Slide 1: Technology and resources for education
Technology and resources for education Year to 30 November 2017 David Brooks Neil Martin Chief Executive Officer Chief Financial Officer © 2018, RM plc – February 2018
Slide 2: Highlights
HIGHLIGHTS A strong performance delivering increased revenues Strong cash conversion resulting in net debt of up 11% to £185.9m (2016: £167.6m) £13.4m (2016: net cash of £40.0m) following the acquisition Increased adjusted operating profits up 17% at £22.1m (2016: £18.8m) Defined benefit pension def
Slide 3: Financial Summary
RM pic Financial Summary
Slide 4: Financial Summary
FINANCIAL SUMMARY £m FY17 FY16 Variance Revenue 185.9 167.6 +10.9% Organic revenue 158.1 167.6 -5.7% Operating profit (adjusted*) 22.1 18.8 +17.4% Operating margin (adjusted*) 11.9% 11.2% 0.7pp Profit before tax (adjusted*) 20.5 18.1 +13.5% Profit after tax (adjusted *) 17.9 14.2 +26.8% Statutory pr
Slide 5: RM Historical Performance
RM HISTORICAL PERFORMANCE Revenue Adjusted Operating Profit £m 300 £m 25.0 250 20.0 22.1 200 18.5 18.2 18.8 150 15.0 17.2 100 10.0 50 5.0 0 2013 2014 2015 2016 2017 0.0 RM Results RM Resources RM Education 2013 2014 2015 2016 2017 Adjusted Operating Margin Ordinary Dividends 11.9% 7.0 £m 12% 10.2% 1
Slide 6: Cash Flow
CASH FLOW £70m £20.5m -£5.0m £60m -£4.2m -£1.3m -£2.0m £50m -£3.0m -£58.4m £40m £30m £20m £40.0m £10m £m -£13.4m -£10m -£20m Net Cash 30 Nov Cash generated by Dividends Pension Capex Tax Other Acquisition of The Net Debt 30 Nov 2016 operations Consortium 2017 Cash generated from operations of £20.5m
Slide 7: Pensions
PENSIONS IAS19 deficit reduced to £20.2m (Nov 2016: £34.8m) • Increase in scheme assets of £15.9m • Decrease in scheme liabilities of £2.4m driven 5% 40 by updated mortality assumptions • Net deficit associated with 2 new schemes of 35 IAS19 Deficit level (£m) £3.7m acquired with The Consortium 4% 3
Slide 8: Financial Summary
FINANCIAL SUMMARY Revenue £M Adjusted* Operating Margin FY17 FY16 Variance FY17 FY16 Variance RM Resources 83.6 58.8 +42.1% RM Resources 13.9% 17.3% -3.4pp RM Results 31.6 31.6 +0.1% RM Results 24.5% 21.5% +3.0pp RM Education 70.6 77.0 -8.4% RM Education 9.3% 7.6% +1.7pp Group 185.9 167.6 +10.9% Gro
Slide 9: Business Review
RM plc Business Review
Slide 10: RM Resources, RM Results, RM Education overview
RM RESOURCES RM RESULTS RM EDUCATION Curriculum and education Technology experts in Software, services and resources for schools and end-to-end global high technology to UK nurseries in the UK and stakes e-assessment schools and colleges internationally c. 20 c. 7,000 Complete range of technology c.
Slide 11: Market leading education resources brands with curriculum innovation
Market leading education resources brands with curriculum innovation and complete product Curriculum Education 26% resources specialist range supplies specialist 4% International International 19,000 c. 255 c. 300 40,000 products FTE FTE products Direct Sales and marketing marketing model model 12%
Slide 12: RM Resources
RM RESOURCES Revenue Adjusted Operating Profit • Revenue increased 42% to £83.6m resulting from the acquisition of The Consortium on 30 June 2017 27.8 11.1 3.2 10.3 10.2 • Organic revenue decline of 5% 63.5 59.1 58.8 8.5 - UK revenues down 12% (H1 -20%, H2 -2%) as 55.9 school budgets impacted by unf
Slide 13: RM Resources: Integration process to date
RM RESOURCES Integration process to date Senior Brands Operational Organisational Strategy Management performance structure One combined team All brands retained Closed two storage facilities. Combined operating model Go to market established Stablising operations announced strategy developed Pensio
Slide 14: Synergies
SYNERGIES Opportunities Synergy outlook increased of combined Range proposition from £2m to £4m • Front office and core distribution locations retained Digital • Some back-office functions consolidated and some first delivered from RM Group off-shore operations • Systems strategy under review and ou
Slide 15: RM Resources outlook
RM RESOURCES UK trading outlook remains subdued due to Greater synergy opportunities and benefits of funding pressures and uncertainty combined proposition underpin mid term confidence Reducing investment in non-core operations in The Consortium (e.g. Care) International business continues to show
Slide 16: RM Results
RM RESULTS Revenue Adjusted Operating Profit • Revenues in line with prior year with 7.8 Assessment growth offsetting Data 6.8 decline 30.7 31.6 31.6 27.8 5.6 £m £m - +7% growth in e-Assessment 4.6 driven by new e-testing contract - Data revenues down 21% in line with planned contract exits 2014 201
Slide 17: RM Results
RM RESULTS E-assessment business continues to grow with the Future growth focusses on four key addition of end to end e-assessment contracts sectors in the UK and Internationally New 5 year e-assessment contract signed with General qualifications, language testing, Oxford University Press to del
Slide 18: RM Education
RM EDUCATION Revenue Adjusted Operating Profit • Adjusted operating profits up 13% to £6.6m • Revenues down 8% - Managed Services -15%. Reduced BSF 111.9 7.7 spend (-£8m) partially offset by new 6.6 contracts (+£3m) 5.8 £m £m 80.2 77.0 5.5 - Infrastructure -5% following 2016 70.6 restructure - Digit
Slide 19: RM Education
RM EDUCATION Unwind of legacy operations continues to DIVISIONS more than offset underlying growth Managed Services Building Schools for the Future (BSF) contracts Retention rates of 94% continue to trade through until 2019 BSF revenues reduced to 40% of managed services portfolio in 2017 (£11
Slide 20: Summary & Outlook
SUMMARY & OUTLOOK Strong results delivering 17% increase in adjusted operating profits Acquisition of The Consortium completed with synergy outlook now double initial estimate Strong growth in operating margins Good cash generation Robust balance sheet Earnings per share growth Capacity for dividend
Slide 21: Appendix
RM pic Appendix
Slide 22: Income Statement
INCOME STATEMENT 12 MONTHS TO 30 NOVEMBER 2017 2016 £M ADJUSTED ADJUSTMENTS TOTAL ADJUSTED ADJUSTMENTS TOTAL Revenue 185.9 - 185.9 167.6 - 167.6 Cost of sales (112.9) - (112.9) (100.4) - (100.4) Gross profit 73.0 - 73.0 67.3 - 67.3 Gross profit % 39.3% - 39.3% 40.1% - 40.1% Operating expenses (50.9)
Slide 23: Cash Flow
CASH FLOW OPERATING CASH FLOWS - £M 2017 2016 Profit from operations 16.2 15.9 Amortisation & impairment of intangibles 1.1 0.3 Acquisition related costs 2.6 0.5 Depreciation & impairment of PPE 2.3 2.2 Share-based payments 0.8 1.0 Provisions 2.0 2.6 Other adjustments (0.6) 1.4 Operating cash flows
Slide 24: Balance Sheet
BALANCE SHEET £M 30 NOV 2017 30 NOV 2016 Goodwill 45.2 14.1 Intangible assets 20.4 0.7 Property, plant & equipment 10.4 6.2 Defined benefit pension surplus 0.5 - Other receivables 1.1 1.2 Deferred tax assets 6.5 8.8 Total non-current assets 84.0 30.9 Inventories 19.4 10.7 Trade & other receivables 2
Slide 25: Pupil Projections
PUPIL PROJECTIONS Full time equivalent pupil projections for state schools in England 2007 to 2025 5,500 Full-time equivalent pupils (000s) 4,800 4677 4504 Predicted increase (2016-25) of 173,000 FTE pupils 4,100 4004 Equivalent to c.650 averaged sized primary schools 3,400 3325 2955 Predicted incre
Slide 26: School Staff Costs
SCHOOL STAFF COSTS Employer State Pension and NI contributions as % of employee earnings, FY14 – FY19 20 National Insurance contributions as a % of employee earnings Pension contributions as a % of employee earnings 16.5% 15 14.1% Increases in both pension (2.4% increase) and National Insurance cont