Hello, welcome to RM's Full Year Results for 2023. My name is Mark Cook, Chief Executive Officer, and I am joined by Simon Goodwin, Chief Financial Officer. The agenda for today is split into three segments. Firstly, I will give an overview of the Financial Year, then Simon will cover the financials in more detail. Finally, I will follow with an update on RM's new strategic focus. FY23 was always earmarked to be a stabilization year, and it had some clear inherited challenges from both an IT and operational perspective. I am very pleased to say that we have made excellent progress to stabilize the business, identify the strategic direction, and I have positive news to share related to customer rewards that reinforces our new strategic investment plan.
FY23 was always going to be a critical year in terms of the EVO IT programme and the knock-on impact to the consulting business. Decisive action was needed to avoid more costly budget overruns and further disruption to the overall business. As a result, we made the following decisions: we closed the loss-making consulting business, which ceased trading in December 2023, avoiding further losses. The EVO IT system itself was permanently cancelled to save significant further costs. The Consortium and TTS distribution centres were consolidated into one site at Harrier Park, realizing GBP 1.5 million of annualized savings. Resources division now only consists of our marquee brand TTS, Technical Teaching Solutions. Now, let's have a look at the key elements for FY23. Firstly, the year was delivered in line with guidance at an operating profit of GBP 300,000 and an EBITDA of GBP 7 million.
Overall revenue was GBP 195.2 million, down 8.9% year-on-year, and this was driven by the Consortium trading downturn and pressure on UK schools. However, we do have some very positive headlines, including a strong performance from our assessment business with a 9% year-on-year growth and our TTS International business with just over 6% year-on-year growth. This was achieved by winning both new customers and extensions to existing customer contracts. Other financial headlines include an improvement in our adjusted net debt to GBP 45.6 million, and this was with significant liquidity covenant headroom. We have now signed and announced our lenders' continual support of our business and strategic plan. In the second half of the year, we saw our transformation program taking effect to improve profitability and normalize working capital.
All in all, we took decisive action to address legacy issues and costs, and in future, I do not expect to refer to these legacy issues as they are now completely behind us. As well as dealing with these issues discussed, we have spent time to clarify RM's future strategic focus. We are today unveiling our intention to become a leading global EdTech company with significant investment in our portfolio of products and solutions for the coming years. This new strategic, operational, and management change will enable RM to unlock its true value. A core component of the future RM portfolio is to build out at scale our Global Accreditation Platform. I am pleased to say we already have customers with new long-term commitments as future users of the Global Accreditation Platform as part of our overall digital assessment solution.
In addition, we have new skills and strengths in our senior leadership team. The executive team has been strengthened with replacement roles such as myself, newly appointed CEO, our head of India, and chief financial, digital, and people officers, as well as retaining key leadership in our assessment and technology businesses. This is a team that has a track record of delivery, and here are some early proof points. Firstly, the legacy issues and actions previously outlined were delivered to time, cost, and quality. Secondly, phase one of the transformation cost savings has been identified, executed, and the benefits are flowing with annualized cost savings of GBP 20 million. And lastly, we have landed long-term assessment customer wins that fit our strategic investment plans. The senior leadership team now have their FY 2024 priorities linked to this strategy, which are clear and embedded in our RM colleagues' objectives.
The strategic business plan enables us to return to revenue and profit growth and reduce our level of debt. The plans to support our turnaround and investment for the future have, of course, been supported by our lenders. All in all, today marks the public intention to regain RM as a leading EdTech company, serving global customers, and I'm glad to say we are in much better shape to enable this vision with confidence. I will now pass over to Simon for the financial review.
Thank you, Mark. Moving on then to a more detailed financial summary of the year. Before I begin, I'll just take a second to explain that our headline numbers do still include the Consortium business as a continuing operation. Although we announced in November 2023 our intent to close Consortium, it was still trading at the end of FY23 and continued to trade through early December. We are now separating out the Consortium business from the rest of the Resources division in the segmental analysis. Therefore, I am able to remove Consortium's results from some of the KPIs included in this presentation in order to provide a more useful indication of the underlying performance of the business for forward-looking comparisons.
Largely as a result of the decision to close Consortium, as well as several other significant activities that took place during the year, we have incurred GBP 46.9 million of exceptional costs in the period, offset by the gain on sale of IP addresses and the RM Integris and Finance business. GBP 43.2 million of these costs relate directly to the decision to stop trading in Consortium and to permanently cease our EVO ERP system implementation, avoiding significant additional costs. The vast majority of those exceptional costs, all bar GBP 5 million, were non-cash accounting adjustments. We reported at the interim results that we were likely to breach the P9 and P12 EBITDA banking covenants, largely as a result of the poor trading in Consortium.
As we've subsequently announced, our lenders have granted waivers to those two covenants in advance of most recently agreeing to amend and ultimately extend our GBP 70 million banking facility to July 2026. Despite these challenges and the need for EBITDA waivers, the business did successfully remain within its hard liquidity covenant throughout this period, closing the year with an adjusted net debt of GBP 45.6 million, a decrease of 2.6%, GBP 1.2 million lower than the reported debt at the end of last year. The surplus in our defined benefit pension schemes at year-end has reduced by GBP 10.2 million to a GBP 12.4 million surplus. This reduction was driven by negative returns on scheme assets, which are more heavily weighted to equities due to the high proportion of scheme members who are some way off the time and age, being partially offset by decreases in scheme liabilities driven by higher discount rates.
So, against the backdrop of all this noise during the year, headline revenue fell 8.9% to GBP 195.2 million, or GBP 175.9 million excluding Consortium, down 2.5% on a like-for-like basis. Adjusted operating profit was GBP 0.3 million, equating to an EBITDA of GBP 7 million, with the most significant losses coming from the now closed Consortium business. We returned to profit in H2, generating GBP 4.8 million of adjusted operating profit delivered on the back of higher revenues, but also as a result of cost-saving actions initiated in H1. This H2 adjusted operating profit is also plus 61% on H2 FY22. On the next slide, we show a summary income statement for FY23. Discontinued operations here only refer to the RM Integris and RM Finance business prior to sale of that business earlier in the year. We previously noted the revenue and adjusted operating profit figures from continuing operations.
Net finance costs reflect debt facility interest charges and net finance income from our DB pension schemes. Interest costs have increased materially in FY23 compared to prior year as a result of both the higher average levels of debt during the year and higher interest rates generally. We have included on this slide a full breakdown of the net GBP 16.6 million of adjusting items. This includes the previously mentioned GBP 43.2 million of costs related to consortium and EVO, of which GBP 38.9 million is impairment of consortium assets, and the balance is within restructuring costs and SaaS license configuration. We have also recognized a GBP 24 million profit on the disposal of RM Integris and Finance and IP license assets. In H2, as well as the impact of consortium, we received the final GBP 4 million tranche of proceeds relating to RM Integris.
We received a further GBP 2.1 million from the sale of IP licenses and incurred a further GBP 2.5 million of the restructuring costs, largely relating to Consortium and the GBP 10 million of annualized savings already discussed. Turning to revenue, here we bridge our 8.9% decrease compared to FY22. By far, the biggest contributor to this was the continued underperformance in the Consortium business, down 43% year-over-year. There was further year-over-year growth within our assessment business of GBP 3.4 million, or +8.7%, to GBP 42.3 million, with growth in volume seen from both existing contracts and the benefit of new contract wins during the year. TTS revenue was down 5.8% in total. TTS UK was down 10.3% year-over-year, within a market for TTS's core curriculum products, which declined by 11.8% over the same period due to persistent challenging conditions within UK schools.
TTS International, however, saw encouraging growth of +5.8%, with especially strong performance in the Middle East and both North and South America. In our technology business, headline revenue reduced by 5.3%. However, the FY22 comparative also included GBP 1.3 million of revenue relating to the BAU sale of IP licenses, which are now being classed as exceptional due to the increased volume of these transactions. The underlying revenue for technology, therefore, declined by 3.2%, which was largely caused by lower services revenue after some customer losses during the prior year. H2 revenue stabilised somewhat, with the year-on-year decline reducing to 2.7%, with no further lost large customers, as well as the positive contribution from Connect the Classroom projects. On this slide, we bridge our adjusted operating profit movements against FY22, which was down GBP 7.2 million. Again, Consortium was by far the biggest contributor to the decline.
Assessments saw profits increase by GBP 2.9 million to GBP 10.3 million as a result of the 8.7% revenue growth and improved operational efficiency. TTS posted marginally lower profit, down from GBP 7.8 million in FY22. This movement in profitability is largely driven by the revenue changes, but the division also benefited from cost savings initiated during the year. In the UK, we were able to successfully mitigate rising inflation and material costs, with margins dropping only slightly year-over-year. In the international business, our margins dropped by slightly more as the impact of high distribution costs also hit. Technology division's profit was down GBP 1.5 million to GBP 0.7 million, of which GBP 1.3 million related to the IP license sales included in FY22's reported numbers. Cost saving initiatives in the year were offset by lower services revenues. The technology business did return to profit in H2, generating GBP 1.8 million of adjusted operating profit.
Corporate costs rose in the year, primarily associated with the rebuilding of the finance and management teams, with high-cost contractors and third-party advisor fees overlapping with the incoming senior permanent headcount and the associated recruitment fees. On this slide, I will take you through the key drivers of our cash flow for the period, focusing on the impact on net debt. The business has delivered a stable net debt position year-over-year, with capitalization of banking fees ultimately resulting in a GBP 1.2 million reported improvement. Underlying the material one-off movements, we have put in place some improved basic working capital initiatives, especially around inventory management and TTS. Within working capital, lower inventory has contributed GBP 9.0 million of cash inflow.
However, as a result of cash protection activities undertaken at the end of FY22, specifically around delays to supply payments, the unwind of that position during the first half of FY23 has seen a GBP 17.8 million cash outflow. I'm pleased to say that the end of FY23 has not seen us need to repeat delays to supply payments. Therefore, we do not anticipate similar material swings to working capital in the coming year. During the year, we received proceeds from the sale of assets totaling GBP 21.6 million relating to IP licence sales and the sale of RM Integris and Finance. Pension contributions were in line with last year and as per our agreed commitments to fund the defined benefit schemes. Our closing net debt position at year-end of GBP 45.6 million was a GBP 6.4 million reduction in debt from the half year.
The second half saw GBP 6.1 million of residual proceeds from the sale of assets, with all other cash flow movements broadly equaling out. Moving on to the outlook for the coming year, FY 2024. Revenue from our ongoing business in FY 2024 is expected to grow materially year-over-year, recovering a large proportion of the lost Consortium revenues. We anticipate high single-digit growth to be generated from new customer wins in Assessment Division, market stabilization across UK schools, and further international expansion of TTS. There will be significant changes to our ongoing cost base. In FY 2024, we will see approximately a GBP 6 million benefit from the annualization of the GBP 10 million of cost savings initiated during FY 2023. We also anticipate some in-year benefit from a further GBP 10 million of cost savings, which we will start to deliver during FY 2024 as we move towards a new target operating model.
We will need to reinvest some of these cost savings during the year to increase our go-to-market activities to deliver on our ambitious growth expectations. We are already seeing a continued material impact of cost inflation, both in our UK and India cost base, while we take steps to protect our biggest asset, our employees. Finally, we expect to see significant increases in FY24 costs in the P&L as a result of the reintroduction of share incentive schemes to the new senior management team. We fully expect to operate within our newly agreed banking covenants. The lack of proceeds from sale of assets in FY24 will be largely compensated for by higher operating cash flows and much improved working capital movements.
Taking into account the increased capital expenditure required to fund our future growth plans, plus continuing interest payments and committed pension contributions, we are therefore not expecting a material change to the net debt position at the end of this financial year. Now, I would like to pass you over to Mark who will take you through the forward-looking slides. Thank you, Simon. I mentioned that management were able to carry out the stabilization actions for 2023. We were also able to revisit the RM DNA that would drive our business forward. Established in 1973 as Research Machines, RM were the early pioneers of EdTech sited in Oxford, England. RM built their own computers and therefore created their own intellectual property. Given RM's long heritage in education, it was important to retest that our values and purpose were still valid and have stood the test of time.
I'm very pleased to say that our vision statement and purpose to enrich the lives of learners is very much still in the center of our strategic focus and relevant in the growing global EdTech market. So what does our vision and purpose statements actually mean to our business today and in the future? Well, in recent years, we've been consumed with legacy issues previously mentioned, which are now behind us. These issues have hidden the true underlying value of the business and with an awkward relationship between three operating divisions and a group management function. So what are we going to do? There's three things. Firstly, we will invest in the digital transformation of education. Next, we will focus on RM's unique selling propositions, our strategic pillars, and digital transformation opportunity that exists.
Thirdly, we will use as our North Star a unified portfolio roadmap of RM products and solutions focused on customer needs. So where are we going as a company and what will that look like in the future? Well, firstly, a company that has 3-4 times the value that it has today. Secondly, a deleveraged, dividend-paying company with double-digit growth and an EBITDA of 5 times that of FY23. Thirdly, we will be a leading EdTech business providing products and solutions to accreditors, educators, and learners globally. In the past, RM has spent a lot of time talking about how we're organized rather than customers we serve. Internally, we have management in 3 divisional silos, India and group.
Going forward, we will have one clear go-to-market approach for our products and solutions, serving customers from early years to high-stakes exams with a clear and unified portfolio roadmap, and a company that is much simpler with a cleaner line of sight to our customers. We will take our global award-winning assessment solution to become a truly scalable and end-to-end digital accreditation platform. Let's take a moment to reflect on the global education landscape and the impact of new technologies. Compared to 50 years ago when RM was founded, or indeed a few years ago, pre- and post-pandemic, the global EdTech market is now changing rapidly. E-learning is growing more than any other segment, with AI solutions, adaptive learning, and the provision of platforms that provide content. It's a huge global target-addressable market with double-digit growth.
But it's also a vast ocean that organizations can easily get lost in without a clear directional map and a guiding North Star to aim towards. Consider for a moment the challenges of education. Access to a quality education is fundamental: adequate funding, teacher shortages, technology disruption, and disparities in educational outcomes among different demographics of learners. More recently, with the introduction of AI, how do educators prepare their students? How do accreditors build their curriculum content for young people entering a future workplace that will require newer technology knowledge such as AI? Consider for a moment EdTech disruptors. Online learning platforms have been introduced, but many of these do not have the same pedigree, purpose, and recognition as the blue chip content from recognized awarding bodies. Other disruptors include adaptive learning systems, virtual and augmented reality creating immersive learning, gamification, and AI learning feedback, etc., etc.
This really is an opportunity for digital education to transform learning outcomes, empower educators, and create a more inclusive and future-ready education ecosystem. All of these are potential enablers of our RM vision, but only if used in a considered logical and methodical way, with a clear map of products and solutions linked and synchronized to global blue chip recognized accreditation organizations who are also on the same future-ready digital transformation. RM has spent the last 50 years in education, and we have five key strengths and USPs to enable our vision, our strategic pillars. Firstly, we are a global provider of EdTech products and solutions. Secondly, we provide these products and solutions to the entire range of learners and the lifetime of learning. We have customers today that are accreditors, awarding bodies, educators such as teachers and schools, and in future, we will deliver learner-direct solutions.
Our reputation as a leading assessment solution provider will enable the introduction of a new global accreditation platform built for scale. 50 years ago, we built computers for schools. Today, approximately 45% of our revenue is our own intellectual property. In future, this will increase towards 80% by investing in RM colleagues' knowledge, RM products, and RM solutions, not with third parties, contractors, and consultants. Taking a look at RM's strategic pillars. Firstly, our future growth is predicated on our products and solutions being available to a global customer base. It may surprise some that today we already support 10 million students globally, deliver to nearly 30,000 educators worldwide in 180 countries. Today, already more than 40% of our profit comes from outside of the UK. RM is proud to have prestigious and well-respected customer brands in education. These are long-term customer relationships over many decades.
This is only possible if we live by our values. All of these relationships have been built on mutual trust, true partnership, and a focus on customer deliverables using our decades of education experience. I mentioned that we have previously spoken about how we are organized rather than having a holistic and clear line of sight to the end customer. Today, we serve mainly accreditors and educators, but in future, our customer cohort will expand significantly with the products and solutions we are bringing to market. In assessment, we have an award-winning solution to deliver exam, marking, and the end-to-end assessment process. Currently, we deliver 20 million online and marked tests in 180 countries every year. This process still has 100 million pieces of paper that we scan every year as part of the process.
We are announcing today that we are building a full end-to-end digital accreditation platform combined with software-as-a-service solution elements. We are building solutions for formative assessment, which will enable educators and learners to assess their progress towards the end examination. We are utilizing AI technologies, and we are in proof-of-concept stage to deliver digital curriculum content for teaching and learning aids to support our physical products, and AI technologies to provide software-as-a-service-based adaptive learning solutions directly for learner consumption. RM has a five-stage model for driving value from digital assessments. For many years, we've been helping our accreditor customers on their digital maturity journey, a five-step process that not only includes paper-based processes into digital, but transforms the digital experience for the educators and learners. This unlocks a whole new customer cohort for RM to provide learner-direct solutions.
Our customers will choose RM because we navigate the digital maturity journey, irrespective of the starting point, and make it easier to digitize across practice, progress, evidence collection, and examinations. We stand out because we don't just provide a technology platform. We have transformation advisory experience for the end-to-end process. To unveil the RM portfolio of products and solutions, we have illustrated this in this simplified high-level graphic. The white elements are what we provide today: platform and solutions to accreditors, educational resources product, and managed ICT services to educators, but today, nothing directly to learners. Our announcement is we will have investment in the full end-to-end global digital accreditation platform with AI-adaptive learning and AI curriculum aids for educators and learners alike. We will, of course, keep everybody informed of progress on new product and solution launches.
Clarity of RM's future with the intention to become a leading global EdTech company. This new strategic operational and management change will enable RM to unlock its true value. We have a new, highly skilled leadership in place who will focus on delivering the vision I've set out today, underpinned by the values and purpose that has driven us for decades. This is a team that has a track record of delivering, and to date, under my leadership, we have completed complex projects on time and to plan. We have landed new strategically important long-term digital contracts supporting our investment in the Global Accreditation Platform, and this will form the core element of our future portfolio roadmap delivering new products and solutions enabled by AI, software-as-a-service, and learner-direct customers.
We have identified in our delivering GBP 20 million of annualized savings through the continuous improvement program that I've implemented on my arrival just over one year ago. We have embedded FY24 clear priorities and objectives aligned to the plc board, executive management, and senior leadership team to deliver on our promises. All in all, today marks the public intention to regain RM as a leading EdTech company serving global customers. A company that is three to four times the value of today, a company that is deleveraged, dividend-paying, with double-digit growth, and an EBITDA five times that of FY23. Thank you.