viewLearning Technologies Group PLC

Learning Technologies doubles long-term finance goals as acquisition drive continues

The e-learning specialist upgraded its long-term goals to run-rate revenues of £200mln and run-rate underlying earnings of at least £55mln by 2021, an increase of around 100%

Learning Tech sells itself as a market leader in workplace digital learning and talent management

Learning Technologies Group PLC (LON:LTG) has doubled its long-term revenue and earnings goals as its acquisition drive continued with another purchase.

The AIM 100 e-learning specialist upgraded its long-term revenue and earnings goals to run-rate revenues of £200mln and run-rate underlying earnings (EBIT) of at least £55mln by the end of 2021.

READ: Learning Tech sets out new long-term goals as it unveils latest acquisition

This stood in stark contrast to its goals in October 2017 of run-rate revenues to £100mln and a run-rate EBIT in excess of £25mln by the end of 2020, making the new goals a jump of at least 100%.

The new goals seem to be taking their lead from the share price, which has also risen about 103% over the last 12 months, as well as news in September that the firm expected its full-year outcome to be significantly ahead of expectations.

Bolt-on acquisitions drive growth

The jump is performance has been boosted by the acquisition of US-based digital human resources firm PeopleFluent in July.

READ: Learning Technologies surges after it raises full-year profit guidance

The firm also snapped up the 70% stake of learning analytics software group Watershed in November for up to US$11.6mln, having bought the other 30% stake in January 2016 for US$3mln.

More acquisitions on the cards

The acquisition drive also shows no signs of slowing down, with the company saying it intends to meet its new earnings goals through a combination of organic growth and strategic bolt-on acquisitions, which it will look to finance internally without having to tap the market.

That said, should the opportunity arise to make an ‘acquisition of scale’, Learning Tech said it would consider shareholder financing.

“The successful integration of PeopleFluent announced at the time of our interim results remains on track, which alongside the performance of our other businesses gives the board confidence in the outturn for 2018 and beyond,” said Learning Tech chief executive Jonathan Satchell.

“Today's new strategic goals to 2021 demonstrate our ambition to continue consolidating the high growth corporate e-learning market.”

Broker upgrades to ‘buy’

In a note to clients, Peel Hunts analysts upgraded the firm to ‘buy’ from ‘hold’ with a target price of 180p, saying that a recent de-rating in the stock since September had been “overdone”.

The broker added that Watershed was expected to become earnings positive in 2020 after growing strongly both in 2017 and in 2018 year-to-date.

With shares trading around 120p, a 33% discount to Peel Hunt’s target price, Learning Technologies carries a market cap of around £740mln.

--Adds chief executive interview--

Quick facts: Learning Technologies Group PLC

Price: 135.8 GBX

Market: AIM
Market Cap: £912.01 m

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Learning Technologies 'extremely pleased' with integration of PeopleFluent

Jonathan Satchell, chief executive of Learning Technologies PLC (LON:LTG), discusses with Proactive Investors the group's first half update. He's expecting revenues, excluding the PeopleFluent business acquired in May, will be at least £27.3mln for the first half of 2018 compared to...

on 26/7/18

3 min read