Slide 1: RM plc – Six months ended 31 March 2009
RM plc Six months ended 31 March 2009 Terry Sweeney Chief Executive Officer Mike Greig Chief Financial Officer investors’ blog: wordpress.rminvestors.com
Slide 2: Agenda
Agenda g Headlines Financial Review Business Review Outlook and Prospects Questions 2
Slide 3: Headlines
Headlines strong start to the year Revenue up 21% Order intake significantly up Committed revenues up to £425m RM Group Shareholder return: dividend up 5% RM Learningg RM Education RM Assessment Resources I t International ti l Technologies (inc. Curriculum Software) and Data ICT infrastructure Gene
Slide 4: Financial headlines
Financial headlines Six months to Mar Year to Sep 2009 2008 2008 Revenue £141.9m £117.7m £289.5m Adjusted* profit from operations £0.8m £(0.5)m £14.6m Adjusted* profit before tax £1.0m £0.6m £16.4m Adjusted* EPS 0 8p 0.8p 0 5p 0.5p 13 1p 13.1p Dividend per share 1.32p 1.26p 5.81p Operating p g cash
Slide 5: Revenue & profit by division
Revenue & profit by division first half not a good indicator of full-year full year outcome RM Education RM Learning Resources RM Assessment £m Technologies (inc Curriculum and Data Total (inc Computrac) Software) Revenue 106.1 27.9 7.9 141.9 H1-2009 Divisional Profit 1.8 1.0 0.4 3.2 BSF bid costs (
Slide 6: Revenue
Revenue +£24 2m +£24.2m RM Learning Technologies: +£21.6m (+26%) First half Full year Organic growth: +£13.5m (16%) BSF: +£9.2m (£11.3m vs. £2.1m) Other organic growth: +£4.3m (5%) First time inclusion of Computrac: £7.5m £7 5m RM Education Resources: +£1.8m General resources: +17% Tesco: new combin
Slide 7: Divisional profit
Divisional profit +£0 4m +£0.4m Divisional profit: £3.2m First half Full year Before f expensed BSF bid costs off £2.0m (H1-2008: £2.5m) RM Learning Technologies: £1.8m Software-as-a-Service businesses maturing Learning platforms / IntegrisG2 Hardware: $-rate well-managed 2004 2005 2006 2007 2008 20
Slide 8: Income statement
Income statement H1-2009 H1-2008 FY-2008 £m Total Amortisation of Adjusted Adjusted Adjusted acquisition related intangible assets Revenue 141.9 141.9 117.7 289.5 Cost of sales (104.2) (104.2) (84.6) (211.7) Gross profit 37.7 37.7 33.1 77.8 Selling and distribution (20.6) (20.6) (18.7) (35.1) Resear
Slide 9: Balance sheet
Balance sheet Seasonal balance sheet Balance sheet 31 Mar 31 Mar 30 Sep £m 2009 2008 2008 Goodwill and acquisition intangibles 36.8 31.8 34.6 Acquisitions Property, plant & equipment and software intangibles 22.8 22.5 24.7 H1-2009: Computrac Interest in associates 1.0 - 1.0 (H2-2008: Easytrace, Incl
Slide 10: Cash and working capital
Cash and working g capital p Long-term bank facilities Cash and net funds 31 Mar 31 Mar 30 Sep £m 2009 2008 2008 £25m committed five-year f f facility with HSBC Cash & cash equivalents 12.0 13.8 18.3 Long-term borrowings (8.0) - (1.0) signed July 2008 Net cash 4.0 13.8 17.3 £8m drawn at 31 March 200
Slide 11: Pensions
Pensions DB pension scheme closed to new entrants since 2002 Deficit (IAS19) at March 2009: £8.3m Increase due to market movements 31 Mar 31 Mar 30 Sep £m 2009 2008 2008 Assets – poor investment returns Assets 73.0 79.4 76.2 Liabilities (81.3) (78.9) (76.8) Liabilities discounted using a 6.5% discou
Slide 12: State of play
State of play p y Education spending Short-term education spending plans confirmed f UK | Budget April 2009: real-terms education budget growth in GY2009/10 and GY2010/11 | Education capital spending brought forward into GY2009/10 | HM-Treasury backing for BSF PFI schemes USA | American Recovery and
Slide 13: Strategy
Strategy gy Education markets only Education customers need suppliers with specialist understanding Deep knowledge of market needs Values shared with the customer base …and and we can further develop our world world-class class education expertise Broadly-based education Group p Target wider educati
Slide 14: RM priorities
RM priorities p Continuing to execute our strategy Broadening educational product range Building international presence Managing costs and cash prudently Controlling permanent headcount Increasing use of offshore resource RM India headcount: 250 Tighter management of capital expenditure and working
Slide 15: RM Learning Technologies
RM Learning g Technologies g Strong organic growth in the period UK RM Learning Technologies organic growth: 16% Market-leading product range Community Connect 4: >1,000 schools Kaleidos Learning Platform: c.2million users RM One: new and improved version EasyTrace: y identityy and access management
Slide 16: RM Learning Technologies
RM Learning g Technologies g Leading BSF ICT supplier Mar 2009 £m BSF Committed for f the long-term Committed revenues 200 More selective bidding activity …consortium nature of most bids means best ICT doesn’t guarantee success 18 schools h l openingi ini H2-2009 H2 2009 Net contribution from FY-201
Slide 17: RM Education Resources
RM Education Resources General Resources Strong organic growth in period Acquisition General resources: +17% Pisces Art TTS order intake exc. Tesco: +40% Art and Crafts Market share growth April 2009 est. £0.5m Broadening product range Arts and crafts School Spending: £1.3bn Secondary and Primary Sc
Slide 18: RM Education Resources
RM Education Resources Curriculum Software UK curriculum software market remains very tough International opportunities Particularly USA and Australia Lightbox Education reorganisation Annual cost savings: c.£1.0m; one-off cost: £0.4m Clear focus Ed Education ti software ft ffor iinternational t ti
Slide 19: RM Assessment & Data
RM Assessment & Data Excellent operational delivery 1.9 million papers marked in H1-2009 (H1-2008: 1.4 million) c.3.2 million papers to be marked over summer (summer 2008: 2.7m) Broader range of customers, increasing penetration Ed Education ti performance f d data t analysis l i and d delivery d li
Slide 20: International
International US Framework win Immediate Computrac / RM Educational Software f integration complete Cobb County Single sales force selling combined product range Up to Strengthened operational management team: new COO and CFO Jan 2009 $32m c 6 000 interactive classroom installations this summer c.6,
Slide 21: Outlook
Outlook First half not a good indicator of full-year outcome UK education budget for GY2009/10 up 6% Revenue growth for full year BSF Computrac General education resources …Management expectations for the year remain unchanged 21
Slide 22: Looking ahead
Looking g ahead Building a resilient business Committed revenues Long-term contracts Repeat customers Diverse funding streams and geographies Conservative financial management g Strong balance sheet Managing costs and cash prudently Products that help teachers to teach and learners to learn Unique e
Slide 23: Appendices
Appendices pp 23
Slide 24: RM Group structure
RM Group p structure RM Group RM Learning RM Education RM A Assessmentt Technologies Resources and Data (inc. Computrac) (inc. Curriculum Software) RM TTS MES Computrac Special Direct Sentinel SpaceKraft RM Inclusive (25%) EasyTrace Pisces Art Forvus DACTA School Management Solutions Lightbox Educat
Slide 25: Acquisitions
Acquisitions q Business Activities Date Net cost 3T Productions Interactive design and development Mar 2000 £5 5m £5.5m Softease Educational software Oct 2001 £4.8m Helicon Educational content Feb 2002 £0.7m Forvus Data analysis Jul 2003 £4 0m £4.0m peakschoolhaus Education inspection services Oct 2
Slide 26: UK market
UK market long term trends long-term 100 6 90 5 80 70 Spend (cash) 4 60 Spend (real terms 2006-07 values) Spend as %age of GDP (right-hand (right hand axis) 50 3 £bn % 40 2 30 20 1 10 0 0 Source: HM Treasury / Institute for Fiscal Studies 26
Slide 27: Education projects
Education projects contracts Education Projects Awarded Value Term Extension Dudley Grid for Learning Jan 1999 >£50m 10 years +2 years Classroom 2000 Lot 3 (Northern Ireland) Feb 2003 £21m complete QCA – Key Stage 3 online testing Feb 2003 £23m 6 years South Yorkshire eLearning Programme May 2003 £3
Slide 28: Education projects – accounting treatment and financial impact
Education projects accounting treatment and financial impact Pre-contract costs not taken to the balance sheet unless contract award virtually certain In practice appointment as selected bidder Separable elements Accounted for using relevant Group accounting policy for that element Revenue and profi
Slide 29: BSF contract awards
BSF contract awards Local Authority Type ICT Supplier Wave Constructor Solihull ICT RM 1 BAM/HBG Bristol Consortium Northgate Pathfinder Skanska Bradford Consortium Sun Pathfinder Amey/Costain Newcastle Consortium In-house 1 Aura Lancashire Consortium Redstone 1 Bovis Lend Lease Sheffield Consortium
Slide 30: BSF typical project
BSF typical project Allocation of spend – typical BSF project Competitive Dialogue Average value of ICT contract: £13m Typical Data centre Stage # bidders Central systems and software 10% Learning Platform OJEU advertisement User equipment Pre-qualification questionnaire 5-10 In-school systems and s