RM: Challenging times lie ahead
VAR reports profitable preliminary final-year results, management changes and projects robust yet cautious outlook for 2013
RM is preparing for more senior-level management changes and continuing market pressures as it presses ahead with its push for profitability.
The VAR reported its preliminary results for the year ended 30 November, with both revenue and profit down slightly on the previous year – total revenue stood at £288.7m for the year compared with £310m in FY 2011, and operating profit was £13.6m, compared with £14.1m in 2011.
In terms of changes at the top, chairman Martyn Ratcliffe is to step down in the summer and David Brooks will take the chief executive reins on 1 March. The firm said the search for a non-executive chairman will begin shortly.
RM has staged an impressive comeback after a turbulent few years caused by the axing of the Building Schools for the Future scheme in 2010. It has offloaded several loss-making business units and been through several management reshuffles as it fought its way back from the brink to profitability.
“The past year has been one of significant change within RM and the Board is pleased with the progress made, particularly in the context of public sector budget constraints,” said the firm in its Stock Exchange announcement. “Following the restructuring in 2011, the increased focus on working capital resulting in a very strong cash position at the year end and the launch of some exciting new cloud-based products in 2012, RM now has an excellent platform for the future as a leading provider of products, solutions and services to the UK education market.”
Since its strategic review last year the VAR has completed the disposal of its non-core and loss-making businesses and reduced headcount from 2,699 in 2011 to 2,250 by November last year. It also launched three new initiatives in the past year: its cloud-based platform RM Unify; its e-book service RM Books; and RM At Home, a free schools information service aimed at parents.
In his summary, outgoing chairman Ratcliffe warned of testing times ahead: “2012 has been a challenging but very successful year for RM with significant progress achieved. The actions taken since the strategic review have stabilised the Group and have established a stronger platform for the future, with some innovative new offerings being launched.
“Furthermore, despite the market environment and the internal organisational changes, RM has maintained its unparalleled position in the UK education market, which is a reflection of the resilience and commitment of the management and staff throughout the Group.
“Looking forward, the Board anticipates that difficult market conditions will continue for the foreseeable future. The decline in the Group's BSF contract profile in 2014 and beyond, together with the anticipated decline in hardware/infrastructure revenue and margin, is not insignificant,” he added.
“As a result, and as previously stated, the Board anticipates Group revenue will continue to decline for some period. However, in the medium term, the investment in new offerings provides the potential to leverage the unique relationship between RM and its customer base, in higher-value sectors of the education market. Such creativity and innovation, based on a more robust foundation and a leading market position, offers an exciting opportunity in the future as RM transitions to the digital education era.”