Learning Technologies Group Regulatory News (LTG)

NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, DIRECTLY OR INDIRECTLY, IN OR INTO, THE UNITED STATES OF AMERICA, UNITED STATES, AUSTRALIA, CANADA, JAPAN, SOUTH AFRICA OR THE REPUBLIC OF IRELAND

22 October 2013

In-Deed Online plc ("In-Deed", the "Company")

Proposed acquisition of Epic Group Limited ("Epic")

Proposed waiver of Rule 9 of the Takeover Code

Change of name to Learning Technologies Group plc ("LTG")

Admission of the Enlarged Group to trading on AIM

In-Deed today announces the proposed acquisition of Epic, a leading international e-learning business. Epic's management team will become Directors and major shareholders in the Company, to be renamed Learning Technologies Group plc.

• Epic holds a market leading position in the UK, has international operations in Brazil and North America and provides a range of e-learning solutions to blue-chip clients including Bridgestone, Deloitte, easyJet, H&M, Lloyds Banking Group and Pearson 

• Epic has an impressive track record of profits and margin improvement with CAGRs of 16.5 per cent. in revenue and 219 per cent. in operating profit in the three financial years to 31 December 2012

• LTG, the new holding company, plans to grow both organically and through acquisition within the highly fragmented e-learning space. In the medium term it intends to create a business generating annual revenue of at least £50 million

• The Board of LTG will include Andrew Brode (Chairman of the highly successful AIM business RWS Holdings plc), Harry Hill (former CEO of Countrywide for 20 years) and Jonathan Satchell (CEO of Epic with a track record of growing e-learning businesses)

• The consideration for the acquisition will be c. £16.3 million comprising the issue of 255 million shares to Epic shareholders at a price of c. 5.88 pence per ordinary share and a payment of c. £1.3 million in cash

• 43.6 per cent. of existing shareholders in In-Deed, including the Board, have irrevocably undertaken to vote in favour of the transaction

• The General Meeting to approve the resolutions relating to the acquisition and the change of name will be held on 7 November 2013 and if approved, the Enlarged Group will be admitted to AIM on 8 November 2013

Harry Hill, the Executive Chairman of In-Deed, commented:

"This is an excellent proposition for In-Deed shareholders and a good use of the In-Deed listing. E-learning is a fast growing segment and this business has established itself as a market leader in the UK and has a strong platform to build out internationally."

Jonathan Satchell, the Chief Executive Officer of Epic, commented:

"We are delighted with the reception we have had from In-Deed's shareholders and directors who have supported the injection of our business into their listing. We are excited about the future: we have a proven proposition with a competitive advantage within the fast-growing e-learning sector, scalable systems and processes, a blue chip repeat client base from which to expand and a Board that brings deep experience of managing growth here and overseas. The listing will enable us to accelerate our growth through access to capital to effect our buy and build strategy."

Enquiries

Neither In-Deed Online plc nor Numis Securities Limited nor any of their respective associates or directors, officers or advisers, provides any representation, assurance or guarantee that the occurrence of the events expressed or implied by any forward-looking statements contained herein will actually occur. Other than in accordance with their legal or regulatory obligations (including under the AIM Rules, the Disclosure and Transparency Rules of the Financial Conduct Authority and the City Code on Takeovers and Mergers), neither In-Deed Online plc nor Numis Securities Limited is under any obligation, and each of them expressly disclaims any intention or obligation, to update or revise any forward looking statements, whether as a result of new information, future events or otherwise.

NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, DIRECTLY OR INDIRECTLY, IN OR INTO, THE UNITED STATES OF AMERICA, UNITED STATES, AUSTRALIA, CANADA, JAPAN, SOUTH AFRICA OR THE REPUBLIC OF IRELAND

In-Deed Online plc ("In-Deed", the "Company")

Proposed acquisition of Epic Group Limited (''Epic'')

Proposed waiver of Rule 9 of the Takeover Code

Change of name to Learning Technologies Group plc

Admission of the Enlarged Share Capital to trading on AIM

1. Introduction

The Board of the Company is pleased to announce that it has agreed to acquire the entire issued and to be issued share capital of Epic, a leading learning technologies agency. The consideration for the Acquisition will be £16.3 million, comprising the issue, credited as fully paid, of 255,000,000 Consideration Shares to the Epic Shareholders at a price of 5.882353 pence per Ordinary Share and a payment to the Epic Shareholders and to holders of Epic Shares who acquired those shares following the exercise of options issued to them pursuant to the Epic Share Option Scheme of an aggregate cash consideration of £1,323,254.

2. Background to and reasons for the Acquisition

On 2 July 2013 the Company completed the sale of its wholly owned subsidiary Xanther Limited and its subsidiary company, Runnett & Co Limited. This disposal resulted in the Company no longer being an operating business and thus becoming an Investing Company under the AIM Rules. The Company's Investing Policy was set out in the circular to Shareholders dated 12 June 2013 which was approved at a general meeting of Shareholders on 2 July 2013. The Company is accordingly required to make an acquisition or acquisitions which constitute a reverse takeover under the AIM Rules for companies implementing its Investment Policy within twelve months of that general meeting.

Since the Company's general meeting in July, the Directors have been seeking suitable opportunities for the Company, resulting in the Acquisition.

The Acquisition, if completed, will result in In-Deed Online becoming an operating company instead of an investing company, and will constitute a reverse takeover under AIM Rules for Companies. The Acquisition is therefore subject to the approval of In-Deed Online Shareholders at a General Meeting of the Company to be held at Edwin Coe LLP, 2 Stone Buildings, Lincoln's Inn, London WC2A 3TH at 10:00 a.m. on 7 November 2013.

3. Information on Epic

The first acquisition of LTG is Epic which is a leading learning technologies agency, established in 1986 and headquartered in Brighton, United Kingdom with additional offices in Rio de Janeiro, Brazil (established in 2011) and New York, United States (established in 2012). Epic provides a range of services, including e-learning, multi-device learning and learning platforms to leading organisations worldwide, including Bridgestone, Deloitte, easyJet, H&M, Lloyds Banking Group and Pearson. It also has a strong base of public sector customers in the UK, which includes a long-term contract with Civil Service Learning. Epic's success has frequently been recognised within the industry and it is the current holder of E-learning Age's 'Elearning Development Company of the Year' award, the UK's premier e-learning award. Epic has won numerous major industry awards, including gold winner at the 2012 E-learning Age Awards for 'Excellence in the Production of Learning Content - Private Sector' and Gold Winner in the 2012 International E-Learning Awards for 'Mobile Learning'.

Epic has a consistent track record of operating profitability and has enjoyed continued year-on-year improvement in operating profit margin since 2010. In the financial year to 31 December 2012, revenue was £6.9m and operating profit was £0.8m, which represent CAGRs of 16.5 per cent. and 219 per cent. respectively since the financial year to 31 December 2010.

The learning technologies market is growing globally and e-learning is expected to be used increasingly in corporate environments for training purposes. Growth is anticipated to be particularly strong in emerging markets, such as Asia-Pacific, Latin America and Sub-Saharan Africa. In addition, the Directors anticipate that increasing complexity and regulation in the workplace will lead to an increase in e-learning requirements.

The global e-learning market remains highly fragmented and as such, there is an opportunity to create a new leader in the market through selected acquisitions. The Directors and Proposed Directors intend that the Group will be a key participant in this consolidation.

4. Key strengths

Market leading position in the UK

Epic has continued to maintain a leading position in the UK e-learning market whilst significantly increasing its operating profit margin from 2010 to 2012 at a year-on-year average of 4.8 per cent. According to post-project review surveys undertaken by Epic in 2012, 100% of the company's clients were satisfied with Epic's service and final project delivery, and had a 9.3 out of 10 likelihood of recommending the service. 21% of the company's business originated from ''word of mouth'' in 2012. In addition, Epic was rated first for "Potential and Performance" by Elearnity in July 2013.

Depth and breadth of services

Epic provides a wide array of bespoke solutions to its clients within the learning technologies field - ranging from e-learning, mobile learning, learning platforms and consultancy. This allows Epic to provide multiple solutions to a wide client base based on individual client's strategies and needs.

Exposure to a structural high growth market

E-learning expenditure is projected to grow at 23% per annum from 2012 to 2017 with 41.7% of G500 companies already using technology adapted training. Epic's distribution across apps, mobile devices (phone and tablet), and different platforms and portals allows it to take advantage of growth in technology, online content and social media that supports learning.

Longstanding relationships with blue-chip client base

In the year to July 2013 c.61% of Epic's revenues came from repeat clients. Moreover, the breadth of Epic's product and service offerings allows it, in the Directors' opinion, to engage those clients on a deeper level than many of its competitors. Epic's private sector clients, which include Bridgestone, Deloitte, easyJet, H&M, Lloyds Banking Group and Pearson constitute c.70% of the company's revenue. Epic's public sector clients include BBC, Ministry of Defence and the UK Civil Service and constitute c.30% of the company's revenue.

Highly experienced leadership team

LTG's Board has considerable experience in developing and growing businesses, including Rightmove plc (founded by Harry Hill and currently a constituent of the FTSE 250 Index), Eclipse Group (the management buyout of which was led by Andrew Brode, subsequently sold to Reed Elsevier) and RWS Holdings plc (which has grown to become Europe's leading technical translations group, chaired by Andrew Brode).

The executive management team has extensive experience of the international e-learning industry, along with ability to expand the Company globally, evidenced by Epic's successful entry into the United States and Latin America. Furthermore, Jonathan Satchell, to be appointed Chief Executive Officer, has particular experience of transforming businesses in the e-learning sector through the acquisitions of both Executive Business Channel Limited (subsequently sold to Futuremedia) and Epic (acquired from Huveaux plc).

Proven financial track record

Epic has achieved strong organic growth in revenue and profits throughout the recent economic downturn. Over the three year financial period ended 31 December 2012, it has delivered a CAGR of 16.5 per cent., 24.5 per cent., 218.7 per cent. and 214.6 per cent. in revenue, gross profit, operating profit and profit before tax respectively. Gross margin was 58.7 per cent. and operating margin was 11.1 per cent. in the year to 31 December 2012. Historically Epic has been entirely funded from internally generated cash flows. Notwithstanding these investments, Epic is in a cash positive position, with low capital expenditure requirements. It has no reliance on external finance providers.

Multiple organic growth opportunities for Epic

Epic anticipates year-on-year revenue growth of c.12-15% during 2013. With a large number of blue chip clients, across a range of sectors and geographies, and with differing levels of sophistication in their training programmes, Epic has a clear organic growth opportunity to continue its expansion by increasingly selling additional learning technologies services in order to more deeply penetrate its

existing client base.

Alongside this opportunity for the core UK business, Epic has offices in two additional attractive geographies: Brazil and the US. While these are currently at an early stage, the directors of Epic are pleased with their performance to date and they offer the potential for strong revenue growth in the future. Furthermore, the directors expect that the launch of Epic's proprietary authoring tool, GoMo, as a SaaS platform will provide Epic with a recurring licence revenue stream.

Attractive acquisition opportunities for LTG

The e-learning market is highly fragmented with c.3,000 companies in Europe alone. There is a strong appetite from strategic, private equity and venture capital firms for e-learning opportunities with $8.5bn M&A deals completed globally in 2012. In the United Kingdom, there are c.260 e-learning software development companies making it the largest market in Europe. Epic has already identified three potential UK acquisition targets and the Directors believe that it is well positioned to take advantage of the market's consolidation.

LTG's acquisition strategy will initially focus on increasing scale in the UK and Europe. In the medium to longer term, the Directors expect LTG to leverage its scale in the UK market to expand internationally with in-fill acquisitions securing exposure to additional growth markets, such as Asia.

5. LTG's growth strategy

In the medium term, the Directors and Proposed Directors intend to grow LTG, both organically and through acquisition, to a business generating annual revenue of at least £50 million per year.

Organic growth will be driven by continuing its impressive rate of new client wins and deeper penetration into its existing clients building on its existing expertise to further extend its offering. Epic's offices in New York and Rio de Janeiro are expected to be key growth engines of the Enlarged Group. The US sales team is planned to double and the Brazil sales team to triple in 2014.

Importantly, the Enlarged Group plans to play a leading role in the consolidation of the e-learning industry through selective acquisitions of competitors and complementary businesses.

The e-learning custom content market is highly fragmented. IBIS Capital estimates that there are 3,000 e-learning companies in Europe with no dominant players. Market leading companies, including Epic, tend to generate revenue of less than £10 million. As such, the Directors and Proposed Directors believe that there is an opportunity to consolidate the market by creating a corporate e-learning business with larger scale and reach. The Directors and Proposed Directors note that there is a strong appetite from strategic, private equity and venture capital firms for e-learning opportunities with $8.5bn M&A deals completed globally in 2012.

It is likely that initial acquisitions will be in the UK where there are c.260 e-learning software development companies making it the largest market in Europe. Early acquisitions are likely to focus on custom content providers as the Directors and Proposed Directors believe that such companies will be simpler to integrate with Epic's existing business. This will create a business of a scale and footprint that should enable Epic to add complementary specialist e-learning services through acquisition or organic development. These include authoring tools, learning data analytics, adaptive learning and LaaS (Learning-as-a-Service). Epic has already identified three potential UK acquisition targets. In the medium to longer term, the Directors and Proposed Directors expect LTG to leverage its scale in the UK market to expand internationally with in-fill acquisitions securing exposure to additional growth markets, such as Asia.

A further opportunity for growth is in the development of a SaaS offering, based upon Epic's GoMo multi-device content authoring tool. This software has been in development over 3 years, and c.£0.4 million has been invested in its development over this time. The Directors and Proposed Directors consider SaaS revenues to be particularly attractive as they are annual licence based and therefore provide a recurring revenue stream to the Epic Group.

6. Directors and senior management

The board of Directors of the Company and senior management of the Enlarged Group on Admission are as follows:

Board of Directors

Andrew Brode, Non-executive Chairman, aged 73

Andrew is a chartered accountant and was chief executive of Wolters Kluwer (UK) Plc between 1978 and 1990. In 1990, he led the management buyout of Eclipse Group Limited, which was sold to Reed Elsevier plc in 2000. In 1995, he led the management buy-in of AIM-listed RWS Holdings plc, Europe's largest technical translations group. Andrew is also non-executive Chairman of AIM listed Electric Word plc and a non-executive director of Vitesse Media plc, also listed on AIM.

He acquired Epic together with Jonathan Satchell in 2008 and has acted as non-executive Chairman since that time. He is also a non-executive director of a number of private-equity backed media companies, including Reading Room Limited.

Jonathan Satchell, Chief Executive Officer, aged 46

Jonathan is responsible for the overall strategic development of the Enlarged Group with a particular focus on innovation and international opportunities. He has a strong sales and entrepreneurial background, having started his first business in 1992 selling subscriptions for Accountancy TV, a joint venture of the Institute of Chartered Accountants in England and Wales and the BBC which created continuing professional development content for training programmes. He has been involved in theeducation and training industry ever since, acquiring Executive Business Channel Limited 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.

He became interim Managing Director of Epic in 2007 and the following year he purchased the Company with Andrew Brode.

Peter Mountford, Executive Deputy Chairman, aged 56

Peter has been a director of a number of private and public companies including a non-executive director of RWS Holdings plc. He is the Chairman of Heropreneurs, an organisation formed to help ex-service men and women become entrepreneurs.

He was the co-founder of Bradmount Investments Limited, which was formed in 1993 as a private investment company, and through which he completed many successful investments and acquisitions. He qualified as a Chartered Accountant in 1982, and in 1986 became one of the founding Directors of Arthur Andersen Corporate Finance. Between 1989 and 1991 he was seconded to the Takeover Panel where he advised on many high profile takeovers and public company transactions.

Peter will, working closely with the Chief Executive Officer, execute the Board acquisition strategy, be responsible for corporate finance related matters and, together with the Chairman, lead on corporate governance matters.

Harry Hill, Non-executive director, aged 65

Harry was 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. Harry was also responsible for forming Countrywide Property Lawyers, which was established to take advantage of conveyancing referrals from within the estate agency chain. His current directorships include Jupiter Second Split Trust plc and Bluethroat Limited (a privately owned property development company) and Commercial Property Digital Limited.

Senior Management

Dale Solomon, Commercial Director, aged 34

Dale oversees Epic's sales, bid, and marketing functions globally.

Before joining Epic in 2010, he spent 12 years as both an internal and external learning consultant. He has extensive experience in learning design, development and facilitation methodology, analysing training needs and measuring Return on Investment for global organisations. He also has considerable understanding of developing sales strategies and growing sales teams and networks of reseller channels and agents.

Richard Jones, Finance Director, aged 49

Richard joined Epic in 2006. He is a member of the ICAEW and has a BA (Hons) degree in Accounting and Finance. He qualified as a Chartered Accountant with Grant Thornton and subsequently worked in Sydney for Price Waterhouse.

7. Expected timetable of principal events

All future dates referred to in this document are subject to change at the discretion of the Company and Numis.

Defined terms used in this announcement shall have the same meaning as those terms defined and used in the admission document of the Company dated 22 October 2013, available at http://www.in-deedplc.co.uk/.

Forward looking statements

Certain statements contained herein constitute forward-looking statements. The forward-looking statements contained herein include statements about the expected effects of the Admission, the expected timing of the Admission and other statements

other than in relation to historical facts. Forward-looking statements including, without limitation, statements typically containing words such as ''intends'', ''anticipates'', ''targets'', ''estimates'', ''believes'', ''should'', ''plans'', ''will'', ''expects'' and similar expressions or statements that are not historical facts are intended to identify those expressions or statements as forward-looking statements. The statements are based on the current expectations of In-Deed Online plc and are naturally subject to uncertainty and changes in circumstances. By their nature, forward-looking statements involve risk and uncertainty and the factors described in the context of such forward-looking statements in this document could cause actual results and developments to differ materially from those expressed in or implied by such forward-looking statements. There are also a number of other factors that could cause actual results or developments to differ materially from those expressed or implied by such forward-looking statements. These factors include, but are not limited to, local and global political and economic conditions, interest rate fluctuations (including those from any potential credit rating decline) and legal or regulatory developments and changes. Given these risks and uncertainties, investors should not place undue reliance on forward-looking statements.

Neither In-Deed Online plc nor Numis Securities Limited nor any of their respective associates or directors, officers or advisers, provides any representation, assurance or guarantee that the occurrence of the events expressed or implied by any forward-looking statements contained herein will actually occur. Other than in accordance with their legal or regulatory obligations (including under the AIM Rules, the Disclosure and Transparency Rules of the Financial Conduct Authority and the City Code on Takeovers and Mergers), neither In-Deed Online plc nor Numis Securities Limited is under any obligation, and each of them expressly disclaims any intention or obligation, to update or revise any forward looking statements, whether as a result of new information, future events or otherwise.