Learning Technologies : Annual Report for the year ended 31/12/2021

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www.ltgplc.com

The Annual Report contains certain forward-looking statements with regard to the operations, performance and financial condition of the Group. By their nature, these statements involve uncertainty since future events and circumstances can cause results to differ from those anticipated. Nothing contained in this Annual Report should be construed as a profit forecast.

Closing the gap between current and future workforce capability

Our Purpose

We are a market leader in learning and talent development and we work as a strategic partner, helping our customers close the gap between current and future workforce capabilities through a combination of best-of-breed products and services.

Highlights

• Sustained momentum and organic growth across the business, with high quality earnings from SaaS and long-term contracts
• Transformational GP Strategies acquisition significantly broadens scale, offering and cross-selling opportunities - delivering earlier than anticipated with EBIT margin expected to be 12% in FY 2022
• New go-to-market strategy to support greater breadth and depth of offering, geographical reach and faster growing markets
• Q1 2021 acquisitions (Reflektive, PDT Global and Bridge) fully integrated and achieving substantially improved profit margins
• Strong organic revenue growth, up 8%
• • Content & Services recovered strongly, organic growth of 25%, now back to 2019 levels, as expected
  • Software & Platforms organic growth of 2% and 17% excluding PeopleFluent, continuing its track record of high-margin growth; PeopleFluent decline more than offset by organic growth in the remainder of the segment including strong contributions from Rustici and Breezy
• Excellent profit growth, as a result of strong organic revenue growth, contribution from recent acquisitions and a continued focus on EBIT margin improvement as the Group expands
• As expected, Group margins have reduced, driven by a change in revenue mix from acquisitions
• Net debt of £141.4m and good cash generation; on target for leverage c.1.0x by FY 2022
• 17% increase in adjusted diluted EPS driven by organic growth and contribution from acquisitions
• The Board will propose a final dividend of 0.7p, an increase of 40%, leading to a full-year dividend of 1.0p, an increase of 33%

Who we are

We are a global provider of technologies and services with a focus on the estimated $100 billion global external corporate training market. We have a strong track record of driving organic revenue growth and profit while also investing in the future through innovation, content, software and systems. This approach when combined with selective acquisitions provides cross-selling and margin improvement opportunities which helps drive sustainable value for our stakeholders. The Group has over 5,000 employees in 34 countries around the world and pro forma annual revenue in excess of £500 million.

What we do

We play a valuable and important role in society. As a business, we help our customers manage and develop human capital. Our products and services have provided efficient learning to more than 200 million people globally during 2021.

See page 29 for more information on our impact on society.

plc Annual Report 2021 Introduction

Our key ESG initiatives

LTG's ESG framework and initiatives are focused around five key objectives, which are integral to our business strategy

1. Supporting clients in making a positive ESG impact
2. Taking care of our people
3. Environmental sustainability
4. Meeting our stakeholder expectations on governance
5. Achieving high standards of data privacy and security

See page 29 for our ESG report.

Revenue

£258.2m

2020: £132.3m

Adjusted EBIT*

£54.8m

2020: £40.3m

Adjusted, diluted EPS

5.010p

2020: 4.294p

Adjusted operating cash

flow conversion

76%

2020: 85%

Organic revenue growth

8%

2020: (8)%

Statutory operating profit

£11.7m

2020: £14.9m

Basic EPS

1.959p

2020: 2.450p

Net debt/(cash)*

£141.4m

2020: £(70.2)m

Introduction

We are delighted to report that Learning Technologies Group plc (LTG) has delivered a robust full-year operational performance with strong organic revenue growth, continuing the swift recovery we saw in the first half, together with a significant increase in adjusted EBIT and adjusted diluted Earnings per Share.

LTG has delivered impressive and sustainable growth for shareholders over many years. The Board is proud that the Group has delivered a compound average growth rate (CAGR) in revenue over the last seven years (2014 to 2021) of 50%. It is testament to our ability to consistently deliver shareholder value - from organic growth and improvement, and from creating value from acquisitions - that our adjusted EBIT and adjusted diluted EPS CAGR over the same seven year period have been at similar levels of growth or higher, at 63% and 45% respectively.

Revenue Adjusted EBIT Adjusted diluted EPS

During 2021, we have added significant momentum to this progress with the completion of the transformational acquisition of US-listed GP Strategies in October 2021 for a consideration of $392 million. The strategically compelling combination of LTG and GP Strategies has created a leading global workforce transformation business focused on learning and talent development. We now have global reach; enhanced and complementary service offerings; and deep, long-standing customer relationships. In the first quarter of 2021, we also acquired Bridge and Reflektive, two strategically important Software as a Service (SaaS) learning and talent platforms, and PDT Global, a specialist diversity and inclusion consultancy, resulting in a combined cash outflow of £52.1 million in the year. We also made the small acquisition of Moodle News in August 2021.

ESG

The Board is mindful just how important environmental, social and governance (ESG) issues are to all our stakeholders. Indeed, ESG is absolutely central to what we do, as we are a business that helps our customers manage and develop their human capital. Our digital solutions make learning more efficient, including removing the need to travel. We estimate our technology and services reached more than 200 million people globally in 2021.

The Board is also aware that focusing on LTG's own performance, as well as what we provide to our customers, also has a beneficial impact for people and the planet. As well as supporting our customers to make a positive ESG impact, we prioritise taking care of our people, environmental sustainability, meeting governance expectations and achieving high standards of data privacy and security through continuous improvement. We have a number of new ESG initiatives in train, including a Board commitment to a net zero emissions target by 2050, or sooner. Further details of LTG's environmental initiatives and performance in 2021 are set out on pages 29 to 40.

The Board

In December 2021, we were pleased to welcome Kath Kearney-Croft to the Board as Chief Financial Officer (CFO), replacing Neil Elton.

Kath brings extensive experience in large public companies and in international financial leadership roles. She was previously Interim CFO at SIG plc and Group Finance Director at The Vitec Group plc. She has also held senior financial roles at Rexam plc and The BOC Group plc.

Neil stepped down from the Board after seven years' service. The Board would like to thank him for his drive and support through a prolonged period of growth, international expansion and value creation.

The Board notes the recommendations of the Hampton- Alexander and Parker reviews in relation to increasing Board and senior management gender and ethnic diversity, and it

takes these into consideration when making appointments. We have eight Board members and officers, of which four are Non-executive Directors. Kath's appointment means this now includes four women, representing 50% of this total, exceeding the Hampton-Alexander target for FTSE 100 and FTSE 250 Boards. Not only this, but we are proud to have some 35% of our wider senior leadership positions held by women, also exceeding the Hampton-Alexander target.

As a Board, we take our governance responsibilities very seriously and believe these allow the Group to pursue its strategy with more pace and less risk. The approach to our wide range of responsibilities is set out in the Chairman's Introduction to Governance on pages 41 to 44.

Dividend and Capital Allocation

The Board remains committed to a progressive dividend policy. Given the robust operational performance during the year, the Board is pleased to announce it is recommending a final dividend of 0.7 pence per share (2020: 0.5 pence).

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

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

People

On behalf of the Board, I would like to welcome to the LTG family our new colleagues from GP Strategies, as well as from Bridge, Reflektive, PDT Global and Moodle News. As a result of the substantial strategic progress made during 2021, LTG now has more than 5,000 employees in 34 countries.

As a business that exists to help our customers manage and develop their human capital, we rely on our employees to deliver much. This includes designing and delivering content, managing our clients' learning services, and developing and delivering capabilities through our technology platforms. Our employees are the daily face of our business across the broad spectrum of our commercial and government customers.

Despite the many COVID-related difficulties encountered, particularly in the first half of the year, our employees have continued to serve customer needs. They have an abundance of technical expertise, deep domain knowledge, entrenched customer relationships and a willingness to continually improve. Even more importantly in the environment we have been working in, they have shown themselves to

be adaptable, working according to new, flexible practices, including extensive home working, as well as additional constraints.

Alongside this, our employees have shown dedication, hard work and an ability to drive our delivery and performance forward in challenging conditions, looking to get the job done well, and on time. I continue to be impressed by the culture of the business. On behalf of the Board I express appreciation and thanks to our employees for their dedication and hard work through the year.

Looking Forward

The Board sees much to be excited about in 2022. Our business is well-positioned in attractive and sustainable learning and talent development markets, and it is driven by a culture of continuous improvement. It is in robust financial health with differentiated capabilities and technology, and this will help us continue our enviable, long-term record of value creation. We have made significant strategic progress in 2021, most notably the transformational acquisition of GP Strategies. The Board expects this acquisition to deliver substantial value, underpinned by margin enhancement as well as from cross- selling to the combined customer base. When taken together, these factors provide the Board with confidence in the Group's near- and longer-term prospects.

Andrew Brode

Chairman

29 April 2022