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Learning Technologies jumps as it hikes dividend by over 60% on back of 2018 earnings surge

The digital learning and talent management firm reported pre-tax earnings (EBIT) for the year of £27.2mln, up 104% on the prior year and ahead of expectations

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The group's performance had been boosted by its acquisition of US recruitment and talent management firm, PeopleFluent, last May

Learning Technologies Group PLC (LON:LTG) shares jumped in early deals on Tuesday after it hiked its final dividend by 67% on the back of an earnings surge in 2018.

The digital learning and talent management firm reported pre-tax earnings (EBIT) for the year of £27.2mln, up 104% on the prior year and ahead of expectations, while revenues had soared 83% to £93.9mln.

READ: Learning Technologies raises profit guidance after sparkling end to 2018

The results were relatively in line with raised forecasts delivered in a trading update back in January that predicted full-year revenues of £94mln and EBIT of no less than £26.5mln.

The group’s software & platforms division, which makes up 64% of its revenues, was up 9% on a like-for-like (LFL) basis, offsetting an 8% LFL decline in its content & services arm caused by “particularly strong” comparatives to the prior year.

Recurring revenues had also risen to 68% of the total in 2018 from 38% the year before, driven primarily by the group’s acquisition of US recruitment and talent management firm PeopleFluent last May.

As a result, LTG said it was hiking its final dividend 67% to 0.35p per share, taking the full year dividend to 0.5p.

Jonathan Satchell, LTG’s chief executive, said that the company had made “a good start” to the new year with trading in line with management expectations.

"2018 was an important year for LTG.  We continued our evolution towards a predominantly software licence model delivering high margin recurring revenue… We are delighted with the progress made at PeopleFluent which has extended our offering beyond corporate digital learning, into talent management.”

He added that this would support “further progress” in 2019 and the company’s new strategic goal of run-rate revenues of £200mln and run-rate EBIT of “at least” £55mln by the end of 2021.

Shares “undervalued”, says broker

In a note to clients, analysts at broker Peel Hunt said LTG’s shares were “undervalued” and retained their ‘buy’ rating and 150p price target.

“We believe the market is undervaluing the transformation of the company to a largely recurring revenue model alongside the potential for further margin expansion in the coming years”.

Shares were up 6.9% at 72.9p, a 51% discount to Peel Hunt's target price.

Quick facts: Learning Technologies Group plc

Price: 122.4 GBX

AIM:LTG
Market: AIM
Market Cap: £818.41 m
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Learning Technologies CEO hails 'outstanding margins and cash generation' in...

Learning Technologies Group PLC's (LON:LTG) Jonathan Satchell talks Proactive London's Andrew Scott through the firm's first half 2019 update. He expects full-year underlying earnings to be “materially ahead” of market expectations after a strong first half for sales and...

on 23/7/19

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