Learning Technologies Group plc

LTG reported H1 2024 revenue of GBP250.3 million versus H1 2023 like-for-like revenue of GBP268.2 million, an organic constant-currency decline of 3.8%. Adjusted EBIT was GBP43.3 million versus GBP41.1 million like-for-like, and adjusted EBIT margin improved to 17.3%, up 200 basis points. Adjusted diluted EPS for continuing operations increased 6% versus H1 2023, mainly due to lower net interest costs. Adjusted operating cash flow was GBP2.3 million, operating cash conversion improved to 70% from 65%, and free cash flow was GBP29.9 million, GBP24.3 million higher than the prior year. Leverage was 0.5x on a covenant basis at end-June before the Vector sale in July; management said net debt was effectively negligible by end-August, with a further voluntary $25 million payment made in July. For full-year guidance, management said adjusted tax and FX remain in line with prior guidance, the net interest rate is forecast at 5.5%, and the Board is minded to declare a flat dividend of 0.45 pence. The outlook was reduced because of a weaker dollar and some GP expectations, and management said it now expects to trend toward the bottom end of the EBIT range, not necessarily the bottom end of the revenue range.

Jonathan Satchell framed the first half as resilient in a difficult macro backdrop, stressing that revenue softness was expected to a degree but worsened in Q2 and beyond. He emphasized that LTG protected profitability, generated strong cash, and rapidly delevered, saying the business is now effectively back to negligible net debt after disposals and cash generation. Strategically, he highlighted AI as a key opportunity, including paid pilots of Content AI, human-plus-AI training programs, and new AI investments across the portfolio. He was candid about caution in the market, especially in the U.S., but said customer loyalty remains high and the group is positioned for growth when confidence improves.

Katharina Kearney-Croft focused on the mix shift and cost discipline that supported margins despite lower revenue. She said SaaS and long-term contracts now represent 76% of group revenue, adjusted EBIT margin improved to 17.3%, operating cash conversion reached 70%, and free cash flow was GBP29.9 million, helped by lower working capital needs, lower lease payments, and reduced R&D capital spend, partly offset by AI investment. She also cited lower net interest paid, higher tax paid in H1, the GBP16.9 million proceeds from Lorien Engineering, and leverage of 0.5x at end-June before the Vector sale. On the outlook, she said the Board is minded to declare a flat dividend of 0.45 pence and guided to a 5.5% net interest rate for the year.

On software, management said PeopleFluent saw higher-than-expected renewal churn and the business remains in decline, but they do not expect H2 to repeat the same pace of erosion. Jonathan said LTG is investing in a product revamp and believes the changes will help retention more than new sales, while still acknowledging the long-term revenue base may settle around GBP30 million. On the U.S. regulatory issue, he said LTG is deauthorized from bidding for new classified work until a new government subsidiary and approvals are in place, but existing classified customers continue to work with the company; he said some existing classified work is paused, with about $200,000 revenue impact this year. On capital allocation, he said a buyback is now possible under the new mandate, but the Board is cautious about using debt to repurchase shares and would be more open to buybacks if the group moves further into net cash.