Slide 1: RM plc 6 months to 31 May 2012
RM Education RM plc 6 months to 31 May 2012 Martyn Ratcliffe, Chairman David Brooks, Chief Operating Officer To be read in conjunction with the Interim Results lain Mcintosh, Chief Financial Officer announcement released on 9 July 2012
Slide 2: Overview
Overview * Good execution of defined strategy — Operating profitably — Disposals programme completed — New initiatives launched — Continuing to simplify structure and processes Strong cash flow and Balance Sheet — Cash generated from operations of £11.6m — Net funds less deferred consideration at Ma
Slide 3: Group Financial Summary
Group Financial Summary Pro forma Pro forma £m 6monthsto 6 months to 12 months to 31 May 2011 31 May 2012 30 Nov 2011 Revenue 128.5 124.7 310.1 Adjusted* operating 7 39 14] profit Adjusted* profit before 7 34 146 tax Adjusted* diluted EPS(p) 1.7p 2.9p 10.8p Unadjusted profit before (1.5) 06 (18.5) t
Slide 4: FY12 Half Year Divisional Summary
FY12 Half Year Divisional Summary 6 months to 31 May 2012 for retained businesses Education Managed Education Education — Unallocated Technology Services Resources Software Central costs Total 2011. 2012 $2011 2012 2011 2012 2011 2012 2011 2012 2011 2012 Revenue 49.3) 47.6) 222| 29.9] 28.2] 28.6] 17
Slide 5: Group Revenue and Adjusted Operating Profit
Group Revenue and Adjusted Operating Profit £1.7m £3.9m 150 8 £128.5m £124.7m 7 120 6 E€ 5 a Q 90 4 5 3 b 60 2 x i= 30 a) 6 0 0 * A 6 months to 6 months to 2 31 May 2011** 31 May 2012 3 4 Exited Operations || Managed Services 5 . . Ss || Education Software || Education Technology 4 - 6 months to 6 m
Slide 6: Group Headcount
Group Headcount 2,834 2,993 2,780 2,747 2,699 2,357 2,280 2500 || Exited 2000 || RM India & Rest of World 1500 || UK Temporary 1000 || UK Permanent 500 I T I I I I Mar-10 Sep-10 Mar-11 May-11 Sep-11_ Nov-1] May-12
Slide 7: Inventory and Trade Receivables
Inventory and Trade Receivables Inventory (4-8) 2012 10 5 0 At31 May Exited Changein At31 May 2011 retained operations At31 May 2011 Trade receivables (3.5) Exited Changein At31 May retained 2012 operations
Slide 8: Cash from Operations
Cash from Operations Cash Netfundsless Cashgenerated Proceeds from Dividends Other Net funds at 31 deferred by operations sales of May 2012 consideration at operations 30 Nov 2011
Slide 9: Pensions
Pensions IAS 19 balance sheet deficit increased: Deficit at 30 Nov 2011 (21.2) £(15.9)m net of tax Cash in excess of service cost 0.8 Annual deficit reduction payments committed to May 2017 Asset returns 3.0 Interest on liabilities (3.2) Impact of market assumptions on liabilities (8.9) Reduction in
Slide 10: Strategy and Market Developments
Strategy and Market Developments
Slide 11: Channel Strategy
Channel Strategy RM has 3 primary distribution channels to schools * Direct Marketing — TTS, RM Spacekraft (Education Resources) * Direct Sales — Education Technology, Education Software, Managed Services — Assessment & Data Solutions * Online — _RM.com, RM Books, RM Unify, RM At Home Strategic Revi
Slide 12: Education Market Continues to Change
Education Market Continues to Change school funding reform 2013-14 confirmed 28 June 2012 Government committed to introduction of The National Funding Formula at next spending review, where schools in similar circumstances receive similar funding regardless of location * 2013-14 funding reform is de
Slide 13: Divisional Performance
Divisional Performance
Slide 14: Education Technology
Education Technology Financial Performance £49.3m £47.6m £8.3m HI to 31 May m FY to 30 Nov £0.9m 6 months to May 2011 6 months to May 2012 £(0.3Im 2012 Revenue Adjusted operating profit Interim profitability is not a good indicator of full-year outcome 4
Slide 15: Education Technology
Education Technology * Anticipated revenue decline 3.6% given public sector budgetary constraints * Revenue from Classroom Technology and Implementation Services businesses declined * Winning 25 — 30% share of Free Schools and Academies in line with historic share * Networks and internet hosting: fl
Slide 16: Managed Services
Managed Services Financial Performance £29.9m 6 months to May 2011 6 months to May 2012 Revenue HI to 31 May £6.1m FY to 30 Nov £3.0m £1.0m 2011 2012 Adjusted operating profit Interim profitability is not a good indicator of full-year outcome 16
Slide 17: Managed Services
Managed Services Strong revenue growth of 34% reflects peak year of BSF implementations but will decline materially next year and beyond as BSF programme winds down Some revenues and profits deferred to H2 due to third-party delays to school openings and phasing of school spending Adjusted operating
Slide 18: Education Resources
Education Resources Financial Performance £28.6m HI to 31 May £5.4m FY to 30 Nov £28.2m £4.0m £1.8m 6 months fo May 2011 6 months to May 2012 2011 2012 Revenue Adjusted operating profit Interim profitability is not a good indicator of full-year outcome 18
Slide 19: Education Resources
Education Resources Modest revenue rise 1.6% despite tough budgetary environment — TTS growth in exports (approx 9% of revenue). Won Queens Award for Export — Medium term risk : retention of supermarket voucher programme — RMSpacekraft revenue declined due to market budget constraints, but remains p
Slide 20: Education Software
Education Software Financial Performance £17.8m £15.9m £3.2m HI to 31 May FY to 30 Nov 6 months fo May 2011 6 months to May 2012 2011 £(0.1)m 2012 Revenue Adjusted operating profit Interim profitability is not a good indicator of full-year outcome 20
Slide 21: Education Software
Education Software Significant revenue decline 10.9% reflecting weak performance in — Learning Platforms — Learning Software and Other Assessment grew examination volumes. — Future uncertainty created by examination policy initiatives Learning Platform market changing rapidly — Glow extension in Sco
Slide 22: New Initiatives
New Initiatives RM plc Innovation in Education
Slide 23: New Initiatives Overview
New Initiatives Overview ¢ RMhas unparalleled distribution channels into the UK education sector — Compatible with strategic market changes — Established well-respected brand * Three new web-based Offerings being launched Development and marketing investment anticipated in 2013 and 2014 — RMBooks (w
Slide 24: RM plc Innovation in Education
RM plc Innovation in Education
Slide 25: e-Book Market
e-Book Market * Digital format sales to Schools account for just 2% of net invoiced value * Overall digital books market grew by 54% in 2011 and accounts for 8% of net invoiced value Physical/digital share of school book market for UK publishers! 100% ~ 90% + 80% + 70% + 60% + 50% + 40% - 30% + 20%
Slide 26: e-Books in Schools
e-Books in Schools Challenges to using e-books in school Primary 7% | 20% Wh | 23% 0% Cost Lack of suitable access Managing allocation to Lack of suitable ebooks Limited wireless Other BH School devices students capability Lead: lership mIcT Secondary 60% ~ 50% 40% 30% 20% 10% 0% Cost Lack of suitab
Slide 27: RM Books Overview
RM Books Overview (www.rmbookshelf.com) * The first e-book model designed for UK schools — Emulates physical book process — No up-front investment required by customers * School rents the e-Textbook for (typically) a school year (fixed period) — School does not have ownership of the e-Textbook and r
Slide 28: RM e-Textbooks: Platform
RM e-Textbooks : Platform Designed and built by RM Education from concept to launch in approximately 6 months Back-Office Processing (Microgen-Aptitude) iOS/Android Reader App Publisher = ial 28
Slide 29: RM Unify
RM Unify RM plc Innovation in Education
Slide 30: Overview of RM Unify
Overview of RM Unify Market Evolution Learning Platforms developed 7-10 years ago Large, integrated all-encompassing systems. Technology and market requirements evolved Expensive to deploy, operate and maintain Cloud-based services gaining acceptance Education budget constraints forcing change Incre
Slide 31: RM launchpad
RM launchpad Unread Messages Cg score Go Office 365 31
Slide 32: RM At Home
RM At Home RM plc Innovation in Education
Slide 33: RM At Home
RM At Home (www.home.rm.com) In Education Resources Division * Launched June 2012 * Extension to current business model TTS * Offering a selected range of TTS products directly to parents * Enhancing home learning experience, particularly during school holiday periods RM Spacekraft * Special Educati
Slide 34: RM School Finder
RM School Finder (www.home.rm.com/schoolfinder) RM School Finder How it works All your important questions answered. <«g What do the pupils achieve? Wetted you about: pio eezess petomance mneasine setomarce ercrmance ny suniec: Prey S085 What are the staff like? Welttet you sl about ‘The quay otreac
Slide 35: Summary
Summary
Slide 36: Summary
Summary Restructuring complete * Operating divisions focusing on clear strategies * Successful disposal programme * Significant reduction in cost base * Organisation structure continuing to evolve to execute future strategy Strong balance sheet and cash position * Strongest cash position since Septe
Slide 37: Appendices
Appendices
Slide 38: Debt Facilities
Debt Facilities £30m unsecured committed Revolving Credit Facility with Barclays * Runs to 27 March 2015 with mutually agreed extensions to March 2017 ¢ Margin 2.75% over LIBOR, falling to 2.50% after a year, subject to Debt / EBITDA ratio Principal financial covenants * Debt / EBITDA < 2.5 times ¢
Slide 39: Income Statement
Income Statement 6 months to 31 May Pro forma 201 ao Adjusted Adjustments” Adjusted Adiustments Total 200 justed Adjustments juste 2 fota . Adjusted Revenue 128.5 124.7 310.1 Cost of sales (89.6) - (89.6) (92.1) - (92.1) (228.7) Gross profit 38.9 - 38.9 32.6 - 32.6 81.4 Gross profit % 30.3% - 30.3%
Slide 40: Balance Sheet
Balance Sheet Pro-forma Pro-forma 31 May 31 May 2011 2011 Goodwill and acquisition intangibles 374 18.4 Cash and cash equivalents 5.3 25.3 Property, plant & equipment and software intangibles 22.4 16.8 Bank loans 112.3) 7 Interest in associate 1.0 0.3 Issued loan notes “a Net funds (7.2) 25.3 Other
Slide 41: Cash Flow
Cash Flow Operating ca Pro forma 6 6 IS fo to 31 May 2011 31 May 2012 Profit/(loss) from operations (1.5) 11 Amortisation 0.9 07 Depreciation 3.6 3.2 Share-based payments 13 0.4 Other adjustments 18 21 Operating cash flows before movements in working capital 6.1 75 Increase in inventories (3.0) (2.0