Sober RM ekes out BSF cash
Contract wins continue, but reflective trading update points to tough market
A subdued interim management statement from RM revealed the system builder is continuing to wring the dregs from the axed Building Schools for the Future (BSF) scheme.
The Oxfordshire-based firm today released a trading update indicating it expects full-year sales to be in line with market expectations. RM's fiscal year began on 1 October, and the company stressed that Q1 is always "the lowest for revenue and order intake".
Today's update struck a reflective tone, pointing out that the "education market continues to present challenges". RM is expecting FY11 sales for its Learning Technologies division to decline year on year, owing to "subdued [...] market conditions".
One-off contract values in its Assessment and Data unit are also "significantly lower than last year". This is attributed to longer government procurement decision-making processes, and also to a strong performance last year.
But today's news was not all bad, as RM claimed the first four months of FY11 saw it tie down a hefty chunk of revenue committed for the long term for each division.
The period from 1 October to 9 February also saw the system builder win or extend seven BSF contracts. However, the scope and value of the projects are considerably smaller than the multi-year, eight-figure deals that were being signed before the change of government.
So far in this fiscal year, RM has bagged BSF deals with the London Boroughs of Hackney, Barking and Dagenham, Islington, Ealing and Camden, worth between £3.7m and £6.1m apiece. BSF contracts with Salford and Derby City Council – worth £5m and £4.6m respectively – have also been signed.
Other wins include a £3.2m deal with Hertfordshire County Council's schools programme and a £7m contract with the National Pupil Database. In December, RM also sealed a six-year managed service deal to provide on-screen marking functions to the Cambridge Assessment examination board.
By far the biggest deal is a £30m, ten-year contract to offer ICT managed services to schools in the Metropolitan Borough of Dudley. RM was appointed preferred bidder in November.
Terry Sweeney, RM chief executive, said: "In the UK, government announcements indicate that, while total revenue funding for schools will increase year on year, there will be winners and losers. The amount of capital funding devolved to individual schools has also decreased significantly.
"Against these short-term difficulties, we continue to win, renew, and extend long-term contracts. We are also seeing encouraging levels of demand in our Education Resources business."