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 -
Notes to Editors:
- 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.
- 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%.
- 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.
- 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.
- 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).