Learning Technologies Group plc Investor Presentation October 2015 - - PowerPoint PPT Presentation

Jonathan Satchell

Chief Executive

Investor Presentation October 2015

Learning Technologies Group plc

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Neil Elton

Group Finance Director

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• Learning Technologies Group plc was created and listed in 2013 to

provide a comprehensive and integrated range of e-learning services and technologies to corporate and government clients

• LTG is a publicly quoted company focused on consolidating the

high growth e-learning sector

• Global footprint including Europe, US and Latin America
• LTG is a dynamic and steadily growing group of specialist learning

technology businesses

• LTG's portfolio includes:
• LEO, a pioneering learning technologies company
• gomo learning, LTG owned IP multi-device authoring tool
• Preloaded, a games with purpose company
• Eukleia, a specialist provider of GRC services to the

financial services sector

• Our portfolio of brands are well recognised across the e learning

industry

• Recognised by industry bodies with numerous awards
• LTG Mission
• Organic growth driven by market share gains and sector growth
• Significant expansion by acquisition of complementary businesses,

through the judicious use of our research, and our industry-specific expertise

• Ambition to build a specialist Group with revenues in excess of

£50m

Introducing LTG

• E-learning expenditure is projected to grow at 23% per annum to

$255.5bn from 2012 to 2017*

• Educational corporate market CAGR of 8.0%*
• 41.7% of G500 companies already using technology adapted

training*

• Distribution across apps, mobile devices (phone and tablet),

and different platforms and portals

• LEO to take advantage of growth in technology, online content

and social media that supports learning

Positive market trend

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Exposure to a structural high growth market

Rated a Strategic Leader by elearnity†

* IBIS Report, January 2013 † Elearnity survey, January 2015

January 2015

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Following the merger of the two leaders in learning technologies and e-learning, Epic and LINE, LEO was created in July 2014 and benefits from more than 30 years of industry experience

• LINE brought with it strategic accounts and a strong sector focus

in defence and security, automotive and corporate. Epic complemented this with a strong focus on professional services, finance, public sector, retail and travel & leisure

• LEO aims to move learning to the heart of business strategy.

By making learning a boardroom issue, LEO will secure bigger, more complex projects by working with global organisations

• n a more strategic level
• High profile contract with central government department in

partnership with KPMG won in Q1 2015

• Success in renewing contracts in competitive bids (e.g. CSL) and

deepening relationships at the strategic level (e.g. JLR and Sky)

• Pipeline of large contracts (ranging from £1m to £5m+) is at its

highest ever Investment in business to meet the strategic requirements of the Group

• Restructuring of the business in September 2015 to emphasise;
• Account management
• Strategic and consultancy relationships
• Learning and technology expertise
• Emphasis on cross-selling opportunities between businesses
• Recruitment of Head of Sales in H1 2015
• Continuing investment in ERP, finance and HR systems and

procedures to improve management information and create a scalable platform for growth

Industry awards

Gold Winner 2014 E-Learning Age Awards ‘Excellence in the production of learning content – third sector’ Silver Winner 2014 E-Learning Age Awards ‘Excellence in the production

• f learning content – private sector’

Silver Winner 2014 E-Learning Age Awards ‘Best e-learning project – UK private sector’ Bronze Winner 2014 Brandon Hall Group ‘Excellence Award in Learning and Development’ Silver Winner 2013 E-Learning Age Awards ‘Excellence in the production

• f learning content – private sector’

Runner up 2013 IELA Awards ‘Mobile learning – business division’ Bronze Winner 2014 Training Journal Awards ‘Best use of technology’ Silver Winner 2013 E-Learning Age Awards ‘Best use of social media for learning’

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1,200+ hours of blended content

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Global Induction underway

Business case: 11,000 new employees in next 3 years

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LEO opened its first North American office in New York in November 2012.

• Established its New York office in late 2012 to better deliver its

services to customers in the US, the world’s largest training and education market. Also gained access to those North American companies and public bodies that only procure from within the local market

• Profitability reached within 13 months
• Appointed e-learning entrepreneur Bill West as Senior VP, North

America in March 2015

• After an exceptional 2014, a slow start to 2015, but sales pipeline

and order book is now increasing

• Significant opportunity to increase market share

US and Brazil

LEO Brazil established as 50:50 JV in 2011 to access the emerging South American e-learning market

• Office based in Rio de Janeiro
• LEO Brazil operates through a local partner led by Richard

Vasconcelos (Chief Executive)

• The Vasconcelos family previously established one of the

largest private universities in Brazil, Estacio Universities in 1970s and bring a wealth of local industry knowledge

• Already an established track record of winning substantial

contracts, including e-learning for the 2016 Olympics

• Initial focus on improving quality to UK standards has resulted in

better margins and improved client feedback

• Focus on increasing margins while maintaining quality levels
• H1 2015 sales ahead of target
• First profitable month in July 2015

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• Founded in 2000, Preloaded has a leading reputation as a BAFTA-winning applied games

studio

• Partners with organisations across the education, entertainment, publishing, advertising and

broadcasting sectors with clients including Amplify (a subsidiary of News Corp), Disney, Science Museum Group, Wellcome Trust and the BBC

• High profile strategic contract won in H1 2015 to create playful learning games at the

centre of a global digital marketing campaign for an international restaurant company; work commenced on next phase which will run into 2016

• Successful project completed for Science Museum has been followed by award of

educational project for British Museum

• Success in cross-selling with other LTG companies – for example, projects won in H2 2015

with British Airways (LEO) and SAP (LEO US)

• Investment in business – new studio in Finsbury Park, new project management system

implemented and increased recruitment of staff to meet demand

Overview Awards and key game statistics

Story Cards, Amplify Serious Play 2014 Education, Silver (2014) Crafty Cut, Amplify Serious Play 2014 Education, Silver (2014) Disney Fairies: Lost and Found #1 Kids Game iTunes store (December 2012) Axon, Wellcome Collection 1 million+ gameplays in launch week 3 million gameplays in first month Wondermind Tate Interactive Media Awards Kids - Best in Class (2012) The End, Channel 4 BIMA Game (2011)

gomo provides two products that enable you to create, host, update and track multi-device learning, anywhere. Only end-to-end self-authoring solution on the market offering such fast, simple content creation and seamless hosting and analytics. gomo 3.0 launched in April 2015 and has seen significant growth in the UK and particularly the US. Delivers a full end-to-end solution for content creation, distribution and analytics.

• Ever-growing client base includes Nike, Burberry, Xerox, Santander, United Healthcare, Boots,

Alfred Dunhill, JCB, JP Morgan, NHS and more

• Allows organisations to derive in depth insights from their e-learning programmes for the first time,

allowing them to tailor and improve their learning outcomes.

• Will drive new sales from organisations looking for an alternative to an LMS.
• Listed by world-recognised e-learning industry guru Craig Weiss as a top 5 authoring tool in the

world

• The newly launched hosting product creates the potential to increase revenue per customer and

attract new subscribers by offering a complete solution

• High renewal rates of licences since April 2015 and encouraging migration to Enterprise licences
• Increasing cross-referral of work to LEO

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Industry awards

Silver Winner 2014 Brandon Hall Awards 'Best Advance in Content Authoring Technology'

• Strong growth drivers for the GRC market place. Three quarters of

600 senior compliance practitioners surveyed by Reuters in 2014/15 expected the focus on managing GRC to increase in the next 12 months. Only 2% expected it to decline. (Source Reuters: Cost of Compliance 2015)

• Eukleia can meet a broad range of GRC Training needs including
• Bespoke E-Learning
• Generic E-Learning
• Instructor led training
• Translation of GRC learning content
• Learning management systems
• Provides GRC training to financial services sectors including

investment banking, retail banking, fund management/private equity, commodity trading, exchanges and regulators

• Track record of new product development to meet changing

regulatory environment

• Blue chip client base including HSBC, Barclays, RBS, Lloyds Bank,

Deutsche, Citi all in top 10 customers during 2015

• Eukleia is highly respected by its customer base as a leader in the

field of GRC

Eukleia Training Limited (‘Eukleia’) - specialist in Governance, Risk and Compliance (‘GRC’) Training

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75%

2% Expect decline

Expect increase

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Consolidated statement

• f comprehensive income

£’000 6 mths to 30 June 2015 (unaudited) YE to 31 Dec 2014 (audited) 6 mths to 30 June 2014 (unaudited) Revenue 8,390 14,920 6,504 Operating Expenses (8,032) (14,433) (6,382) Share of Losses of Joint Venture (41) (160) (22) Operating profit 317 327 100 Adjusted EBITDA 1,287 2,065 874 Depreciation (90) (171) (69) Amortisation of intangibles (480) (659) (233) Share based payment costs (400) (583) (355) Integration costs

• (325)

(117) Operating profit 317 327 100 Costs of acquisition

• (296)

(294) Finance expense (115) (162) (68) Interest receivable 7 4 1 Profit / (loss) before taxation 209 (127) (261) Taxation 144 (35) (42) Profit / (loss) for the period 353 (162) (303)

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Consolidated statement of financial position

£’000 30 June 2015 (unaudited) 31 Dec 2014 (audited) 30 June 2014 (unaudited) ASSETS NON-CURRENT ASSETS

• Property. Plant and equipment

331 339 382 Intangible assets 11,025 11,364 12,184 Deferred tax 825 618

• Investments
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• 12,181

12,337 12,566 CURRENT ASSETS Trade receivables 3,201 2,762 2,535 Other receivables, deposits and prepayments 470 337 427 Amounts recoverable on contracts 2,469 1,806 1,908 Cash and bank balances 2,958 4,358 3,815 9,098 9,263 8,635 TOTAL ASSETS 21,279 21,600 21,251 CURRENT LIABILITIES Trade and other payables 5,560 4,832 5,422 Corporation tax 226 352 115 Provisions

• 30

5,786 5,184 5,567 NON CURRENT LIABILITIES Deferred tax 360 446 398 Other long term liabilities

• 1,512

1,523 Provisions 30 49

• 390

2,007 1,921 TOTAL LIABILITIES 6,176 7,191 7,488 Total Equity Attributable to the Owners of the Parent 15,103 14,409 13,763

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Consolidated Statement of Cash Flows

£’000 6 mths to 30 June 2015 (unaudited) YE to 31 Dec 2014 (audited) 6 mths to 30 June 2014 (unaudited) Profit /(loss) before taxation 209 (127) (261) Adjustments for: Share based payments 400 583 355 Amortisation and depreciation 570 830 302 Others 149 318 41 OPERATING CASH FLOWS BEFORE WORKING CAPITAL CHANGES 1,328 1,604 437 Net Working Capital changes (818) (668) (1,600) Interest received and income tax paid (120) (28) 23 NET CASH FLOWS FROM OPERATING ACTIVITIES 390 908 (1,140) CASH FLOWS USED IN INVESTING ACTIVITIES Acquisition of subsidiaries net of cash acquired

• (4,407)

(3,836) Deferred consideration payments (1,337)

• Others

(245) (500) (132) NET CASH FLOWS USED IN INVESTING ACTIVITIES (1,582) (4,907) (3,968) Issue of share capital net of share issue costs 32 7,756 7,753 Dividends paid (248) (107)

• Repayment of bank loans
• (465)
• NET CASH FLOWS FROM/(USED) IN FINANCING ACTIVITIES

(216) 7,184 7,753 NET INCREASE/(DECREASE) IN CASH AND CASH EQUIVALENTS (1,408) 3,185 2,645 Exchange gains on cash 8 3

• CASH AND CASH EQUIVALENTS AT END OF THE YEAR

2,958 4,358 3,815

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LTG strategy at a glance

Blended Learning e-learning Games and gamification Platforms and portals Virtual reality Consulting Induction, leadership & management, compliance, strategy, product training, customer service Sales training, brand roll-outs Government Automotive Defence Finance Pharma/Health Energy Aviation Retail U.K. U.S. (New York) South America (Rio) Europe (Switzerland) U.S. (strengthen) Middle East (partner) Asia Pacific Europe (strengthen) Personalisation Learner data analytics Augmented reality Measurement Social Learning Digital video search Performance management tools Technical training, sector specific learning & compliance Sector specific learning and compliance, specialist sales training.

Acquisition target characteristics

• 1. Strong management: Where owner/founder and management team want to scale
• 2. New market access: ability for LTG to deliver current services in other regions
• 3. Complementary products/services: with a focus on non-discretionary spend and leading technologies
• 4. New business models: with focus on repeat revenues - content and software IP

Current Target Current Target Target Current

Partner programme: Open University Xerox KPMG Fujitsu SAID Business School General Dynamics Hewlett Packard Atkins

Appendices

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Jonathan Satchell Chief Executive

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Neil Elton Group Finance Director

Highly experienced leadership team

• Strong sales and entrepreneurial

background, having started his first business in 1992 selling subscriptions for Accountancy TV, a JV of the Institute of Chartered Accountants in England and Wales and the BBC which created continued professional development content for training programmes

• Involved in the education and training

industry ever since, acquiring EBC in 1997, which he helped to transform from a provider of training videos to a bespoke e- learning company. The Company was sold to Futuremedia in 2006

• Responsible for the overall strategic

development of LTG with a particular focus on innovation and international

• pportunities
• Has a proven track record of working with

and successfully building up a number of fast growing companies

• Joins from Sagentia Group plc, a technology

research and development company, where he was Group Finance Director from 2010 to 2014

• Between 2007 and 2010, he was Finance

Director at Concateno plc, Europe’s largest tester of drugs of abuse

• Prior to Concateno he was Finance Director

at Mecom Group plc, an acquisitive AIM listed European media group

• Appointed to the Board of LTG in

November 2014.

Piers Lea Chief Strategy Officer

• In 1989, founded LINE Communications

Holdings Limited, which held a leading reputation in the e-learning marketplace as a designer of fully-blended learning solutions

• Has more than 30 years' experience in

distance learning and communications and is an acknowledged expert and thought leader in e-learning

• Joined the Board of LTG as Chief Strategy

Officer to ensure the Group’s long-term strategic future and has created a three- year strategy for the creation of an end-to – end learning technologies agency

Dale Solomon Chief Operating Officer

• Before joining Epic in 2010 spent 12 years as

both an internal and external learning consultant

• Has extensive experience in learning design,

development and facilitation methodology, analysing training needs and measuring Return on Investment for global organisations

• Also has considerable understanding of

developing sales strategies and growing sales teams and networks of reseller channels and agents

• Appointed to the Board following the

creation of LEO in 2014. Responsible for

• verseeing all central support functions of

the Group globally, including Sales, Marketing, Bid, IT & Facilities, Human Resources, Quality, Special Projects and International Operations

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Leslie-Ann Reed Non-executive Director

• A Chartered Accountant and financial

management expert, she has extensive international experience in the media industry having served as Chief Financial Officer of PolyGram Film Operations and also worked at Warner Communications and EMI

• Appointed Chief Financial Officer of

GoIndustry Dovebid plc in 2010 until July 2012 when the business was sold to Liquidity Services Inc

• Served as Chief Financial Officer of Metal

Bulletin plc and as an adviser to Marwyn Investment Management

• Joined the Board of LTG in 2014 and serves

as the Chair of the Audit Committee

Highly experienced leadership team (continued)

Andrew Brode Non-executive Chairman

• Chief Executive of Wolters Kluwer (UK) Plc

between 1978 and 1990

• In 1990, led the management buyout of

Eclipse Group, which was sold to Reed Elsevier in 2000

• In 1995, led the management buy-in
• f AIM-listed RWS Group, Europe’s largest

technical translations group

• He acquired Epic together with Jonathan

Satchell in 2008 and has acted as non- executive Chairman since that time

• Also a non-executive director of a number
• f private-equity backed media companies

Harry Hill Non-executive Deputy Chairman

• Served as Chief Executive Officer of

Countrywide plc for 20 years until 2008. During his tenure at Countrywide, it founded and subsequently sold Chesnara plc and Rightmove plc

• Also responsible for forming Countrywide

Property Lawyers, which was established to take advantage of conveyancing referrals from within the estate agency chain

• Current directorships include Landwood

Property Group and Hunters and Clarke

• Hillyer. He is also a trustee of Launch 22, a

Shoreditch based charity seeking to help young entrepreneurs.

• Serves on the Remuneration Committee
• f LTG

Disclaimer

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This presentation has been compiled by Learning Technologies Group plc (the “Company”) and is being supplied to: (i) persons who have professional experience in matters relating to investments (being “investment professionals” within the meaning of Article 19

• f the Financial Services and Markets Act 2000 (Financial Promotion)

Order 2005 (the “FPO”)) or (ii) persons falling within Article 49(2) (“high net worth companies, unincorporated associations etc.”)

• f the FPO or (iii) persons who are otherwise permitted by law

to receive it (all such persons being “relevant persons”). The presentation contains statements that are, or may be deemed forward-looking statements, which relate, inter alia, to the Company’s proposed strategy, plans and objectives. Such forward looking statements involve known and unknown risks, uncertainties and other important factors beyond the control

• f the Company (including but not limited to future market

conditions, legislative and regulatory changes, the actions of governmental regulators and changes in the political, social or economic framework in which the Company operates) that could cause the actual performance or achievements on the Company to be materially different from such forward-looking statements. No warranty or representation is made that any of these statements

• r forecasts will come to pass or that any forecast results will be
• achieved. Accordingly, you should not rely on any forward-looking

and the Company accepts no obligation to disseminate any updates or revisions to such forward-looking statements whether as a result of new information, future events or results or otherwise. This presentation does not constitute or form part of any offer or invitation to sell or issue, or any solicitation of any offer to purchase

• r subscribe for any securities. The making of this presentation does

not constitute a recommendation by the Company or any of its respective directors, officers, employees, agents or advisors in connection with any purchase of or subscription for securities

• f the Company.