A government committed to bringing the UK’s ailing education systems into the age of information technology is great news for companies such as RM Plc, which supplies computer equipment to schools. Alas, the first half figures to March 31 provides little evidence that the company is in the right sector at the best possible time. Because fat grants from central government were in the pipeline, schools delayed IT expenditure until the end of the company’s first half. In consequence, revenues were only three percent higher at 50.5m pounds and net profits slumped from 1.1m pounds to 439,000 pounds. In the circumstances, chief executive Richard Girling says that the first half results are ahead of expectations. While the hardware supply side was bound to reflect lower prices and margins experienced in the rest of the industry, software and services boosted revenues by 29 percent. With the government determined to ensure all schools have internet access, the immediate prospects are encouraging. Only 5 percent of the UK’s 24,000 primary schools are currently wired up and this suggests a huge operation over the next four to five years. Not only are there the initial capital costs but, in the long-term, networks have to be maintained and RM will provide remote outsourcing services to overcome the problem. The company has just won its first outsourcing contract for a college, worth one million pounds over five years. While colleges, like companies, will not all find outsourcing the best option, this is a side of the business likely to grow. In addition, there is an immediate opportunity in training as the UK’s highly conservative teaching profession are taught how to use their new equipment. With cash balances high, RM has invested 8.6m pounds in R&D at its US partner Computer Curriculum Corporation based at Sunnyvale, California, an arrangements which will reduce license fees. With a substantial stake in a niche market receiving substantial public investment, the prospects look good – though rapid expansion always brings dangers. Staff numbers have grown 7.5 percent over the last six months and a further 100 are to be recruited. Just in case expansion ever flags in the UK, the company is casting its eyes over Europe.
