Learning Technologies Group Regulatory News (LTG)

22 January 2019

Learning Technologies Group plc

("LTG", the "Group")

(AIM: LTG)

Pre Close Trading Update

Profit and cash generation significantly ahead of expectations

Learning Technologies Group plc, the leading integrated digital learning and talent management services and technologies provider, is pleased to announce a trading update for the year ending 31 December 2018.

The Board expects Group revenues to be c.£94.0 million (2017: £52.1 million), with recurring revenues increasing to c.68% (2017: 39%), driven primarily by the transformational PeopleFluent acquisition in May 2018. The Board anticipates recurring revenues to be c.71% on an annualised basis.

Organic revenue growth on a constant currency basis, excluding the CSL contract, was c.+8% across Software & Platforms and c.-8% in Content & Services against tough prior year comparators. PeopleFluent revenues for the last seven months of the year have been reduced, as expected, in line with LTG's accounting policies under IFRS 15.

Adjusted EBIT is expected to be significantly ahead of expectations at not less than £26.5 million (2017: £14.0 million) primarily as a result of improved margins across the Group and operational synergies being realised from the successful integration of PeopleFluent.

In May, as part of the PeopleFluent acquisition, LTG entered into a new $63 million debt finance facility. As a consequence of the strong improvement in margins and good operating cash conversion, the net debt of the Group at 31 December 2018 is significantly better than the Board's expectations at £11.5 million (2017: £1.0 million net cash). Available debt headroom combined with gross cash at 31 December 2018 of £26.8 million (2017: £15.7 million) provides the Group with substantial funding to finance further acquisitions.

LTG delivered a strong sales performance in the final quarter of 2018 which has translated into positive momentum in the new financial year across both the Content & Services and Software & Platforms divisions.

An active pipeline of attractive international acquisition opportunities supports the Group's ambition to continue to consolidate the high growth corporate learning and talent market.

The above results incorporate the alignment of PeopleFluent's accounting policies with LTG, including the application of IFRS 15, capitalisation of R&D and acquisition accounting adjustments under IFRS 3. Further details will be provided with LTG's full year results which are expected to be announced on 19 March 2019.

Jonathan Satchell, CEO of LTG, said:

"2018 has been another exceptional year of growth and fundamental transition for LTG, as we evolve towards a high margin, recurring revenue model with the majority of our revenue derived from the US. This has been achieved by building a compelling offering in the corporate digital learning and talent market and our track record of improving the operating model and performance of recent acquisitions, such as PeopleFluent and NetDimensions.

In November 2018, LTG announced a new strategic goal to achieve run-rate revenues of £200 million and run-rate EBIT of at least £55 million by the end of 2021. It is encouraging to announce good early progress towards this strategic goal, alongside excellent cash generation, a strong balance sheet and an active pipeline of attractive acquisition opportunities."

ENDS

Enquiries:

About LTG

LTG is a leader in the high growth 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 meet their performance objectives.

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.