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Digital Learning Marketplace p (ARGP)

  Print      Mail a friend       Annual reports

Friday 10 August, 2012

Digital Learning Marketplace p

Digital Learning Marketplace plc : Final Results

Digital Learning Marketplace plc : Final Results

For immediate release                                             10 August 2012

Digital Learning Marketplace Plc ("DLM" or "the Company")
Financial statements for the period ended 31 December 2011

The Company today announces that its audited financial statements for the period ended 31 December 2011, extracts from which are set out below, are being posted to shareholders, and will be available on the website www.dlmplc.com

Chairman's Statement

The Company today announces that its audited financial statements for the period ended 31 December 2011, extracts from which are set out below, are being posted to shareholders, and will be available on the website www.dlmplc.com.

This Report and Accounts is the final set as Intellego Holdings plc.  The Company changed its name on 4 January 2012 to Digital Learning Marketplace plc, which better describes the future as it is transformed from an elearning to a digital learning business. The benefits of the realigned strategy will not start to be realised until the second half of 2012.

HIGHLIGHTS

DLM plc continues its transformation:

  • New experienced management and sales team recruited  

  • Acquisition programme has begun with the purchase of PIXELearning Ltd and the Digital Learning Marketplace software Platform ("DLMP"). and, 

  • New products and strategic alliances are being developed 

The strategy comprises two elements:

  • A Buy and Build acquisition strategy; and,  

  • the introduction of new technologies, including the fast growing digital learning market, with at its core the DLMP, a revolutionary centralised learning library, where customers can 'pick and pay' for corporate education content.  

This reporting period is for nine months and therefore not directly comparable with previous years.

  • Statement of financial position -  

  • The key area of financial improvement has been within the balance sheet where there has been continued strengthening; and,  

  • 42% of liabilities relate either to timing differences or are payable in shares such as the Pixel earn out -out. 

  • Statement of comprehensive income -  

  • Sales were £901,441 for the nine month period, compared to £1,598,245 for the previous 12 month period.  Part of the business was sold in April 2010 which contributed £451,000 of sales in that year.  

  • New product lines are being signed up to provide replacement revenues 

  • We won several awards for client work - demonstrating our place in the forefront of the industry 

For further information:

Digital Learning Marketplace Plc                                 Tel: 020 7408 4720
Angus Forrest

Beaumont Cornish Limited (NOMAD)                           Tel: 020 7628 3396
Roland Cornish

Peterhouse Capital                                                     Tel: 020 469 0935
Peter Greensmith / Jon Levinson

Northland Capital Partners Limited (Broker)                  Tel: 020 7796 8800
Katie Shelton / Tim Metcalfe

Leander (Financial PR)                                              Tel: 07795 168157

Christian Taylor-Wilkinson

NOTES TO EDITORS

About DLM

Digital Learning Marketplace plc is a London Stock Exchange AIM listed holding company run by a team of energetic and experienced learning professionals who share two simple but ambitious goals: to shape the future of management training and to transform the corporate learning industry.

DLM is building the next generation of innovative digital learning products - products that will bring about a step-change in the way organisations and individuals learn, develop and improve; and DLM has embarked on an aggressive but selective programme of mergers and acquisitions to consolidate what is a very fragmented market.

CHAIRMAN'S STATEMENT

Learning Market

The learning marketplace is changing.  The advent of digital and mobile technologies is a key enabler for change: first, the creation of learning materials allowing new features to be included is increasing effectiveness; second, the concept of "Cloud Computing" is now commonly accepted and the increased availability and affordability of mobile browsing has encouraged the wider use of smart phones and tablets (eg iPads) for learning; and third, platforms like Facebook and LinkedIn are now accepted components of marketing and relationship development for business.  These changes offer new market and distribution opportunities and make personalised learning a realistic prospect for the first time.

Review of the period 1 April to 31 December 2011

Our business continues to offer a wide range of effective learning solutions.  The acquisition of PIXELearning Ltd ("Pixel") in May 2011 broadened our offering at the premium end of the market by including the use of serious games in educational courses.  Gamification is proven to increase the effectiveness of learning through greater engagement and participation.  Customers are motivated by the improved effectiveness of this method of learning and consequently the shorter timeframe necessary to achieve a specified level of attainment.  Whilst the initial cost of learning incorporating gamification may be higher, better effectiveness leads to an overall reduction in cost.

In September 2011, we appointed a new CEO, Andy Hasoon, bringing industry experience, new vision and strategy to exploit the changes in the market.  

The existing business was reorganised and went through a significant transformation process during the period.  Our objective was to restructure the business so that we could grow the business aggressively including a 'Buy and Build' acquisition strategy.  The team began with particular focus on restructuring our bespoke products business.  We have improved efficiency in this creative division, increasing production capacity, broadening the range of offerings, whilst maintaining quality of delivery.

We started a consultancy division, DLM Professional Services Ltd, to offer advice to our customers at Board level on the use of learning programmes to enhance performance and meet objectives through improvements to workforce behaviour.  

Financial Review

Over the past 21 months as the Company has been reorganised, the Statement of Financial Position has strengthened by £732,000 (2011(£117,888) and 2010 (£849,946)).  Importantly this strengthening would assist the Company to support its new 'Buy and Build' strategy.

Of the £1,271,080 of liabilities in the Statement of Financial Position more than 42% of these, ie £535,000, relate either to timing differences or are provisions payable in shares over the next 18 months, such as the Pixel earn out.

The Statement of Comprehensive Income was affected by a fall in turnover of £451,000 as a result of the sale of the LMS distribution business in April 2010.  As well as a general increase in overheads as the business began to build the infrastructure necessary for growth, there were several one-off costs such as write-downs of intangible assets and goodwill. Finally, the new CEO recruited new managers and began to execute the new 'Buy and Build' acquisition strategy.  

Strategy

In order to validate our future strategy, we commissioned market research in 2011 from a leading industry consultancy.  Based on the findings of this research, we embarked on a new plan to take advantage of technical and market changes.  

The Company developed a strategy with two components:

1.   'Buy and Build': becoming a consolidator in the learning industry, which is very fragmented.  The advantages of scale include a wider breadth of customers and markets, larger size of contracts, greater value perceived by acquirers.  We appointed Europa Partners to help execute the acquisition strategy as the partners have previous extensive experience of making and assimilating multiple acquisitions including obtaining cross-fertilisation growth opportunities whilst delivering efficiencies.  

2.   Innovation: we are building new products and services.  We are creating our Digital Learning Marketplace software platform, ("DLMP"), which has been likened to an Amazon(TM) or an iTunes(TM) for corporate learning.  The DLMP will be a revolutionary new learning platform to allow corporations, SMEs and professionals to access their day-to-day learning requirements from a single repository.  The DLMP is being built in partnership with Pearson Learning and is part-funded by a grant from the Technology Strategy Board.  

Employees

We have been recruiting high quality people with relevant industry expertise to help us execute our growth strategy and to broaden and strengthen the team.  I would like to thank all employees for their contribution in the period.

In August 2012 Andy Hasoon resigned as a director but has agreed to continue in an advisory role.

Post year end

After the year end the group increased its overheads to implement internal growth and to support the proposed acquisition strategy, which was to be funded by raising new finance.  In July 2012, it became clear that it was not possible for the Company to raise significant funds for acquisitions and working capital in the market environment, so the Directors decided to revise its strategy. At least for the short-term, it will concentrate on its more traditional revenue streams and profitable trading, operating at a reduced cost base with a lower working capital requirement.  The Directors also implemented a programme to reduce and manage the liabilities of the group including voluntary agreements with creditors. As noted above, as part of this restructuring, it was agreed that Andy Hasoon would resign as a Director but continue in an advisory role.

The Company has secured £150,000 of additional working capital funding contingent on the re-listing of its shares and is working with its brokers to arrange further additional funding in the near term.

In order to bring the number of shares in issue more in line with the Company's size, resolutions will be proposed at the forthcoming AGM to consolidate the Ordinary Shares.  

Outlook

The results for H1 2012 will be affected by the changes begun in 2011 and referred to above.  The Directors believe the benefits of these changes will not be realised until H2 2012 and the technical challenges of developing new products and services may cause cost-overruns and/or delay launches, and lead times for winning orders may be longer than expected.  

The revisions to the strategy are to ensure that we meet customers' expectations and that the business model is self-sustaining whilst we build credibility with customers, partners and investors. The Directors believe that following the restructuring referred to earlier which includes a lower cost base and, assuming successful negotiations with creditors of one of the Group's subsidiaries, the outlook for the business, while more limited, is realistic and within control of the Board.  In due course, the Board intends to reconsider the Buy and Build strategy.

In the interim DLM is progressing with the launch of new digital products and the Digital Learning Marketplace Platform, so establishing sustainable competitive advantages for the Company, particularly in the development of truly personalised learning.

We are working with both customers and strategic partners on several major projects which are expected to launch in 2012 and look forward to announcing new services and products.  

I would like to welcome new shareholders and thank all shareholders for their support during the period.

Angus Forrest

Chairman
8 August 2012

Digital Learning Marketplace Plc
Financial statements for the period ended 31 December 2011
Consolidated statement of comprehensive income

Nine months to Dec 2011 Year to Mar 2011
Note £
Revenue 2 901,441 1,598,245
Sale of distribution rights- 407,838
901,441 2,006,083
Cost of sales (405,417) (574,062)
Gross profit496,024 1,432,021
Operating charges before depreciation and amortisation and exceptional items (1,349,060) (1,485,671)
Exceptional items 4 571,406 386,519
EBITDA[1] after exceptional items
(281,630) 332,869
Depreciation and amortisation (139,583) (176,193)
(Loss)/profit before financing(421,213) 156,676
Finance cost (5,632) (10,800)
(Loss)/profit on ordinary activities before taxation(426,845) 145,876
Taxation - -
(Loss)/profit on ordinary activities after taxation and total comprehensive income(426,845) 145,876
Basic and diluted loss per share 3 (0.08)p 0.05p

Digital Learning Marketplace Plc
Financial statements for the period ended 31 December 2011
Consolidated statement of financial position

NoteDec 2011 Mar 2011  Mar 2010
£ £ £
Assets
Non-Current Assets
Property, plant and equipment 566 1,803 51,599
Goodwill 5 464,189 206,289 206,289
Other intangible assets 326,319 142,920 198,817
791,074 351,012 456,705
Current Assets
Inventory 7,875 7,589 12,000
Trade and other receivables 310,756 347,553 588,856
Cash and cash equivalents 43,487 38,943 8,029
362,118 394,085 608,885
Total Assets1,153,192 745,097 1,065,590
Liabilities
Non-Current Liabilities
Trade and other payables 160,800 220,000 -
Long term borrowings 49,750 91,350 131,960
210,550 311,350 131,960
Current Liabilities
Trade and other payables 1,060,530 768,737 1,678,127
Borrowings - 40,600 105,449
1,060,530 809,337 1,783,576
Total Liabilities1,271,080 1,120,687 1,915,536
Net Liabilities(117,888) (375,590) (849,946)
Equity
Share capital 1,071,040 924,134 853,017
Share premium 2,200,052 1,802,411 1,545,048
Merger reserve 171,000 31,000 31,000
Profit and loss account (3,559,980) (3,133,135) (3,279,011)
Total Equity(117,888) (375,590) (849,946)

Digital Learning Marketplace Plc
Financial statements for the period ended 31 December 2011
Consolidated statement of changes in equity

Share
capital
Share premiumMerger reserveProfit and
loss account
Total equity
£££££
Balance at 1 April 2010 853,017 1,545,048 31,000 (3,279,011) (849,946)
Shares issued in year 71,117 257,363 - - 328,480
Profit for the year and total comprehensive income - - - 145,876 145,876
Balance at 31 March 2011 924,134 1,802,411 31,000 (3,133,135) (375,590)
Balance at 1 April 2011924,1341,802,41131,000(3,133,135)(375,590)
Shares issued in year 146,906397,641140,000-684,547
Profit for the year and total comprehensive income ---(426,845)(426,845)
Balance at 31 Dec 20111,071,0402,200,052171,000(3,559,980)(117,888)

Digital Learning Marketplace Plc
Financial statements for the period ended 31 December 2011
Consolidated statement of cash flows

Nine months to 31 Dec 2011 Year to 31 March 2011
£ £
Cash flows from operations
Loss/(profit) after taxation (426,845) 145,876
Adjustments for:
Depreciation 3,385 49,796
Amortisation 136,198 126,397
Impairment - -
Finance income - -
Interest expense 5,632 10,800
Decrease in trade and other receivables 77,818 241,303
(Increase)/decrease in inventories (286) 4,411
Decrease in trade and other payables (151,958) (689,390)
Cash used in operations (356,056) (110,807)
Interest paid (5,632) (10,800)
Net cash used in operating activities(361,688) (121,607)
Cash flows from investing activities
Purchase of property, plant and equipment (1,596) -
Investment in intangible assets (24,865) (70,500)
Cash acquired with business 96 -
Finance income - -
Net cash used in investing activities(26,365) (70,500)
Cash flows from financing activities
Net proceeds from issue of share capital 524,547 328,480
Net movement on bank and other loans (131,950) (46,631)
Net cash generated from financing activities392,597 281,849
Net increase in cash and cash equivalents4,544 89,742
Cash and cash equivalents at beginning of period38,943 (50,799)
Cash and cash equivalents at end of period43,487 38,943

Digital Learning Marketplace Plc
Financial statements for the year ended 31 December 2011
Extracts from Notes to the group financial statements

1Going concern

The consolidated accounts for the current period show a loss of £426,845 after the release of CVA liabilities and as at 31 December 2011 the group's liabilities exceeded its total assets by£117,888.  The directors have considered that it is appropriate to adopt the going concern basis in the preparation of the financial statements.  In reaching this conclusion the directors have considered the cash flow forecasts, current trading and prospects as further detailed in the Chairman's statement together with the Company Voluntary Arrangement which is detailed below.

Company Voluntary Arrangement(CVA)
Both Intellego Group Limited and Digital Learning Marketplace Plc entered into a CVA with their creditors in June 2010 and July 2010 respectively. Payments under the CVA were required to be made for six months for Digital Learning Marketplace Plc and for sixty months for Intellego Group Limited.  Digital Learning Marketplace Plc CVA was completed and satisfied on 6 June 2011.  On 23 June 2011 the directors decided that the continuation of the CVA for Intellego Group Limited was no longer viable and the Supervisor of the CVA was asked to wind up Intellego Group Limited.  A winding up order was granted by the court on 20 February 2012.  This has resulted in a release to the consolidated statement of comprehensive income of £571,406 in the current period financial statements (see note 4).

Forecasts
Forecasts have been prepared by the directors for the years to December 2012 and December 2013 based on the directors assessment of achievable sales. The forecasts show that the group will have sufficient funds during the period covered by the forecast based on the following key assumptions:

  • That the revised strategy will provide the basis for the refocused group to generate net cash from its operations 

  • That the negotiations with creditors of one of the group's subsidiaries will be successful 

  • That the fund raising will raise the £300,000 anticipated in the forecasts 

As detailed further in the Chairman's statement the group have reorganised the existing business in the period.  Following the year end there has been investment in a major new project, the Digital Learning Marketplace platform.

Should the group not deliver its business plan and liabilities arise as a result of the wind up of Intellego Group Limited, and sufficient funding is not in place to cover its obligations, there would be significant doubt about the group's ability to continue as a going concern, which therefore indicates a material uncertainty. The financial statements do not include the adjustments that would result if the group was unable to continue as a going concern.

2Segment analysis

The accounting policy for identifying segments is based on internal management reporting information that is regularly reviewed by the chief operating decision maker.  DLM operates three main segments Professional Services, Bespoke and Products.  The activity undertaken by the Professional Services segment is the resale of software developed by third parties.  The Bespoke segment includes consultancy, customisation, including development of content, and integration of e-learning systems.  Maintenance of these systems is undertaken by the Bespoke segment.  The Products segment includes the sale of internally generated content.  The revenues and net result generated by each of DLM plc's segments are summarised as follows:

Nine months to 31 December 2011

Professional ServicesBespokeProductsGroup
££££
Revenue 83,478646,814171,149901,441
Profit / (loss) for the period before exceptional items 42,890(912,278)(128,863)(998,251)
Exceptional items 571,406--571,406
Segment assets -1,073,79179,4011,153,192
Segment liabilities -(1,234,872)(36,208)(1,271,080)
Segment depreciation and amortisation -121,97117,612139,583
Segment capital additions -24,865-24,865

Year to 31 March 2011

Professional ServicesBespokeProductsGroup
££££
Revenue and sale of distribution rights 1,150,619

626,650

228,817

2,006,083

Profit / (loss) for the period (47,814) 91,656 102,034 145,876
Segment assets 61,019 506,476 177,602 745,097
Segment liabilities (681,976) (362,297) (76,414) (1,120,687)
Segment depreciation and amortisation - 152,709 23,484 176,193
Segment capital additions - 70,500 - 70,500

Year to 31 March 2010

Professional ServicesBespokeProductsGroup
££££
Revenue 1,051,588530,692270,9861,853,266
Loss for the period (463,581)(477,860)(102,374)(1,043,815)
Segment assets 224,160264,698576,7321,065,590
Segment liabilities (887,675)(479,079)(548,782)(1,915,536)
Segment depreciation and amortisation 73,24780,47279,732233,451
Segment capital additions -22,818-22,818

The Group's revenues from external customers may also be summarised by geographical area as follows.
All operations are located in the UK:

Dec 2011 Mar 2011
£ £
United Kingdom 666,747 1,851,269
North America 99,614 44,983
Europe 135,080 109,831
901,441 2,066,083

Sale of distribution rights

The sale of distribution rights in the prior year of £407,838 related to the sale in April 2010 of UK distribution rights for the EKP range of Learning Management software back to NetDimensions UK Limited.  The income does not meet the definition of revenue in accordance with IAS 18 - Revenue on the basis that it is not part of the ordinary trading activity of the group.  The income has therefore been disclose separately from revenue in the consolidated statement of comprehensive income.

3Loss per share

The calculation of loss per share is based on a loss for the period of £(426,845) (Mar 2011: profit £145,876) and on 514,849,637 (Mar 2011: 294,649,148) ordinary shares, being the weighted average number of ordinary shares in issue during the period.

In the current period the loss attributable to ordinary shareholders and the weighted average number of ordinary shares for the purpose of calculating the diluted earnings per share are identical to those used for the loss per share. This is because the exercise of share options and warrants would have the effect of reducing the loss per share and is therefore not dilutive under the terms of IAS 33.  For the prior year the weighted average number of shares for the purpose of calculating the diluted earnings per share was 304,549,148 ordinary shares.

Dec 2011 Mar 2011
Basic (loss)/earnings per share (0.08)p0.05p
Diluted (loss)/earnings per share (0.08)p0.05p

4Exceptional items

 Dec 2011 Mar 2011
£ £
Release of liabilities resulting from the CVA 571,406 386,519


Company Voluntary Arrangement(CVA)
As further detailed in note 1 Intellego Holdings Plc (now renamed Digital Learning Marketplace Plc) entered into  a CVA with its creditors in June 2010. Payments under the CVA were required to be made for six months. All contributions under the CVA through to December 2010 were paid and the CVA was recorded as completed on 6 June 2011.  

Intellego Group Limited entered into a CVA with its creditors in June 2010. Payments under the CVA were required to be made for sixty months. On 23 June 2011 the directors decided that the continuation of the CVA for Intellego Group Limited was no longer viable and the Supervisor of the CVA was asked to wind up Intellego Group Limited.  A winding up order was granted by the court on 20 February 2012.  This has resulted in a release of liabilities not payable (being the remaining CVA liabilities and other liabilities in Intellego Group Limited) to the consolidated statement of comprehensive income of £571,406 (March 2011 £ 386,519) as stated above.  

5Goodwill

 
Dec 2011
Goodwill
£
Cost after impairment
At 1 April 2011 206,289
Acquisitions (see note 20) 257,900
Impairment -
At 31 December 2011 464,189
Mar 2011
Goodwill
£
Cost after impairment
At 1 April 2010 206,289
Impairment -
At 31 March 2011 206,289
 
 

Impairment review

Goodwill is tested annually for impairment by reference to the recoverable amount of the relevant cash generating units.  The carrying amount of goodwill totalling £464,189 has been allocated to the cash generating units as follows.

£
Professional services -
Bespoke 449,189
Products 15,000
464,189

The recoverable amount for each of the cash-generating units was determined based on value-in-use calculations.

This is calculated on the basis of projected cash flows for the following five years derived from detailed budgets for this ensuing year, with subsequent years including modest nominal rates of sales and cost growth ranging from zero to 5% per annum and steady gross margins.  These cash flows are adjusted to present day values at a discount rate based on a cost of capital of 15% per annum.   The discount rate is consistent for all segments on the basis that they all operate in similar markets and are exposed to similar risks.  The residual value at the end of five years, computed by reference to projected year six cash flows and discounted, is also included.

The directors have considered the sensitivity of the key assumptions and have concluded that any possible changes that may be reasonably contemplated in these key assumptions would not result in the value in use falling below the carrying value of goodwill, given the amount of headroom available.

No impairment is considered to be required for the current year.

5.1Notes to the announcement:

  1. 1.The following statement was contained in the report of the independent auditors to the members of Digital Learning Marketplace Plc: 

"Emphasis of matter - Going concern

In forming our opinion on the financial statements, which is not qualified, we have considered the adequacy of the disclosure made in note 1 to the financial statements concerning the group and parent company's ability to continue as a going concern. The group made a loss of £426,845 during the period ended 31 December 2011 and, at that date, the group's liabilities exceeded its total assets by £117,888.

These conditions, along with other matters as set out in note 1, indicate the existence of a material uncertainty that may cast significant doubt about the group and company's ability to continue as a going concern."

2        Basis of preparation

The financial information in this preliminary announcement has been prepared under the historical cost convention and in compliance with International Financial Reporting Standards (IFRS) and International Financial Reporting Interpretations Committee (IFRIC) interpretations as adopted by the European Union as at 31 December 2011.

3        Summary accounts

The summary accounts set out above do not constitute statutory accounts as defined by Section 434 of the UK Companies Act 2006. The summarised statement of financial position for the period ended 31 December 2011, the summarised consolidated statement of comprehensive income, the summarised consolidated statement of changes in equity and the summarised consolidated statement of cashflows for the period then ended have been extracted from the Group's statutory financial statements for the period ended 31 December 2011 upon which the auditors' opinion is unqualified and did not contain a statement under either sections 498(2) or 498(3) of the Companies Act 2006. The audit reports for the year ended 31 March 2011 did not contain statements under Section 498(2) or Section 398(3) of the Companies Act 2006. The statutory financial statements for the year ended 31 March 2011 have been delivered to the Registrar of Companies. The 31 December 2011 accounts were approved by the directors on 8 August 2012, but have not yet been delivered to the Registrar of Companies.

[1]  EBITDA represents earnings before depreciation and amortisation, finance income, finance costs and UK income tax.




This announcement is distributed by Thomson Reuters on behalf of Thomson Reuters clients.

The owner of this announcement warrants that:
(i) the releases contained herein are protected by copyright and other applicable laws; and
(ii) they are solely responsible for the content, accuracy and originality of the
information contained therein.

Source: Digital Learning Marketplace plc via Thomson Reuters ONE

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