Almost half way through its financial year (currently to end September), RM has released a trading update for the period. As usual RM points out that it’s actually pretty difficult to judge the outcome of the 12-month period based on performance to date due to the seasonality of the business. But, at least it’s going to sort that problem out by moving its financial year end to November (why not December?).
For what it’s worth, the trading update actually makes for pretty dismal reading. If there’s one glimmer of confidence it’s in the Education Resources business where demand for products “continues to grow”. Having visited RM’s exhibition at BETT it’s easy to see why these products are popular (including the specialist classroom furniture from the ISIS acquisition). However, in the last financial year Education Resources only accounted for 22% of Group revenues.
Unfortunately the rest of the business is struggling against the challenges posed by current education market conditions: The Learning Technologies business - which is almost three-quarters of Group revenues - remained subdued (and RM still anticipates a decline in UK revenues for the full year); the Assessment & Data business –where RM has stated it wants to grow market share – is suffering due to the comparatively lower value of one off developments and enhancements compared to last year; and in the US (which accounts for 7% of Group revenue), a major $32 million, two-year, contract (with the US business’ biggest client) has come to its natural conclusion leaving a large revenue hole to fill.
RM continues to win contracts, as can be seen from the HotViews archive. However, schools budgets are going to remain tight for some time to come. RM must be smart in picking the schools that will be the winners in terms of Government funding (e.g. the pupil premium – where schools will get an extra £430 for each child from a low income family) if it is to continue to grow in this tough climate. Having spoken to them, we know it is on the case!