14 September 2011 – final results
Accountancy group RSM Tenon has announced results for the year to 30 June with a 31% increase in turnover to £249m being in line with expectations, whilst adjusted pre-tax profits came in at £27.1m, ahead of forecasts. Earnings per share on the same basis fell to 6.45p (2010: 6.69p) due to an increase in the number of shares in issue, althoughb the dividend was reduced to 0.55p as against our forecast of 1.6p. The reduction in the dividend will allow the group to preserve resources in a difficult trading environment although the group has reduced net debt to £65.7m (Dec 31 2010: £73.3m) in the second half. However, concerns about the level of debt and the reduced dividend have spooked investors and the shares have dropped back as a result. Although some caution is justified, with 80% of the group’s revenues of a recurring nature we believe that this is more than accounted for in the low p/e ratio. As such, we maintain our recommendation of BUY