'Eventful but positive' year for RM as it quits the PC-making world
By the way, there might be a 50% crash in sales later on. Just so you know
Shape-shifting education supplier RM was in philosophical mood as it exited a biz-changing fiscal '13 with profits up and revenues down, impacted by fewer – but higher margin – Building Schools for the Future contracts.
Turnover in the 12 months to 30 November fell nine per cent year-on-year to £261.7m (8.4 per cent excluding businesses that exited in 2012), as two of the three main operating divisions reported tough market conditions.
Adjusted operating profit grew 35 per cent to £17.2m and profit before tax finished the line at £9.4m, up £2m in the year. Included in the bottom line were £5.1m of exceptional items related to restructuring costs from the Education Technology (ET) biz.
"The well-signalled decline in the BSF programme was the major contributor to revenue reduction, but was equally a valuable source of profit and cash," said chairman John Poulter.
The coalition fired a bullet into BSF during the summer of 2010 but projects that had already been approved or were close to approval, continued and are now winding down. RM won more of the contracts than any other UK supplier.
Continued "funding pressure" in the education sector led to a revenue drop of 10.7 per cent to £181.2m in ET, but adjusted operating profit grew to £8.6m from £5.4m as margins headed north, from 2.6 to 4.8 per cent.
The PC-making biz was shuttered in December and as such ET is to be split into four business units: IT services, Digital Platforms and Content (DPC), Infrastructure Solutions (IS) and Internet services.
With BSF contracts winding down, Services' revenues fell 14 per cent to £85.7m, and DPC turnover dropped 17 per cent to £7.3m "reflecting the run down of learning platforms and reduced curriculum software sales".
Elsewhere in ET, IS sales dipped seven per cent to £15.7m as demand for established products reduced, and the Internet services operation fell five per cent to £19.3m.
Revenues within the PC business fell eight per cent to £53.1m, and in this area RM will wind down production during fiscal '14. This combined with the BSF factor make for some bleak revenue forecasts.
"The expected rundown in BSF activity combined with exiting personal computing device sales will result in a circa 50 per cent reduction in ET division's revenue between FY13 and FY15.
"FY14 will be a year of transition with cost reductions lagging reduced revenues as existing commitments are met and manufacturing and warehouse facilities are closed," said RM.
The Education Resources division - comprised by the TTS Catalogues business and SpaceKraft (which targets educational products at the special needs sector) - saw sales fall 9.7 per cent to £54m "in a declining market".
The third division at RM, Assessment and Data Services - exam marking, onscreen testing and management/analysis of data - was the only unit to report a sales rise, up 13.8 per cent to £26.5m.
"2013 has been an eventful but positive year for RM," said chairman Poulter. ®