Half year trading and US regulatory update
24 July 2024
This announcement contains inside information for the purposes of the market abuse regulation (EU No. 596/2014) as it forms part of United Kingdom domestic law by virtue of the European Union(Withdrawal) Act 2018, as amended.
Learning Technologies Group plc
("LTG", the "Group")
(AIM: LTG)
Half year trading and US regulatory update
Trading update
LTG, a leading provider of services and technologies for learning and talent management, announces a trading update for the six months to 30 June 2024. All figures relate to this period unless otherwise stated.
Reported revenue is expected to be not less than £248 million (H1 2023: £268.2 million on a like-for-like basis(1)), with an FX headwind in H1 due to a weaker US dollar(2). Our SaaS and long-term services contracts, which account for c.75% of revenues, continue to be resilient. However, in line with the broader market, we continue to experience subdued transactional revenues.
LTG continues to deliver margin progression, driven primarily by GP Strategies' commercial transformation, with Group adjusted EBIT for the first half expected to be not less than £43 million (H1 2023: £41.1 million on a like for like basis).
Despite revenue being challenged in this current macro environment, LTG will continue to increase margin in FY24. We expect Group revenues to be in the range of £485 million to £505 million and adjusted EBIT to be in the range of £91 million to £96 million (based on an average GBP:USD rate of 1.26 for H2 2024) for the full year ending 31 December 2024(3). Adjusting for the completion of the sale of VectorVMS(4) on 1 July, revenue is expected to be in the range of £480 million to £500 million and adjusted EBIT in the range of £88 million to £93 million.
LTG has a strong balance sheet and continues to deleverage, with net debt as at 19 July 2024 of c. £6 million, following the disposal of VectorVMS and a voluntary debt repayment of $25 million. Net debt as at 30 June 2024, was £57.2 million (FY 2023: £78.6 million).
The Group will publish its half year results in September 2024.
US regulatory update
As a US company that performs work for the US Government, GP Strategies requires certain approvals and is subject to restrictions intended to protect classified information.
LTG has been notified by GP Strategies of the invalidation ("temporary suspension") of the eligibility for GP Strategies to work on new classified contracts. The suspension will remain in effect until GP Strategies returns to compliance with the applicable operating requirements. The temporary suspension is a serious matter and GP Strategies is working tirelessly to resolve all relevant issues to the satisfaction of the US Government.
GP Strategies will continue to work on existing classified contracts, subject to the customer's agreement. No customer has indicated any intention to terminate their contract. The Board believes that the value of the contracts is not material in the context of total Group revenue and profit.
A further update will be provided in due course.
Further background on the US regulatory update
LTG announced the acquisition of GP Strategies in July 2021. This was conditional on CFIUS (Committee on Foreign Investment in the US) clearance because LTG is a foreign owner of a US company performing classified work for the US Government. CFIUS clearance was granted and the acquisition completed in October 2021.
Since then LTG has operated under FOCI (Foreign Ownership Control and Influence) arrangements which govern the amount of 'control and influence' the foreign parent company has over the operations of the FOCI controlled subsidiary.
LTG is fully aware of the serious nature of this situation and supports all actions the leadership of GP Strategies is taking to resolve it.
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Enquiries: |
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Learning Technologies Group plc Jonathan Satchell, Chief Executive Kath Kearney-Croft, Chief Financial Officer |
+44 (0)20 7832 3440 |
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Deutsche Numis (NOMAD and Corporate Broker) Nick Westlake, Ben Stoop, Tejas Padalkar |
+44 (0)20 7260 1000 |
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Goldman Sachs International (Joint Corporate Broker) Bertie Whitehead, Adam Laikin |
+44 (0)20 7774 1000 |
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FTI Consulting (Public Relations Adviser) Jamie Ricketts, Emma Hall, Lucy Highland, Jemima Gurney |
+44 (0)20 3727 1000 |
About LTG
Learning Technologies Group plc (LTG) is a leader in the growing workplace learning and talent management market. The Group offers end-to-end learning and talent solutions ranging from strategic consultancy, through a range of content and platform solutions to analytical insights that enable corporate and government clients to close the gap between current and future workforce capability.
LTG is listed on the London Stock Exchange's Alternative Investment Market (LTG.L) and headquartered in London. The Group has offices in Europe, North America, South America and Asia-Pacific.
Notes
(1) Excluding Lorien and TTI contracts disposed of in 2023, and reclassification of pass-through revenue, at 1.23 average H1 2023 USD/GBP FX. Reported 2023 H1 financials were £284.6m revenue and £43.1m adjusted EBIT.
(2) Average USD/GBP FX: 1.23 H1 2023 and 1.26 H1 2024.
(3) USD / GBP 1 cent change in average rate for the year = c.£0.8m FY 2024 adjusted EBIT impact.
(4) VectorVMS 2023 performance: $11.4m revenue & $7.1m adjusted EBIT, weighted 45% H1 / 55% H2.
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