Final Results - Year Ended 30 September 1999
RM PLC
22 November 1999
RM plc Preliminary Results 1999
Results For The Year Ended 30 September, 1999
RM plc ('RM'), the leading supplier of information and communications
technology software, services and systems to UK education, today announces
its results for the year ended 30th September, 1999.
Highlights
* Turnover up 24% to £162.2 million (1998 £131.0 million)
* Profit before tax up 22% to £12.3 million (1998 £10.0m)
* Diluted earnings per share 25% higher at 9.8p (1998 7.8p)
* Final Dividend of 2.2p per share, an increase of 22% (1998 1.8p)
* Software and services revenue increased by 40%
* Internet for Learning connecting over 10,000 educational establishments,
6,000 of which are now networked - a 200% increase over last year.
* Creating significant position in emerging education managed services
marketplace, managing over 12,000 desktop PCs compared to 1,000 a year
ago
Richard Girling, Chief Executive of RM plc said:
'This has been an exciting and successful year for RM, with significant
progress in all key areas'.
'Growth in our core business has been driven by the substantial additional
funding available to primary and secondary schools to develop the use of
information and communications technology in the classroom'.
'At the same time, we have maintained our investments in the Internet, in
managed services for schools and in teacher training. These investments are
an important part of our growth plans and we are very encouraged by the
progress we are making. The Internet, in particular, has become an integral
part of our core offer and is becoming ever more important to learning - both
at home and at school'.
'As is usual at this stage, it is too early to give an indication of the
outcome for the financial year. Our business is seasonal and this year there
are additional factors that will further influence the profile of the Group's
profits. Firstly, the Classroom 2000 project in Northern Ireland will require
continued investment and secondly, additional government funding will only
become available in the second half of RM's year. The Board has chosen to
authorise significant investment to address the opportunities ahead. Whilst
this investment will further accentuate the seasonality of the Group's
profits, the Board is confident that results for the full year will show good
progress.'
Enquiries to:
Richard Girling, Chief Executive RM plc 0171 404 5959 on 22/11/99
Mike Greig, Finance Director and thereafter 01235 826000
Andrew Fenwick/Gill Ackers Brunswick 0171 404 5959
Chief Executive's Review
The year ending 30 September 1999 has been both exciting and successful for
RM plc. Growth in the Group's core software, services and systems business
has been driven by the substantial additional funding available for
modernising education. At the same time, our investments in managed
services, in the Internet and in the Learning Schools Programme have
developed well and promise to deliver substantial benefits in the years
ahead.
Results
Results for the year were very good with significant growth in all key areas.
This year additional government funding for the National Grid for Learning
was available throughout the whole of the RM's financial year.
Turnover for the year increased 24% to £162.2 million (1998: £131.0 million)
with profit before tax up 22% at £12.3 million (1998: £10.0 million).
Diluted earnings-per-share were up 25% at 9.8 p compared with 7.8 p for the
previous year. The Group's operating costs increased by 21% reflecting both
organic growth and continued planned investment in R and D (up 22%) and
selling and distribution (up 28%).
The board is recommending a final dividend payment of 2.2p per share (1998
1.8p), an increase of 22%. This brings the full year dividend to 2.86p (1998
2.34p), payable on 3rd February 2000 to shareholders on the register on 3rd
December 1999.
The Group continues to focus on software and services. These businesses grew
by 40% and contributed 46% of turnover and 61% of gross profit. Gross profit
was up at £43.8 million (1998: £36.0 million). Gross profit margin was 27.0%
compared to 27.5% in 1998 reflecting an increased contribution from lower
gross margin services businesses, and the initial impact of the Group's
involvement in the Dudley PFI project (which is being treated as a long term
contract).
RM's balance sheet remains strong with year-end cash balances up £0.8 million
at £17.8 million (1998: £17.0 million). This cash position is after funding
the £9.6 million required for financing the Dudley project.
Markets
RM supplies information and communications technology (ICT) software, systems
and services for use in teaching and learning, with over three-quarters of
its turnover coming from primary and secondary schools.
During the year the government's commitment to the use of ICT in education
was reinforced with the announcement of a further £450 million Standards Fund
Grant for the National Grid for Learning (NGfL) in England (£205 million in
government year 2000/01 and the balance in 2001/02), and a £470 million
programme (funded from the Capital Modernisation Fund) to build ICT-equipped
learning centres.
RM supplies approximately 12,000 primary schools and the Group's revenues
from this market sector increased by 62%. This represents both the impact of
additional funding to build the NGfL and continued underlying market growth.
A significant proportion of primary schools are now choosing to install fully
networked ICT solutions that allow them to gain maximum benefit from the
Internet. RM's primary school networking products - SchoolShare and RM
Window Box Connect - address this market need and have been extremely well
received.
The Group's secondary school revenues increased by 20%. The NGfL funding
available in government year 1999/2000 has a stronger secondary school focus
and revenues from this market sector benefited as a result. The RM Connect
product range continues to set the standard for secondary school networking
and is now used by over 1,460 - or 30% - of schools.
Reflecting this market growth, the Group's software revenues grew by 32% with
particularly strong contributions from Internet and from curriculum software.
As reported at the interim stage, the high level of market activity in other
areas impacted learning software sales, however in the second half progress
with this product range has been encouraging.
In March 1999 RM won a £2.6 million contract to provide school management to
the State of Western Australia. To service the contract, and to develop
further business opportunities in the region, the Group has set up a wholly
owned subsidiary - RM Australasia Pty Ltd - based in Perth.
Education Online
The Internet is now a fundamental part of everything that RM does - RM Window
Box is now supported by the recently announced RM Window Box Online Internet
content service, RM Connect has developed into an Internet-centred network
and RM's managed service products are fundamentally Internet based.
By the end of the year RM's Internet for Learning (IfL) ISP business was
providing Internet connections for over 10,000 educational establishments, of
which over 6,000 have full networked access through ISDN or other high
bandwidth mechanisms. By comparison, fewer than 2,000 establishments took
networked connections from RM a year ago. Through its IfL business RM is now
also providing email facilities for 10% of UK school pupils.
The Group's premium Internet content service - Living Library - continues to
grow both in range of content and in popularity. During the year significant
additional content from RM's existing partners was added making Living
Library the most comprehensive Internet resource available to UK education.
Recent research undertaken by RM shows that 35% of UK primary schools have
access to Living Library and that they consider it to be highly valuable.
RM's other Internet content service - EduWeb - is now supporting web sites
for over 1,000 schools and its NetPals facility has been used by more than
100,000 pupils.
Managed Services
RM has now established a significant position in the emerging managed
services marketplace and currently manages over 12,000 desktops (compared
with less than 1000 a year ago). The Group's managed service activities
address schools, colleges and universities and range from single school
projects to, in the case of the Dudley Grid for Learning (DGfL), managing all
educational ICT - for 43,000 pupils and teachers - across a local education
authority (LEA). Managed services combine high quality partnerships with
customers and predictable, long-term revenue streams.
Significant milestones during the year included the completion of the first
full year of the IT outsourcing agreement at Tynemouth College; and RM's
approval as a Certified NGfL Managed Services Supplier. NGfL Managed
Services will be extremely important to RM. Schools are being encouraged to
use certified suppliers for all of their ICT procurement and RM is among only
twelve suppliers to have received certification.
RM has invested significantly during the year in bidding for the Classroom
2000 project, which will provide a managed ICT service for all 1,300 schools
in Northern Ireland. RM is bidding for this contract in partnership with ICL
in Ireland and our consortium - named Trilith - is now the sole bidder for
the project. Classroom 2000 is the largest and most ambitious ICT
procurement seen in the UK educational ICT marketplace and has an estimated
ten-year lifetime value in excess of £300 million. Whilst the project
represents a major medium-term opportunity for the Group, in the short term,
it will require continued investment.
The Training Opportunity
In January 1999, the New Opportunities Fund (NOF) announced the list of
approved suppliers for its £230 million initiative to provide training in the
effective educational use of ICT to teachers and school librarians. The
Learning Schools Programme, RM's partnership with the Open University to
address this initiative, was approved for all curriculum subjects and all
four home countries - the only programme to be approved across all
categories.
The NOF initiative has enormous significance in RM's market both as a
catalyst for market development (training will enable teachers to choose and
use ICT products more effectively) and a business opportunity in its own
right. RM and the OU have invested heavily in order to become the leading
provider to this emerging market. The Learning Schools Programme is a
supported self-study programme comprising newly developed, computer-based
learning materials backed up by Internet conferencing and face-to-face
tutorials.
Schools have been able to apply for NOF funding since the end of April and
the initiative is due to be completed by 2002. The Learning Schools
Programme has been well received and, by the end of the year, 9,000 school
teachers had signed up for training, representing an order intake of £4
million.
Personnel and Facilities
The group now employs more than 1,200 people, up from 948 a year ago. In
order to accommodate this growth, an additional 3,500 square metres of
purpose built office accommodation is being constructed adjacent the Group's
two major facilities on Milton Park estate. This new building will allow RM
to consolidate a number of small facilities on the estate and will support
organic growth for a number of years.
The Group has also extended its presence in Scotland with the opening of a
new facility in Bellshill, South Lanarkshire. RM's Scottish office is now a
major regional centre supporting over 50 staff including customer support and
sales call centres.
Prospects
As usual at this stage, it is too early to give an indication of the outcome
for RM's current year. RM's business is seasonal with much expenditure in
the first half being in preparation for revenue in the second. As a result,
the first half only contributes a small fraction of full year profits.
As was the case two years ago this year there are additional factors that
will further influence the profile of the Group's profits. Firstly, the
Classroom 2000 project in Northern Ireland will require continued investment.
Secondly, significant additional government funding for educational ICT will,
as before, only become available in the second half of RM's year.
The Board has again chosen to authorise significant investment to address the
opportunities ahead. Whilst this investment will further accentuate the
seasonality of the Group's profits, the Board is confident that results for
the full year will show good progress.
Looking Ahead
In the longer term the outlook for the Group continues to look extremely
positive.
ICT remains at the top of the government's modernisation of education agenda
and continues to be supported by significant funding. As detailed above, the
government confirmed the next two years of NGfL funding for England during
the year and announced further funding under the Capital Modernisation Fund.
Subsequent to the year-end, the NOF announced that it is making available
£200 million through its Community Access to Lifelong Learning (CALL)
programme.
Additionally, in November we announced that Tesco had selected RM as the
supplier for the Tesco Computers for Schools 2000 scheme. Tesco's annual
Computers for Schools programme is the most important scheme of its kind and
over the last eight years has made a significant contribution to ICT in UK
schools.
Along with these market opportunities the scope of ICT to improve teaching
and learning is increasing rapidly. Significantly, the enthusiasm of
individual teachers for educational ICT continues to grow and this will drive
demand for RM's innovative product and service portfolio.
RM is well positioned to benefit from the continued growth in demand for
educational ICT both in this and future years.
Richard Girling
November 1999
CONSOLIDATED PROFIT AND LOSS ACCOUNT
For the year ended 30th September 1999
1999 1998
£000 £000
TURNOVER 162,210 130,996
Cost of sales (118,367) (94,970)
______________________________________________________________________
GROSS PROFIT 43,843 36,026
______________________________________________________________________
Operating expenses
- Selling & distribution (18,777) (14,677)
- Research & development (6,651) (5,431)
- Administration (6,685) (6,396)
______________________________________________________________________
(32,113) (26,504)
OPERATING PROFIT 11,730 9,522
Net interest receivable 532 515
______________________________________________________________________
PROFIT ON ORDINARY ACTIVITIES BEFORE
TAXATION 12,262 10,037
Tax on profit on ordinary activities (3,065) (2,814)
______________________________________________________________________
PROFIT ON ORDINARY ACTIVITIES AFTER
TAXATION 9,197 7,223
Dividends paid and proposed (2,633) (2,124)
______________________________________________________________________
RETAINED PROFIT FOR THE YEAR 6,564 5,099
______________________________________________________________________
Earnings per ordinary share
- Basic 10.0p 8.0p
- Diluted 9.8p 7.8p
CONSOLIDATED BALANCE SHEET
As at 30th September 1999
1999 1998
£000 £000
FIXED ASSETS
Intangible fixed assets 7,837 8,374
Tangible fixed assets 23,032 11,176
______________________________________________________________________
30,869 19,550
CURRENT ASSETS
Stocks 10,171 8,527
Debtors 35,948 35,235
Investments - short term cash deposits 8,837 10,151
Cash at bank and in hand 8,957 6,813
______________________________________________________________________
63,913 60,726
CREDITORS
Amounts falling due within one year (53,578) (47,779)
______________________________________________________________________
NET CURRENT ASSETS 10,335 12,947
TOTAL ASSETS LESS CURRENT LIABILITIES 41,204 32,497
CREDITORS
Amounts falling due after more than one
year (3,531) (3,149)
PROVISION FOR LIABILITIES AND CHARGES (1,130) (56)
______________________________________________________________________
NET ASSETS 36,543 29,292
______________________________________________________________________
CAPITAL AND RESERVES
Called-up share capital 1,842 1,816
Share premium account 6,029 5,368
Profit and loss account 28,672 22,108
______________________________________________________________________
EQUITY SHAREHOLDERS' FUNDS 36,543 29,292
______________________________________________________________________
CONSOLIDATED CASH FLOW STATEMENT
For the year ended 30th September 1999
1999 1998
£000 £000
NET CASH INFLOW FROM OPERATING ACTIVITIES 22,116 18,586
Returns on investments and servicing of
finance 532 515
Taxation (3,569) (2,119)
Capital expenditure and financial investment (16,693) (9,202)
Equity dividends paid (2,243) (1,786)
______________________________________________________________________
NET CASH INFLOW BEFORE USE OF
LIQUID RESOURCES AND FINANCING 143 5,994
______________________________________________________________________
Management of liquid resources 1,314 (2,972)
Financing 687 203
______________________________________________________________________
INCREASE IN CASH IN THE YEAR 2,144 3,225
______________________________________________________________________
RECONCILIATION OF NET CASH FLOW TO MOVEMENT IN CASH AND CASH DEPOSITS
For the year ended 30th September 1999
1999 1998
£000 £000
INCREASE IN CASH IN THE YEAR 2,144 3,225
Cash (outflow)/inflow from change in liquid
resources (1,314) 2,972
______________________________________________________________________
CHANGE IN CASH AND CASH DEPOSITS RESULTING 830 6,197
FROM CASH FLOWS
Cash and cash deposits brought forward 16,964 10,767
______________________________________________________________________
CASH AND CASH DEPOSITS CARRIED FORWARD 17,794 16,964
______________________________________________________________________
NOTES TO THE ACCOUNTS:
1. Report and Accounts 1999
The financial information set out in this preliminary results announcement
does not constitute the Company's statutory accounts for the years ended
30th September 1999 or 30th September 1998 but is derived from those
accounts. Statutory accounts for 1997/1998 contained an unqualified audit
report and have been delivered to the Registrar of Companies. The
statutory accounts for 1998/1999 will be posted shortly, and delivered to
the Registrar of Companies following the Company's Annual General Meeting
to be held on the 26th January 2000.
2.Earnings per share
Earnings per share figures for 1999 and 1998 have been calculated using
FRS14 Earnings per Share. Basic earnings per ordinary share for the year
ended 30th September 1999 is based on 91,650,665 ordinary shares, being
the weighted average number of ordinary shares in issue during the year.
The diluted earnings per ordinary share for the year ended 30th September
1999 takes account of share options in issue and is based on a weighted
average of 94,357,160 ordinary shares issued and issuable.
3. Dividends per share
The Directors have recommended the payment of a final dividend of 2.2p
(net) bringing the total dividend for the year to 2.86p (net) per share.
The final dividend is payable on 3rd February 2000 to shareholders on the
register on 3rd December 1999.
4. Net cash flow from operating activities
1999 1998
£000 £000
Operating profit 11,730 9,522
Depreciation charge 3,889 2,818
Amortisation of intangible fixed assets 951 804
Profit on sale of fixed assets (91) (92)
Increase in stocks (1,644) (2,560)
Increase in debtors (1,574) (7,388)
Increase in creditors 8,855 15,482
______ ______
Net cash inflow from operating activities 22,116 18,586
Copies of the Annual Report and Accounts may be obtained after the posting
date of 16th December 1999 from the registered office of the Company at: New
Mill House, 183 Milton Park, Abingdon, Oxfordshire OX14 4SE
A copy of this announcement is available at RM's internet site:
http://www.rm.com and a copy of the Annual Report and Accounts will be
available from 16th December 1999.
Latest directors dealings
- 19 minutes ago River Global Plc
- 1 hour ago Pipehawk
- 1 hour ago Frasers Group
- 1 hour ago DP Aircraft I Limited Pref
- 1 hour ago Cropper (James)