Hello and welcome to RM's Full Year results for FY 2024. I'm Mark Cook, Chief Executive Officer.
I'm Simon Goodwin, Chief Financial Officer.
In our presentation today, I'll give an overview of RM's results for 2024. Simon will cover our financials in more detail, and then I'll provide an update on RM's strategy and future direction. 2024 was a year of transformation and major progress towards delivering our strategy. I'm pleased to share key wins and renewals were achieved, along with significant operational and financial improvements.
We delivered an adjusted operating profit of GBP 8.6 million ahead of market consensus, and our adjusted EBITDA nearly doubled to GBP 13.1 million. Our highest ever contracted order book was driven by strategic wins and key renewals in our assessment business. All of the assessment contracts up for renewal in 2024, 99% successfully renewed, and we secured two of the largest contracts in RM's history with the International Baccalaureate and Cambridge University Press and Assessment.
These contracts are at the core of our strategic focus to scale our global assessment offering, supporting customers transitioning from paper to digital learning and assessment. Our Technology division achieved a shift in focus to longer-term contract awards with multi-academy trusts, contributed to an improved adjusted operating profit.
Revenue from continuing operations was marginally lower than FY 2023 due to the expected ending of non-core legacy contracts and a tough U.K. and international schools market affecting our Technology and TTS divisions. However, our record contracted order book will now convert into revenue from FY 2025 onwards. Significant progress has been made in simplifying the business, strengthening our operations, and improving delivery. Closure of the loss-making Consortium business resulted in all parts of the group now being made profitable.
A further GBP 10.6 million of annualized cost savings has been achieved, mainly through property rationalization, and we expect the full effect of these savings to be realized from FY 2025. Our new global operating model reflects a business of our size and needs. By simplifying layers, we not only are improving operating margins but also bringing our developers closer to our customers, ensuring we deliver innovations that align with customer needs. Investment has been targeted in areas that will be positively felt by our customers.
GBP 6 million was invested in the development of our Global Accreditation Platform last year, taking advantage of the digital transformation in education towards on-screen examinations. Scaling this offering is a focus for FY 2025 and beyond, capitalizing on its recurring revenue potential and paving the way for profitable and sustainable future growth. Materially reducing net debt is also a key priority for FY 2025, and we are progressing with plans to achieve this. I'll now hand over to Simon, who will take you through our financial performance for the year.
Thanks, Mark. FY24 really was a year of transformation with major progress made towards delivering our strategy, and this was reflected in our financial performance. Before I get started, I wanted to briefly explain how the closure of the Consortium business at the start of the year has affected the way our results have been presented. Consortium is now reported as a discontinued operation.
As a result, the prior year's results also have to be restated, removing Consortium's statutory reported loss, inflating the FY23 profit. At various points during our results and in this presentation, we will refer to the reported FY23 numbers rather than these restated results so as to more clearly demonstrate the positive impact of that decision. Revenue from our continuing operations in FY24 declined by 5.5% to GBP 166.1 million.
This reduction was as a result of the expected decline in non-core legacy contracts in RM Assessment, as well as market pressures impacting TTS International and RM Technology. These declines offset a 12% increase in digital platform revenues in RM Assessment and positive movement in TTS U.K. revenues, with the business gaining market share.
As Mark shared, the major new contract wins in RM Assessment have had very little actual impact on our FY2024 revenues, and our strong contracted order book will start to convert into incremental revenue from FY2025 onwards. Although in-year revenue declined, the business delivered an adjusted operating profit of GBP 8.6 million compared to the GBP 0.3 million reported in FY2023. This equates to an EBITDA of GBP 13.1 million this year, an increase of 87.2% on last year's reported results.
Throughout the year, we continue to execute on cost reductions, achieving a further GBP 10.6 million over and above the GBP 10 million initiated in 2023. Savings this year were driven through consolidation of our two remaining warehouses and reducing excess office space, significant IT savings, a detailed review of all third-party spend, and reductions in headcount costs as we further improved operational efficiency and moved towards our target operating model.
These cost savings have been partially offset by increased inflation and a reinvestment into sales and marketing capabilities in RM Assessment. Exceptional costs at GBP 13.3 million were lower than in FY 2023, which also included gains from the sale of non-core assets, and we expect them to be lower again this year. The business saw adjusted net debt increase during the year by GBP 6.1 million to GBP 51.7 million. This increase was planned and was better than market expectations.
RM also operated well within our banking covenants throughout FY2024. The accounting surplus for our defined benefit pension schemes increased by 65% to GBP 20.5 million at the end of the year. We also successfully concluded the triennial valuation of our two largest pension schemes, with no further cash contributions required over and above those previously agreed. Here we show a summary income statement for FY 2024.
As mentioned previously, discontinued operations here now refer to the Consortium business in FY 2024 and FY 2023, as well as the RM Integris and Finance businesses, which were previously sold during early FY 2023. You can see from this table that despite the 5% reduction in revenue, the contribution made to group profit from the three continuing businesses of RM Assessment, RM Technology, and TTS actually increased by 2.5% to GBP 32.8 million in year as a result of the efficiencies and cost savings delivered this year.
Net finance costs reflect debt facility interest charges and net finance income from our DB pension schemes. This charge to the P&L is GBP 0.7 million higher than last year, partially due to lower investment income in the pension schemes and higher banking fees. Actual interest charges on bank debt were level year on year. In FY 2024, we have recognized a deferred tax asset of GBP 8.5 million, resulting in a credit to the P&L.
Adjustments after tax in FY 2024 of GBP 13.3 million mainly relates to a GBP 9.3 million impairment of TTS goodwill, which is partially a legacy of the Consortium closure, but also reflecting a more challenging outlook in global schools markets. In addition, we have restructuring costs of GBP 4.6 million relating to the closure of properties and other activities linked to the implementation of our strategy and target operating model.
Our statutory loss after tax of GBP 4.7 million compares to an equivalent loss of GBP 29.1 million in 2023. It is worth reminding that 2023 included a GBP 39 million impairment of Consortium, but also GBP 24 million of gains from the disposal of non-core assets. Turning to revenue, here we bridge our 5.5% decline from continuing operations compared to 2023. RM assessment revenues on legacy projects decreased, as expected, by GBP 5.1 million due to the ending of non-core contracts as we reshape our portfolio for the future. In contrast, RM Assessment's recurring revenue increased by 10%, including a 12% increase in platform revenue from digital testing and marking. This increase is largely from higher volumes of assessments being processed by existing customers, plus some growth from new customer wins.
The continued shift from paper to digital assessments will have further positive impacts on revenue, but even more so on profitability in the medium term. Scaling our Global Accreditation Platform in order to be able to support this growth is a priority for this year. TTS U.K. achieved a revenue growth of 2.8%, with their learning resource sales outperforming a tough market. TTS International had a more challenging year, with several of its key markets seeing election disruption and budgetary uncertainty. A strong order intake at the end of the year, though, is giving more confidence going into FY2025.
RM Technology's revenues decreased by 6.4%, reflecting the annualized impact of ending low-margin contracts and other losses in the services and connectivity business. Revenue from hardware sales and digital platforms increased by 2.8%, demonstrating the business's ability to cross-sell into its contracted customer base.
New contract wins in the second half of the year have not yet materially contributed to revenue in the period, but will positively impact future revenue growth. Divisional contribution is the profit that each of RM's operating divisions makes before the allocation of central corporate overheads. You can see on the left-hand side of this chart that once the GBP 6.5 million loss that Consortium contributed in 2023 is removed, our remaining divisions contributed GBP 32 million of profit last year, which increased by 2.5% to GBP 32.8 million this year on the back of lower revenues.
TTS's contribution to group profitability increased marginally to GBP 8.9 million. The closure of Consortium enabled the division to further rationalize its cost base, with the most significant change being the closure of its Sherwood Park distribution center and consolidation into the larger Harrier Park site.
U.K. revenue growth was achieved without the need to resort to wide discounting, unlike our competitors, meaning gross margins increased by 1.8%, more than offsetting the decline in revenue. Assessment's contribution reduced marginally to GBP 14.4 million due to the lower revenue from non-core legacy contracts, coupled with the increased investment in sales and marketing. Technology's contribution increased to GBP 9.5 million due to the annualized impact of operational efficiencies and cost savings initiated in the prior year, as well as additional restructuring undertaken in year.
Technology is now a stable and consistently profitable business. Adjusted net debt was better than market expectations at GBP 51.7 million, equating to a GBP 6.1 million increase over the year. Operating cash flow, including movement in working capital, generated GBP 11.9 million of cash inflow compared to an equivalent GBP 4.7 million cash outflow last year, a positive swing of GBP 16.6 million.
This improvement was caused partially by one-off negative working capital movements last year, not repeating, but also higher profitability and much improved underlying working capital management this year. GBP 4.3 million of deficit recovery payments were made to the group's defined benefit pension schemes. These payments now reduce to GBP 1.2 million in each of the next two years and then cease altogether.
The increase in cash outflow from capital expenditure from GBP 1 million last year to GBP 4.8 million this year is partially linked to a switch from customer-specific contract asset build to the larger investment required in building our Global Accreditation Platform. This investment was commenced last year to take advantage of the movement towards fully on-screen examinations and is expected to continue into FY 2025 and beyond. Mark will share more on our intentions for this platform shortly.
Cash interest paid during the year of GBP 5.6 million was GBP 0.6 million higher than the equivalent amount last year, reflecting the higher net debt at the end of the year and timing of payments. Moving on to our outlook for the coming year. Trading in the first months of the year has been in line with our expectations, and full year outlook remains in line with market expectations. Revenue from continuing operations is expected to grow.
Assessment's strong platform contracted order book will convert to revenue from this year onwards, along with TTS's strong international order intake and t echnology's significant contract wins at the end of last year, making a positive impact. We also anticipate that the new U.K. government will provide some additional financial support to U.K. schools this year to invest in IT infrastructure. We do expect further profitability growth.
Accelerating go-to-market activity will fuel top-line growth, whilst the full year impact of cost savings will further enhance bottom-line profitability. However, we do expect some further cost inflation in the U.K. and India, on top of the recent National Insurance increases, plus the normalization of management incentive scheme costs following several years of losses. No material change is expected in the net debt position this year as we continue to invest in the build of our Global Accreditation Platform and incur high interest costs.
Our Global Accreditation Platform is at the core of our strategy in 2025. As customers continue shifting from paper to digital assessment, our business is positioned to benefit from greater efficiency, scalability, and improved margins. This transition not only enhances learner experience, but significantly increases profitability per assessment, reinforcing a positive financial outlook. I'll now hand over to Mark to provide an update on our strategy and future direction.
RM's vision is to improve educational outcomes worldwide. What we do makes a difference every day, positively impacting the lives of our over 20 million learners of all ages. We enable customers to embrace digital learning, assessment, and marking, ensuring impactful teaching, accurate assessments, and fair accreditation. Our operations span three divisions, delivering products and services that are valued by learners at all stages of the education life cycle, educators, and the world's largest accreditors. Across our divisions, we have a unique portfolio of managed services, owned IP, and digital platforms with leading market positions. As we continue our transformation journey, we're making great strides in modernizing learning through digital technologies and setting our business up for future growth.
RM has a strong global brand with a distinguished 50-year heritage as a pioneer in edtech. We've built long-term relationships with our customers, achieving recurring revenue streams. These relationships have been built on mutual trust and a focus on differentiated market offerings using our decades of pedagogical expertise. We operate in a market with structural growth drivers and continued advancement of technology.
The global edtech market size is forecast to increase by $170.8 billion between 2024 and 2029, with digitalization of assessments being a key market driver. The education sector is transforming. It's on a journey from paper-based exams and paper-based marking to online assessments. From early education to professional qualifications, technology can make learning and assessments more scalable, accessible, cost-effective, and impactful. This is the journey RM is on, as outlined last year.
We are removing internal silos, establishing one clear way of operating, driving a single global growth plan, and uniting our portfolio roadmap. We are focusing on core growth areas, owned IP solutions, and accelerating investment in our Global Accreditation Platform, laying down the foundations for future growth. The goal of these efforts is to become the leading global edtech software platform, with a value two to three times that of today and an EBITDA three times today over the medium term. Our strategic approach is built on a clear understanding of the market, our key customer groups, and what sets us apart. Firstly, the education sector is on a journey from paper to digital. RM is well positioned to capitalize on this.
We provide market-leading products, software, and services to the entire age range of learners, from our award-winning curriculum-aligned learning resources for early years to IT services for primary and secondary schools, through to digital assessment and exam marking for some of the world's largest accreditors. We are a trusted partner to accreditors and educators globally. Last year alone, we supported over 20 million learners worldwide. Around 1.9 million learning resources were sold from our 18,000-strong TTS portfolio range and 21 million online marked tests using our Technology.
In future, we'll deliver directly to learners as well. At the core of our strategy is our Global Accreditation Platform, launched in 2024 to take advantage of the momentum towards fully on-screen examinations. The platform is being developed to manage the entire assessment process, from exam creation and delivery to marking, grading, and appeals.
Two flagship customers joined our platform last year, marking the largest deals in RM's history. We have a strong contracted order book for the platform in 2025. In addition to accreditors, we'll pursue opportunities directly with educators, learners, and in the professional qualification space. Fifty years ago, we built computers for schools. We are fondly remembered by past students. Today, 45% of our revenue is from our own IP, and in future, this will increase.
Behind all of this is our people, their deep expertise, and passion for pedagogy. Together, we are on a mission to improve learning outcomes. It's not just what we do; it's something we take immense pride in. I would like to thank all of my colleagues in RM for everything they've done and continue to do to drive both learning and our business forward.
Focusing in for a moment on our Global Accreditation Platform, RM's journey in digital assessment began 20 years ago with the launch of our first on-screen marking capability. Since then, we've continuously evolved, building capabilities in both e-marking and e-testing. Last year, we hit a major milestone with the launch of our Global Accreditation Platform. The aim is to develop an assessment solution that enables a single platform to deliver across the learning journey in its entirety.
This will span general qualifications such as high-stakes school leaver exams and professional qualifications such as accountancy exams. Delivering a single platform will be the key for adoption for most organizations. Today, there is not just a single platform that can deliver across the learning journey in its entirety. We currently deliver this via various solutions.
While RM's core assessment expertise is currently in the delivery of summative assessment, meaning our platforms allow our customers to deliver high-stakes exams, this platform will allow us to expand our offerings more fully into the formative space, providing support and feedback throughout the learning journey. AI will play a big part of the mix in both the formative and summative spaces, which I will come to shortly.
In 2024, two of the flagship customers joined the platform: International Baccalaureate, whose exams are taken in over 5,600 schools, 160 countries, and Cambridge University Press and Assessment, whose exams are taken in 10,000 schools across 160 countries. We continue to expand into professional qualifications, having won customers such as the Institute of Chartered Accountants from Ghana, demonstrating the broader relevance of our platform.
Revenue from our platform is anticipated to grow significantly in 2025, driven by strong FY24 renewals, annualization of FY24 upsells, and new logo repeatable customers. To give an indication of where we're at in terms of the transition from paper to digital, last year there were 21 million online marked tests throughout our platforms, but this also included 100 million pieces of paper that were scanned. Looking forward from our two flagship platform customers, their key paper-to-digital transformation window is FY28 to FY30. Both customers aim to be fully digital from FY30 onwards, where we'll see 100% of the revenue coming from the platform and margin per test improve materially. Investment in innovation doesn't stop at the platform.
There are some of the significant developments and releases our 400 developers worked on in 2024, and these include 124 new learning resources utilizing our own IP, created and released by TTS, next-generation services from our Technology division, improving efficiencies in cybersecurity in schools, and AI-driven curriculum integration introduced on our website, linking over 9,000 learning resources to the national curriculum.
This year, we're running a number of proof of concept projects to illustrate the potential of AI in the exam marking and feedback processes. The results of our first proof of concept demonstrated that not only is AI marking as effective as human marking, but that AI improves feedback quality even when it's marking an essay or long-form answers at a fraction of the time taken to mark manually. Bringing AI into high-stakes exams may take more time, as people need to feel confident in the technology.
Its immediate potential lies in classroom assessments. AI can instantly mark work, show students how well they did, and give clear feedback on the mark scheme, massively reducing teacher workloads. We are now working to productionize our marking engine and collaborating with customers on further projects to explore how AI can be tailored to the assessment and qualification processes. We've created a portfolio roadmap, a strategic plan for bringing together all key projects and initiatives across our business to ensure they align with our overall goals.
This roadmap helps us target investments in areas that have the biggest difference for our customers and their learners, making learning more accessible, enhancing learning experiences, and adapting to the evolving needs of learners worldwide. Across the portfolio, we will implement AI safely and securely to enhance and modernize learning, while also helping us work more effectively.
Since I joined the business, RM has been on a transformation journey. Our aim is to create a more focused and efficient business, one that leverages its 50-year heritage in education to become the leading global edtech software Platform, supporting customers as they transition from paper to digital. 2025 will see us making great strides on that journey, securing further contracts for the Global Accreditation Platform, further investing in the platform and additional curriculum product launches, and focusing on materially reducing net debt. Our future is exciting. We are on a mission: powering digital education, improving learning outcomes, and changing futures. Thank you.