RM rides on soaring school IT budgets

Unusually low PC margins

RM, the UK's biggest IT supplier for schools, produced half year sales of £113.7 million up 46 per cent(2000: £78.1m) and PBT up 36 per cent to £2.1m (before amortisation of goodwill).

The company expects a return to normal seasonal trading patterns, after experiencing 'unusually low PC hardware margins in the six months to March 31, 2001.

RM is keen to emphasis sales success in its service and solutions portfolio, reporting 43 per cent sales growth in RM Window Box and 49 per cent sales jump for RM Community Connect.

Business long-term is looking good for RM, which notes that education funding is "increasing 9% year-on-year and our products are offering increasing benefits
to our customers". As market leader, RM expects to be a major beneficiary for this increased spend.

But in the short term, its balance sheet looks a little less healthy than for its last interims. The company says that its working capital now looks good but during the period average daily borrowings for the period was £1.6 million - compared to average cash balances of £10.7 million for the same period last year

The main culprit is the Learning Schools Programme (LSP), a joint venture with the Open University to provide distance learning for teachers. So far 125,000 teachers, a quarter of the gene pool, have signed up,.But RM notes longer payment terms for LSP.

Also to blame was "unusually high levels of stock at the end of the last financial year"( presumably PC hardware?). ®