Slimline RM enjoys margin boost

Schools IT outfit boosts profits despite greatly reduced revenue

RM increased profitability and enjoyed underlying revenue growth, despite shedding more than a fifth of its top line in FY14.

The Oxfordshire-based education IT player saw its total turnover for the year to 30 November fall 22.7 per cent year on year to £202.5m. The hefty drop can be wholly attributed to the RM Education division, which saw revenue decline 38.2 per cent to £111.9m. The unit has shrunk following the London-listed company's withdrawal from the PC-building market. The gradual death of the Building Schools for the Future programme over the last five years has also taken its toll on RM's top line, which swelled as high as £380m on the back of the firm's success in winning business through the scheme.

Elsewhere, the RM Resources business, which offers tech and other school supplies, increased FY14 sales by 16 per cent to £62.8m. The exam-marking and data-assessment RM Results unit saw its revenue rise by five per cent to £27.8m.

Despite the large decline in revenue in FY14, RM banked an extra £1.3m in adjusted operating profit, which came in at £18.5m. This equates to a rise in operating margins from 6.6 to 9.1 per cent.

RM chief executive David Brooks said: "2014 was a good year for RM with both RM Resources and RM Results delivering strong organic growth. RM Education has been reshaped, after the closure of the hardware manufacturing and distribution facility in the year. All three divisions improved operating margins with good cash generation.

"RM Resources and RM Results are well positioned for further growth in 2015 and we remain focused on the further development of RM Education's provision of software products and services to UK schools."