(MENAFN- ProactiveInvestors - UK) Learning Technologies Group PLC (LON:LTG) the only pure play digital learning business listed on the stock market operates in a highly fragmented market.
Listed since November 2013 the company has a policy of using its stock market status as a platform from which it can consolidate the sector and judging by its sparkling results for 2015 the strategy is paying off.
The acquisition at the end of July 2015 of Eukleia a provider of e-learning to the financial services sector contributed to a 33% increase in revenues last year to 19.9mln from 14.9mln in 2014.
The company said the integration of Eukleia is already complete and the business is operating according to plan leaving it to focus on the newest addition to the family: Rustici Software the global market leader in digital learning interoperability which it bought from its founders at the end of January 2016 for an initial $26mln.
Chief executive Jonathan Satchell described Rustici as 'the expert plumber of our industry' in an interview with Proactive Investors.
At the same time it took a 27.3% equity stake in Watershed Systems a learning analytics specialist with technology that can evaluate the impact and effectiveness of learning programmes.
Watershed is still in cash-burn stage so a minority stake in the company protects Learning Technologies from financing requirements while still giving the company a seat at the table.
'We are proud that all our businesses are profitable and cash generative' Satchell said explaining why the company had not acquired a majority stake in Watershed.
"I think there is a big disruption coming to the learning industry that will mirror the sort of disruption seen in marketing 10 or so years ago. Marketing analytics enabled companies and marketing professionals to determine the effectiveness of their efforts and I see the same thing happening in the learning process" Satchell revealed.
Acquisitions add strings to its bow
Learning Technologies said the acquisition of Rustici and its investment in Watershed have substantially enhanced its ability to capture rich data about the learner and analyse and assess the impact of e-learning on organisational performance.
The companies acquired no doubt are effective in their own right but the greater value to Learning Technologies (LTG) is its ability to offer a blended service which is resulting in increased take-up of its services.
A stunning example of this was the landmark deal announced in December 2014 with existing customer Civil Service Learning.
In partnership with its strategic partner accountancy firm KPMG and others it will develop a new training platform for 400000 civil servants that incorporates a combination of digital informal and classroom components across 15 curriculum areas from leadership & management diversity EU practices through to project management and digital delivery. This demonstrates the credibility and scale of LTG's offering and capabilities.
It is the most significant contact the group has even won and though it will require some up-front investment this year to get it off the ground the benefits should start feeding through in the second half of this year and then really kick in during 2017 and 2018.
That should keep the growth story going which is just as well because the group has set the bar high.
The blended learning approach is proving especially relevant in today's workplace and Satchell told Proactive Investors that there is still a place for the old-school live presentation by a charismatic presenter.
"All types of learning are relevant but the problem with the traditional method of parking people in a room and presenting to them is what we call 'knowledge decay'. We see a very steep drop-off in the retention of what was learnt in the training room if it is not followed up with e-learning sessions. In fact you want to start with the e-learning befoe the live presentation so you can determine training needs and prime people on what they are going to learn" Satchell said.
Growth everywhere you look
Adjusted underlying earnings (EBITDA) more than doubled in 2015 to 4.3mln from 2.1mln the year before while the adjusted EBITDA margin climbed to 21% from 14%.
Reported profit before tax weighed in at 1.5mln versus a loss of 0.1mln the year before while adjusted profit before tax which ignores one-off items rose 113% to 3.8mln from 1.8mln.
Adjusted diluted earnings per share doubled to 0.756p from 0.375p in 2014 paving the way for an impressive 50% hike in the total dividend to 0.15p from the 0.1p paid in 2014.
'E-learning sector remains highly fragmented and there is good scope for further consolidation' reckoned David Johnson commenting on the company's January 2015 pre-close statement.
The company is evaluating acquisitions with revenues of more than 50mln a year and EBITDA margins of 20% or more.
Expect more judicious acquisitions
'Buy and build is an essential part of where we are taking this business but be under no illusion it's nothing without a very strong underpinning of underlying growth' chief executive Jonathan Satchell told Proactive Investors.
Satchell said the company has walked away from many potential deals over the last year or so but promised there would be further acquisitions.
'I can pretty much guarantee it' he said and having achieved success with its buy-and-build strategy Satchell asks the pertinent question: 'why would we stop now?'
--- This news item was originally published on March 30. Recent comments from the CEO have been added ---
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