Acquisition of TSS Group
RM PLC
10 September 2004
10th September 2004
RM acquires specialist education resources provider TTS Group
RM plc, the leading supplier of information and communications technology (ICT)
and other services to education, announces the acquisition of TTS Group Ltd
(Technology Teaching Systems) for a consideration of up to £11.0 million (with
RM assuming net debt of £0.8 million). TTS Group is a leading provider of high
quality educational resources to individual schools; the acquisition of TTS
brings a profitable and growing business into the RM Group and broadens the
range of educational products that the Group provides to its individual schools
customers in the UK.
TTS provides a wide range of curriculum-specific educational resources to
nursery, primary and secondary schools. The range comprises more than 4,000
different items, including products such as science experiment kits, lesson
plans and technology materials, as well as ICT peripherals. More than
one-quarter of TTS' sales are of products that are exclusive to the company. TTS
markets directly to individual teachers through a series of twelve catalogues,
each of which has a specific curriculum focus (Design & Technology, Science,
Literacy etc).
TTS' turnover for the year to 31st August 2003 was £8.3 million, with operating
profit (before goodwill amortisation) of £1.9 million. Turnover in the year to
31st August 2004 is estimated to have grown by 16% to £9.6 million, with profits
growing correspondingly.
RM is paying an initial consideration of £9.9 million in cash (based upon the
business having tangible net assets of £0.3 million on completion). Further
consideration of up to £1.1 million is payable over two years in loan notes,
conditional on TTS' three Directors transferring their knowledge of the business
to RM by working for the Company over that period. In addition, RM is assuming
net debt of £0.8 million.
Following the acquisition, TTS will be managed as a separate entity within the
RM Group by the existing Directors, with its own sales, marketing and
distribution activities. Over time it is anticipated that, where appropriate,
TTS' business systems and operational activities will be brought together with
those of the RM Group.
Commenting on the acquisition, Tim Pearson, CEO of RM, said:
'TTS fits extremely well into the RM Group: it's a well-managed and highly
profitable business, which has achieved its success through a passionate
commitment to customer service and educational excellence. TTS operates in the
same education marketplace as RM and shares many of our operational requirements
- there are a lot of things we can learn from one another and many opportunities
for joint activity between our two businesses.
'TTS will be a significant asset as RM transitions to a more broadly-based
educational supplier. They have a well-regarded brand and a broad range of
curriculum-focused resources that are complementary to RM's ICT products.
Against a background where the government is encouraging schools to embed ICT in
all their teaching activities, TTS' product range will allow the RM Group to
sell more products to its individual schools customers'
Raymond Griffiths, Managing Director of TTS, added:
'Over the last three years TTS has achieved substantial growth, both in revenue
and profit. However, achieving the next stage of this growth will require a
level of capital investment and management support - particularly in the areas
of online trading and business systems - beyond that we could manage on our own.
Becoming part of the RM Group will provide the scale, operational experience and
investment that TTS requires to move to the next level.
'It was important to us that TTS became part of an organisation that shared our
educational values and allowed us to retain the approach that has made TTS
successful. RM has a good track record of growing the businesses it acquires,
whilst retaining their management, staff and culture.'
RM is holding a telephone briefing for analysts at 9.30 am (BST) on Friday 10th
September. The dial in number for the briefing is +44 (0) 1452 541076.
- Ends -
For further information, please contact:
Mike Greig/Phil Hemmings, RM plc 08709 200200
Fiona Laffan/Mark Antelme, Brunswick 020 7404 5959
Notes to Editors:
1. Technology Teaching Systems was founded in 1985 as a specialist
provider of design and technology resources for schools. TTS Group now employs
70 people and operates from freehold premises (a 20,000 square foot distribution
centre) in Nottinghamshire.
2. The three Directors who comprise TTS' management team have eleven, ten
and seven years experience with TTS respectively. They acquired control of TTS
through a management buyout in 2002. Since the management buyout, the TTS Group
has seen year-on-year sales growth of 16%. TTS' gross profit margins on product
sales are approximately 45%.
3. TTS distributes catalogues to over 100,000 individual teachers
annually. There are currently twelve separate catalogues, which are very tightly
targeted to the needs of specific groups of teachers. These catalogues are
supplemented by regular promotional mailshots targeted at specific curriculum
areas. The full range of catalogues comprises Design & Technology, Science,
History & RE, Mathematics, English, Key Stage 3, ICT, Geography, Early Years,
PSE (Personal & Social Education), Early Years Furniture and Special Needs.
4. The British Education Suppliers Association (BESA) estimates that
schools' total expenditure on education resources (excluding furniture,
stationery and ICT) in government year 2004/05 will be £498 million.
5. Following its strategic review in 2002, RM has been developing a more
broadly-based education product and service offer. As well as winning a number
of large education projects, the Group has made three acquisitions: Sentinel
(Feb 2004, a developer of educational network management software),
Peakschoolhaus (October 2003, an Ofsted inspection and training provider) and
Forvus (July 2003, a data management and statistical services provider).
This information is provided by RNS
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