(Alliance News) - RM PLC on Wednesday reported a narrowed interim loss amid continuing operational and trading challenges in its RM Resources segment, which it lamented had clouded the "good progress" made across the rest of the group.

RM supplies technology and resources to the education sector. It is based in Abingdon, England. Shares in the firm plunged 29% to 49.90 pence on Wednesday morning in London.

In the six months ended May 31, RM reported revenue fell 10% to GBP87.6 million from GBP97.9 million. Its pretax loss narrowed to GBP4.4 million from GBP7.7 million the year prior.

The company said this was largely driven by lower trading volumes in RM Resources, particularly for the Consortium business as it recovers from past "mismanagement" of the IT implementation programme and "challenging" education market conditions.

Costs of sales reduced by 7.6% year-on-year to GBP60.0 million, while operating expenses fell 3.6% to GBP38.4 million. Finance costs, meanwhile, more than doubled to GBP2.8 million.

"In the first half of the year, our focus has been on the task of stabilising the business financially and operationally...Whilst we have accomplished a lot, the most material challenge has been the negative impact of the Consortium business which clouds the good progress made across the rest of the group. The consequences of its slower recovery can be seen in our financial performance and has impacted our expectations for the full year," said Mark Cook, chief executive.

RM said it now expects to deliver adjusted operating profit on or around breakeven for the full-year. In financial 2022, the firm reported an adjusted operating profit from continuing operations of GBP7.5 million.

"Whilst our stabilisation is nearly complete, the operational issues within Consortium have continued to be a drag on both management time and the overall business...We expected to see growth across all our business units and are disappointed by the continuing operational and trading challenges in RM Resources, dominated by Consortium, and exacerbated by the more challenging budgetary environment in schools. As we work to recover sales and win back the trust of our customers, we expect Consortium trading to continue to be below where we would expect it to be, impacting our expectations for the group's full year adjusted operating profit," RM explained.

By Heather Rydings, Alliance News senior economics reporter

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