Education technology group RM (RM.) continued its stunning run after telling the market that it will beat current forecasts for the year just closed to 30 November.

UK schools staying open during the latest lockdown has helped a lot, with RM explaining that the improved trading in the third quarter continued during Q4.

While RM resisted any temptation to give more detail, it was able to say that net debt would be below £5 million. The company had £15 million of borrowings a year ago.

FORECASTS BEATEN

Market expectations had been pitched at £12.7 million of adjusted operating profit on £174 million revenue, down 54% and 22% respectively during a hugely disrupted year.

RM shares jumped 14% on Thursday to 234.9p.

RM provides various technology solutions and other products to the education sector, such as a full suite of curriculum and education resources, exam marking and on-screen testing.

The reopening of schools, and staying open during the latest lockdown, ‘really helped RM get back on track in the third quarter’, said Megabuyte analyst Indraneel Arampatta.

‘2020 clearly ended better-than-expected six months ago.’

UNDIMINISHED OPTIMISM

Management admit that the outlook is still murky, but remain hopeful, with chief executive David Brooks saying ‘we expect the current uncertainty to continue into 2021, with the short-term impact of Covid-19 on education buying patterns and the level of schools exams to be taken, continuing to be difficult to predict.’

That said, Brooks flagged the longer-term shift to digital enablement in education as a real positive for the company, meaning ‘RM remains well placed to make progress.’

This chimes with the fairly optimistic assessment of Megabuyte’s Arampatta, who said that he expects a more positive trading picture in 2021. ‘There’s also the potential for this to be bolstered by a continued move to the Cloud and next-generation infrastructure’, he added.

RM will report its full year results to 30 November some time early in February 2021.

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Issue Date: 03 Dec 2020