£54m takeover helps shares to soar at training specialist LTG
LEARNING Technologies
Group is a fast-growing business, specialising in training courses for organisations ranging from British Airways to Jaguar Land Rover and the Civil Service.
Midas tipped LTG’s shares in November 2014 at 20¼p. Today, following an action-packed few years, the stock is 51p and should continue to rise.
The company has grown organically and by acquisition, and last month, spent £54million buying AIM-listed Net Dimensions, a software firm that helps companies run online training courses effectively.
NetDimensions’ clients include businesses in highly regulated industries, such as major drug producers, and it also works with car makers such as Porsche and Bentley.
The deal makes total sense for LTG, expanding its customer base and the range of services it can offer to new and existing clients. NetDimensions is based in Hong Kong, so the deal should also boost LTG’s Asian presence.
The acquisition was a major step, involving a £46million share placing with large investors and company directors at 37½p. LTG also replaced Barclays as its bank with California’s Silicon Valley Bank, which has lent the business £20 million. The new loan is a ringing endorsement of the firm’s strategy as the US bank is highly regarded in technology circles.
This month, the group unveiled 2016 revenues of £28.3million, a rise of 42 per cent. Underlying profits were up 66 per cent to £6.4million and the dividend rose 40 per cent to 0.21p. Analysts expect revenues of almost £50million and profits of £10million this year, as NetDimensions is integrated. The dividend is expected to rise to 0.25p. LTG has delivered good organic growth since its 2013 float. For example, last year it worked with auditor KPMG to deliver a training module for the entire UK Civil Service – around 400,000 people. Trade negotiations training was added after the Brexit vote.
Midas verdict: LTG should deliver further growth – chief executive Jonathan Satchell is firing on all cylinders, NetDimensions will boost profits significantly and the training industry is growing fast. Existing investors should hold, taking comfort from the fact that Satchell owns almost 25 per cent of the company. New ones might also snap up a few shares.