Learning Technologies : Annual Report for the year ended 31/12/2023

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www.ltgplc.com

The Annual Report and Accounts contains certain forward-looking statements regarding 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 and Accounts should be construed as a profit forecast.

Helping

Organisations

Transform Through

Their People

Our purpose

We are a market leader in learning and talent development and we work as a strategic partner, helping our customers transform through their people. We do this via a combination of consulting, services and technologies.

Highlights

• GP Strategies has more than doubled profit since joining LTG in 2021, driven by margin progression, a successful transformation plan and operational improvements to GPLX in H2 2023.
• Renewed all major client contracts >$10m and expanded revenue in LatAm and Middle East.
• Actively managed our portfolio including the sale of Lorien Engineering Solutions which completed in January 2024.
• Further streamlined and strengthened the commercial operation by integrating Watershed into Rustici, LEO into GP Strategies and Reflektive into Bridge.
• Established Group wide AI task force launching several AI enhanced software products in 2024 and leading on educating our Fortune 500 client base on a "Human + AI" future.
• Achieved significant impact by providing learning to over 200 million people during the year.
• Revenue of £562.3 million and adjusted EBIT of £98.5 million in line with consensus expectations, reflecting a slight decline (2)% in constant currency revenue and (1)% adjusted EBIT.
• Statutory profit before tax increased 13% to £45.6 million.
• Resilient revenue performance in the context of the macroeconomic climate - with 73% of revenue underpinned by durable SaaS and long-term contracts.
• Adjusted EBIT margin increased to 17.5% in FY23 from 17% in FY22.
• GP Strategies' EBIT margin c.15% in H2 and exit run-rate c. 17% in line with previous guidance.
• Record net cashflow from operations during the year of £79.5m driving swift deleveraging to 0.7x prior to incorporating proceeds from disposal of Lorien received in 2024, with continued good cash generation in Q1 2024.
• Progressive dividend policy: final dividend increased by 5% to 1.21p. Full-year dividend 1.66p (+4%).

Who we are

We are a global provider of Learning

• Talent 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 36 countries around the world and annual revenue in excess of £550 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 2023.

See page 9 for more information on our impact on society.

Our key ESG initiatives

LTG's Environmental, Social & Governance (ESG) framework and initiatives are focused around measurable impact across all core tenants of environmental, social, and corporate governance. We detail our ESG business strategy in the following sections:

1. The Environmental Journey - reducing negative impacts
2. Social - Taking care of our people and world
3. Governance - meeting stakeholder expectations
4. Enterprise risk management, data privacy and security - reducing risks in the digital frontier
5. Climate-relatedFinancial Disclosure

See page 31 for our ESG report.

Introduction

Learning Technologies Group plc (LTG) has delivered stable operational results, with revenue on a constant currency basis and adjusted EBIT marginally below 2022 for continuing operations. This resilient performance is testament to the significant number of long-term contracts (73% of revenue from continuing operations) which robustly underpin revenue. Adjusted diluted Earnings per share was broadly in line with prior year for continuing operations, benefiting from a lower adjusted effective tax rate and lower dilutive potential ordinary shares.

The Group has continued to further improve its operating margins despite softness in transactional revenues, while continuing to deliver very strong cash generation. It should be noted that these are fundamental values of the Group, balanced against investing for organic growth. The Group has achieved a compound annual growth rate (CAGR) in revenue of 50% from 2014 to 2023. Furthermore, our adjusted EBIT and adjusted diluted EPS have shown similar or higher levels of growth, with CAGRs of 54% and 40% respectively, over the same period from 2014 to 2023. Statutory operating profit has a CAGR of 78% over the 2014-2023 period and diluted EPS has a CAGR of 40% since 2015.

In 2023, our commitment to executing a new comprehensive go-to-market strategy yielded significant results. Our concerted efforts, which are aimed at delivering a broad and comprehensive offering, not only showcased our value proposition but also translated into tangible benefits for our clients. The result was continued upsell opportunities and the cultivation of stronger client relationships. This success underscores our dedication to providing unparalleled value and ensuring a cohesive experience for our clients.

ESG

At LTG, we recognise that embracing ESG (Environmental, Social and Governance) is our responsibility and is imperative to our business. Our commitment to ESG is rooted in our belief that environmental stewardship, social responsibility and effective governance inform critical decision-making processes and influence multiple facets of our operations. As global markets accelerate towards net zero, the effective management of ESG risks is paramount. By proactively addressing environmental challenges, fostering social inclusivity and upholding the highest governance standards, we strengthen our resilience against potential risks and uncertainties. Our commitment is further demonstrated this year through the hiring of a dedicated ESG manager who will continue to drive our tactical initiatives and overall strategy in this space.

In parallel, not only are we delivering progress on the development of our ESG programme, but we also provide solutions. Many of our clients rely on us as partners to help meet the ESG demands that exist within their own environments. We respond through many of our offerings, specifically through the creation of custom content, our Diversity, Equity and Inclusion (DE&I) work and our ESG training.

This year, we have prepared our annual ESG report in line with regulations, incorporating aspects of the Task Force on Climate-related Financial Disclosures (TCFD).

Further details of LTG's environmental initiatives and performance in 2023 are set out on pages 42 to 46.

The Board

There were no changes to the LTG plc Board in 2023. Our Board currently consists of eight members and officers, of which four are non-executive directors. 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. Four of our Board members are women, representing 50%, exceeding the Hampton-Alexander target for FTSE 100 and FTSE 250 Boards. We are proud to have 43% of our wider executive and senior leadership positions held by women, also exceeding the Hampton-Alexander target.

As a Board, we take our governance responsibilities 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 the Corporate Governance Report on pages 47 to 54.

Dividend and capital allocation

The Board remains committed to a capital allocation policy that prioritises investment in the business to drive growth, selectively acquiring value-enhancing businesses and return of cash to shareholders primarily through a progressive dividend policy. Given the resilient operational performance during the year, the Board is pleased to announce it is recommending a final dividend of 1.21 pence per share (2022: 1.15 pence).

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

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

People

Our greatest asset is our people, and their dedication fuels our success. In the past year, we implemented multiple HR initiatives, strengthening relationships with our senior leaders and the employee population, addressing feedback from our engagement surveys with action and fostering an environment where individuals thrive. Our dedication to the well-being and growth of our employees is not just a corporate ethos but a strategic imperative that directly contributes to the sustainability of our business. On behalf of the Board, I express appreciation and thanks to our employees for their dedication and hard work through the year.

In addition, the promotion and appointment of seasoned leadership during 2023 including co-CEOs in GP Strategies, a Chief Information Officer and new leadership in Open LMS, elevated our capabilities in focusing and driving the business forward. Rigorous planning, robust risk management and the adoption of certain practices have fortified our ability

to weather unforeseen challenges. Our Chief Customer Strategy Officer continued to be instrumental in cultivating and nurturing relationships with new and existing clients. Through a collaborative approach, our team has fostered connections while embarking on an educational journey, informing our clients about the transformative capabilities of Artificial Intelligence (AI) and how it can create efficiencies both practically and commercially.

efficiency, innovate our products and services, and enhance our customer and learner experience, ultimately unlocking opportunities to create value for our shareholders. GP Strategies is leading on educating clients on AI enabling their teams, and our software and platform businesses

are developing AI-enhanced products. We have recently launched educational sessions for our customers and are in the process of developing and launching a range of AI innovation across our services and products.

We remain confident in the structural growth drivers in the learning and talent development industry and the attractive prospects for LTG through expanding its client base, innovating across software and services, enhancing AI capabilities

and through expanding acquisitions. However, as a result of the pause on acquisitions in 2022 and 2023, combined with continued active portfolio management, including the disposal of Lorien alongside the subdued macroeconmic environment, the Board has concluded that the 2025 goal to achieve run-rate revenue of £850 million and £175 million run-rate adjusted EBIT is no longer appropriate. We remain cautiously optimistic on the macro outlook and our continued strong cash generation and balance sheet strength gives the Board confidence in returning to value-accretive acquisitions in 2024 and beyond.

The Board is optimistic of making further progress in 2024. Despite the obstacles presented by the macroeconomic landscape, we are steadfast in our commitment to navigating and overcoming these challenges. Through our offerings and with our talented teams, we are well positioned to meet the learning and talent development needs that exist in the market. The Board remains confident in the Group's ability

to consistently deliver results and we look forward to the continued success and growth ahead.

Looking forward

In alignment with our clients, we see the integration of AI as a critical component of our future strategy. Integrating AI will enable us to make better decisions, improve our operational

Andrew Brode

Chairman

15th April 2024

The challenge

The American Institute of Certified Public Accountants and Chartered Institute of Management Accountants (AICPA & CIMA) is the premier professional association for accountants in the US and UK with over 600,000 members.

Before engaging GP Strategies and LTG, AICPA & CIMA's legacy learning platform was a custom-developed solution that required several layers of unique functionality to deliver its learning and assessment services. Development costs had grown exponentially, partly to account for this complex functionality and partly to compensate for gaps in available support.

As a small team in a highly regulated, high-consequence industry, AICPA & CIMA's training department recognised that it needed to move towards commercial products that allowed for scalable integration and better support coverage. It aimed to provide an industry-leading user experience by enhancing content discoverability while reducing costs.

The solution

The combined power of GP Strategies' (GP) services and several LTG technology companies made this vision possible by implementing game-changing AI capabilities alongside a range of platforms, products, and professional services from across the group.

A new learning ecosystem was created with Bridge's LMS and Rustici Software's Content Controller technology at its core. GP provided substantial implementation support and AI enablement.

Bridge LMS was critical to reducing friction when accessing training courses, while Rustici Content Controller provided a robust means to enforce content licensing. GP's proposal estimated that this new system would reclaim $2.5 million per year in previously lost content licensing revenue.

GP also helped the team temporarily scale up for migration and testing. Custom plugins were created to track proprietary content, while integration work allowed AICPA

• CIMA to take advantage of new product features and updates from Bridge and Rustici without requiring additional tailored adjustments.

Early in deployment, it became clear that only a minority of AICPA & CIMA's 3,000 courses had adequate and updated tags and descriptions. This metadata allows the learning ecosystem's new tagging functionality to work optimally. GP addressed this traditionally time-consuming process by implementing AI to streamline metadata creation, thus adding an extra layer of precision.

The results

After first deployment, AICPA & CIMA experienced the following:

• A reduction in the number of clicks needed to access important content (from seven to one). This has greatly improved the learner experience by removing significant friction.
• A new dashboard and tracking feature, which has heightened learner awareness of outstanding compliance requirements. Content tagged to specific fields of study and continuing professional education (CPE) credits has also allowed learners to quickly close any required gaps.
• Additional monetisation of curated learning journeys and branded cohort learning portals.
• Increased revenue due to enhanced accessibility of content, facilitating easier consumption for members.

"GP Strategies has become a trusted vendor partner in transforming and evolving our complex commercial learning ecosystem. Our 600,000 members and students globally expect a comprehensive modern learning experience for their upskilling needs in this digital age. GP has the critical expertise in digital platforms, products, analytics and professional services, enabling us to scale and execute our transformation vision."

• Michael Grant, Senior Director of Learning Innovation and Assessment at AICPA & CIMA

The challenge

A multinational insurance company listed on the Fortune 500, Watershed's client has a critical requirement in a certain Canadian state to prove a minimum level of employee engagement in professional development activities. The organisation must reinvest a certain percentage of total payroll in eligible training expenditures

• any underspend must be paid as a "fine" to a central industry learning fund. Similar, but less stringent requirements, exist in other jurisdictions in which the organisation does business, including the UK and Ireland.

The state's regulations require the logging of total training activity, including those with a digital footprint within the Learning Management System (LMS), as well as "offline" activities such as face-to-face training and event attendance. The organisation must also be able to cross- reference this logged activity with each learner's salary, in order to calculate the value of each individual's time spent in training. Historically, the organisation had used a manual and highly time-consuming process to achieve this. It therefore sought a solution that allowed the quick and efficient aggregation of data for 30,000 global employees from across a vast learning ecosystem consisting of three content platforms, four authoring tools, as well as Human Resources Information System (HRIS) data.

The solution

The organisation uses the Learning Record Store (LRS) functionality of the Watershed platform to automatically capture and calculate the time individuals spend on training activities. The LRS collates usage data from a number of different learning, video and content authoring systems prior to aggregation and sorting. These systems use a variety of data export methods, and Watershed handles these disparate statement formats through a number of custom connectors (programmed with input from the client, and the individual platform creators). These ecosystem-wide datasets are then turned into meaningful, visual insights with Watershed's Learning Analytics Platform (LAP) functionality.

Watershed's client had previously faced a challenge with some of its historic learning data - records of completions existed, but these learning activities did not have time attributed to them. To attribute a time to this historic learner activity, specialist software was used to assign average read times. Watershed's reporting helped highlight any data anomalies (i.e. longer than expected read times) to ensure thorough testing and therefore data fidelity. This ensured these historic activities could be claimed as payroll spend for the purpose of the state's law.

The results

As a result of using Watershed, the organisation has a solution that saves time and money while proving it's meeting the training requirements of the jurisdictions in which it does business - avoiding tens of thousands of dollars in potential fines annually.

Impressively, the organisation has been able to prove that it's significantly exceeding its training hours requirements. Within the regulations, it can actually carry over excess hours to subsequent compliance years. This means that based on 2022 hours alone, it can now prove that it is compliant beyond 2024.

The successful trial in the Canadian region meant this reporting could be scaled up to the UK and Ireland, adjusting the HRIS data by region and core metrics to measure total time, rather than % of payroll. This scalable solution future-proofs the organisation for expansion into other regions, and the addition of new learning systems and data sources as their ecosystem evolves in the future.

The solution

As an employee development solution infused with learning and performance management, the Bridge platform is uniquely positioned to consolidate Adwise's new employee development framework within a single space.

Bridge's Learning Management System (LMS) has allowed the organisation to assemble a large and growing number of courses and learning materials. Within this environment, employees can also work with their coaches to identify the right learning resources for their current needs.

Meanwhile, Bridge's performance management toolkit ensures every learner is assigned a coach, and is given the ability to formally create, document and track their career development plans, with desired skills, goals, tasks and courses. Prior to its Bridge partnership, Adwise's employee development plans were more informal, and managers were unable to visualise them through a convenient, integrated interface.

Finally, Bridge's feedback capabilities - including skills feedback and start-stop-continue feedback - ensure employee development milestones can be celebrated while offering a sense of direction for future development.

The results

By using Bridge's employee engagement tool, Adwise has documented a 20% increase in employee engagement - and this is reflected in the company's 97.1% retention rate.

Furthermore, Adwise employees have had 30% more growth-centred conversations and the company has also seen a 10% increase in internal promotions since it began its relationship with Bridge.

Throughout Adwise's learning cycle, Bridge helps streamline and automate HR processes, resulting in a 50% reduction in HR administrative costs. Adwise is now able to onboard employees 30% faster, setting new hires on the path

to a rewarding, development-first culture from the very beginning of their journey at the company.

"Bridge is like a breath of fresh air. We've been working with other tools, but none of those tools offered a combination of personal development plans, training courses and feedback mechanisms. Bridge gives me a better overview because everything's combined in one tool."

- Marloes de Jong, Senior Performance Manager, Adwise

The challenge

Close Brothers is a merchant banking group providing lending, savings, securities trading and wealth management services to organisations in the UK. With approximately 4,000 employees across three divisions, Close Brothers needed to move away from the complex, labour-intensive spreadsheets it had been using for years.

Recognising the need to modernise and improve the efficiency of its compensation process, Close Brothers decided it needed a modern compensation management system capable of streamlining its award cycle process. It needed the process of switching from its legacy method to the new system to be as simple as possible. Additionally, the group needed a tool that could assist its remuneration committee with compensation statistics and reports while keeping data secure.

The solution

In 2017, Close Brothers selected PeopleFluent Compensation as its compensation management system. For Close Brothers, PeopleFluent Compensation not only quickly

and efficiently deals with the organisation's headcount requirements but the PeopleFluent team also provided a vision for how the solution would serve the organisation's future needs.

An open dialogue about system implementation considerations and potential future use cases has continued

throughout Close Brother's relationship with PeopleFluent. Accordingly, in 2022, Close Brothers chose to integrate PeopleFluent's performance management solution, PeopleFluent Performance, alongside PeopleFluent Compensation.

PeopleFluent Compensation's flexible and user-friendly interface is especially appealing to Close Brothers. Operating in the cloud, the software automatically saves users' work every minute, keeping records safe and preventing HR teams from having to start lost work over again, which could be both reputationally damaging and costly.

The results

With the help of PeopleFluent Compensation, Close Brothers now has a modern, streamlined process for its compensation cycles. Though the process update was a significant undertaking due to the number of employees and different divisions involved, employees outside of the HR department are not aware that there has been a major change.

PeopleFluent Compensation's user-friendly interface makes working through award cycles more efficient, as the legacy, spreadsheet-based process would need to be checked many times over to ensure that formulae had been correctly inputted and that calculations were accurate. As the software is purpose-built for these kinds of computations, the HR department no longer needs to run manual checks on a huge array of spreadsheet formulae. Consequently, the team has found itself with more time for data-focused conversations regarding compensation strategy and alignment with its business goals.

"We talk more strategically because PeopleFluent Compensation's ease of use gives us the space and time to do so. We're not spending time concerned about whether the system's performing. We know it's doing what we want it to"

• Ben Ward, HR Systems and Data Manager, Close Brothers Banking Division

The challenge

Alarm.com also benefits from:

Alarm.com is a US-based residential and commercial property security and automation business with global reach. In addition to its in-house customer support department, it has a network of over 10,000 dealer partners and 100,000 individual learners reliant on product training covering

the installation and operation of its security hardware and software systems.

Alarm.com required a way to distribute its courseware in varying standards to external dealers and partners' learning management systems (LMSs) while simultaneously providing access to the same content to an internal customer support department assisting these external partners. Historically,

it relied on a highly siloed and manual process to export multiple versions of its courses and used a file-sharing program to transmit files to customers.

These time-consuming procedures relied on a strict bimonthly maintenance window utilising complex spreadsheets in order to ensure course updates remained manageable. Inevitably, Alarm.com sought to reduce its content management burden while ensuring learners and partners could receive up-to-date training.

The solution

With Rustici Software's Content Controller, Alarm.com streamlined training delivery to its internal and partners' learning platforms. It allows for updates to be pushed centrally and changes logged automatically. Alarm.com can make alterations without disrupting content delivery, ensuring learners always have the newest course version.

Crucially, Content Controller helps Alarm.com simplify its administration of the diverging learning file standards required by its different audiences. A central, always up-to- date version is maintained in Alarm.com's preferred format and can be automatically dispatched out in different versions as needed by partners, as and when changes are made.

• Content Controller's content licensing features, guaranteeing IP control while providing courses to its external partners and allowing Alarm.com to automatically enable and disable access to content.
• Content Controller's "Equivalents" feature, assisting with Alarm.com's expanding global presence, and allowing for multiple language versions of its courses to be compiled into a single file.
• Content Controller's built-in Learning Record Store (LRS) allows the company to access more granular analytical insights as it pushes all data points to a single end-point, removing the need for custom integrations or manual processes to get LMS data.

The results

Since implementing Content Controller, Alarm.com has spent less time administering its courses and is now free to focus on creating new content. In 2023 alone, the company increased content created by over 400% from the previous year.

Significant time has been saved by creating one source of truth for the internal customer support department and external partners' audiences. Maintenance downtime has been reduced to virtually zero when updating courses. Alarm.com's partners report an improved overall experience now they can guarantee learners are accessing the most up-to-date version of their courses.

"Content Controller has really streamlined our content management to the point that we don't have to spend as much time doing it and don't depend on a single content manager. Our team is now agile enough that anybody can go in and manage content themselves, so Content Controller has saved us money in that regard. More importantly, it's allowed us to spend our time focusing on other things, like developing content instead of managing it."

- Ian McConnell, Manager, Learning Innovation and Operations