14 December 2023

RM plc

Full year trading update

RM plc (“RM”, the “Company”), a leading global educational technology, digital learning and assessment solution provider, is pleased to provide an update on the Company's anticipated results for the year ended 30 November 2023 ("FY23") and progress of the Consortium business closure.

Trading update

Subject to completion of the FY23 audit, the Company anticipates that its headline results for 2023 will show revenue from continuing operations of c.£196m (FY22: £214.2m), including c.£19m from Consortium (FY22: £33.6m); adjusted operating profit is in line with guidance.

The Assessment division continues to grow, with increased revenue and profitability reflecting the emerging opportunities in the global digital assessment market. As anticipated, the Technology division has returned to profitability in the second half. TTS International performed well in the year with TTS UK held back in a more challenged UK market and the Company remains excited by the opportunities for its TTS product range across its geographic markets.

Net debt

The Company continues to focus on reducing its net debt, which has decreased from the half year and is in line with market expectations.

As confirmed last month, RM reached agreement with its lenders to extend their unconditional waivers for its 30 November EBITDA financial covenant.

The renegotiation of an amendment and extension of its lending facility, which matures in July 2025 is ongoing and the Company still expects the renegotiation to have concluded by the end of Q1 2024.

Closure of Consortium

As announced last month, the Board took the decision to close the loss-making Consortium business, part of RM Resources, from the end of December 2023. The revenue from Consortium in FY23 is estimated to be c.£19m. This decision to close the business is in line with the future strategic direction for the Company and will also enable RM Resources management to focus on its successful and higher margin TTS business.

The business closure is progressing to plan, Consortium ceased taking new customer orders in the first week of December and options to transfer to TTS or sell the remaining stock are progressing. As previously guided, the accounts for the year ended 30 November 2023 are expected to show a material write-off of the carrying value of Consortium and its related assets as a non-cash item, and include an additional provision for exit costs. There is no cash impact from the closure in FY23.

At its full year results in the New Year the Company will unveil its new strategic roadmap and its plans to simplify the business and return to profitability.  It will also provide further details on the financial and operational impact of the Consortium closure.

Mark Cook, Chief Executive of RM, said 

“I am pleased to report that we expect RM to deliver results in line with market expectations in FY23. The strong performance from RM Assessment, as well as RM Technology’s return to profitability in H2, demonstrates the fundamental strengths in the business. Despite taking the difficult decision to close the loss-making Consortium business, there remain several exciting international opportunities for TTS, alongside a number of key structural drivers that provide us with a clear path to return to profitability in the future, underpinned by a new agreement with our lenders.

“I look forward to outlining RM’s new strategy to simplify the business at the FY results, as we continue to build a strong platform for growth.”

Contacts:

RM plc                     investorrelations@rm.com

Mark Cook, Chief Executive Officer 

Simon Goodwin, Chief Financial Officer

Fiona O’Nolan, Investor Relations, Equitory 

Headland Consultancy (Financial PR)                      +44 203 805 4822

Stephen Malthouse (smalthouse@headlandconsultancy.com)

Chloe Francklin (cfrancklin@headlandconsultancy.com)

Dan Mahoney (dmahoney@headlandconsultancy.com)

Notes to Editors:

RM provides market-leading products and services to educational institutions, exam bodies and international governments which improve, simplify and support education and learning. The education sector is transforming, and RM is well positioned to capitalise on this through its three divisions.

• RM Assessment is a leading provider of assessment software, supporting exam awarding bodies, universities, and governments worldwide to digitise their assessment delivery.
• RM Resources is the established provider of education resources for early years, primary schools, and secondary schools across the UK and to 80 countries internationally.
• RM Technology is a market-leading supplier of ICT software, technology and services to UK schools and colleges.

29 November 2023

RM plc

Bank covenants waiver agreement

RM plc, a global educational technology, digital learning and assessment solution provider (“RM”, the “Company”), announces that it has reached agreement with its lenders to extend its unconditional covenant waiver to cover the 30 November 2023 covenant test date.

As announced in its half year results on 9 August, the Company entered into discussions with its lenders to agree suitable waivers and amendments to its existing Facility. On 29 August the renegotiation of the waiver for the period ended 31 August 2023 was announced. In today’s announcement the Company confirms that it has received waivers from its lenders for its 30 November EBITDA financial covenant and continues to comply with the conditions of each lender with regards to that waiver and the respective Facility Agreement. This concludes the waiver negotiations for the financial year ending 30 November 2023.

The renegotiation of an amendment and extension of its lending facility, which matures in July 2025 is ongoing and the Company still expects the renegotiation to have concluded by the end of Q1 2024.

Mark Cook, Chief Executive of RM, commented:

"I am grateful for the continuing support of our lenders and the amendment to our facility’s covenants for the full year. Both lenders have held long term supportive relationships with the Company over many years and continue to support RM as it embarks on its plans to simplify the business, reduce its net debt, and return the Company to growth and profitability.”

Enquiries:

RM plc investorrelations@rm.com

Mark Cook, Chief Executive Officer

Simon Goodwin, Chief Financial Officer

Fiona O’Nolan, Investor Relations

Notes to editors

RM provides market-leading products and services to educational institutions, exam bodies and international governments which improve, simplify and support education and learning.

The education sector is transforming, and RM is well positioned to capitalise on this through its three divisions.

• RM Assessment is a leading provider of assessment software, supporting exam awarding bodies, universities, and governments worldwide to digitise their assessment delivery
• RM Technology is a market-leading supplier of ICT software, technology and services to UK schools and colleges
• RM Resources is the established provider of education resources for early years, primary schools, and secondary schools across the UK and to 80 countries internationally.

THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION FOR THE PURPOSES OF ARTICLE 7 OF THE UK VERSION OF THE MARKET ABUSE REGULATION (EU 596/2014) WHICH IS PART OF UK LAW BY VIRTUE OF THE EUROPEAN UNION (WITHDRAWAL) ACT 2018.

For immediate release

24 November 2023

RM plc

Strategy timetable and closure of the Consortium business

RM plc (“RM”, the “Company”), today announces in line with its strategy to be a leading global educational technology, digital learning and assessment solution provider, that the Board has taken the decision to close its loss-making Consortium business, part of the RM Resources division.

As announced by Mark Cook, CEO, at the half year results in August, focus in the second half has been on the development of a strategic roadmap for RM to create a simpler, more profitable business. This included a detailed review of RM’s portfolio to identify core areas of the business which were best placed to capitalise on the substantial EdTech opportunities. Full details of its strategic roadmap will be provided as part of RM’s full year results announcement in the New Year.

The Consortium business, the provider of education supplies and resources to schools, has experienced an extended period of underperformance following the negative impact of the rollout of a new ecommerce platform in 2022. Today the Company announces that it has taken the difficult decision to close this business from the end of December. The decision to close Consortium is in line with the future strategic direction for the Company and has been made with the full cooperation and support of its lenders. The decision will also enable RM Resources management to focus on its successful TTS business.

In the accounts for the year ending 30 November 2023, the Board expects to make a material write off of the carrying value of Consortium and its related assets as a non-cash item, and to make an additional provision for exit costs but there is not expected to be any cash impact in this current financial year.

The Company plans to issue a trading update in December for its financial year ending 30 November 2023.

Mark Cook, Chief Executive of RM, said

“The decision to simplify the business will enable us to better weather the macro challenges and build a platform for growth. Our 50-year heritage, leading market positions, IP, expertise, and deep customer knowledge, mean we are well positioned to take advantage of the structural drivers in the growing global EdTech industry and deliver for our stakeholders.

But, at the same time, it is with regret that we have decided to close Consortium, a business full of hugely talented and valued colleagues. Unfortunately, its underperformance is a drag the Company can no longer afford and has clouded the good progress made elsewhere. I would like to take this opportunity to thank all my colleagues across RM for their continued commitment and hard work throughout this time.

Looking ahead, I am confident that our new strategy, which we will unveil at the full year results, will shape RM into a pioneer of education technology, enriching the lives of learners globally.”

Contacts:

RM plc                     investorrelations@rm.com

Mark Cook, Chief Executive Officer 

Simon Goodwin, Chief Financial Officer

Fiona O’Nolan, Investor Relations, Equitory 

Headland Consultancy (Financial PR)                      +44 203 805 4822

Stephen Malthouse (smalthouse@headlandconsultancy.com)

Chloe Francklin (cfrancklin@headlandconsultancy.com)

Dan Mahoney (dmahoney@headlandconsultancy.com)

Notes to Editors:

RM provides market-leading products and services to educational institutions, exam bodies and international governments which improve, simplify and support education and learning. The education sector is transforming, and RM is well positioned to capitalise on this through its three divisions.

• RM Resources is the established provider of education resources for early years, primary schools, and secondary schools across the UK and to 80 countries internationally.
• RM Assessment, trading under the Consortium and TTS brands, is a leading provider of assessment software, supporting exam awarding bodies, universities, and governments worldwide to digitise their assessment delivery.
• RM Technology is a market-leading supplier of ICT software, technology and services to UK schools and colleges

TR-1: Standard form for notification of major holdings

1. Issuer Details

ISIN

GB00BJT0FF39

Issuer Name

RM PLC

UK or Non-UK Issuer

UK

2. Reason for Notification

An acquisition or disposal of voting rights

3. Details of person subject to the notification obligation

Name

Harwood Capital LLP

City of registered office (if applicable)

Country of registered office (if applicable)

4. Details of the shareholder

5. Date on which the threshold was crossed or reached

07-Nov-2023

6. Date on which Issuer notified

09-Nov-2023

7. Total positions of person(s) subject to the notification obligation

8. Notified details of the resulting situation on the date on which the threshold was crossed or reached

8A. Voting rights attached to shares

8B1. Financial Instruments according to (DTR5.3.1R.(1) (a))

8B2. Financial Instruments with similar economic effect according to (DTR5.3.1R.(1) (b))

9. Information in relation to the person subject to the notification obligation

2. Full chain of controlled undertakings through which the voting rights and/or the financial instruments are effectively held starting with the ultimate controlling natural person or legal entities (please add additional rows as necessary)

10. In case of proxy voting

Name of the proxy holder

The number and % of voting rights held

The date until which the voting rights will be held

11. Additional Information

12. Date of Completion

13. Place Of Completion

London Stock Exchange

TR-1: Standard form for notification of major holdings

1. Issuer Details

ISIN

GB00BJT0FF39

Issuer Name

RM PLC

UK or Non-UK Issuer

UK

2. Reason for Notification

An acquisition or disposal of voting rights

3. Details of person subject to the notification obligation

Name

Avalon UK Limited

City of registered office (if applicable)

Road Town

Country of registered office (if applicable)

BVI

4. Details of the shareholder

Full name of shareholder(s) if different from the person(s) subject to the notification obligation, above

City of registered office (if applicable)

Country of registered office (if applicable)

5. Date on which the threshold was crossed or reached

06-Oct-2023

6. Date on which Issuer notified

10-Oct-2023

7. Total positions of person(s) subject to the notification obligation

8. Notified details of the resulting situation on the date on which the threshold was crossed or reached

8A. Voting rights attached to shares

8B1. Financial Instruments according to (DTR5.3.1R.(1) (a))

8B2. Financial Instruments with similar economic effect according to (DTR5.3.1R.(1) (b))

9. Information in relation to the person subject to the notification obligation

2. Full chain of controlled undertakings through which the voting rights and/or the financial instruments are effectively held starting with the ultimate controlling natural person or legal entities (please add additional rows as necessary)

10. In case of proxy voting

Name of the proxy holder

The number and % of voting rights held

The date until which the voting rights will be held

11. Additional Information

12. Date of Completion

10-Oct-2023

13. Place Of Completion

Hong Kong

This announcement contains inside information for the purposes of Article 7 of the Market Abuse Regulation (EU) 596/2014 as it forms part of UK domestic law by virtue of the European Union (Withdrawal) Act 2018 ("UK MAR"), and is disclosed in accordance with the Company's obligations under Article 17 of UK MAR. Upon the publication of this announcement via a Regulatory Information Service, this inside information is now considered to be in the public domain. The person responsible for making this disclosure on behalf of the Company is Mark Cook, Chief Executive Officer. 

5 October 2023

RM plc

Sale of IPv4 addresses

RM plc, a leading international supplier of technology and resources to the education sector (LSE: RM) (“RM”, the “Company”), today announces that it has agreed to sell an additional portion of its Internet Protocol v4 (“IPv4”) addresses (“the Sale”) to Hilco Streambank (“Hilco”) for a total consideration of $2.2m in cash.

The IP addresses are classified as intangible assets and were acquired at nil value. The Sales will, therefore, not affect the Company’s total net assets, other than the addition of the cash proceeds from the Sales, which will be used to strengthen the balance sheet. These sales have been classified as other income in line with the treatment of the sale of Intangible Assets. 

The Sale, when aggregated with the previous sale of $10.2m of IP addresses, as announced on 28 December 2022, will constitute a Class 2 transaction under the Listing Rules.

The Company retains the rights over a further c.213,000 IPv4 addresses, which will support growth in RM Technology’s connectivity business.

Enquiries:

RM plc                     investorrelations@rm.com

Mark Cook, Chief Executive Officer

Simon Goodwin, Chief Financial Officer

Fiona O’Nolan, Investor Relations

Headland Consultancy (Financial PR)                      +44 203 805 4822

Stephen Malthouse (smalthouse@headlandconsultancy.com)

Chloe Francklin (cfrancklin@headlandconsultancy.com)

Jemma Savage (jsavage@headlandconsultancy.com)

Notes to Editors:

RM provides market-leading products and services to educational institutions, exam bodies and international governments which improve, simplify and support education and learning.

The education sector is transforming, and RM is well positioned to capitalise on this through its three divisions.

• RM Resources is the established provider of education resources for early years, primary schools, and secondary schools across the UK and to 80 countries internationally
• RM Assessment is a leading provider of assessment software, supporting exam awarding bodies, universities, and governments worldwide to digitise their assessment delivery
• RM Technology is a market-leading supplier of ICT software, technology and services to UK schools and colleges

TR-1: Standard form for notification of major holdings

1. Issuer Details

ISIN

GB00BJT0FF39

Issuer Name

RM PLC

UK or Non-UK Issuer

UK

2. Reason for Notification

An acquisition or disposal of voting rights

3. Details of person subject to the notification obligation

Name

Harwood Capital LLP

City of registered office (if applicable)

Country of registered office (if applicable)

4. Details of the shareholder

5. Date on which the threshold was crossed or reached

15-Sep-2023

6. Date on which Issuer notified

18-Sep-2023

7. Total positions of person(s) subject to the notification obligation

8. Notified details of the resulting situation on the date on which the threshold was crossed or reached

8A. Voting rights attached to shares

8B1. Financial Instruments according to (DTR5.3.1R.(1) (a))

8B2. Financial Instruments with similar economic effect according to (DTR5.3.1R.(1) (b))

9. Information in relation to the person subject to the notification obligation

2. Full chain of controlled undertakings through which the voting rights and/or the financial instruments are effectively held starting with the ultimate controlling natural person or legal entities (please add additional rows as necessary)

10. In case of proxy voting

Name of the proxy holder

The number and % of voting rights held

The date until which the voting rights will be held

11. Additional Information

12. Date of Completion

18/09/2023

13. Place Of Completion

London Stock Exchange

Wednesday, 30 August 2023

RM plc

Director/PDMR Performance Share Plan Awards

In accordance with the Market Abuse Regulations, RM plc announces that, on 29 August 2023, options were granted for nil consideration over the following numbers of ordinary shares of 2 2/7pence each in the Company under the RM Performance Share Plan 2019:

The options are exercisable in the period 31 August 2026 to 29 August 2033 at an exercise price of £0.00 per share.  It is anticipated that option exercises will be satisfied by the transfer of shares from the Company's employee benefit trust.

Vesting of the award and the receipt of shares will be based on the following criteria:

1. Forty percent (40%) of the Award is subject to a performance condition comparing the Company's total shareholder return (TSR) against a comparator group of FTSE Small Cap Index (excluding investment trusts) companies over the period of 3 years commencing on 01 December 2022 and ending on 30 November 2025.

2. Sixty percent (60%) of the Award is subject to a performance condition relating to the performance of the Company’s TSR against absolute targets ranging from 120p to 195p, with this condition also measured at the end of the same 3-year period.

No award can vest before 31 August 2026. The Award will be subject to a Holding Period which will end two years after the vesting date. 

Enquiries:

Notes:

1. The RM Performance Share Plan 2019 was approved by shareholders at the Company’s AGM held on 27 March 2019.

29 August 2023

 RM plc

Successful negotiation of bank covenants waiver for August 2023

RM plc, a leading international supplier of technology and resources to the education sector (LSE: RM) (“RM”, the “Company”), today provides an update on the successful renegotiation of a short-term unconditional covenant waiver with its lenders, and the ongoing discussions with its lenders to extend this covenant waiver to cover the 30 November 2023 covenant test date.

As announced in its half year results on 9 August 2023, the business operated within its existing financial covenants for the first half of 2023 but indicated that it expected to breach the facility’s LTM EBITDA covenant from the third quarter of the FY2023 financial year, albeit the Company is not expected to breach its liquidity covenant test in FY23 or FY24. The Directors therefore concluded that it remained appropriate to prepare the half-year financial statements on a going concern basis.

The Banks currently remain supportive of management, recognising the issues that the business has faced and also the steps taken through this transformation period (cost savings and restructuring) to return to previous levels of financial performance. In light of the continued headwinds and the need for the annualisation of savings to mature, the Company and the Banks entered into discussions to agree suitable waivers and amendments to its existing facility.

RM announces that it has successfully received waivers with its lenders for its August 2023 EBITDA financial covenant and continues to comply with the conditions of each lender with regards to that waiver and the respective facility agreement. The negotiation of a suitable covenant waiver for the period ending 30 November 2023 is ongoing, and we expect to be able to announce its conclusion before the end of the current financial year.

The Company has also commenced the renegotiation of an amendment and extension of its lending facility, which matures in July 2025. The Company is working with its advisers and the Banks, and the Company expects renegotiation to have concluded by the end of Q1 2024. 

Mark Cook, Chief Executive of RM, commented:

"Whilst the last financial year has been extremely challenging, I am grateful for the continuing support of our lenders and the amendment to our facility’s covenants. Both lenders have held long term supportive relationships with the Group over many years and continue to support RM as it implements its Transformation Programme to reduce its net debt and return the Company to growth and profitability."

Enquiries:

RM plc       investorrelations@rm.com

Mark Cook, Chief Executive Officer 

Emmanuel Walter, Chief Financial Officer (interim)

Fiona O’Nolan, Investor Relations 

Headland Consultancy (Financial PR)                    +44 203 805 4822

Stephen Malthouse (smalthouse@headlandconsultancy.com)

Chloe Francklin (cfrancklin@headlandconsultancy.com)

Jemma Savage (jsavage@headlandconsultancy.com)

Notes to editors

RM provides market-leading products and services to educational institutions, exam bodies and international governments which improve, simplify and support education and learning.

The education sector is transforming, and RM is well positioned to capitalise on this through its three divisions.

• RM Resources is the established provider of education resources for early years, primary schools, and secondary schools across the UK and to 80 countries internationally
• RM Assessment is a leading provider of assessment software, supporting exam awarding bodies, universities, and governments worldwide to digitise their assessment delivery
• RM Technology is a market-leading supplier of ICT software, technology and services to UK schools and colleges

TR-1: Standard form for notification of major holdings

1. Issuer Details

ISIN

GB00BJT0FF39

Issuer Name

RM PLC

UK or Non-UK Issuer

UK

2. Reason for Notification

An acquisition or disposal of voting rights

3. Details of person subject to the notification obligation

Name

Avalon UK Limited

City of registered office (if applicable)

Road Town

Country of registered office (if applicable)

BVI

4. Details of the shareholder

Full name of shareholder(s) if different from the person(s) subject to the notification obligation, above

City of registered office (if applicable)

Country of registered office (if applicable)

5. Date on which the threshold was crossed or reached

09-Aug-2023

6. Date on which Issuer notified

11-Aug-2023

7. Total positions of person(s) subject to the notification obligation

8. Notified details of the resulting situation on the date on which the threshold was crossed or reached

8A. Voting rights attached to shares

8B1. Financial Instruments according to (DTR5.3.1R.(1) (a))

8B2. Financial Instruments with similar economic effect according to (DTR5.3.1R.(1) (b))

9. Information in relation to the person subject to the notification obligation

2. Full chain of controlled undertakings through which the voting rights and/or the financial instruments are effectively held starting with the ultimate controlling natural person or legal entities (please add additional rows as necessary)

10. In case of proxy voting

Name of the proxy holder

The number and % of voting rights held

The date until which the voting rights will be held

11. Additional Information

12. Date of Completion

11-Aug-2023

13. Place Of Completion

Hong Kong

10 August 2023

RM plc

The notification set out below is provided in accordance with the requirements of the UK Market Abuse Regulation

Contacts:

RM plc

Howard Rubenstein, Company Secretary

Hrubenstein@rm.com 

9 August 2023

RM plc

The notifications set out below are provided in accordance with the requirements of the UK Market Abuse Regulation

Contacts:

RM plc

Howard Rubenstein, Company Secretary Hrubenstein@rm.com

9 Aug 2023

RM plc

Interim Results for the six months ended 31 May 2023

Business stabilising, transformation programme initiated
and significant cost savings identified and executed

Consortium underperformance clouds value of the rest of the Group

RM plc (“RM”), a leading supplier of technology and resources to the education sector, reports its half year results for the six months ended 31 May 2023.

Mark Cook, Chief Executive of RM, said “In the first half of the year, our focus has been on the task of stabilising the business financially and operationally. This has seen us improve controls, processes, and the team’s capability. Alongside this, we have taken decisive action to reduce our cost base and working capital. Whilst we have accomplished a lot, the most material challenge has been the negative impact of the Consortium business which clouds the good progress made across the rest of the Group. The consequences of its slower recovery can be seen in our financial performance and has impacted our expectations for the full year.

Now that the ‘heavy lifting’ stabilisation work is nearing completion, the Transformation Programme, which is focused on improving growth and profit, has identified significant continuous improvement opportunities, which are being reviewed, quantified, and prepared for execution. We have made a good early start in actioning these opportunities, but it will take time for them to be reflected in our financial performance. I continue to be excited by the compelling opportunity to deliver value creation in a growing global EdTech market.”

Financial highlights

• Revenue of £87.6m, down 11% (H1 2022: £97.9m), with strong progress in RM Assessment and International (RM Resources) partially offsetting lower trading volumes in Consortium (RM Resources), which was impacted by the late launch of the ecommerce platform and a more challenging trading environment in schools
• The reduction in revenues combined with IT implementation costs and delays in the Consortium go-live flowed through to adjusted operating profit performance, as the Group posted a loss of £4.5m 
• Statutory profit up to £6.8m (H1 2022: loss of £5.9m) reflecting lower costs associated with the IT implementation and gains on asset disposals
• Operating within our covenants with Adjusted Net Debt2 of £52.0m (HY 22: £41.5m) reflecting lower profits, normalised working capital and exceptional spend delivering business transformation activity including the independent business review and disposal of operations
• Completion of the sale of RM Integris and RM Finance, and surplus Internet Protocol v4 (‘IPv4’) addresses for net cash proceeds of £17.2m.

Strategic highlights

• Leadership team strengthened with appointments of Simon Goodwin as Chief Financial Officer, joining at the end of August, and Dr. Grainne Watson as Chief Digital Officer who joined in June
• “Evolution” ecommerce platform supporting the Consortium business live but customer volumes slower to return than anticipated
• Transformation Programme begun, with clear actions taken in the first half to reduce operating costs, bring key skills in-house, strengthen our management team, and rebuild our finance function

• Identified significant continuous improvement and cost savings opportunities within each of the three divisions and at Group level, with estimated annualised cost savings of £10m in FY24
• Development of strategic roadmap expected to conclude in the second half - with a clear focus on the substantial opportunities within the business.

Current trading and outlook

Since the period end, RM Assessment and RM Technology have continued to trade well, with contract extensions signed with Education Scotland partnership (Glow) and with Brooke Weston Trust (BWT) in RM Technology, with two new contracts alongside 100% customer renewals for the period in RM Assessment.

As a result of the turnaround actions which have taken place in the RM Technology division, we would expect to start to see the results come through into revenue growth for the business in the second half, and small single digit growth for the full year.

We expect the strong performance in the RM Assessment business to continue in the second half of the year and therefore, the year as a whole.

Whilst our stabilisation is nearly complete, the operational issues within Consortium have continued to be a drag on both management time and the overall business, and this is reflected in the financial performance in the first half. We expected to see growth across all our business units and are disappointed by the continuing operational and trading challenges in RM Resources, dominated by Consortium, and exacerbated by the more challenging budgetary environment in schools. As we work to recover sales and win back the trust of our customers, we expect Consortium trading to continue to be below where we would expect it to be, impacting our expectations for the Group’s full year adjusted operating profit.

We now expect to deliver Group adjusted operating profit on or around breakeven for the full year, and in excess of £10million of identified annualised cost savings to benefit in FY24. 

1.Throughout this statement, adjusted operating (loss)/profit and EPS are Alternative Performance Measures, stated after adjusting items (See Note 2) which are identified by virtue of their size, nature and/or incidence. The treatment of adjusted items is applied consistently period on period and is consistent with the way that underlying trading performance is measured by management.

2. Amounts at 31 May 2022 have been restated consistently with the adjustments made at 30 November 2022, see Note 2

Presentation and webcast details

A recording of the presentation for investors and analysts will be available at 9.00am today via a live webcast and on demand at the following website:

https://brrmedia.news/RM_HY23

There will be a live Q&A session following the webcast accessible via a conference call:

For additional details and registration for the webcast, please contact Headland Consultancy on +44 203 805 4822 / rm@headlandconsultancy.com.

Contacts:

RM plc                     investorrelations@rm.com

Mark Cook, Chief Executive Officer 

Emmanuel Walter, Chief Financial Officer (interim)

Fiona O’Nolan, Investor Relations 

Headland Consultancy (Financial PR)                      +44 203 805 4822

Stephen Malthouse (smalthouse@headlandconsultancy.com)

Chloe Francklin (cfrancklin@headlandconsultancy.com)

Jemma Savage (jsavage@headlandconsultancy.com)

Notes to Editors:

RM provides market-leading products and services to educational institutions, exam bodies and international governments which improve, simplify and support education and learning.

The education sector is transforming, and RM is well positioned to capitalise on this through its three divisions.

• RM Resources is the established provider of education resources for early years, primary schools, and secondary schools across the UK and to 80 countries internationally
• RM Assessment is a leading provider of assessment software, supporting exam awarding bodies, universities, and governments worldwide to digitise their assessment delivery
• RM Technology is a market-leading supplier of ICT software, technology and services to UK schools and colleges

Business Review

Strategic and operational update

The first half of the year was dominated by the extraordinary closing of the prior year’s financial reporting, the launch of a new “Evolution” ecommerce platform for the Consortium business in March, and a new automated distribution centre which went live shortly after that. Through the extended year-end process, we collectively tackled and overcame a number of challenges to ensure our financial stability including;

• £70m banking facility extended to July 2025 with revised covenants
• Disposal of RM Integris and Finance businesses, and sale of surplus IPv4 addresses for a net total of £17.2m
• Agreed funding plan with the Pension Trustees and The Pensions Regulator

The first half focus has been the need to stabilise the business and mitigate the considerable negative impact of the Consortium business, which continues to hold back the overall performance of the Group in the current year. Alongside this we have focused on bringing RM’s intellectual property in house; improve controls, processes, and finance team capability; implement cost savings; and reduce our working capital. We have also taken the decision to reduce our headcount by circa 325 FTE in a number of operational and support areas. These combined actions have expected annualised cost savings in excess of £10million in FY24.

These necessary actions across a number of operational areas have helped get the business back onto a stronger operational footing and include:

• Reducing dependency on third parties and bringing key skills in-house
• Commenced restructuring and rationalisation of internal support functions
• Rebuilt the finance function
• Reducing working capital through inventory management and accounts receivable overdue in RM Resources
• Paused the planned “Evolution” rollout across the rest of the Group
• Clearing the backlog of customer queries from prior failures on Consortium customer orders
• An internal focus on reducing unnecessary spend

Strengthen and stabilise

After the challenges faced in the prior year, our priorities for the remainder of FY23 remain to strengthen our financial position, review the IT enterprise architecture, and embed our Transformation Programme across the business.

When I first reviewed the business, I used the phrase ‘simplify, strengthen and succeed’ to frame the phases the company needed to progress through to fully get back to financial and operational fitness. Six months into my role, I have had the opportunity to take a deeper look at our people, products, services and IP and I believe there are substantial opportunities to deliver greater shareholder value from our portfolio of businesses. I therefore focused my efforts in the half on designing and commencing our Transformation Programme, with the initial priority of stabilising the business, which we expect to have been achieved by the year end, but also quickly taking actions which have some benefits in the short term as well as in medium and longer term. We have recruited an experienced Transformation Director, to execute on the Programme workstreams.

Strengths, opportunities, and recovery within our portfolio

RM has a fantastic portfolio of managed services, IP, and digital platforms with leading market positions, and our focus is to better leverage the product opportunities in the education sector as it continues to embrace digitisation and ensure a sharper focus on sales & marketing, product, customer excellence and satisfaction.

We operate across three standalone divisions – RM Resources, RM Assessment and RM Technology, with RM Resources further split into three business units of TTS UK and TTS International, which design and own our proprietary products for schools, and Consortium, our UK school supplies business. Our portfolio of businesses is not well understood by the market, and the business has not been taking full advantage of its enviable market positions across education and learning in the UK and internationally.

Our divisions operate in a market with structural growth drivers, strong market positions and continued advancement of technology across the education sector, with the global EdTech market expected to grow at a CAGR of 13% to 2028.

RM Resources has three strategic business units: TTS UK and TTS International collaborate with teachers and educational experts from across the globe to create unique and innovative learning resources and learning environments for children in more than 115 countries. Each year TTS’s educational experts develop hundreds of unique curriculum-aligned resources, from concept to creation, with many of them receiving industry awards. Consortium UK has been supporting learners and educators for over 50 years, supplying everything from classroom essentials to cleaning supplies, sports equipment to musical instruments, with over 35,000 carefully curated products designed to support the whole school or nursery. This is underpinned by bespoke account management and digital shopping solutions that help to save time and money for our customers.

Across TTS, encompassing both UK and International, we continue to see positive demand for our unique in-house developed IP, highlighting the unique value of our curriculum focussed learning resources in supporting teachers and practitioners in improving educational attainment. Leveraging TTS’s recognised educational expertise, the brand also successfully launched its first CPD accredited Early Years podcast series and its associated assessments which has attracted more than 80k downloads and has been nominated for three categories at the UK Content Awards.

After the delayed launch in March of a new and much enhanced “Evolution” ecommerce platform for the Consortium brand, which completed the planned technology transformation in the Consortium business unit, marketing activities began to drive customer volumes. However, the pace of the sales recovery is proving to be slower than anticipated as customer confidence has been dented by problems of our own making and needs to be re-built. This is continuing to impact the financial performance of the division.

Following the completion of the IT and distribution centre implementations the division is returning to a stable footing after an extended period of organisational and customer disruption which primarily impacted the Consortium brand. With new technology underpinning operations and ecommerce, management focus now shifts to improving customer return within Consortium and continuous improvement opportunities leveraging TTS’s market-leading IP globally and optimising the new infrastructure to increase customer value.

RM Assessment is a global leader in platform delivery of digital assessment and exam marking solutions for learners, accreditors, and professional bodies.

The division has made positive progress in the first half, with successful delivery of the live exam and marking sessions for customers across the professional qualifications, language testing and school exam segments of the market.  H1 saw a 100% customer renewal rate with £9.5m of customer contract extensions demonstrating the ongoing commitment of customers to our services.

Two new customers were secured in the Professional Qualifications market, worth an initial £1.2m over the next 3 years.

The first is a contract to digitise the marking of paper exams for technical and vocational qualifications, with a customer taking this first step on their journey to digital examinations. This service is already live, and first exam sessions have been delivered successfully.

The second is a contract for an end-to-end digital assessment solution to support those training for Accountancy qualifications. This uses the whole of the RM Assessment portfolio to bring digital exams to life as candidates progress through their learning journey to qualification. First live exams have already been delivered, with another positive candidate experience being reported back.

The division's focus on leading customers through the journey to digital assessment maturity was recognised by an award at the e-Assessment Association conference, for the ‘Most Innovative Use of Technology in Assessment’ for its exam malpractice service, recognising RM's continued commitment to overcoming the challenges of digital adoption and enabling the education industry.

RM Technology is a strategic partner for schools, helping them to drive more engaged learning, more collaborative teaching and better outcomes through technology by providing platform-based managed services, ICT solutions and value-added reseller services to schools, authorities and trusts.

Following a restructuring in FY22 and with new leadership now established, the Technology division made good progress in the first half on improving its operating model and efficiency, with both active value creation and defensive value capture initiatives underway. The sale of RM Integris and Finance was also completed in the half and cash proceeds received.

The division has maintained revenue stability across both Connectivity and Digital Platforms (Software) whilst improving the gross margin within those business units. The Hardware strategy and the onboarding of key partners has improved performance since FY22.

Initiatives and market projects including the DfE’s Connect the Classroom (CTC) have been established, generating a pipeline valued at £11.5m with an expected conversion rate greater than 50%. Focus on Services continues which has shown growth, improved upsell and cross-sell which has allowed RM to deliver more value to existing clients whilst improving share of wallet. We were pleased to extend our relationships with Education Scotland (Glow) and Brooke Weston Trust (BWT). However, three large customers lost at the start of FY22 have impacted revenue in the half and will continue to do so for the balance of FY23. Gross margin rebuild across Services, Connectivity and Digital Platforms is progressing well whilst Hardware sees a slight dip as it moves into volume sales in line with its strategy to target Multi-Academy Trusts (MAT). Customer retention remains high at 95% showing that RM Technologies’ relevance and satisfaction continues to be a driver of its success.

These operational and strategic improvements will take time, and profit recovery will lag revenue growth, but RM Technology continues to benefit from a strong market position and channel reach.  

Transformation Programme and strategic roadmap 

We embarked on an ambitious Transformation Programme in the first half, and our priority has initially been focused on Phase 1 which was to stabilise operations and financials, following a very challenging 2022, and which continues to be impacted by the ongoing poor trading performance within Consortium. Whilst we have accomplished a lot, these challenges will continue to dominate the full year results and cloud the good progress across the rest of the Group.

The Transformation Programme has five clear workstreams; Stabilisation, People & Teams, Finance & Corporate, Divisions, and Strategy, and the identification, execution and benefit realisation are broken down into six monthly phases. In the Stabilisation phase we have identified opportunities for growth, and operational efficiencies – some of which we have actioned already, albeit they do not yet positively impact our financial performance. We expect the benefit from these actions to flow from FY24.

As RM celebrates 50 years of service this year, we are excited by the opportunity to deliver value creation in a global EdTech market growing at 14% annually, and the drafting of the strategic roadmap for the business is expected to conclude in the second half, setting out our plans for delivering that value. We are committed to properly understanding our business processes in order to define the architecture required, enabling us to drive down our overheads. We remain focused on the substantial IP opportunities which we see within our TTS businesses, as well as developing the broader opportunities within the global EdTech market for our proprietary technology and assessment platform businesses; with the aim of delivering fully digital assessments to the market and providing the best connectivity and managed service across platforms to the education sector.

Financial review

Group performance

Group revenue decreased by 11% to £87.6m (H1 2022: £97.9m) largely driven by lower trading volumes in RM Resources, in particular the Consortium business as it recovers from both the past mismanagement of the IT implementation programme and the challenging education market conditions. Whilst Resources had a difficult H1, the TTS International business grew year on year by 18%. RM Technology revenues declined by 8% reflecting contract losses in the Services business in FY22 and included £1.3m relating to the sale of excess IPv4 addresses. Subsequent sales of IPv4 assets have been classified as other income. Revenues in the RM Assessment division grew by 8% reflecting the results of the improved sales pipeline and the new contracts won in FY22.

Adjusted Operating Loss was £(4.5)m (H1 2022: profit of £4.5m). The profit reduction is most notable in the RM Resources division, with the impact of lower trading volumes in Consortium dropping through to the bottom line. RM Technology saw a reduction due to the lower underlying revenues and IPv4 sales of £1.3m. This was partially offset by strong performance in RM Assessment, reflecting the results of the increased and improved operational gearing.

Adjusted loss before tax was £6.7m, (H1 2022: profit of £3.7m), which alongside the reduced adjusted operating profit, was due to higher interest costs.

Adjusted diluted earnings per share decreased to (5.8p) (H1 2022: 4.0p).

Statutory Profit increased to £6.8m (H1 2022: loss of £5.9m), predominantly driven by the £9.5m gain on the sale of the RM Integris and RM Finance businesses, and the £8.5m benefit of the sale of IPv4 addresses in May. In the period, £3.5m (H1 2022: £7.7m) of one-off costs were incurred relating to the Configuration of SaaS licenses as part of our IT system implementation as well as £1.8m incurred to extend our banking facilities.

Divisional performance

Our services, delivered across three divisions, are spread across the key areas of hardware, software and content. Given our long-term experience, we guide our customers across a complex landscape with a focus on helping to manage the entire learning and assessment lifecycle and providing the best connectivity across platforms.

RM Resources provides educational resources and supplies to schools and nurseries in the UK and internationally. Products supplied are a mix of own-designed items, own-branded and third-party products.

Revenue decreased by 18% to £42.2m (H1 2022: £51.6m). Strong growth in TTS International revenues, which increased by 18% to £10.3m (H1 2022: £8.7m), was driven by improvements across most geographies but notably Europe where revenues have doubled against pre-pandemic levels of 2019. Revenue in the UK decreased by 26% to £31.8m (H1 2022: £42.9m) driven by lower trading volumes in the Consortium business where revenues were impacted by lower customer volumes and decreased spend following the disruption of last year’s IT implementation.

Adjusted operating loss was £4.5m (H1 2022: profit of £1.2m). Profitability was impacted by the lower trading volumes and increased costs relating to the ongoing dual running of distribution sites and technology stacks across TTS and Consortium.

RM Assessment provides IT software and end-to-end digital assessment services to enable online exam marking, testing and the management and analysis of educational data. Customers include government ministries, exam boards, professional awarding bodies and Universities in the UK and internationally.

* Amounts at 31 May 2022 have been restated consistently with the adjustments made at 30 November 2022, refer to Note 2.

Revenue from continuing operations increased by 8% to £19.7m (H1 2022: £18.2m) driven by volume growth on existing contracts and the impact of additional revenue from contracts won in FY22.

Adjusted operating profit from continuing operations increased by 14% from the prior year to £3.2m (H1 2022: £2.8m), with operating margins increasing to 16.2% (H1 2022: 15.4%) reflecting the benefit of the additional revenues and improved operational gearing.

RM Technology is a strategic partner for schools to help drive more engaged learning, more collaborative teaching and better outcomes through technology and services to UK schools, Academies, and colleges.

Revenue decreased by 8% to £25.7m. Excluding £1.3m IP sales in FY22, the continuing operations revenue decreased by 3.7%. This was driven primarily by reduced Services sales which lost three key customers during FY22.

Adjusted operating profit decreased to a £0.5m loss, mainly driven by the lower revenues and £1.3m of IPv4 sales being included in the operating profit in H1 2022.

Corporate Costs

Corporate costs in the period were £2.8m, up from £1.5m in H1 2022, as a result of higher audit fees, rebuilding the finance function and losses primarily arising from adverse GBP:AUD movements.

Disposals

The sale of RM Integris & RM Finance received shareholder approval and completed at the end of May 2023 with net proceeds of £8.7m received. Subsequently, the transaction was also cleared by the Competition and Markets Authority, and the additional consideration of £3.5m was received in June. A further £0.3m of the Deferred Consideration was received in July. The conditions relating to the payment of the remaining £0.25m of Deferred Consideration remain outstanding.

In December 2022 the Group sold a portion of their IPv4 addresses for a total consideration of £8.5m in cash. Further information on these Disposals can be found in Note 15.

Net debt

The first half of the financial year is normally a working capital outflow period for the Group, with inventory purchases ahead of the second half peak selling period, with the majority of cash inflow from the examinations sessions also coming in the second half. This seasonality continued in 2023 with £(12.9)m (H1 2022: cash outflow of £6.5m) of adjusted cash outflow from operations in H1.

The operating cash outflow was offset by proceeds from the sale of further surplus IPv4 assets (£8.5m) and the sale of RM Integris and RM Finance (£8.7m), which completed in the period.

As a result of this return to more normal seasonal working capital movements, we closed the period at £52.0m of net debt (H1 2022: £41.5m, H2 2022: £46.8m).

In the period, we opted to restructure and extend our £70m revolving credit facility, which will now run to July 2025, and includes resetting the covenant tests. From May 2023 to November 2024, a quarterly Last Twelve Months (LTM) EBITDA test applies, which is then replaced from February 2025 by quarterly LTM EBITDA leverage and interest cover tests, both of which have a threshold of 4x. The business operated within these covenant levels for the duration of the period.

Dividend

A condition of the new extended and amended banking facility agreement has been to restrict dividend distribution until the Company has reduced its net debt to LTM EBITDA (post IFRS 16) leverage to less than 1x for two consecutive quarters, and therefore we are not currently able to declare a dividend.

The Board understands the importance of dividends to our shareholders and are clear that reinstating the dividend is a key milestone on our recovery path.

Pension

The Company operates two defined benefit pension schemes (“RM Education Scheme” and “Care Scheme”) and participates in a third, multi-employer, defined benefit pension scheme (the “Platinum Scheme”). All schemes are now closed to future accrual of benefits.

The IAS19 net position (pre-tax) across the Group reduced by £4.7m in the half to a surplus of £17.9m (30 November 2022: £22.6m) with both the RM Education Scheme and the Platinum Scheme being in surplus. The reduction has been driven by actual inflation experience over the period and a decrease in the value of scheme assets more than offsetting the positive impact of higher discount rates which is based on corporate bond yields.

The 31 May 2021 triennial valuation for the current schemes was completed in 2022, with the total scheme deficit reducing from £46.5m to £21.6m. The deficit recovery payments of £4.4m per annum will continue until the end of 2024, before reducing to £1.2m until the end of 2026 when recovery payments cease.

During the half year ended 31 May 2023, the Group has agreed further positions with the Trustee of the current schemes. The agreement provides the main two pension schemes with a second ranking fixed and floating charge over the shares of all obligor companies (except for RM plc) and a payment of £0.5m at bi-annual intervals starting on August 2024 which is contingent upon the adjusted debt leverage ratio being less than 3.2x at that date. The definition of adjusted leverage is aligned to the banking facility outlined above.

The Group has also agreed to pay a one-off additional contribution of £0.1m to the Platinum Scheme.

Internal Controls

In the Audit and Risk Committee Report in 2022, the targeted internal control project was highlighted. The project was officially launched with relevant stakeholders in April 2023, covering all aspects of the internal control framework. The Project office was set up with a clear governance structure and communication channels. The programme is supported by external specialist experts. The management team and the Board have been regularly updated on the progress made against the project plan.

Board changes

As previously announced, Simon Goodwin will join the Company as Chief Financial Officer at the end of August. Simon will be central to the Group’s transformation strategy and helping to drive value across the business. Following Simon’s appointment, Emmanuel Walter, Interim Chief Financial Officer, will leave the Company in October. We are very grateful to Emmanuel for his support over the last year.

In addition, Christopher Humphrey joined the Board as a Non-Executive Director with effect from 7 July 2023, and became a member of all Board Committees on appointment. Christopher brings extensive technology and software experience to the RM Board and is an experienced Non-Executive Director.

Vicky Griffiths, Non-Executive Director, will step down from the Board with effect from 6 October 2023 due to other commitments. The Board would like to express its gratitude to Vicky for her contribution during her appointment.

Going concern

In assessing the going concern position, the Directors have considered the balance sheet position as included on page 14 and the level of available finance not drawn down. The net current assets and adjusted net debt for the Group at 31 May 2023 were £8.1m and £52.7m respectively (30 November 2022: net current liabilities of £(49.2)m and £46.8m respectively). RM Group plc has a bank facility (“the facility”) which totalled £70.0m at the date of this report. The facility maturity was extended in March 2023 and is committed until July 2025. The terms of the revised facility are as disclosed in Note 31 of the 2022 Annual Financial Statements.

The debt facilities are subject to financial covenants from May 2023 to November 2024 on a minimum EBITDA basis for a rolling 12-month historical period (“LTM EBITDA”), and a hard liquidity requirement to maintain net debt below £62.5m. For the period ending 31 May 2023 the LTM EBITDA minimum basis was £3.8m, which the Group did not breach, and adjusted net debt was below the hard liquidity requirement.

The Directors have prepared cash flow forecasts for the period to 12 months from the date of this report utilising a base case and reasonably plausible downside scenario case. Under the base case, taking account of available facilities and existing cash resources, the working capital available to the Group is sufficient to meet its liabilities as they fall due for at least 12 months from the date of this report, but is expected to breach its EBITDA covenant from the third quarter of the financial year in its secured facility.  Under the base case it is not expected to breach the liquidity covenant test.

If the Group were unable to mitigate sufficiently the reasonably plausible downside scenario case and were also unable to execute further cost or cash management programmes, in addition to breaching the EBITDA covenant as noted above, the Group would also be at risk of breaching its hard liquidity covenant during FY24.

The Banks agreeing to amendments to covenants is not within the Group’s control and as a result the Directors cannot conclude that the possibility of an un-waived breach of covenant is remote.

The Company has shared up to date financial data with the Banks who remain supportive of management, recognise the issues that the business has faced and also the steps taken (cost savings and restructuring) to return to previous levels of financial performance.

In light of the continued headwinds and the need for the annualisation of savings to mature, the Company and the Banks are in discussions and currently expect to agree suitable waivers and amendments (including potential covenant re-sets and maturity extension) to allow the Company's facility to remain available.

After due consideration of these factors, the Directors believe that it remains appropriate to prepare these financial statements on a going concern basis, However, until agreed with the Banks, there remains a material uncertainty related to events or conditions that may cast significant doubt over the Group’s ability to continue as a going concern, and hence realise their assets and discharge their liabilities in the normal course of business. The financial statements do not include any adjustments that would arise from the basis of preparation being inappropriate.

Further detail on the Directors assessment of Going Concern including details in relation to the base assessment and the reasonably plausible downside scenario are set out in note 2.

Responsibility statement of the Directors in respect of the half-yearly financial report

We confirm that to the best of our knowledge:

• the condensed set of financial statements has been prepared in accordance with United Kingdom adopted IAS 34 Interim Financial Reporting;
• the interim management report includes a fair review of the information required by:

1. DTR 4.2.4R of the Disclosure Guidance and Transparency Rules, being the condensed set of financial statements have been prepared in accordance with the applicable set of accounting standards, gives a true and fair view of the assets, liabilities, financial position and profit or loss of the issuer, or the undertakings included in the consolidation as a whole
2. DTR 4.2.7R of the Disclosure Guidance and Transparency Rules, being an indication of important events that have occurred during the first six months of the financial year and their impact on the condensed set of financial statements; and a description of the principal risks and uncertainties for the remaining six months of the year; and
3. DTR 4.2.8R of the Disclosure Guidance and Transparency Rules, being related party transactions that have taken place in the first six months of the current financial year and that have materially affected the financial position or performance of the entity during that period; and any changes in the related party transactions described in the last annual report that could do so.

By order of the Board,

Mark Cook

Chief Executive Officer

9 August 2023

Condensed Consolidated Income Statement

For the 6 months ended 31 May 2023

The accompanying notes form part of these financial statements.

Condensed Consolidated Statement of Comprehensive Income

For the 6 months ended 31 May 2023

Condensed Consolidated Balance Sheet