RMC makes first issue in 29 years
Friday 08 September 1995
Deputy City Editor
The City yesterday welcomed a pounds 459m rights issue from RMC, its first call on shareholders for 29 years. Although the cash call was pitched at 950p, the shares, which might normally be expected to fall on the news, closed 30p higher at 1,139p.
The one-for-four issue will be used to buy a minority stake in RMA, RMC's 63.6 per cent-owned German subsidiary. Analysts said the deal, which at pounds 356m represented only 8.4 times historic earnings, had been struck at an extremely attractive price.
Jim Owen, the company's chairman who steps down at the end of the year, described the acquisition as "an important step in the development of RMC in continental Europe". Having entered the German market in 1954, RMC is one of its leading manufacturers of concrete and cement.
The acquisition had first been mooted about a year ago by RMC's German partners which had no control over the company and received a relatively small dividend. Although the price paid appears small, for the German shareholders it represented 14 years' dividends which they believed they could reinvest more profitably elsewhere.
RMC also announced interim figures, confirming the group's continuing recovery from recession. Pre-tax profits jumped 32 per cent to pounds 130.3m, earnings per share increased by 31 per cent to 32.1p and the half-way dividend rose 10 per cent to 7.7p. Yesterday's share price rise followed a strong run since February when they traded at 910p.
Out of total operating profits of pounds 150.7m, the German operation contributed pounds 65.2m, easily RMC's largest geographical division. Activity levels remained high as the effort to rebuild Germany following unification continued.
RMC was one of the first companies to invest heavily in Germany. To begin with, the division's development was slow, but it accelerated rapidly with the onset of the country's post-war economic recovery.
Originally a producer of ready mixed concrete, RMA moved in the 1960s to secure its supplies of aggregates; in the 1970s it moved into cement manufacture. Following the reunification of Germany in 1990, RMC moved quickly to establish a big building materials business in the former east. It will have invested more than pounds 500m in sites around Berlin.
Elsewhere, RMC's UK operations increased operating profits 16 per cent, but the company warned that the improvement in volumes experienced in the second half of 1994 had not continued after April. The biggest drag on sales had been the new housing market which had affected all RMC's UK operations.
RMC's expansion over the past 10 years has been funded from operating cash flow and borrowings. However, in the past year, the company has spent pounds 140m on a number of acquisitions and it felt that a further pounds 356m would restrict its future plans. Other acquisitions are in the pipeline.
Investment Column, page 20
- 1 Man who held up 'hire me' sign at Waterloo station returns a year later with 'I'm hiring' sign
- 5 This crazy skiing video will leave you feeling queasy
Paris attacks: Do not call Charlie Hebdo killers 'terrorists', BBC says
Rowan Atkinson to sell £10 million McLaren 'supercar' he crashed into a tree and a lamppost
UK weather: Snow to fall in the coming week with sub-zero temperatures to last until early February
Saudi preacher who 'raped and tortured' his five -year-old daughter to death is released after paying 'blood money'
Warriors in ancient Iraq suffered Post-Traumatic Stress Disorder more than 3,000 years ago, say researchers
Nigel Farage: NHS might have to be replaced by private health insurance
'We would evict Queen from Buckingham Palace and allocate her council house,' say Greens
French court convicts three over homophobic tweets, in case hailed as a 'significant victory' by LGBT rights campaigners
George Galloway condemns 'racist, Islamophobic, hypocritical rag' Charlie Hebdo at freedom of speech rally
British Muslim school children suffering a backlash of abuse following Paris attacks
Greece elections: Syriza and EU on collision course after election win for left-wing party
iJobs Money & Business
£30000 - £32000 per annum + benefits : Ashdown Group: A highly successful, int...
£18000 - £20000 per annum: Recruitment Genius: This rapidly expanding business...
£25 - 28k + Bonus: Guru Careers: An In-house / Internal Recruiter is needed to...
Negotiable: Recruitment Genius: A Tax Assistant is required to join a leading ...