Slide 1: RM plc – Six months ended 31 March 2008
RM plc Six months ended 31 March 2008 Printed on 100% recycled paper Tim Pearson – CEO Mike Greig – Group Finance Director Education focus Relative Technical scale capability Where education and technology meet
Slide 2: Headlines
2 Headlines Progress BSF win rate excellent RM’s largest ever contract win (Newham BSF: £53m) Further growth in committed revenues Progress in all other areas Delivery track record continuing with new projects First half not a good indicator of year as a whole Short-term effects in first
Slide 3: Financial headlines
3 Financial headlines Six months to Mar Year to Sep 2008 2007 2007 Revenue £117.7m £115.6m £270.9m Profit before tax £0.6m £2.2m £15.5m before amortisation of acquisition related intangible assets and 2007 exceptional pension credit Diluted EPS 0.5p 1.7p 12.3p before amortisation of acquisition rela
Slide 4: Revenue and business mix
Revenue and business mix RM Education Assessment and Data Education Management Learning Resources Services Systems Technologies and Software Learning Technologies Revenue by focus area £m H1-2008 H1-2007 FY-2007 Non-BSF strategic projects Learning Technologies 81.6 87.4 210.4 Glow, C2K Lot 6 – str
Slide 5: Operating costs and profit
Operating costs and profit £m H1-2008 H1-2007 Selling & distribution 18.7 16.6 Research & development 7.6 8.1 Impact of acquisitions: £2.2m Administration 7.3 5.4 DACTA / SpaceKraft / SERAP Operating costs* 33.6 30.1 Administration: £1.2m; Selling & Distribution: £1.0m *before amortisation of acqu
Slide 6: Income statement
Income statement H1-2008 H1-2007 FY-2007 Total Less: Before Before Before £m amortisation of amortisation of amortisation of amortisation of acquisition acquisition acquisition acquisition related related related related intangibles intangibles intangibles* intangibles* Revenue 117.7 - 117.7 115.6 2
Slide 7: Balance sheet
Balance sheet 31 Mar 31 Mar 30 Sep £m 2008 2007 2007 Goodwill and acquisition intangible 31.8 23.4 27.9 assets Goodwill increase reflects acquisitions Property, plant & equipment and 22.5 24.3 23.5 other intangible assets (software) Retirement benefit surplus 0.5 - - Depreciation exceeded net capex
Slide 8: Cash
Cash £m 31 Mar 31 Mar 30 Sep 2008 2007 2007 Cash & cash equivalents 13.8 22.3 29.3 Issued loan notes (1.0) (0.9) (0.2) Normal seasonal pattern Net funds 12.8 21.4 29.1 Trading pattern and balance sheet movements Issuable loan notes (2.1) - (1.7) This year additional factors Deferred cash considera
Slide 9: Pensions
Pensions Small surplus at March 2008: £0.5m Cash contributions in excess of service cost: £2.5m Second part of special pension payment: £1.5m (31 October 2007) Six months of £1.7m pa additional cash contribution Market volatility We have used a 6.4% discount rate Liabilities very sensitive to
Slide 10: RM Group
RM Group Education Assessment Education Resources Focus area and Management Learning Technologies and Data Services Systems Curriculum Software Activities Outsourced Management, ICT infrastructure products and services Software and services and data administration and for schools, colleges and unive
Slide 11: Context
Context UK market 91.5 86.1 Education budget 81.9 76.2 2.8% pa real terms increase from 2007/08 to 2010/11 Confirmed in March 2008 Budget 2008/09 to 2009/10: 5.1% nominal; 2009/10 to 2010/11: 6.3% nominal Teachers’ salary recommendation 2007/08 2008/09 2009/10 2010/11 2008: 2.45%; 2009: 2.3%; 20
Slide 12: Context
Context Population %Population 0-14 Education spend per student Education spend % GDP International UK 61m 17% $7,376 6.1% US 304m 20% $12,023 7.5% Canada 33m 16% $8,641 5.9% Changing requirements Australia 20m 19% $7,527 5.8% Europe (ex UK) 430m 16% $6,500 6.0% Today’s pupils still working in 207
Slide 13: RM worldwide
RM worldwide DACTA Employees in mainland Europe RM Group (Head office) Abingdon Further 11 offices in the UK 1,890 employees RM Educational Software Inc. Massachusetts 10 employees | ¥ a = a RM EST RM Asia-Pacific (Head office) Trivandrum Perth a 250 employees Further offices in Melbourne, Sydney, D
Slide 14: Satisfaction
Satisfaction 7.64 7.67 7.41 7.21 Customer satisfaction score in line with 2008 target 7.00 Fifth year of increase Major companies approaching RM to benchmark 6.50 Strategic project customer satisfaction 2003 2004 2005 2006 2007 H1 2008 Key to long-term successful project delivery Customer Sati
Slide 15: Education Resources
Education Resources General curriculum resources Revenue more than doubled year-on-year Acquisitions: DACTA, SpaceKraft Organic growth >30% Education Resources Awards Expenditure on people and process to match growth Winner - 2008 TTS: number of orders up 20%; average lead time down 25% New
Slide 16: Education Resources
Education Resources Curriculum Software UK market remains tight i-nfer – formative assessment Honeycomb, Fuse – Web 2.0 tools Easiteach – whiteboard tools International growth US revenues up 80% Sonica ESL English for Spanish speakers 3T Developing new markets Publishing tools School con
Slide 17: Education Management Systems
Education Management Systems IntegrisG2 – hosted, Web-delivered school management software Very ‘sticky’ market, so limited number of LAs tender each year High level of success where we have bid Now in 22 UK Local Authorities 300 new school deployments in H1 Further deployments planned for H2 BS
Slide 18: Assessment and Data Services
Assessment and Data Services On-screen marking Single Level Tests Business development Proposed replacement for SATs (end of Key Single Level Test pilot for QCA Stage testing) First professional qualification pilots Will be administered when pupil is ready Delivery Currently in pilot phase Summe
Slide 19: Learning Technologies
Learning Technologies Learning Platforms Kaleidos major new version launch Investment / order intake Glow rollout: >120,000 users now registered Community Connect 4 Major development project over last two years Well-received at recent technical seminars Expected to drive revenue in H2 Exclusiv
Slide 20: Green technology
Green technology DCSF focus on green schools New ring-fenced money Targeted Capital Fund: Carbon Reductions £110m over three years; 212 new build secondary schools (140 BSF) 60% carbon emission reduction target Target reductions can be achieved through green ICT Low energy hardware ecoquiet
Slide 21: BSF
BSF Excellent progress Four (out of eight awarded) projects so far this year Group’s largest ever contract (Newham: £53m) First newly-built, RM-equipped school opened Five of first twelve BSF schools supplied by RM LEP Equity Stake RM will hold 15% stake in the Private Sector Partner which wil
Slide 22: BSF
BSF Current Process (82 weeks) Proposed Process (75 weeks) Stage Weeks Bidders Stage Weeks Bidders Pre-qualification 0-8 All Pre-qualification 0–9 All Long-list 9-14 5–8 Dialogue Phase 1 10–28 3 PfS procurement review Dialogue Phase 1 15–42 3 Evaluation 29 3 Evaluation 43 3 Dialogue Phase 2 30–54 2
Slide 23: Outlook
Outlook First half never a good indicator of full year outcome H1-2008 Increased strategic project bid costs First half Full year Some delays in new product and service areas H2-2008 2002 2003 2004 2005 2006 2007 2008 Material revenue growth expected as a result of: Community Connect 4 shipments Rep
Slide 24: Conclusions
Conclusions BSF Clear market leader Delivery going well Other … still on track for net contribution in FY-2010 PC Strong growth in Education Resources H1 H1 H1 H1 H1 H1 Public sector customers with 3-year budgets 2003 2004 2005 2006 2007 2008 PC percentage of revenue Strong balance sheet Reducin
Slide 25: Appendices
Appendices BSF 26 ICT contracts BSF 27 Typical project BSF 28 Opportunities beyond the initial contract 25
Slide 26: BSF
BSF ICT contracts Local Authority Status Type ICT Supplier Wave Constructor Solihull Contract ICT-only RM 1 BAM / HBG Bristol Contract Consortium Northgate Pathfinder Skanska Bradford Contract Consortium Sun Pathfinder Amey/Costain Newcastle - Consortium In house 1 Aura Lancashire Contract Consortiu
Slide 27: BSF
BSF Typical project Allocation of spend – typical BSF project Average value of ICT contract: £13m Data centre Central systems and software 10% Learning Platform User equipment In-school systems and software 45% Network equipment Software Managed Service Services 45% Implementation and integration Tr
Slide 28: BSF
BSF Significant opportunities beyond initial contract Other ICT opportunities in the Local Authority Additional services to BSF schools BSF BSF future waves future waves extensions BSF BSF initial contract initial contract extensions Time 28