RM looks overseas as UK sales drop looms in FY11

After robust growth in FY10, education IT firm expects decline in revenue from core classroom technologies

After a solid 2010 fiscal year, education IT supplier RM is expecting core classroom technology sales to shrink next year.

The firm's revenue for the year to the end of September rose 10 per cent annually to £380.1m. Adjusted operational profit was up 12 per cent to £19.9m, although this includes an exceptional pension credit cost of £7m. But committed revenue of £385m as of year-end represents an eight per cent decline on last year's figure.

RM's three sales units all posted top-line increases. The firm's Learning Technologies wing, which contributes more than 70 per cent of total sales, boosted revenue 4 per cent year on year to £273.9m. RM's Education Resources division grew turnover 30 per cent to £83.3m, while Assessment and Data sales rose 18 per cent to £22.9m.

Revenue generated outside the UK rose almost a fifth to £49.6m. But the proportion of RM's revenue coming from the now-defunct Building Schools for the Future (BSF) programme increased three points to 14 per cent over the course of FY10.

The firm is expecting sales from its core Learning Technologies division to contract next year, as spending cuts bite into public sector budgets. But RM chief executive Terry Sweeney said front-line education budgets have been relatively well protected.

"Looking ahead, clearly the UK public sector is in a period of significant funding and policy change," he said. "However, the overall funding environment for schools is better than many anticipated and shows modest real-terms growth over the next four years. RM has a long track record of responding positively to changes in UK education policy.

"Internationally, we continue to see plenty of opportunity for RM product and services. Continued growth in our higher-margin segments, combined with greater focus on cost control, means that we approach the year ahead with confidence."