The stabilisation and recovery of UK education specialists RM looks to be on track with the group reporting ‘progress in line with the Board’s expectations’ for adjusted operating profit in Q3. But the management team, led by Chairman Martyn Ratcliffe, remains rightly cautious given the market changes – most notably the end of the Building Schools for the Future (BSF) programme - that will affect performance over the next few years (see also RM: moving in the right direction).
There’s very little financial detail in today’s IMS. What we do know, on the plus side, is that RM’s net cash has improved considerably – up to £13.2m at the end of August compared to a net debt of £18.5m a year earlier. RM also reports progress on discussions over the closure of its defined benefit pension plan. It expects the plan to close around the year end but at a cost: the initial cash contribution from the company is likely to be around £5m, with ongoing annual deficit recovery payments more than doubling from the current level of £1.7m p.a.
Looking beyond the numbers, we’ve been impressed by RM’s latest strategic initiatives. The last few months have seen the launch of both RM Books - an online system that enables schools to rent, buy and manage ebooks which can be viewed on or downloaded to virtually any internet enabled device – and RM Unify, a single sign-on application launch pad and library. It’s early days for both initiatives but they look to be a good fit with what the way the UK education market is moving and could be just what RM needs to generate fresh revenues in the medium term (for more on developments in the sector PublicSectorViews subscribers should download our UK Education SITS Market Trends and Forecasts 2012 Report.)