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Decline in core awarding business impacts City and Guilds

publication date: Jul 2, 2017

City & Guilds Group (C&G) delivered net income before adjustments of £2.3m (2015: £6.7m) on total income down 2.6% to £137.4m (2015: £141.1m), according to its recently published Report and Financial Statements. C&G says the decline in total income was principally due to a contraction in C&G’s core awarding business, driven by ongoing policy changes and a significant reduction in learners in the market (estimated at around 7%), partially offset by a 9% increase in like-for-like revenue of £18.9m at Kineo, the organisation’s eLearning business, and a full year contribution of £7.3m (2015: £4.0m) from Oxford Group, which was acquired in January 2015. After adjustments, including the deconsolidation of the Institute of Leadership in January 2016, the organisation had net funds of £75.3m (2015: £118.3m) at the year end.

C&G operates across the globe, through 10,000 approved training centres and partners worldwide. The organisation works with governments, learning providers, employers, senior executives and individual learners. In recent years, C&G’s focus has been on diversifying the group into verticals which are less reliant on public funding, and investing in new ventures and in products and services to expand its offer. As a result, C&G is now organised into five business units: 

  • City & Guilds, the organisation’s core business, which provides vocational qualifications, learning resources, assessment and accreditation to colleges and training providers. C&G’s qualifications and learning programmes are available across 26 industries and over the past five years there has been an average of over two million C&G registrations each year (including ILM). C&G also offers 137 apprenticeship frameworks from agriculture to engineering, management to hairdressing. 
  • ILM, which comprises leadership and management qualifications, assessment and accreditation. C&G says 95,000 managers took an ILM qualification in FY16 (2015: 89k). 
  • City & Guilds Kineo, which provides corporate learning and learning technology solutions. Since acquiring Kineo in November 2012 for £9.7m, C&G has bolted on several complementary businesses, including Flexible Learning Networks (November 2013), a New Zealand-based company which trades as Kineo Pacific, and Nine Lanterns (acquired in October 2015 for £1.8m), a Melbourne-based company which creates custom built eLearning content and platform solutions. 
  • The Oxford Group, which provides leadership development, training and executive coaching programmes through a global network of over 200 leadership training consultants. Oxford Group was acquired by C&G in January 2015 for a total consideration of £9.5m, including a deferred element of up to £3.5m.
  • C&G Digitalme, a provider of digital credentialing services. Using Open Badge technology, Digitalme provides digital badges, which enable learners to validate their learning and communicate their skills to education providers and employers in a digital world. C&G acquired the business for £1.0m in June 2016.

Qualifications remain core to C&G’s business objectives and the organisation continues to invest in new products. C&G’s new TechBac awards, which have been developed with employers and education providers, offer 14-19 year olds a mix of technical and workplace skills and behaviours, designed to bridge the gap between education and employment. First taught in September 2016, C&G says 137 of its technical qualifications are now approved by the Department for Education. TechBacs will appear alongside GCSE and A levels in school performance tables from September 2018.

Other products and services launched by the C&G group in the last twelve months include PIVOT, an online tool developed by Kineo to enable businesses to deliver, manage and track delivery of apprenticeships, and Management Plus, a blended learning approach developed by Kineo and The Oxford Group to develop front-line managers, by addressing specific skills gaps to make sure they have the right skills for the job

More recently, in May 2017, C&G expanded its provision of training delivery, with the acquisition of Workington-based training and apprenticeships provider, GEN II Engineering & Technology Training (Gen2). For the year ended 31 March 2016, Gen2 delivered an operating profit of £419k (2015: £912k) on revenue of £12.6m (2015: £12.6m). The financial terms of the deal have not been disclosed.

Established in 2000 by five international companies from within the Engineering, Nuclear, and Advanced Manufacturing sectors, Gen2 is the largest training provider to the UK civil nuclear industry. At acquisition, the company had 1,300 apprentices in learner programmes, as well as 250 students on higher education programmes, and employed around 160 staff.

C&G says the acquisition expands its remit in technical and skills development, and will strengthen its offer in STEM related industries, which are often hampered by skills gaps. Following the acquisition, C&G says Gen2, in partnership with other industry bodies, will explore becoming one of the first government-backed Institutes of Technology, which were outlined in the government’s Industrial Strategy in January 2017.

In September 2015, C&G launched a £2.5m New Venture Fund to invest in post-revenue companies to support innovation in global skills and workforce development. To date, C&G’s New Venture Fund has invested in five companies: 

  • Filtered (Excel With Business Limited) - a London-based online training company, which uses adaptive technology to provide personalised learning material and online testing for each user. C&G says 700,000 users have taken courses from its suite of programmes, which include essential business skills, competency in Microsoft Office, and business analysis. C&G offers Filtered eLearning to its employees for skills training. The New Venture Fund invested £488k in March 2016 for a 5.2% equity stake. 
  • Credly - a US-based provider of digital badges and other credentials that recognise and validate achievements in training, professional development and lifelong learning activity. Founded in 2012 to meet the growing demand for online accreditation and proof-of-learning, Credly attracted funding from other investors in its March 2016 $2.5m seed round, including University Ventures, New Markets Venture Partners, Lumina Foundation and Lion Brothers Company. C&G’s New Ventures Fund invested £286k. 
  • GetMyFirstJob, an online apprenticeship matching service which C&G says has around 300,000 registered users and thousands of applications processed each month. The New Venture Fund invested £488k in May 2016. 
  • EmpowerTheUser (ETU) - Dublin-based developer of a SaaS simulation-based learning and assessment platform for the corporate training and talent management market. Founded in 2010 by Declan Dagger, CEO, ETU partners with global organisations, such as Morgan Stanley, PwC and BNY Mellon, to deliver simulations for training and assessing workplace skills and behaviours. The New Ventures Fund invested in ETU in March 2017. The financial terms of the investment have not been disclosed. Leaf Investments is also an investor in ETU. 
  • HT2 Labs – Oxford-based provider of technology for workplace digital learning. Founded by father and son team Alan and Ben Betts, HT2 Labs develops technology that enables businesses to design, develop and deliver workplace learning solutions for their employees. Driven by big data and large-scale text analytics, HT2 Labs systems combine to create online learning environments that allow organisations to measure the extent of behavioural change seen during learning programmes. The New Ventures Fund invested in HT2 Labs in April 2017. The financial terms of the investment have not been disclosed. 

C&G also has investments in Manipal City & Guilds Pte Limited (India Skills), a joint venture with Manipal, in which C&G injected a further £102k (2015: £65k) in FY16, Totara Learning Solutions (investment of £322k) and MyKindaFuture, which helps help students explore their career options post-education (investment of £557k).

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