Rm Plc · LSE:RM.
Rm — 14 months to 30 Nove Earnings Presentation
38 slides from Rm's earnings presentation, Feb 6, 2012
Slide 1: RM plc Preliminary Results, 14 Months to 30 November 2011
RM plc p 14 Month Period to 30 No ovember 2011 Martyn Ratcliffe, Executive Chairman Iain McIntosh, Chief Financial Officer To be read in conjunction with the Preliminary Results announcementt released l d on 6 FFebruary b 2012
Slide 2: FY11 Overview
FY11 Overview A Difficult Year • Education sector severely impacted by public sector s cuts (BSF shielded RM from total impact) • International businesses under-performed, particularly USA • RM had h d not taken k adequate d action to prepare for f foreseeable f bl challenges h ll Strategic Review •
Slide 3: Group Financial Summary
Group Financial Su ummary 12 months to 14 months to 12 months to 12 months to £m Sept 2010 N 2011 Nov Nov 2010 Nov 2011 Revenue 380.1 350.8 376.1 310.1 Adjusted operating 22.6 10.0 21.4 14.1 profit* profit Adjusted diluted EPS(p) 18.8 7.3 17.4 10.8 Cash from operations 23.7 24.8 14.2 39.5 Gross cash
Slide 4: FY11 Divisional Summary
FY11 Divisional Sum mmary 12 months to 30 November Learning Educa ation Assessment & Total £m Technologies Resou urces Data 2010 2011 2010 2011 2010 2011 2010 2011 Revenue 271.8 214.4 81.6 74.4 22.7 21.3 376.1 310.1 Adjusted 9.7 8.7 8.8 3.8 2.9 1.6 21.4 14.1 Operating Profit* % Profit 3.6% 4.1% 10.8
Slide 5: Group Revenue
Group Revenue *Exited operations are businesses sold and held for sale at the balance sheet date, d some of which have subsequently been sold. 5
Slide 6: Group Adjusted Operating Profit
Group Adjusted Op perating Profit *Exited operations are businesses sold and held for sale at the balance sheet date, d some of which have subsequently been sold. 6
Slide 7: Profit from Operations
Profit from Operatio ons FY10 to FY11 comparison (12 month hs to 30 November) 7
Slide 8: Adjustments to Operating Profit
Adjustments to Ope erating Profit 12 months to 30 November 2011 8
Slide 9: Group Headcount
Group Headcount * *Exited operations are businesses sold and held for sale at the balance sheet date, d some of which have subsequently been sold. 9
Slide 10: Exited Operations
Exited Operations US Hardware (Computrac) • Approx consideration: £2.9m. Loss-making g in FY11 A Australia li • Approx consideration : £0.9m. Loss-making in FY11 DACTA • Inventory realisation at approximately 70% % of book value: £0.2m. Loss-making in FY11 Lego JV • Approx consideration : £3.8m, inc
Slide 11: Debt Facilities
Debt Facilities New £30m unsecured committed Revolvving Credit Facility signed with Barclays • Runs to 27 March 2015 with mutually agree ed extensions to March 2017 • Margin 2.75% over LIBOR, falling to 2.50% after a a year, subject to Debt / EBITDA ratio Principal financial covenants • Debt / EBITD
Slide 12: Pensions
Pensions IAS 19 on balance b l sheet h deficit d f increased: d £m UK Defined Benefit Pension Scheme C Consistent i t t record d off managementt action ti Deficit at 30 Sep 2010 (12.4) £9.0m net of tax 2002: base retirement age increased to 65 2003: closed to new members Cash in excess of service co
Slide 13: RM Strategy
RM Strategy Group Strategy: UK education market with w international distribution Phase 1: Restructuring Almost Complete e • Disposal of non-core businesses • Continuing operations restructured into 4 divisions • Headcount and cost base reduced signifiicantly Phase 2: Operational Strategy • Strategy
Slide 14: Strengths & Opportunities
Strengths & Oppo ortunities Strengths g Opportunities pp • Brand and distribution channels in UK • Expansion of offerings to customer base • B Breadth dth and dddepth th off experience i iin • New N initiatives i iti ti education market • International distribution (not fixed • Staff: commitment and
Slide 15: New Organisation Structure
New Organisatio on Structure 12 months to 30 November 2011 15
Slide 16: Education Technology: Overview & Strategy
Education Techno ology Overview & Strategy Classroom Technologies • PC hardware (RM & 3rd-party), other hardware e (e.g. whiteboards), implementation & support – Approx 2,300 schools purchased hardwa are/related services from RM. Good performance in academies and free schools • Revenue & margins wil
Slide 17: Education Technology: Retained Operations
Education Techno ology Retained Operations (12 months to t 30 November 2011) 17
Slide 18: Education Technology: Retained Operations
Education Techno ology Retained Operations • All business areas anticipated to continue to experience market pressures • Margins anticipated to be consistent with other hardware-oriented IT businesses • Strategic importance to RM as the Group Group’ss major sales channel to UK schools 18
Slide 19: Education Technology: Revenue Seasonality
Education Techno ology Revenue Seasonality 19
Slide 20: Managed Services: Overview & Strategy
Managed Service es Overview & Strategy Building Schools for the Future (BSF) • Successful implementation of 44 schools in 20 011. Reduction on 2010 • Peak implementation year is 2012 (approx 50 schools) s • Decline from 2013 and minimal revenue from new n implementations after 2014 • Typically yp y
Slide 21: Managed Services: Retained Operations
Managed Service es Retained Operations (12 months to t 30 November 2011) 21
Slide 22: Managed Services: Retained Operations
Managed Service es Retained Operations • 2011 revenue decline in line with BSF roll-out schedule • Increase in 2012 revenue anticipated with decline thereafter • Margins anticipated to be relatively constant 22
Slide 23: Managed Services: Revenue Seasonality
Managed Service es Revenue Seasonality 23
Slide 24: Education Resources: Overview & Strategy
Education Resourrces Overview & Strategy TTS • Value-added distribution of RM-developed and d third-party classroom resources. Primarily direct to schools but some via dealer/distributors/retailers (28%) and international distributor network (8%) – Approx 90% of primary schools and 45% of secondary
Slide 25: Education Resources: Retained Operations
Education Resourrces Retained Operations (12 months to t 30 November 2011) 25
Slide 26: Education Resources: Retained Operations
Education Resourrces Retained Operations • TTS revenue growth of 4% in 2011 2011. RM- Spacekraft decline of 5% • TTS margins anticipated to be relatively constant • RM-Spacekraft profitable but lower margin than TTS 26
Slide 27: Education Resources: Revenue Seasonality
Education Resourrces Revenue Seasonality 27
Slide 28: Education Software: Overview
Education Softwa are Overview Assessment: e-Marking and e-Testing solutions and services • Strong UK market position and growing internaationally • 4 new e-marking customers • 2 contract extensions worth a combined total of o £33m Data Solutions • Dominated by large DfE contract – retender an nticip
Slide 29: Education Software: Retained Operations
Education Softwa are Retained Operations (12 months to t 30 November 2011) 29
Slide 30: Education Software: Retained Operations
Education Softwa are Retained Operations In 2011: • ADS declined by ~6% • SMS and LP declined by ~14% • Easiteach declined materially related to review of provisions • Other activities had mixed performance Assessment business and SMS relatively stable. Other software activities under significant pr
Slide 31: Education Software: Revenue Seasonality
Education Softwa are Revenue Seasonality 31
Slide 32: RM India
RM India 30 November 2011 476 employees (30 Nov 2011) T t l Cost Total C t - £6.2m £6 2 for f 14 months th tto Nov 2011 RM India Trivan ndrum Customer Software Internal Management & Support Development Shared Services Administration Approx 18% Approx 55% Approx 19% Approx 8% RM India d is a wholly-o
Slide 33: Summary
Summary 2011 – A challenging year • But operating profitably and cash-generaative • Strongest period end cash position since 2008 Restructuring g almost complete p • 4 operating divisions with clear strategiess • Successful disposal programme • S b t ti l reduction Substantial d ti iin costt base b
Slide 34: Appendices
Appendices pp
Slide 35: Appendix 1: Income Statement
Appendix 1 Income statement Year to 30 Nov £m 2010 2011 Adjusteed Adjustments* Total Adjusted Adjustments* Total Revenue 376 6.1 - 376.1 310.1 - 310.1 Cost of sales (276.9) 9) - (276 9) (276.9) (228 7) (228.7) - (228 7) (228.7) Gross profit 99 9.2 - 99.2 81.4 - 81.4 Gross profit % 26.4 4% - 26.4% 26
Slide 36: Appendix 2: Balance Sheet
Appendix 2 Balance sheet 30 Novv 30 Nov £m 2010 2011 £m 2010 0 2011 Cash and cash equivalents (2.4) 24.5 Goodwill and acquisition intangibles 37.8 8 18.5 Bank loans (12.4) (13.0) Property, plant & equipment and software intangibles 23.9 9 20.2 Issued loan notes (0.5) - Interest in associate 1.0 0 0.
Slide 37: Appendix 3: Cash Flow
Appendix 3 Cash flow (12 months to 30 Novembe er) Operating cash flows – £m FY-2010 FY-2011 Profit/(loss) from operations 23.1 (18.9) Amortisation 2.3 1.7 Depreciation 7.4 7.1 Share-based payments 1.5 1.1 Other adjustments (7.5) 28.9 Operating cash flows before movements in working capital 26 8 26.8
Slide 38: Appendix 4: 2011 Operating Division Structure
Appendix 4 2011 Operating division structure 12 Months to 14 Months to 12 Months to 12 Months to £m Sep 2010 Nov 2011 Nov 2010 Nov 2011 Learning Revenue 273.9 243.0 271.8 214.4 Technologies Adjusted 10 4 10.4 54 5.4 97 9.7 87 8.7 Operating Profit Education Ed ti R Revenue 83 3 83.3 83 9 83.9 81 6 81