Ditching PC production, the running down of the old Building Schools for the Future contracts, and relatively “subdued” government spending on education ate into RM’s lunch money in 2015.
The specialist education supplier turned over £178.2m in the year ended November, down 12 per cent on the prior fiscal, and it was all the fault of one division – RM Education.
The unit reported sales of £80.2m, down from £111.9m; managed services fell 35.5 per cent to £32.2m; the cloud based management system grew 1.2 per cent to £7.7m; and infrastructure dived nearly 26 per cent to £40.3m.
“As anticipated, revenues in 2015 again declined with a reduction in new school openings under the BSF programme,” said RM of its managed services unit.
RM was the biggest suppliers to BSF, a scheme started by the Labour government that was quickly shelved when the coalition came to power in 2010 in favour of the Academies Programme.
The infrastructure strand to the Education division is now centred on designing and managing networks, and reselling third party products under an agreement signed with Misco. RM halted the loss-making PC production line at its Oxford factory in late 2014.
Elsewhere in the group, RM Resources – which sells educational curriculum products and materials – grew 7.6 per cent to £63.5m, and RM Results (selling systems for exams, tests and marking) grew 10.4 per cent to £30.7m.
Operating profit for the 12 months came in at £19.59m, up from £16.47m in the prior year. But this bounce was due to the release of provisions held for real estate and onerous leases.
RM CEO David Brookes described fiscal year 2015 as “another good year of progress for the group”, adding: “RM Education has been reshaped and ids now on a stable platform for the future.”
But he warned: “Market conditions in the UK eduction sector will continue to be subdued as a result of increased pressure on school budget.
The share price fell a little over five per cent today after the market digested the results. But analysts believe the company has reached rock bottom and financial results will recover from this year onwards. ®