RM’s (RM.) acquisition of ‘The Consortium’ last June is already paying off. The education and care business, bought for £56.5m from Connect (CNCT), contributed £27.8m to the group’s resources division – driving up revenues here by 42 per cent to £83.6m. Bosses now expect The Consortium to deliver synergies of around £4m – double their initial estimate.
However, strip out the impact of this acquisition, and the top line at the resources segment fell 5 per cent year on year, as budgets for primary schools and nurseries were hit by unfunded rises in staff pension and national insurance costs. Another case of tightening public/municipal budgets impacting the private sector, but the division did stabilise after a “difficult first half”.
Revenues at the education business fell by 8 per cent to £70.6m, due partly to the planned completion of various Building Schools for the Future contracts. Even so, successful cost-cutting helped the division’s adjusted operating margin to rise from 7.6 per cent to 9.3 per cent.
Encouragingly, cash generation was strong, and RM’s defined-benefit pension scheme deficit narrowed from £34.8m to £20.2m year on year.
Analysts at Peel Hunt forecast adjusted pre-tax profits of £24.1m and EPS of 23p for the 12 months to November 2018, up from £19.7m and 20.1p in the 2017 financial year.
RM (RM) | ||||
ORD PRICE: | 183p | MARKET VALUE: | £151m | |
TOUCH: | 177-185p | 12-MONTH HIGH: | 205p | LOW: 144p |
DIVIDEND YIELD: | 3.6% | PE RATIO: | 12 | |
NET ASSET VALUE: | 36.1p* | NET DEBT: | 44.9% |
Year to 30 Nov | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
2013 | 262 | 9.4 | 6.7 | 3.3† |
2014 | 203 | 15.8 | 13.9 | 4.0 |
2015 | 178 | 19.2 | 18.5 | 5.0 |
2016 | 168 | 15.1 | 14.4 | 6.0 |
2017 | 186 | 14.6 | 15.8 | 6.6 |
% change | +11 | -3 | +10 | +10 |
Ex-div: | 15 Mar | |||
Payment: | 13 Apr | |||
*Includes intangible assets of £65.5m, or 79p a share †Excludes special dividend of 16p per share |