Shares: Training to hit the right key: Three companies that instruct businesses in computer use look set for growth

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The Independent Online
COMPUTER systems are revolutionising the way we do business. At least they would do if we knew how to use them. Training is becoming an increasingly vital element in helping companies extract the maximum benefit from the systems they are installing.

This in turn is creating a booming market for the companies meeting this need. Below, I look at three very different companies that are providing training mostly aimed at computer professionals. In each case, the training businesses are not the main profit centres but the icing on the cake of what I believe are attractive investment opportunities.

A company known for its serious approach to training is Admiral, 560p, a successful business in Surrey that helps large corporations and public-sector bodies implement information technology.

Large companies typically have their own in-house computer experts. However, it is not economical to maintain enough such people to undertake large projects such as the installion a whole new system. For that, even big companies turn to third-party specialists such as Admiral.

Since 1986, Admiral's profits have risen from pounds 1m to pounds 4.6m, and since 1987, staffing has increased from 236 to around 800. The current year has begun strongly, with analysts looking for pounds 5.7m for a prospective price/earnings ratio of 16.4.

The group is well-suited to train others, because it is quite fanatical about training its own staff in a process known internally as 'Admiralisation'. New recruits have a spell at head office to get an overall feel for the business. And all staff are expected to go for company training sessions out of office hours, to appraise each other. They also have to follow rigorous procedures - for example, in presenting reports to clients in jargon-free language.

With this background, the company is becoming increasingly active in training others. It began by using computers to train staff in an interactive way for non-computer functions such as selling cars (shades of actor John Cleese's Video Arts company and its training videos). But increasingly, it is running face-to-face information technology training, in which recent acquisitions have made it one of the largest providers in the UK.

A new subsidiary, Admiral Training Centres, will make its first full-year contribution to profits in 1994. It recently acquired the contract to provide Barclays Bank with its information technology training.

A less obvious company to be involved in training is Euromoney Publications, a company best known for its international magazine of the same name. There are now 53 magazines and newsletters in the Euromoney group, but it also has thriving divisions holding seminars and conferences and providing training.

The big move into training came last year with the acquisition of the then-struggling DC Gardner business, which specialises in teaching banking staff. But the group is also now active in the computer training field. Its latest acquisition, Semaphore, is the largest US business teaching computer programmers how to use 'object technology'.

This is a modern approach that makes programmes easier to write. It is enjoying meteoric growth in the US and is expected to spread rapidly to the UK, Europe and the rest of the world. This partly explains Euromoney's interest, given the cross-border nature of most of the group's operations.

Apart from the continuing buoyant performance of the longer standing parts of the operation such as Euromoney magazine, the group has shown a marvellous touch since 1989 with an acquisition programme that is generating around half of group profits. The latest six months' figures, showing an 81 per cent increase in profits and 51 per cent in earnings per share, were accompanied by a placing to raise pounds 20m. The group has sufficient cash to meet its obligations under its pattern of staged payments but wanted to raise more to continue the programme.

Big investors were so keen to participate that the placing was done at a premium price of 1,875p and the price has continued to climb to 1,965p. On expectations of profits pushing towards pounds 25m this year and pounds 30m next year, against last year's pounds 17.7m and pounds 6.7m in 1988, I expect the share price to continue climbing.

Last but not least is recently floated computer networking specialist, Persona, which has already climbed to 193p against an issue price of 160p. Wayne Channon, the chairman and chief executive, leaves listeners gasping as he describes the growth in the market and the changes that are coming.

It has not all been plain sailing for Persona, which distributes networking products and trains professionals to operate them through its fast-growing Faculty subsidiary. In 1989 and 1990, the group made losses, but profits have since exploded from pounds 78,000 in 1991 to pounds 1.75m last year. House stockbroker Beeson Gregory is looking for pounds 2.2m this year and pounds 2.6m next.

A measure of the growth is that the group will shortly be adding two training rooms to the one recently opened in London, and doubling the number to six at its Chessington headquarters, just off the M25.

Mr Channon points out one reason why training is a vital on-going requirement for his customers: networking experts are in such chronic short supply that poaching is rife.

(Photographs omitted)