REG - Learning Technol.Grp - Half year trading and US regulatory update

Learning TechnologiesAnnouncement

24/07/2024 07:00

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RNS Number : 6187X  Learning Technologies Group PLC  24 July 2024

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.

 Enquiries:
 Learning Technologies Group plc                           +44 (0)20 7832 3440

 Jonathan Satchell, Chief Executive

 Kath Kearney-Croft, Chief Financial Officer
 Deutsche Numis (NOMAD and Corporate Broker)               +44 (0)20 7260 1000

 Nick Westlake, Ben Stoop, Tejas Padalkar
 Goldman Sachs International (Joint Corporate Broker)      +44 (0)20 7774 1000

 Bertie Whitehead, Adam Laikin
 FTI Consulting (Public Relations Adviser)                 +44 (0)20 3727 1000

 Jamie Ricketts, Emma Hall, Lucy Highland, Jemima Gurney

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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