Slide 1: 6 months to 31 May 2015
6 months to 31 May 2015 To be read in conjunction with David Brooks Iain McIntosh the Interim Results Chief Executive Officer Chief Financial Officer announcement released on 6 July 2015
Slide 2: Overview
Overview • Good operational performance on the journey back to growth with trading in line with our expectations – Strong organic growth in RM Resources and RM Results – Adjusted operating margin increased from 8.0% to 8.7% – Group adjusted operating profit of £6.9m (H1 to May 2014: £7.3m) • Positiv
Slide 3: Group Targets
Group Targets • Group revenue growth in FY16 • All three divisions growing revenue by FY17 • Group adjusted operating profit margin over 10% • Focus on organic growth 3
Slide 4: Business Review
Business Review
Slide 5: 3 Divisions
3 Divisions RM Resources (formerly Education Resources) TTS provides a wide range of physical and curriculum resources to use in schools and other educational settings in the UK and overseas SpaceKraft provides resources and immersive learning environments to meet the requirements of learners with S
Slide 6: FY15 H1 Divisional Summary
FY15 H1 Divisional Summary 6 months to 31 May 2015 Unallocated RM Resources RM Results RM Education Central Total £m costs** 2014 2015 2014 2015 2014 2015 2014 2015 2014 2015 Revenue 29.3 32.7 10.1 10.6 52.7 36.5 - - 92.1 79.8 Adjusted Operating 3.8 4.5 2.0 1.6 3.4 2.6 (1.9) (1.8) 7.3 6.9 Profit* %
Slide 7: Group Revenue & Adjusted Operating Profit
Group Revenue & Adjusted Operating Profit Revenue Adjusted* operating profit 100 declined by 13% decreased by 5% £92.1m 90 £7.3m** £6.9m £79.8m 80 +11% 8 Profit by Segment £m Adjusted* Operating Revenue £m 70 6 60 4 50 40 -31% 2 30 0 20 10 -2 +5% 6 months to 31 May 2014 6 months to 31 May 2015 0 6 m
Slide 8: RM's Repositioning over 5 years
RM’s Repositioning over 5 years £376.1m Exited RM Education £43.5m £310.1m £288.7m RM Results RM Resources £26.4m £2.8m £261.8m Revenues £m £202.5m £255.5m £204.5m £202.7m £181.2m £111.9m £22.7m £21.3m £23.3m £26.5m £27.8m £54.4m £58.0m £59.8m £54.0m £62.8m £21.4m £18.5m £17.2m £14.1m £12.7m Adjuste
Slide 9: RM Resources: Financial performance
RM Resources Financial performance Revenue Adjusted operating profit £62.8m £10.3m 11% growth £32.7m £29.3m £4.5m £3.8m Full year 2014 H1 2014 H1 2015 Full year 2014 H1 2014 H1 2015 9
Slide 10: RM Resources
RM Resources • Excellent organic growth in a flat UK market – TTS UK Direct Marketing revenues increased 13% – TTS International revenues increased 17% – TTS UK Distributors were flat • Margins improved to 13.9% (H1 2014: 13.1%) 6% TTS UK Direct Marketing 7% TTS International 12% TTS UK Distributors
Slide 11: RM Results: Financial performance
RM Results Financial performance Revenue Adjusted operating profit £27.8m £4.6m 5% growth £2.0m £10.1m £10.6m £1.6m Full year 2014 H1 2014 H1 2015 Full year 2014 H1 2014 H1 2015 11
Slide 12: RM Results
RM Results • Revenue increased 5% • Strong margins at 15.1% only reduced on H1 2014 (20.0%) as prior period reflected step up in margin recognised on one long term contract • Contract for e-marking signed to 2017 with AQA as one of two suppliers • Preferred supplier on ICAEW e-assessment contract 42
Slide 13: RM Education: Financial performance
RM Education Financial performance Revenue Adjusted operating profit £111.9m £7.7m 31% decrease £52.7m £3.4m £2.6m £36.5m Full year 2014 H1 2014 H1 2015 Full year 2014 H1 2014 H1 2015 13
Slide 14: RM Education
RM Education • Margins increased from 6.4% to 7.0% • Gaining traction with Multi Academy Trusts reaching preferred bidder for 2 trusts • SMS RM Integris wins – Derbyshire 98% of primary schools converted • New internet connectivity and e-safety contract with West Berkshire 7% Services 11% Internet P
Slide 15: Financial Summary
Financial Summary
Slide 16: Group Financial Summary
Group Financial Summary 6 months to 6 months to £m % Change 31 May 2014 31 May 2015 Revenue 92.1 79.8 (13)% Adjusted* EBITDA 9.0 8.2 (8)% Adjusted* operating profit 7.3 6.9 (5)% Adjusted* profit before tax 7.0 6.3 (10)% Statutory profit before tax 6.7 9.2 38% Adjusted* basic EPS 6.4p 6.0p (6)% Inter
Slide 17: Cash Flow Bridge
Cash Flow Bridge 60 £1.7m £1.6m 50 £[0.4]m £[2.5]m £(2.3]m 40 £(2.0)m £[0.6]m £(0.3)m 30 Cash £m £47.9m £43.1m 20 10 0 Cash & short Cash Proceeds Purchase of Dividends Purchase of Pension Tax paid Other Cash & short term generated by from sale of property, own shares contribution term deposits at op
Slide 18: Pensions
Pensions Investments at 31 May IAS 19 balance sheet deficit 2015 increased since last year end Equities 51% Fixed income £m • Gilts 19% Deficit at 30 Nov 2014 (26.8)m £(21.4)m net of tax • Corporate bonds 15% Cash contribution 2.0m Insurance contract 13% Asset returns less 3.0m Cash including escrow
Slide 19: Outlook
Outlook
Slide 20: Outlook
Outlook • Organic growth in RM Resources continues without sacrificing margins • Organic growth and gaining new customers, both in the UK and overseas, will drive margin growth in RM Results • RM Education in final year of significant top line decline. Focus on 5 priority areas in software and servi
Slide 21: Appendices
Appendices
Slide 22: Income Statement
Income Statement 6 months to 31 May £m 2014 2015 Adjusted Adjustments Total Adjusted Adjustments Total Revenue 92.1 - 92.1 79.8 - 79.8 Cost of sales (57.0) - (57.0) (47.6) - (47.6) Gross profit 35.1 - 35.1 32.2 - 32.2 Gross profit % 38.1% - 38.1% 40.3% - 40.3% Operating expenses (27.7) - (27.7) (25.
Slide 23: Adjustments to Operating Profit
Adjustments to Operating Profit 10 £2.4m £[0.4]m £[0.2]m 8 £0.2m Profit £m 6 £6.9m £9.0m 4 2 0 H1 FY15 adjusted Restructuring Net decrease in Share based Amortisation of H1 FY15 operating operating profit property provisions payment charges acquisition profit intangible assets Data has been rounded
Slide 24: Balance Sheet
Balance Sheet £m 31 May 31 May 2014 2015 Goodwill and acquisition intangibles 14.7 14.4 Property, plant & equipment and software intangibles 9.1 8.2 Other receivables 1.9 1.2 Deferred tax assets 4.9 8.3 Total non-current assets 30.6 32.1 Inventories 11.6 12.8 Trade & other receivables 32.5 24.6 Tax
Slide 25: Cash Flow
Cash Flow 6 months to 6 months to Operating cash flows – £m 31 May 2014 31 May 2015 Profit from operations 7.1 9.0 Amortisation 0.3 0.3 Depreciation 1.5 1.1 Share-based payments 0.4 0.4 Other adjustments (0.5) (2.0) Operating cash flows before movements in working capital 8.8 8.9 Increase in invento
Slide 26: Pupil Projections - Primary
Pupil Projections - Primary Pupil projections in England in maintained nurseries and state-funded primary schools 4.8m 4.6m 4.4m 4.2m 4.0m 9% increase 3.8m 379k more pupils 3.6m 3.4m Source: DfE National Pupil Projections 2014 26
Slide 27: Pupil Projections - Secondary
Pupil Projections - Secondary Pupil projections in England in state-funded secondary schools 3.3m 3.2m 3.1m 3.0m 2.9m 2.8m 2.7m 2.6m 2.5m 17% increase 477k more pupils 2.4m Source: DfE National Pupil Projections 2014 27
Slide 28: UK Education Spend
UK Education Spend £100bn £90bn Coalition (2010-15) £80bn £70bn Labour (1997-2010) £60bn £50bn Conservative (1987-1997) £40bn Figures adjusted for inflation £30bn £20bn £10bn £0bn 1990-91 1992-93 1996-97 1999-00 1987-88 1991-92 2013-14 1994-95 2000-01 2002-03 2006-07 2009-10 1988-89 1995-96 2001-02
Slide 29: RM Education: technology for schools
We make & Software Tools Suppor technology work for schools’ teaching and learning needs Schools. — Management ss ; Solutions _“ ""S — 3 , CPPS A eS Connectivity Consultancy ~~ reno & e-safety Education 29
Slide 30: RM Results: assessment technology
AWARDING ORGANISATION Soe Saif im mini ed | HU 0) REGULATOR if ; NTT @ Se TELL é @ |alalala|b6L@ RGiarcacr e% ar © RM Results Powerful technology and expertise to streamline the assessment cycle, from exam writing to results analysis and presentation 30
Slide 31: RM Resources
RM Resources tts) ‘SpaceKraft 31