Slide 1: Half year results 2023
Half year results 2023 Wednesday, 09 August 2023 Mark Cook Chief Executive Officer Emmanuel Walter Chief Financial Officer (interim) ©RM plc HY23 Results
Slide 2: Agenda
Agenda Overview Financial Strategy & Summary Q&A Review Operations Mark Cook Emmanuel Walter Mark Cook Mark Cook Chief Executive CFO (interim) Chief Executive Chief Executive 2 RM Half Year Results 2023
Slide 3: Overview
Overview Mark Cook, CEO RM pic
Slide 4: Transformation programme to unlock value creation
Transformation programme to unlock value creation Stabilisation People & Finance & Divisions Strategy Teams Corporate Continuous improvement Bi-annual phases Bi-annual phases … “the CEO priorities, for the first 180 days, included a checklist to ensure we had more stable operations, a strong team in
Slide 5: Introduction
Introduction Good progress on Transformation, RM strategic direction becoming clear Financial results impacted by Consortium under-performance • Revenue of £87.6m, down 11% YoY; strong performance from Assessment, with 8% growth from existing and new contract wins. Consortium remains challenged and
Slide 6: Actions taken to stabilise, reduce costs & strengthen operations
Actions taken to stabilise, reduce costs & strengthen operations Key actions taken in first 6 months across a number of operational areas Reduced dependency on Restructuring and Rebuilding finance function third parties and brought rationalisation of internal and reducing working capital key skills
Slide 7: Financial review
Financial review Emmanuel Walters, CFO (Interim)
Slide 8: Group Financial Overview
Group Financial Overview Revenue Adjusted* Adjusted* Net Debt Operating Profit Diluted EPS £87.6m £(4.5)m (6.7)p £52.0m down 11% down 200% down 300% up £5m 3.4 4.5 97.9 87.6 (6.7) (4.5) £18m £18m H1 22 H1 23 H1 22 H1 23 H1 22 H1 23 FY 22 H1 23 • Revenues down 11% with solid growth in RM Assessment (
Slide 9: Revenue
Revenue Adjusted* Revenue down 11% £m £(10.3)m (9.5) 1.5 (2.3) 97.9 Consortium (9.3) (58)% TTS (1.8) (7)% 87.6 International 1.6 18% H1 22 RM Resources RM Assessment RM Technology H1 23 • RM Resources down 18% on prior year with strong growth in International (up 18%) offset by lower trading volumes
Slide 10: Adjusted Operating Profit
Adjusted Operating Profit Adjusted* operating profit down £9m £m £(9.0)m • RM Resources loss of £4.5m, down from a profit of £1.2m, driven by lower revenues in Consortium and increased costs associated with £2.5m dual running of distribution sites and technology stacks across the two brands in adjus
Slide 11: Income Statement
Income Statement £m H1 2023 H1 2022 Variance Cont inuing Discont inued Tot al Cont inuing Discont inued Tot al Tot al Revenue 87.6 2.4 90.0 97.9 2.4 100.3 (10.3) Adjusted Operating Profit (4.5) 0.8 (3.8) 4.5 0.5 5.0 (8.8) Adjust ed Operat ing Margin - 5% 31% - 4% 5% 21% 5% - 9% Int erest (2.2) - (2.
Slide 12: Cashflow
Cashflow Elevated net debt underpinned by new banking facility to July 2025 £[x]m • Net Debt £52.0m (FY22: £46.8m) • Proceeds from sale of RM Integris & Finance (£8.7m), IPv4 addresses (£8.5m) and iCASE product (£0.2m) • IP sales relates to surplus IPv4 addresses from the Connectivity business in RM
Slide 13: Financial outlook & guidance
Financial outlook & guidance • Cost actions being taken in FY23 expected to deliver in excess of £10m annualised full-year benefit in FY24: • H1’23 Actioned £2.3m • Technology headcount reduction £1.5m • Procurement £0.2m • Property related £0.6m • H2’23 Actioned £6.3m • Resources restructuring £3m
Slide 14: Strategy & Operations
Strategy & Operations Mark Cook, CEO
Slide 15: Transformation programme to unlock value creation
Transformation programme to unlock value creation Stabilisation People & Teams Finance & Divisions Strategy Identified significant Implementing the Corporate continuous right teams across the Drafting strategic Building a future Enabling the growth improvement business, adopting roadmap for Target O
Slide 16: People & Teams
People & Teams Implementing the right teams across the business, adopting commercial mindset, and driving cultural change • New hires to strengthen Executive Leadership and support Transformation – Chief Financial Officer, Chief Digital Officer, Head of Real Estate and Head of Procurement • FTE Comm
Slide 17: Finance & Corporate
Finance & Corporate Improving Business Processes, IT & Working Capital • Embedding an internal control framework & culture into RM Plc including mapping financial and business processes to address control deficiencies • Chief Digital Officer – initial focus on improving internal processes within IS
Slide 18: Finance & Corporate
Finance & Corporate Rigour, controls and cost savings in Procurement, Real Estate & Workplace • Introducing more rigour and controls across procurement and reducing overspend • Annualised savings achieved via tender activity, rebate reviews and contract negotiations • Key supplier review, rationalis
Slide 19: Evolving our Divisions
Evolving our Divisions Enabling the growth potential in the go-to-market divisions and building the future strategy for margin expansion RM Resources RM Assessment RM Technology Global market leader in bespoke Global leader in platform delivery of Connectivity expert for education designed curriculu
Slide 20: RM Resources
RM Resources Continuing positive demand for TTS unique IP • Strong TTS growth from international markets • Further leveraging TTS’s strength in curriculum and ICT IP including new robotics and Early Years product pipeline • Ecommerce platform & automated warehouse operational, not yet fully utilised
Slide 21: RM Assessment
RM Assessment Global opportunity as assessment moves 100% digital • Two new customers wins and delivery progress on six new major service solutions • 100% customer renewal rate in with £9.5m of extensions • Portfolio enhancement work towards digital Saas-based offerings • Customers need expert asses
Slide 22: RM Technology
RM Technology Vision to become global provider of platform delivered managed services in education • Improved operating model and structure progressing well • Focus on services and margin rebuild with improved upsell and cross-sell to deliver more value to clients • Customer retention remains high a
Slide 23: How does RM capitalise on its market position?
How does RM capitalise on its market position? • Extensive domain expertise and a deep understanding We help of the education sector learners globally We help leaners globally We help • Strong partnerships with educational institutions and through their entire facilitators globally education from pr
Slide 24: Summary
Summary Mark Cook, CEO RM plc
Slide 25: Summary
Summary • Decisive actions taken in the half to stabilise the business, reduce costs and strengthen operations • In excess of £10m annualised cost savings from operational and strategic actions to flow through in FY24 • Consortium continues to be a challenge to improving our financial performance, a
Slide 26: Q&A
Q&A
Slide 27: Appendix
Appendix RM pic
Slide 28: Income Statement
Income Statement H1 2023 H1 2022 £'m Adjusted Adjustments Total Adjusted Adjustments Total Revenue 87.6 87.6 97.9 97.9 Cost of sales (60.0) (60.0) (65.0) (65.0) Gross profit 27.5 27.5 32.9 32.9 Gross profit % 31.4% 31.4% 33.6% 33.6% Operating expenses (32.1) (6.4) (38.4) (28.4) (11.5) (39.9) Profit
Slide 29: Balance Sheet
Balance Sheet £'m 31 May 2023 31 May 2022 Goodwill 49.1 49.5 Other intangible assets 24.4 27.2 Property, plant and equipment 15.1 16.6 Right of use asset 14.8 17.0 Defined Benefit Pension Scheme Surplus 18.5 39.7 Other receivables 0.3 0.1 Contract fulfilment assets 1.6 1.6 Deferred tax assets 10.1 0
Slide 30: Cashflow
Cashflow £'m H1 2023 H1 2022 (Loss)/Profit from operations, including discontinued operations (10.1) (6.5) Amortisation & Impairment of intangibles 1.2 1.0 Depreciation & impairment of PPE 2.7 2.2 (Gain)/loss on foreign exchange derivatives 1.1 (0.1) Increase/(decrease) in provisions 0.3 0.2 Other a
Slide 31: RM Resources
RM Resources H1 Actions & Progress Opportunities & Focus • Successful launch of an enhanced eCommerce platform • Completion of remaining distribution centre for Consortium consolidation in progress for H2 decision • Continuing positive demand for TTS unique IP with strong • International new custome
Slide 32: RM Assessment
RM Assessment Our H1 progress Opportunities & Focus • Two new customers wins and delivery progress • Global opportunity as customers need expert on six new major service solutions assessment partner to move to digital • 100% customer renewal rate in with £9.5m assessment and ultimately to transform
Slide 33: RM Technology
RM Technology H1 Actions & Progress Opportunities & Focus • Introduction of improved operating model and structure • Strong pipeline of opportunities identified with progressing well – will complete in H2 refocused business development resource • Margin rebuild across customers including inflation •
Slide 34: Disclaimer
Disclaimer • Forward-looking statements speak only as at the date of this Presentation. Except as required by applicable law or regulation (including to meet the requirements of the London Stock Exchange Rules, the Market Abuse Regulation as it forms part of domestic law in the United Kingdom by vir