RM's shares tank by a third as ERP rollout hits profits

RM’s £60m-revenue RM Technology arm still expected to grow in fiscal 2022, however

RM has stressed that its £60m-revenue edtech arm, RM Technology, is in line to record growth in its current financial year despite news of problems elsewhere in its business knocking up to a third off its share price.

In a trading update this morning, LSE-listed RM warned that operating profits in its year to 30 November 2022 will be "significantly lower than forecast".

The source of RM's woes lie in its RM Resources arm, whose Consortium brand is currently enduring "ongoing challenges" caused by a recent ERP implementation. RM Resources generated the majority (£114.4m) of RM's £210.9m revenues last year.

RM's share price fell by as much as a third this morning on the news.

RM's two other arms - RM Technology and RM Assessment - are expected to deliver revenue growth in its current year, it said, however. The former recorded revenues of £64.6m in FY 2021, but saw its 1H 2022 tally slip six per cent to £30.4m.

Although the lower profits at RM Resources has "in part" been offset by sales of IP addresses brought forward from FY23 in RM Technology, the schools supplier was frank about the scale of the challenges caused by the issue.

"The challenges associated with the IT implementation have been material and impacted our short-term priorities and financial performance," RM CEO Neil Martin said.

"We remain focused on delivering a plan to put the business back on a solid footing that will deliver longer term value for all our stakeholders."