A muted market reaction to RM Plc’s (RM.) interim results implied that shareholders were satisfied, despite a weaker top line performance year on year. Shares rose 2 per cent in early trading, signalling relief that double-digit sales declines seen over recent years might be slowing.
Education resources supplier RM’s adjusted operating profits were flat at £7.1m after an increase in adjusted operating margins from 9 per cent to 10 per cent, which was earned via a tighter cost base and good performances from the results and education divisions.
The results business, which has grown internationally and works with the International Baccalaureate, among other organisations, grew revenues 2.2 per cent. And while the company’s education business lost 5.4 per cent from the top line, its operating margin improved thanks to a close eye on costs. Elsewhere, the resources business saw the largest sales dive because of schools’ budget-tightening.
However, management expects the recently acquired education and care division of Connect Group (CNCT) - now known as ‘Consortium’ under RM - to complement TTS, the existing resources business. RM’s interim dividend was also upped by 10 per cent, which in turn brought the dividend cover to between two and three times earnings.
Analysts at Numis left their pre-tax profit forecast for the year to November 2017 unchanged at £18.5m. However, they reduced their forecast for FY18 by 1.5 per cent to £23.1m, giving EPS of 21.9p.
| RM (RM) | ||||
| ORD PRICE: | 180p | MARKET VALUE: | £ 149m | |
| TOUCH: | 171-180p | 12-MONTH HIGH: | 196p | LOW: 120p |
| DIVIDEND YIELD: | 3.4% | PE RATIO: | 13 | |
| NET ASSET VALUE: | 21.2p | NET CASH: | £29.3m | |
| Half-year to 31 May | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
| 2016 | 76.8 | 6.0 | 5.7 | 1.50 |
| 2017 | 71.3 | 3.8 | 4.7 | 1.65 |
| % change | -7 | -37 | -18 | +10 |
| Ex-div: | 10 Aug | |||
| Payment: | 08 Sep | |||
