Strong sales momentum, with EBIT materially ahead of expectations
Learning Technologies Group plc, provider of services and technologies for digital learning and talent management, announces the following trading update for the six months to 30 June 2019.
For the first half of the year, the Board expects Group revenues to be approximately £62.5 million (H1 2018: £33.8 million), an increase of c.85%. Adjusted EBIT is anticipated to be ahead of expectations at not less than £20.0 million for the first half of 2019 (H1 2018: £8.9 million), representing an EBIT increase of c.125% and EBIT margin increase from 26.3% to c.32.0%. The Board is confident that full-year adjusted EBIT will be materially ahead of current market expectations.
Approximately 67% of revenues are from recurring contracts (H1 2018: 51%), primarily driven by the transformational PeopleFluent acquisition in May 2018.
Revenues in PeopleFluent were supported by a higher-than-expected retention rate for its software licences. This underscores the Board’s confidence that, as previously guided, PeopleFluent is on track to return to growth in 2020. Breezy HR has integrated swiftly and is growing revenue ahead of expectations. Excluding PeopleFluent, organic revenue growth in the Software & Platforms division was strong for H1, and the expectation is that this trend will continue in H2.
Content & Services organic revenues were up significantly on H2 2018. Strong sales momentum from LEO and Preloaded has continued from Q4 2018 into H1 2019, with notable successes including a large multi-million dollar contract win for LEO in the US. As a result the Board expects substantial organic growth in the Content & Services division in the second half of the year.
Net debt is in line with expectations at £13.9 million (31 December 2018: £11.5 million), following the acquisition of Breezy HR in April 2019 for an initial cash consideration of £8.8 million, the final deferred contingent consideration payment to Rustici vendors of £2.8 million, and a final dividend payment of £2.3 million.
The above results are stated on a comparable basis with the Group’s 2018 Annual Report and Accounts and exclude the impact of the adoption of IFRS 16 with effect from 1 January 2019. The Board also intends to restate adjusted EBIT to include the share based payment charge. Further details of the impact of these adjustments will be provided in the Group’s half year results announcement on 16 September 2019.
Jonathan Satchell, Chief Executive, said:
“I am particularly delighted by the sales momentum in our Content & Services division that has built over the last nine months. Our Software & Platforms division continues to go from strength-to-strength.
LTG’s outstanding margins and cash generation provide additional capacity to invest in further sales growth in the second half of the year, and pursue a number of new initiatives to augment organic growth into 2020. We continue to consider a number of very interesting acquisition opportunities that would meaningfully enhance the Group.
This strong H1 performance underpins the Board’s confidence that full-year EBIT will be materially ahead of expectations.”