Just when education supplier RM is getting itself back on track, it has revealed that a £40m black hole will emerge in its accounts when Blighty's Building Schools for the Future programme is finally shuttered.
The UK firm stumbled in fiscal 2011 as it posted steep losses, managed to recover somewhat in fiscal 2012 and is back on its feet at the half-way point of this financial year - for the time being, anyway.
Turnover for the six months to May 2013 fell 2.6 per cent to £118.8m, excluding businesses it exited. Including those units, sales fell 5.3 per cent from £124.7m. Last year RM changed its year-end month to November.
Chairman John Poulter warned [PDF]: "The UK education sector is, and will remain, under financial constraint and revenue is expected to decline."
The firm reckons it will pick up some Building Schools for the Future (BSF) activity in the second half of this year, but forecasts a £40m reduction in projects by 2015. That is a lot of schools equipment sales to find in a relatively short space of time.
The Tory-Lib Dem coalition put a bullet in Labour's BSF scheme - a troubled multibillion-pound investment programme to improve UK education - when it came to power in 2010 - and RM was by far the largest benefactor of the scheme. Today's government favours academies and free schools projects instead, and RM has had some success here.
The bottom line, however, did move in the right direction for RM, with operating profits coming in at £5.35m compared to £1.1m a year earlier. Net profit was £3.8m, up from a £155,000 loss.
This shareholder goodness was helped in part by a drop in operating expenses, but also because RM did not saddle the cost of offloading businesses nor did it face share-based payment charges this time round.
The Education Technology (ET) unit posted sales of £82.6m, a little off the pace with the £83.9m filed a year ago but adjusted operating profit climbed to £2.7m from £1.6m.
This was against a "backdrop of public sector budgetary constraints" as RM felt the pinch from austerity measures and competition remained intense.
The ET unit, which includes managed services, internet services, network software, digital platforms, hardware and support, requires the "immediate attention" of the CEO, said Poulter.
"Considerable effort is being directed to improve the profitability of the ET business by both commercial and efficiency improvements and through an appraisal of each of the constituent elements of the business," said Poulter.
Some hopes may be pinned on RM Unify, the school level "Platform to the Cloud" and the RM Book e-books platform.
The Education Resources unit - distribution of curriculum products and materials - declined 7.9 per cent to £26.4m and made an operating profit of £3m, down from £3.9m.
The Assessment and Data Services division was the only one to post growth; sales were up to £9.8m from £9.5m. Operating profit jumped from £600,000 to £900,000. ®