Rm Plc · LSE:RM.
Rm — Merger or Acquisition (February 2017)
15 slides from Rm's merger presentation, Feb 7, 2017
Slide 1: Proposed Acquisition of Connect Education & Care
PROPOSED ACQUISITION OF CONNECT EDUCATION & CARE © 2017, RM plc – 07 February 2017
Slide 2: Transaction Highlights
TRANSACTION HIGHLIGHTS • RM plc (“RM”) proposed acquisition of the Education & Care business of Connect Group PLC (“Connect Education & Care”) ̶ Gross consideration of £56.5m, on a cash and debt free basis ̶ Implied 2016 EBITDA1 multiple of 6.3x (ex. synergies), 5.1x (incl. synergies) ̶ RM will also
Slide 3: Connect Education & Care: Overview
EDUCATION & CARE BUSINESS OF CONNECT CONNECT EDUCATION & CARE: OVERVIEW GROUP PLC: OVERVIEW DESCRIPTION REVENUE BREAKDOWN Leading independent supplier of branded and own • 97% UK revenue brand products primarily to educational institutions • 3% International revenue • Over 30,000 customers, predomin
Slide 4: Education Resources: Market Overview
EDUCATION RESOURCES: MARKET OVERVIEW1 ADDRESSABLE MARKET (2016E) UK SCHOOL BUDGETS International Historical Expected Forecast schools 9% 60 £53bn £54bn £51bn £51bn £51bn £52bn Early Years 5% UK schools UK schools 40 (Independent) (Primary) 40% 13% £2.2bn 20 UK schools - (Secondary) UK schools: £2.0b
Slide 5: Strategic Rationale
STRATEGIC RATIONALE Respective brands would be retained given importance of brand identity Become a market Complementary Better balanced Improved UK leader product offering product portfolio regional presence Creation of a market Connect Education & The combined business The combined business leader
Slide 6: Enlarged Group – Side by Side
ENLARGED GROUP – SIDE BY SIDE Combining strengths NATIONAL REGIONAL SPECIALIST GENERALIST ENLARGED GROUP Strategic focus Curriculum resources specialist Education supplies generalist No. staff c. 225 FTE c. 300 FTE • A market leader in education resources No. products 19,000 40,000 Product split 35%
Slide 7: Synergies
SYNERGIES • £2.0m total cost synergies ̶ £2.0m annual pre-tax cost savings before integration costs ̶ Full run-rate synergies expected to be achieved by 12 months following completion ̶ Cost to achieve of £2.5m expected to be incurred by 12 months following completion • Cost synergies include ̶ Opti
Slide 8: Integration Overview
INTEGRATION OVERVIEW INTEGRATION PLANNING STRUCTURE • A detailed integration plan, led by senior executives of RM, TTS and Connect Education & Care, will be RM Board established. The purpose of the plan is to: ̶ Deliver on the synergies; Integration Steering Committee ̶ Ensure excellent customer, su
Slide 9: Financing
FINANCING • New unsecured revolving credit facility of £75m, to replace the existing £30m facility upon completion ̶ Provided by Barclays Bank plc and HSBC Bank plc • Maturity ̶ 3 years from completion (with extension options) with scheduled graduated amortisation to £60m starting 12 months from fir
Slide 10: Appendix
APPENDIX
Slide 11: Connect Education & Care: Business Profile
CONNECT EDUCATION & CARE: BUSINESS PROFILE Connect Education & Care is a leading independent supplier of branded and own brand products primarily to educational institutions • Well established business, trading for over 40 years • Supplies over 30,000 customers, predominantly in the UK • Extensive p
Slide 12: Connect Education & Care: Customer Segments and Product Offering
CONNECT EDUCATION & CARE: BUSINESS PROFILE CUSTOMER SEGMENTS SERVED PRODUCT OFFERING • The education sector in the UK and abroad forms • Best selling product groups are consumables used the largest customer group at c.95% of FY16 in the education sector (e.g. pencils, paper, exercise revenue books,
Slide 13: TTS: Business Profile
TTS: BUSINESS PROFILE CUSTOMER SEGMENTS SERVED PRODUCT OFFERING • Well established education curriculum resources • Specialists in curriculum focused, added value business with strength in Early Years and Primary education resources education • TTS‘s product offering covers more niche product • Prim
Slide 14: Trading History
TRADING HISTORY REVENUE ADJUSTED OPERATING PROFIT ADJUSTED OPERATING MARGIN 17.5% 17.5% 63.5 11.1 17.3% 59.1 58.8 10.3 10.2 50.7 15.5% 7.2 £m £m 2013 2014 2015 2016 2013 2014 2015 2016 2013 2014 2015 2016 REVENUE1 O P E R A T I N G P R O F I T 1,2 OPERATING MARGIN2 63.8 64.9 65.9 64.8 7.4 7.8 7.8 7.
Slide 15: Disclaimer
DISCLAIMER IMPORTANT NOTICE NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION IN WHOLE OR IN PART IN, INTO OR FROM ANY JURISDICTION WHERE TO DO SO WOULD CONSTITUTE A VIOLATION OF THE RELEVANT LAWS OF SUCH JURISDICTION. This document is not a prospectus and no investment decision should be made by any per