Education cuts force RM to take £1.5m hit

The Government’s planned cuts in education spending have forced IT supplier RM to take a £1.5m charge this year.

In an interim management statement issued this morning, the company admits that the Government’s plans to effectively scrap its Building Schools for the Future (BSF) programme will have a dramatic impact on the company’s order book.

While RM expects to fulfill all of the schools contracts it was awarded this year, and more than 80% of those awarded next year, it expects to complete fewer than 40% of the deliveries planned for 2012 and beyond.

Consequently, the company is “restructuring” the team that dealt with project bids, which will cost the company £1.5m in this financial year.

“In his recent Emergency Budget, the Chancellor indicated that education remains a relative priority for public spending and that the Government intends to maintain ‘frontline’ education budgets,” chief executive Terry Sweeney claims.

“However, total education funding was not explicitly protected and it is likely that our UK customers’ budgets will come under pressure. Whilst this will present challenges for RM, the strategy of diversification we have been adopting over recent years positions us well.”

The company’s statement reports that RM’s net debt stood at £22.1m at the end of June, compared to £14.6m at the end of June 2009.