Slide 1: RM plc – Interim Results
1 RM plc – Interim Results Six months to 31st March 2005 Education focus Relative Technical Scale capability Tim Pearson - CEO Mike Greig - Group Finance Director
Slide 2: Headlines
2 Headlines • Results in line with management’s expectations Return to more normal seasonal pattern In the context of broadly flat market • Progress across the business Delivery Reputation Innovation • Growing investment in BSF
Slide 3: Financial headlines
3 Financial headlines Six months to 31 March 2005 2004 2003 • Turnover £109.2m £108.9m £85.4m • (Loss)/profit before tax (before amortisation of goodwill) (£0.3m) £2.7m (£0.8m) • Net funds at 31 March £12.7m £34.4m £33.2m £27m investment in acquisitions and long term contracts • Diluted EPS (before
Slide 4: Turnover
4 Turnover 160 140 120 • Turnover up £0.3m 100 £m 80 Replacement of one-off H1 2004 turnover (£13m) 60 40 Half year contributions from TTS and Sentinel 20 0 Increased turnover from education projects H101 H201 H102 H202 H103 H203 H104 H204 H105 Group turnover • Infrastructure software and services +
Slide 5: Gross profit percentage & operating costs
5 Gross profit percentage & operating costs • Evolving business mix – increased contribution from: Acquisitions Education projects • Gross profit percentage: 26.9% (2004: 26.6%) TTS +ve; education project accounting −ve PC hardware market continues to be highly competitive Operating costs Absence of
Slide 6: Profit and loss
6 Profit and loss Six months to 31 March Twelve months to 30 September £’000 2005 2004 2004 Turnover 109,211 108,944 263,264 Gross profit 29,355 28,968 68,507 Selling and distribution (16,095) (15,090) (32,746) Research and development (7,523) (6,614) (14,546) Administration (excluding amortisation
Slide 7: Balance sheet
7 Balance sheet • Cash and investments at 31 March 2005: £13.8m (31 March 2004: £35.2m) Outflow as expected, due to: TTS acquisition: £11.0m Consolidated balance sheet extracts 31 March 30 September PFI project capex: £10.0m £m 2005 2004 2004 Stocks & WIP: £5.9m increase – long term contracts Intang
Slide 8: IFRS
8 IFRS 30th September 2004 1st October 2004: RM’s transition date to IFRS • IFRS project on track RM reports FY2004 full-year results under UK GAAP RM FY2005 September year end RM reports FY2005 interim results under UK GAAP first IFRS accounts: interims 2006 30th September 2005 RM reports FY2005 fu
Slide 9: Market context: opportunity and risk
9 Market context: opportunity and risk Education a high priority for the new Government • Education spend: 4.4% real-terms growth in GY2005/06 and GY2006/07 Details of new administration’s agenda yet to emerge • ICT expected to remain a high priority Schools are more likely to identify ICT as a ‘mai
Slide 10: Market context: opportunity and risk
10 Market context: opportunity and risk Potential for significant changes in the market Emerging central focus on procurement potential impacts on RM • Continuing talk about ‘public sector efficiency’ Aggregated purchasing changes the competitive +/− landscape Gershon review of public services Focus
Slide 11: Progress: reputation
11 Progress: reputation Reputation is a key influence on buyer behaviour • Niche market: reputation communicates rapidly 10 Whole Year Average 9 • Finite market: limited number of customers Year to Date 8 7 • Existing customers: satisfaction continues to improve 6 5 c.6,000 customer satisfaction sur
Slide 12: Progress: innovation
12 Progress: innovation Education-focused innovation drives customer success • Award-winning products BETT Awards: Kaleidos / Easiteach Literacy / Easiteach Maths / Maths Alive Education Resources Awards: RM One / Active World Messy Mats (TTS) • Learning Platform Kaleidos / Kaleidos Portal Plus In d
Slide 13: Progress: delivery
13 Progress: delivery Effective services Hugely improved services drive customer success Scale 16,000 establishments call each year • Core component of RM’s offer 50,000 desktops directly managed by RM Education projects: managed services / process outsourcing / educational delivery 25,000 telephone
Slide 14: Progress: delivery
14 Progress: delivery Successful education projects RM managed services deliver customer success • Operational delivery, change management and process development … enabling sophisticated new educational approaches for our customers Project Delivery Highlights • Established projects: avg customer sa
Slide 15: Progress: education projects
15 Progress: education projects • Lambeth £17.1m / 8-year educational ICT PFI project signed • BBC Digital Curriculum development 3T Productions and RM appointed preferred Direct Suppliers • Lifelong Learning managed services Two more further education colleges at preferred bidder stage • PANDA/PAT
Slide 16: Progress: international
16 Progress: international North America – RM Educational Software Inc • Market opportunity c. 1.8 million classrooms (6x UK) Whiteboard penetration: 4% of classrooms (UK 20% of classrooms) • Progress Partnerships with four whiteboard manufacturers (accounting for c. 20% of US supply) OEM agreements
Slide 17: Progress: acquisitions
17 Progress: acquisitions • Sentinel Progressing to plan • TTS Good contribution in first six months as an RM Group company Innovative product developments Potential for Group-wide benefits • peakschoolhaus As previously announced, not selected by Ofsted as a preferred regional inspection services p
Slide 18: Building Schools for the Future
18 Building Schools for the Future A major opportunity for RM BSF – critical success factor RM • Secondary schools: £30 billion, 15-year programme Educational vision 9 Technology expertise 9 Rebuild/refurbish all secondary schools in England, including: Education understanding 9 school build; facili
Slide 19: Building Schools for the Future
19 Building Schools for the Future Update Wave 1 Wave 2 Wave 3 2005/06 2006/07 2007/08 • Procurement process started Bradford* Birmingham Barnsley Bristol* Hackney Durham Some Wave 1 projects may ‘overtake’ Pathfinders Gateshead Haringey Derbyshire Greenwich* Islington Kent • Developing business mod
Slide 20: Outlook
20 Outlook • First half never a good indicator of full-year performance … though have replaced one-off turnover from H1 2004 • New Government agenda vs. existing policy priorities • Increasing BSF investment in both H2 and 2006 No material revenues before 2007 • Other second half factors Full year c
Slide 21: Conclusion
21 Conclusion • Delivery Building an excellent track record for education projects Improving satisfaction with existing schools customers Establishing a US position • Opportunity • Finding the correct balance of investment and profit: BSF likely to define the secondary school market for the next ten