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Learning Technology - Half Year Report

Learning Technologies Group plc

 

HALF YEAR RESULTS 2019

 

Strong sales and margin expansion drives EBIT and cash generation

 

Learning Technologies Group plc ("LTG" or the "Company"), the provider of services and technologies for digital learning and talent management, is pleased to announce its half year results for the six months ended 30 June 2019.

 

Strategic highlights:

·      Strong Group EBIT margin performance and cash generation

·      Cross-selling initiatives driving sales momentum

·      PeopleFluent progressing well - confident of return to growth in 2020

·      Content & Services displaying significant improvement versus H2 2018, with momentum in LEO and Preloaded, reflecting focussed investment in sales

·      Launch of Instilled Learning Experience Platform ('LXP')

·      Successful acquisition of BreezyHR, integrated swiftly and now delivering impressive revenue growth

 

Financial highlights:

·      Revenue up 85% to £62.6m (H1 2018: £33.8m), 74% recurring revenue (H1 2018: 51%)

·      Software & Platforms (68% of Group revenue)

        - Organic revenue up 7%, excluding PeopleFluent

        - PeopleFluent successfully managing retention rates to stabilise revenues

        - Growth across Rustici, gomo and Watershed

        BreezyHR integration completed and growing strongly

·      Content & Services (32% of Group revenue)

        Organic revenue (excluding CSL contract) down 3% but confident of strong organic growth for Financial Year 2019

        Excellent sales momentum supports expectation of strong H2 for LEO and Preloaded

        Cross-selling supporting recent wins

·      Adjusted EBIT ahead of expectations, up 134% to £19.4m (H1 2018: £8.3m)

·      Strong margin progression, with EBIT margins up 660 basis points to 31.1%

·      Adjusted diluted EPS of 2.228 pence, up 117%

·      Proposed interim dividend of 0.25 pence, up 67%

·      Good cash generation, resulting in net debt of £13.9m following $12.7m acquisition of Breezy and net debt : EBITDA of 0.3x (H1 2018: 0.8x)

·      Robust balance sheet and debt facility supports strong acquisition pipeline

 

Current trading and outlook

·      FY2019 in line with upgraded expectations, as announced on 22 July 2019

·      Software & Platforms performing well aided by high growth acquisitions and new product developments

·      Content & Services expected to deliver organic growth of c.8% in FY2019

·      Strong cash generation since period end; net debt at end August 2019 down to £7.8m

·      Active pipeline of strategic acquisition opportunities with significant funding capacity

·      Sales pipeline and high proportion of recurring revenue underpins the Board's confidence for 2019 performance

 

Jonathan Satchell, CEO of LTG, said:

"In the first half of 2019 both our divisions have delivered a strong performance, with Software & Platforms delivering an increasing proportion of high margin recurring revenues from software licenses, and organic sales momentum greatly increasing in Content & Services.

 "The Group continues to deliver excellent shareholder value by efficiently transforming recently acquired businesses, with PeopleFluent successfully integrated and expected to return to growth in 2020 and BreezyHR, acquired in April 2019, achieving significant growth and showing great promise.

"Our first half performance increased recurring revenues and robust current trading provides great confidence for the year ahead to deliver further organic growth, strong margins and excellent cash generation. On the back of this momentum, we are investing in H2 2019 to drive sales further, as well as supporting organic growth initiatives into 2020."