RM hit by school building cutbacks

26th Jul 2010 07:46

Schools IT equipment supplier RM will take a £1.5m charge this year and restructure its project team as a result of the cuts to the BSF (Building Schools for the Future) programme proposed by the coalition government.This review has effectively stopped all future BSF procurement and, as a consequence RM is restructuring its strategic projects bidding activity. Already agreed projects will not be affected, but from 2012 the workload drops off steeply, it said.The firm has expects to complete 15 projects with revenue of £272m, of which approximately £60m had been recognised by the end of H1-2010. "Management believes that the remaining business expected under these contracts is still available to the group," the statement said.These account for all of all BSF school deliveries previously expected this year; more than 80% of those expected in FY-2011; but fewer than 40% of revenues expected after 2012. Work scheduled for 2012 and beyond is more uncertain. RM had expected a further six BSF projects, covering 76 schools. That represented revenue of £167m. Thirteen of these are 13 are 'sample' schools and may still go ahead, RM said, but it is writing off the bid costs. "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. 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," chief executive Terry Sweeney said.