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Education services company RM issues profit warning

Cuts in education spending lead company to warn of job losses and reduced dividends, and announce the sale of three subsidiaries

Education services provider RM is planning to cut 300 jobs and sell off three businesses as cuts in government education spending led the group to announce a profits warning.

The company, which has appointed former education minister Lord Adonis to the board, also said it would be slashing its dividend.

“After a decade of increasing education budgets, the current climate provides a sharp contrast. Recent reductions in UK public sector expenditure and the termination of the Building Schools for the Future programme have, and will continue to have, an impact on the group in the next few years,” the company said.

RM will sell Isis, a provider of classroom furniture; EasyTrace, a cashless catering system; and Dacta, the European distributor for Lego education products, as well as other minority shareholdings, in an attempt to become more focused.

“Regrettably, in order to establish RM on a sound platform for the future, the board has concluded that it also needs to engage in a consultation process with employees regarding proposed redundancies,” RM added.

Staff numbers will reduce by 13%, meaning RM will get rid of 320 staff. Directors will waive their bonuses as a result of the company’s problems.

The outlook for the company over the next year is bleak, RM said. “In both primary and secondary categories approximately 70% of schools are anticipating reductions in capital expenditure… in terms of IT spending approximately 40% of both primary and secondary schools are expecting a reduction in the year ahead.”

The shares closed at 80p, 20% down on their Wednesday closing price of 100p. They have fallen by more than half this year. © 2011 Guardian News and Media Limited or its affiliated companies. All rights reserved. | Use of this content is subject to our Terms & Conditions | More Feeds