profit growth and healthy cash flow. We continue to concentrate on simplifying our portfolio, thus sharpening our focus on learning and talent development. As part of our strategy we recently closed the divestiture of Vector for a cash consideration of $50 million on a cash and debt free basis (net proceeds c.$35m after tax and costs) which alongside a voluntary debt repayment resulted in an approximately neutral net debt position as at 30 August 2024. Notwithstanding the current challenges, we believe that LTG will return to growth driven by a combination of heightened focus on execution to take advantage of long-term structural drivers, portfolio management, acquisitions and an improvement in market conditions. H1 2024 Performance Highlights Revenues for the six months to June 2024 declined by 3.8% on a constant currency organic basis. The decline in revenue was driven by continued lower transactional and project revenues in our Content & Services division, PeopleFluent declines within Software and Platforms and a subdued macro backdrop impacting overall spending on learning and talent development activities. Group adjusted EBIT for the first half grew by 5% year over year and group adjusted margin in the first half of the year was 17.3% versus 15.3% in H1 2023 (all on a like-for-like basis). The margin progression was driven primarily by continued execution of GP Strategies' commercial transformation and efficiencies across the group. LTG is a highly cash generative business and is also delivering incremental proceeds through disposals. Net debt as at 30 August 2024 was ��1 million, following the disposal of Vector and a voluntary additional debt repayment of $25 million. Net debt as at 30 June 2024, was ��57.5 million (FY 2023: ��78.6 million) before accounting for the Vector proceeds. Our long-term services and SaaS contracts accounted for 76% of revenues in H1 2024 and provide a strong base and durability in earnings. Operational Review The Content and Services division includes GP Strategies, Affirmity and PRELOADED and comprised 73% of revenue and 60% of Adjusted EBIT in H1 2024. The Software and Platforms division reflects the results of our software companies including Rustici, Bridge, Breezy, OpenLMS, and PeopleFluent. The Software and Platforms divisions comprised 27% of revenue and 40% of Adjusted EBIT in H1 2024 Content & Services Revenue decreased by 2.9% on an organic constant currency basis. GP Strategies experienced strong growth in Leadership & Advisory and in Latin America which was offset by softness in Managed Learning Services, Learning Experience and Government divisions driven by lower activity from our existing client base and a softer pipeline. Their strategic focus remains on driving more cross-selling within divisions, gaining market share in emerging markets and sectors requiring business transformation, and AI enabling the entire business to be more productive for customers. With regard to AI initiatives, client uptake of GP Strategies new ContentAIQ platform has exceeded expectations and their leading Human + AI training program remains one of the pre-eminent programs for leadership across the Fortune 500 client base. Third parties continue to recognise GP Strategies' leading expertise and capabilities, with the firm winning 30 Brandon Hall HCM Excellence Awards in the last 12 months. PRELOADED experienced lower activity in the first half including a delay in a large contract, however clients are starting to become more active. Affirmity delivered healthy revenue growth during the period driven by continued new client wins and upselling. Software and Platforms Revenue decreased by 5.9% on an organic constant currency basis. Individual business performances were as follows: ��� Rustici : Continued strong performance in H1 2024 with a number of new AI enabled products coming to market including Rustici Generator (AI driven content processing service). ��� Bridge: Incurred higher than expected renewals churn in H1 driven by temporary factors including restructuring of sales teams and spend scrutiny. The new Bridge 'Learn and Develop' solution which brings Skills-focused, AI enabled technology derived from the Patheer acquisition, is landing very well with existing customers and new prospects. ��� Breezy: The macro impact of small medium business (SMB) hiring weakness continues to impact the business in 2024. ��� OLMS: There were lower than expected new customer bookings in H1 however underlying ARR grew in Q2. The new leadership team has conducted a thorough review resulting in a full understanding of the challenges and is initiating many positive strategic changes. ��� PeopleFluent: Renewals churn was higher than expectations. They are launching a new product enhancement on Skills and AI called Stories which will address key perceived deficiencies in the Learning Product and we expect this to have a positive effect on retention. Corporate Governance As previously announced, Simon Boddie was appointed as Senior Independent Director with effect from 8 July 2024. I thank him for his continued support to me and the executive team. GP Strategies Regulatory Update As a US company that performs work for the US Government, GP Strategies requires certain approvals and is subject to restrictions intended to protect classified information. In July 2024, LTG was notified by GP Strategies of the invalidation ("temporary suspension") of the eligibility for GP to work on new classified contracts. The GP executive team continues to be in constant dialogue with the DCSA (Defense Counterintelligence and Security Agency) and is making good progress on resolving the issues pertaining to certain approvals, with full resolution our key objective. A new subsidiary, solely focused on all forms of federal US Government contracts, is in the process of being established. It is expected to become operational in H1 2025 and has applied to be eligible to work on new classified contracts. GP Strategies continues to work on existing classified contracts, however one customer has paused their contract which has a revenue impact of c.$200k in 2024. No other contracts are due for renewal imminently, and the value of the contracts is not material in the context of total Group revenue and profit. Dividend On the 28th of June 2024, the Company paid a final dividend of 1.21 per share, giving a total dividend for 2023 of 1.66 pence per share, up 3.8% over 2022. The Board is pleased to declare an interim dividend of 0.45 pence per share (H1 2023: 0.45 pence per share). This dividend will be paid by 28 October 2024 to all shareholders on the register as at 4 October 2024. Current Trading and Outlook The Group previously expected revenue to be in the range of ��480 to ��500 million and adjusted EBIT to be in the range of ��88 to ��93 million for FY 2024 (adjusting for the completion of the sale of Vector on 1 July). This range was based on an average GBP:USD rate of 1.26 for H2 2024. Based on an average GBP:USD rate of 1.31 for H2, the ranges adjust to ��473 to ��493 million of revenue and adjusted EBIT of ��86 to ��91 million for FY 2024 (adjusting for the completion of the sale of Vector on 1 July). The Board expects the Group to be towards the bottom of the range given current trading, in particular at GP Strategies. The Board is focused on continuing to drive efficiencies whilst actively managing the portfolio to support a return to organic growth once market conditions improve. Jonathan Satchell Chief Executive 17 September 2024 Chief Financial Officer's Review In the six months ended 30 June 2024, in a challenging macroeconomic climate with a weaker US dollar, revenues for continuing operations were ��250.3 million, reflecting a 3.8% organic constant currency decline. On a reported basis, revenue from continuing operations decreased 12% from ��284.6 million. The Group has experienced resilience in SaaS and long-term contracts versus project-related and transactional revenue with the proportion of this category reflecting 76% of Group revenue from 72% in H1 2023. Revenue in Content & Services decreased 5.9% to ��183.7 million on a like-for-like basis1 and 13% on a reported basis (H1 2023: ��211.5 million), with the division now accounting for 73% of Group revenue (H1 2023: 74%). Organic constant currency revenue declined by 2.9% (H1 2023: 1.8% growth), originating in GP Strategies and PRELOADED, which was partially offset by growth in Affirmity. Long-term contracts accounted for 70% of the division's revenue, an increase from 65% in H1 2023. GP Strategies H1 performance reflects continued softness in transactional and project-related work, alongside a lower number of learners in some Managed Learning Service contracts, partially offset by strong growth in LATAM and Leadership divisions. GP Strategies also continued to benefit from the commercial transformation strategy with year on year margin improvements. PRELOADED revenue experienced slower than expected sales conversion, and Affirmity revenue benefitted from growth predominately in long-term contacts. Revenue in Software & Platforms decreased 9% to ��66.6 million (H1 2023: ��73.1 million) with the division representing 27% of Group revenue (H1 2023: 26%). On a constant currency basis Software & Platforms declined 5.9% (H1 2023: 4.7% decline) driven by the structural decline in PeopleFluent, lower revenue in OpenLMS due to fewer large services deals with partners and business migrations, the continued reduction in Reflektive revenue driven by primarily technology sector customer churn, and some slightly higher churn and lagging renewals within Bridge. In Breezy, we continue to see stability in SaaS revenues, but challenges remain in transactional revenues. These challenges were partially offset by continued strong growth in Rustici due to higher utilisation of its products. Adjusted EBIT on a like-for-like basis increased 5% to ��43.3 million from ��41.1 million with a resulting adjusted EBIT margin of 17.3% up from 15.3% in H1 2023 driven primarily by cost control and continued focus on the successful commercial transformation programme within GP Strategies, offset by lower revenue as outlined above. Reported adjusted EBIT for continuing operations was broadly in line with prior year of ��43.1 million. Adjusted EBIT margin for continuing operations in the Content & Services division at 14.2% (H1 2023: 11.7%) was driven by the benefits of GP's commercialisation strategy supplemented by the release of prior year share-based payment costs resulting from leavers and prior year performance criteria not being met. Software & Platforms adjusted EBIT margin increased from 25.1% in H1 2023 to 25.8% due to cost reduction and lower share-based payment costs. The Group reported a 65% increase in statutory operating profit of ��38.3 million (H1 2023: ��23.2 million) which is stated after amortisation of acquired intangibles, various transaction costs and earn-out charges, profit or loss on disposal of fixed and non-core assets, cloud computing and integration costs. Amortisation of acquired intangibles decreased to ��15.9 million (H1 2023: ��16.6 million). Acquisition earn-out charges decreased to ��0.2 million (H1 2023: ��1.1 million). Contingent consideration arrangements are in place for eCreators & PDT and are dependent on challenging incremental revenue growth targets. Net profit on disposal of fixed assets was ��0.1 million (H1 2023 loss: ��0.9 million). Profit on disposal of non-core asset was ��12.3 million (H1 2023: nil), relating to the sale of the Lorien business on 2 January 2024. Cloud computing costs were ��0.2 million (H1 2023: ��0.1 million). Costs of integration decreased to ��0.4 million (H1 2023: ��1.2 million) related to the final stages of the integration of GP Strategies including legal costs related to the US regulatory issue. Disposal costs for H1 were ��0.8 million (H1 2023: ��0.1 million) related to the disposal of Vector completed 1 July and active portfolio management. For further details of the items excluded from statutory operating profit see note 6. Net finance expenses of ��4.3 million (H1 2023: ��6.7 million) include interest on borrowings of ��5.7 million (H1 2023: ��7.0 million), ��0.2 million (H1 2023: ��0.3 million) relating to the Group's leases under IFRS 16, and ��1.6 million interest receivable (H1 2023: ��0.5 million). The Group reported a profit before tax of ��34.0 million for the six months ended 30 June 2024 (H1 2023: ��16.5 million). The tax charge of ��7.4 million (H1 2023: ��4.5 million) is primarily driven by applying UK and international tax rates to associated results after adjustments for non-taxable disposals, as well as the derecognition of deferred tax assets related to prior year losses in Puerto Rico due to declining operations in this territory (note 4). Basic earnings per share for continuing and discontinued operations in H1 2024 was 3.363 pence (H1 2023: 1.376 pence). Adjusted diluted earnings per share for continuing operations as set out in Note 9 was 6% up on the prior year at 3.496 pence (H1 2023: 3.293 pence) reflecting slightly higher adjusted operating profit, lower net interest costs and slightly higher number of shares including the potential dilutive impact of share options. Gross cash of ��78.5 million and net debt of ��57.5 million excluding ��8.8 million of lease liabilities, at 30 June 2024 compares with gross cash of ��72.5 million and net debt of ��78.6 million, excluding ��11.3 million of lease liabilities, at 31 December 2023. The covenant net debt / adjusted EBITDA ratio was 0.5x in June 2024 (0.7x in December 2023). A further voluntary repayment of $25.0 million (��19.5 million) was paid on 10 July using part of the Vector sale proceeds (note 17). Cash generated from operations was strong at ��37.7 million (H1 2023: ��32.6 million) as we continue to manage working capital and reduce property leases, and net cash flow from operating activities was ��27.1 million (H1 2023: ��26.7 million). Free cash flow3 was ��29.9 million (H1 2023: ��5.6 million) as set out below. ��m H1 2024 H1 2023 Variance Statutory operating profit 38.2 23.2 15.0 Adjusting items 5.1 19.9 (14.8) Adjusted EBIT 43.3 43.1 0.2 Depreciation & Amortisation 6.9 7.1 (0.2) Share-based payment charges 0.9 3.1 (2.2) Dec / (Inc) in working capital2 (12.1) (13.3) 1.2 Capital expenditure (6.3) (7.2) 0.9 Lease liabilities (2.3) (3.2) 0.9 Other (0.1) (1.6) 1.5 Adjusted operating cash flow3 30.3 28.0 2.3 Cash Conversion3 70% 65% 5% pts Interest paid (6.5) (11.1) 4.6 Interest received 1.6 0.5 1.1 Tax paid (10.6) (5.9) (4.7) Integration & disposal costs (1.1) (1.2) 0.1 Earnout & contingent consideration (0.1) (4.7) 4.6 Proceeds from asset sale 16.3 - 16.3 Free cash flow3 29.9 5.6 24.3 1 Excluding Lorien and TTI contracts disposed of in 2023, and reclassification of pass-through revenue, at 1.23 average H1 2023 USD/GBP FX. 2 Excludes integration & transaction costs 3 Alternative Performance Measure (APM) term defined and explained in the Glossary Adjusted operating cash flow was ��2.3 million higher than H1 2023 primarily reflecting lower working capital, capital expenditure and lease payments, offset by lower share-based payment charges. Cash conversion was 70%, an improvement from 65% in H1 2023. Net interest payments decreased to ��4.9 million from ��10.6 million, following ��4.5m paid in H1 2023 related to interest costs from 2022 payable in January 2023 as the loan was rolled for 6 months to mitigate interest rate rises in H2 2022. Tax payments increased to ��10.6 million (H1 2023: ��5.9 million) including a ��3.6 million 2023 catch-up. Integration costs relate to the GP Strategies acquisition as we enter into the final stages of this process. ��0.1m earnout payment relates to Learning Media Services in H1 2024 (H1 2023: Breezy and eCreators). Proceeds from asset sale were ��16.3 million in H1 2024 (H1 2023: ��nil), from the disposal of Lorien Engineering Solutions. Net assets increased to ��443.7 million at 30 June 2024 (31 December 2023: ��427.2 million) and total equity per share3 increased from 54.0 pence per share to 56.1 pence per share. On 1 July 2024, Learning Technologies Group plc successfully completed on the sale of Vector to PIXID Group for a cash consideration of $50 million on a cash and debt free basis (note 22). Vector is a leading vendor management platform for contingent labour with operations predominantly in North America and also in the UK. By way of background, Vector was acquired as part of the $150 million PeopleFluent acquisition in 2018. For the full year ended 31 December 2023, Vector generated revenue and Adjusted EBIT of $11.4m and $7.1 million respectively. The sale of Vector is part of LTG's announced strategy to actively manage the portfolio, sharpening our focus on learning and talent development. The sale of Vector follows the completed disposals of TTi Global staffing contracts in 2023 and Lorien Engineering Solutions in January 2024. Kath Kearney-Croft CFO 17 September 2024 Consolidated statement of comprehensive income Six months to 30 June 2024 Six months to 30 June 2023 Year to 31 Dec 2023 Note ��'000 ��'000 ��'000 Revenue 3 250,328 284,582 562,305 Operating expenses (211,164) (258,320) (499,642) Share-based payment charge (906) (3,081) (4,381) Profit on sale of joint venture - - 425 Operating profit 38,258 23,181 58,707 Adjusted EBIT 43,347 43,115 98,539 Adjusting items included in Operating profit 6 (5,089) (19,934) (39,832) Operating profit 38,258 23,181 58,707 Finance expenses 7 (5,927) (7,243) (14,132) Finance income 7 1,644 539 1,032 Profit before taxation from continuing operations 33,975 16,477 45,607 Income tax charge 4 (7,366) (4,472) (13,015) Profit after taxation from continuing operations 26,609 12,005 32,592 Loss on discontinued operations, net of tax 5 - (1,125) (3,138) Profit for the period/year 26,609 10,880 29,454 Profit for the period/year attributable to the owners of the parent 26,609 10,880 29,454 Other comprehensive income: Exchange differences on translating foreign operations (1,489) (11,920) (20,169) Total comprehensive profit / (loss) for the period/year 25,120 (1,040) 9,285 Earnings per share from continuing operations Basic (pence) 9 3.363 1.518 4.121 Diluted (pence) 9 3.260 1.476 3.985 Adjusted earnings per share Basic (pence) 9 3.607 3.387 8.069 Diluted (pence) 9 3.496 3.293 7.803 Earnings per share from continuing and discontinued operations Basic (pence) 9 3.363 1.376 3.724 Diluted (pence) 9 3.260 1.338 3.601 Adjusted earnings per share Basic (pence) 9 3.607 3.253 7.680 Diluted (pence) 9 3.496 3.163 7.427 Consolidated statement of financial position Note 30 June 2024 ��'000 30 June 2023 (restated) ��'000 31 Dec 2023 ��'000 NON-CURRENT ASSETS Property, plant and equipment 11 2,013 2,433 2,217 Right-of-use assets 11 5,414 10,449 6,812 Intangible assets 10 461,098 512,059 493,016 Deferred tax assets 15 8,116 7,335 6,147 Other receivables, deposits and prepayments 1,601 2,145 2,093 478,242 534,421 510,285 CURRENT ASSETS Trade receivables 12 92,751 105,768 107,962 Other receivables, deposits and prepayments 13 15,092 14,620 14,374 Amounts recoverable on contracts 30,746 39,349 25,757 Inventory 1,313 2,403 1,260 Corporation tax 2,863 - 5,155 Cash and cash equivalents 14 78,503 78,132 72,522 Restricted cash balances 14 2,672 2,303 2,389 223,940 242,575 229,419 Assets in disposal groups classified as held for sale 19 22,259 6,695 8,007 TOTAL ASSETS 724,441 783,691 747,711 CURRENT LIABILITIES Lease liabilities 2,686 4,162 4,423 Trade and other payables 16 120,317 141,582 133,950 Borrowings 17 30,115 31,220 30,091 Provisions 18 1,038 1,621 2,026 Corporation tax 7,856 5,468 8,237 ESPP scheme liability 991 881 995 163,003 184,934 179,722 NON-CURRENT LIABILITIES Lease liabilities 6,152 8,486 6,913 Deferred tax liabilities 15 4,647 8,436 5,744 Other long-term liabilities 80 1,466 405 Borrowings 17 105,912 155,289 120,984 Corporation tax payable - 763 756 Provisions 18 491 534 621 117,282 174,974 135,423 Liabilities directly associated with assets in disposal groups classified as held for sale 19 413 4,137 5,335 TOTAL LIABILITIES 280,698 364,045 320,480 NET ASSETS 443,743 419,646 427,231 EQUITY Share capital 2,967 2,967 2,967 Share premium account 318,698 318,698 318,698 Merger relief reserve 31,983 31,983 31,983 Reverse acquisition reserve (22,933) (22,933) (22,933) Share based payment reserve 19,777 17,674 18,974 Foreign exchange translation reserve 4,071 13,809 5,560 Accumulated retained earnings 89,180 57,448 71,982 TOTAL EQUITY 443,743 419,646 427,231 Consolidated statement of changes in equity Share capital Share Premium Merger relief reserve Reverse acquisition reserve Share based payments reserve Foreign exchange reserve Retained earnings Total equity ��'000 ��'000 ��'000 ��'000 ��'000 ��'000 ��'000 ��'000 Balance at 1 January 2023 2,962 318,183 31,983 (22,933) 14,714 25,729 55,662 426,300 - - - - - - - - Profit for period - - - - - - 10,880 10,880 Exchange differences on translating foreign operations - - - - - (11,920) - (11,920) Total comprehensive income for the period - - - - - (11,920) 10,880 (1,040) Issue of shares net of share issue costs 5 515 - - - - - 520 Share based payment charge / credited to equity - - - - 3,081 - - 3,081 Distributions in respect of cancelled share options - - - - (121) - - (121) Tax credit on share options - - - - - - - - Transfer on exercise and lapse of options - - - - - - - - Dividends paid - - - - - - (9,094) (9,094) Transactions with owners 5 515 - - 2,960 (9,094) (5,614) Balance at 30 June 2023 2,967 318,698 31,983 (22,933) 17,674 13,809 57,448 419,646 Profit for period - - - - - - 18,574 18,574 Exchange differences on translating foreign operations - - - - - (8,249) - (8,249) Total comprehensive income for the period - - - - - (8,249) 18,574 10,325 Issue of shares net of share issue costs - - - - - - - - Reserves transfer - - - - - - - - Share based payment charge / credited to equity - - - - 1,300 - - 1,300 Tax credit on share options - - - - - - (520) (520) Transfer on exercise and lapse of options - - - - - - - - Exercise of share options through trust 38 38 Dividends paid - - - - - - (3,558) (3,558) Transactions with owners - - 1,300 - (4,040) (2,740) Balance at 31 December 2023 2,967 318,698 31,983 (22,933) 18,974 5,560 71,982 427,231 Profit for period - - - - - - 26,609 26,609 Exchange differences on translating foreign operations - - - - - (1,489) - (1,489) Total comprehensive (expense) / income for the period - - - - - (1,489) 26,609 25,120 Share based payment charge / credited to equity - - - - 906 - - 906 Distributions in respect of cancelled share options - - - - (103) - - (103) Tax credit on share options - - - - - - 158 158 Dividends paid - - - - - - (9,569) (9,569) Transactions with owners - - - - 803 - (9,411) (8,608) Balance at 30 June 2024 2,967 318,698 31,983 (22,933) 19,777 4,071 89,180 443,743 Consolidated statement of cash flows Note Six months to 30 June 2024 ��'000 Six months to 30 June 2023 ��'000 Year to 31 Dec 2023 ��'000 Cash flow from operating activities Profit before taxation 33,975 16,477 45,607 Loss before taxation from discontinued operations 5 - (1,452) (3,488) Adjustments for:- Loss on disposal of PPE and right-of-use assets (55) 893 2,163 Gain on sale of non-core business 20 (12,279) - - Share based payment charge 906 3,081 4,381 Amortisation of intangible assets 20,685 20,880 41,551 Depreciation of plant and equipment 11 628 745 1,492 Depreciation of right-of-use assets 11 1,458 2,128 3,741 Finance expense 7 188 257 518 Interest on borrowings 7 5,739 6,986 13,614 Acquisition-related contingent consideration and earn-outs 6 239 1,088 224 Payment of acquisition-related contingent consideration and earn-outs - (4,726) (4,636) Profit on sale of joint venture - - (425) Interest income 7 (1,644) (539) (1,032) Other non-cash items - - 2,000 Operating cash flow before working capital changes 49,840 45,818 105,710 Decrease in trade and other receivables 14,159 24,189 21,692 (Increase)/decrease in inventory (53) (70) 1,052 (Increase)/decrease in amount recoverable on contracts (3,903) (6,187) 8,269 Decrease in payables (22,330) (31,190) (40,581) Cash generated from operations 37,713 32,560 96,142 Income tax paid (10,572) (5,904) (16,649) Net cash flow from operating activities 27,141 26,656 79,493 Cash flow used in investing activities Purchase of property, plant and equipment (589) (490) (1,192) Development of intangible assets (5,671) (6,707) (12,883) Sale of Investment in associates or joint ventures 16,290 - 425 Net cash flow used in investing activities 10,030 (7,197) (13,650) Cash flow (used in)/from financing activities Dividends paid 8 (9,569) - (12,652) Repayment of bank loans (15,259) (15,409) (51,315) Interest paid (6,544) (11,147) (16,714) Interest received 1,644 539 1,032 Issue of ordinary share capital net of share issue costs - 521 520 Contingent consideration payments in the period (83) - - Interest paid on lease liabilities (209) (261) (546) Cash payments for the principal portion of lease liabilities (2,088) (2,977) (5,192) Net cash flow (used in)/from financing activities (32,108) (28,734) (84,867) Net increase / (decrease) in cash and cash equivalents 5,063 (9,275) (19,024) Cash and cash equivalents at beginning of the period/year 72,522 94,847 94,847 Effects of foreign exchange rate changes 918 (7,440) (3,301) Cash and cash equivalents at end of the period/year 14 78,503 78,132 72,522 Notes to the consolidated financial statements for the six months to 30 June 2024 1. General information Learning Technologies Group plc ("the Company'') and its subsidiaries (together, "the Group'') provide a range of learning and talent software and services to corporate customers. 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 3B F. The registered number of the Company is 07176993. 2. Basis of preparation The unaudited condensed consolidated interim financial information has been prepared in accordance with IAS 34 Interim Financial Reporting. They do not include all disclosures that would otherwise be required in a complete set of financial statements and should be read in conjunction with the 2023 annual report. The interim results for the six months to 30 June 2024 are unaudited and do not therefore constitute statutory accounts in accordance with Section 434 of the Companies Act 2006. Statutory accounts for the year ended 31 December 2023 have been filed with the Registrar of Companies and the auditor's report was unqualified, did not contain any statement under Section 498(2) or 498(3) of the Companies Act 2006 and did not contain any matters to which the auditors drew attention without qualifying their report. The accounting policies used in preparing the interim results are the same as those applied to the latest audited annual financial statements. Going concern 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 may be supplemented, if required, by additional drawings under the Group's committed $50.0 million revolving credit facility (RCF) which is available until October 2025; refer to note 17 for further details. The Group continues to hold a strong liquidity position as at 30 June 2024, with gross cash and cash equivalents of ��78.5 million exclusive of cash classified as held for sale (note 14 ). Net debt of ��57.5 million includes a fully drawn $265.0 million term loan which is repayable in quarterly instalments of $9.6 million commencing in December 2022 (note 17 ) (31 December 2023: gross cash was ��72.5 million and net debt was ��78.6 million). Whilst there are a number of risks to the Group's trading performance, as summarised in the 'Principal risks and uncertainties' section on pages 25-26 within the 2023 Annual Report, 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, and borrowing facilities. The Group's forecasts demonstrate it will generate profits and cash in the year ending 31 December 2024 and beyond and that the Group has 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. Going concern (continued) The Directors have concluded that it is appropriate to adopt the going concern basis of accounting in preparing the interim financial information, having undertaken a review of a reforecast for 2024 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. 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, SaaS and long-term contracts, transactional revenue, 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. 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 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 payment charges, contingent consideration and earn-outs, cloud computing configuration and customisation costs, joint venture profits, profit on sale of a joint venture and fixed asset and right-of-use asset disposal gains or losses. 3. Segment analysis Geographical information The Group's revenue from external customers and non-current assets by geographical location are detailed below. UK Europe North America Asia Pacific Rest of world Total ��'000 ��'000 ��'000 ��'000 ��'000 ��'000 Six months to 30 June 2024 Revenue from continuing operations 24,074 20,351 175,900 17,498 12,505 250,328 Revenue from discontinued operations - - - - - - Total Revenue 24,074 20,351 175,900 17,498 12,505 250,328 Non-current assets 35,992 548 417,335 15,922 329 470,126 Six months to 30 June 2023 Revenue from continuing operations 33,023 26,916 194,875 17,637 12,131 284,582 Revenue from discontinued operations - - - - - - Total Revenue 33,023 26,916 194,875 17,637 12,131 284,582 Non-current assets (restated) 29,653 900 478,812 17,270 451 527,086 Year to 31 December 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 The total non-current assets figure is exclusive of deferred tax assets in each of the periods above. The non-current assets for June 2023 have been restated due to a prior period adjustment (note 21 ). Information about reported segment revenue, profit or loss from continuing operations and total assets 30 June 2024 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 58,889 67,644 1,540 128,073 17,192 43,160 1,407 1,608 63,367 191,440 Transactional 10,468 31,017 14,124 55,609 6 30 3,243 - 3,279 58,888 Total Revenue 69,357 98,661 15,664 183,682 17,198 43,190 4,650 1,608 66,646 250,328 Depreciation & amortisation (1,874) (4,474) (6,348) Adjusted EBIT 26,146 17,201 43,347 Amortisation of acquired intangibles (7,432) (8,427) (15,859) Acquisition related adjusting items (261) (334) (595) Other adjusting items 12,101 (736) 11,365 Finance expenses (3,160) (1,123) (4,283) Profit before tax 27,394 6,581 33,975 Additions to intangible assets 534 5,137 5,671 Total Assets 531,569 192,872 724,441 30 June 2023 (restated) 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 63,853 71,275 1,507 136,635 15,191 50,249 2,246 1,958 69,644 206,279 Transactional 10,850 49,865 14,171 74,886 - 31 3,386 - 3,417 78,303 Total Revenue 74,703 121,140 15,678 211,521 15,191 50,280 5,632 1,958 73,061 284,582 Depreciation & amortisation (2,391) (3,978) (6,369) Adjusted EBIT 24,794 18,321 43,115 Amortisation of acquired intangibles (7,581) (8,995) (16,576) Acquisition related adjusting items (1,192) (1,046) (2,238) Other adjusting items (832) (288) (1,120) Finance expenses (4,983) (1,721) (6,704) Profit before tax 10,206 6,271 16,477 Additions to intangible assets 4,985 1,722 6,707 Total Assets 582,492 201,199 783,691 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 During the year ended 31 December there were 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 comparative results for the period ended 30 June 2023 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. Information about major customers In the six months to 30 June 2024 one customer within the regional services SaaS and long-term contracts under content and services accounted for ��25,843,000 of reported revenues (Six months to 30 June 2023: no customer accounted for more than 10 per cent of reported revenues). 4. Taxation Current and deferred tax for the six months to 30 June 2024 has been calculated by applying the jurisdictional statutory rates on an entity by entity basis, after adjustments for non-taxable intra-group dividend income and non-taxable disposals, to derive the Group's total income tax expense/ (credit). This is allocated to current and deferred tax as outlined below: Six months to Six months to Year to 30 June 2024 30 June 2023 31 Dec 2023 ��'000 ��'000 ��'000 Current tax: Tax on profits for the period/year 4,692 - 5,502 Adjustments in respect of prior periods / years (80) 1,449 (1,029) Foreign current tax on profits for the period / year 5,713 9,034 16,441 Total current tax 10,325 10,483 20,914 Deferred tax: Origination and reversal of temporary differences (4,028) (5,836) (12,158) Adjustments in respect of prior periods / years 1,147 (359) 2,129 Change in deferred tax rate (78) (143) 1,780 Total deferred tax (2,959) (6,338) (8,249) Income tax expense 7,366 4,145 12,665 Of the total income tax expense, ��7,366,000 relates to taxation on continuing operations (six months to June 2023 expense ��4,472,000 and year to 31 December 2023 expense ��13,015,000). 5. (Loss) / Profit on discontinued operations, net of tax In the prior periods, the discontinued operations related to the closure of non-core operations with the table below showing the results which qualified as discontinued operations and which are included in the Group Income Statement and Group Statement of Cash Flows respectively. There is no impact of the Income Statement and statement of cash flows in respect of the current period ended 30 June 2024. Six months to 30 June 2024 Six months to 30 June 2023 Year to 31 Dec 2023 ��'000 ��'000 ��'000 Revenue - - 34 Operating expenses - (1,452) (3,522) Share based payment charge - - - Operating loss - (1,452) (3,488) Adjusted EBIT - (1,389) (3,425) Adjusting items included in Operating loss Loss on disposal of fixed assets - (1) (1) Closure costs - (62) (62) Impairment of assets held for sale - - - Operating loss - (1,452) (3,488) Loss before taxation - (1,452) (3,488) Taxation - 327 350 Loss after taxation - (1,125) (3,138) Six months to 30 June 2024 Six months to 30 June 2023 Year to 31 Dec 2023 Cash flow from operating activities - (1,452) (3,488) Share based payment charges - - - Loss/(profit) on disposal of PPE, right-of-use assets and lease liabilities - - 3 Impairment of assets held for sale - - - Other - - 2,000 Decrease/(increase)in trade and other receivables - - - (Decrease/increase in payables - - - Net cash (used in) / from operating activities - (1,452) (1,485) Net cash from investing activities - - (3) Net cash flows from financing activities - - - Net cash inflow / (outflows) from discontinued operations - (1,452) (1,488) 6. Adjusting items These items are included in the 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 below. Six months to Six months to Year to 30 June 2024 30 June 2023 31 Dec 2023 ��'000 ��'000 ��'000 Adjusting items included in Operating profit: Acquisition related costs: Amortisation of acquired intangibles 15,859 16,576 32,706 Acquisition-related contingent consideration and earn-outs 239 1,088 224 Integration costs 356 1,150 2,410 Total acquisition related costs 16,454 18,814 35,340 Other adjusting items: (Profit) / Loss on disposal of fixed assets (109) 41 124 Loss on disposal of right-of-use assets 54 852 2,039 Profit on disposal of non-core asset (12,279) - - Profit on sale of joint venture - - (425) Cloud computing configuration and customization costs 214 122 292 Restructuring costs - - 2,537 Costs related to asset held for sale - - 529 Disposal costs 755 105 - Other income - - (604) Total other adjusting items (11,365) 1,120 4,492 Total adjusting items 5,089 19,934 39,832 As outlined above, the material adjustments during the period are made in respect of: - Amortisation of acquired intangibles - the cost of ��15.9 million (2023: ��16.6 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. - Acquisition-related 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. - Disposal costs relate to the fees incurred for the sale of Vector in July 2024 (note 22 ) and a non-core asset during 2023 (see note 20 ). - Integration costs - the costs of integrating acquired 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 ��0.3 million integration costs are legal and professional fees of ��0.1 million, an allocation of internal labour for employees who have worked on integration activities during the year of ��0.2 million. - Other in the year ended 31 December 2023 relates to a carve out of the external staffing business of TTI Global, part of GP Strategies, for a cash consideration of approximately $800k. This is an adjusting item due to its 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. 7. Finance expenses Six months to Six months to Year to 30 June 2024 30 June 2023 31 Dec 2023 ��'000 ��'000 ��'000 Interest on borrowings 5,739 6,986 13,614 IFRS 16 finance expense 188 257 518 Finance expense 5,927 7,243 14,132 Interest receivable (1,644) (539) (1,032) Finance income (1,644) (539) (1,032) Net finance expense 4,283 6,704 13,100 8. Dividends paid Six months to Six months to Year to 30 June 2024 30 June 2023 31 Dec 2023 ��'000 ��'000 ��'000 Final dividends paid 9,569 9,094 9,094 Interim dividend paid - - 3,558 9,569 9,094 12,652 The declared interim dividend of 0.45 pence per share, amounting to a total dividend payment of ��3.6 million, is not included as a liability in these financial statements and will be paid on 28 October 2024 to shareholders on the register at the close of business on 4 October 2024. 9. Earnings per share Six months to Six months to Year to 30 June 2024 30 June 2023 31 Dec 2023 ��'000 ��'000 ��'000 Continuing operations Basic earnings per share (pence) 3.363 1.518 4.121 Diluted earnings per share (pence) 3.260 1.476 3.985 Adjusted basic earnings per share (pence) 3.607 3.387 8.069 Adjusted diluted earnings per share (pence) 3.496 3.293 7.803 Continuing and discontinued operations Basic earnings per share (pence) 3.363 1.376 3.724 Diluted earnings per share (pence) 3.260 1.338 3.601 Adjusted basic earnings per share (pence) 3.607 3.253 7.680 Adjusted diluted earnings per share (pence) 3.496 3.163 7.427 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 period. Diluted earnings per share is calculated by adjusting the weighted average number of ordinary shares outstanding to assume conversion of all dilutive potential ordinary shares. The Company has share options that are dilutive potential ordinary shares. In order to give a better understanding of the underlying operating performance of the Group, an adjusted earnings per share 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 earnings per share is stated after the impact of the adjusting items disclosed in note 6 . 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 operations is based on the following earnings and number of shares. Six months to 30 June 2024 Six months to 30 June 2023 Year to 31 December 2023 Profit after tax Weighted average number of shares Pence per share Profit after tax Weighted average number of shares Pence per share Profit after tax Weighted average number of shares Pence per share ��'000 '000 ��'000 '000 ��'000 '000 Basic earnings per ordinary share 26,609 791,160 3.363 12,005 790,677 1.518 32,592 790,920 4.121 Effect of adjustments: Total adjusting items (see note 6 ) 5,089 19,934 39,832 Income tax (credit)/expense 7,366 4,472 13,015 Effect of adjustments 12,455 1.574 24,406 3.087 52,847 - 6.682 Adjusted profit before tax 39,064 36,411 85,439 - - Tax impact after adjustments (10,528) (1.331) (9,632) (1.218) (21,622) - (2.734) Adjusted basic earnings per ordinary share 28,536 791,160 3.607 26,779 790,677 3.387 63,817 790,920 8.069 Effect of dilutive potential ordinary shares: Share options - 25,097 (0.111) - 22,509 (0.094) - 26,947 (0.266) Adjusted diluted earnings per ordinary share 28,536 816,257 3.496 26,779 813,186 3.293 63,817 817,867 7.803 Diluted earnings per ordinary share attributable to the owners of the parent 26,609 816,257 3.260 12,005 813,186 1.476 32,592 817,867 3.985 The calculation of earnings per share from continuing and discontinued operations is based on the following earnings and number of shares. Six months to 30 June 2024 Six months to 30 June 2023 Year to 31 December 2023 Profit after tax Weighted average number of shares Pence per share Profit after tax Weighted average number of shares Pence per share Profit after tax Weighted average number of shares Pence per share ��'000 '000 ��'000 '000 ��'000 '000 Basic earnings per ordinary share 26,609 791,160 3.363 10,880 790,677 1.376 29,454 790,920 3.724 Effect of adjustments: Total adjusting items (see note 6 ) 5,089 19,997 39,895 - - Income tax (credit)/expense 7,366 4,145 12,665 - - Effect of adjustments 12,455 1.574 24,142 - 3.053 52,560 - 6.645 Adjusted profit before tax 39,064 35,022 - - 82,014 - - Tax impact after adjustments (10,528) (1.331) (9,305) - (1.177) (21,272) - (2,690) Adjusted basic earnings per ordinary share 28,536 791,160 3.607 25,717 790,677 3.253 60,742 790,920 7.680 Effect of dilutive potential ordinary shares: Share options - 25,097 (0.111) - 22,509 (0.090) - 26,947 (0.253) Adjusted diluted earnings per ordinary share 28,536 816,257 3.496 25,717 813,186 3.163 60,742 817,867 7.427 Diluted earnings per ordinary share attributable to the owners of the parent 26,609 816,257 3.260 10,880 813,186 1.338 29,454 817,867 3.601 10. Intangible assets Goodwill Customer contracts and relationships Branding Acquired IP Internal software develop-ment Total ��'000 ��'000 ��'000 ��'000 ��'000 ��'000 Cost At 1 January 2023 (restated) 351,511 199,121 16,778 99,572 37,816 704,798 Additions - - - - 6,707 6,707 Foreign exchange differences (13,381) (4,354) (595) (3,883) (1,101) (23,314) At 30 June 2023 (restated) 338,130 194,767 16,183 95,689 43,422 688,191 Additions - - - - 6,176 6,176 Disposal - - - - (124) (124) Foreign exchange differences (2,638) (645) (199) (723) (724) (4,929) At 31 December 2023 335,492 194,122 15,984 94,966 48,750 689,314 Additions - - - - 5,671 5,671 Reclassification of assets held for sale (13,181) (26,601) - (1,986) (2,972) (44,740) Foreign exchange differences 2,211 1,163 78 621 349 4,422 At 30 June 2024 324,522 168,684 16,062 93,601 51,798 654,667 Accumulated amortisation At 1 January 2023 - 93,673 5,880 37,118 22,913 159,584 Amortisation charged in period - 9,367 1,424 5,785 4,304 20,880 Foreign exchange differences - (2,080) (196) (1,474) (582) (4,332) At 30 June 2023 - 100,960 7,108 41,429 26,635 176,132 Amortisation charged in period - 9,369 1,398 5,363 4,541 20,671 Disposal - - - - (115) (115) Foreign exchange differences - 314 (93) (289) (322) (390) At 31 December 2023 - 110,643 8,413 46,503 30,739 196,298 Amortisation charged in period - 9,147 1,387 5,323 4,828 20,685 Reclassified as assets held for sale - (20,505) - (1,986) (1,978) (24,469) Foreign exchange differences - 564 11 304 176 1,055 At 30 June 2024 - 99,849 9,811 50,144 33,765 193,569 Carrying amount At 30 June 2023 (restated) 338,130 93,807 9,075 54,260 16,787 512,059 At 31 December 2023 335,492 83,479 7,571 48,463 18,011 493,016 At 30 June 2024 324,522 68,835 6,251 43,457 18,033 461,098 The Goodwill balances have been restated as at 1 January 2023 and 30 June 2023 relating to a prior period adjustment as described in note 21 . 11. Property, Plant, equipment and right-of-use assets Right of Use Assets Computer equipment Fixtures and fittings Leasehold Improvement Total Computer equipment Property Motor vehicles Total ��'000 ��'000 ��'000 ��'000 ��'000 ��'000 ��'000 ��'000 Cost At 1 January 2023 5,668 374 393 6,435 470 21,265 77 21,812 Additions 415 12 63 490 - 1,316 - 1,316 Foreign exchange differences (154) 262 (121) (13) (2) (232) - (234) Disposals (1,706) (23) (142) (1,871) - (313) - (313) At 30 June 2023 4,223 625 193 5,041 468 22,036 77 22,581 Additions 696 - 6 702 102 1,728 - 1,830 Foreign exchange differences (160) (1) (58) (219) 1 436 - 437 Disposals (93) (4) 2 (95) - (6,722) - (6,722) At 31 December 2023 4,666 620 143 5,429 571 17,478 77 18,126 Additions 588 1 - 589 - 240 91 331 Foreign exchange differences (36) 4 (3) (35) - 106 - 106 Disposals (336) (177) (140) (653) - - - - At 30 June 2024 4,882 448 - 5,330 571 17,824 168 18,563 Accumulated Depreciation At 1 January 2023 3,136 116 326 3,578 327 9,633 44 10,004 Charge for the period 559 97 90 746 58 2,055 15 2,128 Disposals (1,704) (23) (105) (1,832) - - - - Foreign exchange difference (19) 253 (118) 116 - - - - At 30 June 2023 1,972 443 193 2,608 385 11,688 59 12,132 Charge for the period 630 40 77 747 73 1,529 11 1,613 Disposals (7) (4) 2 (9) - (2,432) - (2,432) Reclassified as assets held for sale - - - - - 1 - 1 Foreign exchange differences (6) 1 (129) (134) - - - - At 31 December 2023 2,589 480 143 3,212 458 10,786 70 11,314 Charge for the period 597 31 - 628 24 1,428 6 1,458 Disposals (314) (177) (140) (631) 12 365 - 377 Foreign exchange differences 109 2 (3) 108 - - - - At 30 June 2024 2,981 336 - 3,317 494 12,579 76 13,149 Net book value At 30 June 2023 2,251 182 - 2,433 83 10,348 18 10,449 At 31 December 2023 2,077 140 - 2,217 113 6,692 7 6,812 At 30 June 2024 1,901 112 - 2,013 77 5,245 92 5,414 12. Trade receivables 30 June 2024 30 June 2023 31 Dec 2023 ��'000 ��'000 ��'000 Trade receivables 98,147 109,890 113,080 Allowance for impairment losses (5,396) (4,122) (5,118) 92,751 105,768 107,962 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 recognized or the date that the services are delivered and an associated contract asset is recognized. 30 June 2024 30 June 2023 31 Dec 2023 ��'000 ��'000 ��'000 Contract liabilities offset within trade receivables above 5,321 3,981 13,099 13. Other receivables, deposits and prepayments 30 June 2024 30 June 2023 31 Dec 2023 ��'000 ��'000 ��'000 Sundry receivables 4,854 6,742 5,179 Prepayments 10,238 7,878 9,195 15,092 14,620 14,374 Sundry receivables include rent deposits and other sundry receivables. 14. Cash and cash equivalents, restricted cash and short-term deposits For the purpose of the statement of cash flows, cash and cash equivalents comprise cash held by the Group and short-term bank deposits with an original maturity of three months or less: 30 June 2024 30 June 2023 31 Dec 2023 ��'000 ��'000 ��'000 Cash and cash equivalents 78,503 78,132 72,522 Restricted cash balances comprise amounts held on behalf of third parties and employees as part of the Employee Stock Purchase Plan ('ESPP'): 30 June 2024 30 June 2023 31 Dec 2023 ��'000 ��'000 ��'000 Restricted cash 2,672 2,303 2,389 15. Deferred tax assets / liabilities The balances as at 1 January 2023 and 30 June 2023 have been restated as per note 21 . The movement in deferred tax assets and liabilities prior to offsetting are shown below: Deferred Tax Assets Share options Tax losses Short-term timing differences Intangibles Total ��'000 ��'000 ��'000 ��'000 ��'000 At 1 January 2023 (restated) 3,622 5,248 12,814 10,857 32,541 Deferred tax charged directly to the income statement - 1,920 1,058 636 3,614 Exchange rate differences (48) (166) (507) (451) (1,172) Changes in tax rate - 124 36 - 160 At 30 June 2023 (restated) 3,574 7,126 13,401 11,042 35,143 Deferred tax charged directly to the income statement (281) (2,146) 6,083 (653) 3,003 Deferred tax charged directly to equity (520) - - - (520) Exchange rate differences 50 15 815 (80) 800 Changes in tax rate 4 (124) 271 (414) (263) At 31 December 2023 2,827 4,871 20,570 9,895 38,163 Deferred tax charged directly to the income statement - (486) (757) 650 (593) Deferred tax charged directly to equity 158 - - - 158 Exchange rate differences 6 41 (27) 67 87 Changes in tax rate - 83 (11) - 72 At 30 June 2024 2,991 4,509 19,775 10,612 37,887 Deferred Tax Liabilities Intangibles Accelerated tax deprecation Short-term timing differences Total ��'000 ��'000 ��'000 ��'000 At 1 January 2023 (restated) 37,739 (423) 2,648 39,964 Deferred tax charged directly to the income statement (3,648) (9) 1,075 (2,582) Exchange rate differences (1,054) 16 (118) (1,156) Changes in tax rate - - 18 18 At 30 June 2023 (restated) 33,037 (416) 3,623 36,244 Deferred tax charged directly to the income statement (310) 596 (1,116) (830) Exchange rate differences (308) 1 994 687 Changes in tax rate 1,667 (1) (7) 1,659 At 31 December 2023 34,086 180 3,494 37,760 Deferred tax charged directly to the income statement (3,631) (6) 163 (3,474) Exchange rate differences 224 5 (90) 139 Changes in tax rate - 2 (9) (7) At 30 June 2024 30,679 181 3,558 34,418 The total deferred tax assets and liabilities subject to offsetting are presented below: Total Deferred tax assets Total Deferred tax liabilities 30 June 2024 ��'000 30 June 2023 (restated) ��'000 31 Dec 2023 ��'000 30 June 2024 ��'000 30 June 2023 (restated) ��'000 31 Dec 2023 ��'000 Prior to offsetting 37,887 35,143 38,163 34,418 36,244 37,760 Offset of tax (29,771) (27,808) (32,016) (29,771) (27,808) (32,016) After offsetting 8,116 7,335 6,147 4,647 8,436 5,744 16. Trade and other payables 30 June 2024 30 June 2023 31 Dec 2023 ��'000 ��'000 ��'000 Trade payables 17,809 15,056 24,979 Contract liabilities 56,084 74,292 63,398 Tax and social security 14,632 11,574 15,158 Contingent consideration 13 - 20 Acquisition-related contingent consideration and earn-outs 306 1,610 145 Accruals and other payables 31,473 39,050 30,250 120,317 141,582 133,950 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 2023 was recognised as revenue in 2024 and the current contract liabilities balance at 30 June 2024 is expected to be recognised as revenue in 2024 and 2025. The acquisition-related contingent consideration and earn-outs balance in 2024 relates to the acquisition of eCreators and Patheer. The 2023 balances relate to the acquisition of Learning Media Services and Patheer, and were financial instruments held at fair value within the scope of IFRS 9 and were repaid during 2024. The 2024 and 2023 contingent consideration balance relates to Moodle News. 17. 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. 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 (��39.5 million at the period-end exchange rate) and a $50.0 million uncommitted accordion facility (��39.5 million at the period-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 2023, the Group also made an 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 2024 or 2023. On 10 July 2024 a voluntary additional debt repayment of $25.0 million (��19.5 million) was made on the term loan using the proceeds from the sale of Vector (note 22 ). 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 30 June 2024, the Group's interest cover was 9.01 and its leverage ratio was 0.51. The lease liabilities have arisen on adoption of IFRS 16 and are secured by the related underlying assets. 30 June 2024 30 June 2023 31 Dec 2023 ��'000 ��'000 ��'000 Current interest-bearing loans and borrowings 30,115 31,220 30,091 Non-current interest-bearing loans and borrowings 105,912 155,289 120,984 Current lease liabilities 2,531 4,162 4,423 Non-current lease liabilities 5,669 8,486 6,913 144,227 199,157 162,411 Net debt reconciliation Net debt can be analyzed as follows: 30 June 2024 30 June 2023 31 Dec 2023 ��'000 ��'000 ��'000 Cash and cash equivalents 78,503 78,132 72,522 Borrowings: - Term loan (136,027) (186,509) (151,075) Net debt (57,524) (108,377) (78,553) 18. Provisions Property provisions (1) Litigation and regulation provisions (2) Onerous contract provisions (3) Closure provisions (4) Total ��'000 ��'000 ��'000 ��'000 ��'000 At 1 January 2023 1,003 921 488 1,047 3,459 Released to the income statement - - (319) (62) (381) Paid in the period (86) (11) - (718) (815) Additions 6 - - - 6 Foreign exchange movement (64) (37) (13) - (114) At 30 June 2023 859 873 156 267 2,155 Charged / (released) to the income statement (87) (320) (156) 62 (501) Paid in the period 49 11 - (1,015) (955) Additions - 208 - 1,792 2,000 Foreign exchange movements (1) (6) - (45) (52) At 31 December 2023 820 766 - 1,061 2,647 Released to the income statement (68) - - - (68) Paid in the period (83) (5) - (974) (1,062) Additions 3 - - - 3 Foreign exchange movements (1) 10 - - 9 At 30 June 2024 671 771 - 87 1,529 Current 180 771 - 87 1,038 Non-current 491 - - - 491 At 30 June 2024 671 771 - 87 1,529 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 organization due to a more challenging macro -economic environment. 19. Assets and liabilities classified as held for sale On 2 January 2024, the Group sold its investment Lorien Engineering, previously presented as assets and associated liabilities held for sale. See note 20 . During the period, the Group decided to dispose of Vector VMS and as at 30 June 2024 is classified as held for sale, with the assets and liabilities held of the lower of fair value less costs to sell and the net book value. Effect of the assets and associated liabilities on financial position of the Group 30 June 2024 ��'000 Non-current assets Goodwill 13,181 Intangible assets 7,090 20,271 Current assets Trade receivables 605 Other receivables, deposits and prepayments 46 Amounts due from related parties 585 Cash and bank balances 384 Restricted cash balances 368 1,988 Assets in disposal groups classified as held for sale 22,259 Current liabilities Trade and other payables 413 Liabilities directly associated with assets in disposal groups classified as held for sale 413 20. Disposal of non-core business 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 were $20.7 million (��16.3 million) resulting in gain on disposal of $18.3 million (��12.3 million, see note 6 ). There were no other impacts on financial performance or cash flows other than the gain on sale in relation to Lorien during the period ended 30 June 2024. The carrying amount of the assets and liabilities sold as at the date of disposal were as follows: 30 June 2024 ��'000 Non-current assets Goodwill 501 Intangible assets 1,279 Property, plant and equipment 66 Right of use assets 97 1,943 Current assets Trade receivables 5,740 Other receivables, deposits and prepayments 135 Amounts recoverable on contracts 691 6,566 Total Assets 8,509 Current liabilities Lease liabilities 97 Trade and other payables 4,401 4,498 Total Liabilities 4,498 Net Assets 4,011 21. Prior period adjustments During the year ended 31 December 2023, the Company 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, 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 30 June 2023 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 Impact on note 15 Deferred tax assets prior to adjustment 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 Deferred tax liabilities prior to adjustment 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 10 ), reduce deferred tax liabilities prior to offsetting ��9.1 million and increase deferred tax asset of ��5.0 million prior to offsetting (note 15 ). After offsetting, the increase in deferred tax assets was ��14.1m with no corresponding change in the deferred tax liability. 22. Events since the reporting date Sale of Vector On 1 July 2024, the Group sold Vector for a cash consideration of $50 million (��39.5 million) on a cash and debt free basis. The expected gain on sale is estimated to be ��6.1 million. The only impact in these financial statements in relation to the continuing operations are costs in relation to the sale of ��680,000 included within costs of acquisition (note 6 ). These balances are subject to finalisation of the completion accounts. Voluntary additional debt repayment On 10 July 2024 a voluntary additional debt repayment of $25.0 million (��19.5 million) was made on the term loan using the proceeds from the sale of Vector. US regulatory update As a US company that performs work for the US Government, GP Strategies requires certain approvals and is subject to restrictions intended to protect classified information. Subsequent to the period end, LTG has been notified by GP Strategies of the invalidation ("temporary suspension") of the eligibility for GP Strategies to work on new classified contracts. The suspension will remain in effect until GP Strategies returns to compliance with the applicable operating requirements. The temporary suspension is a serious matter and GP Strategies is working tirelessly to resolve all relevant issues to the satisfaction of the US Government. GP Strategies continues to work on existing classified contracts, however one customer has paused their contract which has a revenue impact of c.$200k in 2024. No other contracts are due for renewal imminently, and the value of the contracts is not material in the context of total Group revenue and profit. There have been no other notifiable events between 30 June 2024 and the date of this report. Glossary Alternative Performance Measures In reporting financial information, the Group presents alternative performance measures ("APMs") which are not defined or specified under the requirements of IFRS. The Group believes that these APMs, which are not considered to be a substitute for or superior to IFRS measures, provide stakeholders with additional useful information on the underlying trends, performance and position of the Group and are consistent with how business performance is measured internally. The alternative performance measures are not defined by IFRS and therefore may not be directly comparable with other companies' alternative performance measures. The key APMs that the Group uses are outlined below. 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 6 to the financial statements. Saas and long-term contracts Revenue Refer to Note 3 Saas and long-term contracts 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 Transactional revenue is defined as the revenue streams of the Group that arise from one-off fees or services that may or may not happen again. Balance Sheet Measures Net cash or debt None Refer to Note 17 Net cash / debt is defined as Cash and cash equivalents and short-term deposits, less Bank overdrafts and other current and non-current borrowings. A reconciliation is provided in Note 17 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 2023 were 791,160,022 (based on Note 26 of the 2023 Annual report) and 791,160,022 at 30 June 2024. 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. Company information Directors Andrew Brode, Non-Executive Chairman Jonathan Satchell, Chief Executive Officer Kath Kearney-Croft, Chief Financial Officer Piers Lea, Chief Strategy Officer Simon Boddie, Senior Independent Director Aimie Chapple, Independent Non-Executive Director Leslie-Ann Reed, Independent Non-Executive Director Company Secretary Claire Walsh Company number 07176993 Registered address 3 New Street Square London EC4A 3BF Independent auditors BDO LLP Chartered Accountants and Statutory Auditors 55 Baker Street London W1U 7EU Nominated adviser and joint broker Deutsche Numis 45 Gresham Street London EC2V 7BF Joint broker Goldman Sachs Plumtree Court 25 Shoe Lane London EC4A 4AU Legal advisers DLA Piper U.K LLP 160 Aldersgate Street London EC1A 4HT Registrar Computershare Investor Services plc The Pavilions Bridgewater Road Bristol BS13 8AE Principal Bankers HSBC UK Bank plc 71 Queen Victoria Street, London, EC4V 4AL, UK HSBC Innovation Bank Limited Alphabeta, 14-18 Finsbury Square, London, EC2A 1BR, UK Fifth Third Bank NA 142 W 57th Street, Suite 1600, New York, NY 10019, USA Barclays Bank plc 1 Churchill Place, London, E14 5HP, UK The Governor and Company of the Bank of Ireland 4th Floor, Bow Bells House, 1 Bread Street, London, EC4M 9BE, UK Communications consultancy FTI Consulting LLP 200 Aldersgate Aldersgate Street London EC1A 4HD This information is provided by RNS, the news service of the London Stock Exchange. 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