While describing the current schools market as tough, RM’s management were able to announce a positive set of results for the six months to 31 March 2006.
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Revenue’s up 5% to £114.2m
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Profit before tax £2m (2005 was a £0.9m loss)
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Dividend per share up 7% to 1.12p
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Increased contributions from long-term projects
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New education project success (inc. BSF)
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Continued development of a wider range of products and services including assessment
In the press release which accompanied the results, CEO Tim Pearson was keen to emphasis the fundamental change in RM’s business strategy claiming that it was a more focused, robust and diverse business than it was four years ago. This seems to be true, but perhaps the most important issue for investors (in RM and other education companies) was his sober assessment of the Building Schools for the Future programme. RM, he pointed out, have won the only IT contract to be awarded as part of a BSF project.
While he said that BSF remained an important long-term opportunity, he acknowledged that it, ‘has run more slowly than anticipated’. This is somewhat of an understatement given the millions being invested by companies and consortia (and their shareholders) in bidding for BSF work. So, while RM’s results look good, their management’s sanguine outlook for BSF is perhaps the most public recognition that the expected financial boom is more likely to be an expensive and drawn out process.
