Training group pulls itself together

Karl Chapman, chief executive of quoted training outfit CRT, believes that changing technology is going to transform the training and education market over the next few years, leading to the build-up of some very substantial businesses in a very fragmented sector. By way of a parallel, he cites the example of food retailing, which has gone from corner shop to giant superstore over the last 10 to 20 years. He expects something similar to happen in training with CRT which, at 159p, is well placed to become a major player.

The key to the group's potential lies in its complementary mix of businesses. Through subsidiaries, Pitman and Link, the group provides training in computers and a wide mix of other vocations via their nationwide branch networks. In another flourishing business CRT provides computer software personnel on contract to a long list of blue-chip customers. Last, but not necessarily least, comes a multimedia business which is developing a range of CD-based training packages such as Easy Tutor - Learn Windows 95 for use both in CRT's classes and for retail sale.

Until recently, the group's performance has been overshadowed by an acquisition - one out of seven - that went wrong. The culprit, a management consultancy called Doctus, flourished in the run-up to privatisation by helping to knock former state-owned businesses into shape to function in a less protected world. But as that business tailed away, profits turned to losses and CRT ended up selling the firm to its management.

CRT's profits have been on something of a roller coaster in the 1990s. After a peak pounds 6.2m in the year to 30 April 1992 they fell to near break- even after exceptional items in 1994 before rebounding to pounds 6m in the last- reported full year. Further progress has been made in the half-year to 31 October, 1995 though a combination of factors - start-up costs, the expansion of Link and the multimedia division and dilution from a rights issue - kept earnings per share growth down to around 20 per cent compared with a 65 per cent rise in sales.

CRT's business is heavily weighted to the second half which, allied to the strong growth trend, leaves analysts looking for a record pounds 8m profit for the full year with earnings per share of 8.0p.

That implies a prospective p/e of just over 20. That may sound expensive but there is great momentum in the group's growth that should carry through in future years.

Higher than budgeted demand for vocational training found the group needing to increase capacity quickly, which has temporarily lowered profits from that division. The second half is expected to have shown a return to profits growth as revenue flow offset the higher fixed costs incurred by gearing up the branch network.

The vocational arm, Link, now operates from more than 100 branches nationwide while Pitman increased branch numbers from 57 to 69 over the first half. It differs from Link in being a largely franchised operation, making its money from royalties and the supply of course materials. Sales rose by 23 per cent year on year.

The lower-margin recruitment divisions are also growing strongly. Mr Chapman says that in broad terms recruitment accounts for 60 per cent of sales and 40 per cent of profits with the figures reversed for the training side. In the half-year the recruitment division increased operating profits by 60 per cent to pounds 1.54m on sales up 83 per cent to pounds 33.8m, reflecting a 25 per cent increase in the number of contract and temporary staff on placement to 2,300 and a 39 per cent increase in permanent placements.

In multimedia, the group is building up its range of CD- Roms to teach people computer skills. Development and marketing costs are around pounds 400,000 per package so, inevitably, the division will make losses until it builds up sales and a decent catalogue list. CRT is itself a big customer through its Pitman and Link training operations. Sales have soared from pounds 0.6m in l994-95 to an expected pounds 2m and the division is predicted to break even in the year just ended. By the end of 1996 there should be 14 titles and the makings of a very profitable business.

That, in turn, could help the group to beat analysts' expectations of profits of pounds 9.5m and earnings per share of 9.5p for the coming year. The prospects make the shares a buy.

Life and Style
The new Windows 10 Start Menu
More than 90 years of car history are coming to an end with the abolition of the paper car-tax disc
newsThis and other facts you never knew about the paper circle - completely obsolete today
Arts and Entertainment
There has been a boom in ticket sales for female comics, according to an industry survey
comedyFirst national survey reveals Britain’s comedic tastes
Arts and Entertainment
Hilary North's 'How My Life Has Changed', 2001
books(and not a Buzzfeed article in sight)
Life and Style
fashionShame it had to end like that, says Alexander Fury
Arts and Entertainment
Mystery man: Ben Affleck and Rosamund Pike in '‘Gone Girl'
films... by the director David Fincher
Kim Jong Un gives field guidance during his inspection of the Korean People's Army (KPA) Naval Unit 167
newsSouth Korean reports suggest rumours of a coup were unfounded
ebooksAn unforgettable anthology of contemporary reportage
Bruce Chatwin's novel 'On the Black Hill' was set at The Vision Farm
travelOne of the finest one-day walks you could hope for - in Britain
people'I’d rather have Fred and Rose West quote my characters on childcare'
Arts and Entertainment
Gay and OK: a scene from 'Pride'
filmsUS film censors have ruled 'Pride' unfit for under-16s, though it contains no sex or violence
Life and Style
Magic roundabouts: the gyratory system that has excited enthusiasts in Swindon
motoringJust who are the Roundabout Appreciation Society?
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Trainee Recruitment Consultant - Birmingham - Real Staffing

£18000 - £23000 per annum + Commission: SThree: Real Staffing are currently lo...

Trust Accountant - Kent

NEGOTIABLE: Austen Lloyd: TRUST ACCOUNTANT - KENTIf you are a Chartered Accou...

Graduate Recruitment Consultant - 2013/14 Grads - No Exp Needed

£18000 - £20000 per annum + OTE £30000: SThree: SThree are a global FTSE 250 b...

Law Costs

Highly Competitive Salary: Austen Lloyd: CITY - Law Costs Draftsperson - NICHE...

Day In a Page

Ebola outbreak: The children orphaned by the virus – then rejected by surviving relatives over fear of infection

The children orphaned by Ebola...

... then rejected by surviving relatives over fear of infection
Pride: Are censors pandering to homophobia?

Are censors pandering to homophobia?

US film censors have ruled 'Pride' unfit for under-16s, though it contains no sex or violence
The magic of roundabouts

Lords of the rings

Just who are the Roundabout Appreciation Society?
Why do we like making lists?

Notes to self: Why do we like making lists?

Well it was good enough for Ancient Egyptians and Picasso...
Hong Kong protests: A good time to open a new restaurant?

A good time to open a new restaurant in Hong Kong?

As pro-democracy demonstrators hold firm, chef Rowley Leigh, who's in the city to open a new restaurant, says you couldn't hope to meet a nicer bunch
Paris Fashion Week: Karl Lagerfeld leads a feminist riot on 'Boulevard Chanel'

Paris Fashion Week

Lagerfeld leads a feminist riot on 'Boulevard Chanel'
Bruce Chatwin's Wales: One of the finest one-day walks in Britain

Simon Calder discovers Bruce Chatwin's Wales

One of the finest one-day walks you could hope for - in Britain
10 best children's nightwear

10 best children's nightwear

Make sure the kids stay cosy on cooler autumn nights in this selection of pjs, onesies and nighties
Manchester City vs Roma: Five things we learnt from City’s draw at the Etihad

Manchester City vs Roma

Five things we learnt from City’s Champions League draw at the Etihad
Martin Hardy: Mike Ashley must act now and end the Alan Pardew reign

Trouble on the Tyne

Ashley must act now and end Pardew's reign at Newcastle, says Martin Hardy
Isis is an hour from Baghdad, the Iraq army has little chance against it, and air strikes won't help

Isis an hour away from Baghdad -

and with no sign of Iraq army being able to make a successful counter-attack
Turner Prize 2014 is frustratingly timid

Turner Prize 2014 is frustratingly timid

The exhibition nods to rich and potentially brilliant ideas, but steps back
Last chance to see: Half the world’s animals have disappeared over the last 40 years

Last chance to see...

The Earth’s animal wildlife population has halved in 40 years
So here's why teenagers are always grumpy - and it's not what you think

Truth behind teens' grumpiness

Early school hours mess with their biological clocks
Why can no one stop hackers putting celebrities' private photos online?

Hacked photos: the third wave

Why can no one stop hackers putting celebrities' private photos online?