Schools supplier RM (RM.) has, in the past 14 months, ceased manufacturing and selling PCs and other hardware in favour of providing higher-margin software. The upshot was a sharp slump in full-year sales, but an 8 per cent increase in adjusted operating profit to £18.5m.
Teething pains related to its new strategy, together with depressed industry budgets and fewer school openings, sent education sales down 38 per cent to £112m. However, bulls are likely to focus on a wider operating margin and rising sales of digital offerings such as RM Integris, its cloud-based school management system.
Strong international and online sales and a revamped UK primary school curriculum drove a 43 per cent increase in adjusted operating profit at RM's resources division, which supplies third-party learning materials. The group's results segment, meanwhile - which provides digital exam marking, testing and data analysis - suffered from former education minister Michael Gove's changes to exams and curricula, which reduced demand for test retakes. Nonetheless, strong interest in RM's e-marking business helped the division increase adjusted operating profits by 7 per cent.
Broker Numis expects pre-tax profit of £16.8m in 2015, giving EPS of 14.8p (down from £18.1m and 15.4p last year).
| RM (RM.) | ||||
|---|---|---|---|---|
| ORD PRICE: | 152p | MARKET VALUE: | £126m | |
| TOUCH: | 154-157p | 12-MONTH HIGH: | 174p | LOW: 120p |
| DIVIDEND YIELD: | 2.6% | PE RATIO: | 11 | |
| NET ASSET VALUE: | 10p* | NET CASH: | £47.9m | |
| Year to 30 Nov | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 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†† |
| 2014 | 203 | 15.8 | 13.9 | 4.0 |
| % change | -23 | +67 | +107 | +21 |
Ex-div: 12 Mar Payment: 10 Apr *Includes intangible assets of £15.1m, or 18p a share ††Excludes special dividend of 16p a share †Period to Sep 30 **14 months | ||||
