from RM Plc (isin : GB00BJT0FF39)
RM plc: Preliminary Results for the year ended 30 November 2022
RM plc (RM.)
29 March 2023 RM plc
Preliminary Results for the year ended 30 November 2022
RM plc (“RM”), a leading supplier of technology and resources to the education sector, reports its final results for the year ended 30 November 2022. Mark Cook, Chief Executive of RM, said: “RM’s performance in FY2022 was materially impacted by the challenges associated with the IT implementation project in our Consortium business. These challenges led to us having to take a number of actions, including suspending the payment of dividends. I recognise that there is much to be done to rebuild value for our stakeholders, but I’m pleased to report that we now have a much more stable financial and operational position, including a renewed banking facility which will run until July 2025.
“My priorities as RM’s CEO are clear. Firstly, to continue to strengthen the Company’s finances, secondly, to review the IT enterprise architecture and thirdly, to embed a transformation approach across the business. The third priority is about retaining the 50 years of Education IP in the Company, but also to better leverage the product opportunities in the Education sector and ensure a sharper focus on customer excellence and satisfaction.
“While there is much to be done, the business and market fundamentals are positive and the whole team at RM are focussed on delivering for our customers, improving outcomes for learners and unlocking value for all our stakeholders.”
Highlights
* Throughout this statement, adjusted operating profit and EPS are 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. ** Alternative performance measure, see Note 2. 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.
Presentation and live webcast details A presentation for analysts and investors will be held today at 9.00am. The audio and slide presentation will be webcast live and on demand at the following website: https://www.investis-live.com/rmplc/64146e954aa86d150050e0cf/rmak The webcast will also be accessible via a live conference call:
For additional details and registration for the webcast, please contact Headland Consultancy on +44 203 805 4822 / rm@headlandconsultancy.com.
Posting of Annual Report and Accounts Contacts:
Chair Statement Overview 2022 was a difficult year for the Group, dominated by the challenging deployment of the new IT system into the Consortium brand of the Resources Division. This impacted customer service in that part of the business and the financial performance of the Group overall as additional costs were incurred, putting the Group under unnecessary financial stress. Thanks to the determination and hard work of the team, the situation is now under control. A stable footing both financially and from a systems perspective has been established. Notwithstanding the significant impact of this event on profit and shareholder value, the Group delivered 4% revenue growth, including the highest ever revenues from the Assessment Division and TTS Resources brand. This is my first annual statement since taking over as Chair and it is helpful to set out my perspective on the Group and our priorities. RM has market leading positions, channel strength and a good product and market fit across its portfolio. The business operates in an important and resilient marketplace and is well positioned to deliver sustainable growth in response to a number of positive structural trends in the education market. However, as the team had already acknowledged, there is a need for a period of transformation to improve the way in which RM is structured and executes in order to be able to deliver effectively on these opportunities. A requirement to change With this in mind, at the start of the year, the Company laid out a reset of its strategy with a 2-year transition phase, with the aims of simplifying and focussing its portfolio, strengthening the leadership team and restructuring the Technology Division. Progress continues in each of these areas, including the announcement of the sale of the RM Integris and Finance products from the Technology Division for up to £16m. However, the implementation phase of the internal IT system replacement and warehouse consolidation and automation programme, in development since 2018, has been a substantial setback. The difficulties in deployment and subsequent remediation of these in the Consortium business dominated the management agenda in the second half of the year and led to an even greater urgency to bring about change. Now on a platform to progress In response, the business has now stabilised the IT platform and made the final deployment in the Consortium business to complete this phase of the programme. A new interim Chief Technology Officer has been appointed and the wider implementation programme has been paused to enable management to reconsider the wider IT architecture. A new interim Chief Financial Officer, Emmanuel Walter, has been appointed, bringing greater financial rigour and control. To respond to the liquidity challenges the Group has been facing, the business accelerated the sale of some surplus assets of Internet Protocol v4 (IPV4) addresses from its connectivity business and restructured its £70m banking facility which is now extended to July 2025. It will also benefit from the strategic sale of the RM Integris and RM Finance businesses mentioned earlier which is anticipated to complete in the first half of 2023. This provides a sound footing on which to continue to develop the business and focus on optimising the portfolio value of a Group that delivers significant value in the education sector. I have been working closely with the leadership team to identify the necessary actions to unlock that value and will continue to ensure that they have the Board’s full support to do so.
Thanks to the team Navigating this year has required exceptional efforts from so many of the people within the RM business and I have been impressed by their resilience and passion for our purpose and for their customers and on behalf of the Board I would like to thank the whole team. We have continued to evolve the Board and leadership of the Group. Most notably, Mark Cook joined as Chief Executive Officer in January 2023, replacing Neil Martin who stepped down after 7 years with the Group. Mark brings with him important experience in transformation and creating shareholder value. Paul Dean will be retiring as Chair of the Audit and Risk Committee after the publication of the FY2022 preliminary results and will be replaced by Richard Smothers who joined the Board in January 2023. As mentioned, Emmanuel Walter joined as interim Chief Financial Officer in July 2022. I would like to thank Neil and Paul for their contributions to RM and wish them both well in the future. To support continuity through a period of change, the Company has agreed to extend the term of Patrick Martell’s appointment as the senior independent Non-Executive Director by one year to 31 December 2023 which will take him into his tenth year with the Group. During the last year, the Board has had to step up in what has been a dynamic and testing environment. I’m thankful to my fellow Board members for their efforts and commitment during this period helping RM to steer a path to a more stable position. 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 Last Twelve Months (LTM) EBITDA (post IFRS 16) leverage to less than 1x for two consecutive quarters and therefore, we are not able to recommend the payment of 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. Outlook The macroeconomic backdrop remains challenging with inflation continuing to put pressure on our own operations and on school budgets. However, RM now has the benefit of a stable operating and financial platform on which to focus more fully on rebuilding and optimising shareholder value from its portfolio and I am confident in the positive progress that will be made.
Helen Stevenson Chair
Chief Executive Officer’s statement
I am pleased to have joined RM at an important point for the Group. The attraction of the role was clear with a business in a socially important and resilient sector and with strong market positions. The organisation has a deep and rich heritage in the Education sector and will celebrate 50 years of trading in 2023. It is a sector that is experiencing structural change, most notably associated with the use of technology which was advanced through its experience during the pandemic in 2020 and 2021, and this creates an interesting growth opportunity and positive inflection point for RM.
At the same time, RM acknowledged in last year’s annual report, that it is a business that needs to change. I have spent the best part of my career working in technology businesses and leading business transformations. My priority is clear, to work with the Board and the leadership team to bring that experience to bear with the objective of building value for all our stakeholders. There is much to be done, but the work by the team over the last 6 months, has put RM back on a much firmer financial and operational footing, and I am committed to ensuring that the Group takes full advantage of the opportunities in its chosen markets.
2022 Performance
Despite a disappointing bottom line financial performance in 2022 with profitability levels materially below that of previous years, the top line gave cause for encouragement. Revenue growth was 4% and the Assessment Division and the TTS resources brand delivered record revenues benefitting from UK and international sales growth. As we have noted previously, profitability in 2022 was negatively impacted by increased costs related to the IT implementation and inflation impacts on costs, in particular international freight costs that were several multiples higher than pre-pandemic levels, combined with ongoing drag from the Technology Division pending benefits from its turnaround.
The impact of the IT implementation challenges was broader than just profitability. The requirement to stabilise the operational performance in Consortium and to fix the implementation issues drove materially higher levels of borrowing than planned. Dividends were suspended as a consequence alongside further actions to prioritise net debt, such as the accelerated sale of IPv4 addresses in the second half.
I recognise that there is much to be done to rebuild value for all our stakeholders, but we start 2023 with a more stable financial and operational position.
Transformation approach to Continuous Improvement
My near-term focus will be to continue to strengthen the Group finances alongside looking at the value creation path ahead. I am working with the management team to pinpoint all opportunities that drive enterprise value utilising our expertise in the education sector, product design and the potential from a digital transformation. We are focussed on building shareholder and enterprise value in a short time frame and as a result building ope |