Executives at IT firm RM are cautiously optimistic that the company is back on track after cutting its 1,500-strong workforce by 250 last year.

The company, which is the largest supplier of computer equipment to British schools, is now recruiting heavily nationwide and at its headquarters at Milton Park, near Abingdon.

It is upbeat about the future, despite the difficulty of predicting the impact of the Government's school budget settlement.

Reporting results for the six months to March 31, RM said it had slashed underlying pre-tax losses to £800,000 from £4.7m in 2002.

The core schools business is highly seasonal, with most turnover and profits in the second half of the year.

With redundancies and other cost-cutting, operating costs fell eight per cent to £22.9m, compared with £25m in the same period last year.

RM won £110m of new business in the first half of this year, following the establishment of a dedicated strategic projects team a year ago.

Chief executive Tim Pearson said: "We have 100 vacancies across the company, of which about two dozen are for sales designers and support engineers at Milton Park."

Mr Pearson said: "RM is now a healthier business with a reduced cost base, improved customer satisfaction and strengthened management.

"During the first half of the year our core schools business has grown faster than the market as a whole, and we've made excellent progress with our strategic projects activities.

"We are not exuberant, but we are definitely in a better position than we were a year ago."

Mr Pearson said despite media stories of teacher redundancies, overall budgets had shrunk by less than one per cent. Some shortfalls could be made up by the schools' reserves. Government has also said schools can use devolved capital funding to fill other gaps.

Revenues suffered from the end of the Learning Schools Programme, the Government's Lottery-funded teacher-training project.

Underlying turnover slid 12 per cent to £84.6m, reflecting growth in the group's core schools business.

Total turnover was £85.4m, down from £89.1m in 2002.