Education software group RM Plc (LON:RM.) shares jumped in early trading Tuesday after saying it had started 2019 in a “good position” and hiked its final dividend after strong growth in the latest full year.
The firm reported an adjusted pre-tax profit for the year ended 30 November 2018 of £26mln, up from £19.7mln in 2017, while revenues surged to £221mln from £185.9mln.
READ: RM sees profit ahead of expectations, boosted by acquisitions and international growth
Across its divisions, RM said its education resources segment, RM Resources, saw revenue growth of 45% to £121.6mln, while revenues at its marking service RM Results grew slightly to £31.8mln from £31.6mln and its ICT software supplier arm RM Education declined 4% to £67.6mln which was blamed on the completion of several long term contracts, although the divisions profits increased to £7.8mln from £6.6mln.
Adjusted operating margins also increased by 1 percentage point to 12.4%, while net debt was slashed to £5.8mln from £13.4mln.
As a result of the improved overall performance, RM hiked its final dividend to 5.7p from 4.95p, taking the total dividend for the year to 7.6p, an increase of 15%.
In its outlook for the new financial year, RM’s chairman John Poulter said the newly consolidated RM Education segment, which had integrated educational supplies firm Consortium after an acquisition in 2017, stood to benefit from “distribution synergies to counteract anticipated price pressure as customers move increasingly online”.
Poulter added that the RM Results business was “much invigorated” both in the UK and overseas, boosted by seven contract wins over the year, while RM Education had grown its profit despite the revenue decline as operating margins befitted from cost efficiencies.
“Notwithstanding macroeconomic uncertainties, the group enters 2019 in a good position,” Poulter said.
RM had previously upped its results forecasts in December, saying revenues would be significantly higher than 2017 due to a full-year contribution from the acquisition of Consortium.
In a note to clients, analysts at broker Peel Hunt said the results were 3% ahead of their expectations, and as a result upped their earnings per share (EPS) forecasts for the 2019 fiscal year by 2% and 4% for 2020.
Shares were up 5.3% at 240p.