RM’s Executive Chairman, Martyn Ratcliffe, continues to come through on his promises. In September (see RM clears out old furniture and rearranges the rest), we were told to expect numerous disposals as the Group refocused its efforts. October saw the first, as RM sold off its US operations (see RM slims down its US spread). This was followed in November by the disposal of its Australian operations to Civica (see Civica takes on RM’s Oz ops).
Today, RM is announcing the disposal of certain non core elements of its Dacta business (which we take to mean not related to the distribution of LEGO Education) and its related 49% shareholding in the LEGO Education Europe JV. The JV was formed at the end of September 2010 and started trading on 1st January 2011; it has exclusive European distribution rights for LEGO Education products.
Tolo Toys Learning Limited, for which Lego Education Europe was a distributor, is picking up the non-core Dacta business for Eur2.7 million in cash (Eur1.0m on completion and the rest on a deferred payment basis). While RM/Dacta’s 49% stake in LEGO Education Europe is being sold to LEGO A/S for a cash consideration of Eur4.4million. The remaining business, assets and employees of Dacta involved with the support of LEGO Education Europe will transfer to LEGO A/S. Dacta, was acquired by RM in 2007, when it was already the European distributor of LEGO Education – RM acquired the business for an initial cash consideration of £2.28million with a further £1.71million payable in 2010 subject to certain performance targets.
Between them, the two businesses contributed Eur1.35 million (£1.2 million) to Group pre-tax profits in the year to 30th September 2010. However, they are expected to be loss-making in the fourteen months to 30th November 2011 (the new financial year end).
Now all that's left is to await the final promised sale - that of another non-core UK business, Easytrace (cashless catering systems). And of course, to watch with interest to see what the newly refocused and restructured Group can achieve in the UK education market. As we’ve said before, we support RM’s return to its knitting. But it needs to happen fast, and no-one is more aware of that than Mr Ratcliffe himself (see Ratcliffe to put more skin in RM’s game).