RM has been schooled: Sales fell by over £69m in fiscal 2014
PC biz exit, tight-fisted education tech buyers blamed
The downward pressure on school budgets, the shuttering of the PC production line and the shift from reselling hardware sucked almost £70m in sales out of education supplier RM last year.
The company reported turnover of £202.5m for the fiscal 2014 ended 30 November, down more than 22.5 per cent year-on-year, with the Education division (formerly Education Technology) the culprit.
After sinking into the red, RM decided to wind down the Education unit's PC assembly line from autumn 2013, closing it entirely last summer, and – as expected – this hit revenues, which fell 38 per cent, or £69.3m, to £111.9m.
“The shaping of RM Education continues,” said chairman John Poulter in a trading statement.
In addition to the move away from kit selling, “continued funding pressure in the UK education sector” also influenced sales during the year, the company said.
Staff reductions in the Education unit were ahead of plan and the write-down of remaining inventory was lower than expected.
RM Resources – selling curriculum products and materials to schools for both general and departmental use – grew 16 per cent to £62.8m. RM Results – onscreen marking, systems that create exams and tests – grew five per cent to £27.8m
After the cost of sales was accounted for, gross profit was actually marginally higher than a year earlier, while expenses and one-off charges were considerably lighter. All in all, this led to operating profit of £16.47m versus £10.35m in fiscal 2013 – when the bulk of the restructuring was done.
Good things are expected of the Resources and Results divisions in the current financial year, and without the distraction of hardware and lower costs, the Education biz “will take further steps” in its turnaround, we're told.®