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The Week Ahead: RM Group gets top marks for homework as revenues surge

Edited,Peter John
Sunday 26 November 2006 01:00 GMT
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Beer groups dominate a heavy results period with Mitchells & Butlers and Wolverhampton & Dudley Breweries both reporting full-year figures.

However, the week begins with RM Group, the software and computer services group, that is making a strong push to capture the government cash being pumped into primary and secondary schools.

The company has already won contracts with four councils and aims to capture one-third of the IT budget for UK schools. Analysts are predicting pre-tax profits of £14m-£15.5m against £14m last time but a sharp rise in revenues and profit margins in the year to September 2007.

On Tuesday, De La Rue, the bank-note printer and cash machines group, announces its half-year numbers and analysts are looking for pre-tax profits of more than £42m compared with £30.6m last time.

Increased demand for complex security features in banknotes to combat the growing sophistication of forgers boosted full-year numbers in May.

Wednesday's appetite for figures will be fed largely by Compass, the world's biggest catering company. The group, which serves up £11bn of meals to schoolchildren, hospital patients, company staff and Wimbledon fans among others, is forecast to announce operating profits of £506m and 11.3p of earnings per share, similar to last year.

The contract caterer has been bedevilled by legal issues, but the market has factored them into the share price, which has been strong recently, particularly since its recent positive trading update.

The company's UK business, which suffered from the Jamie Oliver-inspired backlash against unhealthy school meals, has shown signs of stabilising.

Mitchells & Butlers reports full-year numbers on the same day. The share price has been very strong leading up to the figures mainly, analysts say, because of bid speculation and positive trading and comments from other pub companies.

Specifically, there have been more positive comments on the impact of the smoking ban seen in Scotland. With the company's most recent guidance suggesting earnings would be at the upper end of the board's expectations, Goldman Sachs predicts pre-tax profits of £206m and earnings per share of 29p.

In the media sector, Future, the special-interest magazine group, is not expected to delight its investors after announcing in August that profits would be £3.5m below expectations, because of continued weakness in advertising and newsstand sales.

Numis Securities cut its pre-tax estimate from £14m to £10.5m, down from £19.4m last time. There are no signs that trading has improved since the company's update.

For example, Emap said at its interims two weeks ago that UK consumer magazine circulation was mixed and advertising was weak.

Sage, the computer services company, is expected to reveal £220m of pre-tax profits, up from £194m last time.

The figures were flagged in a trading statement, but analysts will be looking for more information on organic growth, which is expected to be 6 per cent for the year.

On Thursday, the market will be waiting to see what develops at Jessops, the chain of 315 camera shops. Following the trading update in September, most of the analysts believe that £355m of sales and £17m pre-tax profit are likely as the company enlarges its share of the growing digital camera market.

Holidaybreak, the camping and holiday caravan group, is set to announce full-year profits of £32m - up 8 per cent on last year and driven largely by a lower interest charge.

The recovery in business activity in the second half is believed to have been insufficient to drive top-line growth.

Finally, the ever-hungry Wolverhampton & Dudley Breweries, which gobbled up Jennings of Cumbria earlier this year, reports on Friday. The company slugs it out with Suffolk-based Greene King for the title of the biggest traditional brewer and pub owner.

It is set to announce that pre-tax profits have risen from £90.1m to £101m and earnings per share from 84.4p to 91.6p.

More importantly for the company's investors, Wolves is set to maintain its 30-year tradition of raising the dividend by at least 10 per cent.

Analysts will be keen to press chief executive Ralph Findlay on further potential acquisitions, but the company has said prices have become elevated by the consolidation of the past couple of years and there is speculation that a share buy-back might be on the cards instead.

Last week Enterprise Inns confirmed plans to buy back £460m of shares over the next 12 months.

CALENDAR

Tomorrow 27

UK RESULTS: (final) RM; (interim) Homeserve, Proventec, UBC Media

Tuesday 28

UK RESULTS: (F) Character, Grainger Trust, Media Corp, Sarantel, Topps Tiles; (I) Asos, Cambridge Antibodies; (Q4) De La Rue, GB Group, GCAP Media, Intermediate Capital, Kelda, Kingston Communications, Mitie, Torotrak

Wednesday 29

UK RESULTS: (F) Brewin Dolphin, Compass, Gooch & Housego, Mitchells & Butler, Sage; (I) Asfare, Helical Bar, Opsec Security, Sportingbet; (Q1) Warner Estate Holdings

Thursday 30

UK RESULTS: (F) Abacus, Jessops, Optos; (I) AWG, Dyson, Expro International, Findel, First Property, FKI, Goldshield, Pennon, QinetiQ, Quintain Estates

Friday 1

UK RESULTS: (F) Wolverhampton & Dudley

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