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RM. Rm Plc

54.90
1.00 (1.86%)
28 Mar 2024 - Closed
Delayed by 15 minutes
Share Name Share Symbol Market Type Share ISIN Share Description
Rm Plc LSE:RM. London Ordinary Share GB00BJT0FF39 ORD 2 2/7P
  Price Change % Change Share Price Bid Price Offer Price High Price Low Price Open Price Shares Traded Last Trade
  1.00 1.86% 54.90 53.00 56.80 844,074 16:35:02
Industry Sector Turnover Profit EPS - Basic PE Ratio Market Cap
Computers & Software-whsl 219.04M -14.5M -0.1741 -3.10 44.87M

RM PLC Final Results (1773W)

07/02/2017 7:01am

UK Regulatory


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TIDMRM.

RNS Number : 1773W

RM PLC

07 February 2017

7 February 2017

RM plc

Final Results for the period ending 30 November 2016

RM plc ("RM"), a leading education resources, software and services group, reports its final results for the year ending 30 November 2016.

HIGHLIGHTS

 
 
   Financial                                                 2016          2015                 Change 
---------------------------------------------------  ------------  ------------  --------------------- 
 
              Statutory revenue                         GBP167.6m     GBP178.2m                 - 6.0% 
 
              RM Resources                               GBP58.8m      GBP63.5m                 - 7.4% 
              RM Results                                 GBP31.6m      GBP30.7m                 + 2.8% 
              RM Education                               GBP77.0m      GBP80.2m                 - 4.0% 
              Exited businesses                           GBP0.2m       GBP3.7m 
 
              Revenue excluding exited businesses*      GBP167.5m     GBP174.5m                 - 4.0% 
 
              Adjusted** operating profit                GBP18.8m      GBP18.0m                 + 4.6% 
 
              Adjusted** operating profit margins           11.3%         10.3%                + 0.9pp 
 
              Statutory profit after tax                 GBP11.6m      GBP15.0m                - 22.2% 
---------------------------------------------------  ------------  ------------  --------------------- 
 
   Adjusted** diluted EPS                                   17.4p         15.8p                + 10.6% 
 
   Paid and proposed dividend per                           6.00p         5.00p                + 20.0% 
   share 
---------------------------------------------------  ------------  ------------  --------------------- 
 
 
 Operational 
------------------------------------------------------------------------------------------ 
 
                    *    A solid performance delivering adjusted operating 
                         profits up 4.6% at GBP18.8m (2015: GBP18.0m) 
 
 
                    *    Adjusted operating margin increases to 11.3% (2015: 
                         10.3%) with revenues down as anticipated by 4% to 
                         GBP167.5m 
 
 
                   o RM Resources revenues were down 7.4% as difficult UK market 
                   conditions were partially offset by continued growth in international 
                   o Another year of revenue and profit growth in RM Results supported 
                   by new e-assessment contracts and extensions to key customer agreements 
                   o RM Education continued its transition to a software and services 
                   provider with 61% recurring annuity revenues and increased profits 
                   whilst making further progress in reshaping the division 
 
                    *    Profit after tax was GBP11.6m (2015: GBP15.0m), with 
                         the reduction from 2015 being due primarily to a 
                         property provision release of GBP2.4m in the prior 
                         year and a GBP2.1m charge in 2016 for restructuring 
                         and acquisition costs 
 
 
                    *    Strong cash balance of GBP40m delivered by improving 
                         cash conversion of 84% 
 
 
                    *    Pension deficit increases to GBP34.8m (2015: 
                         GBP21.9m) as liabilities have been impacted by lower 
                         market discount rates 
 
 
                    *    Full year paid and proposed dividend increased by 20% 
                         to 6.00p *** 
 
 
                    *    Proposed acquisition of the Education & Care business 
                         of Connect Group plc for a purchase price of GBP56.5 
                         million announced today 
 
 
                    *    Market conditions expected to remain challenging in 
                         the short term, which will require continued 
                         management focus to deliver operating margins 
------------------------------------------------------------------------------------------ 
 

Commenting on the results, David Brooks, Chief Executive of RM, said:

"2016 has been another year of delivering a solid set of results, in which we have reported improved profitability and increased operating margins and are proposing a further increase in our dividend.

We are also pleased to have announced the proposed acquisition of the Education & Care business of Connect Group plc. This acquisition, in combination with our existing RM Resources operation, would provide a number of strategic and operational benefits."

* Revenue, adjusted profit and margin numbers exclude Space Kraft Limited which was sold in December 2015.

** Adjusted operating profit is before the amortisation of acquisition related intangible assets; impairment of held for sale assets and related transition costs; the gain/(loss) on sale of operations; share-based payment charges; restructuring provision movements, acquisition costs, changes in the provision for dilapidations and onerous lease contracts and exceptional credit on the Defined Benefit Pension Scheme and excludes Space Kraft Limited.

*** The expected timetable for the final dividend and Annual General Meeting is as follows:

 
 Ex-dividend date for 2016 final dividend       16 March 2017 
  (4.50 pence per share) 
---------------------------------------------  ------------------ 
 Record date for 2016 final dividend            17 March 2017 
---------------------------------------------  ------------------ 
 AGM                                            22 March 2017 at 
                                                 11.30 a.m. 
---------------------------------------------  ------------------ 
 Payment of 2016 final dividend                 21 April 2017 
---------------------------------------------  ------------------ 
 
   References to times are to Greenwich Mean Time. If any 
   of the above times or dates should change, the revised 
   times and/or dates will be notified to shareholders by 
   an announcement on a Regulatory Information Service. Payment 
   of the 2016 final dividend is subject to the approval by 
   shareholders of the final dividend. 
----------------------------------------------------------------- 
 
 
 Contacts 
  RM plc                            FTI Consulting 
 David Brooks, Chief Executive    Chris Lane / Elena Kalinskaya 
  Officer 
 Neil Martin, Chief Financial 
  Officer 
  08450 700 300                   020 3727 1000 
 

Chairman's Statement

2016 was a year of good progress for RM. Although revenue declined as expected, adjusted operating profits and margins improved compared with the prior year. Cash conversion also improved markedly and we finished the year with net cash of GBP40 million.

RM Resources saw a decline in revenues compared with the prior year during which school expenditure on curriculum resources was higher due to primary school curriculum change. Schools were also impacted by unfunded increases in pension and National Insurance costs. International revenues continued to grow and the Division's margins were maintained.

RM Results delivered good revenue and profit growth supported by an expanded e-testing managed service contract. The Division's future market position was further strengthened by the renewal of several long term contracts and the securing of an e-assessment contract which, for the first time, combines both e-testing and e-marking.

RM Education revenues declined as a result of its continued reshaping whilst profitability grew and operating margins improved. A further step was undertaken towards the end of the year to remove UK headcount from the lowest margin parts of the business. 2017 will be the last year in which BSF contracts are a significant contributor. Recurring annuity revenues are running at over 60% of the total.

The Group continues to have a strong balance sheet, with cash and short term deposits at the year-end of GBP40.0 million (2015: GBP48.3 million). This was after a GBP12 million pension contribution in the year which included a one off GBP8 million payment associated with the May 2015 triennial valuation.

The Board is recommending a final dividend of 4.50 pence per share which would constitute, at 6.00 pence per share in total, an increase of 20% over the prior year. This demonstrates the previously stated intention to progress towards a more appropriate level of dividend cover. The proposed dividend would result in cover of 2.9 times.

The Company has agreed to buy the Education & Care business of Connect Group plc, for a purchase price of GBP56.5 million. This acquisition, which is expected to complete in the first half of 2017, would complement the existing RM Resources business and is expected to be accretive to the Company's adjusted earnings per share in the first year. Completion is conditional inter alia upon shareholder approval and clearance from the Competition & Markets Authority.

The outlook for 2017 is affected by continued pressure on school budgets and adverse changes in foreign exchange rates following the EU Referendum result. However, management is focussed on all three divisions continuing to deliver sound operating margins.

John Poulter

Chairman

7 February 2017

Extract from Strategic Report

RM plc is a leading education resources, software and services group. The education sector remains the Company's focus as we target delivering sustainable shareholder returns with a resilient and efficient operating model. RM is now delivering double digit adjusted operating margins and a high return on capital employed.

Operating Review

The Group is structured in three operating divisions, each with its own managing director and management team with some staff functions provided centrally. Approximately 36% (2015: 33%) of Group headcount is based in India, providing support services and software development to the operating divisions.

RM Resources

The RM Resources Division consists of the operating business TTS.

TTS provides education resources used in schools through a predominantly direct marketing business model with goods supplied from large, centralised UK distribution centres. Products supplied are a mix of third party branded and TTS own IPR items manufactured by a network of third party suppliers with a focus on specialist curriculum resources.

The Division's strategy is to grow its market share in the provision of resources to schools, early years and special educational needs markets via direct catalogue and online sales, both in the UK and internationally.

After several years of growth RM Resources revenues decreased by 7.4% to GBP58.8 million (2015: GBP63.5 million), with a decline in UK sales partially offset by continued international revenue growth. The decline in the UK was driven by much tighter budgets in primary schools and the end of curriculum change spend that had benefitted FY14 and FY15. International now represents over 20% of revenue in this Division.

Divisional adjusted operating margins remained stable at 17.3% (2015: 17.5%) reflecting the cost reduction activity undertaken once it was clear that schools and nurseries would spend less on curriculum resources in the year. Adjusted operating profit was GBP10.2 million (2015: GBP11.1 million).

TTS UK

Revenue in the UK declined by 10.6% to GBP46.8 million (2015: GBP52.2 million). The market has been significantly down this year, impacted by one-off unfunded increases in teacher pension and National Insurance costs that had to be absorbed within primary school budgets. The Company estimates that the market for specialist curriculum resources, an area in which TTS has historically been very strong, has declined by 11% as primary schools and nurseries focus their resources budgets on commodity items, essential in this tighter budgetary environment.

The Company continues to invest in the TTS online channel. Online orders now make up 35.2% of UK direct marketing sales.

The Board expects the UK education resources market to continue to be tough as a result of increased pressure on the discretionary element of school budgets. The Company's focus continues to be on maintaining sector leading margins while looking to retain its strong market position as a specialist curriculum resources supplier.

TTS International

Revenue from international sales to overseas resellers and international schools increased by 7.5% to GBP12.0 million (2015: GBP11.1 million). This was driven by strong growth of TTS own IPR products through reseller channels more than offsetting a decline in sales to international schools in which the prior year benefited from a large order, in excess of GBP1 million, from a customer in the Middle East which was not repeated. The Board expects international revenues to continue to grow in the coming year.

RM Results

The RM Results business provides IT software and services to exam boards and professional awarding bodies to allow e-assessment through the use of onscreen exam marking (e-marking) and onscreen testing (e-testing). In addition, the Division manages and analyses educational data on behalf of the UK central government.

The strategy is to grow the e-assessment business through expanding the scope of solutions to existing customers and to win new customers in both the UK and overseas markets. Software and services are provided through a combination of proprietary and third party, in-house and outsourced arrangements. Internationally, the business is expected to develop through partnerships and software licensing rather than as a service based activity.

Revenue increased by 2.9% to GBP31.6 million (2015: GBP30.7 million). The e-assessment part of the business grew strongly by 10.8% which more than offset the planned reduction in the Data business (15%). Adjusted operating margins increased further to 21.5% (2015: 18.1%). Adjusted operating profit increased by 21.4% on the prior year to GBP6.8 million (2015: GBP5.6 million).

During the year the business successfully secured several new contracts and extensions to existing contracts including a new five year e-testing contract with the Institute of Chartered Accountants in England and Wales (ICAEW). ICAEW has been a customer for e-marking for a number of years and RM Results now provides them with an end-to-end e-assessment offering.

In November 2016, the Council for Curriculum, Examinations and Assessment in Northern Ireland (CCEA) signed a contract for the provision of e-marking services for a further two years.

During the year the contract with the Scottish Qualifications Authority to provide e-marking services for exam scripts in Scotland was extended to February 2018 with the option to extend by a further year.

In July 2016 a five year contract to develop and operate an e-assessment platform for the delivery of English Language tests in 130 countries was signed with Cambridge Assessment.

In addition to the above RM Results has been selected as the Preferred Bidder for the provision of a Global Assessment Platform to Oxford University Press's (OUP) English Language Teaching division. The proposed five year contract provides item and test authoring, online test delivery and online marking of a range of OUP English Language testing products through an integrated technology platform.

The Data business is heavily dependent on the Department for Education, principally through the National Pupil Database contract. RM Results and the Department for Education are in positive discussions over RM continuing to provide data related services to the Department for Education.

The Board is targeting the growth opportunities in e-assessment to more than outweigh reduced revenues in the Data business, thereby allowing the Division to maintain good operating margins.

RM Education

RM Education is a UK focused business supplying IT software and services to schools and colleges.

After several years of double digit revenue decline, following the move away from hardware and a reduction in new school openings under the Building Schools for the Future (BSF) programme, revenue decline slowed significantly to 4.0%. The Division turned over GBP77.0 million (2015: GBP80.2 million). Adjusted operating profit margins increased to 7.6% (2015: 6.8%). Adjusted operating profit increased to GBP5.8 million (2015: GBP5.5 million).

The Division's strategy is to move increasingly to recurring revenue streams while improving margins. The business is successfully delivering this strategy through the increasing adoption of its portfolio of services and software products by existing and new UK school and college customers. Recurring annuity revenues were over 60% in 2016 which has increased significantly since 2013 levels (36.5%).

Market trends affecting the business include the demand from schools for solutions which are low-cost yet can cope with an increasingly diverse range of technologies. In addition, in the last five years, purchasing decisions in England have been increasingly devolved to schools, away from central government and local authorities. RM Education is starting to see an evolving trend of schools who are part of Multi-Academy Trust chains (MATs) looking to source IT centrally as a MAT, therefore representing a return towards a more aggregated purchasing model.

The RM Education business is made up of Managed Services - IT outsourcing (43% of revenue), Digital Platforms - Cloud based software offerings (9%) and Infrastructure (48%) - generally lower margin solutions aimed at schools who want to run their own IT. The primary focus for this business going forward is in the Managed Services and Digital Platform areas. During the year the Infrastructure part of this Division was restructured away from some of the lowest margin transactional elements such as network infrastructure, network installation and third party hardware sales. This led to a reduction of c.10% of RM Education's UK staff and a one-off exceptional charge in the year of GBP1.6 million.

Managed Services

The Managed Services offering is primarily the provision of full IT outsourcing services to UK schools and colleges. Managed Services revenues increased by 2.8% to GBP33.1 million (2015: GBP32.2 million). Retention rates of existing customers increased during the year to 97%. In addition, 54 new schools signed managed services contracts in the year.

A proportion of the Division's managed service contracts are subject to long-term project accounting policies, in particular those relating to BSF. Consequently, as these contracts progress towards completion, profits continue to benefit from the effects of good operational performance, risk mitigation and cost control.

Digital Platforms

These include established products such as RM Integris (RM's cloud based school management system) as well as newer offerings including RM Unify. Digital Platforms revenues decreased by 9.1% to GBP7.0 million (2015: GBP7.7 million) as legacy products such as RM EasiTeach and RM EasiMaths come to their natural end of life. Underlying sales in RM Integris and RM Unify, the two cloud platforms that the Company is investing in, together grew by 3.5% to GBP6.1 million.

Going forward, the priority areas of focus are on winning new RM Integris primary, secondary and Multi-Academy Trust customers and on progressing the RM Unify proposition and profile through embedding and expanding system usage amongst existing customers, alongside ensuring the renewal of our Scottish schools digital network contract (Glow) in December 2017, which constitutes a large proportion of the current RM Unify user base.

Infrastructure

Infrastructure is a very tight margin business including the tools, products and services to help schools manage their own IT. Revenues decreased by 8.2% to GBP37.0 million (2015: GBP40.3 million) as the Division continues to move away from lower margin transactional business. As highlighted above, during the year the Division restructured this area and reduced the UK workforce. This acceleration of exiting some of the lowest margins elements of the Infrastructure business will not alter the overall profitability of this area but will see revenue decline by double digits in 2017.

RM India

As at 30 November 2016, RM's operation in Trivandrum accounted for 36% of Group headcount (2015: 33%).

The Indian operation provides services solely to RM Group companies. Activities include software development, customer and operational support and back office shared service support (e.g. customer order entry, IT, finance and HR) and administration.

Employees

Average Group headcount for the year was 1,822 (2015: 1,860), which is comprised of 1,634 (2015: 1,645) permanent and 188 (2015: 215) temporary or contract staff, of which 1,173 (2015: 1,294) were located in the UK and 649 (2015: 566) in India. At 30 November 2016 headcount was 1,731 (2015: 1,899).

The following table sets out a more detailed summary of the permanent staff employed as at 30 November 2016:

 
                                                Male      Female 
 Executive Directors                        2 (100%)      0 (0%) 
 Senior Managers (excluding Executive 
  Directors)                                42 (76%)    13 (24%) 
 All employees                           1,063 (67%)   528 (33%) 
 

The Company is committed to offering equal employment opportunities and its policies are designed to attract, retain and motivate the best staff regardless of gender, sexual orientation, race, religion, age or disability. The Group gives proper consideration to applications for employment when these are received from disabled persons and will employ them in posts whenever suitable vacancies arise. Employees who become disabled are retained whenever possible through retraining, use of appropriate technology and making available suitable alternative employment.

The Group encourages the participation of all employees in the operation and development of the business and has a policy of regular communications. The Group incentivises employees and senior management through the payment of bonuses linked to performance objectives, together with the other components of remuneration detailed in the Remuneration Report.

The Group has a wide range of other written policies, designed to ensure that it operates in a legal and ethical manner. These include policies related to health and safety, 'whistle blowing', anti-bribery and corruption, business gifts, grievance, career planning, parental leave, systems and network security. All of RM's employment policies are published internally.

Acquisition

As announced on 7 February 2017, the Company has agreed to buy the Education & Care business of Connect Group plc, for a purchase price of GBP56.5 million. Completion is conditional inter alia upon shareholder approval and clearance from the Competition & Markets Authority. This acquisition, which is expected to complete in the first half of 2017, would complement the existing TTS business and is expected to be accretive to the Company's adjusted earnings per share in the first year.

Group Financial Performance

Group revenue declined by 5.9% to GBP167.6 million (2015: GBP178.2 million) as anticipated on a statutory basis and by 4.0% to GBP167.5 million (2015: GBP174.5 million) on a like-for-like adjusted basis excluding exited businesses.

Details of the adjustments to operating profit quoted within this report can been seen in note 2 to the financial statements.

To provide a better understanding of underlying business performance, amortisation charges relating to acquisition related intangible assets, share-based payment charges, restructuring provision movements, acquisition costs and other items of an exceptional nature have been disclosed in an adjustments column in the Income Statement to give 'Adjusted' results. Note 2 to these financial statements identifies these adjustments highlighting recurring and non-recurring items.

Adjusted operating profit margins increased again this year from 10.2% in 2015 to 11.1%. Despite the decline in revenue, adjusted operating profit increased to GBP18.8 million (2015: GBP18.2 million). On a statutory basis, operating profit was GBP15.9 million (2015: GBP19.6 million), with adjustments principally being a provision of GBP1.6 million for re-structuring, GBP0.5 million of acquisition costs and share based payments charges of GBP1.0 million. In 2015, there was a provision release associated with an onerous lease property contract which improved operating profits by GBP2.4 million.

The Group generated an unadjusted statutory profit before tax of GBP15.1 million (2015: GBP19.2 million).

The total tax charge within the Income Statement for the year was GBP3.5 million (2015: GBP4.3 million). The Group's tax charge for the period, measured as a percentage of profit before tax, was 23% (2015: 22%). The increase is principally due to a higher level of expenses that are not deductible for tax purposes, primarily due to the capital costs related to the disposal of SpaceKraft Ltd in December 2015, and timing differences which offset the reduction in the UK corporate tax rate. Adjusted basic earnings per share were 17.4 pence (2015: 16.2 pence). Statutory basic earnings per share were 14.4 pence (2015: 18.5 pence) and statutory diluted earnings per share were 14.4 pence (2015: 17.8 pence).

RM generated cash from operations for the year of GBP13.4 million (2015: GBP10.9 million), which represents a cash conversion from operating profit of 84%. Cash and short-term deposits decreased to GBP40.0 million (2015: GBP48.3 million) despite payments of GBP12.0 million in the year to the Company's defined benefit pension scheme, which included a one-off GBP8.0 million payment which was part of the 2015 triennial valuation. The lowest cash and short-term deposit position during the year due to seasonal cash flows was GBP19.4 million.

Cash generated from operations is expected to continue to be less than operating profit in the year ahead, reflecting the reversal of a favourable working capital position related to long-term contracts.

Dividends

The total dividend paid and proposed for the year has been increased by 20% to 6.00 pence per share (2015: 5.00 pence). This is comprised of the interim dividend of 1.50 pence per share and, subject to shareholder approval, a proposed final dividend of 4.50 pence per share. The estimated total cost of normal dividends paid and proposed for 2016 is GBP4.9 million (2015: GBP4.1 million). This increased dividend proposal reduces the dividend cover ratio from 3.2 to 2.9 times.

Defined Benefit Pension Scheme ("Scheme")

At 30 November 2016, the IAS 19 scheme deficit (pre-tax) was GBP34.8 million (2015: GBP21.9 million). This increase in Scheme deficit results primarily from a reduction in the discount rate to 3.00% from 3.85% in the previous year, following a significant reduction in UK corporate bond yields over that period, resulting in a higher present value of liabilities of the Scheme.

Impact of the EU Referendum vote

The change in economic conditions following the June 23(rd) referendum decision on UK's membership of the EU has had two immediate impacts. First, the Group has foreign currency denominated costs that outweigh foreign currency denominated revenues and, as a consequence of the changes in exchange rates, has identified a circa GBP2 million potential impact from this exposure in the year ending 30 November 2017. The Group will look at actions to mitigate a proportion of the increased costs. In 2016 we were protected against these movements as a result of our hedging arrangements that were in place.

Secondly, changes in UK Gilt rates that have followed the referendum result have also had a negative impact on the IAS19 valuation of the Company's defined benefit pension scheme.

The referendum result has not changed the UK Government's policy of ring fencing funding for priority areas and, therefore, there is no foreseen impact on education funding.

Going Concern

The financial position, cash flows and liquidity position are described in the financial statements and the associated notes. In addition, the notes to the financial statements include RM's objectives, policies and processes for managing its capital, its financial risk management objectives, and its exposure to credit and liquidity risk. Having reviewed the future plans and projections for the business, the principal risks that could impact on the group's liquidity and solvency over the next 12 months and its current financial position, the Board believes that RM is well placed to manage its business risks successfully. Therefore, the Board has a reasonable expectation that RM has adequate resources to continue in operational existence for the foreseeable future, a period of not less than 12 months from the date of this report. For this reason, it continues to adopt the going concern basis of accounting in preparing the annual financial statements.

In relation to the proposed acquisition of the Education & Care business of Connect Group plc detailed earlier in this Strategic Report, the Group has secured a GBP75 million revolving credit facility with Barclays Bank plc and HSBC Bank plc in anticipation of the completion of the acquisition. As is usual for such a facility, there are financial covenants that will need to be adhered to over the term of the lending. The Directors have carried out additional due diligence and consider that, should the transaction complete within the timeframe that is currently envisaged, the combined group will be able to comply with the terms of these arrangements. Further details are given in the Directors' Report.

Financial Viability Statement

In accordance with the UK Corporate Governance code, in addition to an assessment of going concern, the Directors have also considered the prospects of the Company over a longer time period. The period of assessment chosen is three years, which is consistent with the time over which the Company's medium-term financial plans are prepared. These financial plans include Income Statements, Balance Sheets and Cash Flow Statements. They have been assessed by the Board in conjunction with the principal risks of the Company, which are documented within the Principal Risks and Uncertainties section below, along with their mitigating actions.

The Board considers that the principal risks which have the potential to threaten the Company's business models, future performance, solvency or liquidity over the three year period are:

1. Public policy risk - UK education policy priority changes or restrictions in government funding due to fiscal policy.

   2.     Operational execution - including: 
   a.     RM Results operational performance over peak examination marking periods 

b. significantly increased working capital requirements within the RM Education and RM Results long-term contract portfolios and requirements in evolving RM Education business models

c. major adverse performance in a key contract or product which results in negative publicity and which damages the Group's brand

3. Business continuity - an event impacting the Group's major buildings, systems or infrastructure components. This would include a major incident at TTS's main warehouse.

4. Strategic risks - loss of a significant contract which underpins an element of a division's activity.

   5.     Defined Benefit Pension Scheme - funding of the Scheme deficit in adverse market conditions. 

Having assessed the above risks, singularly and in combination, and via sensitivity analysis, the Directors have a reasonable expectation that the Company will be able to continue in operation and meet its liabilities as they fall due over the three year period of assessment and are not aware of any reason that viability would be an issue for the foreseeable period after this.

In relation to the proposed acquisition of the Education & Care business of Connect Group plc detailed earlier in this Strategic Report, the Directors have considered the additional risks as part of the acquisition working capital due diligence that could arise as a result. These include considering the impact of the additional GBP75 million facility that will be used to finance the acquisition. Having completed the analysis and considered those risks, the Directors have a reasonable expectation that the Company will continue in operation and meet its liabilities as they fall due over the three year period of assessment and are not aware of any reason why the Company's viability would be an issue for the foreseeable period after this.

Environmental Matters

The Group's impact on the environment, and its policy in relation to such matters, are noted in the Directors' Report.

Principal Risks and Uncertainties

The management of the business and the execution of the Company's strategy are subject to a number of risks. Risks are reviewed by the Executive Committee, Audit Committee and Board. The Board confirms that it has carried out a robust assessment of the principal risks facing the Group and appropriate processes have been put in place to monitor and mitigate them, further details of which are given in the Corporate Governance Report. The key business risks for the Group are set out in the table below.

 
Risk                   Description and likely         Mitigation 
                        impact 
---------------------  -----------------------------  ---------------------------------------- 
Public policy          The majority of RM's           The Company seeks to understand 
                        business is funded             the education policy environment 
                        from UK government             by regular monitoring of policy 
                        sources. Changes               positions and by building relationships 
                        in political administration,   with education policy makers. 
                        or changes in policy 
                        priorities, might              The Group's three divisions 
                        result in a reduction          have diverse revenue streams 
                        in education spending,         and product/service offerings. 
                        leading to a decline 
                        in market size.                The Company's strategy is to 
                                                       focus on areas of education 
                        UK government funding          spend which are important to 
                        in the education               meet customers' objectives. 
                        sector is constrained          Where the revenues of an individual 
                        by fiscal policy.              business is in decline, management 
                                                       seeks to ensure that the cost 
                        Global economic conditions     base is adjusted accordingly. 
                        might result in a 
                        reduction in budgets 
                        available for public 
                        spending generally 
                        and education spending 
                        specifically. 
---------------------  -----------------------------  ---------------------------------------- 
Education practice     Education practices            The Company seeks to maintain 
                        and priorities may             knowledge of current education 
                        change and, as a               practice and priorities by maintaining 
                        result, RM's products          close relationships with customers. 
                        and services may 
                        no longer meet customer 
                        requirements, leading 
                        to a risk of lower 
                        revenue. 
---------------------  -----------------------------  ---------------------------------------- 
Operational execution  RM provides sophisticated      The Company invests in maintaining 
                        products and services,         a high level of technical expertise. 
                        which require a high 
                        level of technical             Internal management control 
                        expertise to develop           processes are in place to govern 
                        and support, and               the delivery of projects, including 
                        on which its customers         regular reviews by relevant 
                        place a high level             management. The operational 
                        of reliance, any               and financial performance of 
                        significant operational        projects, including future obligations, 
                        failure would result           the expected costs of these 
                        in reputational damage         and potential risks are regularly 
                        and increased costs.           monitored by management. 
 
                        RM is engaged in 
                        the delivery of large, 
                        multi-year projects, 
                        typically involving 
                        the development and 
                        integration of complex 
                        ICT systems, and 
                        may have liability 
                        for failure to deliver 
                        on time. 
---------------------  -----------------------------  ---------------------------------------- 
Data and business      RM is engaged in               The Company's IS function has 
 continuity             storing and processing         invested in developing its Data 
                        personal data, where           Centres, and has been successfully 
                        accuracy, privacy              certified to ISO/IEC 27001:2005 
                        and security are               for the provision of systems, 
                        important. Any significant     information and hosting services. 
                        security breach could 
                        damage reputation              The Company has established 
                        and impact future              a Security and Business Continuity 
                        profit streams.                Committee to oversee the security 
                                                       aspects of the Group's information 
                        The Group would be             systems. This covers data integrity 
                        significantly impacted         and protection, defence against 
                        if, as a result of             external threats (including 
                        a major incident,              cyber risks) and disaster recovery. 
                        one of its major 
                        buildings, systems             The Group seeks to protect itself 
                        or infrastructure              against the consequences of 
                        components could               a major incident by implementing 
                        not function for               a series of back up and safety 
                        a long period of               measures. 
                        time. 
                                                       The Group has property and business 
                                                       interruption insurance cover. 
---------------------  -----------------------------  ---------------------------------------- 
People                 RM's business depends          The Company seeks to be an attractive 
                        on highly skilled              employer and regularly monitors 
                        employees. Failing             the engagement of its employees. 
                        to do so could impact          The Company has talent management 
                        operationally on               and career planning programmes. 
                        ability to deliver 
                        contractual commitments. 
---------------------  -----------------------------  ---------------------------------------- 
Innovation             The IT market is               The Company monitors technology 
                        subject to rapid,              and market developments and 
                        and often unpredictable,       invests to keep its existing 
                        change. As a result            products, services and sales 
                        of inappropriate               methods up-to-date, as well 
                        technology choices,            as seeking out new opportunities 
                        the Group's products           and initiatives. 
                        and services might 
                        become unattractive            The Group works with teachers 
                        to its customer base.          and educators to understand 
                                                       opportunities and requirements. 
                        The Group's continued 
                        success depends on 
                        developing and/or 
                        sourcing a stream 
                        of innovative and 
                        effective products 
                        for the education 
                        market and marketing 
                        these effectively 
                        to customers. 
---------------------  -----------------------------  ---------------------------------------- 
Dependence on          The performance of             The Company invests in maintaining 
 key contracts          the RM Education and           a high level of technical expertise 
                        RM Results Divisions           and on building effective working 
                        are dependent on the           relationships with its customers. 
                        winning and extension          The Company has in place a range 
                        of long-term contracts         of customer satisfaction programmes, 
                        with government,               which include management processes 
                        local authorities,             designed to address the causes 
                        examination boards             of customers' dissatisfaction. 
                        and commercial customers. 
---------------------  -----------------------------  ---------------------------------------- 
Pension                The Group operates             The Scheme was closed to new 
                        a defined benefit              entrants in 2003 and closed 
                        pension scheme in              to future accrual of benefits 
                        the UK, which is               in October 2012. 
                        in deficit. The scheme 
                        deficit can adversely          A pension escrow account was 
                        impact the net assets          established in 2014 to fund 
                        position of the trading        risk mitigation exercises. 
                        subsidiary RM Education        The first of these was completed 
                        Ltd.                           in October 2014 with the purchase 
                                                       of a pensioner buy-in from 
                                                       an insurance company and in 
                                                       the year a flexible retirement 
                                                       option exercise was conducted. 
 
                                                       The Company evaluates risk 
                                                       mitigation proposals with the 
                                                       Scheme trustee. 
---------------------  -----------------------------  ---------------------------------------- 
Financial - capital    The Company's ability          The Company monitors the level 
                        to pay dividends               of distributable reserves in 
                        to shareholders depends        RM plc and subsidiary companies 
                        on having sufficient           and considers their ability 
                        distributable reserves         to make dividend payments, via 
                        in the holding company,        the holding company, to the 
                        RM plc. The Group              shareholders. 
                        is reliant on continued 
                        dividend distribution 
                        from subsidiaries, 
                        principally TTS, 
                        and ensuring no significant 
                        impairment of RM 
                        plc's carrying assets. 
---------------------  -----------------------------  ---------------------------------------- 
 

David Brooks

Chief Executive Officer

7 February 2017

Directors' responsibilities statement

The responsibility statement below has been prepared in connection with the Company's full Annual Report and Accounts for the year ended 30 November 2016. Certain parts are not included within this announcement.

Each of the Directors, whose names and functions are listed at the front of the Annual Report, confirm that, to the best of their knowledge:

-- the Group financial statements, which have been prepared in accordance with IFRSs, as adopted by the EU, give a true and fair view of the assets, liabilities, financial position and profit of the Group; and

-- the information contained in the Strategic Report includes a fair review of the development and performance of the business and the position of the Group, together with a description of the principal risks and uncertainties that it faces.

The responsibility statement was approved by the Board of Directors on 7 February 2017 and is on its behalf by:

Greg Davidson

Company Secretary

7 February 2017

 
 CONSOLIDATED INCOME STATEMENT 
 for the year ended 30 November 
  2016 
                                          Year ended 30 November                Year ended 30 November 
                                           2016                                  2015 
                                           Adjusted   Adjustments       Total    Adjusted   Adjustments     Total 
                                   Note      GBP000        GBP000      GBP000      GBP000        GBP000      GBP000 
--------------------------------  -----  ----------  ------------  ----------  ----------  ------------  ---------- 
 
 Revenue                            2       167,615             -     167,615     178,228             -     178,228 
 Cost of sales                            (100,365)             -   (100,365)   (109,316)             -   (109,316) 
 Gross profit                                67,250             -      67,250      68,912             -      68,912 
 Operating expenses                 2      (48,421)       (2,907)    (51,328)    (50,713)         1,392    (49,321) 
--------------------------------  -----  ----------  ------------  ----------  ----------  ------------  ---------- 
 Profit from operations                      18,829       (2,907)      15,922      18,199         1,392      19,591 
 Investment income                  3           279             -         279         409           894       1,303 
 Finance costs                      4       (1,012)          (74)     (1,086)     (1,510)         (149)     (1,659) 
 Profit before tax                           18,096       (2,981)      15,115      17,098         2,137      19,235 
 Tax                                5       (3,941)           472     (3,469)     (3,984)         (289)     (4,273) 
 Profit for the year                         14,155       (2,509)      11,646      13,114         1,848      14,962 
--------------------------------  -----  ----------  ------------  ----------  ----------  ------------  ---------- 
 
 
 Earnings per ordinary share 
 - basic                            6         17.4p                     14.4p       16.2p                     18.5p 
 - diluted                          6         17.4p                     14.4p       15.6p                     17.8p 
--------------------------------  -----  ----------  ------------  ----------  ----------  ------------  ---------- 
 Paid and proposed dividends 
  per share 
 - interim                          7                                   1.50p                                 1.20p 
 - final                            7                                   4.50p                                 3.80p 
--------------------------------  -----  ----------  ------------  ----------  ----------  ------------  ---------- 
 Adjustments to results have been presented to give a better guide to 
  business performance (see note 2). 
 
 All amounts were derived from 
  continuing operations. 
 
 
 CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME 
 for the year ended 30 November 
  2016 
                                                               Year ended      Year ended 
                                                              30 November     30 November 
                                                                     2016            2015 
                                                          Note     GBP000          GBP000 
----------------------------------------------------     -----  ---------  -------------- 
 
 Profit for the year                                               11,646          14,962 
 Items that will not be reclassified 
  subsequently to profit or loss 
 Defined Benefit Pension Scheme 
  remeasurements                                                 (23,555)           2,402 
 Tax on items that will not be reclassified 
  subsequently to profit or loss                          5         3,970           (950) 
 Items that are or may be reclassified subsequently 
  to profit or loss 
 Fair value gain/(loss) on 
  hedged instruments                                                  515           (180) 
 Exchange gain/(loss) on translation 
  of overseas operations                                              261            (80) 
 Tax on items that are or may be reclassified 
  subsequently to profit or loss                          5            32            (36) 
 Other comprehensive (expense)/income                            (18,777)           1,156 
-------------------------------------------------------  -----  ---------  -------------- 
 Total comprehensive (expense)/income for 
  the year attributable to equity holders                         (7,131)          16,118 
-------------------------------------------------------  -----  ---------  -------------- 
 
 
 CONSOLIDATED STATEMENT OF CHANGES 
  IN EQUITY 
 for the year 
 ended 30 
 November 2016 
                                                               Capital 
                               Share      Share       Own   redemption    Hedging   Translation    Retained 
                             capital    premium    shares      reserve    reserve       reserve    earnings      Total 
                     Note     GBP000     GBP000    GBP000       GBP000     GBP000        GBP000      GBP000     GBP000 
------------------  -----  ---------  ---------  --------  -----------  ---------  ------------  ----------  --------- 
 
 At 1 December 
  2014                         1,889     27,018   (2,950)           94        544         (304)    (18,177)      8,114 
 Profit for the 
  year                             -          -         -            -          -             -      14,962     14,962 
 Other 
  comprehensive 
  (expense)/income                 -          -         -            -      (180)          (80)       1,416      1,156 
 Total 
  comprehensive 
  (expense)/income                 -          -         -            -      (180)          (80)      16,378     16,118 
 Transactions with 
 owners 
 of the Company 
 Shares issued                     1         17         -            -          -             -           -         18 
 Sale of shares 
  held in 
  staff share 
  scheme                           -          -         -            -          -             -          55         55 
 Share-based 
  payment awards 
  exercised                        -          -     2,910            -          -             -     (3,038)      (128) 
 Purchase of own 
  shares                           -          -   (2,470)            -          -             -           -    (2,470) 
 Share-based 
  payment fair 
  value charges                    -          -         -            -          -             -         864        864 
 Ordinary 
  dividends paid      7            -          -         -            -          -             -     (3,424)    (3,424) 
 At 30 November 
  2015                         1,890     27,035   (2,510)           94        364         (384)     (7,342)     19,147 
 Profit for the 
  year                             -          -         -            -          -             -      11,646     11,646 
 Other 
  comprehensive 
  (expense)/income                 -          -         -            -        515           261    (19,553)   (18,777) 
------------------  ----- 
 Total 
  comprehensive 
  (expense)/income                 -          -         -            -        515           261     (7,907)    (7,131) 
 Transactions with 
 owners 
 of the Company 
 Share-based 
  payment awards 
  exercised                        -          -       840            -          -             -     (1,450)      (610) 
 Purchase of own 
  shares                           -          -     (317)            -          -             -           -      (317) 
 Share-based 
  payment fair 
  value charges                    -          -         -            -          -             -       1,006      1,006 
 Ordinary 
  dividends paid      7            -          -         -            -          -             -     (4,299)    (4,299) 
 At 30 November 
  2016                         1,890     27,035   (1,987)           94        879         (123)    (19,992)      7,796 
------------------  -----  ---------  ---------  --------  -----------  ---------  ------------  ----------  --------- 
 
 
 
 CONSOLIDATED BALANCE SHEET 
                                                        At 30 November   At 30 November 
                                                                  2016             2015 
                                                 Note           GBP000           GBP000 
---------------------------------------------   -----  ---------------  --------------- 
 Non-current assets 
 Goodwill                                                       14,067           14,067 
 Acquisition related intangible assets                               -                8 
 Other intangible assets                                           704              562 
 Property, plant and equipment                                   6,219            7,059 
 Other receivables                                8              1,153            1,168 
 Deferred tax assets                              5              8,793            6,121 
                                                                30,936           28,985 
 ---------------------------------------------  -----  ---------------  --------------- 
 Current assets 
 Inventories                                                    10,689           10,862 
 Trade and other receivables                      8             24,403           25,592 
 Cash and short-term deposits                     9             39,987           48,320 
 Assets held for sale                                                -            1,162 
                                                                75,079           85,936 
                                                       ---------------  --------------- 
 Total assets                                                  106,015          114,921 
----------------------------------------------  -----  ---------------  --------------- 
 Current liabilities 
 Trade and other payables                         10          (54,521)         (64,974) 
 Tax liabilities                                               (1,259)          (2,787) 
 Provisions                                       11           (3,536)          (2,077) 
 Liabilities directly associated with assets 
  classified as held for sale                                        -            (549) 
                                                              (59,316)         (70,387) 
                                                       ---------------  --------------- 
 Net current assets                                             15,763           15,549 
----------------------------------------------  -----  ---------------  --------------- 
 Non-current liabilities 
 Other payables                                   10             (971)            (662) 
 Provisions                                       11           (3,157)          (2,864) 
 Defined Benefit Pension Scheme obligation                    (34,775)         (21,861) 
                                                              (38,903)         (25,387) 
                                                       ---------------  --------------- 
 Total liabilities                                            (98,219)         (95,774) 
----------------------------------------------  -----  ---------------  --------------- 
 Net assets                                                      7,796           19,147 
----------------------------------------------  -----  ---------------  --------------- 
 
 Equity attributable to shareholders 
 Share capital                                    12             1,890            1,890 
 Share premium account                                          27,035           27,035 
 Own shares                                                    (1,987)          (2,510) 
 Capital redemption reserve                                         94               94 
 Hedging reserve                                                   879              364 
 Translation reserve                                             (123)            (384) 
 Retained earnings - (deficit)                                (19,992)          (7,342) 
 Total equity                                                    7,796           19,147 
----------------------------------------------  -----  ---------------  --------------- 
 
 
 CONSOLIDATED CASH FLOW STATEMENT 
 for the year ended 30 November 2016 
                                                              Year ended     Year ended 
                                                             30 November    30 November 
                                                                    2016           2015 
                                                         Note     GBP000         GBP000 
------------------------------------------------------  -----  ---------  ------------- 
 Profit before tax                                                15,115         19,235 
 Investment income                                        3        (279)        (1,303) 
 Finance costs                                            4        1,086          1,659 
 Profit from operations                                           15,922         19,591 
 Adjustments for: 
 Impairment of non-acquisition related intangible 
  assets                                                              77            150 
 Amortisation of acquisition-related intangible 
  assets                                                               8            303 
 Amortisation of non-acquisition related intangible 
  assets                                                             239            297 
 Depreciation and impairment of property, plant 
  and equipment                                                    2,223          2,406 
 Gain on sale of operations                                        (135)           (65) 
 Gain on disposal of property, plant and equipment                   (5)           (95) 
 Loss on foreign exchange derivatives                                684            133 
 Share-based payment charge                                        1,006            864 
 Increase/(decrease) in provisions                                 2,557          (716) 
 Defined Benefit Pension Scheme administration 
  cost                                                               845            530 
------------------------------------------------------ 
 Operating cash flows before movements in working 
  capital                                                         23,421         23,398 
 Decrease/(increase) in inventories                                  173          (707) 
 Decrease in receivables                                           1,056          6,102 
 Decrease in trade and other payables                           (10,338)       (14,369) 
 Utilisation of onerous lease and dilapidations 
  provisions                                              11       (345)        (2,186) 
 Utilisation of employee-related restructuring 
  provisions                                              11       (184)        (1,166) 
 Utilisation of other provisions                          11       (396)          (132) 
 Cash generated from operations                                   13,387         10,940 
 Defined benefit pension scheme cash contributions              (11,984)        (3,984) 
 Tax paid                                                        (3,567)          (171) 
 Borrowing facilities arrangement and commitment 
  fees                                                             (422)          (447) 
 Income on sale of finance lease debt                                  6             45 
 Net cash inflow from operating activities                       (2,580)          6,383 
------------------------------------------------------  -----  ---------  ------------- 
 Investing activities 
 Interest received                                                   255            364 
 Repayment of loans by third parties                                  16             18 
 Proceeds from sale of other receivables                  2            -          1,586 
 Proceeds from sale of operations                                    759              - 
 Proceeds on disposal of property, plant and 
  equipment                                                           43            165 
 Purchases of property, plant and equipment                      (1,333)        (1,576) 
 Purchases of other intangible assets                              (456)          (322) 
 Amounts transferred from short term deposits             9        2,986              - 
 Net cash generated by/(used in) investing 
  activities                                                       2,270            235 
------------------------------------------------------  -----  ---------  ------------- 
 Financing activities 
 Dividends paid                                           7      (4,299)        (3,424) 
 Repayment of capital obligations under vehicle 
  finance leases                                                       -          (244) 
 Proceeds of share capital issue, net of share 
  issue costs                                                          -             18 
 Proceeds from sale of shares held in Staff 
  Share Scheme                                                         -             55 
 Purchase of own shares                                            (317)        (2,470) 
 Satisfaction of share-based payment awards                        (610)          (128) 
 Net cash used in financing activities                           (5,226)        (6,193) 
 Net (decrease)/increase in cash and cash equivalents            (5,536)            425 
 Cash and cash equivalents at the beginning 
  of the year                                             9       42,320         41,893 
 Effect of foreign exchange rate changes                             189              2 
 Cash and cash equivalents at the end of the 
  year                                                    9       36,973         42,320 
------------------------------------------------------  -----  ---------  ------------- 
 

1. Preliminary announcement

The preliminary results for the year ended 30 November 2016 have been prepared in accordance with those International Accounting Standards (IAS) and International Financial Reporting Standards (IFRS) issued by the International Accounting Standards Board (IASB) and adopted for use in the EU and therefore comply with Article 4 of the EU IAS Regulation applied in accordance with the provisions of the Companies Act 2006. However, this announcement does not contain sufficient information to comply with IFRS. The Group expects to publish a full Strategic Report, Directors' Report and financial statements which will be delivered before the Company's annual general meeting on 22 March 2017. The full Strategic Report and Directors' Report and financial statements will be published on the Group's website at www.rmplc.com.

The financial information set out in this preliminary announcement does not constitute the Group's statutory accounts for the year ended 30 November 2016. Statutory accounts for 2015 have been delivered to the Registrar of Companies and those for 2016 will be delivered following the Company's annual general meeting. The auditor's reports on both the 2016 and 2015 accounts were unqualified, did not draw attention to any matters by way of emphasis without qualifying their report and did not contain statements under s498(2) or (3) of the Companies Act 2006 or equivalent preceding legislation. This Preliminary announcement was approved by the Board of Directors on 7 February 2017.

Consolidated Income Statement presentation

The Income Statement is presented in three columns. This presentation is intended to give a better guide to business performance by separately identifying adjustments to profit which are considered exceptional in nature or with potential significant variability year on year in non-cash items which might mask underlying trading performance.

The columns extend down the Income Statement to allow the tax and earnings per share impacts of these transactions to be disclosed. Equivalent adjustments to profit arising in future years, including increases in or reversals of items recorded, will be disclosed in a consistent manner.

Adjustments to profit

See note 2 for further details in respect of adjustments to profit, which have been analysed as recurring and non-recurring items.

Basis of preparation

The financial statements have been prepared on the historical cost basis except for certain financial instruments, share-based payments and pension assets and liabilities which are measured at fair value. The preparation of financial statements, in conformity with generally accepted accounting principles, requires the use of estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Although these estimates are based on the Directors' best knowledge of current events and actions, actual results ultimately may differ from those estimates.

Significant accounting policies

The accounting policies used for the preparation of this announcement have been applied consistently.

2. Operating segments

 
 The Group's business is supplying products, services and solutions 
  to the UK and international education markets. Information reported 
  to the Group's Chief Executive for the purposes of resource allocation 
  and assessment of segmental performance is focussed on the nature of 
  each type of activity. 
 
  The Group is structured into three operating divisions: RM Resources, 
  RM Results and RM Education. The exited business in the year relates 
  to SpaceKraft. 
 
  A full description of each division, together with comments on its 
  performance and outlook, is given in the Strategic Report. Corporate 
  Services consists of central business costs associated with being a 
  listed company and non-specific pension costs. 
 
  This Segmental analysis shows the results and assets of these divisions. 
  Revenue is that earned by the Group from third parties. 
  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. 
 
 
 Segmental results 
                                           RM        RM          RM   Corporate       Exited     Total 
 Year ended 30 November 2016        Resources   Results   Education    Services   Businesses 
                                       GBP000    GBP000      GBP000      GBP000       GBP000    GBP000 
---------------------------------  ----------  --------  ----------  ----------  -----------  -------- 
 Revenue 
   UK                                  46,779    26,925      75,450           -          151   149,305 
   Europe                               5,249     3,231       1,138           -            -     9,618 
   North America                        1,723         -         232           -            -     1,955 
   Asia                                   981       117          50           -            -     1,148 
   Middle East                          2,815         -           9           -            -     2,824 
   Rest of the world                    1,288     1,307         170           -            -     2,765 
                                       58,835    31,580      77,049           -          151   167,615 
---------------------------------  ----------  --------  ----------  ----------  -----------  -------- 
 Adjusted profit from operations       10,156     6,798       5,820     (3,926)         (19)    18,829 
 Investment income                                                                                 279 
 Adjusted finance costs                                                                        (1,012) 
 Adjusted profit before tax                                                                     18,096 
 Adjustments (see below)                                                                       (2,981) 
 Profit before tax                                                                              15,115 
---------------------------------  ----------  --------  ----------  ----------  -----------  -------- 
 
                                           RM        RM          RM   Corporate       Exited     Total 
 Year ended 30 November 2015        Resources   Results   Education    Services   Businesses 
                                       GBP000    GBP000      GBP000      GBP000       GBP000    GBP000 
---------------------------------  ----------  --------  ----------  ----------  -----------  -------- 
 Revenue 
   UK                                  52,391    26,508      79,285           -        3,279   161,463 
   Europe                               4,062     3,039         423           -          165     7,689 
   North America                          932         -         272           -           64     1,268 
   Asia                                   678       109         171           -           22       980 
   Middle East                          4,555         -           7           -           18     4,580 
   Rest of the world                      925     1,069          85           -          169     2,248 
                                       63,543    30,725      80,243           -        3,717   178,228 
---------------------------------  ----------  --------  ----------  ----------  -----------  -------- 
 Adjusted profit from operations       11,107     5,554       5,494     (4,140)          184    18,199 
 Investment income                                                                                 409 
 Adjusted finance costs                                                                        (1,510) 
 Adjusted profit before tax                                                                     17,098 
 Adjustments (see below)                                                                         2,137 
 Profit before tax                                                                              19,235 
---------------------------------  ----------  --------  ----------  ----------  -----------  -------- 
 
 
 
 Adjustments to administrative expenses 
                                                      Year ended     Year ended 
                                                     30 November    30 November 
                                                            2016           2015 
                                                          GBP000         GBP000 
------------------------------------------------   -------------  ------------- 
 
 Amortisation of acquisition-related intangible 
  assets                                                       8            303 
 Impairment of held for sale assets and related 
  transition costs                                             -            323 
 Gain on sale of operations                                (135)           (65) 
 Share-based payment charges                               1,006            864 
 Release of provisions for dilapidations on 
  leased properties and onerous lease contracts             (90)        (2,368) 
 Restructuring                                             1,593          (243) 
 Acquisition related costs                                   525              - 
 Exceptional credit on Defined Benefit Pension 
  Scheme                                                       -          (206) 
                                                           2,907        (1,392) 
 ------------------------------------------------  -------------  ------------- 
 

In the year ended 30 November 2016 notable adjustments to profit include:

Recurring items:

These are items which occur regularly but which management judge to have a distorting effect on the underlying results of the Group or are not regularly monitored for the purpose of determining business performance. These items include the amortisation of acquisition related intangible assets; share-based payment charges and changes in the provision for dilapidations and onerous lease contracts.

Recurring items are adjusted each year irrespective of materiality to ensure consistent treatment.

Non-recurring items:

These are items which are non-recurring and are identified by virtue of either their size or their nature. These items can include, but are not restricted to, impairment of held for sale assets and related transition costs; the gain/loss on sale of operations and restructuring and acquisition costs. As these items are one-off or non-operational in nature, management considers that they would distort the Group's underlying business performance.

During the year, the restructuring of the Infrastructure part of the RM Education division was undertaken to move away from some of the lowest margin transactional elements such as network infrastructure, network installation and third party hardware sales. This led to a reduction of broadly 10% of the RM Education UK staff and a one-off exceptional charge of GBP1.6m.

During the year, the group incurred professional advisor costs relating to an acquisition of GBP525,000, see note 15 for further details.

In the prior year, the Group's 135 Milton Park leased premises were sub-let to South Oxfordshire District Council for a minimum period of 3 years. The premises are onerous to the Group's requirements, as they were at 30 November 2014, and on sub-letting GBP2.4m was released from the onerous lease provision.

In the prior year, the Group's interests in Newham Learning Partnership (PSP) ltd were sold for a total cash consideration of GBP1.6m; and a profit of GBP0.9m was recorded as an adjustment to Investment income (see note 3).

 
 Segmental assets 
                               RM        RM          RM   Corporate       Exited 
                        Resources   Results   Education    Services   Businesses     Total 
                           GBP000    GBP000      GBP000      GBP000       GBP000    GBP000 
---------------------  ----------  --------  ----------  ----------  -----------  -------- 
 At 30 November 2016 
 Segmental                 31,968     7,085      17,803         217            -    57,073 
 Other                                                                              48,942 
 Total assets                                                                      106,015 
---------------------  ----------  --------  ----------  ----------  -----------  -------- 
 
                               RM        RM          RM   Corporate       Exited 
                        Resources   Results   Education    Services   Businesses     Total 
                           GBP000    GBP000      GBP000      GBP000       GBP000    GBP000 
---------------------  ----------  --------  ----------  ----------  -----------  -------- 
 At 30 November 2015 
 Segmental                 32,962     7,732      16,539         700        1,162    59,095 
 Other                                                                              55,826 
 Total assets                                                                      114,921 
---------------------  ----------  --------  ----------  ----------  -----------  -------- 
 
 
 3. Investment income 
                                                  Year ended     Year ended 
                                                 30 November    30 November 
                                                        2016           2015 
                                                      GBP000         GBP000 
--------------------------------------------   -------------  ------------- 
 Bank interest                                           123            224 
 Income on sale of finance lease debt                     46             45 
 Income from sale of other receivables (see 
  note 2)                                                  -            894 
 Other finance income                                    110            140 
                                                         279          1,303 
 --------------------------------------------  -------------  ------------- 
 
 
 4. Finance costs 
                                                              Year ended     Year ended 
                                                             30 November    30 November 
                                                                    2016           2015 
                                                          Note    GBP000         GBP000 
-------------------------------------------------------  ------  -------  ------------- 
 
 Borrowing facilities arrangement fees and 
  commitment fees                                                    421            467 
 Net finance costs on defined benefit pension 
  scheme                                                             498            964 
 Unwind of discount on long term contract 
  provisions                                                          37             74 
 Unwind of discount on onerous lease and dilapidations 
  provisions                                               11         84            149 
 Other finance costs                                                  46              5 
------------------------------------------------------- 
                                                                   1,086          1,659 
-------------------------------------------------------  ------  -------  ------------- 
 
 
 5. Tax 
 a) Analysis of tax charge in the Consolidated 
  Income Statement 
                                                      Year ended     Year ended 
                                                     30 November    30 November 
                                                            2016           2015 
                                                          GBP000         GBP000 
------------------------------------------------   -------------  ------------- 
 Current taxation 
 UK corporation tax                                        2,924          3,684 
 Adjustment in respect of prior years                        302            297 
 Overseas tax                                                296            278 
 Total current tax charge                                  3,522          4,259 
-------------------------------------------------  -------------  ------------- 
 Deferred taxation 
 Temporary differences                                       173            259 
 Adjustment in respect of prior years                      (237)          (213) 
 Overseas tax                                                 11           (32) 
 Total deferred tax (credit)/charge                         (53)             14 
 Total Consolidated Income Statement tax charge            3,469          4,273 
-------------------------------------------------  -------------  ------------- 
 
 
 b) Analysis of tax (credit)/charge in the Consolidated Statement 
  of Comprehensive Income 
                                                      Year ended     Year ended 
                                                     30 November    30 November 
                                                            2016           2015 
                                                          GBP000         GBP000 
------------------------------------------------   -------------  ------------- 
 UK corporation tax 
 Defined benefit pension scheme                          (1,241)          (469) 
 Share based payments                                      (142)          (504) 
 Deferred tax 
 Defined benefit pension scheme movements                (2,325)            949 
 Defined benefit pension scheme escrow                     (749)              - 
 Share based payments                                        110            540 
 Deferred tax relating to the change in rate                 345            470 
 Total Consolidated Statement of Comprehensive 
  Income tax (credit)/charge                             (4,002)            986 
-------------------------------------------------  -------------  ------------- 
 
 
 
 c) Reconciliation of Consolidated 
  Income Statement tax charge 
 The tax charge in the Consolidated Income Statement reconciles to 
  the effective rate applied by the Group as follows: 
 
                                            Year ended 30 November        Year ended 30 November 
                                                      2016                         2015 
                                          Adjusted     Adjustments      Adjusted     Adjustments 
                                                           Total                        Total 
                                            GBP000    GBP000   GBP000     GBP000   GBP000   GBP000 
--------------------------------------   ---------  --------  -------  ---------  -------  ------- 
 
 Profit on ordinary activities 
  before tax                                18,096   (2,981)   15,115     17,098    2,137   19,235 
 
 Tax at 20% (2015: 20.33%) 
  thereon:                                   3,619     (596)    3,023      3,476      434    3,910 
 Effects of: 
 - change in tax rate on carried 
  forward 
  deferred tax assets                           65         -       65        123        -      123 
 - other expenses not deductible 
  for tax 
  purposes                                     110         -      110         50        -       50 
 - other temporary timing differences            -       151      151        (7)        1      (6) 
 - R&D tax credit                             (10)         -     (10)          4        -        4 
 - impairments                                   -         -        -         12       36       48 
 - overseas tax                                 81         -       81        246        -      246 
 - gain on sale of operations                    -      (27)     (27)          -    (182)    (182) 
 - prior period adjustments                     76         -       76         80        -       80 
 Tax charge in the Consolidated 
  Income Statement                           3,941     (472)    3,469      3,984      289    4,273 
---------------------------------------  ---------  --------  -------  ---------  -------  ------- 
 
 
 
 d) Deferred tax 
 The Group has recognised deferred tax assets as these are anticipated 
  to be recoverable against profits in future periods. The major deferred 
  tax assets and liabilities recognised by the Group and movements thereon 
  are as follows: 
                                                        Defined 
                                                        benefit                                Acquisition 
                                                        pension                   Short-term       related 
                                      Accelerated        scheme   Share-based         timing    intangible 
 Group                           tax depreciation    obligation      payments    differences        assets     Total 
                                           GBP000        GBP000        GBP000         GBP000        GBP000    GBP000 
-----------------------------  ------------------  ------------  ------------  -------------  ------------  -------- 
 
 At 1 December 2014                           787         5,351         1,016          1,085          (92)     8,147 
 Credit/(charge) to income                      -             -          (53)           (52)            91      (14) 
 Credit to equity                               -       (1,419)         (540)              -             -   (1,959) 
 Transfer to assets held for 
  sale                                       (53)             -             -              -             -      (53) 
 At 30 November 2015                          734         3,932           423          1,033           (1)     6,121 
 Credit/(charge) to income                    112             -          (59)            (1)             1        53 
 Charge to equity                               -         1,980         (110)            749             -     2,619 
 At 30 November 2016                          846         5,912           254          1,781             -     8,793 
-----------------------------  ------------------  ------------  ------------  -------------  ------------  -------- 
 Certain deferred tax assets and 
  liabilities have been offset above. 
 
 
 6. Earnings per ordinary share 
 
                                        Year ended 30 November            Year ended 30 November 
                                                  2016                              2015 
                                                  Weighted                          Weighted 
                                       Profit      average    Pence      Profit      average    Pence 
                                          for       number      per         for       number      per 
                                     the year    of shares    share    the year    of shares    share 
                                       GBP000         '000               GBP000         '000 
--------------------------------   ----------  -----------  -------  ----------  -----------  ------- 
 Basic earnings per ordinary 
  share 
 Basic earnings                        11,646       81,144     14.4      14,962       80,954     18.5 
 Adjustments (see note 2)               2,509            -      3.0     (1,848)            -    (2.3) 
                                                                                 ----------- 
 Adjusted basic earnings               14,155       81,144     17.4      13,114       80,954     16.2 
---------------------------------  ----------  -----------  -------  ----------  -----------  ------- 
 Diluted earnings per ordinary 
  share 
 Basic earnings                        11,646       81,144     14.4      14,962       80,954     18.5 
 Effect of dilutive potential 
  ordinary shares: share based 
  payment awards                            -            -        -           -        3,080    (0.7) 
                                                                     ---------- 
 Diluted earnings                      11,646       81,144     14.4      14,962       84,034     17.8 
 Adjustments (see note 2)               2,509            -      3.0     (1,848)            -    (2.2) 
                                                                                 ----------- 
 Adjusted diluted earnings             14,155       81,144     17.4      13,114       84,034     15.6 
---------------------------------  ----------  -----------  -------  ----------  -----------  ------- 
 
 
 
 7. Dividends 
 Amounts recognised as distributions to equity 
  holders were: 
                                                          Year ended     Year ended 
                                                         30 November    30 November 
                                                                2016           2015 
                                                              GBP000         GBP000 
----------------------------------------------------   -------------  ------------- 
 
 Final dividend for the year ended 30 November 
  2015 - 3.80p per share (2014: 3.04p)                         3,079          2,451 
 Interim dividend for the year ended 30 November 
  2016 - 1.50p per share (2015: 1.20p)                         1,220            973 
                                                               4,299          3,424 
 ----------------------------------------------------  -------------  ------------- 
 The proposed final dividend of 4.50p per share for the year ended 
  30 November 2016 was approved by the Board on 7 February 2017. 
  The dividend is subject to approval by Shareholders at the annual 
  general meeting. The anticipated cost of this dividend is GBP3,660,000 
  which is not included as a liability at 30 November 2016. 
 
 
 8. Trade and other receivables 
 
                                                 2016     2015 
                                       Note    GBP000   GBP000 
------------------------------------  ------  -------  ------- 
 Current 
 Financial assets 
 Trade receivables                             15,060   17,303 
 Long-term contract balances                        -      138 
 Other receivables                              1,294    1,048 
 Derivative financial instruments                 685      138 
 Accrued income                                 1,824    1,489 
 Amounts owed by Group undertakings                 -        - 
                                               18,863   20,116 
 Non-financial assets 
 Prepayments                                    5,540    5,476 
                                               24,403   25,592 
 -------------------------------------------  -------  ------- 
 Non-current 
 Financial assets 
 Other receivables                              1,153    1,168 
                                               25,556   26,760 
 -------------------------------------------  -------  ------- 
 
 
 9. Cash and short-term deposits 
 
                                                      2016     2015 
                                                    GBP000   GBP000 
----------------------------------------------   ---------  ------- 
 Cash and cash equivalents                          36,973   42,320 
 Short-term deposits                                 3,014    6,000 
                                                    39,987   48,320 
 ----------------------------------------------  ---------  ------- 
 
 The short-term deposits are for a maximum period of 6 
  months at interest rates of 0.70%. 
 
 
 
 10. Trade and other payables 
 
                                                           2016     2015 
                                                 Note    GBP000   GBP000 
----------------------------------------------  ------  -------  ------- 
 Current liabilities 
 Financial liabilities 
 Trade payables                                          13,777   11,518 
 Amounts owed to Group undertakings                           -        - 
 Other taxation and social security                       2,842    4,010 
 Other payables                                           2,284      761 
 Accruals                                                 9,096   12,525 
 Obligations under finance leases                             -       40 
 Derivative financial instruments                            45        5 
 Long-term contract balances                             16,766   25,509 
                                                         44,810   54,368 
 Non-financial liabilities 
 Deferred income                                          9,711   10,606 
                                                         54,521   64,974 
 -----------------------------------------------------  -------  ------- 
 Non-current liabilities 
 Non-financial liabilities: 
 Deferred income: 
  - due after one year but within two years                 462      472 
  - due after two years but within five years               509      190 
                                                            971      662 
 -----------------------------------------------------  -------  ------- 
                                                         55,492   65,636 
 -----------------------------------------------------  -------  ------- 
 
 
 11. Provisions                             Onerous 
                                          lease and   Employee-related 
                                      dilapidations      restructuring    Other     Total 
 Group                                       GBP000             GBP000   GBP000    GBP000 
---------------------------------   ---------------  -----------------  -------  -------- 
 
 At 30 November 2014                          8,094                365      708     9,167 
 Utilisation of provisions                  (2,186)            (1,166)    (132)   (3,484) 
 Release of provisions                      (2,368)               (85)    (423)   (2,876) 
 Increase in provisions                           -              1,070    1,025     2,095 
 Effect of movements in exchange 
  rates                                           -                  -        2         2 
 Transfer to held for sale 
  liabilities                                 (110)                  -      (2)     (112) 
 Unwind of discount                             149                  -        -       149 
 At 30 November 2015                          3,579                184    1,178     4,941 
 Utilisation of provisions                    (345)              (184)    (396)     (925) 
 Release of provisions                        (161)                  -    (147)     (308) 
 Increase in provisions                           -              1,844    1,057     2,901 
 Unwind of discount                              84                  -        -        84 
 At 30 November 2016                          3,157              1,844    1,692     6,693 
----------------------------------  ---------------  -----------------  -------  -------- 
 
 Provisions for onerous leases and dilapidations have been recognised 
  at the present value of the expected obligation at discount rates 
  of 2.6% (2015: 2.6%) per annum reflecting a risk free discount rate, 
  applicable to the liabilities. These discounts will unwind to their 
  undiscounted value over the remaining lives of the leases via a finance 
  cost within the Income Statement. At 30 November 2016, GBP1,465,000 
  (2015: GBP1,829,000) of the provision refers to onerous leases, and 
  GBP1,692,000 (2015: GBP1,750,000) refers to dilapidations. The major 
  release in the prior year relates to the successful sub-letting of 
  one of the Group's properties. 
 The average remaining life of the leases at 30 November 2016 is 3.1 
  years (2015: 3.5 years). 
 In making their assessment of the required provisions, the group 
  is required to estimate the likely sub-let income that could be earned 
  over the remaining life of the lease. This requires the Directors 
  to make judgements relating to the likelihood that a property will 
  be sub-let and the income that will be earned. 
 Employee related restructuring provisions refer to costs arising 
  from restructuring to meet the future needs of the Group and are 
  all expected to be utilised during the following financial year. 
 Other provisions includes one-off items not covered by any other 
  category. During the year risk provisions totalling GBP475,000 from 
  ended BSF contracts were transferred from long-term contract creditors 
  to provisions. The other most significant element in the provision 
  at 30 November 2016 relates to regulatory compliance. 
 
 
 
 
 Group                         2016     2015 
                             GBP000   GBP000 
-------------------------   -------  ------- 
 
 Current liabilities          3,536    2,077 
 Non-current liabilities      3,157    2,864 
                              6,693    4,941 
 -------------------------  -------  ------- 
 
 
 
 12. Share capital 
 
 Company and Group                           Ordinary shares 
                                              of 2(2) /(7) p 
                                              '000    GBP000 
 Allotted, called-up and fully paid: 
 At 1 December 2014                         82,640     1,889 
 Issued in the year                             10         1 
 At 30 November 2015                        82,650     1,890 
 Issued in the year                              -         - 
 At 30 November 2016                        82,650     1,890 
----------------------------------------  --------  -------- 
 
 Ordinary shares issued carry no right 
  to fixed income. 
 
 

13. Defined benefit pension scheme

As at 31 May 2015, the triennial valuation for statutory funding purposes showed a deficit of GBP41,800,000 (31 May 2012: GBP53,500,000). The Group agreed with the Scheme Trustee that it will repay this amount via deficit catch-up payments of GBP4,000,000 in December 2015 and GBP3,600,000 per annum until 30 September 2024. At 30 November 2016 there were amounts outstanding of GBP300,000 (2015: GBP300,000) for one month's deficit payment and GBP32,000 (2015: GBP32,000) for Scheme expenses. The next triennial valuation of the Scheme is due as at 31 May 2018 and may result in changes to the level of deficit catch-up payments required.

In addition to the GBP4,000,000 of catch up payments in December 2015, a further GBP4,000,000 contribution was paid in December 2015 into an escrow account established in March 2014, the use of which within the Scheme is required to be agreed by RM Education Limited and the Scheme Trustee.

IAS 19 Employee Benefits, amended June 2011, has been adopted in these financial statements.

14. Related party transactions

Ipswich School

John Poulter, non-executive director of RM plc, is a director of Ipswich School. Sales made in the year total GBP2,419 and at the year end there is a balance of GBP90 outstanding.

Grant Thornton LLP

The Company has engaged Grant Thornton to provide advice in connection with certain acquisition related activities. No payments were made to Grant Thornton during the year ended 30 November 2016. Deena Mattar, one of the Company's Non-Executive Directors, is a member of the Advisory Board of Grant Thornton. Grant Thornton were chosen from a competitive tender conducted by the Company and Deena Mattar was not involved in that exercise.

British Educational Suppliers Association

TTS Director Catherine Jeffrey sits on the Executive Council of BESA, in the year the Group made purchases of GBP7,424.

The Group encourages its Directors and employees to be Governors, Trustees or equivalent of educational establishments. The Group trades with these establishments in the normal course of its business.

15. Events after the reporting period

On 7 February 2017, the Company agreed to acquire the entire issued share capital of Hedgelane Limited (including its principal trading subsidiary known as The Consortium) from Smiths News Holdings Limited (part of the Connect Group plc group of companies) (the "Acquisition"). In connection with the Acquisition, the Company has entered into a GBP75 million revolving credit facility (the "New Facility") with Barclays Bank plc and HSBC Bank plc. Completion of the Acquisition is conditional upon, among other things, clearance being received from the Competition and Markets Authority and shareholder approval. The New Facility will become available upon completion of the Acquisition and will expire 36 months from such date. If the Acquisition does not complete for any reason, the New Facility will not come into effect and the Current Facility will remain in force unaffected.

This information is provided by RNS

The company news service from the London Stock Exchange

END

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