Tightening school budgets threatened to put RM (RM.) in detention in the reported period. But robust demand for testing software widened the schools supplier's margins, pushing adjusted operating profit up 3 per cent to £7.1m.
RM's shift from manufacturing personal computers to selling more lucrative software continued to pay off. Revenue and profit soared by more than a fifth in the budding results business, as educators snapped up electronic testing tools and management secured an expanded, five-year contract with Cambridge Assessment for English language exams. But they fell in the resources division, as the tailwind of changes to primary school curricula faded and schools cut back on textbooks and learning materials. And although the education segment's digital offerings gained traction with schools and colleges, it suffered from the government's scrapping of a plan to modernise secondary schools.
The group's cash pile shrank significantly due to £10m paid into the pension scheme. Lower interest rates meant the deficit between assets and liabilities has widened by 5 per cent to £23m. Broker Numis expects pre-tax profit of £16.7m in the year to November 2016, giving EPS of 15.4p (from £17.1m and 15.6p in FY2015).
| RM (RM.) | ||||
|---|---|---|---|---|
| ORD PRICE: | 122p | MARKET VALUE: | £101m | |
| TOUCH: | 122-126p | 12-MONTH HIGH: | 185p | LOW: 112p |
| DIVIDEND YIELD: | 4.3% | PE RATIO: | 8 | |
| NET ASSET VALUE: | 16p* | NET CASH: | £32.1m | |
| Half-year to 31 May | Turnover (£m)** | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2015 | 77.7 | 9.2 | 9.1 | 1.2 |
| 2016 | 76.6 | 6.0 | 5.7 | 1.5 |
| % change | -1 | -35 | -37 | +25 |
Ex-div: 11 Aug Payment: 9 Sep *Includes intangible assets of £14.9m, or 18p a share **Excludes SpaceKraft business, sold in December 2015 | ||||
