RM reports improved first-half profitability

(Sharecast News) - RM reported improved profitability for the first half of the year on Tuesday, despite lower group revenue, as its cost-saving programme and strong growth in its assessment division began to yield results. Revenue from continuing operations fell 6.5% to £73.2m for the six months ended 31 May, reflecting weaker trading in the TTS and technology divisions due to continued pressure on UK school budgets and tariffs affecting TTS's US exports.

However, adjusted operating profit turned positive at £0.9m, compared to a £0.3m loss a year earlier.

Adjusted EBITDA rose to £3.5m from £2.4m, and the adjusted loss before tax narrowed to £2.4m from £3.4m.

Statutory loss after tax improved to £3.3m from £6.8m, while adjusted diluted earnings per share halved to a loss of 2p.

Assessment was a bright spot, with core platform revenue up 19% and a rising contracted order book, including new wins such as Trinity College and contract renewals with SEAB in Singapore and SACE in Australia.

The London-listed company said the division's new integrated assessment platform, RM Ava, launched in June and was expected to underpin future growth as digital testing gains global traction.

"I'm really pleased with the continued progress we're making in positioning RM for sustainable, long-term growth," said Mark Cook, chief executive of RM.

"Our profitability has improved further, driven by stronger margins and the benefits of our cost-saving initiatives."

He added that in the company's assessment division, RM Ava provided it with a compelling platform in an expanding global market.

"While UK schools market conditions remain challenging, we see opportunities in both TTS and technology."

The company reaffirmed its full-year guidance and said trading in the second half had started positively.

Management said it expected assessment growth to offset declines in the other divisions by year-end.

RM also announced plans to legally and operationally separate its three divisions to enhance strategic flexibility and unlock further efficiencies.

Adjusted net debt rose to £59.6m due to continued investment in RM Ava, but a new banking agreement extended facilities to July 2027 on similar terms.

A recent triennial pension valuation showed a £10.5m surplus, meaning no further contributions would be required beyond the previously agreed £1.8m.

At 1155 BST, shares in RM were up 0.55% at 98.04p.

Reporting by Josh White for Sharecast.com.