REG-RM plc RM plc: Proposed sale of the RM Integris and RM Finance Business

RMAnnouncement

28/11/2022 07:15

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   RM plc (RM.)
   RM plc: Proposed sale of the RM Integris and RM Finance Business

   28-Nov-2022 / 07:00 GMT/BST
   Dissemination of a Regulatory Announcement, transmitted by EQS Group.
   The issuer is solely responsible for the content of this announcement.

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   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 Lagler, Group General Counsel
   and Company Secretary of the Company.

    

   28 November 2022

    

                                     RM plc
            Proposed sale of the RM Integris and RM Finance Business

                                        

                  Continuation of RM's transformation strategy

     Cash proceeds intended to reduce debt and strengthen the balance sheet

                                        

   RM plc, a leading supplier of technology and resources to the education
   sector (LSE: RM) ("RM", the "Company" or, together with its subsidiary
   undertakings, the "Group"), today announces that it has conditionally
   agreed to sell the RM Integris and RM Finance Business and related assets
   of its principal trading subsidiary, RM Education Limited ("RMEL"), (the
   "RM Integris and RM Finance Business") to The Key Support Services Limited
   ("The Key").

   Total consideration for the Sale, which will constitute a Class 1
   transaction, will be up to £16.0 million in cash on a cash-free/debt-free
   basis and subject to customary normalised working capital adjustments (the
   "Sale"). This agreement follows the strategic review outlined earlier this
   year. Completion of the Sale ("Completion") is expected to take place
   during the first half of 2023.

   Highlights:

     • Sale of the RM Integris and RM Finance Business to The Key for a
       consideration of up to £16.0 million in cash.
     • Initial consideration of £12.0 million in cash will be paid on
       completion, adjusted to reflect the normalised working capital
       position of the RM Integris and RM Finance Business.
     • The remaining consideration will be paid in cash subject to the
       satisfaction of certain conditions, including those relating to
       competition clearance.
     • The net proceeds of the Sale will be used to reduce Group indebtedness
       and strengthen its balance sheet.
     • The Sale executes against the previously outlined strategy to
       restructure the RM Technology Division and to refocus its strategy on
       its core Managed Services business.
     • The Sale constitutes a Class 1 transaction under the Listing Rules of
       the Financial Conduct Authority (the "FCA"), (the "Listing Rules") and
       is therefore conditional upon, amongst other things, shareholder
       approval.

   Neil Martin, Chief Executive Officer of RM plc, commented:

   "This Sale allows RM to better focus our resources and efforts within RM
   Technology to take greater advantage of the market opportunity presented
   by the growth in larger school groups and the increasing use of
   technology. In addition to its strategic importance, the net proceeds of
   the Sale will reduce our debt levels across the Group, thereby supporting
   our transformation strategy to deliver long term value for our
   stakeholders.

   "RM Integris and RM Finance are both good products and will be well placed
   to develop as part of The Key, which we believe is a good outcome for our
   customers, employees, and other stakeholders. We thank all our employees
   for their excellent work, especially those in the RM Integris and RM
   Finance Business."

   Enquiries:

   RM plc                                   
   Neil Martin, Chief Executive Officer    Tel: +44 (0)1235 401 805
   Emmanuel   Walter,   Chief    Financial  1 investorrelations@rm.com
   Officer (interim)
   Cynthia   Alers,   Investor   Relations  
   Director (interim)
                                            
   Headland Consultancy                    Tel:  +44 (0)203 805 4822
   Stephen Malthouse                       smalthouse@headlandconsultancy.com
   Jemma Savage                             

    

    

   Notes to Editors:

    

   RM plc is a leading supplier to the international education sector, with a
   turnover of £211m and approximately 2,000 employees globally. Established
   in 1973, 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, an established provider of education resources for early
       years, primary schools, and secondary schools across the UK and to
       eighty countries internationally.
     • RM Assessment, a leading provider of assessment software, supporting
       exam awarding bodies, universities, and governments worldwide to
       digitise their assessment delivery.

     • RM Technology, a market-leading supplier of ICT software, technology
       and services to UK schools and colleges.

    

   Further Information on the Sale

   1.                   Background to, and reasons for, the Sale

   Technology is playing an ever-greater role in education – from the
   classroom to the way schools and trusts are managed. Schools and trusts
   are asking for more advice, guidance, and support to realise the benefits
   that technology can bring. RM's expertise in the education sector and its
   national scale mean it can deliver value for customers in this market by
   being a platform-led managed services company. 

    

   The continued conversion to Academy status and the growth of Multi-Academy
   Trusts are changing the landscape of English schools. RM's target
   customers are mid-sized Multi-Academy Trusts, which it expects will make
   up most of the market within the next few years. In contrast, RM Integris
   and RM Finance are popular with single-site primary schools, and the
   product is not developed to meet the growing requirements of the Group's
   target Multi-Academy Trust customers. The Sale of the RM Integris and RM
   Finance Business is a strategic decision to enable the Group to focus on
   meeting the growing demand from its target customer base. It is part of
   the wider restructure of the RM Technology business, as set out in the
   Group's transformation plan announced in February 2022.

   2.                   Principal terms of the Sale

   The Sale Agreement

   The Company (as guarantor), RMEL and The Key have entered into a sale and
   purchase agreement (the "Sale Agreement") pursuant to which RMEL has
   conditionally agreed to sell the entire issued share capital of a newly
   incorporated, wholly owned subsidiary of RMEL, Schools Educational
   Software Limited ("Newco"), to The Key.

   Newco will acquire the RM Integris and RM Finance Business as part of the
   hive-down transaction prior to Completion.

   The initial consideration payable under the Sale Agreement is £12.0
   million in cash (the "Initial Consideration"). The Initial Consideration
   will be paid on a cash-free/debt-free basis and adjusted to reflect the
   normalised working capital position of the RM Integris and RM Finance
   Business.

   The total consideration will increase by up to an additional £4.0 million
   (the "Additional Consideration") to £16.0 million subject to satisfaction
   of certain conditions, including those related to competition clearance.
   This includes deferred cash consideration of £550,000, which will be
   payable subject to set thresholds relating to hosting uptime and
   assistance in transfer of services from RM's India subsidiary.

   If the Additional Consideration is not payable, but The Key divests Newco
   (or all, or substantially all, of its business and assets) within a
   defined period following Completion a divestment fee of up to £4.0 million
   will be payable to RMEL subject to certain conditions being met.

   The Sale Agreement contains certain warranties, undertakings, covenants,
   and indemnities from RMEL to The Key in respect of the RM Integris and RM
   Finance Business which are in a customary form for such a transaction.

   The Sale constitutes a Class 1 transaction under the Listing Rules and, as
   such, the Sale Agreement is conditional upon the approval of the Company's
   shareholders in a general meeting (the "General Meeting"). A Class 1
   circular (the "Circular") which is required to be approved by the FCA,
   containing, amongst other things, further details of the Sale, the
   Company's board of directors' (the "Board") recommendation to vote in
   favour of the resolution approving the Sale (the "Resolution") and the
   notice convening the General Meeting will be published by the Company in
   due course and will be available for inspection at
    2 https://www.rmplc.com/announcements in due course.

   In the event that the Resolution is not approved by shareholders at the
   General Meeting on or before the date falling 12 months from the date of
   the Sale Agreement (the "Longstop Date") and Completion does not occur,
   the Company has agreed to pay The Key a break fee of £343,887 in cash.

    

   Further details of the Sale Agreement will be set out in the Circular.

   The TSA

   Prior to Completion, RMEL and Newco will also enter into a transitional
   services agreement (the "TSA").  The services under the TSA will generally
   be provided for up to one year following Completion.

   Further details of the TSA will be set out in the Circular.

   3.                   Information on the RM Integris and RM Finance
   Business

   RM Integris is a leading school management information system in England.
   Flexible and easy-to-use, RM Integris is designed to give teachers and
   administration staff the tools they need for flexible, efficient working.
   RM Finance is a financial management system for administering school
   finances and budgeting. Together, this business has approximately 3,000
   customers.

   4.                   Information on the continuing Group

   The Sale of the RM Integris and RM Finance Business is part of a wider
   restructure of RM's Technology business under the Group's transformation
   strategy which was announced in February 2022. The Group is focused on
   improving its go-to-market strategies. The RM Resources and RM Assessments
   divisions will remain unaffected by the Sale.

    5. Financial impact of the Sale

   The RM Integris and RM Finance Business had unaudited revenues of £4.7
   million and unaudited profit before tax of £2.0 million for the year ended
   30 November 2021. Unaudited gross assets were £413,000 for the same
   period.1

   1As the financial information for the RM Integris and RM finance business
   has been extracted from the RM Technology segment, consistent with the
   segmental disclosures in note 4 to the FY21 Financial Statements, finance
   costs have not been attributed to the result in deriving the profit before
   tax.  Net financing costs and tax are not allocated to segments as the
   funding, cash and tax management of the Group are activities carried out
   by the central treasury and tax functions.  The income statement balances
   are as per the RM accounting system for these products.  The only
   calculation here is that the profit before tax figure includes a share of
   the divisional overhead charges which is consistent with the approach used
   for the segmental results as per note 4 cited above.

   Important notice

    

   This announcement is for information purposes only and does not constitute
   or form part of any offer to issue or sell, or the solicitation of an
   offer to acquire, purchase or subscribe for, any securities in any
   jurisdiction and should not be relied upon in connection with any decision
   to subscribe for or acquire ordinary shares in the capital of the
   Company.  In particular, this announcement does not constitute or form
   part of any offer to issue or sell, or the solicitation of an offer to
   acquire, purchase or subscribe for, any securities in the United States.

    

   This announcement has been issued by, and is the sole responsibility of,
   the Company. No person has been authorised to give any information or to
   make any representations other than those contained in this announcement
   and, if given or made, such information or representations must not be
   relied on as having been authorised by the Company.

    

   No statement in this announcement is intended to be a profit forecast or
   profit estimate and no statement in this announcement should be
   interpreted to mean that earnings per share of the Company for the current
   or future financial years would necessarily match or exceed the historical
   published earnings per share of the Company.

    

   This announcement may include statements that are, or may be deemed to be,
   "forward-looking statements". These forward-looking statements can be
   identified by the use of forward-looking terminology, including the terms
   "believes", "estimates", "plans", "projects", "anticipates", "expects",
   "intends", "may", "will", "would" or "should" or, in each case, their
   negative or other variations or comparable terminology. These
   forward-looking statements include matters that are not historical facts.
   They appear in a number of places throughout this announcement and include
   statements regarding the directors of the current Company's intentions,
   beliefs or expectations concerning, among other things, the Company's
   results of operations, financial condition, liquidity, prospects, growth,
   strategies, and the Company's markets. By their nature, forward-looking
   statements involve risk and uncertainty because they relate to future
   events and circumstances. Actual results and developments could differ
   materially from those expressed or implied by the forward-looking
   statements. Forward-looking statements may and often do differ materially
   from actual results. Any forward-looking statements in this announcement
   are based on certain factors and assumptions, including the directors of
   the Company's current view with respect to future events and are subject
   to risks relating to future events and other risks, uncertainties and
   assumptions relating to the Company's operations, results of operations,
   growth strategy and liquidity. Whilst the directors of the Company
   consider these assumptions to be reasonable based upon information
   currently available, they may prove to be incorrect. Save as required by
   applicable law or the Listing Rules of the Financial Conduct Authority or
   the Disclosure Guidance and Transparency Rules of the Financial Conduct
   Authority, the Company undertakes no obligation to release publicly the
   results of any revisions to any forward-looking statements in this
   announcement that may occur due to any change in the directors of the
   Company's expectations or to reflect events or circumstances after the
   date of this announcement.

    

   Neither the content of the Company's website nor any website accessible by
   hyperlinks to the Company's website is incorporated in, or forms part of,
   this announcement.

    

   Certain figures contained in this announcement, including financial
   information, have been subject to rounding adjustments. Accordingly, in
   certain instances, the sum or percentage change of the numbers contained
   in this announcement may not conform exactly with the total figure given.

    

   All references to time in this announcement are to London time, unless
   otherwise stated.

    

    

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   ISIN:           GB00BJT0FF39
   Category Code:  MSCH
   TIDM:           RM.
   LEI Code:       2138005RKUCIEKLXWM61
   OAM Categories: 2.2. Inside information
                   3.1. Additional regulated information required to be
                   disclosed under the laws of a Member State
   Sequence No.:   203966
   EQS News ID:    1498187


    
   End of Announcement EQS News Service

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References

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