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RM cuts BSF contractors and restructures bidding team

Microscope contributor

RM has cut contractors working on the recently departed Building Schools for the Future projects and is restructuring its bidding teams.

The firm was the biggest IT supplier in BSF - it has reached financial close with 15 projects worth in the region of £272m - and was the preferred bidder for six deals worth around £167m in revenues which will no longer go ahead.

In a brief update to the City this morning, RM said "underlying expectations" for fiscal 2010 were unchanged but warned results would include exceptional costs of £1.5m amid some belt tightening.

"RM has acted immediately to reduce costs associated with bidding for BSF project by reducing contract staff and external spend," the firm said.

"In addition, we are currently restructuring our strategic projects bid team, refocusing their activities on non-BSF project business across the group both in the UK and internationally," it added.

Total debt at the end of June, RM's fiscal Q3 was £22.1m compared to £14.6m a year earlier including borrowings on its committed facility with HSBC, loan notes payable and deferred consideration on previous acquisitions.

BSF is expected to represent 15% of RM's revenues this fiscal year but recent research revealed it may lose circa £300m worth of contracts so some commercial re-engineering will be required in fiscal 2012 when existing projects are delivered.

"It was a future opportunity that we were looking forward to which is not there anymore," RM told MicroScope. "It is a big hole that is two years away. We'll fill it by expanding overseas, possibly more quickly than we were previously going to."

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