Slide 1: RM Inspiring Engaging Education
RM Inspiring ; Engaging Education § (ecming
Slide 2: RM plc Six months to 31 March 2011
RM plc Six months to 31 March 2011 Terry Sweeney, CEO Iain McIntosh, CFO
Slide 3: Agenda
Agenda Headlines Strategy Financial review Operating review - Learning Technologies - Education Resources - Assessment and Data Looking ahead Questions
Slide 4: Headlines
Headlines Inspiring engaging learning 4
Slide 5: Headlines: Continuing to execute our strategy
Headlines Continuing to execute our strategy • Challenging market conditions in UK and US • Decline in revenue, as previously anticipated • Continue to attract new business and win major long-term contracts • Committed revenues up 12% to £436m at March 2011 (March 2010: £390m) • Modest first half lo
Slide 6: Key financials
Headlines Key financials Six months to March Year to Sept 2010 2011 2010 Revenue £156.4m £133.0m £380.1m Adjusted* operating profit / (loss) £1.2m £(1.4)m £19.9m Adjusted* profit / (loss) before tax £1.2m £(1.4)m £19.6m Adjusted* basic EPS 1.0p (1.1)p 16.3p Dividend per share 1.39p 1.47p 6.64p Net c
Slide 7: UK market landscape
UK market landscape Government policy changes Spending Review • 0.1% pa real terms increase in English maintained school spend • Introduction of the Pupil Premium • Substantial cut in capital budgets Schools White Paper • Dedicated Schools Grant – single stream funding • Introduction of the English
Slide 8: US market landscape
US market landscape • The market remains very challenging due to budgetary constraints • Stimulus funding ends November 2011 • US interactive whiteboard market decreased 16% YoY in the last 3 months to December 2010* • 35% of classrooms currently have interactive whiteboards (75% for UK) • Commitmen
Slide 9: Our business
Our business Total focus on education Customer Assessment and Learning Education Data Technologies Resources Awarding bodies E-marking E-testing National Data collection, analysis, Learning platforms Online learning Governments reporting environments Local Authorities / Data collection and reporting
Slide 10: Our business strategy
Our business strategy Total Focus on Education • UK brand leadership Diversification across Education • Resilient to policy change • Broad offering and customer base Innovation • World leading assessment platforms • Cloud-based enterprise solutions • Teacher-led innovation Operational Efficiency • R
Slide 11: Our strengths
Our strengths UK market position • In England, over 80% of primary schools and 40% of secondary bought from RM Group in the last 12 months • Leading provider of E-marking services to UK examination awarding bodies Financially secure • £7.3m net funds less deferred consideration • £53m banking facili
Slide 12: Shareholder return
Shareholder return Uninterrupted full-year dividend growth since 2002 Dividend RM 3 full-year compound annual growth rate: 7% RM DPS Interim + full year RM DPS Interim FTSE Small Cap DPS FTSE 250 DPS £17.1m dividends paid in the last 3 years 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 12
Slide 13: Financial Review
Financial Review Inspiring engaging learning 13
Slide 14: Group revenue and profit
Group revenue and profit +10% £156.4m -15% Interim profitability is not a good indicator of full-year £141.9m 10.3 +21% +30% outcome -20% £133.0m H1 7.9 +11% 8.2 £117.7m 38.3 FY 26.5 +45% 7.1 +6% -2% 37.5 £19.9m 25.0 £17.7m £14.6m +26% +0% -19% 107.5 107.8 85.6 87.3 H1-2008 H1-2009 H1-2010 H1-2011 2
Slide 15: Income statement
Income statement Six months to 31 March Year to 30 Sep 2010 2011 2011 2011 2010 £m Adjusted Adjusted Adjustments* Total Adjusted Revenue 156.4 133.0 - 133.0 380.1 Gross profit 41.9 38.3 - 38.3 99.7 Gross profit % 26.8% 28.8% - 28.8% 26.2% Operating expenses (40.7) (39.7) (0.4) (40.1) (79.8) Profit /
Slide 16: Income statement: year-on-year difference
Income statement Difference year-on-year £’000 Six months to March Difference 2010 2011 Adjusted operating profit / (loss) 1,205 (1,365) (2,570) Add back: restructuring costs 801 1,788 987 2,006 423 (1,583) Add back: Share-based payment charges 528 1,235 707 Adjusted operating profit before restruct
Slide 17: Operational efficiency
Operational efficiency Off-shoring • Services now carried out in India: - Software development - Internal IT support - Online customer support - Primary schools accounts receivable - Headcount up 41% to 465 at 31 March 2011 (2010: 329) - Expansion in seats in 2011 to c.685 Restructuring • Incurred r
Slide 18: Cash flow summary
Cash flow summary £m Six months to March 2010 2011 Profit / (loss) from operations 0.4 (1.8) Amortisation 1.4 0.9 Depreciation 3.9 3.5 Share-based payments 0.5 1.2 Other adjustments (0.6) 1.2 Operating cash flows before movements in working capital 5.6 5.0 (Increase) / decrease in inventories (2.0)
Slide 19: Balance sheet
Balance sheet Six months to March Year to 30 Sep Cash positive £m 2010 2011 2010 • Net funds less deferred Goodwill and acquisition intangibles 38.5 37.6 37.9 consideration £7.3m Property, plant & equipment and software intangibles 23.7 22.8 24.2 (2010: £(1.5)m) Interest in associates 1.0 1.1 1.0 Ot
Slide 20: Revenue visibility
Revenue visibility Learning Technologies Education Resources <1 Year Assessment and Data 1-2 Years >2 Years £436m £425m +12% +29% -8% 11.7% £390m £329m 138 3.7% +46% 145 -19% +18% 117 99 97 +0% 86 -16% 72 +35% 86 +35% +4% 201 201 194 -1% +0% 84.6% 144 H1-2008 H1-2009 H1-2010 H1 - 2011 Committed reve
Slide 21: Change of year-end
Change of year-end Financial period of fourteen months to November 2011 • Rationale – Separates planning from busiest operational period – Separates close of financial year from busiest operational period – November aligns with business planning and operational cycles ...and avoids calendar year-end
Slide 22: Operating review
Operating review Inspiring engaging learning 22
Slide 23: Learning Technologies: Update
Learning Technologies Update UK UK long-term contract wins H1-2011 Responding to market conditions: Customer Activity Term Value Award Date • Continuing to innovate e.g. RM Learning Dudley Managed 10 years £30m Mar-11 Platform 11.01 service • More for less e.g. Broadband services Newham BSF 9 years
Slide 24: Learning Technologies: Financial performance
Learning Technologies Financial performance £107.5m +0% £107.8m +26% -19% 2.0 +40% 2.8 8.7 Interim profitability is not a good indicator of full-year +30% 11.3 -4% outcome £85.7m £85.6m -66% £87.3m 1.9 2.7 £9.3m 1.0 +5% 3.8 £8.0m +770% £6.0m RoW / AP +17% FY -3% -14% US H1 96.8 93.7 UK 82.7 80.8 200
Slide 25: Education Resources: Update
Education Resources Update • 5% like-for-like organic growth excluding DACTA • TTS continue excellent growth, both UK and export, revenues up 16% on last year • TTS launched more than 2,800 new products, over 350 developed in-house • LEGO® Education Europe; RM joint venture with LEGO® successfully l
Slide 26: Education Resources: Financial performance
Education Resources Financial performance Interim profitability is not a good indicator of full-year £38.3m £37.5m outcome † 5% organic -2% † growth excluding +45% £7.7m DACTA £7.1m H1 £26.5m £6.4m FY £25.0m +6% £3.1m £1.6m £0.9m £0.9m H1-2008 H1-2009 H1-2010 H1-2011 2008 2009 2010 2011 Revenue* Adj
Slide 27: Assessment and Data: Update
Assessment and Data Update • 76% growth in long-term committed revenues to £51m (2010: £29m) E-Marking wins Scottish Qualifications Authority MeritTrac (India) Renewals Cambridge Assessment Six year E-marking contract extension International Baccalaureate extension to 2020 (£7.0m) Data Services NPDA
Slide 28: Assessment and Data: Financial performance
Assessment and Data Financial performance Interim profitability is not a good indicator of full-year outcome £10.3m £2.8m £2.6m +30% H1 -20% +11% £8.2m FY £7.9m £2.1m £7.1m £1.2m £1.0m £0.6m £0.5m H1-2008 H1-2009 H1-2010 H1 2011 2008 2009 2010 2011 Revenue Adjusted operating profit 28
Slide 29: Looking ahead
Looking ahead Inspiring engaging learning 29
Slide 30: Outlook
Outlook Highly seasonal business Focus on operational delivery in H2-2011 Challenging market conditions in UK and US Rigorous cost base management - Early action to adjust cost base in H1-2011 - Protecting Group profitability Continued operating margin improvement 30
Slide 31: Questions
Questions Inspiring engaging learning 31
Slide 32: Thank you for listening.
Thank you for listening. For further information, or a copy of this presentation, please contact us on 01235 854 765 or email csimpson@rm.com
Slide 33: RM Inspiring Engaging Education
RM Inspiring ; Engaging Education § (ecming