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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
  +0.00p +0.00% 222.00p 222.00p 228.00p - - - 4,362 12:02:07
Industry Sector Turnover (m) Profit (m) EPS - Basic PE Ratio Market Cap (m)
Software & Computer Services 185.9 14.6 15.8 14.1 186.20

RM PLC Final Results

06/02/2018 7:00am

UK Regulatory (RNS & others)

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1 Year : From Jan 2018 to Jan 2019

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RNS Number : 9792D


06 February 2018

6 February 2018

RM plc

Final Results for the period ending 30 November 2017

RM plc ("RM"), a leading supplier of technology and resources to the education sector, reports its final results for the year ending 30 November 2017.


   Financial                                       2017          2016                Change 
-----------------------------------------  ------------  ------------  -------------------- 
              Revenue                         GBP185.9m     GBP167.6m                +10.9% 
              RM Resources                     GBP83.6m      GBP58.8m                +42.1% 
              RM Results                       GBP31.6m      GBP31.6m                  0.0% 
              RM Education                     GBP70.6m      GBP77.0m                 -8.4% 
              Adjusted* operating profit       GBP22.1m      GBP18.8m                +17.4% 
              Adjusted* operating profit          11.9%         11.2%                +0.7pp 
                                               GBP12.9m      GBP11.6m                +10.3% 
              Statutory profit after 
-----------------------------------------  ------------  ------------  -------------------- 
   Adjusted* diluted EPS                          21.9p         17.4p                +25.9% 
   Paid and proposed dividend**                   6.60p         6.00p                +10.0% 
   per share 
-----------------------------------------  ------------  ------------  -------------------- 
         *    A strong year delivering growth in adjusted operating 
              profits of 17.4% to GBP22.1m 
         *    Revenues increased by 11% to GBP185.9m and adjusted 
              operating margins rise to 11.9% 
         *    Acquisition of the Education & Care business of 
              Connect Group plc (The Consortium) completed 30 June 
              2017 contributing revenues of GBP27.8m 
         *    Profit after tax grew 10.3% to GBP12.9m (2016: 
         *    Strong cash conversion resulting in net debt of 
              GBP13.4m (2016: net cash of GBP40.0m) following the 
         *    Defined benefit pension deficit decreases to GBP20.2m 
              (2016: GBP34.8m) 
         *    Full year proposed dividend increased by 10% to 6.60p 

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

"2017 was a significant year for the Group and it was encouraging to see the improvement in underlying operating margins and strong cash generation. The Group increased revenues following the acquisition of The Consortium, which we are now confident will deliver synergies that are approximately double our initial estimate.

Going forward, despite the continued subdued UK Education market, 2018 has started in line with our expectations and we are confident of a year of good progress."

* Adjusted operating profit is before the amortisation of acquisition related intangible assets; costs associated with the acquisition of The Consortium and subsequent costs related with the delivery of synergies; share-based payment charges; and changes in the provision for onerous lease contracts.

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

 Ex-dividend date for 2017 final          15 March 2018 
  dividend (4.95 pence per share) 
---------------------------------------  --------------- 
 Record date for 2017 final dividend      16 March 2018 
---------------------------------------  --------------- 
 AGM                                      21 March 2018 
                                           at 11.30 a.m. 
---------------------------------------  --------------- 
 Payment of 2017 final dividend           13 April 2018 
---------------------------------------  --------------- 
   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 2017 final dividend is subject to 
   the approval by shareholders of the final 
  RM plc                            FTI Consulting 
                                    08450 700300 
 David Brooks, Chief Executive    Jamie Ricketts / Elena 
  Officer                          Kalinskaya 
 Neil Martin, Chief Financial 
  08450 700 300                   020 3727 1000 

Chairman's Statement

2017 was a positive year for RM with revenue, adjusted operating profits and margins improved compared with the prior year. The Group completed the acquisition in June 2017 of the Education and Care business of Connect plc (The Consortium) which is being combined with TTS. Cash generation was strong and the Company finished the year with modest net debt of GBP13.4m.

RM Resources increased revenues and profits, driven by the acquisition. The first few months of ownership have seen good progress in integrating The Consortium and TTS. The Board expects the annual synergies from this acquisition to be broadly double the original estimates of GBP2m. Excluding the effect of the acquisition, RM Resources saw a decline in revenues compared with the prior year, with international growth more than offset by declines in the UK. After a difficult first half, the RM Resources business stabilised in the second half of the year.

RM Results revenues were unchanged from the prior year but profits grew strongly. The Division's future was strengthened by the renewal of a number of long-term contracts and winning several deals with new customers in both the e-testing and e-marking areas.

RM Education revenues declined as expected, following a reshaping of the lower margin elements of the business in late 2016. Profitability and operating margins improved on the prior year, as did cash generation.

The strong cash performance in all three divisions resulted in a profit to cash conversion rate of over 100%. The Group's defined benefit pension schemes deficit, including a small effect from The Consortium schemes, decreased to GBP20.2m (2016: GBP34.8m).

The Board is recommending a final dividend of 4.95 pence per share which would constitute, at 6.60 pence per share in total, an increase of 10% over the prior year.

The outlook for 2018 is still affected by continued pressure on UK school budgets. However, management is focused on delivering the synergies from the acquisition in RM Resources, while delivering continued good operating performance and developing strategies for top-line growth.

John Poulter


5 February 2018

Extract from Strategic Report

RM plc is a leading supplier of technology and resources to the education sector. Our products and services are used in most parts of UK education from early years settings, primary and secondary schools and colleges to major exam boards and central government. The Company's focus continues to be on delivering sustainable shareholder returns with a resilient and efficient operating model. RM is increasing its revenues and adjusted operating margins and delivering 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 corporate services functions provided centrally. Approximately 32% (2016: 36%) of Group headcount is based in India, providing support services and software development to the operating divisions.

RM Resources

The RM Resources Division now consists of the brands TTS, The Consortium and West Mercia Supplies.

At the beginning of 2017, the Division comprised TTS only. On 30 June 2017, the Company completed the acquisition of the Education and Care business of Connect plc, which added The Consortium and West Mercia Supplies ("The Consortium") brands to RM Resources.

RM Resources provides education resources and supplies used in UK and international schools and early years establishments. Products supplied are a mix of commodity, third party branded, own brand equivalents and TTS own designed 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 online sales, a direct sales force and direct catalogue, both in the UK and internationally.

RM Resources revenues increased by 42% to GBP83.6m following the acquisition of The Consortium and the inclusion of revenues from that business from July onwards. Organic TTS revenues declined by 5% to GBP55.9m (2016: GBP58.8m), with UK revenues declining by 12% to GBP41.1m (2016: GBP46.8m), partially offset by strong growth of 23% in international revenues to GBP14.8m (2016: GBP12.1m). International revenues now represent 26% of revenue in TTS. In the five months since being acquired, The Consortium delivered GBP27.8m of revenues, of which GBP1.0m was from international sales and GBP1.7m was from non-Education resources sectors.

Divisional adjusted operating profit increased to GBP11.6m (2016: GBP10.2m) as the Division's profitability benefited from the acquisition of The Consortium outlined above. However, operating margins decreased to 13.9% (2016: 17.3% - TTS only). This reduction was driven by a reduction in TTS's margins to 15.1% (2016: 17.3%), resulting from a reduction in revenues combined with a more competitive pricing market and exchange rate impacts which reduced profits by GBP0.9m. The Consortium (11.3% operating margins) further diluted the margin of the Division as a whole.


UK revenues increased by 45% to GBP67.8m (2016: GBP46.8m) driven by the acquisition of The Consortium. Organic TTS UK revenues decreased by 12% as primary schools and nurseries focussed their resources budgets more on commodity items. This was due to discretionary budgets being negatively impacted by unfunded increases in staff pension and national insurance costs. The decline in TTS in the UK was more pronounced in the first half of the year (-20%) than in the second half of the year (-2%). This reflected some improvement in the market, although we continue to expect that tight budgets will keep the UK market subdued.

The Company continues to invest in its online channels. Online orders now make up broadly half of UK direct education sales. We expect the proportional growth in online sales to continue in future years, as more customers use it as their preferred method of ordering.


The international business is made up of sales of own designed products through resellers and distributors to over 70 countries and sales of a wider portfolio of education supplies directly to international English curriculum schools. Organic TTS revenues from international sales to overseas resellers and international schools increased by 23% to GBP14.8m (2016: GBP12.1m). This was driven by strong growth of our own designed products through reseller channels (+32%) and growth in sales to international schools (+14%). We expect international revenues to continue to grow in the coming year. The acquisition of The Consortium delivered an additional increase in sales to international schools (GBP1.0m in the five months since the acquisition completed). The increased product range will significantly add to the combined proposition of the Division going forward.


The integration of the TTS and The Consortium businesses is progressing well. A single senior management team consisting of members from both organisations has been appointed and has started to rationalise the distribution storage footprint, move to a combined operating model for the business and develop the go to market strategy for the UK and internationally. In addition, supply chain savings and organisational restructuring is in progress. Better synergies coupled with more scope for operational efficiencies are now expected, in time, to realise benefits of approximately double our initial expectations of GBP2m pa. This outlook assumes no changes to the estate and distribution network or the potential benefits of delivering a unified set of systems and processes where beneficial.

The Board is currently not expecting a significant uplift from revenue synergies in its outlook due to the subdued nature of the UK market and the increased risks of new online entrants. However, combined purchasing contracts with aggregated buying groups, the inclusion of TTS own designed products into The Consortium's sales channels and a joint approach to maximising the opportunity in English curriculum international schools are just three of the initial initiatives being worked on.

RM Results

The RM Results Division provides IT software and services to exam boards and professional awarding bodies to help them digitise exams in the UK and internationally through the use of e-assessment. In addition, the Division manages and analyses educational data on behalf of the UK central government, which was part of a 'Data' division.

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. The target markets for e-assessment are general qualifications, language testing, professional awarding bodies and higher education. Software and services are provided through a combination of proprietary and third party, in-house and outsourced arrangements. Internationally, the business is largely expected to develop through partnerships and software licensing.

Revenue remained stable at GBP31.6m. The e-assessment part of the business grew by 7%, which offset the planned exit of a number of contracts in the Data business (-21%). Adjusted operating profit increased strongly by 14% on the prior year to GBP7.8m (2016: GBP6.8m).

Adjusted operating margins increased to 24.5% (2016: 21.5%).

RM Results signed a five year agreement in 2017 for the provision of a Global Assessment Platform to Oxford University Press (OUP). The 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 Division has also successfully secured several key contract renewals and extensions with existing customers including:

A three year contract extension to continue to provide e-marking services until 2021 to the education charity, AQA, the UK's largest schools exam awarding body.

A two year extension with the Department of Education for the National Pupil Database contract.

An extended e-marking contract with the Caribbean Examinations Council (CXC).

Following the planned exit of a number of contracts the Data business now consists of a contract to deliver the National Pupil Database contract to the Department for Education.

The Board is targeting the growth opportunities in e-assessment whilst maintaining good operating margins and sees RM Results as being very well placed to respond to the ever increasing digitisation of high stakes exams in the UK and internationally. Organic and non-organic growth options will be considered in this promising, technology driven area.

RM Education

RM Education is a UK focused business supplying IT software and services to schools and colleges. In recent years the strategy has been to improve operating margins and the proportion of annuity revenue whilst transitioning from its large legacy hardware manufacturing operations. This should create a more stable software and services platform from which it can grow.

Revenues in the Division declined by 8% to GBP70.6m (2016: GBP77.0m) with the planned contract completion of several Building Schools for the Future (BSF) contracts and the decline of some of the lower margin legacy infrastructure business. Adjusted operating profit margins continued to improve, increasing to 9.3% (2016: 7.6%), benefitting from a 12% reduction in the cost base. Adjusted operating profit increased to GBP6.6m (2016: GBP5.8m).

Recurring annuity revenues increased from 61% to 68% in 2017, reflecting the continued improvements over recent years since 2013 levels (37%).

The RM Education business is made up of Managed Services - IT outsourcing (40% of revenue), Digital Platforms (10%) - Cloud-based software offerings and Infrastructure (50%) - aimed at schools who want to run their own IT. The primary focus for this business going forward is increasing its annuity revenues.

Managed Services

The Managed Services offering is primarily the provision of IT outsourcing services to UK schools and colleges. Managed Services revenues decreased by 15% to GBP28.1m (2016: GBP33.1m) with several large BSF contracts coming to an end resulting in lower levels of project spend and revenues associated with BSF contracts falling to GBP11m from GBP19m in the prior year. Retention rates of existing customers during the year was 94% and, in addition, 49 new schools signed managed services contracts in the year. The proportion of revenues coming from contracts outside BSF programmes grew from 43% in 2016 to 60% in 2017.

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 complete in the year or progress towards completion, profits benefit from the effects of good operational performance, risk mitigation at completion and wider reductions in the RM Education Division cost base.

Digital Platforms

The Digital Platform offering covers key products such as RM Integris (RM's cloud-based school management system) and RM Unify, our cloud-based authentication and portal system, as well as certain other legacy content offerings. Digital Platforms revenues increased by 5% to GBP7.3m (2016: GBP7.0m) as growth in these key products more than offset declines in those legacy products. Customer retention rates of core Digital Platform products were 97% in the year.

The Division also signed a new contract for five years with Education Scotland to continue to provide RM Unify to all schools in Scotland.


Infrastructure is a very tight margin business including the tools, products and services to help schools manage their own IT. Revenues decreased by 5% to GBP35.2m (2016: GBP37.0m) as the Division continues to move away from lower margin transactional business. As highlighted before, at the end of 2016, the Division restructured this area and reduced the UK workforce. The retention rate across the core annuity products of Connectivity and Network Support within the Infrastructure business was 94%.

A significant new three year contract was tendered for and won in this Division in 2017 to provide connectivity services to over 500 schools in Hertfordshire.

RM India

As at 30 November 2017, RM's operation in Trivandrum accounted for 32% of Group headcount (2016: 36%).

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


Average Group headcount for the year was 1,787 (2016: 1,822), which is comprised of 1,633 (2016: 1,634) permanent and 154 (2016: 188) temporary or contract staff, of which 1,172 (2016: 1,173) were located in the UK and 615 (2016: 649) in India. At 30 November 2017 headcount was 1,907 (2016: 1,731).

The following table sets out a more detailed summary of the permanent staff employed as at 30 November 2017:

                                      Male      Female 
 Executive Directors              2 (100%)      0 (0%) 
 Senior Managers (excluding 
  Executive Directors)            45 (80%)    11 (20%) 
 All employees                 1,102 (62%)   683 (38%) 

The Group 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, disability or educational background. 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.

The Corporate Governance Report sets out the Company's Diversity Policy.


As noted above, the Company completed the acquisition of The Consortium on 30 June 2017 for a purchase price of GBP56.5m (on a cash free, debt free basis). The acquisition complements the Company's already existing TTS business and has been accretive to the Company's adjusted earnings per share.

The final net cash consideration paid was GBP59.0m including GBP0.5m of cash in the business. The difference between the headline price of GBP56.5m noted above and the final consideration paid reflected the positive net working capital position of the balance sheet of the acquired business as at the date of completion. Intangible assets of GBP18.1m have been identified reflecting value associated with the distribution and product brands acquired, together with a further GBP31.1m of goodwill alongside GBP9.8m of net assets.

The acquisition was satisfied entirely in cash at completion and was funded through existing cash reserves and a new GBP75m revolving credit facility. Further details in relation to that facility are given in the Directors' Report.

Group Financial Performance

Group revenue grew by 11% to GBP185.9m (2016: GBP167.6m) supported by the acquisition of The Consortium, which contributed GBP27.8m. Organic revenues, excluding the benefit of the acquisition, declined 6% to GBP158.1m (2016: GBP167.6m).

                                2017                                2016 
                  Adjusted   Adjustment   Statutory   Adjusted   Adjustment   Statutory 
                 ---------  -----------  ----------  ---------  -----------  ---------- 
 Revenue           185.9         -          185.9      167.6         -          167.6 
  profit            22.1       (5.9)        16.2        18.8       (2.9)        15.9 
 Profit before 
  tax               20.5       (5.9)        14.6        18.1       (3.0)        15.1 
 Tax               (2.6)        0.9         (1.7)      (3.9)        0.5         (3.5) 
 Profit after 
  tax               17.9       (5.1)        12.9        14.2       (2.5)        11.6 
===============  =========  ===========  ==========  =========  ===========  ========== 

Adjusted operating profit margins increased again this year from 11.2% in 2016 to 11.9%. Adjusted operating profit increased to GBP22.1m (2016: GBP18.8m).

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 the financial statements identifies these adjustments highlighting recurring and non-recurring items.

On a statutory basis, operating profit was GBP16.2m (2016: GBP15.9m), with adjustments principally being GBP2.6m of acquisition related costs, GBP1.6m for costs associated with delivering acquisition synergies, share-based payments charges of GBP0.8m, GBP0.5m of amortisation of acquisition related intangible assets and a GBP0.4m movement in provisions for onerous lease contracts.

The Group generated a statutory profit before tax of GBP14.6m (2016: GBP15.1m) with a net interest charge of GBP1.6m.

The total tax charge within the Income Statement for the year was GBP1.7m (2016: GBP3.5m). The Group's tax charge for the period, measured as a percentage of profit before tax, was 12% (2016: 23%). The reduction is principally due to a reduction of GBP1.2m in the transfer pricing provision associated with cross border intra-group transactions between the UK and India which has been agreed with the relevant tax authorities and a reduction in the UK corporate tax rate. Statutory profit after tax increased to GBP12.9m (2016: GBP11.6m).

Adjusted basic earnings per share were 22.0 pence (2016: 17.4 pence). Statutory basic earnings per share were 15.8 pence (2016: 14.4 pence) and statutory diluted earnings per share were 15.7 pence (2016: 14.4 pence).

RM generated cash from operations for the year of GBP20.5m (2016: GBP13.4m), which represents a cash conversion from operating profit in excess of 100%. Net debt was GBP13.4m, compared to cash and short-term deposits of GBP40m in 2016, reflecting the impact of the acquisition which was satisfied entirely in cash at completion.

Cash generated from operations is expected to be broadly in line with operating profit in the year ahead.


The total dividend paid and proposed for the year has been increased by 10% to 6.60 pence per share (2016: 6.00 pence). This is comprised of the interim dividend of 1.65 pence per share paid in September 2017 and, subject to shareholder approval, a proposed final dividend of 4.95 pence per share. The estimated total cost of normal dividends paid and proposed for 2017 is GBP5.4m (2016: GBP4.9m). Dividend cover for the year is 3.3 times, as compared to a figure of 2.9 times in 2016. This reflects the 26% growth in adjusted basic earnings per share and the 10% growth in dividend proposed.

The Board is committed to a long-term sustainable dividend policy with the objective of a dividend cover of between two to three times adjusted earnings per share over the medium-term. RM plc has GBP28.6m of distributable reserves as at 30 November 2017 available to support the dividend policy.

RM plc is a non-trading investment holding company and derives its profits from dividends paid by subsidiary companies. The Directors consider the Group's capital structure and dividend policy at least twice a year, ahead of announcing results and during the annual budgeting process, looking at longer-term sustainability. The Directors do so in the context of the Company's ability to execute the strategy and to invest in opportunities to grow the business and enhance shareholder value.

The dividend policy is influenced by a number of the principal risks identified in the table of 'Principal Risks and Uncertainties' set out below and which could have a negative impact on the performance of the Group or its ability to distribute profits.

Defined Benefit Pension Schemes ("Schemes")

Prior to the acquisition of The Consortium, the Company operated one defined benefit pension scheme (the "RM Education Scheme"). As part of the acquisition of The Consortium, the Company now operates a further defined benefit pension scheme (the "CARE Scheme") and participates in a third, multi-employer, defined benefit pension scheme (the "Platinum Scheme"). Both of the RM Education Scheme and the CARE Scheme are closed to future accrual of benefits. While the Platinum Scheme remains open to future accrual of benefits, the number of Group employees participating in that Scheme is very small and so the impact of that Scheme on the Group is limited.

Despite the introduction of the two new defined benefit schemes outlined above, the IAS19 deficit (pre-tax) across the Group decreased by GBP14.6m to GBP20.2m (Nov 2016: GBP34.8m). This reduction was primarily driven by an increase in the scheme assets of the RM Education Scheme of GBP15.6m and a decrease in the liabilities of that Scheme of GBP2.4m, driven by updated mortality assumptions. As at 30 November 2017 the net deficit associated with the CARE Scheme and Platinum Scheme combined was GBP3.7m.

Following a change in actuary during the year the discount methodology applied under IAS19 for all three Schemes was revised to better reflect the long dated credit risk of the cashflows for those Schemes.

Since the acquisition of The Consortium, agreement has been reached with the Trustees of the CARE Scheme with regards to the triennial valuation as at 31 December 2016 at a deficit of GBP4.2m, with recovery payments of GBP379,000 pa over the next ten years. As a result, the total Group deficit recovery plan cashflow requirements across all of the above schemes are GBP4.4m pa. The triennial review for the RM Education Scheme is due in May 2018. The next review date for the Platinum Scheme is in December 2018.

Impact of the EU Referendum vote

The Company continues to monitor the evolving impacts of the referendum decision on UK's membership of the EU. 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 as a whole.

The Group has European sales of GBP11.3m, primarily driven by the sale of own designed products from the RM Resources Division. The Group will monitor the nature of the Brexit arrangements as they influence the trading relationship between the UK and the EU. It is not expected at this stage that they will fundamentally change demand for these products which have been growing strongly in recent years.

The Group has foreign currency denominated costs that outweigh foreign currency denominated revenues and therefore increased currency volatility creates an exposure. Exchange rates have been more stable in 2017 following the post referendum adjustment in 2016 but the Company continues to monitor these closely. This risk is managed through currency hedging against exchange rate movements, typically 9-12 months into the future. The Group is also working to rebalance its exposure by growing its foreign denominated sales ahead of its costs to reduce the currency imbalance and more naturally hedge this risk.

Going Concern

The financial position, cashflows 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. During the year, the Group completed the acquisition of The Consortium which was supported by an increase in its revolving credit facility from GBP30m to GBP75m and resulted in the Group moving to a net current liability position of GBP13.4m. The maximum net debt position during the period following the acquisition was GBP37.7m. Having reviewed the future budgets 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 and remain in compliance with the financial covenants associated with its borrowings. Therefore, the Board has a reasonable expectation that the Group and Company have 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, the Company continues to adopt the going concern basis of accounting in preparing the annual financial statements.

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 Group and Company over a longer time period. The period of assessment chosen is three years, which is consistent with the time period over which the Group's medium-term financial budgets are prepared. These financial budgets include Income Statements, Balance Sheets and Cash Flow Statements. They have been assessed by the Board in conjunction with the principal risks of the Group, 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 Group'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. Significantly increased working capital requirements within the RM Education and RM Results long-term contract portfolios and requirements in evolving RM Education business models.

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

   c.     RM Results operational performance over peak examination marking periods. 

3. Business continuity - an event impacting the Group's major buildings, systems or infrastructure components. This would include a major incident at one of the RM Resources main warehouses.

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

   5.     Defined Benefit Pension Schemes - funding of Scheme deficits in adverse market conditions. 

6. Inability to deliver, or a significant delay in implementation of, the synergies planned alongside the acquisition of The Consortium whilst still incurring the costs of delivery.

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.

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. The Company has a structured approach to the assessment and management of risks. A detailed risk register is maintained, in which risks are categorised under the following categories: political, strategic, operational and financial. The full register is reviewed at least annually by each Division to ensure that the risks that could potentially affect each Division are properly captured. The register also includes a summary of the steps taken to manage or mitigate against those risks and the person or people responsible for the relevant actions. This register is then consolidated and Group-wide risks added, to ensure that the risk covers the entire Group's operations. This is then reviewed by the Executive Committee, the Audit Committee and the Board. As such, 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 are also set out in the Corporate Governance Report.

The key business risks for the Group are set out in the table below.

Risk and             Description                Mitigation 
 categorisation       and likely impact 
-------------------  -------------------------  --------------------------------- 
Public policy        The majority               The Company reviews the 
 (Political           of RM's business           education policy environment 
 Risk)                is funded from             by regular monitoring 
                      UK government              of policy positions and 
                      sources. Changes           by building relationships 
                      in political               with education policy 
                      administration,            makers. 
                      or changes in 
                      policy priorities,         The Group's three divisions 
                      might result               have diverse revenue 
                      in a reduction             streams and product/service 
                      in education               offerings. 
                      spending, leading 
                      to a decline               The Company's strategy 
                      in market size.            is to focus on areas 
                                                 of education spend which 
                      UK government              are important to meet 
                      funding in the             customers' objectives. 
                      education sector           Where the revenues of 
                      is constrained             an individual business 
                      by fiscal policy.          is in decline, management 
                                                 seeks to ensure that 
                      Global economic            the cost base is adjusted 
                      conditions might           accordingly. 
                      result in a 
                      reduction in 
                      budgets available 
                      for public spending 
                      generally and 
                      education spending 
-------------------  -------------------------  --------------------------------- 
Education            Education practices        The Company maintains 
 practice             and priorities             knowledge of current 
 (Political           may change and,            education practice and 
 Risk)                as a result,               priorities by maintaining 
                      RM's products              close relationships with 
                      and services               customers. 
                      may no longer 
                      meet customer 
                      leading to a 
                      risk of lower 
-------------------  -------------------------  --------------------------------- 
Operational          RM provides                The Company invests in 
 execution            sophisticated              maintaining a high level 
 (Operational         products and               of technical expertise. 
 Risk)                services, which 
                      require a high             Internal management control 
                      level of technical         processes are in place 
                      expertise to               to govern the delivery 
                      develop and                of projects, including 
                      support, and               regular reviews by relevant 
                      on which its               management. The operational 
                      customers place            and financial performance 
                      a high level               of projects, including 
                      of reliance.               future obligations, the 
                      Any significant            expected costs of these 
                      operational                and potential risks are 
                      failure would              regularly monitored by 
                      result in reputational     management. 
                      damage and increased 
                      RM is engaged 
                      in the delivery 
                      of large, multi-year 
                      projects, typically 
                      involving the 
                      and integration 
                      of complex IT 
                      systems, and 
                      may have liability 
                      for failure 
                      to deliver on 
-------------------  -------------------------  --------------------------------- 
Data and             RM is engaged              The Company's IS function 
 business             in storing and             has invested in developing 
 continuity           processing personal        its Data Centres, and 
 (Operational         data, where                has been successfully 
 Risk)                accuracy, privacy          certified to ISO/IEC 
                      and security               27001:2005 for the provision 
                      are important.             of systems, information 
                      Any significant            and hosting services. 
                      security breach 
                      could damage               The Company has established 
                      reputation and             a Group Security and 
                      impact future              Business Continuity Committee 
                      profit streams.            to oversee the security 
                                                 aspects of the Group's 
                      The Group would            information systems. 
                      be significantly           This covers data integrity 
                      impacted if,               and protection, defence 
                      as a result                against external threats 
                      of a major incident,       (including cyber risks) 
                      one of its key             and disaster recovery. 
                      buildings, systems 
                      or infrastructure          The Group seeks to protect 
                      components could           itself against the consequences 
                      not function               of a major incident by 
                      for a long period          implementing a series 
                      of time.                   of back up and safety 
                                                 The Group has property 
                                                 and business interruption 
                                                 insurance cover. 
-------------------  -------------------------  --------------------------------- 
People (Operational  RM's business              The Company seeks to 
 Risk)                depends on highly          be an attractive employer 
                      skilled employees.         and regularly monitors 
                      Failing to recruit         the engagement of its 
                      and retain such            employees. The Company 
                      employees could            has talent management 
                      impact operationally       and career planning programmes. 
                      on RM's ability 
                      to deliver contractual 
-------------------  -------------------------  --------------------------------- 
Integration          An inability               The Company has established 
 Risk                 to deliver,                a formal internal steering 
                      or a significant           committee to oversee 
                      delay in implementation    the integration of The 
                      of, the synergies          Consortium. In addition, 
                      planned in relation        the Company retained 
                      to the acquisition         Grant Thornton to provide 
                      of The Consortium          external expertise in 
                      and/or the loss            relation to such matters. 
                      of customers 
                      as a result                Integration risks are 
                      of related disruption.     proactively managed and 
                                                 a number of mechanisms 
                                                 are in place to monitor 
                                                 the ongoing impact of 
                                                 the various activities, 
                                                 including staff consultations 
                                                 and satisfaction surveys 
                                                 and ongoing customer 
                                                 Financial reports are 
                                                 generated each month 
                                                 to ensure that spend 
                                                 on integration activities 
                                                 and resulting expected 
                                                 benefits remain within 
                                                 The Board is kept appraised 
                                                 of the current status 
                                                 of the integration work 
                                                 on a regular and ongoing 
-------------------  -------------------------  --------------------------------- 
Innovation           The IT market              The Company actively 
 (Strategic           and elements               monitors technology and 
 Risk)                of the education           market developments and 
                      resources market           invests to keep its existing 
                      are subject                products, services and 
                      to rapid, and              sales methods up-to-date, 
                      often unpredictable,       as well as seeking out 
                      change. As a               new opportunities and 
                      result of inappropriate    initiatives. 
                      technology and 
                      product choices,           The Group works with 
                      the Group's                teachers and educators 
                      products and               to understand opportunities 
                      services might             and requirements. 
                      become unattractive 
                      to its customer 
                      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           The performance            The Company invests in 
 on key contracts     of the RM Education        maintaining a high level 
 (Strategic           and RM Results             of technical expertise 
 Risk)                Divisions are              and on building effective 
                      dependent on               working relationships 
                      the winning and            with its customers. The 
                      extension of               Company has in place 
                      long-term contracts        a range of customer satisfaction 
                      with government,           programmes, which include 
                      local authorities,         management processes 
                      examination boards         designed to address the 
                      and commercial             causes of customers' 
                      customers.                 dissatisfaction. 
-------------------  -------------------------  --------------------------------- 
Pensions             The Group operates         The RM Education Scheme 
 (Financial           two defined benefit        was closed to new entrants 
 Risk)                pension schemes            in 2003 and closed to 
                      in the UK (the             future accrual of benefits 
                      "RM Education              in 2012. 
                      Scheme" and the 
                      "CARE Scheme"              The CARE Scheme was 
                      respectively)              closed to new entrants 
                      and participates           in 2006 and closed to 
                      in a third defined         future accrual of benefits 
                      benefit pension            in 2011. 
                      scheme (the "Platinum 
                      Scheme").                  The Company evaluates 
                                                 risk mitigation proposals 
                      Scheme deficits            with the trustees of 
                      can adversely              these respective Schemes. 
                      impact the net 
                      assets position            The Platinum Scheme 
                      of the trading             is a multi-employer 
                      subsidiaries               scheme over which the 
                      RM Education               Company has no direct 
                      Ltd and The Consortium     control. However, due 
                      for Purchasing             to the small number 
                      and Distribution           of the Company's employees 
                      Ltd.                       who are in this Scheme, 
                                                 the risk to the Company 
                                                 from this Scheme is 
-------------------  -------------------------  --------------------------------- 
Dividends            The Company's              The Company monitors 
 (Financial           ability to pay             the level of distributable 
 Risk)                dividends to               reserves in RM plc and 
                      shareholders               subsidiary companies 
                      depends on having          and considers their ability 
                      sufficient distributable   to make dividend payments, 
                      reserves in                via the holding company, 
                      the holding                to the shareholders. 
                      company, RM 
                      plc. The Group 
                      is reliant on 
                      continued dividend 
                      from subsidiaries 
                      and ensuring 
                      no significant 
                      impairment of 
                      RM plc's carrying 
-------------------  -------------------------  --------------------------------- 

David Brooks

Chief Executive Officer

5 February 2018

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 2017. 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 financial statements, prepared in accordance with the applicable set of accounting standards, give a true and fair view of the assets, liabilities, financial position and profit or loss of the Company and the Group taken as a whole; and

-- the Strategic Report includes a fair review of the development and performance of the business and the position of the Company and the Group taken as a whole, together with a description of the principal risks and uncertainties that they face.

The responsibility statement was approved by the Board of Directors on 5 February 2018.

Greg Davidson

Company Secretary

5 February 2018

  for the year ended 30 
   November 2017 
                        Year ended 30                            Year ended 30 
                         November 2017                            November 2016 
                            Adjusted   Adjustments       Total    Adjusted   Adjustments     Total 
                 Note         GBP000        GBP000      GBP000      GBP000        GBP000      GBP000 
 -------------  -----  -------------  ------------  ----------  ----------  ------------  ---------- 
  Revenue         2          185,863             -     185,863     167,615             -     167,615 
  Cost of 
   sales                   (112,857)             -   (112,857)   (100,365)             -   (100,365) 
  Gross profit                73,006             -      73,006      67,250             -      67,250 
   expenses                 (50,908)       (5,904)    (56,812)    (48,421)       (2,907)    (51,328) 
 -------------  -----  -------------  ------------  ----------  ----------  ------------  ---------- 
  Profit from 
   operations      2          22,098       (5,904)      16,194      18,829       (2,907)      15,922 
   income         3              365             -         365         279             -         279 
   costs          4          (1,920)          (45)     (1,965)     (1,012)          (74)     (1,086) 
   tax                        20,543       (5,949)      14,594      18,096       (2,981)      15,115 
  Tax             5          (2,594)           851     (1,743)     (3,941)           472     (3,469) 
  Profit for 
   year                       17,949       (5,098)      12,851      14,155       (2,509)      11,646 
 -------------  -----  -------------  ------------  ----------  ----------  ------------  ---------- 
  Earnings per 
  - basic         6            22.0p                     15.8p       17.4p                     14.4p 
  - diluted       6            21.9p                     15.7p       17.4p                     14.4p 
 -------------  -----  -------------  ------------  ----------  ----------  ------------  ---------- 
  Paid and 
   share          7 
  - interim                                              1.65p                                 1.50p 
  - final                                                4.95p                                 4.50p 
 -------------  -----  -------------  ------------  ----------  ----------  ------------  ---------- 
  Adjustments to results have been presented to give 
   a better guide to business performance (see note 
  All amounts were derived from 
   continuing operations. 
 for the year ended 
  30 November 2017 
                                                                              Year ended        Year 
                                                                             30 November       ended 
                                                                                    2017          30 
                                                     Note                         GBP000      GBP000 
---------------------  -------------  ------------  ----------  ------------------------  ---------- 
 Profit for the year                                                              12,851      11,646 
 Items that will not be reclassified 
  subsequently to profit or 
 Defined Benefit 
  remeasurements                                     12                           17,960    (23,555) 
 Tax on items that will not 
  be reclassified subsequently 
  to profit or loss                                  5                           (3,123)       3,970 
 Items that are or may be reclassified 
  subsequently to profit or loss 
 Fair value 
  on hedged 
  instruments                                                                    (1,306)         515 
 Exchange (loss)/gain on translation 
  of overseas operations                                                            (36)         261 
 Tax on items that are or 
  may be reclassified subsequently 
  to profit or loss                                  5                              (80)          32 
 Other comprehensive 
  income/(expense)                                                                13,415    (18,777) 
---------------------  -------------  ------------  ----------  ------------------------  ---------- 
 Total comprehensive income/(expense) 
  for the year attributable to 
  equity holders                                                                  26,266     (7,131) 
--------------------------------------------------  ----------  ------------------------  ---------- 
                                                                          At 30 November       At 30 
                                                                                    2017    November 
                                                Note                              GBP000      GBP000 
------------------------------------  ------------------------  ------------------------  ---------- 
 Non-current assets 
 Goodwill                                                                         45,164      14,067 
 Intangible assets                                                                20,377         704 
 Property, plant and equipment                                                    10,369       6,219 
 Defined Benefit Pension 
  Scheme surplus                                 12                                  495           - 
 Other receivables                                8                                1,144       1,153 
 Deferred tax assets                              5                                6,484       8,793 
                                                                                  84,033      30,936 
------------------------------------  ------------------------  ------------------------  ---------- 
 Current assets 
 Inventories                                                                      19,413      10,689 
 Trade and other receivables                      8                               29,147      24,403 
 Cash and short-term deposits                                                      1,797      39,987 
                                                                                  50,357      75,079 
                                                                ------------------------  ---------- 
 Total assets                                                                    134,390     106,015 
------------------------------------  ------------------------  ------------------------  ---------- 
 Current liabilities 
 Trade and other payables                         9                             (57,636)    (54,521) 
 Tax liabilities                                                                   (632)     (1,259) 
 Provisions                                      10                              (3,436)     (3,536) 
 Overdraft                                                                       (2,028)           - 
                                                                                (63,732)    (59,316) 
                                                                ------------------------  ---------- 
 Net current (liabilities)/assets                                               (13,375)      15,763 
------------------------------------  ------------------------  ------------------------  ---------- 
 Non-current liabilities 
 Other payables                                   9                                (852)       (971) 
 Provisions                                      10                              (3,019)     (3,157) 
 Deferred tax liability                           5                              (2,993)           - 
 Defined Benefit Pension 
  Scheme obligation                              12                             (20,731)    (34,775) 
 Loan                                            14                             (13,188)           - 
                                                                                (40,783)    (38,903) 
                                                                ------------------------  ---------- 
 Total liabilities                                                             (104,515)    (98,219) 
------------------------------------  ------------------------  ------------------------  ---------- 
 Net assets                                                                       29,875       7,796 
------------------------------------  ------------------------  ------------------------  ---------- 
 Equity attributable to 
 Share capital                                   11                                1,890       1,890 
 Share premium account                                                            27,035      27,035 
 Own shares                                                                      (1,406)     (1,987) 
 Capital redemption reserve                                                           94          94 
 Hedging reserve                                                                   (427)         879 
 Translation reserve                                                               (159)       (123) 
 Retained earnings - (deficit)                                                     2,848    (19,992) 
 Total equity                                                                     29,875       7,796 
------------------------------------  ------------------------  ------------------------  ---------- 


 for the year 
 30 November 2017 
                               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 
  2015                         1,890     27,035   (2,510)           94        364         (384)     (7,342)     19,147 
 Profit for the 
  year                             -          -         -            -          -             -      11,646     11,646 
  (expense)/income                 -          -         -            -        515           261    (19,553)   (18,777) 
  (expense)/income                 -          -         -            -        515           261     (7,907)    (7,131) 
 Transactions with 
  owners of the 
  awards exercised                 -          -       840            -          -             -     (1,450)      (610) 
 Purchase of own 
  shares                           -          -     (317)            -          -             -           -      (317) 
  fair value 
  charges                          -          -         -            -          -             -       1,006      1,006 
  paid                7            -          -         -            -          -             -     (4,299)    (4,299) 
 At 30 November 
  2016                         1,890     27,035   (1,987)           94        879         (123)    (19,992)      7,796 
 Profit for the 
  year                             -          -         -            -          -             -      12,851     12,851 
  (expense)/income                 -          -         -            -    (1,306)          (36)      14,757     13,415 
------------------  ----- 
  (expense)/income                 -          -         -            -    (1,306)          (36)      27,608     26,266 
 Transactions with 
  owners of the 
  awards exercised                 -          -       581            -          -             -       (581)          - 
  fair value 
  charges                          -          -         -            -          -             -         821        821 
  paid                7            -          -         -            -          -             -     (5,008)    (5,008) 
 At 30 November 
  2017                         1,890     27,035   (1,406)           94      (427)         (159)       2,848     29,875 
------------------  -----  ---------  ---------  --------  -----------  ---------  ------------  ----------  --------- 
 for the year ended 30 November                Year ended           Year 
  2017                                        30 November          ended 
                                                     2017    30 November 
                                          Note     GBP000         GBP000 
---------------------------------------  -----  ---------  ------------- 
 Profit before tax                                 14,594         15,115 
 Investment income                         3        (365)          (279) 
 Finance costs                             4        1,965          1,086 
 Profit from operations                            16,194         15,922 
 Adjustments for: 
 Acquisition related costs                 2        2,643            525 
 Impairment of intangible assets                       33             77 
 Amortisation of intangible assets                  1,107            247 
 Depreciation and impairment of 
  property, plant and equipment                     2,289          2,223 
 Gain on sale of operations                             -          (135) 
 Loss on disposal of other intangible                  21              - 
 Loss/(gain) on disposal of property, 
  plant and equipment                                 135            (5) 
 (Gain)/loss on foreign exchange 
  derivatives                                     (1,306)            684 
 Share-based payment charge                           821          1,006 
 Increase in provisions                             1,997          2,557 
 Defined Benefit Pension Scheme 
  administration cost                      12         552            845 
 Operating cash flows before movements 
  in working capital                               24,486         23,946 
 (Decrease)/increase in inventories                  (27)            173 
 Decrease in receivables                            5,443          1,056 
 Decrease in trade and other payables             (7,129)       (10,863) 
 Utilisation of onerous lease 
  and dilapidations provisions             10       (308)          (345) 
 Utilisation of employee-related 
  restructuring provisions                 10     (1,697)          (184) 
 Utilisation of other provisions           10       (236)          (396) 
 Cash generated from operations                    20,532         13,387 
 Defined benefit pension scheme 
  cash contributions                       12     (4,187)       (11,984) 
 Tax paid                                         (2,019)        (3,567) 
 Income on sale of finance lease 
  debt                                                  9              6 
 Net cash inflow from operating 
  activities                                       14,335        (2,158) 
---------------------------------------  -----  ---------  ------------- 
 Investing activities 
 Interest received                                    307            255 
 Repayment of loans by third parties                   16             16 
 Acquisition net of cash acquired          13    (58,407)              - 
 Acquisition related costs                        (2,834)              - 
 Proceeds from sale of operations                       -            759 
 Proceeds on disposal of property, 
  plant and equipment                                  12             43 
 Purchases of property, plant 
  and equipment                                   (1,150)        (1,333) 
 Purchases of other intangible 
  assets                                            (176)          (456) 
 Amounts transferred from short 
  term deposits                                     3,014          2,986 
 Net cash generated by/(used in) 
  investing activities                           (59,218)          2,270 
---------------------------------------  -----  ---------  ------------- 
 Financing activities 
 Dividends paid                            7      (5,008)        (4,299) 
 Drawdown of borrowings                    14      14,000              - 
 Borrowing facilities arrangement 
  and commitment fees                             (1,098)          (422) 
 Interest paid                                      (224)              - 
 Purchase of own shares                                 -          (317) 
 Satisfaction of share-based payment 
  awards                                                -          (610) 
 Net cash used in financing activities              7,670        (5,648) 
 Net (decrease)/increase in cash 
  and cash equivalents                           (37,213)        (5,536) 
 Cash and cash equivalents at 
  the beginning of the year                        36,973         42,320 
 Effect of foreign exchange rate 
  changes                                               9            189 
 Cash and cash equivalents at 
  the end of the year                               (231)         36,973 
---------------------------------------  -----  ---------  ------------- 

1. Preliminary announcement

The preliminary results for the year ended 30 November 2017 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 21 March 2018. The full Strategic Report and Directors' Report and financial statements will be published on the Group's website at

The financial information set out in this preliminary announcement does not constitute the Group's statutory accounts for the year ended 30 November 2017. Statutory accounts for 2016 have been delivered to the Registrar of Companies and those for 2017 will be delivered following the Company's annual general meeting. The auditor's reports on both the 2017 and 2016 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 5 February 2018.

Consolidated Income Statement presentation

The Directors assess the performance of the Group using an adjusted operating profit and profit before tax. The Directors use this measurement basis as it excludes the effect of transactions that could distort the understanding of the Group's performance for the year and comparability between periods. This includes making certain adjustments for income and expense which are one-off in nature, or non-cash items and those with potential variability year on year which might mask underlying performance. Further details are provided in Note 2.

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 
  2017                     Resources   Results   Education    Services   Businesses 
                              GBP000    GBP000      GBP000      GBP000       GBP000    GBP000 
------------------------  ----------  --------  ----------  ----------  -----------  -------- 
 UK                           67,826    26,566      68,828           -            -   163,220 
 Europe                        7,413     3,258         678           -            -    11,349 
 North America                 1,618         -         231           -            -     1,849 
 Asia                          1,226       204         691           -            -     2,121 
 Middle East                   3,922         -           8           -            -     3,930 
 Rest of the world             1,627     1,590         177           -            -     3,394 
                              83,632    31,618      70,613           -            -   185,863 
------------------------  ----------  --------  ----------  ----------  -----------  -------- 
 Adjusted profit 
  from operations             11,604     7,761       6,552     (3,819)            -    22,098 
 Investment income                                                                        365 
 Adjusted finance 
  costs                                                                               (1,920) 
 Adjusted profit 
  before tax                                                                           20,543 
 Adjustments (see 
  note 2)                                                                             (5,949) 
 Profit before tax                                                                     14,594 
------------------------  ----------  --------  ----------  ----------  -----------  -------- 
                                  RM        RM          RM   Corporate       Exited     Total 
 Year ended 30 November 
  2016                     Resources   Results   Education    Services   Businesses 
                              GBP000    GBP000      GBP000      GBP000       GBP000    GBP000 
------------------------  ----------  --------  ----------  ----------  -----------  -------- 
 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 
  note 2)                                                                             (2,981) 
 Profit before tax                                                                     15,115 
------------------------  ----------  --------  ----------  ----------  -----------  -------- 
 Segmental assets 
                            RM        RM          RM   Corporate       Exited 
                     Resources   Results   Education    Services   Businesses     Total 
                        GBP000    GBP000      GBP000      GBP000       GBP000    GBP000 
------------------  ----------  --------  ----------  ----------  -----------  -------- 
 At 30 November 
 Segmental             103,935     6,324      15,627         205            -   126,091 
 Other                                                                            8,299 
 Total assets                                                                   134,390 
------------------  ----------  --------  ----------  ----------  -----------  -------- 
                            RM        RM          RM   Corporate       Exited 
                     Resources   Results   Education    Services   Businesses     Total 
                        GBP000    GBP000      GBP000      GBP000       GBP000    GBP000 
------------------  ----------  --------  ----------  ----------  -----------  -------- 
 At 30 November 
 Segmental              31,968     7,085      17,803         217            -    57,073 
 Other                                                                           48,942 
 Total assets                                                                   106,015 
------------------  ----------  --------  ----------  ----------  -----------  -------- 
 Adjustments to administrative 
                                                  Year           Year 
                                                 ended          ended 
                                           30 November    30 November 
                                                  2017           2016 
                                                GBP000         GBP000 
--------------------------------------   -------------  ------------- 
 Amortisation of acquisition-related 
  intangible assets                                503              8 
 Gain on sale of operations                          -          (135) 
 Share-based payment charges                       821          1,006 
 Net increase/(release) of provisions 
  for onerous lease contracts                      353           (90) 
 Acquisition related costs                       2,643            525 
 Restructuring costs                             1,584          1,593 
                                                 5,904          2,907 
 --------------------------------------  -------------  ------------- 

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 and share-based payment charges.

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

Highlighted 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 transaction costs; changes in the provision for onerous lease contracts; 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 an onerous provision was created for the top floor of the head office property and an onerous provision release was made for the continued sub-letting of one of the Group's properties. For further details see Note 10.

During the year, the Group incurred professional advisor costs relating to the acquisition and integration of The Consortium, see Note 13 for further details. Restructuring costs were incurred during the year which also relate to the integration of The Consortium.

In the prior 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 infrastructures, network installation and third-party hardware sales. This lead to a reduction of broadly 10% of the RM Education UK staff and a one-off exceptional charge of GBP1.6m.

 3. Investment income 
                                       Year ended           Year 
                                      30 November          ended 
                                             2017    30 November 
                                           GBP000         GBP000 
---------------------------------   -------------  ------------- 
 Bank interest                                 47            123 
 Income on sale of finance lease 
  debt                                        168             46 
 Other finance income                         150            110 
                                              365            279 
 ---------------------------------  -------------  ------------- 
 4. Finance costs 
                                              Year ended           Year 
                                             30 November          ended 
                                                    2017    30 November 
                                          Note    GBP000         GBP000 
---------------------------------------  ------  -------  ------------- 
 Borrowing facilities arrangement 
  fees and commitment fees                           524            421 
 Net finance costs on defined benefit 
  pension scheme                           12      1,049            498 
 Unwind of discount on long term 
  contract provisions                                 49             37 
 Unwind of discount on onerous 
  lease and dilapidations provisions       10         91             84 
 Interest on bank loans and overdrafts               229              - 
 Other finance costs                                  23             46 
                                                   1,965          1,086 
---------------------------------------  ------  -------  ------------- 
 5. Tax 
 a) Analysis of tax charge in the 
  Consolidated Income Statement 
                                                 Year ended           Year 
                                                30 November          ended 
                                                       2017    30 November 
                                                     GBP000         GBP000 
-------------------------------------------   -------------  ------------- 
 Current taxation 
 UK corporation tax                                   2,976          2,924 
 Adjustment in respect of prior 
  years                                             (1,555)            302 
 Overseas tax                                           387            296 
 Total current tax charge                             1,808          3,522 
--------------------------------------------  -------------  ------------- 
 Deferred taxation 
 Temporary differences                                  (6)            173 
 Adjustment in respect of prior 
  years                                                 104          (237) 
 Overseas tax                                         (163)             11 
 Total deferred tax (credit)                           (65)           (53) 
 Total Consolidated Income Statement 
  tax charge                                          1,743          3,469 
--------------------------------------------  -------------  ------------- 
 b) Analysis of tax charge/(credit) in the Consolidated 
  Statement of Comprehensive Income 
                                                 Year ended           Year 
                                                30 November          ended 
                                                       2017    30 November 
                                                     GBP000         GBP000 
-------------------------------------------   -------------  ------------- 
 UK corporation tax 
 Defined benefit pension scheme                       (428)        (1,241) 
 Share based payments                                     -          (142) 
 Deferred tax 
 Defined benefit pension scheme 
  movements                                           3,481        (2,325) 
 Defined benefit pension scheme 
  escrow                                                  -          (749) 
 Share based payments                                    80            110 
 Deferred tax relating to the change 
  in rate                                                70            345 
 Total Consolidated Statement of 
  Comprehensive Income tax charge/(credit)            3,203        (4,002) 
--------------------------------------------  -------------  ------------- 
 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                   Year ended 
                                            November 2017                  30 November 
                                    Adjusted      Adjustments      Adjusted     Adjustments 
                                                     Total                          Total 
                                      GBP000    GBP000    GBP000     GBP000    GBP000   GBP000 
--------------------------------   ---------  --------  --------  ---------  --------  ------- 
 Profit on ordinary 
  activities before tax               20,543   (5,949)    14,594     18,096   (2,981)   15,115 
 Tax at 19.33% (2016: 
  20%) thereon:                        3,971   (1,150)     2,821      3,619     (596)    3,023 
 Effects of: 
 - change in tax rate 
  on carried forward 
  deferred tax assets                      -         -         -         65         -       65 
 - other expenses not 
  deductible for tax 
  purposes                               211       321       532        110         -      110 
 - other temporary timing 
  differences                           (38)      (22)      (60)          -       151      151 
 - R&D tax credit                          -         -         -       (10)         -     (10) 
 - effect of profits/losses 
  in various overseas 
  tax jurisdictions                    (100)         -     (100)         81         -       81 
 - gain on sale of operations              -         -         -          -      (27)     (27) 
 - Prior period adjustments 
  - UK                                 (280)         -     (280)       (28)         -     (28) 
 - Prior period adjustments 
  - overseas                         (1,170)         -   (1,170)        104         -      104 
 Tax charge in the Consolidated 
  Income Statement                     2,594     (851)     1,743      3,941     (472)    3,469 
---------------------------------  ---------  --------  --------  ---------  --------  ------- 
 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: 
                                                  benefit                                Acquisition 
                                Accelerated       pension                   Short-term       related 
                                        tax        scheme   Share-based         timing    intangible 
 Group                         depreciation    obligation      payments    differences        assets     Total 
                                     GBP000        GBP000        GBP000         GBP000        GBP000    GBP000 
---------------------------  --------------  ------------  ------------  -------------  ------------  -------- 
 At 1 December 2015                     734         3,932           423          1,033           (1)     6,121 
  to income                             112             -          (59)            (1)             1        53 
 Credit to equity                         -         1,980         (110)            749             -     2,619 
 At 30 November 2016                    846         5,912           254          1,781             -     8,793 
  to income                            (13)             -            59           (65)            84        65 
 Charge to equity                         -       (3,481)          (80)           (70)             -   (3,631) 
 Acquired Deferred 
  tax assets/(liabilities)              321         1,009             -             11       (3,077)   (1,736) 
 At 30 November 2017                  1,154         3,440           233          1,657       (2,993)     3,491 
---------------------------  --------------  ------------  ------------  -------------  ------------  -------- 

Certain deferred tax assets and liabilities have been offset above.

 6. Earnings per ordinary 
                                         Year ended 30                  Year ended 
                                          November 2017                 30 November 
                                            Weighted                     Weighted 
                                   Profit    average            Profit    average 
                                      for     number    Pence      for     number    Pence 
                                      the         of      per      the         of      per 
                                     year     shares    share     year     shares    share 
                                   GBP000       '000            GBP000       '000 
-------------------------------   -------  ---------  -------  -------  ---------  ------- 
 Basic earnings per 
  ordinary share 
 Basic earnings                    12,851     81,455     15.8   11,646     81,144     14.4 
 Adjustments (see note 
  2)                                5,098          -      6.2    2,509          -      3.0 
 Adjusted basic earnings           17,949     81,455     22.0   14,155     81,144     17.4 
--------------------------------  -------  ---------  -------  -------  ---------  ------- 
 Diluted earnings per 
  ordinary share 
 Basic earnings                    12,851     81,455     15.8   11,646     81,144     14.4 
 Effect of dilutive potential 
  ordinary shares: share-based 
  payment awards                        -        179    (0.1)        -          -        - 
 Diluted earnings                  12,851     81,634     15.7   11,646     81,144     14.4 
 Adjustments (see note 
  2)                                5,098          -      6.2    2,509          -      3.0 
 Adjusted diluted earnings         17,949     81,634     21.9   14,155     81,144     17.4 
--------------------------------  -------  ---------  -------  -------  ---------  ------- 
 7. Dividends 
 Amounts recognised as distributions 
  to equity holders were: 
                                           Year ended           Year 
                                          30 November          ended 
                                                 2017    30 November 
                                               GBP000         GBP000 
-------------------------------------   -------------  ------------- 
 Final dividend for the year ended 
  30 November 2016 - 4.50p per share 
  (2015: 3.80p)                                 3,660          3,079 
 Interim dividend for the year 
  ended 30 November 2017 - 1.65p 
  per share (2016: 1.50p)                       1,348          1,220 
                                                5,008          4,299 
 -------------------------------------  -------------  ------------- 
 The proposed final dividend of 4.95p per share 
  for the year ended 30 November 2017 was approved 
  by the Board on 5 February 2018. The dividend 
  is subject to approval by Shareholders at the 
  annual general meeting. The anticipated cost 
  of this dividend is GBP4,046,000 which is not 
  included as a liability at 30 November 2017. 
 8. Trade and other receivables 
                                                Year     Year ended 
                                               ended    30 November 
                                         30 November           2016 
                                              GBP000         GBP000 
------------------------------------   -------------  ------------- 
 Financial assets 
 Trade receivables                            20,770         15,060 
 Long-term contract balances                       3              - 
 Other receivables                             1,146          1,294 
 Derivative financial instruments                  -            685 
 Accrued income                                1,366          1,824 
 Amounts owed by Group undertakings                -              - 
                                              23,285         18,863 
 Non-financial assets 
 Prepayments                                   5,862          5,540 
                                              29,147         24,403 
 ------------------------------------  -------------  ------------- 
 Financial assets 
 Other receivables                             1,144          1,153 
-------------------------------------  -------------  ------------- 
                                              30,291         25,556 
 ------------------------------------  -------------  ------------- 
 9. Trade and other payables 
                                                Year     Year ended 
                                               ended    30 November 
                                         30 November           2016 
                                              GBP000         GBP000 
------------------------------------   -------------  ------------- 
 Current liabilities 
 Financial liabilities 
 Trade payables                               18,524         13,777 
 Other taxation and social security            4,765          2,842 
 Other payables                                  535          2,284 
 Derivative financial instruments                389             45 
 Accruals                                     12,975          9,096 
 Long-term contract balances                  10,183         16,766 
 Amounts owed to Group undertakings                -              - 
                                              47,371         44,810 
 Non-financial liabilities 
 Deferred income                              10,265          9,711 
                                              57,636         54,521 
 ------------------------------------  -------------  ------------- 
 Non-current liabilities 
 Non-financial liabilities: 
 Deferred income: 
  - due after one year but within 
   two years                                     409            462 
  - due after two years but within 
   five years                                    443            509 
                                                 852            971 
 ------------------------------------  -------------  ------------- 
                                              58,488         55,492 
 ------------------------------------  -------------  ------------- 
 10. Provisions                Onerous 
                             lease and   Employee-related 
                         dilapidations      restructuring    Other     Total 
 Group                          GBP000             GBP000   GBP000    GBP000 
--------------------   ---------------  -----------------  -------  -------- 
 At 1 December 
  2015                           3,579                184    1,178     4,941 
  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 
 Acquired on 
  30 June                          165                  -        -       165 
  of provisions                  (308)            (1,697)    (236)   (2,241) 
 Release of 
  provisions                   (1,115)                  -    (568)   (1,683) 
 Increase in 
  provisions                     1,780                831      819     3,430 
 Unwind of discount                 91                  -        -        91 
 At 30 November 
  2017                           3,770                978    1,707     6,455 
---------------------  ---------------  -----------------  -------  -------- 
 Provisions for onerous leases and dilapidations 
  have been recognised at the present value of 
  the expected obligation at discount rates of 
  2.6% (2016: 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 2017, GBP1,525,000 (2016: GBP1,465,000) 
  of the provision refers to onerous leases, and 
  GBP2,245,000 (2016: GBP1,692,000) refers to dilapidations. 
  During the year an onerous provision was created 
  for the top floor of the head office property 
  and an onerous provision release was made for 
  the successful sub-letting of one of the Group's 
  properties. Following the acquisition in the 
  year, the Group's dilapidation provisions as 
  a whole were reviewed and subsequently increased. 
 The average remaining life of the leases at 30 
  November 2017 is 2.1 years (2016: 3.1 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 
 Other provisions includes one-off items not covered 
  by any other category of which the most significant 
  items are the risk provisions from ended BSF 
  contracts transferred from long-term contract 
  creditors to provisions, at the year end this 
  amount is GBP779,000 (2016: GBP475,000). 
 Disclosure of provisions 
                                                   Year           Year 
                                                  ended          ended 
                                            30 November    30 November 
                                                   2017           2016 
                                                 GBP000         GBP000 
----------------------------------------  -------------  ------------- 
 Current liabilities                              3,436          3,536 
 Non-current liabilities                          3,019          3,157 
                                                  6,455          6,693 
----------------------------------------  -------------  ------------- 
 11. Share capital 
 Company and Group                    Ordinary 
                                      shares of 
                                      2(2) /(7) 
                                    '000         GBP000 
 Allotted, called-up 
  and fully paid: 
 As at 30 November 
  2015, 2016 and 2017             82,650          1,890 
---------------------------  -----------  ------------- 
 Ordinary shares issued 
  carry no right to fixed 
 12. Defined benefit pension schemes 
 The Group has both defined benefit and defined 
  contribution pension schemes. There are three defined 
  benefit pension schemes, the Research Machines 
  plc 1988 Pension Scheme (the "RM Scheme") and, 
  following the acquisition of The Consortium in 
  June 2017, the CARE Scheme and the Platinum Scheme. 
  The RM Scheme and the CARE Scheme are both operated 
  for employees and former employees of the Group 
  only. The Platinum Scheme is a multi-employer scheme, 
  with The Consortium being just one of a number 
  of employers. The Group plays no active part in 
  managing that Scheme, although the number of the 
  Group's employees in that Scheme is small and so 
  the impact / risk to the Group from that Scheme 
  is limited. 
  For all three Schemes, based on the advice of 
  a qualified independent actuary at each balance 
  sheet date and using the projected unit method, 
  the administrative expenses and current service 
  costs are charged to operating profit, with the 
  interest cost, net of interest on scheme assets, 
  reported as a financing item. 
  Defined benefit pension scheme remeasurements 
  are recognised as a component of other comprehensive 
  income such that the balance sheet reflects the 
  scheme's surplus or deficit as at the balance sheet 
  date. Contributions to defined contribution plans 
  are charged to operating profit as they become 
  Scheme assets are measured at bid-price, where 
  available, at 30 November 2017. The present value 
  of the defined benefit obligation was measured 
  using the projected unit method. 
  Under the guidance of IFRIC 14, the Group are 
  able to recognise a pension surplus on the balance 
  sheet for all three schemes. In the year the RM 
  and CARE schemes shown a deficit and the Platinum 
  scheme is in surplus. 
  The Research Machines plc 1988 Pension Scheme 
  (RM 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 assets 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 Scheme 
  is a funded scheme. 
 Under the Scheme, employees were entitled to retirement 
  benefits of 1/60th of final salary for each qualifying 
  year on attainment of retirement age of 60 or 65 
  years and additional benefits based on the value 
  of individual accounts. No other post-retirement 
  benefits were provided by the Scheme. 
 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. 
  IAS 19 Employee Benefits (revised) liabilities 
  at 30 November 2017 have been rolled forward based 
  on this valuation's base data. 
 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 Trustees 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 
  2017 there were amounts outstanding of GBP300,000 
  (2016: GBP300,000) for one month's deficit payment 
  and GBP32,000 (2016: 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. 
 The parent company RM plc has entered into a pension 
  protection fund compliant 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 
 The Consortium CARE Scheme 
 Until 31 December 2005, The Consortium for Purchasing 
  and Distribution Ltd ("The Consortium", acquired 
  by the Company on 30 June 2017) operated the CARE 
  Scheme providing benefits on both a defined benefit 
  (final salary-linked) and a defined contribution 
  basis. From 1 January 2006, the defined benefit 
  (final salary- linked) and defined contribution 
  sections were closed and all employees, subject 
  to the eligibility conditions set out in the Trust 
  Deed and Rules, joined a new defined benefit (Career 
  Average Revalued Earnings) section. As at 28 February 
  2011 the Scheme was closed to future accruals. 
  The Scheme is subject to the Statutory Funding 
  Objective under the Pensions Act 2004. A valuation 
  of the Scheme is carried out at least once every 
  three years to determine whether the Statutory 
  Funding Objective is met. As part of the process, 
  The Consortium must agree with the trustees of 
  the Scheme the contributions to be paid to address 
  any shortfall against the Statutory Funding Objective. 
  The Statutory Funding Objective does not currently 
  impact on the recognition of the Scheme in these 
  accounts. The Scheme is managed by a Board of 
  Trustees appointed in part by the Company and 
  in part from elections by members of the Scheme. 
  The Trustees have responsibility for obtaining 
  valuations of the fund, administering benefit 
  payments and investing Scheme assets. The Trustees 
  delegate some of these functions to their professional 
  advisers where appropriate. The valuation of the 
  Scheme at 31 December 2016 was a deficit of GBP4.2m. 
 Prudential Platinum Pension 
 The Consortium acquired West Mercia Supplies in 
  April 2012 (prior to the Company acquiring The 
  Consortium). Upon acquisition by The Consortium 
  of West Mercia Supplies, a pension scheme was 
  set up providing benefits on both a defined benefit 
  (final salary-linked) and a defined contribution 
  basis for West Mercia employees. The most recent 
  full actuarial valuation was carried out by the 
  independent actuaries Xafinity on 31 December 
  2015. Using the assumptions below the results 
  of the full valuation were adjusted and rolled 
  forward to form the basis for the current year 
  valuation. The Scheme is administered within a 
  legally separate trust from The Consortium and 
  the Trustees are responsible for ensuring that 
  the correct benefits are paid, that the Scheme 
  is appropriately funded and that the Scheme assets 
  are appropriately invested. The valuation of the 
  Scheme at 31 December 2015 was a deficit of GBP70,000. 
 Amounts recognised in the Income Statement and 
  in the Statement of Comprehensive Income 
                                                              Year           Year 
                                                             ended          ended 
                                                       30 November    30 November 
                                                              2017           2016 
                                               Note         GBP000         GBP000 
--------------------------------------------  -----  -------------  ------------- 
 Administrative expenses and taxes                           (552)          (845) 
 Current service costs                                        (69)              - 
 Operating expense                                           (621)          (845) 
--------------------------------------------  -----  -------------  ------------- 
 Interest cost                                             (6,946)        (7,301) 
 Interest on Scheme assets                                   5,897          6,803 
 Net interest expense                           4          (1,049)          (498) 
--------------------------------------------  -----  -------------  ------------- 
 Expense recognised in the Income 
  Statement                                                (1,670)        (1,343) 
--------------------------------------------  -----  -------------  ------------- 
 Effect of changes in demographic 
  assumptions                                                7,920          1,838 
 Effect of changes in financial assumptions                (4,608)       (36,938) 
 Effect of experience adjustments                            1,898              - 
 Total actuarial gains/(losses)                              5,210       (35,100) 
 Return on Scheme assets excluding 
  interest on Scheme assets                                 12,750         11,545 
 Income/(expense) recognised in the Statement 
  of Comprehensive Income                                   17,960       (23,555) 
---------------------------------------------------  -------------  ------------- 
 Income/(expense) recognised in Total 
  Comprehensive Income                                      16,290       (24,898) 
--------------------------------------------  -----  -------------  ------------- 

Reconciliation of the Scheme assets and obligations through the year

                              RM scheme       CARE   Platinum           Year           Year 
                                            scheme     scheme          ended          ended 
                                                                 30 November    30 November 
                                                                        2017           2016 
                                 GBP000     GBP000     GBP000         GBP000         GBP000 
--------------------------   ----------  ---------  ---------  -------------  ------------- 
 At start of year               190,983          -          -        190,983        174,029 
 Acquired during the 
  year                                -     15,734      1,871         17,605              - 
 Interest on Scheme 
  assets                          5,706        170         21          5,897          6,803 
 Return on Scheme 
  assets excluding 
  interest on Scheme 
  assets                         12,734         26       (10)         12,750         11,545 
 Administrative expenses          (538)          -       (14)          (552)          (845) 
 Contributions from 
  Group                           3,984         95        108          4,187         11,984 
 Contributions from 
  employees                           -          -          9              9              - 
 Benefits paid                  (5,981)      (237)       (12)        (6,230)       (12,533) 
---------------------------                                                   ------------- 
 At end of year                 206,888     15,788      1,973        224,649        190,983 
---------------------------  ----------  ---------  ---------  -------------  ------------- 
 At start of year/period      (225,758)          -          -      (225,758)      (195,890) 
 Acquired during the 
  year                                -   (21,888)    (1,654)       (23,542)              - 
 Interest cost                  (6,692)      (236)       (18)        (6,946)        (7,301) 
 Actuarial gains/(losses)         3,077      1,872        260          5,209       (35,100) 
 Benefits paid                    5,981        237         12          6,230         12,533 
 Service cost                         -          -       (69)           (69)              - 
 Contributions from 
  employees                           -          -        (9)            (9)              - 
 At end of year               (223,392)   (20,015)    (1,478)      (244,885)      (225,758) 
---------------------------  ----------  ---------  ---------  -------------  ------------- 
 Pension deficit               (16,504)    (4,227)          -       (20,731)       (34,775) 
---------------------------  ----------  ---------  ---------  -------------  ------------- 
 Pension surplus                      -          -        495            495              - 
---------------------------  ----------  ---------  ---------  -------------  ------------- 
 Net pension deficit           (16,504)    (4,227)        495       (20,236)       (34,775) 
---------------------------  ----------  ---------  ---------  -------------  ------------- 
 Reconciliation of net defined 
  benefit obligation 
                                          Year ended     Year ended 
                                         30 November    30 November 
                                                2017           2016 
                                              GBP000         GBP000 
------------------------------------   -------------  ------------- 
 Net obligation at the start 
  of the year                               (34,775)       (21,861) 
 Net obligation acquired during              (5,937)              - 
  the year 
 Cost included in Income Statement           (1,670)        (1,343) 
 Scheme remeasurements included 
  in the Statement of Comprehensive 
  Income                                      17,959       (23,555) 
 Cash contribution                             4,187         11,984 
 Net pension deficit                        (20,236)       (34,775) 
-------------------------------------  -------------  ------------- 
                                          Year ended     Year ended 
                                         30 November    30 November 
                                                2017           2016 
 Obligation by participant                    GBP000         GBP000 
------------------------------------   -------------  ------------- 
 Active                                        1,212              - 
 Vested deferreds                            209,869        198,370 
 Retirees                                     33,804         27,388 
                                             244,885        225,758 
 ------------------------------------  -------------  ------------- 
                                          Year ended     Year ended 
                                         30 November    30 November 
                                                2017           2016 
 Value of Scheme assets                       GBP000         GBP000 
------------------------------------   -------------  ------------- 
 Fair value of Scheme assets 
  with a quoted market price 
 Cash and cash equivalents, 
  including escrow                            10,535          7,370 
 Equity instruments                          107,814         87,274 
 Debt instruments                              1,973         68,951 
 Liability driven investments                 77,939              - 
 Value of unquoted Scheme 
 Insurance contract                           26,388         27,388 
                                             224,649        190,983 
 ------------------------------------  -------------  ------------- 
 Significant actuarial assumptions 
                                                   Year           Year 
                                                  ended          ended 
                                            30 November    30 November 
                                                   2017           2016 
---------------------------------------   -------------  ------------- 
 Discount rate (RM/Platinum schemes)              2.85%          3.00% 
 Discount rate (CARE scheme)                      2.75%            n/a 
 Rate of RPI price inflation                      3.20%          3.15% 
 Rate of CPI price inflation                      2.10%          2.15% 
 Rate of salary increases (Platinum               2.10%            n/a 
 Rate of pensions increases 
 pre 6 April 1997 service                         1.50%          1.50% 
 pre 1 June 2005 service                          3.10%          3.10% 
 post 31 May 2005 service                         2.10%          2.20% 
 Post retirement mortality table                   S2PA           S2PA 
                                                    CMI            CMI 
                                                   2016           2015 
                                                  1.25%          1.50% 
 Weighted average duration of defined          23 years       25 years 
  benefit obligation 
 Assumed life expectancy on retirement 
  at age 65: 
  Retiring at the accounting date 
   (male member aged 65)                           22.1           22.7 
  Retiring in 20 years after the 
   accounting date (male member aged 
   45)                                             23.5           24.8 
----------------------------------------  -------------  ------------- 
   Following a change of actuary during the year 
   the discount methodology applied under IAS19 for 
   all three schemes was revised to better reflect 
   the long dated credit risk of the cash flows for 
   those schemes. 
 13. Acquisitions of subsidiaries 
 Acquisitions in the current period 
 On 30 June 2017, the Group acquired all of the 
  shares in Hedgelane Limited, including its principal 
  trading subsidiary known as The Consortium. The 
  Consortium is a leading supplier of branded and 
  own-branded products primarily to educational 
 The acquisition of The Consortium represents a 
  strategic opportunity for RM to enhance signi 
  cantly the scale and offering of its education 
  resources business. The Board believes that the 
  combination of RM's education resources business, 
  TTS, and The Consortium will lead to an expanded, 
  more diversi ed and better balanced product portfolio, 
  comprising a wide spectrum of higher, value-added, 
  curriculum-focussed resources and essential commodity 
  and education resource products. The businesses 
  also have complementary geographic coverage and 
  customer relationships, and combined will have 
  an improved purchasing position and bene t from 
  other signi cant operational improvement opportunities. 
 The fair value of the cash consideration for the 
  acquisition is GBP59.0m. Transaction fees associated 
  with the acquisition and expensed to the Consolidated 
  Statement of Comprehensive Income in 2017 were 
 Effect of acquisition 
  The acquisition had the following 
  effect on the Group's assets and 
                                                on Acquisition 
---------------------------------------    ------------------- 
 Brands                                              18,100 
 Website platform                                        2,520 
 Property, plant and equipment                           5,473 
 Inventories                                             8,695 
 Trade and other receivables                            10,185 
 Cash and cash equivalents                                 549 
 Defined benefit pension scheme 
  surplus                                                  216 
 Trade and other payables                              (9,720) 
 Defined benefit pension scheme 
  obligation                                           (6,153) 
 Current tax liabilities                                   (4) 
 Deferred tax                                          (1,837) 
 Provisions                                              (165) 
 Net assets acquired                                    27,859 
-----------------------------------------  ------------------- 
 Goodwill                                               31,097 
 Consideration paid                                     58,956 
-----------------------------------------  ------------------- 
 Satisfied by 
 Cash                                                   58,956 
 Total purchase consideration                           58,956 
-----------------------------------------  ------------------- 
 Net cash flow on acquisition                           58,956 
 Cash and cash equivalents                               (549) 
-----------------------------------------  ------------------- 
 Cashflow on acquisition                                58,407 
-----------------------------------------  ------------------- 
 In the period 1 July 2017 to 30 November 2017 
  The Consortium contributed revenue of GBP27.8m 
  and statutory profit after tax of GBP0.8m If the 
  acquisition had occurred on 1 December 2016 The 
  Consortium would have contributed revenue of GBP58.8m 
  and statutory profit after tax of GBP1.2m. In 
  determining these amounts, management has assumed 
  that the fair value adjustments that arose on 
  the date of acquisition would have been the same 
  if the acquisition occurred on 1 December 2016. 
   Fair value adjustments 
   On the acquisition of The Consortium, all assets 
    were fair valued and appropriate intangible assets 
    recognised following the principles of IFRS 3. Certain 
    asset fair values are included as provisional in 
    the short term as management continue to integrate 
    the acquired business. 
   A deferred tax liability related to these intangible 
    assets was also recognised. Management identified 
    the main material intangible assets as The Consortium 
    own brand and the website platform. Brands were valued 
    at GBP18.1m using the Relief from Royalty method 
    and are being amortised over 15 years which is in 
    accordance with IAS 38. The website platform was 
    valued at GBP2.5m by considering the replacement 
   Goodwill of GBP31.1m represents the excess of the 
    purchase price over the fair value of the net tangible 
    and intangible assets acquired. The goodwill arising 
    on the acquisition is largely attributable to the 
    synergies and values associated with being part of 
    the enlarged RM resources proposition. Stock has 
    been valued in line with group policy taking into 
    account the recoverability and obsolescence. The 
    properties have been restated to fair market value. 
    Trade and other receivables and payables were all 
    reviewed and are in line with group policy. 
     Acquisition related costs 
   The group incurred acquisition related costs of GBP3.2m 
    related to advisor fees, banking arrangements and 
    stamp duty. These costs have been included in the 
    administrative expenses in the group's consolidation 
    statement of comprehensive income. Costs relating 
    to debt raising have been capitalised and amortised 
    over the life of the loan, see note 14. 
   14. Borrowings 
 Group                                                    2017       2016 
                                                        GBP000     GBP000 
 Bank loan                                            (14,000)          - 
 Add capitalised fees                                      812          - 
 Borrowings                                           (13,188)          - 
----------------------------------------------    ------------  --------- 
   Bank and professional service fees relating 
   to securing the loan have been capitalised and 
   are amortised over the length of the loan. 

15. Related party transactions

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.

Ipswich School

John Poulter, non-executive director of RM plc, is a director of Ipswich School. Sales made in the year total GBP12,296 (2016: GBP2,419) and at the year-end there is a balance of GBP2,929 (2016: GBP90) outstanding.

Spinfield School

Neil Martin, executive director, is a governor of Spinfield School. TTS sales made in the year total GBP456 (2016: GBPnil) and at the year-end there is a nil balance (2016: GBPnil). The Consortium sales made in the year total GBP669.80 (2016: GBPnil) and at the year-end there is a balance of GBP83 (2016: GBPnil) outstanding.

Grant Thornton LLP

Deena Mattar, non-executive director of RM plc, is a non-executive of the Partnership Oversight 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. The Company has engaged Grant Thornton to provide advice in connection with certain activities. The following payments were made in the year - GBP650,000 of integration costs in TTS and The Consortium, GBP48,000 stock work in The Consortium and GBP25,000 accrual for IFRS15 work.

TES Global Ltd (formerly TSL Education Ltd)

Lord Andrew Adonis was a Member of Advisory Board until 21 April 2017. During the year, the Group purchased GBP2,695 from the TES Global Ltd.

This information is provided by RNS

The company news service from the London Stock Exchange



(END) Dow Jones Newswires

February 06, 2018 02:00 ET (07:00 GMT)

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