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| 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 | |
|---|---|---|---|---|---|---|---|---|---|---|
| 0.00 | 0.00% | 71.00 | 70.50 | 74.00 | 36,348 | 10:31:13 |
| Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
|---|---|---|---|---|---|
| Computers & Software-whsl | 195.19M | -29.1M | -0.3496 | -2.03 | 59.11M |
From Apr 2019 to Apr 2024
TIDMRM.
RNS Number : 9934J
RM PLC
04 July 2017
4 July 2017
RM plc
Interim Results for the period ending 31 May 2017
RM plc ("RM"), the leading education resources, IT software and services group, reports its interim results for the 6 months ended 31 May 2017.
HIGHLIGHTS
Financial 2017 2016 Change ------------------------------ ----------- ----------- ---------- Revenue(1) GBP71.3m GBP76.6m - 6.9% RM Resources GBP25.5m GBP29.3m - 12.9% RM Results GBP13.5m GBP13.2m + 2.2% RM Education GBP32.4m GBP34.2m - 5.4% Adjusted* operating profit GBP7.1m GBP7.1m + 0.2% Adjusted* operating profit 10.0% 9.3% +0.7pp margin ------------------------------ ----------- ----------- ---------- Adjusted* diluted EPS 7.5p 6.1p + 23.7% ------------------------------ ----------- ----------- ---------- Interim dividend 1.65p 1.50p + 10.0% ------------------------------ ----------- ----------- ----------
(1) Excludes the results of the exited Space Kraft business in 2016, H1 2016 revenue was GBP0.2m and operating loss was GBP0.0m.
Hot Features
Premium
Operational
--------------------------------------------------------------
* Revenue(1) down 6.9% to GBP71.3m reflecting continued
reduction in UK Resources revenues and lower
infrastructure and project spend in RM Education
* Adjusted* operating profit of GBP7.1m is in line with
prior year
* Increased adjusted* operating margins of 10.0%
* Cash balance of GBP29.3m (31 May 2016: GBP32.1m) as
at 31 May 2017
* Pension deficit reduced to GBP22.2m (30 Nov 2016:
GBP34.8m) primarily reflecting positive assets
performance
* The acquisition of the Connect Education and Care
business was completed on 30 June 2017 supported by a
GBP75m unsecured revolving credit facility
* Interim dividend increased by 10% to 1.65p
--------------------------------------------------------------
Commenting on the interim results, David Brooks, Chief Executive of RM, said:
"Trading in the first six months has been as expected. We have grown our margins to 10.0% with improvements in RM Results and RM Education. RM Resources experienced a more difficult period as demand for discretionary curriculum products continued to be impacted by increased pressure on school budgets. We welcome the Connect Education and Care business into the Group and are presently planning for integration. The Board's expectations for the full year results remain unchanged."
Contacts RM plc FTI Consulting David Brooks, Chief Executive Chris Lane / Elena Officer Kalinskaya Neil Martin, Chief Financial Officer 020 3727 1000 08450 700300
* Throughout this statement, adjusted profit and adjusted EPS are stated before 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 amortisation of acquisition related intangible assets; the gain on sale of operations; share-based payment charges; acquisition costs; restructuring costs and changes in the provisions for dilapidations and onerous lease contracts. Exited businesses are excluded.
RM plc
Interim results for the 6 months ended 31 May 2017
Results
6 months 6 months 12 months
to to to
May May November
2017 2016 2016
------------------------------- --------- ---------- ----------
Revenue GBP71.3m GBP76.8m GBP167.6m
Adjusted* operating profit GBP7.1m GBP7.1m GBP18.8m
Adjusted* profit before tax GBP6.6m GBP6.5m GBP18.1m
Adjusted* profit after tax GBP6.2m GBP5.2m GBP14.2m
Statutory operating profit GBP4.3m GBP6.6m GBP15.9m
Statutory tax credit/(charge) GBP0.1m GBP(1.4)m GBP(3.5)m
Adjusted* diluted Earnings
per share 7.5p 6.1p 17.4p
Ordinary dividend per share 1.65p 1.50p 6.00p
Cash and short term deposits GBP29.3m GBP32.1m GBP40.0m
------------------------------- --------- ---------- ----------
Revenue declined by 7.1% to GBP71.3m versus the same period last year (or by 6.9% when excluding the exited business, SpaceKraft which was sold in December 2015), with growth in the RM Results division being more than offset by decline in the RM Resources and RM Education divisions.
Adjusted* operating profit was in line with the prior year at GBP7.1m. Adjusted* profit before tax was GBP6.6m.
Cash used in operations of GBP4.1m (H1 2016: cash used GBP0.4m) primarily reflected the utilisation of the 2016 restructuring provision (GBP1.8m) and higher inventory (GBP1.8m). Net cash and short-term deposits at 31 May 2017 were GBP29.3m.
The adjusted tax charge in the period was GBP0.4m with an effective tax rate of 5.7% (H1 2016: 21.0%). The reduction in the tax rate reflects the one-time benefit of a reduction in the transfer pricing tax provision of GBP1.0m associated with cross border intra-group transactions between the UK and India.
Adjusted* diluted earnings per share increased by 23.7% to 7.5p
Pension
The IAS 19 deficit relating to RM's defined benefit pension scheme has decreased since 30 November 2016 by GBP12.6m to GBP22.2m (30 November 2016: GBP34.8m), primarily reflecting positive assets performance and changes in demographic assumptions which more than offset the impact of lower discount rates. During the period the methodology used in establishing discount rates was changed to better reflect management's estimate of the long-dated credit risk implied in bond yields appropriate for the cash flow liabilities in the scheme.
The current deficit recovery plan agreed in May 2015 includes payments of GBP3.6m per annum until 2024. The next triennial valuation is in May 2018.
Dividend
The interim dividend per share has been increased by 10.0% to 1.65p. The dividend will be payable on 8 September 2017 to shareholders on the register on 11 August 2017.
RM Resources
This division provides education resources used in schools in the UK and internationally through a mainly direct marketing business. Products supplied are a mix of third party branded and TTS branded items manufactured from a network of third party suppliers.
6 months 6 months 12 months
to to to
May May November
2017 2016 2016
--------------------------------- --------- --------- ----------
RM Resources revenue GBP25.5m GBP29.3m GBP58.8m
RM Resources adjusted* operating
profit GBP2.8m GBP4.3m GBP10.2m
--------------------------------- --------- --------- ----------
The above excludes the exited SpaceKraft business which was sold in December 2015.
RM Resources reported a revenue decline of 12.9% to GBP25.5m (H1 2016: GBP29.3m). UK direct marketing revenues decreased by 20% with schools continuing to focus on buying essentials as a result of ongoing tightened UK budgets for schools.
International revenues grew by 29% primarily driven by increased sales of proprietary products.
Online ordering continues to grow and now represents 44% of UK orders (H1 2016: 34%).
Operating margins reduced to 11.1% (2016: 14.6%) impacted by lower UK revenues and adverse foreign exchange movements which more than offset a GBP1.1m reduction in operating costs in the period.
The acquisition of the Connect Education and Care business was concluded on 30 June 2017. The focus is on successfully combining this highly complementary business within RM Resources to create scale and a market leading position and to deliver meaningful synergies.
RM Results
The RM Results business provides IT software and e-Assessment services to enable onscreen exam marking (e-marking), onscreen testing (e-testing) and the management and analysis of educational data. Customers include government ministries, exam boards and professional awarding bodies in the UK and overseas.
6 months 6 months 12 months
to to to
May May November
2017 2016 2016
------------------------------- --------- --------- ----------
RM Results revenue GBP13.5m GBP13.2m GBP31.6m
RM Results adjusted* operating
profit GBP2.8m GBP2.4m GBP6.8m
------------------------------- --------- --------- ----------
Revenue increased by 2.2% to GBP13.5m (H1 2015: GBP13.2m). This growth reflects benefits from a new 5 year framework agreement signed with Oxford University Press to deliver a global assessment platform and the timing of revenues accounted for in the first half that more than offset lower Data contract revenues.
Adjusted* operating profit increased to GBP2.8m (H1 2016: GBP2.4m) due to improved operating margins of 20.5% (H1 2016: 18.0%).
RM Education
RM Education is a UK focused business supplying ICT software and services to schools and colleges.
6 months 6 months 12 months
to to to
May May November
2017 2016 2016
----------------------- --------- --------- ----------
RM Education revenue GBP32.4m GBP34.2m GBP77.0m
RM Education adjusted*
operating profit GBP3.1m GBP2.3m GBP5.8m
----------------------- --------- --------- ----------
As expected, revenues in RM Education reduced by 5.4% reflecting the continued transition away from legacy offerings. These included reduced Building Schools for the Future infrastructure spend and lower warranty and network revenues.
In the period we were selected by Education Scotland to continue to deliver our largest Digital platform contract providing Glow authentication and portal services over 5 years. We were also awarded a 3 year contract for Connectivity services for over 500 schools in Hertfordshire.
Despite the reduction in revenue, the division significantly improved operating margins to 9.6% (H1 2016: 6.6%) reflecting the benefits of the cost action taken in the prior year.
Corporate Costs
Corporate costs have reduced to GBP1.6m (H1 2016: GBP1.8m) reflecting reduced administration and project costs associated with the defined benefit pension scheme.
Statement on Principal Risks and Uncertainties
Pursuant to the requirements of the Disclosure and Transparency Rules, the Group provides the following information on its principal risks and uncertainties. The Group considers strategic, operational and financial risks and identifies actions to mitigate those risks. These risk profiles are updated at least annually. The principal risks and uncertainties detailed within the Group's 2016 Annual Report remain applicable. This is available from the RM website: www.rmplc.com.
Following the acquisition of Connect Education and Care, one further risk has been added as below:
Risk - Acquisition
Description and likely impact - RM plc acquisition fails to generate anticipated revenues, synergies and/or cost savings.
Mitigation - RM performed pre-transaction due diligence, has engaged an integration specialist to support the process and will closely monitor actual performance to ensure we are meeting operational and financial targets. Any divergence from these plans will result in management action to improve performance and minimise the risk of financial impact. Executive management and the Board will receive regular reports on the status of the acquisition with formal reviews supported by the Group's internal audit function.
Outlook
Whilst market conditions in the UK Education sector continue to be challenging as a result of pressure on school budgets the Board's expectations for the full year results remain unchanged. Our balance sheet remains strong and the Board is focusing on the integration of the Connect Education and Care business and investing in the three divisions while ensuring that margins can be maintained or improved in the current year.
Condensed Consolidated Income
Statement
for the 6 months
ended 31 May 2017
------------------------------ ------------ --------- --------- ------------ --------- ---------- ------------ ----------
6 months ended 6 months ended Year ended 30
31 May 2017 31 May 2016 November 2016
Adjusted Adjustments Total Adjusted Adjustments Total Adjusted Adjustments Total
Note GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
------------ ----- --------- ------------ --------- --------- ------------ --------- ---------- ------------ ----------
Revenue 71,285 - 71,285 76,759 - 76,759 167,615 - 167,615
Cost of
sales (41,628) - (41,628) (44,774) - (44,774) (100,365) - (100,365)
------------ ----- --------- ------------ --------- --------- ------------ --------- ---------- ------------ ----------
Gross
profit 29,657 - 29,657 31,985 - 31,985 67,250 - 67,250
Operating
expenses 4 (22,551) (2,766) (25,317) (24,910) (493) (25,403) (48,421) (2,907) (51,328)
Profit
from
operations 7,106 (2,766) 4,340 7,075 (493) 6,582 18,829 (2,907) 15,922
Investment
income 170 - 170 114 - 114 279 - 279
Finance
costs (716) (36) (752) (657) (38) (695) (1,012) (74) (1,086)
------------ ----- --------- ------------ --------- --------- ------------ --------- ---------- ------------ ----------
Profit
before
tax 6,560 (2,802) 3,758 6,532 (531) 6,001 18,096 (2,981) 15,115
Tax 5 (373) 435 62 (1,372) (9) (1,381) (3,941) 472 (3,469)
------------ ----- --------- ------------ --------- --------- ------------ --------- ---------- ------------ ----------
Profit
for the
period 6,187 (2,367) 3,820 5,160 (540) 4,620 14,155 (2,509) 11,646
------------ ----- --------- ------------ --------- --------- ------------ --------- ---------- ------------ ----------
Earnings
per
ordinary
share: 6
Basic 7.6p 4.7p 6.4p 5.7p 17.4p 14.4p
Diluted 7.5p 4.6p 6.1p 5.4p 17.4p 14.4p
Paid and
proposed
dividends
per share: 7
Interim 1.65p 1.50p 1.50p
Final - - 4.50p
Adjustments to results have been presented
to give a better guide to business performance
(see note 4).
All amounts were derived
from continuing operations.
Condensed Consolidated Statement
of Comprehensive Income
for the 6 months ended 31
May 2017
--------------------------------------- --------- --------- -------------
6 months 6 months Year ended
ended ended 30 November
31 May 31 May 2016
2017 2016
GBP000 GBP000 GBP000
--------------------------------------- --------- --------- -------------
Profit for the period 3,820 4,620 11,646
Items that will not be reclassified
subsequently to profit or loss:
Defined benefit pension scheme
remeasurements 11,366 (10,279) (23,555)
Tax on items that will not be
reclassified subsequently to
profit or loss (1,905) 1,932 3,970
Items that are or may be reclassified
subsequently to profit or loss:
Fair value (loss)/gain on
hedged instruments (553) 56 515
Exchange gain on translation
of overseas operations 60 60 261
Tax on items that are or may
be reclassified subsequently
to profit or loss 51 17 32
---------------------------------------- --------- --------- -------------
Other comprehensive income/(expense) 9,019 (8,214) (18,777)
---------------------------------------- --------- --------- -------------
Total comprehensive income/(expense) 12,839 (3,594) (7,131)
---------------------------------------- --------- --------- -------------
Condensed Consolidated Balance
Sheet
At 31 May 2017
6 months 6 months Year ended
ended ended
Note 31 May 31 May 30 November
2017 2016 2016
-------------------------------- -----
GBP000 GBP000 GBP000
-------------------------------- ----- --------- --------- ------------
Non-current assets
Goodwill 14,067 14,067 14,067
Other intangible assets 762 812 704
Property, plant and equipment 5,112 6,950 6,219
Other receivables 10 1,144 1,166 1,153
Deferred tax assets 6,706 7,189 8,793
-------------------------------- ----- --------- --------- ------------
27,791 30,184 30,936
Current assets
Inventories 12,501 10,805 10,689
Trade and other receivables 10 24,899 25,815 24,403
Cash and short-term deposits 8 29,268 32,118 39,987
-------------------------------- ----- --------- --------- ------------
66,668 68,738 75,079
Total assets 3 94,459 98,922 106,015
-------------------------------- ----- --------- --------- ------------
Current liabilities
Trade and other payables 11 (48,119) (56,719) (54,521)
Tax liabilities (403) (1,280) (1,259)
Provisions 12 (1,748) (1,132) (3,536)
-------------------------------- ----- --------- --------- ------------
(50,270) (59,131) (59,316)
Net current assets 16,398 9,607 15,763
-------------------------------- ----- --------- --------- ------------
Non-current liabilities
Other payables 11 (1,051) (690) (971)
Provisions 12 (3,367) (2,948) (3,157)
Defined Benefit Pension Scheme
obligation 13 (22,238) (22,958) (34,775)
-------------------------------- ----- --------- --------- ------------
(26,656) (26,596) (38,903)
Total liabilities (76,926) (85,727) (98,219)
-------------------------------- ----- --------- --------- ------------
Net assets 17,533 13,195 7,796
-------------------------------- ----- --------- --------- ------------
Equity attributable to shareholders
Share capital 1,890 1,890 1,890
Share premium account 27,035 27,035 27,035
Own shares (1,987) (2,510) (1,987)
Capital redemption reserve 94 94 94
Hedging reserve 326 420 879
Translation reserve (63) (324) (123)
Retained earnings - (deficit) (9,762) (13,410) (19,992)
-------------------------------- ----- --------- --------- ------------
Total equity 17,533 13,195 7,796
-------------------------------- ----- --------- --------- ------------
Condensed Consolidated Statement
of Changes in Equity
for the 6 months Share Share Own Capital Hedging Translation Retained Total
ended 31 May 2017 capital premium shares redemption reserve reserve earnings
reserve
Note GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
------------------ ----- --------- --------- -------- ----------- --------- ------------ ---------- ---------
At 1 December
2016 1,890 27,035 (1,987) 94 879 (123) (19,992) 7,796
Profit for the
period - - - - - - 3,820 3,820
Other
comprehensive
income/(expense) - - - - (553) 60 9,512 9,019
------------------ ----- --------- --------- -------- ----------- --------- ------------ ---------- ---------
Total
comprehensive
income/(expense) - - - - (553) 60 13,332 12,839
Transactions with
owners of the Company:
Share-based payment
fair value adjustments - - - - - - 558 558
Ordinary
dividends
paid 7 - - - - - - (3,660) (3,660)
------------------ ----- --------- --------- -------- ----------- --------- ------------ ---------- ---------
At 31 May 2017 1,890 27,035 (1,987) 94 326 (63) (9,762) 17,533
------------------ ----- --------- --------- -------- ----------- --------- ------------ ---------- ---------
for the 6 months Share Share Own Capital Hedging Translation Retained Total
ended 31 May 2016 capital premium shares redemption reserve reserve earnings
reserve
Note GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
------------------ ----- --------- --------- -------- ----------- --------- ------------ ---------- ---------
At 1 December
2015 1,890 27,035 (2,510) 94 364 (384) (7,342) 19,147
Profit for the
period - - - - - - 4,620 4,620
Other
comprehensive
expense - - - - 56 60 (8,330) (8,214)
------------------ ----- --------- --------- -------- ----------- --------- ------------ ---------- ---------
Total
comprehensive
income/(expense) - - - - 56 60 (3,710) (3,594)
Transactions with
owners of the Company:
Sale of shares
held in staff
share
scheme - - - - - - 21 21
Share-based payment
fair value adjustments - - - - - - 700 700
Ordinary
dividends
paid 7 - - - - - - (3,079) (3,079)
------------------ ----- --------- --------- -------- ----------- --------- ------------ ---------- ---------
At 31 May 2016 1,890 27,035 (2,510) 94 420 (324) (13,410) 13,195
------------------ ----- --------- --------- -------- ----------- --------- ------------ ---------- ---------
for the year Share Share Own Capital Hedging Translation Retained Total
ended capital premium shares redemption reserve reserve earnings
30 November 2016 reserve
Note GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
------------------ ----- --------- --------- -------- ----------- --------- ------------ ---------- ---------
At 1 December
2015 1,890 27,035 (2,510) 94 364 (384) (7,342) 19,147
Profit for the
year - - - - - - 11,646 11,646
Other
comprehensive
income/(expense) - - - - 515 261 (19,553) (18,777)
------------------ ----- --------- --------- -------- ----------- --------- ------------ ---------- ---------
Total
comprehensive
income/(expense) - - - - 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 adjustments - - - - - - 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
------------------ ----- --------- --------- -------- ----------- --------- ------------ ---------- ---------
Condensed Consolidated Cash
Flow Statement
for the 6 months ended 31
May 2017
6 months 6 months
ended ended Year ended
31 May 31 May 30 November
2017 2016 2016
Note GBP000 GBP000 GBP000
---------------------------------------- ------ --------- --------- -------------
Profit before tax 3,758 6,001 15,115
Investment income (170) (114) (279)
Finance costs 752 695 1,086
---------------------------------------- ------ --------- --------- -------------
Profit from operations 4,340 6,582 15,922
Adjustments for:
Impairment of acquisition
related intangible assets - - 77
Amortisation of acquisition
related intangible assets - 8 8
Amortisation of other intangible
assets 101 120 239
Depreciation and impairment
of property, plant and equipment 1,237 1,057 2,223
Gain on sale of operations - (136) (135)
Loss/(gain) on disposal of
property, plant and equipment 7 42 (5)
(Gain)/loss on foreign exchange
derivatives (491) 133 684
Share-based payment fair value
adjustment 558 700 1,006
Increase/(decrease) in provisions 12 482 (79) 2,557
Defined Benefit Pension Scheme
administration cost 13 318 480 845
---------------------------------------- ------ --------- --------- -------------
Operating cash flows before
movements in working capital 6,552 8,907 23,421
(Increase)/decrease in inventories (1,812) 57 173
(Increase)/decrease in receivables (422) (353) 1,056
Movement in payables:
- decrease in trade and other
payables (6,392) (8,233) (10,338)
- utilisation of onerous
lease and dilapidations provisions 12 (15) (306) (345)
- utilisation of employee-related
restructuring provisions 12 (1,752) (94) (184)
- utilisation of other provisions 12 (295) (381) (396)
---------------------------------------- ------ --------- --------- -------------
Cash (used in)/generated by
operations (4,136) (403) 13,387
Defined Benefit Pension Scheme
cash contributions (1,992) (9,992) (11,984)
Tax paid (563) (1,882) (3,567)
Borrowing facilities arrangement
and commitment fees (193) (365) (422)
Income on sale of finance
lease debt - 16 6
---------------------------------------- ------ --------- --------- -------------
Net cash (outflow)/inflow
from operating activities (6,884) (12,626) (2,580)
---------------------------------------- ------ --------- --------- -------------
Investing activities
Interest received 89 98 255
Repayment of loans by third
parties 8 - 16
Proceeds from sale of operations - 759 759
Proceeds on disposal of property,
plant and equipment 18 13 43
Purchases of property, plant
and equipment (110) (1,019) (1,333)
Purchases of other intangible
assets (158) (369) (456)
Amounts transferred from short-term
deposits 3,014 - 2,986
---------------------------------------- ------ --------- --------- -------------
Net cash generated by/(used
in) investing activities 2,861 (518) 2,270
---------------------------------------- ------ --------- --------- -------------
Financing activities
Ordinary dividends paid 7 (3,660) (3,079) (4,299)
Proceeds from sale of shares
held in Staff Share Scheme - 21 -
Purchase of own shares - - (317)
Satisfaction of share-based
payment awards - - (610)
---------------------------------------- ------ --------- --------- -------------
Net cash used in financing
activities (3,660) (3,058) (5,226)
---------------------------------------- ------ --------- --------- -------------
Net (decrease) in cash and
cash equivalents (7,683) (16,202) (5,536)
Cash and cash equivalents
at the beginning of the period/year 36,973 42,320 42,320
Effect of foreign exchange
rate changes (22) - 189
---------------------------------------- ------ --------- --------- -------------
Cash and cash equivalents
at the end of period/ year 8 29,268 26,118 36,973
---------------------------------------- ------ --------- --------- -------------
Notes to the Condensed Interim Financial Statements
1. General information
RM plc ('Company') is incorporated in the United Kingdom
and listed on the London Stock Exchange. The unaudited
Condensed Consolidated Interim Financial Statements
as at 31 May 2017 and for the 6 months then ended comprise
those of the Company and its subsidiaries (together
'the Group').
Condensed 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 4 for further details in respect of adjustments
to profit, which have been analysed as recurring and
non-recurring items.
Other Comprehensive Income
During the period, GBP11.4m of actuarial gains relating
to the defined benefit pension scheme deficit have been
recognised in Other Comprehensive Income. These include
deficit reduction payments of GBP2.0m.
2. Accounting policies
This condensed set of financial statements has been
prepared in accordance with IAS 34 Interim Financial
Reporting as adopted by the European Union.
The annual financial statements of the Group are prepared
in accordance with International Financial Reporting
Standards (IFRSs) as adopted by the European Union.
As required by the Disclosure and Transparency Rules
of the Financial Conduct Authority (FCA), the condensed
set of financial statements has been prepared applying
the accounting policies and presentation that were applied
in the preparation of the Group's published Consolidated
Financial Statements for the year ended 30 November
2016.
The preparation of the Condensed Consolidated Interim
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 Interim 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.
In preparing these Condensed Consolidated Interim Financial
Statements, the significant judgements made by management
in applying the Group's accounting policies and the
key sources of estimation uncertainty were the same
as those that applied to the Consolidated Financial
Statements as at and for the year ended 30 November
2016.
Going concern
The Directors, having made appropriate enquiries, consider
that the Group has adequate resources to continue in
operational existence for the foreseeable future and
that therefore it is appropriate to adopt the going
concern basis in preparing the Interim Financial Statements.
In relation to the proposed acquisition of the Education
& Care business of Connect Group PLC, the Directors
have, as part of the acquisition working capital due
diligence, considered the additional risks 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.
At the point of signing the New Facility will be in
use as referred to in note 15.
3. Segmental results
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.
Corporate Services consists of central business costs associated with being a listed company and non-division 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.
6 months ended Corporate Exited
31 May 2017 RM Resources RM Results RM Education Services Businesses Total
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
------------------------ ------------- ----------- ------------- ---------- ------------ --------
Revenue 25,480 13,450 32,355 - - 71,285
------------------------- ------------- ----------- ------------- ---------- ------------ --------
Adjusted profit/(loss)
from operations 2,827 2,751 3,098 (1,570) - 7,106
Adjusted investment
income 170
Adjusted finance
costs (716)
------------------------- ------------- ----------- ------------- ---------- ------------ --------
Adjusted profit
before tax 6,560
Adjustments (see
note 4) (2,802)
------------------------- ------------- ----------- ------------- ---------- ------------ --------
Profit before
tax 3,758
------------------------- ------------- ----------- ------------- ---------- ------------ --------
6 months ended RM Resources RM Results RM Education Corporate Exited Total
31 May 2016 Services Businesses
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
------------------------ ------------- ----------- ------------- ---------- ------------ --------
Revenue 29,265 13,155 34,188 - 151 76,759
------------------------- ------------- ----------- ------------- ---------- ------------ --------
Adjusted profit/(loss)
from operations 4,272 2,364 2,264 (1,806) (19) 7,075
Adjusted investment
income 114
Adjusted finance
costs (657)
------------------------- ------------- ----------- ------------- ---------- ------------ --------
Adjusted profit
before tax 6,532
Adjustments (see
note 4) (531)
------------------------- ------------- ----------- ------------- ---------- ------------ --------
Profit before
tax 6,001
------------------------- ------------- ----------- ------------- ---------- ------------ --------
Year ended 30 RM Resources RM Results RM Education Corporate Exited Total
November 2016 Services Businesses
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
------------------------ ------------- ----------- ------------- ---------- ------------ --------
Revenue 58,835 31,580 77,049 - 151 167,615
------------------------- ------------- ----------- ------------- ---------- ------------ --------
Adjusted profit/(loss)
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
note 4) (2,981)
------------------------- ------------- ----------- ------------- ---------- ------------ --------
Profit before
tax 15,115
------------------------- ------------- ----------- ------------- ---------- ------------ --------
Segmental assets
------------------- ------------- ----------- ------------- ---------- ------------ --------
RM Resources RM Results RM Education Corporate Exited Total
Services Businesses
At 31 May 2017 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
------------------- ------------- ----------- ------------- ---------- ------------ --------
Segmental 33,533 6,912 17,682 138 - 58,265
Other 36,194
------------------- ------------- ----------- ------------- ---------- ------------ --------
Total assets 94,459
------------------- ------------- ----------- ------------- ---------- ------------ --------
RM Resources RM Results RM Education Corporate Exited Total
Services Businesses
At 31 May 2016 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
------------------- ------------- ----------- ------------- ---------- ------------ --------
Segmental 34,444 5,662 15,949 3,362 - 59,417
Other 39,505
------------------- ----------------------------------------------------- ------------ --------
Total assets 98,922
------------------- ------------- ----------- ------------- ---------- ------------ --------
RM Resources RM Results RM Education Corporate Exited Total
Services Businesses
At 30 November GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
2016
------------- ----------- ------------- ---------- ------------ --------
Segmental 31,968 7,085 17,803 217 - 57,073
Other 48,942
------------------- ----------------------------------------------------- ------------ --------
Total assets 106,015
------------------- ------------- ----------- ------------- ---------- ------------ --------
Other non-segmented assets includes tax assets, cash and short-term deposits and other non division-specific assets.
4. Adjustments to Consolidated
Income Statement
6 months 6 months Year ended
ended ended
31 May 31 May 30 November
2017 2016 2016
Operating expenses GBP000 GBP000 GBP000
----------------------------------- --------- --------- ------------
Amortisation of acquisition
related intangible assets - (8) (8)
Gain on sale of operations - 136 135
Share-based payment charges (558) (700) (1,006)
(Increase)/decrease of provisions
for dilapidations on leased
properties and onerous lease
contracts (884) 79 90
Acquisition costs (1,324) - (525)
Restructuring costs - - (1,593)
------------------------------------ --------- --------- ------------
(2,766) (493) (2,907)
----------------------------------- --------- --------- ------------
Finance costs (36) (38) (74)
------------------------------------ --------- --------- ------------
(2,802) (531) (2,981)
----------------------------------- --------- --------- ------------
Tax 435 (9) 472
------------------------------------ --------- --------- ------------
(2,367) (540) (2,509)
----------------------------------- --------- --------- ------------
In the 6 months ended 31 May 2017 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, finance costs 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 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.
5. Tax
Corporation tax for the interim period is charged at the expected effective tax rate for the financial year ending 30 November 2017, based upon adjusted profit as explained within note 4. The charge incorporates both current and deferred taxation:
6 months ended 6 months ended Year ended 30
31 May 2017 31 May 2016 November 2016
Adjusted Adjustments Total Adjusted Adjustments Total Adjusted Adjustments Total
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
-------------- --------- ------------ ------- --------- ------------ -------- --------- ------------ --------
Profit before
tax 6,560 (2,802) 3,758 6,532 (531) 6,001 18,096 (2,981) 15,115
Tax charge (373) 435 62 (1,372) (9) (1,381) (3,941) 472 (3,469)
-------------- --------- ------------ ------- --------- ------------ -------- --------- ------------ --------
Effective
tax rate 5.7% 15.5% (1.6%) 21.0% (1.7%) 23.0% 21.8% 15.8% 23.0%
-------------- --------- ------------ ------- --------- ------------ -------- --------- ------------ --------
The reduction in our tax rate reflects the one-time benefit of GBP978,000, due to a reduction in the transfer pricing tax provision associated with cross border intra-group transactions between the UK and India.
6. Earnings per
ordinary share
6 months ended 6 months ended Year ended 30
31 May 2017 31 May 2016 November 2016
Profit Weighted Pence Profit Weighted Pence Profit Weighted Pence
after average per after average per after average per
tax number share tax number share tax number share
of shares of shares of
shares
GBP000 '000 GBP000 '000 GBP000 '000
Basic earnings
per ordinary
share:
Basic earnings 3,820 81,324 4.7 4,620 80,954 5.7 11,646 81,144 14.4
Adjustments (see
note 4) 2,367 - 2.9 540 - 0.7 2,509 - 3.0
----------------------
Adjusted basic
earnings 6,187 81,324 7.6 5,160 80,954 6.4 14,155 81,144 17.4
---------------------- ------- ----------- ------- ------- ----------- ------- ------- --------- -------
Diluted earnings
per ordinary
share:
Basic earnings 3,820 81,324 4.7 4,620 80,954 5.7 11,646 81,144 14.4
Effect of dilutive
potential ordinary
shares: share-based
payment awards - 1,248 (0.1) - 4,245 (0.3) - - -
----------------------
Diluted earnings
per ordinary
share 3,820 82,572 4.6 4,620 85,199 5.4 11,646 81,144 14.4
Adjustments (see
note 4) 2,367 - 2.9 540 - 0.7 2,509 - 3.0
----------------------
Adjusted diluted
earnings 6,187 82,572 7.5 5,160 85,199 6.1 14,155 81,144 17.4
---------------------- ------- ----------- ------- ------- ----------- ------- ------- --------- -------
7. Dividends
Amounts recognised as distributions
to equity holders were:
------------------------------------- --------- --------- ------------
6 months 6 months Year ended
ended ended
31 May 31 May 30 November
2017 2016 2016
GBP000 GBP000 GBP000
------------------------------------- --------- --------- ------------
Final dividend for the year ended
30 November 2016 - 4.50p per share
(2015: 3.80p) 3,660 3,079 3,079
Interim dividend for the year ended
30 November 2016 - 1.50p per share
(2015: 1.20p) - - 1,220
3,660 3,079 4,299
------------------------------------- --------- --------- ------------
The proposed interim dividend of 1.65p per share was approved by the Board on 30 June 2017. The anticipated cost of GBP1,342,000 has not been included as a liability at 31 May 2017.
8. Cash and short-term deposits
6 months 6 months Year ended
ended ended 30 November
31 May 31 May 2016
2017 2016
GBP000 GBP000 GBP000
------------------------------------- ----- --------- --------- -------------
Cash and cash equivalents 29,268 26,118 36,973
Short-term deposits - 6,000 3,014
------------------------------------- ----- --------- --------- -------------
29,268 32,118 39,987
------------------------------------- ----- --------- --------- -------------
9. Long-term contracts
6 months 6 months Year ended
ended ended 30 November
31 May 31 May 2016
2017 2016
Note GBP000 GBP000 GBP000
------------------------------------- ----- --------- --------- -------------
Amounts due from contract customers
included in trade and other
receivables 10 206 1 -
Amounts due to contract customers
included in trade and other
payables 11 (12,389) (21,664) (16,766)
------------------------------------- ----- --------- --------- -------------
(12,183) (21,663) (16,766)
------------------------------------- ----- --------- --------- -------------
10. Trade and other receivables
6 months 6 months Year ended
ended ended 30 November
31 May 31 May 2016
2017 2016
Note GBP000 GBP000 GBP000
------------------------------------- ----- --------- --------- -------------
Current
Financial assets
Trade receivables 16,896 18,319 15,060
Long-term contract balances 9 206 1 -
Other receivables 1,214 1,796 1,294
Derivative financial instruments 362 - 685
Accrued income 1,681 762 1,824
------------------------------------- ----- --------- --------- -------------
20,359 20,878 18,863
Non-financial assets
Prepayments 4,540 4,937 5,540
------------------------------------- ----- --------- --------- -------------
24,899 25,815 24,403
------------------------------------- ----- --------- --------- -------------
Non-current
Financial assets
Other receivables 1,144 1,166 1,153
------------------------------------- ----- --------- --------- -------------
26,043 26,981 25,556
------------------------------------- ----- --------- --------- -------------
11. Trade and other
payables
6 months 6 months Year ended
ended ended 30 November
31 May 31 May 2016
2017 2016
Note GBP000 GBP000 GBP000
----------------------------- ------------------- ----------------- --------- -------------
Current
Financial liabilities
Trade payables 11,525 11,707 13,777
Other payables 964 315 2,284
Derivative financial
instruments 45 - 45
Accruals 8,336 8,813 9,096
Long-term contract balances 9 12,389 21,664 16,766
----------------------------- ------------------- ----------------- --------- -------------
33,259 42,499 41,968
Non-financial liabilities
Deferred income 10,993 10,214 9,711
Other taxation and social
security 3,867 4,006 2,842
14,860 14,220 12,553
----------------------------- ------------------- ----------------- --------- -------------
48,119 56,719 54,521
----------------------------- ------------------- ----------------- --------- -------------
Non-current
Non-financial liabilities
Deferred income:
- due after one year
but within two years 603 422 462
- due after two years
but within five years 448 268 509
----------------------------- ------------------- ----------------- --------- -------------
1,051 690 971
----------------------------- ------------------- ----------------- --------- -------------
49,170 57,409 55,492
----------------------------- ------------------- ----------------- --------- -------------
12. Provisions
Onerous Employee-related Other Total
lease restructuring
and dilapidations
GBP000 GBP000 GBP000 GBP000
----------------------------- ------------------- ----------------- --------- -------------
At 1 December 2016 3,157 1,844 1,692 6,693
Utilisation of provisions (15) (1,752) (295) (2,062)
Release of provisions (66) - (364) (430)
Increase in provisions 870 - 3 873
Unwind of discount 41 - - 41
----------------------------- ------------------- ----------------- --------- -------------
At 31 May 2017 3,987 92 1,036 5,115
----------------------------- ------------------- ----------------- --------- -------------
13. Defined Benefit Pension scheme
One Group sponsored defined benefit pension scheme is in operation, the Research Machines plc 1988 Pension Scheme ("Scheme").
The Scheme is a funded scheme. The Scheme provides benefits to qualifying employees and former employees of RM Education Limited, but was closed to new members with effect from 1 January 2003 and closed to future accrual of benefits from 31 October 2012.
The assets of the Scheme are held separately from RM Education Limited's in a trustee-administered fund. The Trustee is a limited company. Directors of the Trustee company are appointed by RM Education Ltd and by members.
The most recent actuarial valuation of Scheme assets and the present value of the defined benefit obligation was carried out for statutory funding purposes at 31 May 2015 by a qualified independent actuary, this was used as the basis for the 30 November 2016 IAS 19 valuation and the roll forward to 31 May 2017.
As at 31 May 2015, the triennial valuation for statutory funding purposes showed a deficit of GBP41.8m (31 May 2012: GBP53.5m). The Group agreed with the Scheme Trustees that it will repay this amount via deficit catch-up payments of GBP4.0m in December 2015 and GBP3.6m per annum until 30 September 2024. 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 the half year to 31 May 2017, total payments of GBP2.0m were paid into the Scheme under this arrangement. As at 31 May 2017 there is GBP7.0m in an escrow account which has been included in the calculation of the Scheme assets, the use of which within the Scheme is required to be agreed by RM Education Limited and the Scheme Trustee.
The entire deficit position of the Scheme is held within these financial statements on the balance sheet as RM Education Limited in substance bears all of the material risks associated with the Scheme.
The parent company RM plc has entered into a pension protection fund compliance guarantee in respect of scheme liabilities. No liability has been recognised for this within the Company as the Directors consider that the likelihood of it being called upon is remote.
14. Related party transactions
Transactions between the Company and its subsidiaries, which are related parties, have been eliminated on consolidation.
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 (the Education and Care 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. The Acquisition received clearance from the Competition and Markets Authority on 1 June 2017 and the New Facility came into use as at 30(th) June 2017 and will expire 36 months from this date.
Responsibility statement of the directors in respect of the half-yearly financial report
We confirm that to the best of our knowledge:
-- the condensed set of financial statements has been prepared in accordance with IAS 34 Interim Financial Reporting as adopted by the EU;
-- the interim management report includes a fair review of the information required by:
a) DTR 4.2.7R of the Disclosure Guidance and Transparency Rules, being an indication of important events that have occurred during the first six months of the financial year and their impact on the condensed set of financial statements; and a description of the principal risks and uncertainties for the remaining six months of the year; and
b) DTR 4.2.8R of the Disclosure Guidance and Transparency Rules, being related party transactions that have taken place in the first six months of the current financial year and that have materially affected the financial position or performance of the entity during that period; and any changes in the related party transactions described in the last annual report that could do so.
By order of the Board,
Neil Martin
Chief Financial Officer
4 July 2017
INDEPENT REVIEW REPORT TO RM PLC
Conclusion
We have been engaged by the company to review the condensed set of financial statements in the half-yearly financial report for the six months ended 31 May 2017 which comprises Condensed Consolidated Income Statement, Condensed Consolidated Statement of Comprehensive Income, Condensed Consolidated Balance Sheet, Condensed Consolidation Cash Flow Statement, Condensed Consolidated Statement of Change in Equity and the related explanatory notes.
Based on our review, nothing has come to our attention that causes us to believe that the condensed set of financial statements in the half-yearly financial report for the six months ended 31 May 2017 is not prepared, in all material respects, in accordance with IAS 34 Interim Financial Reporting as adopted by the EU and the Disclosure Guidance and Transparency Rules ("the DTR") of the UK's Financial Conduct Authority ("the UK FCA").
Scope of review
We conducted our review in accordance with International Standard on Review Engagements (UK and Ireland) 2410 Review of Interim Financial Information Performed by the Independent Auditor of the Entity issued by the Auditing Practices Board for use in the UK. A review of interim financial information consists of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. We read the other information contained in the half-yearly financial report and consider whether it contains any apparent misstatements or material inconsistencies with the information in the condensed set of financial statements.
A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing (UK) and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion. .
Directors' responsibilities
The half-yearly financial report is the responsibility of, and has been approved by, the directors. The directors are responsible for preparing the half-yearly financial report in accordance with the DTR of the UK FCA.
As disclosed in note 2, the annual financial statements of the group are prepared in accordance with International Financial Reporting Standards as adopted by the EU. The directors are responsible for preparing the condensed set of financial statements included in the half-yearly financial report in accordance with IAS 34 as adopted by the EU.
Our responsibility
Our responsibility is to express to the company a conclusion on the condensed set of financial statements in the half-yearly financial report based on our review.
The purpose of our review work and to whom we owe our responsibilities
This report is made solely to the company in accordance with the terms of our engagement to assist the company in meeting the requirements of the DTR of the UK FCA. Our review has been undertaken so that we might state to the company those matters we are required to state to it in this report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company for our review work, for this report, or for the conclusions we have reached.
John Bennett
for and on behalf of KPMG LLP
Chartered Accountants
Arlington Business Park, Theale
Reading, RG7 4SD
4 July 2017
This information is provided by RNS
The company news service from the London Stock Exchange
END
IR UOONRBBABRAR
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July 04, 2017 02:00 ET (06:00 GMT)
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