Interim Management Statement

RNS Number : 9810A

RM PLC

10 February 2011

 



RM - Interim Management Statement

RM, the international education company, is today issuing its first half Interim Management Statement covering the period from 1 October 2010 to 9 February 2011.

Trading update

Education market conditions continue to present challenges; however, Management's expectations for the 12-month period to 30 September 2011 remain in line with the current market consensus range.

RM's business is seasonal, reflecting buying patterns in the schools marketplace. A large majority of the Group's profit arises in the second half of the twelve-month period to September, and the first quarter of this period is the lowest for revenue and order intake. This seasonal pattern means that performance at this stage in the year is not a reliable indicator of the outcome for the twelve months to 30 September 2011.

As stated in the Group's 2010 annual results announcement, from 2011 RM intends to change its financial year end from 30 September to 30 November. The change of year end will mean that 2011 will be a 14-month period, running from 1 October 2010 to 30 November 2011. RM will report interim results for the six months to March 2011 and annual results for the fourteen-month period.

In line with its normal programme of communications with shareholders, RM anticipates issuing a pre-close update to the market prior to 31 March 2011, the end of the first six months of its financial year.

Operational update

The Group has made good progress in the first four months of the year in securing long-term committed revenues for its Learning Technologies and Assessment and Data businesses. The Group has extended its strategic relationship with Dudley Metropolitan Borough, renewed contracts with its two 'cornerstone' Assessment and Data customers, reached financial close for the last five remaining Building Schools for the Future (BSF) projects, and negotiated extensions to two other BSF contracts.

As anticipated at the time of RM's annual results announcement on 22 November 2010, market conditions for Learning Technologies transactional business remain subduedwhilst customers respond to changes in policy and funding arrangements. RM indicated in that announcement that it anticipated a decline in UK Learning Technologies revenues in the 12-month period to September 2011. Recent Government announcements about the allocation of schools funding in government year 2011/12, combined with trading in the first quarter of the year, have reinforced this view.

In the US, the $32m Cobb County project, originally announced in January 2009, is now largely complete. Other interactive classroom fit-out demand has slowed significantly reflecting budgetary uncertainties and constraints. The Group's US business continues to develop opportunities for Easiteach Next Generation and for our 'cloud'-delivered Learning Platform.

The value of 'one-off' developments and enhancements in the Assessment and Data business during the period is significantly lower than last year, reflecting both a particularly strong comparative period and longer decision cycles in central government departments and examination boards.

Demand for the Group's Education Resources products continues to grow.

Financial position

RM's financial position remains strong and the Board believes the Company remains well-placed to manage it business risks for the foreseeable future.

Terry Sweeney, CEO of RM, said:

'In the UK, Government announcements indicate that, whilst 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.

'The recent BETT exhibition provided us with an opportunity to show our UK and overseas customers the full range of our innovative education solutions and gauge their buying intentions. We saw real enthusiasm for our products and services and I remain confident that RM is well-placed in a long-term global growth market.'

For further information please contact:

Iain McIntosh / Phil Hemmings, RM plc	08450 700300
Julie Clarke / James Macey White, Financial Dynamics	020 7831 3113

About RM

RM is an international education group providing innovative products and services to schools, colleges & universities, local government, and central government education departments & agencies. RM's products range from classroom resources, through school and classroom technology, to systems for marking exams and delivering school performance data. RM is listed on the main market of the London Stock Exchange under the symbol RM.L, ISIN GB0002870417. Further details are available at www.rm.com/investors and through the Group's investor blog at rminvestors.wordpress.com

Significant developments during the period

On 6 October 2010, RM announced that it had been chosen to provide managed ICT services to primary schools in Salford. The project is expected to be worth £5m over five years and is an extension of the Group's existing BSF project in Salford.

On 9 October 2010, RM confirmed that it had been reappointed by the Department for Education to deliver the National Pupil Database - Achievement and Attainment Tables. The contract is expected to be worth £7m over two years.

On 16 November 2010, RM confirmed that it had been selected to provide managed ICT services to Phase 2 of the London Borough of Hackney's BSF programme. The project is expected to be worth £6m over five years and is an extension of the Group's existing BSF project in Hackney.

On 25 November 2010, RM announced that it had been appointed preferred bidder for a contract to provide managed ICT services to schools in the Metropolitan Borough of Dudley. The project is expected to be worth up to £30m over ten years and is a renewal of the Group's existing project in Dudley.

On 30 November 2010, RM confirmed that it had reached financial close for a contract to provide ICT to the London Borough of Barking and Dagenham's BSF programme. The contract is expected to be worth £4.5m.

On 1 December 2010, RM confirmed that it had been selected to provide managed ICT services to phase 2 of the London Borough of Islington's BSF programme. The project is expected to be worth up to £3.7m over five years and is an extension of the Group's existing BSF project in Islington.

On 2 December 2010, RM confirmed that it had reached financial close for a contract to provide ICT to Derby City Council's BSF programme. The contract is expected to be worth £4.6m.

On 15 December 2010, RM confirmed that it had entered into a six-year managed service agreement to provide on-screen marking services to the examination board Cambridge Assessment. The contract is a renewal of the Group's existing relationship with Cambridge Assessment.

On 16 December 2010, RM confirmed that it had reached financial close for a contract to provide ICT to the London Borough of Ealing's BSF programme. The contract is expected to be worth £5.0m.

On 22 December 2010, RM confirmed that it had reached financial close for a contract to provide ICT to the London Borough of Camden's BSF programme. The contract is expected to be worth £6.1m.

On 17 January 2011, RM confirmed that it had reached financial close for a contract to provide ICT to Hertfordshire County Council's schools programme. The contract is expected to be worth £3.2m.

 

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