Slide 1: Technology and Resources for Education
TECHNOLOGY AND RESOURCES FOR EDUCATION © 2019, RM plc – February 2019
Slide 2: Agenda
>AGENDA RM plc Highlights David Brooks Financial Review Neil Martin 2018 Divisional Review Neil Martin 2019 Focus & Outlook David Brooks Q&A
Slide 3: National curriculum resources
National Regional High visibility Cloud based National Full suite Using AI in revenue curriculum education supplies digital digital presence and resources provider platforms scale generalist assessment #1 #1 c.13m #1 50,000 Exam scripts 50% of customers Safeguarding Products processed p.a. internati
Slide 4: Highlights of 2018
HIGHLIGHTS OF 2018 PLATFORM FOR • LONG TERM GROWTH • •
Slide 5: Financial Summary
RM plc FIN@NCIAL SUMMARY
Slide 6: Financial Overview
FINANCIAL OVERVIEW Adjusted* Adjusted* Revenue Operating Profit Net Debt Diluted EPS £221m £27.5m £13.4m 25.8 £186m £5.8m 21.2 £21.3m Up 29% Reduced £7.6m Up 22%
Slide 7: Revenue & Profit Development
REVENUE & PROFIT DEVELOPMENT Revenue up 19% International Revenue up 30% 230.0 30.0 220.0 210.0 25.0 200.0 190.0 20.0 180.0 170.0 15.0 160.0 150.0 10.0 2017 RM RM RM Legacy Acquisition 2018 2017 Europe North Asia Middle Rest of 2018 Resources Results Education America East World Adjusted operating p
Slide 8: Income Statement
INCOME STATEMENT £m 2018 2017 Variance
Slide 9: Cash Flow and Pension
CASH FLOW AND PENSION £m 2018 2017 Change 5% 40 35 4% 30 IAS19 Deficit level (£m) 25 3% 20 15 2% 10 5 1% 0 • 2012 2013 2014 2015 2016 2017 2018 Pension deficit Discount rate RPI inflation
Slide 10: Divisional Review
. Hy =} S a @ LW a RM plc o 2 oe 2018 5 ae DIVISIONAL Ot ) REVIEW @
Slide 11: Divisional Summary
DIVISIONAL SUMMARY Revenue £M Adjusted Operating Margin FY18 FY17 Variance FY18 FY17 Variance RM Resources 121.6 83.6 +45% RM Resources 13.7% 13.9% -0.2pp RM Results 31.8 31.6 +1% RM Results 25.6% 24.5% +1.1pp RM Education 67.6 70.6 -4% RM Education 11.6% 9.3% +2.3pp Group 221.0 185.9 +19% Group 12.
Slide 12: RM Resources
RM RESOURCES Revenue Adjusted Operating Profit 16.6 59.7 £m 11.6 27.8 £m 10.2 58.8 55.9 61.9 2016 2017 2018 2016 2017 2018 TTS Consortium Revenues breakdown Adjusted Operating Margin 17.3% 13.9% 13.7% UK Education International Legacy 2016 2017 2018
Slide 13: RM Results
RM RESULTS Revenue Adjusted Operating Profit 8.2 31.6 31.6 31.8 7.8 6.8 £m £m 2016 2017 2018 2016 2017 2018 Revenues breakdown Adjusted Operating Margin 25.6% 24.5% 21.5% UK Education International Data 2016 2017 2018
Slide 14: RM Education
RM EDUCATION Revenue Adjusted Operating Profit 77.0 7.8 70.6 67.6 6.6 £m £m 5.8 2016 2017 2018 2016 2017 2018 Revenues breakdown Adjusted Operating Margin 11.6% 9.3% 7.6% Services Connectivity Digital Platforms Legacy 2016 2017 2018
Slide 15: IFRS15 Impacts
IFRS15 IMPACTS Year 1 Year 2 Year 3 Year 4 Year 5 Year 1 Year 2 Year 3 Year 4 Year 5 Profit Revenue Cash Profit Revenue Cash • • •
Slide 16: Focus & Outlook
ga t - & z oe a) (> nt * Y ats ® <® £ Q < TO) te) > — eo PYF £002 2 ALO
Slide 17: Where We Are Today
Six years of EPS growth Six years of dividend growth Major acquisition successfully integrated International revenues doubled in last four years Robust balance sheet with good free cash flow All three divisions well placed in their markets 7
Slide 18: Potential to accelerate strategy through M&A where appropriate
Potential to accelerate strategy through M&A where appropriate
Slide 19: Strategic Focus: IP and technology development
~*~ STRATEGIC FOCUS @ IP and technology development * Increase investment in own designed new product and software development capability * Further develop technology depth and breadth including artificial intelligence capability, e- assessment and data analytics - Exploit current intellectual prope
Slide 20: Strategic Focus
RM Resources TTS own developed products Background Customers are looking for curriculum relevant products to drive improved learning outcomes Solution Increased investment in own developed TTS products across all subject areas and to be sold only through our channels Result Own developed products re
Slide 21: Strategic Focus: International growth
* STRATEGIC FOCUS © International growth * Increase investment in our international sales and marketing capability * Take existing IP into international markets - Sales to International markets now almost £30m RM plc 21
Slide 22: Strategic Focus
RM Results E-marking to the world Background Examination bodies across the globe are looking to digitise a largely paper-based system to improve quality and efficiency Solution RM have developed an award winning e-marking solution, RM Assessor, that is proven to improve marking quality for high-stak
Slide 23: Strategic Focus: Innovate with our customers
* STRATEGIC FOCUS \ : 4 ~ of © Innovate with our - - customers — ; * Provide our customers further insight into their = business through the use of data analytics * Challenge our customers on their own business processes and how we might help improve them * Look for technology solutions to make it a
Slide 24: Strategic Focus
RM Results Analysing the exam cycle Background Exams in schools often happen in a summer peak, with millions of papers to be marked in short timescales and with increasing challenges to find enough markers. Our customers are looking at ways of de-risking the process Solution Bringing together knowle
Slide 25: Strategic Focus: Efficiency and simplicity
~*~ STRATEGIC FOCUS © Efficiency and simplicity * Invest to simplify business processes and improve efficiencies - Application of automation where appropriate - Continue to offshore where possible RM plc at 25
Slide 26: Strategic Focus
Education Remote Network Management Background Many of our customers need cost savings in order to consider moving from an in-house IT team to an outsourced service. The reliance on a few on-site staff to manage the ICT makes these savings difficult Solution Provide a fully remote Network Manager se
Slide 27: Distribution centre consolidation
Distribution centre consolidation 2019 2020 2021 Operations Property
Slide 28: Outlook
RM plc OUTLOOK
Slide 29: Outlook
OUTLOOK GROUP ENTERS 2019 IN A GOOD POSITION
Slide 30: Q&A
Q&A
Slide 31: Appendix
APPENDIX
Slide 32: Income Statement
> INCOME STATEMENT £M ADJUSTED Revenue 221.0 Cost of sales (129.7) Gross profit 91.3 Gross profit % 41.3% Operating expenses (63.8) Amortisation of acquisition related intangibles Restructuring provision Pension GMP charge Acquisition costs Increase of property related provisions Operating profit Op
Slide 33: Cash Flow
> CASH FLOW OPERATING CASH FLOWS - £M Profit from operations Amortisation & impairment of intangibles Depreciation & impairment of PPE Share-based payments Provisions Other adjustments Operating cash flows before movements in working capital (Increase)/decrease in inventories (Increase)/decrease in
Slide 34: Balance Sheet
> BALANCE SHEET £M Goodwill Intangible assets Property, plant & equipment Defined benefit pension surplus Other receivables Deferred tax assets Total non-current assets Inventories Trade & other receivables Tax assets Cash & short-term deposits Total current assets Total assets Current liabilities,
Slide 35: Pupil Projections
PUPIL PROJECTIONS 5,500 Full-time equivalent pupils (000s) 4,800 4,677 4,504 4,004 Predicted increase (2016-25) of 173,000 FTE pupils 4,100 Equivalent to c.650 averaged sized primary schools PRIMARY SCHOOLS 3,400 3,325 2,955 2,758 Predicted increase (2016-25) of 567,000 FTE pupils 2,700 SECONDARY SC
Slide 36: RM Historical Performance
RM HISTORICAL PERFORMANCE Revenue Adjusted Operating Profit £m 300 £m 30.0 250 25.0 200 20.0 150 15.0 100 10.0 50 5.0 0 2014 2015 2016 2017 2018 0.0 RM Results RM Resources RM Education 2014 2015 2016 2017 2018 Adjusted Operating Margin Ordinary Dividends 8.0 £m 14.0% 12.4% 11.4% 7.0 7.6 12.0% 10.8%