RM (RM) H1 2024 earnings summary

Executive summary

• Revenue from continuing operations was £79.2m, down 9.6% year-over-year, mainly due to the closure of the Consortium business and a shift to longer-term, recurring contracts, with revenue recognition deferred to future periods.

• All three divisions returned to profitability, with adjusted operating profit up 86% and EBITDA at £1.9m, up £3.4m from HY23.

• Strategic execution included a major long-term contract with International Baccalaureate, driving a 51% increase in the Assessment order book to £66.9m and a 70% pipeline increase to £170m.

• Transformation and cost reduction programs delivered £6.6m of annualised savings in H1, progressing toward a £10m target.

• Net debt at half year was £52.7m, in line with expectations and supported by a new banking facility extended to July 2026.

Financial highlights

• Adjusted operating loss improved to £0.6m from £4.5m loss in HY23; adjusted EBITDA reached £1.9m, up £3.4m year-over-year.

• Adjusted diluted EPS was (4.1)p, improved from (6.7)p in HY23.

• Gross margin improved to 38.0% from 31.5% in HY23.

• Net assets at 31 May 2024 were £12.2m, down from £17.8m a year earlier.

• Exceptional costs of £3.1m incurred, mainly for restructuring and property rationalisation.

Outlook and guidance

• H2 revenue is expected to significantly outperform H1 due to seasonality and post-election clarity in the UK.

• Full-year revenue expected to be broadly flat year-over-year as revenue mix shifts to long-term recurring contracts, with adjusted operating profit in line with market expectations.

• Profitability to benefit from £6.6m of cost savings in H2, with a target of £10m annualised savings.

• Net debt expected to remain within banking covenants by year-end.

• Company expects to operate within banking covenants for FY24, supporting growth plans and ongoing obligations.