Slide 1: RM plc Year to 30 November 2012
RM plc Year to 30 November 2012 David Brooks, Chief Operating Officer To be read in conjunction with the Iain McIntosh, Chief Financial Officer Preliminary Results announcement released on 21 February 2013
Slide 2: FY12 Overview - 1
FY12 Overview - 1 • Good execution of defined strategy – Operating profitably in line with market expectations – Disposals programme completed – New initiatives launched • Strong cash flow and Balance Sheet – Cash generated from operations of £33.5m (2011: £39.5m for year to Nov; £24.8 million for 1
Slide 3: FY12 Overview - 2
FY12 Overview - 2 • Divisional Summary – Education Resources : Strong performance increasing margins and working capital management – Education Technology : Market conditions continue to be challenging – Education Software : Business undergoing transition. Good performance from Assessment business.
Slide 4: Group Financial Summary
Group Financial Summary 14 months to Proforma Year to Year to £m 30 Nov 2011 30 Nov 2011 30 Nov 2012 Revenue including exited businesses 350.8 310.1 288.7 Revenue excluding exited businesses 320.8 283.7 285.9 Adjusted* EBITDA including exited businesses 19.5 22.3 20.5 Adjusted* operating profit incl
Slide 5: Group Revenue and Adjusted Operating Profit
Group Revenue and Adjusted** Operating Profit £310.1m £288.7m £14.1m £13.6m *Proforma financial information ** Including exited operations 5
Slide 6: Adjustments to Operating Profit
Adjustments to Operating Profit Year to 30 November 2012 16 £13.6m (£3.5m) 14 12 (£2.8m) 10 £0.5m £9.0m £1.3m (£0.1m) 8 6 4 2 0 FY12 adjusted Impairment of Restructuring & Net pension Share-based Other FY12 operating operating profit goodwill and loss on sale of credit payment charges profit amortis
Slide 7: Cash Generation
Cash Generation Year to 30 November 2012 50 £2.5m (£2.1m) £33.5m (£7.2m) 45 (£0.2m) £37.8m 40 35 30 25 20 15 £11.3m 10 5 0 Net funds less Cash generated Proceeds from Dividends Pension Other Net funds at 30 deferred by operations Sales of payments in November 2012 consideration at operations excess
Slide 8: Pensions
Pensions IAS 19 balance sheet deficit decreased: £m Deficit at 30 Nov 2011 (21.2) £(15.9)m net of tax Cash in excess of service cost 7.2 Annual deficit reduction payments are committed to 2027 Asset returns 10.4 Gain on curtailment 1.8 Interest on liabilities (6.3) Impact of market assumptions on (1
Slide 9: Group Headcount
Group Headcount 2,834 2,993 2,747 2,358 2,280 2,250 9
Slide 10: Divisional Performance
Divisional Performance
Slide 11: FY12 Divisional Summary
FY12 Divisional Summary Year to 30 November 2012 excluding exited businesses Education Managed Education Education Unallocated Total £m Technology Services Resources Software Central costs 2011 2012 2011 2012 2011 2012 2011 2012 2011 2012 2011 2012 Revenue 125.7 109.0 61.5 81.4 58.0 59.8 38.5 35.7 -
Slide 12: Education Technology
Education Technology Financial Performance £125.7m £8.3m £109.0m £3.6m Year to November 2011* Year to November 2012 Year to November 2011* Year to November 2012 Revenue Adjusted operating profit * Proforma financial information 12
Slide 13: Education Technology
Education Technology • As anticipated revenue decline 13% due to public sector budgetary constraints • Winning c.20 – 25% share of Free Schools and Academies • Revenues anticipated to continue to decline • Margin pressures will continue as benefit of BSF related volumes reduce Total revenue = £109.0
Slide 14: Managed Services
Managed Services Financial Performance £81.4m £6.1m £61.5m £2.9m Year to November 2011* Year to November 2012 Year to November 2011* Year to November 2012 Revenue Adjusted operating profit * Proforma financial information 14
Slide 15: Managed Services
Managed Services • Strong revenue growth of 32% reflects peak year of BSF implementations but will decline materially in 2014 and beyond as BSF programme winds down • Some revenues and profits deferred to future years due to third-party delays to school openings and phasing of school spending • Adju
Slide 16: Education Resources
Education Resources Financial Performance £59.8m £58.0m £8.9m £5.4m Year to November 2011* Year to November 2012 Year to November 2011* Year to November 2012 Revenue Adjusted operating profit * Proforma financial information 16
Slide 17: Education Resources
Education Resources • Modest revenue growth 3% despite budgetary environment – TTS growth in exports (approx 11% of business). Won Queens Award for International Trade – Risk related to retention of annually renewed customer CSR programme (over 10% of revenues) – RM SpaceKraft revenue declined due t
Slide 18: Education Software
Education Software Financial Performance £38.5m £35.7m Year to November 2011* Year to November 2012 Revenue Adjusted operating profit * Proforma financial information 18
Slide 19: Education Software
Education Software • Revenue decline of 7.5% reflecting performance in – Learning Platforms – Learning Software and Other • Assessment revenue grew due to increase in examination volumes – Future uncertainty created by examination policy initiatives – New overseas opportunities (e.g. pilot in Sloven
Slide 20: Channel Strategy and New Propositions
Channel Strategy and New Propositions
Slide 21: Channel Strategy
Channel Strategy RM has 3 primary distribution channels to schools • Direct Marketing – TTS, RM SpaceKraft (Education Resources) • Direct Sales – Education Technology – Assessment & Data Solutions (‘ADS’) • Online – RM Books, RM Unify, RM.com, RM At Home (consumer channel with focused product range)
Slide 22: 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 23: Overview of RM Unify
Overview of RM Unify • Market Evolution – Learning Platforms developed 7-10 years ago • Large, integrated all-encompassing systems. Expensive to deploy, operate and maintain – Cloud-based services gaining acceptance – Education budget constraints forcing change – Increase in use of open source softw
Slide 24: RM Unify
Matt Saunders RM Bett Demo Schoot os Sign Out RM Books RM Education RM Wikis RM People Directory RM Education RM Education Qa Oa oa. oa Office 365 (Calendar) Office 365 (Contacts) Microsoft Microsoft EX RM Site Creator for Office 365 RM Education t Jideo learning made simple 4 MediaCore Desmos Graph
Slide 25: Summary
Summary
Slide 26: Summary
Summary Restructuring complete • Operating divisions focusing on clear strategies • Disposal programme completed • Significant reduction in cost base • Organisation structure continuing to evolve to execute future strategy Strong balance sheet and cash position despite increased pension deficit paym
Slide 27: Appendices
Appendices
Slide 28: Appendix 1: Income Statement
Appendix 1 Income Statement Year to 30 Nov £m 2011 2012 Adjusted* Adjustments Total Adjusted* Adjustments Total Revenue 310.1 - 310.1 288.7 - 288.7 Cost of sales (228.7) - (228.7) (217.9) - (217.9) Gross profit 81.4 - 81.4 70.8 - 70.8 Gross profit % 26.2% - 26.2% 24.5% - 24.5% Operating expenses (67
Slide 29: Appendix 2: Balance Sheet
Appendix 2 Balance Sheet 30 Nov 30 Nov £m 2011 2012 £m 2011 2012 Cash and cash equivalents 24.5 37.8 Goodwill and acquisition intangibles 18.5 15.4 Bank loans (13.0) - Property, plant & equipment and software intangibles 20.2 13.7 Net funds 11.5 37.8 Interest in associate 0.3 0.1 Deferred considerat
Slide 30: Appendix 3: Cash Flow
Appendix 3 Cash Flow Operating cash flows – £m FY-2011 FY-2012 Profit/(loss) from operations (18.9) 9.0 Amortisation 1.7 1.5 Depreciation 7.1 5.7 Share-based payments 1.1 0.1 Other adjustments 28.9 5.2 Operating cash flows before movements in working capital 19.9 21.5 Decrease/(increase) in inventor
Slide 31: Appendix 4: Debt Facilities
Appendix 4 Debt Facilities £30m unsecured committed Revolving Credit Facility with Barclays • Runs to 27 March 2016 with mutually agreed extension possible to March 2017 • Margin 2.75% over LIBOR, falling to 2.50% from February 2013 subject to Debt / EBITDA ratio Principal financial covenants • Debt