RM: we were caught out by education cuts

 

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By Barry Collins

Posted on 6 Feb 2012 at 14:09

RM has admitted it failed to anticipate the full effects of the slowdown in education IT spending after posting losses of £23.4m.

The education IT specialist has borne the brunt of education cuts and the scrapping of the Building Schools for the Future (BSF) programme, which saw plans for the refurbishment of more than 700 schools shelved.

Consequently, RM has been forced to make hundreds of staff redundant and dispose of foreign ventures in the US and Australia.

In a statement to accompany RM's annual accounts, the executive chairman admits the company reacted too slowly to the economic downturn. "In recent years, while recognising that the market was changing, the severity of the changes was not fully appreciated by the business, exacerbated by the continuing positive effect of the Building Schools for the Future (BSF) programme which mitigated the effects of the slow down," Martyn Ratcliffe writes.

"This situation was compounded by an unsuccessful international expansion programme and a lack of innovation in recent years, whereby few new growth opportunities in the core UK market were created to offset the foreseeable decline in BSF."

Ratcliffe said RM will now concentrate on its UK operations, and insists that the underlying business remains healthy, once disposals and one-off redundancy costs are set aside. "Despite this challenging environment, RM’s underlying business remains profitable, reporting £10 million of adjusted operating profit for the 14 month period (2010: £22.6 million for the 12 month period) and generating cash from operations of £24.8 million (2010: £23.7 million)," he claims.

"The increased focus on working capital, together with the disposal programme, have resulted in a significant improvement in the Group’s cash position."