Slide 1: Preliminary Results
Preliminary Results Technology and Resources for Education 15 February 2022 Neil Martin Mark Berry Nigel Kirkland Chief Executive Officer Chief Financial Officer Chief Information Officer © 2021, RM plc
Slide 2: Agenda
Agenda z Highlights Financial Review Strategy & Outlook Q&A Neil Martin CEO Mark Berry CFO Neil Martin CEO Nigel Kirkland CIO
Slide 3: 2021 Highlights
2021 Highlights Improved 2021 performance despite continued COVID-19 disruption Satisfactory results versus the prior year taking into account continued disruption Revenue up 12% driven by strong trading in RM Resources enabling adjusted operating profit improvement of 22% Balance sheet remains resi
Slide 4: Financial Summary
Financial Summary anat: RM plc
Slide 5: FY21 Financial Overview
FY21 Financial Overview Resilient performance following school closures and exam cancellations Adjusted* Adjusted* Revenue Operating Profit Diluted EPS Net Debt Dividend £211m £18.5m 16.4p £18.3m 4.7p £18.5m 16.4p £18.3m 4.7p £211m £189m £15.1m 13.6p 3.0p £1.3m 2020 2021 2020 2021 2020 2021 2020 202
Slide 6: FY21 Revenue and profit development
FY21 Revenue and profit development Revenue and profit increases driven by strong recovery in Resources Revenue up 12% Adjusted operating profit up 22% £m £m +£3.4m +£21.9m 24.0 215.0 22.0 210.0 20.0 205.0 200.0 18.0 195.0 16.0 190.0 14.0 185.0 12.0 180.0 175.0 10.0 2020 RM RM RM 2021 2020 RM RM RM
Slide 7: FY21 Income Statement
FY21 Income Statement £m 2021 2020 Variance Revenue 210.9 189.0 +12% Adjusted Operating Profit 18.5 15.1 +22% Adjusted Operating Margin 8.8% 8.0% +0.8pp Interest (1.4) (1.0) +32% Interest costs reflect debt facility charges and finance costs related to the defined benefit pension schemes Adjusted Pr
Slide 8: Cashflow
Cashflow Good operating cash generation offset by planned spend on key investment programmes +£8.4m +£17.3m -£8.9m -£11.8m -£4.5m -£3.9m -£1.3m -£3.9m -£17.0m Net Debt £18.3m (November 2020: £1.3m) Adjustments mainly comprise spend on new IT platform and dual running costs Net capex comprises capita
Slide 9: Pension
Pension Surplus driven by returns on scheme assets; triennial valuation nearing conclusion 4% 40 30 IAS19 Surplus/(Deficit) level (£m) 20 3% 10 0 -10 2% -20 -30 1% -40 2015 2016 2017 2018 2019 2020 2021 Pension deficit Discount rate RPI inflation IAS19 pension deficit improved by £49.1m from 30 Nov
Slide 10: 2021 Divisional Review
2021 Divisional Review RM plc
Slide 11: RM Resources
RM Resources Strong recovery despite school closures and material cost inflation Revenue +24% vs 2020 with similar open school days Rolling 4 week order intake UK revenue +4% vs. 2019 International revenue -18% vs. 2019 2021 Strong recovery following re-opening of UK schools TTS brand grew market sh
Slide 12: RM Assessment
RM Assessment Resilient performance despite COVID-19 related exam cancellations Revenue In line with prior year as partial recovery of global exam activity was offset by insourcing by a key customer in Geography Customers Exam Activity Exam Activity 2020 ? vs.2020 vs. 2019 UK School Exams 3 +10% -95
Slide 13: RM Technology
RM Technology Revenues stable as schools faced continued disruption Revenue In line with prior year as schools maintained systems despite closures in H1 Revenue Adjusted Operating Profit £m £m Operating profit lower driven by: 65.0 64.6 Lower gross margins due to revenue mix 9.3 Increased operating
Slide 14: Strategy & Outlook
Strategy & Outlook Investment case for the future
Slide 15: Taking RM Forward
Taking RM Forward Building on resilience to unlock growth Market opportunity Strategy reset Enablers to unlock Strong cash through change growth generation Changing education Building on strong market New technology platform, Well positioned for landscape is creating and brand foundations, operating
Slide 16: Changing Market Drivers
Changing Market Drivers Use of technology in Digital delivery of Aggregated School Education Assessment Procurement Accelerating as schools Growing engagement on Growth in larger school progress on long digital digital solutions post groups is key disrupter in maturity journey COVID-19 disruption bu
Slide 17: Strategic Objectives
Strategic Objectives Why is it important Where are we today In progress Reach more Defined target customers RM Resources Refreshed propositions Critical to optimize market share RM Assessment New technology platform customers RM Technology New structure and leadership Improve Optimise return on inve
Slide 18: Enablers to unlock growth
Enablers to unlock growth Building a stronger business New digital and automated platforms Portfolio & Operating Model Talent & culture
Slide 19: Markets
Markets vv _ Finance Vendor Portal —trecCommerce if o= e : vA 8 v La = .£ = a. € ili ti Sy 19
Slide 20: Evolution – What is it ?
Evolution – What is it ? Programme of activity to transform and improve the business processes and technology Evolution is underpinned by cloud technology that will : Allow us to replace out of date and legacy core technology systems Re-design inefficient business processes Integrate our business cr
Slide 21: Evolution Timeline Summary
Evolution Timeline Summary What we’ve achieved Our focus now What’s next Interim Product Warehouse eProcurement pilot Information Management + Supplier Portal Management Manual release Contact Centre, Digital Go-live TTS Schools & Finance, Go-live Assessment Warehouse and Go-live Automation Offline
Slide 22: Evolution – Business outcome
Evolution – Business outcome The business outcomes can be grouped into four areas: Operational performance and Customer Experience Revenue Supply chain Generation optimisation Secure technology
Slide 23: Exploiting portfolio synergies
Exploiting portfolio synergies The need for greater customer focus has led to a new divisional structure and target operating model with a focus on leveraging revenue and operational synergies to maximise the value of the Group over the sum of its parts Common purpose and vision Strategic partnershi
Slide 24: Talent and Culture
Talent and Culture Investment in key leadership is a fundamental building block Greater strategic focus, empowerment and talent development will build on a passionate culture Common purpose and vision Strategic partnerships & Group customer leverage RESOURCES ASSESSMENT TECHNOLOGY Curriculum Digital
Slide 25: Phased approach
Phased approach Strategy Transition Performance Re-set Phase Phase Actions taken to date Enablers to growth Leverage the investment • Strategy reset launched • Embedding and maturing new • Greater customer and market • Structure changed to 3 systems and leadership focus divisional leadership teams •
Slide 26: Summary
Summary 2021 delivered a satisfactory improvement in financial performance The market landscape is changing Capitalising on the opportunities requires RM to adapt Clearer strategic focus Improved commercial execution Strategy reset with good early progress Transition phase will deliver the change Re
Slide 27: Q&A
Q&A
Slide 28: Appendix
Appendix I. it o talking |STEAM
Slide 29: Income Statement
Income Statement YEAR TO 30 NOVEMBER 2021 2020 £M ADJUSTED ADJUSTMENTS TOTAL ADJUSTED ADJUSTMENTS TOTAL Revenue 210.9 - 210.9 189.0 - 189.0 Cost of sales (140.2) - (140.2) (121.6) (0.4) (121.9) Gross profit 70.6 - 70.6 67.4 (0.4) 67.1 Gross profit % 33.5% - 33.5% 35.7% - 35.5% Operating expenses (52
Slide 30: Cashflow
Cashflow YEAR TO 30 NOVEMBER 2021 2020 OPERATING CASH FLOWS - £M ADJUSTED ADJUSTMENTS TOTAL ADJUSTED ADJUSTMENTS TOTAL Profit from operations 18.5 (11.5) 7.0 15.1 (4.5) 10.6 Amortisation & impairment of intangibles - 2.4 2.4 1.0 2.0 3.0 Depreciation & impairment of PPE 4.3 - 4.3 3.7 - 3.7 Gain on di
Slide 31: Balance Sheet
Balance Sheet £M 30 NOVEMBER 2021 30 NOVEMBER 2020 Goodwill 49.2 49.3 Intangible assets 23.4 19.0 Property, plant & equipment 16.2 8.4 Defined benefit pension surplus 35.0 0.7 Other receivables 0.1 0.1 Right of use Asset 18.0 19.4 Contract fulfilment assets 4.2 3.4 Deferred tax assets 0.2 5.3 Total
Slide 32: Divisional Summary incl FY19
Divisional Summary incl FY19 Revenue £M Adjusted Operating Margin 2021 2020 Variance 2019 Variance 2021 2020 Variance 2019 Variance RM Resources 114.4 92.4 +22.0 114.5 -0.1 RM Resources 8.8% 3.3% +5.5pp 12.0% -3.2pp RM Assessment 31.9 31.6 +0.3 37.7 -5.8 RM Assessment 17.9% 20.9% -3.0pp 23.2% -5.3pp
Slide 33: Program spend/impact of IAS 38 change
Program spend/impact of IAS 38 change Spend £M 2019 2020 2021 To date Capex 0.2 0.8 6.9 7.9 Operating cost 2.2 1.7 8.3 12.2 Total 2.4 2.5 15.2 20.1 £12.2m of capital expenditure re-classified as operating costs following IAS 38 accounting update Capex comprises website, design and customization cost
Slide 34: RM Resources
RM Resources Innovative curriculum resources, inspiring content and outstanding service UK Market leader with 2 distinctive brands, TTS and Consortium, RM Resources improves learning outcomes by providing unique WHAT WE DO and innovative teaching resources and education supplies to schools and nurse
Slide 35: RM Assessment
RM Assessment Enhancing the role digital assessment solutions play throughout lifelong learning journey We help our customers accelerate their adoption of digital and WHAT WE DO transform assessments to unlock teaching and learning benefits. We don’t just provide a technology platform Global Assessm
Slide 36: RM Technology
RM Technology Helping educators harness technology to improve the learning environment Strategic IT services partner for schools and colleges to deliver WHAT WE DO a technology environment that improves learning outcomes and make the most of their IT investments UK IT Services in Education Current m
Slide 37: UK Education Policy Focus
UK Education Policy Focus Spend per pupil fell by 9% in real terms between 2010 - 2019 Government funding commitments are planned to almost recover to 2010 levels by 2023 Source: HM Treasury