It was a good day at the office – or classroom – for Learning Technologies (LTG). Beyond delivering a particularly strong set of half-year numbers to June, the group also revealed that full-year profits are expected to be “significantly ahead” of management’s expectations. The shares soared by more than a fifth in reply.
Key to this upgraded guidance was PeopleFluent – the cloud-based talent management platform that LTG bought in May this year for $150m (£114m). Its integration has progressed ahead of expectations, meaning bosses now expect the business’s operating margin to reach at least 25 per cent in 2019 – up from earlier guidance of at least 20 per cent.
The half-year results offered a plethora of other positive metrics. Recurring revenues escalated to 51 per cent from 37 per cent, although on an annualised basis these would have come in at 70 per cent – bringing improved visibility as the group moves into 2019 and beyond. Moreover, the top line became increasingly diversified by geography. Of the group'’s total sales, 59 per cent stemmed from overseas – up from 45 per cent. And the PeopleFluent deal has enhanced LTG’s footprint in the US, its largest market.
Meanwhile, NetDimensions – the learning management software platform purchased by LTG in 2017 – returned to organic growth, supported by a lower cost base. The group is merging NetDimensions and PeopleFluent’s talent software businesses, and has identified significant operational cost synergies.
The group's move into the black from a reported pre-tax loss a year earlier provides the starkest illustration of why investor optimism is growing, but look under the bonnet and it's even more impressive, with the adjusted operating margin rising from 17.8 per cent to 26.3 per cent, reflecting the progress on costs and further scale benefits.
Broker Peel Hunt expects adjusted pre-tax profits of £18.2m and EPS of 2.3p for 2018 (up from £12.5m and 1.9p in 2017).
| LEARNING TECHNOLOGIES (LTG) | ||||
| ORD PRICE: | 144p | MARKET VALUE: | £955m | |
| TOUCH: | 143.5-144p | 12-MONTH HIGH: | 146p | LOW: 52p |
| DIVIDEND YIELD: | 0.3% | PE RATIO: | 158 | |
| NET ASSET VALUE: | 25p* | NET DEBT: | 10% | |
| Half-year to 30 Jun | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
| 2017** | 21.1 | -2.3 | -0.45 | 0.09 |
| 2018 | 33.8 | 1.3 | 0.22 | 0.15 |
| % change | +60 | - | - | +67 |
| Ex-div: | 11 Oct | |||
| Payment: | 02 Nov | |||
*Includes intangible assets of £239m, or 36p a share **2017 comparatives restated to reflect adoption of IFRS 15 £ = $1.32 | ||||
