Slide 1: Resources, Software and Services for Education
RESOURCES, SOFTWARE AND SERVICES FOR EDUCATION 6 MONTHS TO 31 MAY 2017 DAVID BROOKS Chief Executive Officer NEIL MARTIN Chief Financial Officer © 2017, RM plc – July 2017
Slide 2: Highlights
HIGHLIGHTS Adjusted* operating profit of £7.1m in line with prior year and on track to deliver full year expectations Increased adjusted* operating margins of 10.0% up from 9.3% in 2016 Revenue down 6.9% to £71.3m (2016 : £76.6m) reflecting reduced UK Resources revenues and lower infrastructure spen
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Slide 4: Financial Summary
FINANCIAL SUMMARY £m H1 17 H1 16 Variance • 3
Slide 5: Financial Summary
FINANCIAL SUMMARY REVENUE £M ADJUSTED OPERATING MARGIN* H1 17 H1 16 Variance H1 17 H1 16 Variance 25.5 29.3 -12.9% 11.1% 14.6% -350bps 13.5 13.2 +2.2% 20.5% 18.0% +250bps 32.4 34.2 -5.4% 9.6% 6.6% +300bps 71.3 76.6 -6.9% 10.0% 9.3% +70bps ADJUSTED OPERATING PROFIT* £M REVENUE ADJUSTED OPERATING PROF
Slide 6: Cash Flow
CASH FLOW £45m -£4.1m £40m -£3.7m £35m -£2.0m -£0.3m -£0.6m -£0.1m £30m £25m £20m £40.0m £15m £29.3m £10m £5m £m Net Cash 30 Cash used by Dividends Pension Capex Tax Other Net Cash 31 Nov 2016 operations May 2017 • Cash used by operations of £4.1m vs £0.4m in the prior year - Utilisation of prior ye
Slide 7: Pensions
PENSIONS • IAS19 deficit decreased to £22.2m (Nov 2016: £34.8m) 5% 40 35 • Discount rate reduced to 2.8% (Nov 2016: 3.0%) IAS19 Deficit level (£m) • Interest rate sensitivity: 10bps change results in a 4% 30 c. £5m deficit movement Market rates 25 • Deficit reduction primarily driven by increase in
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Slide 9: Divisions overview
National curriculum resources specialist c. 20 customers c. 7,000 customers 19,000 products (3,000 ‘own IP’) UK’s largest provider of on-screen Complete range of technology offerings One quarter of revenues from International marking of high stakes schools exams and support to schools & colleges sal
Slide 10: RM Resources
RM RESOURCES Revenue Adjusted Operating Profit • Revenue decline of 12.9% driven by continued tightening of UK school budgets - UK direct marketing revenues -20% - International revenues +29% • Adjusted operating margin down to 11.1% as lower revenues and adverse foreign exchange impacts more than o
Slide 11: Acquisition of Connect Education & Care
ACQUISITION OF CONNECT EDUCATION & CARE • Acquisition completed on 30 June 2017 • New unsecured revolving credit facility of £75m • Last reported results for the division as part of the Connect Group - Revenues down -9.1% to £28.7m for the period Sept 2016 – Feb 2017 vs. the prior year - Gross margi
Slide 12: RM Results
RM RESULTS Revenue Adjusted Operating Profit • Revenue growth of 2.2% to £13.5m as growth in Assessment more than offset the anticipated decline in Data - Assessment grew 13% to £10.1m - Data declined by 19% to £3.4m • Adjusted operating margins further improved to 20.5% • 5 year framework agreement
Slide 13: RM Education
RM EDUCATION Revenue Adjusted Operating Profit • Revenue decline of 5.4% to £32.4m - Managed Services revenue down 8% - Reduced Building Schools for the Future project spend - Infrastructure revenue down 4% - Lower warranty revenues and reduction in Networks following 2016 restructure - 3 year conne
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Slide 15: Summary
SUMMARY Results in line with full year expectations in a difficult market Continued growth in operating margins Acquisition of Connect Education & Care business completed on 30 June 2017 Robust balance sheet with cash at £29.3m prior to £56.5m acquisition. - £75m credit facility - Pension deficit re
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Slide 17: Income Statement
INCOME STATEMENT 6 MONTHS TO 31 MAY 2017 2016 £M ADJUSTED ADJUSTMENTS TOTAL ADJUSTED ADJUSTMENTS TOTAL 16
Slide 18: Cash Flows
CASH FLOWS OPERATING CASH FLOWS - £M 2017 2016 NON-OPERATING CASH FLOWS – £M 17
Slide 19: Balance Sheet
BALANCE SHEET £M 31 MAY 2017 31 MAY 2016 18
Slide 20: Pupil Projections
PUPIL PROJECTIONS Full time equivalent pupil projections for state schools in England 2007 to 2025 Full-time equivalent pupils (000s) 5,500 4,800 4677 4504 Predicted increase (2016-25) of 173,000 FTE pupils 4004 4,100 3325 3,400 2955 Predicted increase (2016-25) of 567,000 FTE pupils 2758 2,700 Prim
Slide 21: UK Education Expenditure (Real Terms)
UK EDUCATION EXPENDITURE (REAL TERMS) Inflation adjusted (base 2015-16) by political party in government Coalition (2010-2015) £100bn £90bn £80bn Conservative (2015-2020) £70bn Labour (1997-2010) UK Education Spend £60bn £50bn £40bn Conservative (1987-1997) £30bn £20bn £10bn £0bn UK Government Finan
Slide 22: Staff Costs
STAFF COSTS EMPLOYER STATE PENSION AND NI CONTRIBUTIONS AS % OF EMPLOYEE EARNINGS, FY14 – FY19F 20 National Insurance contributions as a % of employee earnings Pension contributions as a % of employee earnings 16.5% 15 Increases in both pension (2.4% increase) and 14.1% National Insurance contributi