Learning Technologies upbeat on performance of enlarged group

Digital education and talent management service provider Learning Technologies reported a 29% improvement in revenue in its first half on Tuesday, to £82.6m, including first-time contributions from Reflektive, PDT Global and Bridge.

The AIM-traded firm said its organic revenue growth rate of 7% for the six months ended 30 June included a “strong recovery” in professional services.

Software and platforms saw 5% organic growth, with “particularly strong” growth at Rustici and Breezy, while content and services saw 14% organic growth, with the division on track to return to 2019 levels as expected.

Recurring revenues stood at 77%, down from 81% in the first half of 2020, as content and services revenues recovered.

Adjusted EBIT increased 20% to £22m, while the company’s EBIT margin was down to 26.7% from 28.7%, primarily due to currency headwinds and short-term losses from Reflektive and Bridge following their acquisitions in the first quarter.

Learning Technologies said it was expecting to return to its guided margin levels for the full financial year.

Operating cash conversion stood at 79%, down from 100% in the first half of last year and 85% for the full 2020 financial year.

Net cash stood at £24.9m at period end, down from £70.2m at the end of December, after the deployment of £52.1m for the three acquisitions made in the period.

The board said it was “committed” to a progressive dividend policy, approving an interim dividend of 0.3p per share, up 20% year-on-year.

Looking at its current trading, Learning Technologies reported a “good start” to the second half, reflecting “strong” order book growth during the first half.

Content and services was on track to return to 2019 revenue levels for the full year, while “robust” organic and acquired growth was reported across software and platforms, with the firm’s market offering positioned to leverage opportunities in the small and mid-market sectors.

The acquisition of GP Strategies was on track to complete in the fourth quarter, funded by the £85m equity placing and $305m debt refinancing completed in July.

Learning Technologies said it remained on target to deliver on market expectations for the full year, despite continuing currency headwinds.

“LTG's swift return to organic revenue growth reflects a strong and well-integrated business with class-leading multi-product solutions for the growing global learning and talent management market,” said chief executive officer Jonathan Satchell.

“Delivering 7% organic revenue growth has been an exceptional achievement by our employees who have adapted well to an evolving and more flexible working environment.”

Following the “excellent” first half performance, including the integration of its three most recent acquisitions, Satchell said the firm was “excited” about the potential to generate further substantial shareholder value from the addition of GP Strategies.

“The enlarged business provides a platform for further organic growth in a marketplace that is increasingly receptive to solutions that help organisations efficiently recruit, train, motivate and retain their people.”

At 1117 BST, shares in Learning Technologies Group were down 1.66% at 213p.