Interim Management Statement

RNS Number : 0625A

RM PLC

29 July 2008

 

RM - Interim Management Statement

RM is today issuing its second-half Interim Management Statement covering the four-month period since 1 April 2008. This is the first time RM has been required to issue a second-half IMS.

RM's business is seasonal, reflecting buying patterns in the schools marketplace. As always, the vast majority of the Group's full-year profit arises in the fourth quarter, which means that performance at this stage is not a reliable indicator of outcome for the year as a whole. In line with our normal programme of communications with shareholders, we anticipate issuing a pre-close update prior to the end of our financial year on 30 September. 

Trading update - expectations for the full year remain unchanged

Since the Group's interim results, announced on 12 May 2008, we have made good progress in a number of areas. However, we have also seen further tightening in the education software market, and PC margins are being affected by worldwide market conditions. Whilst there is more to do in the fourth quarter, management's expectations for the full year remain unchanged. 

Operational update

Since 1 April 2008, two more local authorities have chosen RM as their BSF (Building Schools for the Future) ICT supplier. The Group has now been chosen for 11 of the 25 projects that have been awarded, more than twice as many as its nearest competitor. In Leeds, where we were appointed BSF ICT supplier in May 2007, our contract has been extended to cover a further four secondary schools at a value of £7m, clearly showing the potential for additional business.

Our excellent operational delivery track record for large education projects continues to be a major asset. Those BSF projects where delivery has started are going well and delivering good customer satisfaction levels; Glow, the national education intranet for Scotland, is receiving international recognition; and our outsourced on-screen marking activity will process 50 million items this year. Customer satisfaction (RM's most important non-financial measure) for the year so far is in line with our target.

Community Connect 4, RM's next generation networking system, started shipping in June 2008. As we said in our interim results statement, shipments started later than originally planned, which will result in a very busy summer installations period. The product is being well-received by customers and we are pleased with the level of orders.

Appointment of new CEO

On 9 June 2008, the Group announced the appointment of Terry Sweeney as CEO Designate, in succession to Tim Pearson, who will retire as CEO on 30 September 2008. Terry Sweeney joined RM in 1998 and most recently served as Managing Director - Education Resources and Curriculum Software. Terry was appointed to the Board on 9 June 2008; day-to-day management of the business is transferring to Terry during the handover period.

Financial position

The seasonal nature of the Group's business results in a peak in working capital over the summer: products and services are delivered throughout summer ahead of the new academic year, whilst school summer holidays mean cash collections fall mainly in September. This year, the seasonal cash requirement will be extended by the opening of BSF schools, where longer-than-usual payment terms mean that some cash collections will fall into FY-2009.

Cash balances at the end of June 2008 were £4.0m (June 2007: £8.8m; September 2007: £29.3m). This is after the acquisition of SpaceKraft (October 2007, net consideration of £4.5m), the acquisition of a 25% stake in Inclusive Technology (April 2008, £1.0m), and making the final part of a special pension payment (October 2007, £1.5m). 

For further information, please contact: 

Mike Greig/Phil Hemmings, RM plc	08450 700300
Andrew Fenwick/Catherine Colloms, Brunswick	020 7404 5959

Notes:

Founded in 1973, the RM Group is a leading provider of educational products and services to schools, colleges and universities, local government and central government education departments and agencies. RM works closely with educationalists to create new products, processes and technology which improve teaching and learning. RM is listed on the main market of the London Stock Exchange under the symbol RM.L, ISIN GB0002870417.

Material events and transactions during the period:

• 7 April 2008: RM acquired a 25% stake in Inclusive Technology, one of the UK's leading suppliers of special educational needs and early years products, for a cash consideration of £1.0m. This investment brings further strength to RM's growing education resources business and complements the Group's existing SEN activities: Special Direct and SpaceKraft. 

• 11 April 2008: RM announced that, as part of the Newham Learning Partnership consortium, it had been selected as the ICT supplier for the London Borough of Newham's BSF programme. The project is expected to be worth £53m over eleven years.

• 28 April 2008: RM announced that it had reached agreement with Leeds City Council to extend the scope of Leeds' BSF ICT contract to a further four secondary schools. The contract extension is worth £7m.

• 5 June 2008: RM announced that shipments of Community Connect 4, the Group's next generation networking system, had commenced.

• 13 June 2008: RM announced that it had been selected by Aberdeen College to provide an outsourced managed ICT service for the College's 48,000 students and 800 staff. The project is initially expected to be worth £7.5m over five years.

• 30 June 2008: RM announced that Haringey Council's Procurement Committee had approved the Group's appointment as selected bidder to provide ICT services for the Borough's BSF programme. The project is worth £25m.

• 9 July 2008: RM confirmed that it had reached contractual close with Islington Council for the Borough's BSF ICT contract. The contract is worth £6m.

 

END

 

 

IMSILFEDDRITFIT