TIDMLTG
RNS Number : 2948H
Learning Technologies Group PLC
24 March 2020
Learning Technologies Group plc
FCA moratorium on publication of preliminary financial
statements
Update on FY19, current trading and actions in response to
COVID-19
Learning Technologies Group plc ("LTG" or the "Company"), the
provider of services and technologies for digital learning and
talent management, confirms that it will comply with the
recommendation from the Financial Reporting Council (FRC) to all
listed companies to delay the publication of preliminary financial
statements for at least two weeks, following a similar request from
the FCA on 21 March 2020 relating to companies listed on the Main
Market of the London Stock Exchange.
LTG was one of a number of companies alerted to the FRC
recommendation on Monday 23 March, ahead of the planned
announcement of our preliminary financial statements for the year
ended 31 December 2019, originally scheduled for release today.
Given the advice from the FRC, we are providing an update today
on FY19, current trading and our actions in response to
COVID-19.
An update will be given as to the timing of the publication of
our FY19 results, as soon as further advice from the FRC, the FCA
and the London Stock Exchange becomes available.
FY19 strategic highlights
-- Good organic momentum from cross-selling initiatives and investment
in product development
-- Content & Services returned to organic constant currency growth,
as expected
-- Highly complementary acquisition of Open LMS, post period-end,
adds expertise in a market-leading Learning Management System
('LMS') predominantly for higher education institutions and is
immediately earnings enhancing (expected to complete on 31 March
2020)
FY19 financial highlights
-- FY19 profit and cash performance ahead of expectations as announced
on 21 January 2020
o Revenue of GBP130.1m; 39% increase on 2018
o Adjusted EBIT of GBP41.0m; 58% increase on 2018
-- Strong increase in recurring revenues, reflecting excellent performance
in Software & Platforms division including improved retention
rate in PeopleFluent
-- Software & Platforms (68% of Group revenue)
o Organic constant currency revenue up 6% (c.11% on a three year
CAGR basis), excluding PeopleFluent
o PeopleFluent ahead of expectations and on track to return to
growth in 2020 as guided at the time of the acquisition in 2018,
subject to the impact of COVID-19
o BreezyHR (acquired April 2019) delivered c.60% organic growth
and extended our talent acquisition products into the small, mid
and enterprise market
-- Content & Services (32% of Group revenue)
o Organic constant currency revenue up 8% in the Division's
three content businesses, LEO, Preloaded and Eukleia, in line with
previous guidance
o Strong recovery, as previously guided, reflects H2 momentum
from LEO and Preloaded
o Cross-selling supporting recent wins
o Overall, organic revenue (excluding CSL contract) up 4% (c.5%
on a three-year CAGR basis), reflecting a small deliberate
reduction in the services division of PeopleFluent Learning
following our strategic decision in late 2018 to cease to provide
customisations on our SaaS LMS platform in line with good industry
practice
-- Strong margin progression, with EBIT margins up 380 basis points
to 31.5%
-- Excellent cash performance: net cash of GBP3.8 million at year-end,
ahead of expectations
Current trading
-- Current financial year has started well and is in line with management
expectations
-- Gross cash as of the date of this announcement is c.GBP54.0 million
including drawdown of the $21 million RCF in preparation for the
acquisition of Open LMS expected to complete on 31 March 2020
-- We have not yet seen a material impact from the ongoing COVID-19
outbreak on our performance. We anticipate our recurring revenues
to continue, but content projects may be impacted as customers
manage their own cash positions and new business wins delayed
Actions in response to COVID-19
-- In light of the potential impact of COVID-19, management has taken
proactive measures to prioritise the strong liquidity and net
cash position of the Group and to follow WHO and government guidance
to protect the safety of our workforce, customers and partners
-- To sustain our position of strength, the Board is adopting a prudent
approach to shareholder distributions, and will postpone the final
dividend (proposed at 0.50 pence per share) until market conditions
stabilise
-- We have postponed Director cash bonuses until market conditions
stabilise; however, we will honour our substantial bonus payments
to our staff to reflect their significant and positive contribution
to our performance in 2019
-- We will fund the deferred consideration of BreezyHR through shares
in lieu of cash payment of $4.0 million due at end of March 2020
-- We have taken a number of other measures to protect LTG's strong
financial position including a reduction in marketing, travel
and capital expenditure budgets. We have also postponed salary
increases for all staff until 2021, terminated the majority of
contractors and implemented a recruitment freeze
-- We estimate the combined cash saving in 2020 from these measures
is in excess of GBP13.0 million
-- COVID-19 creates uncertainty for the remainder of the financial
year but the Board has further cash preservation measures that
it is willing to implement if appropriate, recognising that maintaining
our dedicated and talented workforce is a key priority in anticipation
of the upturn
Jonathan Satchell, CEO of LTG, said:
"2019 was an exceptional year for LTG. We saw excellent momentum
in our Software & Platform businesses, and a return to organic
growth in Content & Services, as expected. I am particularly
pleased to see our investment in product development and
cross-selling initiatives supporting organic growth, while we
continue to improve margins and cash performance.
In recent weeks the macro picture has evolved quickly, in light
of the COVID-19 outbreak. As you would expect, protecting our
people and customers has been our top priority in recent days and
weeks, and we are committed to supporting them at this time. Whilst
we are in a strong financial position with good liquidity, we are
working hard to limit the impact of COVID-19 on our business and
performance, and have extensive contingency planning in place to
mitigate the risks from the unprecedented climate we are in. As
part of our planning, the Board has taken immediate and prudent
action to protect our strong liquidity position until market
conditions stabilise."
Financial summary:
GBPm unless otherwise stated 2019 2018 Change
-----------------------------------
Revenue 130.1 93.9 +39%
------ ------- -------
Recurring Revenue % 74% 68%
------ ------- -------
Revenue Outside UK % 80% 74%
------ ------- -------
Adj. EBIT 41.0 26.0 +58%
------ ------- -------
Adjusted EBIT margin 31.5% 27.7%
------ ------- -------
Statutory PBT 14.3 3.4 +316%
------ ------- -------
Adj. Diluted EPS (pence) 4.7 3.2 +47%
------ ------- -------
Proposed final dividend per share
(pence) 0.00 0.35
------ ------- -------
Net Cash/(Debt) 3.8 (11.5)
------ ------- -------
Enquiries:
Learning Technologies Group plc
Jonathan Satchell, Chief Executive +44 (0)20 7402
Neil Elton, Chief Financial Officer 1554
Numis Securities Limited (NOMAD and Corporate
Broker)
Stuart Skinn e r , (Nomad), Nick Westlake, Ben +44 (0)20 7260
Stoop 1000
Goldman Sachs International (Joint Corporate
Broker) +44 (0)20 7774
Bertie Whitehead, Adam Laikin 1000
FTI Consulting (Public Relations Adviser) +44 (0)20 3727
Rob Mindell, Jamie Ricketts, Chris Birt 1000
About LTG
LTG is a leader in the growing workplace digital 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 and Asia-Pacific.
Notes
1. All financials in this statement relating to FY19 are
unaudited.
2. Links to the FRC and FCA announcements, for reference:
https://www.frc.org.uk/news/march-2020-(1)/frc-supports-moratorium-in-corporate-reporting
https://www.fca.org.uk/news/statements/fca-requests-delay-forthcoming-announcement-preliminary-financial-accounts
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END
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