“Eventful but positive,” is chairman John Poulter’s summary of 2013 at schools supplier RM (RM.). Labour's Building Schools for the Future (BSF) programme is winding down and the company has stopped selling personal-computing devices. Yet profit still rose faster than expected, the shift toward higher-margin software and services is on track, and RM is returning £15m to shareholders via a special dividend worth 16p a share.
Underlying operating profit in the core education-technology division soared 61 per cent to £8.6m. Earnings swelled even faster at the onscreen exam-marking and testing division, and the supplies business made £7.2m despite the end of a supermarket-sponsored voucher scheme.
RM admits 2014 will be a “year of transition”. Cost cuts will lag the hit on revenue caused by the company's withdrawal from lower-margin hardware sales and the reduction in BSF work, which together are expected to halve education-technology sales between 2013 and 2015. Yet this was already well flagged. In reaction to these results, Broker Numis increased its EPS forecasts for 2014 by 21 per cent to 7.4p (down from 12.4p in 2013) and by 6 per cent for next year to 11.1p. It also reckons the special dividend and share consolidation will enhance earnings by over 10 per cent.
RM (RM.) | ||||
|---|---|---|---|---|
| ORD PRICE: | 125p | MARKET VALUE: | £117m | |
| TOUCH: | 122-128p | 12-MONTH HIGH: | 125p | LOW: 63p |
| DIVIDEND YIELD: | 2.6% | PE RATIO: | 19 | |
| NET ASSET VALUE: | 31p* | NET CASH: | £63.2m | |
| Year to 30 Nov | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2009† | 347 | 16.3 | 14.0 | 6.2 |
| 2010† | 380 | 23.9 | 19.7 | 6.6 |
| 2011†** | 351 | -23.4 | -25.3 | 3.0 |
| 2012 | 289 | 7.4 | 4.3 | 3.0 |
| 2013 | 262 | 9.4 | 6.7 | 3.3 |
| % change | -9 | +28 | +57 | +10 |
Ex-div: TBC Payment: TBC *Includes intangible assets of £15.9m, or 17p per share †Period to Sep 30 **14 months | ||||
