Slide 1: RM plc Interim Results
Where Technology and Education Meet RM plc Interim Results Half-year ended 31 March 2007 Tim Pearson – CEO Mike Greig – Group Finance Director
Slide 2: Headlines
2 Headlines Significant developments in each of our four focus areas Learning Technologies Assessment and Data Services Education Management Systems Education Resources and Software Further improvement in customer satisfaction score BSF success – three project wins in the period Will continue to req
Slide 3: Financial headlines
3 Financial headlines Half-year to 31 Mar Year to 30 Sep 2007 2006 2006 Revenue £115.6m £114.2m £262.3m Profit before tax £5.6m £2.0m £14.5m Amortisation of acquisition related intangibles (£0.1m) - (£0.1m) Exceptional pension credit £3.5m - - Profit before tax £2.2m £2.0m £14.6m Before amortisation
Slide 4: Exceptional Pension Credit
4 Exceptional Pension Credit 5% cap on future pensionable salary increases agreed by defined benefit scheme active members Consultation process described in 2006 Annual Report Resulted in: Immediate £3.5m reduction in scheme liabilities and corresponding reduction in deficit Reduction in future fund
Slide 5: Revenue and business mix
5 Revenue and business mix Network Learning Software Platforms Education Infrastructure software and Support Management Systems services C onnectivity Assessment and Data Growth in networks and Internet & broadband Managed Education Services Software SYeLP successfully concluded PC s and Education D
Slide 6: Operating costs
6 Operating costs Continued good operational £m Six months to 31 Mar 2007 2006 management Selling and distribution 16.6 16.2 Research and development 8.1 7.5 Increased investment in developing Administration 5.4 5.6 the business Operating costs 30.1 29.3 Amortisation of acquisition related Additiona
Slide 7: Income statement
7 Income statement Six months to Mar Year to Sep £m 2007 2006 2006 Before After amortisation of Amortisation of amortisation of acquisition acquisition related acquisition related intangible intangible assets related intangible assets and and exceptional assets and exceptional pension credit excepti
Slide 8: Balance sheet
8 Balance sheet 31 Mar 31 Mar 30 Sep £m 2007 2006 2006 Fixed assets Goodwill and acquisition related 23.5 20.8 23.3 intangible assets Capex: £5.0m Other intangible assets 2.1 1.5 2.5 TTS new building: £2.7m Property, plant and equipment 22.1 26.1 22.5 Other: £2.3m Deferred tax assets 5.1 5.5 7.4 Hos
Slide 9: Cash
9 Cash Exceptional outflows in H1 £m 31 Mar 2007 31 Mar 2006 30 Sep 2006 New TTS building: £2.7m Cash and cash equivalents 22.3 24.5 30.1 First part of special pension payment: Issued loan notes 0.9 1.9 0.9 £2.0m Net funds 21.4 22.6 29.2 Deferred cash 0.1 1.0 0.7 consideration Net funds less deferre
Slide 10: Pensions
10 Pensions £9.8m reduction in pension deficit since September IAS 19 deficit March 2007: £8.9m (September 2006: £18.7m) Management action: £6.3m 5% cap on pensionable salary increases reduced deficit by £3.5m Special pension payment: £2.0m paid in H1 FY2007 Additional cash contribution continued: £
Slide 11: RM Context
11 RM Context Education Assessment Education Learning Resources Education Focus and Data Services Management Systems Technologies and Software Addressing four areas of opportunity RM RM School RM … each with separate funding stream Forvus Management Solutions (inc. Community Connect, Learning Platfo
Slide 12: Customer Satisfaction
12 Customer Satisfaction 7.51 7.41 7.21 7.0 Customer Satisfaction score Continues to improve 6.5 Ahead of target for the year RM EasyMail Plus 2003 2004 2005 2006 H1 2007 Demonstration of openness and commitment to customer Customer Satisfaction success RM EasyMail Plus … which is essential to long-
Slide 13: Learning Technologies
13 Learning Technologies Computers for Pupils Two-year Government programme to provide computers for disadvantaged pupils RM appointed by London Grid for Learning as framework supplier 22 London Boroughs – likely value: c.£5m Devices: multi-vendor desktops, laptops, PDAs, UMPCs Connectivity: ADSL an
Slide 14: Building Schools for the Future
14 Building Schools for the Future Competitive Dialogue Continues to be expensive New EC procurement procedure – now being used for BSF Bid costs in FY2007: c.£3.5m Designed for procurements where it isn’t possible to Competitive dialogue process increases cost before preferred determine precise tec
Slide 15: Building Schools for the Future
15 Building Schools for the Future Competitive Dialogue News since preliminary results announcement Stage # bidders Lambeth: RM appointed preferred bidder OJEU advertisement Government determination to increase the pace Pre-qualification 5-10 questionnaire Wave 4 announced on time (December 2006) In
Slide 16: Learning Platform
16 Learning Platform Learning Platforms Communication & Collaboration Chat Newsgroups Significant investment area Instant messaging Video conferencing Several major releases this year Learning & Teaching Virtual Learning Environment Content Timetabling Glow – national Learning Platform for Scotland
Slide 17: Assessment and Data Services
17 Assessment and Data Services e-Marking World-leading intellectual property scoris® – third generation innovative e-marking software Web-delivered and centrally hosted ‘Education process outsourcing’ business model Cambridge Assessment – £21m outsourced e-Marking contract Integrates e-Marking into
Slide 18: Assessment and Data Services
18 Assessment and Data Services On-screen testing AQA contract Minimum contracted value £1m over 4 years Contract value varies with number of tests Three key deliverables: Test creation including a software authoring tool Test delivery based on the existing QCA KS3 infrastructure Test centre (school
Slide 19: Education Resources
19 Education Resources Strategy Differentiate by continual product development Significant customer involvement in product development Curriculum and other school environment changes drive product development Developing recognised and well-liked brands Attractive business model Different profile to
Slide 20: Education Resources – TTS
20 Education Resources – TTS TTS has performed strongly since acquisition On track for >80% growth since acquisition (2004 to 2007) Opportunities for further growth MES Special Direct Electric Education New catalogues Sports International – Middle East, Australia, USA Tesco Sport for Schools and Clu
Slide 21: Education software
21 Education software BBC jam suspension Future BBC activity unclear Further 9 months of uncertainty (BBC thinking time plus Public Value Test) Short-term impact on 3T Productions 3T largest external supplier of BBC jam content Work completed at time of suspension will be billed Work previously expe
Slide 22: Education Management Systems
22 Education Management Systems IntegrisG2 – Web-delivered, centrally-hosted school management software Good progress building momentum in a conservative market First 100 schools now using IntegrisG2 Primary Recent contract wins in Wakefield and Powys Strong pipeline for IntegrisG2 Finance Developed
Slide 23: Outlook and Conclusions
23 Outlook Satisfactory first half performance As always first half not necessarily a good indicator of full year outcome Management expectations for the full year unchanged Conclusions BSF win rate ahead of target Bid costs currently reducing reported profit … but expected to boost profits from 201
Slide 24: Appendices
Where Technology and Education Meet Appendices RM is about improving the life chances of children by delivering outstanding education products and services that help teachers to teach and learners to learn. Customer Success – High Standards – Innovation and Improvement Openness – Respect for Others
Slide 25: RM at a glance
25 Assessment and Data Services Government The leading UK provider Departments of educational ICT Education and Management Agencies Products or services in Systems most UK schools RM ICT partner to c.30% UK Education schools Resources Local Authorities Significant large project experience Growing in
Slide 26: Sources of Competitive Advantage
26 Sources of Competitive Advantage After Porter: Competitive Advantage
Slide 27: Contracts
27 Contracts Education Projects Awarded Value Term Dudley Grid for Learning Jan 1999 >£50m 10 years C2K Lot 3 (Northern Ireland) Feb 2003 £21m 5 years C2K Lot 6 (Northern Ireland) Feb 2007 £6.4m 5 years QCA – Key Stage 3 online testing Feb 2003 £23m 6 years South Lanarkshire Council Jul 2003 >£40m 7
Slide 28: Assessment
28 Assessment On-screen testing Candidate Pupil, student, employee Online test admin Education & Training Organisations Schools, Colleges, Training Cos. … Market Dimensions Award English schools spend on Delivery and assessment £750m Admin GCSE / AS Level / A Level Number of qualifications 8.3m awar
Slide 29: Education projects
29 Education projects Accounting treatment and financial impact Pre-contract costs not taken to the balance sheet unless contract award probable In practice appointment as preferred bidder Separable elements Accounted for using relevant Group accounting policy for that element Revenue and profit rec