RM profits up after PC business exit

Full year sales at RM have dropped as anticipated, but growth in profits suggests things are going the right way following the closure of its PC business

Bosses at education solutions provider RM have said the business’ transition towards a software and services-centric model is well on track after full-year profits and margins for the 12 months to 30 November grew.

In results announced on 3 February, RM said that adjusted operating margins increased with adjusted operating profit rising to £17.2m from £12.7m last year, while adjusted profit before tax was up from £12.1m to £16.4m, statutory profit before tax grew from £7.4m to £9.4m, and cash generated by operations grew to £34.7m from £33.5m in its fiscal 2012.

Due to the “well-signalled” decline in the BSF programme, RM’s sales declined by 8.4% year-on-year to £261.7m excluding its exited PC business, which it shuttered in October 2013 with the loss of 300 jobs.

Chairman John Poulter commented: “The strategic decision within the Group's Education Technology division to discontinue the manufacture and distribution of computer hardware in order to expand software and service offerings represented a major change and was received with understanding in the marketplace.

“The operational reorganisation consequent upon this decision is in the process of implementation and is on track in respect of timing and cost.”

The impact of the winding down of BSF and the closure of RM’s PC division are expected to cut Education Technology sales by 50% from 2013 levels by 2015, and the firm said this year would be one of transition, with cost reductions lagging reduced revenues as existing commitments are met and its manufacturing facilities are shut down.

Poulter said that RM’s other two divisions, Assessment and Data Services (ADS) and Education Resources both “acquitted themselves well.”

ADS, he explained, had extended a number of existing contractual relationships and grown its margins, while Education Resources continued to tick over nicely, despite a large Corporate Social Responsibility programme sponsored by a major corporate not being repeated during 2013.

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