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Education specialist RM has been a vendor prepared to make bold decisions, exciting the hardware market and refocusing non software and services, and it is again having to take action to protect the core business.
The firm has been spending the past few months focusing on developing a strategic roadmap, and even before that has been concluded, the decision has been made to bring the shutters down on the education supplies and resources operation, the Consortium business.
RM has made the decision because the Consortium business has been underperforming for some time, after a roll-out of a fresh e-commerce platform last year failed to have a positive impact.
RM informed investors back in March that the shift to a fresh system had taken a toll, with profits of £4.2m in 2021 sliding to a statutory loss of £14.5m last year. That also sparked net debts to climb from £18.3m to £46.8m
But the firm also indicated that the integration had been completed and things were likely to improve over the course of its fiscal '22. This update has revealed that those hopes failed to make enough of a difference to reverse the performance at Consortium.
As a result, from the end of next month Consortium will close, with the move getting the backing of RM’s lenders.
The move will mean that the firm is expecting to make a material write-off of the carrying items of Consortium and its assets as a non-cash item, and will make provision for exit costs, although no impact is expected to be felt in the current financial year.
RM is due to provide a trading update next month on how its financial year, which ends on the 30 November, has gone.
Mark Cook, chief executive of RM, said that the closure of Consortium was part of the strategic plan and would benefit the overall business.
“The decision to simplify the business will enable us to better weather the macro challenges and build a platform for growth. Our 50-year heritage, leading market positions, IP, expertise, and deep customer knowledge, mean we are well-positioned to take advantage of the structural drivers in the growing global EdTech industry and deliver for our stakeholders,” he said.
“But, at the same time, it is with regret that we have decided to close Consortium, a business full of hugely talented and valued colleagues. Unfortunately, its underperformance is a drag the company can no longer afford and has clouded the good progress made elsewhere,” he added.
RM picked up Consortium in June 2017 for £56.5m from Connect. Initially, the business made positive contributions to revenues in the Group’s resources division.
Cook said that the firm would provide a clearer idea of where the strategy was going soon: “Looking ahead, I am confident that our new strategy, which we will unveil at the full year results, will shape RM into a pioneer of education technology, enriching the lives of learners globally.”