Staff at cost cutting education tech supplier RM discovered today the deficit in the company pension pot has widened substantially.
In a trading update, the Oxfordshire-based business confirmed that financial results for the year ended 30 November are in line with forecasts - analysts expected sales to shrink by £8m year-on-year to £170m and EBITDA to decline five per cent to £19.9m.
The net cash position has deteriorated slightly, falling from £48m at the end of last year to £40m at the end of the recent one. All the while, the deficit in the defined benefit scheme has risen to £35m from £21.9m.
RM said this was as a “result of the significant reduction in corporate bond yields. The Next triennial valuation of the scheme is May 2018”.
It has not been a vintage calendar year for RM, what with continued shrinkage in the financial results and the redundancy programme that started a couple of weeks ago.
Around 70 people across the business, including 35 from HQ in Abingdon have been put at risk of redundancy. The cutting of the cloth was to offset declining demand for the infrastructure hardware and installation services.
Respected analyst Megabuyte pointed out the City was expecting RM’s revenues in the current fiscal year to be flat with fiscal ’16, and to return to growth in the following year.
“With improving financials, investors may well be attracted to the five per cent dividend yield, although the ongoing pension issue, which required a £10m cash-top-up in the first half alone, remain a fly in the ointment,” said Ian Spence, founder and CEO at Megabuyte. ®