Earnings Release • Feb 3, 2014
Earnings Release
Open in ViewerOpens in native device viewer
National Storage Mechanism | Additional information
RNS Number : 0605Z
RM PLC
03 February 2014
3 February 2014
RM plc
Preliminary Results for the year ending
30 November 2013
RM plc ("RM") reports its results for the year ending 30 November 2013.
SUMMARY
• Revenue excluding exited businesses fell as anticipated by 8.4% to £261.7m (2012: £285.9m)
• Adjusted operating margins increased with adjusted operating profit* rising to £17.2m (2012: £12.7m)
• Adjusted profit before tax* increased to £16.4m (2012: £12.1m). Statutory profit before tax* increased to £9.4m (2012: £7.4m)
• Cash generated by operations £34.7m (2012: £33.5m). Cash and short term deposits at Nov 2013 £63.2m (2012: £37.8m)
• Full year paid and proposed dividend per share increased 10% to 3.30 pence (2012: 3.00 pence)
• Diluted earnings per share* increased to 6.6 pence (2012: 4.3 pence). Diluted adjusted earnings per share increased to 12.4 pence (2012: 9.8 pence)
• Special dividend of 16.00 pence per share (£15m) proposed
• Pension deficit before tax reduced to £15.8m (2012: £20.4m)
Commenting on the results, David Brooks, Chief Executive of RM, said:
"The repositioning of our Education Technology division towards software and services is on track. Looking forward, these changes will have an impact in 2014, but will provide us with a more robust business in 2015 and beyond. Assessment and Data Services and Education Resources are expected to continue to perform well in the year ahead."
| Contacts RM plc |
08450 700300 |
| David Brooks, Chief Executive Officer | |
| Iain McIntosh, Chief Financial Officer | |
| FTI Consulting | |
| Sophie McMillan / Tracey Bowditch | 020 7831 3113 |
* References to adjusted profit exclude: amortisation charges relating to acquisition related intangible assets; gains/losses on sale of operations; impairment of goodwill, intangible assets and investment; exceptional pension credits; restructuring costs; share-based payment charges; movements in property related provisions; and other non-operational items. FY13 refers to the financial year ending 30 November 2013. The Group has early adopted the IAS19(Revised) accounting standard changes with respect of the defined benefit pension scheme. The prior year financials have been revised for comparability.
Extract from Chairman's Statement
2013 has been an eventful but positive year for RM plc.
Trading performance, which is detailed below, showed revenues down as anticipated, but sharply improved profitability, together with good cash generation. The well-signalled decline in the Building Schools for the Future ('BSF') programme was the major contributor to revenue reduction, but was equally a valuable source of profit and cash.
The strategic decision within the Group's Education Technology division to discontinue the manufacture and distribution of computer hardware in order to expand software and service offerings represented a major change, and was received with understanding in the marketplace. The operational reorganisation consequent upon this decision is in the process of implementation and is on track in respect of timing and cost.
The other two divisions, Assessment and Data Services ('ADS') and Education Resources, acquitted themselves well. ADS has extended contractual relationships with existing customers and increased margins. Education Resources has delivered good margins despite a large Corporate Social Responsibility ('CSR') programme, sponsored by a major corporate, not being repeated this year.
The Group has a strong balance sheet with cash and short term deposits at year end of £63.2 million.
The Board is recommending a final dividend of 2.46 pence per share which would, in total, constitute an increase of 10% over the prior year. In addition, recognising that the Group's cash resources are greater than those required to meet the prudent requirements of the business, the Board is proposing to pay a special dividend of 16.00 pence per share (£15 million) at the same time as the final dividend.
The Board is proposing the establishment of an escrow account to be utilised for initiatives to reduce the risks related to the RM defined benefit pension scheme which was closed to new entrants in 2003 and to accrual of benefits in 2012. It is anticipated that an amount of £8 million will be paid into this account by the Group in 2014.
With reference to the Board, I became Chairman of RM and David Brooks took over as Chief Executive in Spring 2013. Jo Connell will be retiring from the Board at the Annual General Meeting in March 2014. Substantial thanks are due to her for her service to the Group over the past six years. Patrick Martell has been appointed to the Board with effect from 1 January 2014.
Looking forward, the changes to the Education Technology division will, as announced, impact 2014 but create a more robust business for the future. ADS and Education Resources are expected to continue to perform well.
John Poulter
Chairman
3 February 2014
Extract from Strategic Report
Group Financial Performance
Group revenues excluding businesses exited in 2012 declined by 8.4% to £261.7 million (2012: £285.9 million, £288.7 million including exited businesses).
To provide a better guide to underlying business performance, the Income Statement amortisation charges relating to acquisition related intangible assets, share-based payment charges and other items of a non-operational nature have been disclosed in an adjustments column in the Income Statement to give 'Adjusted' results.
The Group has adopted the provisions of the recently revised International Accounting Standard 19 ('IAS19R') with respect to treatment of defined benefit pension schemes. This accounting change has no impact on total distributable reserves but does affect where certain costs appear in the Income Statement. The impact of this change on the results for the years ended 30 November 2012 and 2013 are set out in more detail in Note 2.
Adjusted operating profit margins increased from 4.4% in 2012 to 6.6%. Adjusted operating profit increased to £17.2 million (2012: £12.7 million). The Group generated an unadjusted statutory profit before tax of £9.4 million (2012: £7.4 million). Significant exceptional items included £5.1 million of restructuring costs following the strategic review of the Education Technology division and the associated impact on central services. In addition, there was an increase in property-related provisions of £2.6 million, principally related to provision for onerous leases on surplus property.
The total tax charge within the Income Statement for the year was £3.3 million (2012: £3.5 million). The Group's tax charge for the period, measured as a percentage of profit before tax, was 35% (2012: 47%). This decrease is principally due to a higher proportion of 'Adjustments' to operating profit being tax deductible. Excluding the impact of such adjustments, the tax charge on adjusted profit before tax was at an effective rate of 30% (2012: 26%). Statutory basic earnings per share were 6.7 pence (2012: 4.3 pence) and statutory diluted earnings per share were 6.6 pence (2012: 4.3 pence).
RM delivered another year of strong cash generation with cash generated by operations for the year of £34.7 million (2012: £33.5 million). As a result, cash and short term deposits increased to £63.2 million (2012: £37.8 million). The lowest cash position during the year due to seasonal cash flows was £33.0 million (2012: £6.5 million).
Working capital efficiency improved further. Specific elements include inventory levels reducing by 29% year on year and trade receivables reducing by 35%.
Dividends
The total dividend paid and proposed for the year has been increased by 10% to 3.30 pence per share (2012: 3.00 pence). This comprises an already paid interim dividend of 0.84 pence per share and, subject to shareholder approval, a proposed final dividend of 2.46 pence per share. The estimated total cost of normal dividends paid and proposed for 2013 is £3.0 million (2012: £2.8 million).
In addition, recognising that the Group's cash resources are greater than those required to meet the prudent requirements of the business, the Board is proposing to pay a special dividend of 16.00 pence per share (£15 million) at the same time as the annual dividend in April 2014. The Board will also recommend that the special dividend is combined with a share consolidation. This is common in such circumstances and is intended to maintain the comparability of the Company's share price before and after the special dividend.
Defined Benefit Pension Scheme
The RM defined benefit pension scheme was closed to new entrants in 2003. An agreement was reached with the Trustees to close the scheme to future accrual of benefits from 31 October 2012. At 30 November 2013 the IAS 19R scheme deficit (pre-tax) was £15.8 million (2012: £20.4 million). The triennial valuation of the scheme's position at 31 May 2012 for statutory funding purposes showed a scheme deficit of £53.5 million. A deficit recovery plan over 15 years was agreed with the Trustees for future annual deficit recovery payments of £3.6 million, these amounts being guaranteed by the parent company. The Group also pays the Scheme's expenses, including the Payment Protection Fund levy. Total cash payments including expenses for the year were £4.4 million (2012: £7.3 million payments in excess of current service cost).
The Board has proposed the establishment of an escrow account to be utilised for initiatives to reduce the risks related to the scheme. It is anticipated that an amount of £8 million will be paid into this account in 2014 in addition to the annual deficit recovery payments.
Divisional Review
The Group is structured in three operating divisions, each with its own Managing Director and management team. Some staff functions are provided centrally. In addition approximately 25% of Group headcount is based in India, providing support services and software development to the operating divisions.
Education Technology
The Education Technology division is a UK-focused business supplying IT and related services to schools and colleges. The sale of personal computing devices was discontinued from December 2013. Going forward the Education Technology division will focus on four distinct product groups: IT Services, Digital Platforms and Content, Infrastructure solutions and Internet services. The business has experienced declining transactional volumes for hardware over many years, apart from demand derived from new school openings under the Building Schools for the Future ('BSF') programme which is coming to a close. Existing contractual commitments to provide personal computing devices will be fulfilled and the division will continue to provide third party infrastructure hardware as part of its Infrastructure and Services businesses. The divisional strategy is to continue to develop and encourage adoption of its portfolio of software products and services through new and existing propositions which meet the needs of UK schools.
Market trends affecting the business include increasing interest in schools towards adoption of Bring Your Own Device ('BYOD') policies. This offers RM an opportunity to supply both services and network infrastructure solutions to facilitate this complex transition. In addition, purchasing decisions in England have been increasingly devolved to schools and academy groups and away from central government and local authorities. This required a change in the way RM engages with its market and the review has resulted in an increased focus on marketing and telephone sales over face to face sales, though direct contact will still be necessary when complex solutions are involved.
As anticipated, continued funding pressures in the UK education sector led to overall revenue in the Education Technology division declining by 10.6% to £181.2 million (2012: £202.7 million). However, adjusted operating profit margins increased from 2.6% to 4.8%. In large part this was due to improved margins on long term contracts within the Services part of the business, including BSF contracts, where profitability in 2012 was negatively impacted by provision for costs forecast to migrate customers from learning platform offerings, combined with lower than expected final costs on projects completing in 2013. Adjusted operating profit was £8.6 million (2012: £5.4 million).
The performance of the four retained product groups and the personal computing hardware business, which is in the process of being exited, are reviewed below.
Services
These include implementation, management and support of IT infrastructure within schools and colleges, including BSF contracts. As anticipated, revenues in 2013 declined with a reduction in new school openings under the BSF programme. Due to the contract roll-out schedule it is anticipated that BSF revenue will decline significantly over the next year with only modest revenue from BSF implementations after 2014. Services revenues decreased by 14% to £85.7 million (2012: £99.1 million).
RM's strong record of extending contractual relationships with existing Services customers has continued, including a new seven year ICT managed services contract signed with South Lanarkshire Council.
Long-term managed services are subject to long-term project accounting policies and revenues and profits were positively affected by good operational performance and cost control in completing BSF contracts.
New service propositions have been launched in the year including a mixed remote/onsite support service for primary schools which allows them to select from a range of service levels and gain the benefits of wider access to knowledge available across RM while maintaining continuity of elements of on-site service.
Digital Platforms and Content
These include established products such as RM Integris (RM's cloud-based school management system), RM Easimaths curriculum software and RM EasiTeach whole class teaching software but also newer offerings including RM Books and RM Unify. Digital Platforms and Content revenues decreased by 17% to £7.3 million reflecting the run down of learning platforms and reduced curriculum software sales.
Revenue from RM Integris increased following customer wins including schools across Oxfordshire. The strategy is to increase RM's market share in a market dominated by a competitor and with low levels of switching between suppliers. RM Integris is a cloud based Software as a Service offering with annual licences.
RM Unify is a product launched by RM in 2013 as a technology solution to allow customers easy access to the varied digital, cloud based, educational specific content and materials now available. RM Unify incorporates a cloud-based 'launchpad' and 'application store' enabling schools to procure and access a wide variety of applications in a secure, single sign-on environment. As part of an extension to a contract with the Scottish Government, RM Unify has been made available to all schools in Scotland. Since the year end RM has also been awarded a new contract to provide RM Unify to all schools in Scotland until January 2016. In addition, RM Unify has been chosen by a number of existing managed services customers as the replacement for their learning platform. Over 90 third party applications are now available for use through RM Unify. Revenue is derived from annual school subscriptions and from fees from sales of third party applications. The division's strategy is generally not to develop its own curriculum software but to provide the best of what is available from third parties via RM Unify.
RM Books, launched last year, is still in the early stages of adoption. RM Books provides the first e-book solution designed for UK schools. The launch has been well received by publishers with the majority of leading UK textbook publishers now participating. Approximately 5,000 titles are currently available through RM Books. The service is free to schools with RM taking a share of revenue from content sold through the system. The market penetration of e-books in consumer markets has increased dramatically in recent years but e-book adoption in schools is currently limited. The current focus is on securing a share of 'early adopters' and demonstrating the educational value added. Revenues remain small and RM Books is expected to remain an area of investment going forward.
Infrastructure Solutions
Infrastructure Solutions include sales of RM's Community Connect and Ranger network management tools and related provision of hardware such as routers and wireless systems. Existing products are typically sold as perpetual licences with annual maintenance contracts. Revenues decreased by 7% to £15.7 million (2012: £16.9 million) as demand for established products reduced year on year.
In the year the division invested in a significant new proposition, RM Neon, which has been launched since the year end. RM Neon provides a new generation of network and device monitoring tools to schools and is available via an annual subscription. Consistent with Education Technology's wider strategy, these tools allow network managers to incorporate the best of third party and 'home grown' applications and scripts.
Internet
RM is a broadband and e-safety service provider to approximately 7,000 schools. RM designs and manages networks, procuring and integrating bandwidth and e-safety products from third parties. Competitors include regional educational aggregators and some of the large telecom providers who sell to schools directly. The devolution of purchasing decisions to individual schools is reducing the likelihood of local authorities procuring services centrally on their behalf.
RM's business is dominated by one large regional consortium which accounts for the majority of its revenue. This relationship is underpinned by a contract which runs until 2018 though volumes are variable.
Revenues decreased by 5% to £19.3 million (2012: £20.2 million).
Personal Computing Hardware
Revenue derived from hardware (RM-branded and third-party computing products, together with maintenance and warranty and other third-party classroom equipment) decreased by 8% to £53.1 million (2012: £57.7 million).
As discussed above, the division will exit the declining and low margin sale and manufacture of personal computing devices over the course of FY14. Where required under wider managed services contracts, RM will contract third parties to provide such devices or offer a procurement service.
The expected rundown in BSF activity combined with exiting personal computing device sales will result in a c.50% reduction in the Education Technology division's revenue between FY13 and FY15. FY14 will be a year of transition with cost reductions lagging reduced revenues as existing commitments are met and manufacturing and warehousing facilities are closed.
Education Resources
The Education Resources division comprises two operating businesses: TTS and SpaceKraft.
TTS provides resources used in schools through a mainly direct marketing business model with goods supplied from large centralised UK warehouse operations. Products supplied are a mix of third party branded and TTS branded items manufactured by a network of third party suppliers.
The division's strategy is to grow market share in the provision of resources to the UK schools, early years and Special Educational Needs markets via direct catalogue and on-line sales and marketing channels as well as through selective supply of products to UK trade and international schools and distributors.
As anticipated, divisional revenue declined year on year with the absence of a contribution from an annual contract providing educational products for a Corporate Social Responsibility ('CSR') programme sponsored by a major UK group which was discontinued by the customer. Revenues fell by 9.7% to £54.0 million (2012: £59.8 million) in a declining UK market.
Despite lower revenues at SpaceKraft, which was loss-making, divisional adjusted operating margins remained strong at 13.3% compared with 14.8% in the prior year. Adjusted operating profit was £7.2 million (2012: £8.8 million).
Inventory and supply chain management remained strong. A new warehouse management system was successfully introduced during the year which has improved delivery performance and operational efficiency such as warehouse space utilisation.
TTS UK Catalogues and Online
Revenues from TTS UK catalogues and on-line sales increased by 2% to £37.0 million (2012: £36.4 million). During the period, TTS experienced the impact of reduced funding streams to Early Years and nurseries, though revenue from primary and secondary schools increased.
A new parent focused programme was launched in the year. This allows parents to purchase from catalogues distributed by schools with a percentage of revenues provided back to the schools via credits to purchase TTS products.
Product ranges have been expanded through the addition of more high volume products in everyday demand, some of which are provided via direct shipment from third party suppliers.
TTS International
Revenues from international sales to overseas resellers and to international schools increased by 11% to £7.0 million (2012: £6.3 million). This was driven by growth in Europe, the Middle East and Asia.
TTS CSR and Trade
Revenues from UK trade and the provision of a Corporate Social Responsibility programme to a major UK group decreased in aggregate from £13.1 million to £6.6 million. The CSR programme mentioned above represented over 10% of TTS revenues in FY12.
SpaceKraft
SpaceKraft supplies products and installation services for the Special Educational Needs market. Products are a mix of own brand manufactured items and third party sourced. Sales of installations are made direct with other products supplied through catalogues and on-line.
Revenues declined in the year by 15% to £3.4 million (2012: £4.0 million) with budgetary reductions in this area particularly impacting installation services. The business was loss-making in the year. Following a significant cost base reduction exercise, a new management team was appointed to the business in the second half of the year and back-office support activities are being more closely integrated with the TTS business.
Assessment and Data Services ('ADS')
The ADS business provides onscreen exam marking, onscreen testing and the management and analysis of educational data. Its customers include government ministries, exam boards and professional awarding bodies around the world improving the efficiency, accuracy and clarity of the assessment cycle.
The strategy in the Assessment side of the business is to expand the scope of services to existing customers through provision of leading software products and services and to win new customers in both the UK and overseas. Software is proprietary while other services such as image scanning are outsourced to third parties. Internationally the business is anticipated to evolve through partnerships and software licencing rather than as a service based activity.
The business was successful in securing contract extensions with several existing customers including Cambridge Assessment and the Association of Chartered Certified Accountants ('ACCA'). Revenues rose in the year through a combination of increased examination volumes and customer change requests.
Internationally the business is pursuing opportunities for the onscreen marking of paper based exams. In the UK examination and curricula changes introduced by the English Department for Education will reduce the number of exam retakes while a move away from modular courses to final exam based assessment will also impact the business in the medium term. There is a long term trend from paper based to onscreen testing though this adoption, for school based examinations, is slow.
The Data side of the business is highly dependent on one public sector customer, the Department for Education. RM was successful in winning a new School Performance Data Programme contract which runs to 2018 with an option to extend to 2020. This is the successor to the National Pupil Database contract and includes the capture and publishing of data for the school performance tables in England.
ADS brought together all its propositions under the RM Results brand during the year. While the business has an excellent record in extending existing contractual relationships, the rate of contract wins with new customers and for onscreen testing has been weaker than anticipated and is an important area of focus for the future. Pilots with two new awarding bodies, in the UK and overseas, are underway.
Revenues increased by 13.8% to £26.5 million (2012: £23.3 million). Adjusted operating margins increased further to 15.6% (2012: 10.8%). Adjusted operating profit was £4.1 million (2012: £2.5 million).
RM India
At 30 November 2013, RM's operation in Trivandrum accounted for approximately 25% of Group headcount (2012: 23%).
The Indian operation provides services solely to RM Group companies. Activities include software development, customer and operational support and back office shared service support (e.g. customer order entry, IT, finance and HR) and administration.
David Brooks
Chief Executive Officer
3 February 2014
Directors' Responsibilities Statement
The responsibility statement below has been prepared in connection with the Company's full Annual Report for the year ended 30 November 2013. Certain parts thereof are not included within this announcement.
We confirm to the best of our knowledge:
· the Group financial statements, which have been prepared in accordance with IFRSs, as adopted by the EU, give a true, balanced and fair view of the assets, liabilities, financial position and performance of the Group; and
· the information contained in the Annual Report includes a true, balanced and fair review of the development and performance of the business and the position of the Group, together with a description of the principal risks and uncertainties that it faces.
The responsibility statement was approved by the Board of Directors on 3 February 2014 and is signed on its behalf by:
Iain McIntosh
Chief Financial Officer
| CONSOLIDATED INCOME STATEMENT | ||||||||
| for the year ended 30 November 2013 | ||||||||
| Year ended 30 November 2013 | Year ended 30 November 2012 | |||||||
| Note | Adjusted | Adjustments Total | Adjusted | Adjustments Total | ||||
| Restated (note 2) | Restated (note 2) | |||||||
| £000 | £000 | £000 | £000 | £000 | £000 | |||
| Revenue | 261,759 | - | 261,759 | 288,688 | - | 288,688 | ||
| Cost of sales | (187,793) | - | (187,793) | (217,868) | - | (217,868) | ||
| Gross profit | 73,966 | - | 73,966 | 70,820 | - | 70,820 | ||
| Operating expenses | (56,757) | - | (56,757) | (58,115) | - | (58,115) | ||
| Amortisation of acquisition related intangible assets | - | (195) | (195) | - | (244) | (244) | ||
| Impairment of goodwill, acquisition related intangible assets and investments | - | (328) | (328) | - | (3,212) | (3,212) | ||
| Gain/(loss) on sale of operations | - | 1,387 | 1,387 | - | (2,448) | (2,448) | ||
| Share-based payment charges | - | (507) | (507) | - | (129) | (129) | ||
| Restructuring costs | - | (5,128) | (5,128) | - | (312) | (312) | ||
| Increase in provision for dilapidations on leased properties and onerous lease contracts | - | (2,627) | (2,627) | - | (457) | (457) | ||
| Exceptional credit on settlement | - | 543 | 543 | - | 715 | 715 | ||
| Release of deferred consideration | - | - | - | - | 195 | 195 | ||
| Exceptional net credit on defined benefit pension scheme | - | - | - | - | 1,324 | 1,324 | ||
| (56,757) | (6,855) | (63,612) | (58,115) | (4,568) | (62,683) | |||
| Profit from operations | 17,209 | (6,855) | 10,354 | 12,705 | (4,568) | 8,137 | ||
| Investment income | 4 | 730 | - | 730 | 926 | - | 926 | |
| Finance costs | 5 | (1,490) | (159) | (1,649) | (1,510) | (181) | (1,691) | |
| Profit before tax | 16,449 | (7,014) | 9,435 | 12,121 | (4,749) | 7,372 | ||
| Tax | 6 | (4,910) | 1,643 | (3,267) | (3,160) | (301) | (3,461) | |
| Profit for the year | 11,539 | (5,371) | 6,168 | 8,961 | (5,050) | 3,911 | ||
| Earnings per ordinary share | 7 | |||||||
| - basic | 12.6p | (5.9)p | 6.7p | 9.8p | (5.5)p | 4.3p | ||
| - diluted | 12.4p | (5.8)p | 6.6p | 9.8p | (5.5)p | 4.3p | ||
| Paid and proposed dividends per share | 8 | |||||||
| - interim | 0.84p | 0.75p | ||||||
| - final | 2.46p | 2.25p | ||||||
| - special | 16.00p | - | ||||||
| Adjustments to results have been presented to give a better guide to business performance (see note 1). | ||||||||
| All amounts were derived from continuing operations. | ||||||||
| CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME | ||||||||
| Year ended 30 November 2013 |
Year ended 30 November 2012 |
|||||||
| Note | Restated (note 2) | |||||||
| £000 | £000 | |||||||
| Profit for the year | 6,168 | 3,911 | ||||||
| Items that will not be reclassified subsequently to profit and loss: | ||||||||
| Defined benefit pension scheme remeasurements | 13 | 1,442 | (6,586) | |||||
| Tax on items that will not be reclassified subsequently to profit and loss | (799) | 1,492 | ||||||
| Items that are or may be reclassified subsequently to profit and loss: | ||||||||
| Fair value (loss)/gain on hedged instruments | (435) | 5 | ||||||
| Exchange loss on translation of overseas operations | (329) | (171) | ||||||
| Tax on items that are or may be reclassified subsequently to profit and loss | 73 | (11) | ||||||
| Other comprehensive expense | (48) | (5,271) | ||||||
| Total comprehensive income/(expense) for the year attributable to equity holders | 6,120 | (1,360) | ||||||
| CONSOLIDATED BALANCE SHEET | ||||
| At 30 November 2013 | ||||
| 2013 | 2012 | |||
| Restated (note 2) |
||||
| Note | £000 | £000 | ||
| Non-current assets | ||||
| Goodwill | 14,067 | 14,395 | ||
| Acquisition related intangible assets | 764 | 960 | ||
| Other intangible assets | 1,026 | 2,278 | ||
| Property, plant and equipment | 9,099 | 11,440 | ||
| Interest in associate | - | 58 | ||
| Other receivables | 9 | 1,911 | 1,911 | |
| Deferred tax assets | 6 | 4,622 | 6,331 | |
| 31,489 | 37,373 | |||
| Current assets | ||||
| Inventories | 10,549 | 14,787 | ||
| Trade and other receivables | 9 | 35,134 | 55,604 | |
| Tax assets | 340 | 847 | ||
| Cash and short-term deposits | 10 | 63,169 | 37,823 | |
| 109,192 | 109,061 | |||
| Total assets | 140,681 | 146,434 | ||
| Current liabilities | ||||
| Trade and other payables | 11 | (78,917) | (88,098) | |
| Provisions | 12 | (7,201) | (4,108) | |
| (86,118) | (92,206) | |||
| Net current assets | 23,074 | 16,855 | ||
| Non-current liabilities | ||||
| Retirement benefit obligation | 13 | (15,828) | (20,433) | |
| Other payables | 11 | (3,455) | (3,634) | |
| Provisions | 12 | (6,255) | (4,929) | |
| (25,538) | (28,996) | |||
| Total liabilities | (111,656) | (121,202) | ||
| Net assets | 29,025 | 25,232 | ||
| Equity attributable to equity holders | ||||
| Share capital | 1,870 | 1,870 | ||
| Share premium account | 26,997 | 26,997 | ||
| Own shares | (2,972) | (2,972) | ||
| Capital redemption reserve | 94 | 94 | ||
| Hedging reserve | (474) | (39) | ||
| Translation reserve | (385) | (56) | ||
| Retained earnings | 3,895 | (662) | ||
| Total equity | 29,025 | 25,232 | ||
| These financial statements of RM plc, registered number 01749877, were approved and authorised for issue by the Board of Directors on 3 February 2014. | ||||
| CONSOLIDATED CASH FLOW STATEMENT | |||||||||||
| for the year ended 30 November 2013 | |||||||||||
| Year ended 30 November 2013 |
Year ended 30 November 2012 |
||||||||||
| Restated (note 2) |
|||||||||||
| Note | £000 | £000 | |||||||||
| Profit from operations | 10,354 | 8,137 | |||||||||
| Adjustments for: | |||||||||||
| Loss/(gain) on foreign exchange derivatives | 75 | (250) | |||||||||
| Impairment of investment in associate | - | 258 | |||||||||
| Impairment of goodwill | 328 | 2,954 | |||||||||
| Impairment of property, plant and equipment | - | 144 | |||||||||
| Amortisation of acquisition related intangible assets | 195 | 244 | |||||||||
| Amortisation of other intangible assets | 582 | 1,254 | |||||||||
| Depreciation of property, plant and equipment | 3,919 | 5,701 | |||||||||
| (Gain)/loss on sale of operations | (1,387) | 2,448 | |||||||||
| Loss on disposals of other intangible assets | 736 | 496 | |||||||||
| (Gain)/loss on disposals of property, plant and equipment | (118) | 302 | |||||||||
| Share-based payment charge | 507 | 129 | |||||||||
| Increase in provisions | 7,777 | 841 | |||||||||
| Defined benefit pension administration cost | 13 | 391 | 866 | ||||||||
| Exceptional pension fund credit | - | (1,824) | |||||||||
| Release of deferred consideration | - | (195) | |||||||||
| Operating cash flows before movements in working capital | 23,359 | 21,505 | |||||||||
| Decrease in inventories | 4,238 | 3,610 | |||||||||
| Decrease in receivables | 20,383 | 3,895 | |||||||||
| (Decrease)/increase in payables | (13,317) | 4,529 | |||||||||
| Cash generated by operations | 34,663 | 33,539 | |||||||||
| Defined benefit pension cash contribution (2012: in excess of current service cost) | 13 | (4,384) | (7,279) | ||||||||
| Tax paid | (1,790) | (59) | |||||||||
| Borrowing facilities arrangement and commitment fees | (451) | (658) | |||||||||
| Interest paid | (20) | (92) | |||||||||
| Income on sale of finance lease debt | 4 | 289 | 644 | ||||||||
| Net cash inflow from operating activities | 28,307 | 26,095 | |||||||||
| Investing activities: | |||||||||||
| Interest received | 4 | 441 | 258 | ||||||||
| Proceeds of sale of operations | 336 | 2,481 | |||||||||
| Proceeds on disposal of property, plant and equipment | 420 | 856 | |||||||||
| Purchases of property, plant and equipment | (1,980) | (1,852) | |||||||||
| Purchases of other intangible assets | (68) | (400) | |||||||||
| Increase in short-term deposits | 10 | (6,000) | - | ||||||||
| Amounts received from joint venture undertaking | - | 1,878 | |||||||||
| Amounts advanced to third parties | - | (919) | |||||||||
| Net cash (used in)/generated by investing activities | (6,851) | 2,302 | |||||||||
| Financing activities | |||||||||||
| Dividends paid | 8 | (2,834) | (2,090) | ||||||||
| Net proceeds from sale and leaseback of vehicles | 771 | - | |||||||||
| Proceeds of share capital issue, net of share issue costs | - | 35 | |||||||||
| Decrease in borrowings | - | (13,005) | |||||||||
| Net cash used in financing activities | (2,063) | (15,060) | |||||||||
| Net increase in cash and cash equivalents | 19,393 | 13,337 | |||||||||
| Cash and cash equivalents at the beginning of the year | 37,823 | 24,529 | |||||||||
| Effect of foreign exchange rate changes | (47) | (43) | |||||||||
| Cash and cash equivalents at the end of the year | 10 | 57,169 | 37,823 | ||||||||
| CONSOLIDATED STATEMENT OF CHANGES IN EQUITY | |||||||||||
| for the year ended 30 November 2013 | |||||||||||
| Share capital | Share premium | Own shares | Capital redemption reserve | Hedging reserve | Translation reserve | Retained earnings | Total | ||||
| Restated (note 2) | |||||||||||
| Note | £000 | £000 | £000 | £000 | £000 | £000 | £000 | £000 | |||
| At 1 December 2011 | 1,869 | 26,963 | (3,202) | 94 | (44) | 115 | 2,723 | 28,518 | |||
| Profit for the year | - | - | - | - | - | - | 3,911 | 3,911 | |||
| Other comprehensive income/(expense) | - | - | - | - | 5 | (171) | (5,105) | (5,271) | |||
| Total comprehensive income | - | - | - | - | 5 | (171) | (1,194) | (1,360) | |||
| Transactions with owners of the Company | |||||||||||
| Shares issued | 1 | 34 | - | - | - | - | - | 35 | |||
| Share-based payment awards exercised | - | - | 230 | - | - | - | (230) | - | |||
| Share-based payment fair value charges | - | - | - | - | - | - | 129 | 129 | |||
| Dividends paid | 8 | - | - | - | - | - | - | (2,090) | (2,090) | ||
| At 30 November 2012 | 1,870 | 26,997 | (2,972) | 94 | (39) | (56) | (662) | 25,232 | |||
| Profit for the year | - | - | - | - | - | - | 6,168 | 6,168 | |||
| Other comprehensive income/(expense) | - | - | - | - | (435) | (329) | 716 | (48) | |||
| Total comprehensive income | - | - | - | - | (435) | (329) | 6,884 | 6,120 | |||
| Transactions with owners of the Company | |||||||||||
| Share-based payment fair value charges | - | - | - | - | - | - | 507 | 507 | |||
| Dividends paid | 8 | - | - | - | - | - | - | (2,834) | (2,834) | ||
| At 30 November 2013 | 1,870 | 26,997 | (2,972) | 94 | (474) | (385) | 3,895 | 29,025 | |||
1. Preliminary announcement
The preliminary results for the year ended 30 November 2013 have been prepared in accordance with the accounting principles of International Financial Reporting Standards (IFRS) as adopted by the European Union and applied in accordance with 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 19 March 2014. The full Strategic report and Directors' report and financial statements will be published on the Group's website at www.rmplc.com.
The financial information set out in this preliminary announcement does not constitute the Group's statutory accounts for the year ended 30 November 2013. Statutory accounts for 2012 have been delivered to the Registrar of Companies and those for 2013 will be delivered following the Company's annual general meeting. The auditor's reports on both the 2013 and 2012 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 3 February 2014.
Going concern
The Directors have assessed forecast future cash flows for the foreseeable future, being a period of at least a year following the approval of the Accounts, and are satisfied that the Group's agreed working capital facilities are sufficient to meet these cash flows. Given the Group's continued seasonality and long-term education project contractual commitments, operational cash flows are forecast to be at their highest outflow between July and September.
Considering the above, the Directors believe that the Group is well placed to manage its business risks successfully despite the continued current uncertain economic outlook and have a reasonable expectation that the Group has adequate resources to continue in operational existence for the foreseeable future. Therefore, they continue to adopt the going concern basis of accounting in preparing the annual financial statements.
Consolidated income statement presentation
The income statement is presented in three columns. This presentation is intended to give a better guide to business performance by separately identifying the following adjustments to profit: the amortisation of acquisition related intangible assets; the impairment of goodwill, acquisition related intangible assets, other intangible assets and investments; the gain/loss on sale of operations; share-based payment charges; restructuring costs; increase in provision for dilapidations on leased properties and onerous lease contracts; exceptional credit on settlement; release of deferred consideration; and an exceptional net pension credit on the Group's defined benefit pension scheme. The columns extend down the income statement to allow the tax and earnings per share impacts of these transactions to be understood.
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, except for the adjustments in note 2 to this announcement.
| 2. Prior year adjustments | |||||
| a. Employee Benefits | |||||
| The adjustments made as a result of adopting IAS 19 Employee Benefits (as revised in June 2011) in the Consolidated Income Statement and Consolidated Statement of Comprehensive Income are as follows: | |||||
| Year ended 30 November 2013 |
Year ended 30 November 2012 | ||||
| Effect | As reported | Adjustment | Restated | ||
| £000 | £000 | £000 | £000 | ||
| Consolidated Income Statement | |||||
| Operating expenses | (391) | (57,249) | (866) | (58,115) | |
| _______ | _______ | ||||
| Profit from operations | (391) | (866) | |||
| Finance costs | (486) | (1,540) | (151) | (1,691) | |
| _______ | _______ | ||||
| Profit before tax and profit attributable to equity holders | (877) | (1,017) | |||
| Consolidated Statement of Comprehensive Income | |||||
| Defined benefit pension scheme remeasurements | 877 | (7,603) | 1,017 | (6,586) | |
| Total comprehensive income for the year attributable to equity holders- | - | ||||
| The reduction in profit attributable to equity holders has reduced Basic and Diluted earnings per share by 1.0 pence in the year ended 30 November 2013 (2012: 1.1 pence). | |||||
| Segmental results | |||||
| Segmental Adjusted profit in note 3 is stated after the following adjustments to operating expenses: | |||||
| Year ended 30 November 2013 |
Year ended 30 November 2012 |
||||
| £000 | £000 | ||||
| Education Technology | 352 | 779 | |||
| Assessment and Data Services | 39 | 87 | |||
| 391 | 866 | ||||
| These adjustments have no impact on the Consolidated Balance Sheet at 30 November 2013 or 30 November 2012. |
| b. Long-term contracts | ||||||||
| The classification of certain balances relating to long-term contracts has been changed this year to improve the Consolidated Balance Sheet presentation by presenting all long-term contract balances together. To give consistency, the equivalent balances as at 30 November 2012 have been restated, as detailed below. This re-presentation of the balances had no impact on reserves or equity. | ||||||||
| 30 November 2012 | ||||||||
| As reported | Adjustment | Restated | ||||||
| £000 | £000 | £000 | ||||||
| Trade and other receivables: | ||||||||
| Long-term contract balances | 8,748 | (2,290) | 6,458 | |||||
| Accrued income | 334 | (106) | 228 | |||||
| _______ | ||||||||
| Trade and other receivables, Current assets and Total assets | (2,396) | |||||||
| Trade and other payables: | ||||||||
| Long-term contract balances | (17,646) | (7,872) | (25,518) | |||||
| Deferred income - current | (26,400) | 7,117 | (19,283) | |||||
| _______ | ||||||||
| Trade and other payables and Current liabilities | (755) | |||||||
| Other payables: | ||||||||
| Deferred income - due after one year but within two years | (3,799) | 1,405 | (2,394) | |||||
| Deferred income - due after two years but within five years | (2,986) | 1,746 | (1,240) | |||||
| _______ | ||||||||
| Other payables, Non-current liabilities and Total liabilities | 3,151 | |||||||
| Net assets | - |
| 3. Operating segments | ||||||
| The Group's business is supplying products, services and solutions to the UK and international education markets. | ||||||
| Following a review of the Group's divisional structure in November 2012, from 1 December 2012 the Group was restructured into three operating divisions: Education Technology, Education Resources, and Assessment and Data Services. From 1 December 2012, the Group changed the presentation of financial information included in the consolidated management accounts to reflect the new reporting structure with this information being presented to the chief operating decision maker. Segmental information for the Group is reported on this basis for the year ended 30 November 2013 and prior year financial information has been restated to be in line with this new basis. | ||||||
| The nature of the products/services sold within each segment is explained below: | ||||||
| Education Technology - a UK focused business supplying schools with ICT managed services, internet services, network software, digital platforms, hardware and related services, including implementation and support. The division also includes the implementation, management and support of IT infrastructure as part of the Building Schools for the Future contracts. | ||||||
| Education Resources - provides schools with curriculum focused classroom resources including teaching equipment and materials. | ||||||
| Assessment and Data Services - Supplies government ministries, exam boards and professional awarding organisations with technology and expertise creating high stakes exams and tests, onscreen testing, onscreen marking and management and analysis of educational data. | ||||||
| The November 2012 review also identified certain central costs and assets which had previously been allocated across the divisions and were considered more appropriately reported within Corporate Services. The segmental results for the year ended 30 November 2013 include these costs and assets within Corporate Services and the segmental results for the year ended 30 November 2012 have been restated to be in line with this new basis. | ||||||
| The following disclosure shows the result and total assets of these segments (2012 is restated based on the new divisional structure, and incorporates the prior year adjustments (note 2)): |
| The revenue disclosed below is that earned by the Group from third parties. | ||||||
| Segmental results | ||||||
| Education Technology | Education Resources | Assessment & Data Services | Corporate Services | Exited operations ** |
Total | |
| £000 | £000 | £000 | £000 | £000 | £000 | |
| Year ended 30 November 2013 | ||||||
| Revenue | 181,171 | 54,008 | 26,545 | - | 35 | 261,759 |
| Adjusted profit from operations | 8,643 | 7,164 | 4,134 | (2,738) | 6 | 17,209 |
| Investment income | 730 | |||||
| Finance costs | (1,490) | |||||
| Adjusted profit before tax | 16,449 | |||||
| Adjustments * | (7,014) | |||||
| Profit before tax | 9,435 | |||||
| Year ended 30 November 2012 | ||||||
| Revenue | 202,731 | 59,809 | 23,335 | - | 2,813 | 288,688 |
| Adjusted profit from operations | 5,363 | 8,825 | 2,522 | (3,554) | (451) | 12,705 |
| Investment income | 926 | |||||
| Finance costs | (1,510) | |||||
| Adjusted profit before tax | 12,121 | |||||
| Adjustments * | (4,749) | |||||
| Profit before tax | 7,372 | |||||
| Segmental assets | ||||||
| Group | ||||||
| 30 November 2013 | ||||||
| Segmental | 33,728 | 31,794 | 6,890 | 221 | - | 72,633 |
| Other | 68,048 | |||||
| Total assets | 140,681 | |||||
| 30 November 2012 | ||||||
| Segmental | 58,074 | 36,438 | 6,957 | 48 | - | 101,517 |
| Other | 44,917 | |||||
| Total assets | 146,434 | |||||
| * Refer to note 1 for an explanation of adjustments to profit. | ||||||
| ** Exited operations represent the results from operations sold following the September 2011 Strategic Review. |
Included within the disclosed segmental assets are non-current assets (excluding financial instruments, deferred tax assets and other financial assets) of £26.3 million (2012: £28.3 million) located in the United Kingdom and £0.6 million (2012: £0.8 million) located in India. Other non-segmented assets materially includes deferred tax and cash and short-term deposits.
| 4. Investment income | |||
| Year ended 30 November 2013 |
Year ended 30 November 2012 |
||
| £000 | £000 | ||
| Bank interest | 223 | 258 | |
| Income on sale of finance lease debt | 289 | 644 | |
| Other finance income | 218 | 24 | |
| 730 | 926 | ||
| 5. Finance costs | |||
| Year ended 30 November 2013 |
Year ended 30 November 2012 |
||
| Restated (note 2) |
|||
| Note | £000 | £000 | |
| Interest on bank overdrafts and loans | 15 | 176 | |
| Borrowing facilities arrangement fees and commitment fees | 495 | 424 | |
| Cost of leasing finance | 130 | - | |
| Finance lease interest | 20 | - | |
| Net finance costs on defined benefit pension scheme | 13 | 830 | 910 |
| Unwind of discount on provisions | 159 | 181 | |
| 1,649 | 1,691 | ||
| 6. Tax | |||
| a) Analysis of tax charge in the Consolidated Income Statement | |||
| Year ended 30 November 2013 |
Year ended 30 November 2012 |
||
| £000 | £000 | ||
| Current taxation | |||
| UK corporation tax | 1,707 | 3,124 | |
| Adjustment in respect of prior years | 859 | (154) | |
| Overseas tax | 453 | 411 | |
| Total current tax charge | 3,019 | 3,381 | |
| Deferred taxation | |||
| Temporary differences | 206 | 348 | |
| Adjustment in respect of prior years | 93 | (288) | |
| Overseas tax | (51) | 20 | |
| Total deferred tax charge | 248 | 80 | |
| Total Consolidated Income Statement tax charge | 3,267 | 3,461 | |
| b) Analysis of tax charge/(credit) in the Consolidated Statement of Comprehensive Income | |||||||||||
| Year ended 30 November 2013 |
Year ended 30 November 2012 |
||||||||||
| £000 | £000 | ||||||||||
| UK corporation tax | |||||||||||
| Defined benefit pension scheme | (735) | (2,086) | |||||||||
| Deferred tax | |||||||||||
| Defined benefit pension scheme | 1,534 | 594 | |||||||||
| Share based payments | (73) | 11 | |||||||||
| Total Consolidated Statement of Comprehensive Income tax charge/(credit) | 726 | (1,481) | |||||||||
| c) Reconciliation of Consolidated Income Statement tax charge | |||||||||||
| The tax charge in the Consolidated Income Statement reconciles to the effective rate applied by the Group as follows: | |||||||||||
| Year ended 30 November 2013 | Year ended 30 November 2012 | ||||||||||
| Adjusted | Adjustments Total | Adjusted | Adjustments Total | ||||||||
| Restated (note 2) | Restated (note 2) | ||||||||||
| £000 | £000 | £000 | £000 | £000 | £000 | ||||||
| Profit on ordinary activities before tax | 16,449 | (7,014) | 9,435 | 12,121 | (4,749) | 7,372 | |||||
| Tax at 23.33% (2012: 24.67%) thereon: | 3,839 | (1,637) | 2,202 | 2,990 | (1,172) | 1,818 | |||||
| Effects of: | |||||||||||
| - change in tax rate on carried forward deferred tax asset |
224 | (23) | 201 | 157 | (19) | 138 | |||||
| - other expenses not deductible for tax purposes |
373 | (186) | 187 | 351 | 32 | 383 | |||||
| - temporary timing differences unrecognised for deferred tax |
(331) | - | (331) | 107 | - | 107 | |||||
| - other temporary timing differences | - | - | - | 211 | 112 | 323 | |||||
| - R&D tax credit | (242) | - | (242) | (468) | - | (468) | |||||
| - impairments | (29) | 297 | 268 | (58) | 792 | 734 | |||||
| - overseas tax | 124 | 124 | 312 | - | 312 | ||||||
| - loss on sale of operations | - | (94) | (94) | - | 556 | 556 | |||||
| - prior period adjustments | 952 | - | 952 | (442) | - | (442) | |||||
| Tax charge in the Consolidated Income Statement | 4,910 | (1,643) | 3,267 | 3,160 | 301 | 3,461 | |||||
Factors that may affect future tax charges
The Budget Statement on 20 March 2013 announced that the UK corporation tax rate will reduce to 21% by 2014 and 20% by 2015. A reduction in the rate from 24% (effective from 1 April 2012) to 23% (effective from 1 April 2013) was substantively enacted on 3 July 2012.
This will reduce the company's future current tax charge accordingly. The deferred tax asset at 30 November 2013 has been calculated based on the rate of 20% which had been substantively enacted at the balance sheet date.
The Group incurs higher effective tax rates on its operations in India than in the UK. The Group's effective tax rate will tend to increase as the Indian operations become a larger proportion of its activities.
| 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: | ||||||
| £000 | £000 | £000 | £000 | £000 | £000 | |
| At 1 December 2011 | 1,074 | 5,294 | 150 | 754 | (299) | 6,973 |
| (Charge)/credit to income | 137 | - | (110) | (185) | 78 | (80) |
| (Charge)/credit to equity | - | (594) | (11) | - | - | (605) |
| Disposed on sale of business | 12 | - | 1 | 30 | - | 43 |
| At 30 November 2012 | 1,223 | 4,700 | 30 | 599 | (221) | 6,331 |
| (Charge)/credit to income | (235) | - | 78 | (159) | 68 | (248) |
| (Charge)/credit to equity | - | (1,534) | 73 | - | - | (1,461) |
| At 30 November 2013 | 988 | 3,166 | 181 | 440 | (153) | 4,622 |
| Certain deferred tax assets and liabilities have been offset above. |
The Group has recognised deferred tax assets in jurisdictions where these are expected to be recoverable against profits in future periods. At the balance sheet date, the Group also has an unrecognised gross deferred tax asset of £1.2 million (2012: £2.4 million) which is available for offset against future profits within the United States of America. Included within this balance are unrecognised tax losses of £1.5 million (2012: £1.7 million). A deferred tax asset has not been recognised in respect of any of this amount due to uncertainty surrounding the future use of these losses.
No deferred tax liability is recognised on temporary differences of £247,000 (2012: £240,000) relating to the unremitted earnings of overseas subsidiaries as the Group is able to control the timings of the reversal of these temporary differences and it is probable that they will not reverse in the foreseeable future.
| 7. Earnings per ordinary share on profit for the year | ||||||||
| Year ended 30 November 2013 | Year ended 30 November 2012 | |||||||
| Basic earnings per ordinary share: | Profit for the year | Weighted average number of shares | Pence per share | Profit for the year | Weighted average number of shares | Pence per share | ||
| £000 | '000 | £000 | '000 | |||||
| Basic earnings | 6,168 | 91,718 | 6.7p | 3,911 | 91,543 | 4.3p | ||
| Adjustments* | 5,371 | - | 5.9p | 5,050 | - | 5.5p | ||
| Adjusted basic earnings | 11,539 | 91,718 | 12.6p | 8,961 | 91,543 | 9.8p | ||
| Diluted earnings per ordinary share: | ||||||||
| Basic earnings | 6,168 | 91,718 | 6.7p | 3,911 | 91,543 | 4.3p | ||
| Effect of dilutive potential ordinary shares: share based payment awards | - | 1,153 | (0.1)p | - | 116 | - | ||
| Diluted earnings per ordinary share: | 6,168 | 92,871 | 6.6p | 3,911 | 91,659 | 4.3p | ||
| Adjustments* | 5,371 | - | 5.8p | 5,050 | - | 5.5p | ||
| 11,539 | 92,871 | 12.4p | 8,961 | 91,659 | 9.8p | |||
| * Refer to note 1 for an explanation of adjustments to profits. |
| 8. Dividends | ||||||||
| Amounts recognised as distributions to equity holders were: | ||||||||
| Year ended 30 November 2013 |
Year ended 30 November 2012 |
|||||||
| £000 | £000 | |||||||
| Final dividend for the year ended 30 November 2012 of 2.25p (2011: 1.53p) per share | 2,064 | 1,402 | ||||||
| Interim dividend for the year ended 30 November 2013 of 0.84p (2012: 0.75p) per share | 770 | 688 | ||||||
| 2,834 | 2,090 | |||||||
| The proposed final dividend of 2.46p per share for the year ended 30 November 2013 was approved by the Board on 31 January 2014. The dividend is subject to approval by shareholders at the annual general meeting. The anticipated cost of this dividend is £2.3 million. The Board is also proposing a special dividend of 16.00p per share, which will cost £15 million; this is also subject to approval by shareholders. Neither of these proposed dividends has been included as a liability at 30 November 2013. The Board will also recommend that the special dividend is combined with a share consolidation. This is common in such circumstances and is intended to maintain the comparability of the Company's share price before and after a special dividend. |
||||||||
| 9. Trade and other receivables | ||||||||
| 2013 | 2012 | |||||||
| Restated (note 2) |
||||||||
| £000 | £000 | |||||||
| Current | ||||||||
| Financial assets | ||||||||
| Trade receivables | 27,432 | 41,978 | ||||||
| Long-term contract balances | 671 | 6,458 | ||||||
| Other receivables | 474 | 760 | ||||||
| Accrued income | 157 | 228 | ||||||
| Non-financial assets | ||||||||
| Prepayments | 6,400 | 6,180 | ||||||
| 35,134 | 55,604 | |||||||
| Non-current | ||||||||
| Financial assets | ||||||||
| Other receivables | 1,911 | 1,911 | ||||||
| 37,045 | 57,515 | |||||||
| Currency profile of receivables | ||||||||
| Sterling | 36,748 | 56,545 | ||||||
| US Dollar | 17 | 626 | ||||||
| Euro | 56 | 65 | ||||||
| Indian Rupee | 224 | 279 | ||||||
| 37,045 | 57,515 | |||||||
| The Directors consider that the carrying amounts of trade and other receivables approximates their fair values. | ||||||||
| Analysis of trade receivables by type of customer | |||
| 2013 | 2012 | ||
| £000 | £000 | ||
| Government | 10,482 | 27,540 | |
| Commercial | 16,950 | 14,438 | |
| 27,432 | 41,978 | ||
| Trade receivables included an allowance for estimated irrecoverable amounts at 30 November 2013 of £1,777,000 (2012: £1,624,000), based on management's knowledge of the customer, externally available information and expected payment likelihood. This allowance has been determined by reference to specific receivable balances and past default experience. New customers are subject to credit checks where available, using third party databases prior to being accepted. | |||
| Ageing of unimpaired trade receivables | |||
| 2013 | 2012 | ||
| £000 | £000 | ||
| Not past due | 21,106 | 34,734 | |
| Overdue by less than 60 days | 5,622 | 5,697 | |
| Overdue by between 60 and 90 days | 323 | 733 | |
| Overdue by more than 90 days | 381 | 814 | |
| 27,432 | 41,978 |
Other non-current receivables includes £1.7 million (2012: £1.7 million) of gross amounts receivable from the Group's equity investments in BSF delivery companies, Newham Learning Partnership (PSP) Ltd and Essex Schools (Holdings) Ltd. The interest charged on these receivables is 11.75% pa.
| 10. Cash and short-term deposits | |||||
| 2013 | 2012 | ||||
| £000 | £000 | ||||
| Cash and cash equivalents | 57,169 | 37,823 | |||
| Short-term deposits | 6,000 | - | |||
| 63,169 | 37,823 | ||||
| The short-term deposits are for a period of 6 months at interest rates of 0.80-0.85%. |
| 11. Trade and other payables | ||||||||||||
| 2013 | 2012 | |||||||||||
| Restated (note 2) |
||||||||||||
| £000 | £000 | |||||||||||
| Current liabilities | ||||||||||||
| Financial liabilities | ||||||||||||
| Trade payables | 12,163 | 14,302 | ||||||||||
| Other taxation and social security | 3,019 | 5,857 | ||||||||||
| Other payables | 1,848 | 574 | ||||||||||
| Accruals | 18,395 | 22,533 | ||||||||||
| Obligations under finance leases | 350 | - | ||||||||||
| Derivative financial instruments | 544 | 31 | ||||||||||
| Long-term contract balances | 27,708 | 25,518 | ||||||||||
| 64,027 | 68,815 | |||||||||||
| Non-financial liabilities | ||||||||||||
| Deferred income | 14,890 | 19,283 | ||||||||||
| 78,917 | 88,098 | |||||||||||
| Non-current liabilities | ||||||||||||
| Financial liabilities | ||||||||||||
| Obligations under finance leases | 438 | - | ||||||||||
| Non-financial liabilities: | ||||||||||||
| Deferred income: | ||||||||||||
| - due after one year but within two years | 1,827 | 2,394 | ||||||||||
| - due after two years but within five years | 1,190 | 1,240 | ||||||||||
| 3,455 | 3,634 | |||||||||||
| 82,372 | 91,732 | |||||||||||
| Currency profile of trade and other payables | ||||||||||||
| 2013 | 2012 | |||||||||||
| Restated (note 2) |
||||||||||||
| £000 | £000 | |||||||||||
| Sterling | 80,284 | 89,804 | ||||||||||
| US Dollar | 1,364 | 1,279 | ||||||||||
| Euro | 193 | 98 | ||||||||||
| Indian rupee | 531 | 551 | ||||||||||
| 82,372 | 91,732 | |||||||||||
| The Directors consider that the carrying amount of trade and other payables approximates their fair value. | ||||||||||||
| Obligations under finance leases | ||||||||||
| The Group sold part of its vehicle fleet to a finance lease provider during the year. Interest rates on finance lease contracts are charged at the Bank of England base rate + 2%, which is fixed at the date of acquiring the asset, and the lease term is four years. | ||||||||||
| 2013 | 2012 | |||||||||
| Minimum lease payments | Present value of minimum lease payments | Minimum lease payments |
Present value of minimum lease payments | |||||||
| £000 | £000 | £000 | £000 | |||||||
| Amounts payable under finance lease contracts: | ||||||||||
| Within one year | 373 | 350 | - | - | ||||||
| In the second to fifth years inclusive | 446 | 438 | - | - | ||||||
| 819 | 788 | - | - | |||||||
| Less: finance charges allocated to future periods | (31) | - | - | - | ||||||
| Present value of minimum lease payments | 788 | 788 | - | - | ||||||
| 12. Provisions | ||||||||||
| Employee-related restructuring | Onerous lease and dilapidations |
Other | Total | |||||||
| £000 | £000 | £000 | £000 | |||||||
| At 1 December 2011 | 3,769 | 7,497 | 2,147 | 13,413 | ||||||
| Release of provisions | (677) | (389) | (788) | (1,854) | ||||||
| Utilisation of provisions | (3,103) | (1,656) | (187) | (4,946) | ||||||
| Increase in provisions | 464 | 776 | 1,003 | 2,243 | ||||||
| Unwind of discount | - | 181 | - | 181 | ||||||
| At 30 November 2012 | 453 | 6,409 | 2,175 | 9,037 | ||||||
| Release of provisions | - | - | (1,092) | (1,092) | ||||||
| Increase in provisions | 4,942 | 2,627 | 320 | 7,889 | ||||||
| Utilisation of provisions | (1,154) | (1,331) | (52) | (2,537) | ||||||
| Effect of movements in exchange rates | - | 21 | (21) | - | ||||||
| Unwind of discount | - | 159 | - | 159 | ||||||
| At 30 November 2013 | 4,241 | 7,885 | 1,330 | 13,456 | ||||||
| Employee-related restructuring provisions refer to costs arising from restructuring to meet the future needs of the Group and are all expected to be utilised during the following financial year. | ||||||||||
| Provisions for onerous leases and dilapidations have been recognised at the present value of the expected obligation at discount rates of 3% 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 2013, £5.6 million (2012: £4.2 million) of the provision refers to onerous leases, and £2.3 million (2012: £2.2 million) refers to dilapidations. | ||||||||||
| As a result of the restructure of the Education Technology division announced in October 2013 the Group expects to provide for an onerous lease provision on one further building in the second half of 2014. The additional provision is expected to be circa £1.5 million. | ||||||||||
| The average remaining life of the leases at 30 November 2013 is 2.1 years (2012: 3.8 years). | ||||||||||
| Other provisions includes one-off items not covered by any other category and the significant elements relate to on-going legal activity in connection with the defined benefit pension scheme of £0.5 million, and to provisions recognised as part of the exit of operations, both of which were included in the previous year. All provisions in this category, other than those held by the parent company, are classified as current. The release of provisions within Other provisions category includes £1.0 million (2012: £0.7 million) which has been recognised on the exit of operations and included within the gain on sale of operations in the Consolidated Income Statement and Cash Flow Statement. |
||||||||||
| Disclosure of provisions | |||
| 2013 | 2012 | ||
| £000 | £000 | ||
| Current liabilities | 7,201 | 4,108 | |
| Non-current liabilities | 6,255 | 4,929 | |
| 13,456 | 9,037 | ||
| The Directors consider that the carrying amount of provisions approximates their fair value. |
13. Retirement benefit scheme - defined benefit scheme
| The Group has one defined benefit pension scheme, the Research Machines plc 1988 Pension Scheme. The scheme is a funded scheme. The scheme provides benefits to qualifying employees and former employees of RM Education Limited, but was closed to new members with effect from 1 January 2003 and closed to future accrual of benefits from 31 October 2012. The assets of the scheme are held separately from those of the Group in a trustee-administered fund. |
| The most recent actuarial valuation of plan assets and the present value of the defined benefit obligation were carried out for statutory funding purposes at 31 May 2012 by a qualified independent actuary. IAS 19 Employee Benefits liabilities have been rolled forward based on this valuation's base data. Plan assets are measured at bid-price at 30 November 2013. The present value of the defined benefit obligation and the related current service cost up to the date of curtailment of accrual was measured using the projected unit credit method. |
| As at 31 May 2012, the triennial valuation for statutory funding purposes showed a deficit of £53.5 million (31 May 2009: £16.6 million). The Group agreed with the Scheme Trustees to repay this amount via deficit catch up payments of £4 million per annum until 31 May 2013 and thereafter at £3.6m per annum until 31 May 2027. |
| 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 are provided. |
| The Group holds the entire deficit position of the scheme on its balance sheet as it is the principal employer and in substance bears all of the material risks associated with the scheme. |
| The Group has adopted IAS 19 Employee Benefits, amended June 2011. The transition effect of adoption is shown in note 2. above. |
| RM plc has entered into a guarantee to irrevocably undertake with the Trustee that, if ever the RM Education Limited does not pay any amount when due in respect of its Guaranteed Obligations, it must immediately on demand by the Trustees pay that amount (that was due but unpaid) as if it were the principal obligor. The guarantee for the deficit recovery remains in place on condition that the assumptions underlying the valuation in 2012 remain materially unchanged for all subsequent triennial valuations undertaken. |
| Amounts recognised within operating profit and in the Statement of Comprehensive Income | ||||
| Year ended 30 November 2013 |
Year ended 30 November 2012 |
|||
| Restated (note 2) | ||||
| £000 | £000 | |||
| Amounts recognised within operating profit | ||||
| Current service cost | - | 2,209 | ||
| Administrative expenses and taxes | 391 | 866 | ||
| Curtailment gain | - | (1,824) | ||
| Operating expense | 391 | 1,251 | ||
| Interest cost | 6,722 | 6,327 | ||
| Interest on plan assets | (5,892) | (5,417) | ||
| Net interest expense | 830 | 910 | ||
| 1,221 | 2,161 | |||
| Amounts recognised in the Statement of Comprehensive Income | ||||
| Effect of changes in demographic assumptions | - | 5,528 | ||
| Effect of changes in financial assumptions | 8,199 | 10,120 | ||
| Effect of experience adjustments | - | (3,252) | ||
| Total actuarial losses | 8,199 | 12,396 | ||
| Return on plan assets | (9,641) | (5,810) | ||
| (1,442) | 6,586 | |||
| Total defined benefit (credit)/cost | (221) | 8,747 | ||
| Reconciliation of the scheme assets and obligations through the year | ||||
| Year ended 30 November 2013 |
Year ended 30 November 2012 |
|||
| Restated (note 2) | ||||
| £000 | £000 | |||
| Assets | ||||
| At start of period | 129,710 | 111,415 | ||
| Interest on plan assets | 5,892 | 5,417 | ||
| Actual return on plan assets less interest on plan assets | 9,641 | 5,810 | ||
| Administrative expenses paid from plan assets | (391) | (866) | ||
| Contributions from employer | 4,384 | 9,488 | ||
| Contributions from scheme members | - | 10 | ||
| Benefits paid | (1,548) | (1,564) | ||
| At end of period | 147,688 | 129,710 | ||
| Obligations | ||||
| At start of period | 150,143 | 132,589 | ||
| Current service costs | - | 2,209 | ||
| Curtailment gain resulting from closure to future accrual | - | (1,824) | ||
| Interest cost | 6,722 | 6,327 | ||
| Contributions from scheme members | - | 10 | ||
| Actuarial losses | 8,199 | 12,396 | ||
| Benefits paid | (1,548) | (1,564) | ||
| At end of period | 163,516 | 150,143 | ||
| Deficit in scheme and liability recognised in the balance sheet | (15,828) | (20,433) |
| Reconciliation of net defined benefit liability | ||||
| Year ended 30 November 2013 |
Year ended 30 November 2012 |
|||
| Restated (note 2) | ||||
| £000 | £000 | |||
| Net defined benefit liability at the start of the year | (20,433) | (21,174) | ||
| Defined benefit cost included in operating profit | (1,221) | (2,161) | ||
| Defined benefit pension scheme remeasurements included in Consolidated Statement of Other Comprehensive Income | 1,442 | (6,586) | ||
| Cash outflow in respect of current service cost | - | 2,209 | ||
| Cash outflow in excess of current service cost | 4,384 | 7,279 | ||
| Net defined benefit liability at the end of the year | (15,828) | (20,433) | ||
| Defined benefit obligation by participant status | ||||
| 30 November 2013 | 30 November 2012 | |||
| £000 | £000 | |||
| Active members | - | - | ||
| Vested deferreds | 145,944 | 132,765 | ||
| Retirees | 17,572 | 17,383 | ||
| 163,516 | 150,148 | |||
| Fair value of plan assets with a quoted market price | ||||
| 30 November 2013 | 30 November 2012 | |||
| £000 | £000 | |||
| Cash and cash equivalents | 416 | 98 | ||
| Equity instruments | 74,840 | 64,820 | ||
| Debt instruments | 72,432 | 64,792 | ||
| 147,688 | 129,710 | |||
| Significant actuarial assumptions | ||||
| Year ended 30 November 2013 |
Year ended 30 November 2012 |
|||
| Weighted average to determine benefit obligations | ||||
| Discount rate | 4.65% | 4.50% | ||
| Rate of salary increases | n/a | n/a | ||
| Rate of RPI price inflation | 3.45% | 2.85% | ||
| Rate of CPI price inflation | 2.55% | 2.15% | ||
| Rate of pensions increases | ||||
| pre 6 April 1997 service | 1.35% | 1.35% | ||
| pre 1 June 2005 service | 3.30% | 2.80% | ||
| post 31 May 2005 service | 2.25% | 2.00% | ||
| Post retirement mortality table | - - - S1NA CMI 2011 1.25% - - - | |||
| Weighted average to determine defined benefit cost | ||||
| Discount rate | 4.50% | 4.80% | ||
| Rate of salary increases | n/a | n/a | ||
| Rate of RPI price inflation | 2.85% | 3.00% | ||
| Rate of CPI price inflation | 2.15% | 2.30% | ||
| Rate of pensions increases (post 31 May 2005 service) | 2.00% | 2.00% | ||
| Post retirement mortality table | - - - S1NA CMI 2011 1.25% - - - | |||
| Weighted average duration of defined benefit obligation | 24 years | 24 years | ||
| Assumed life expectancy on retirement at age 65 | ||||
| Retiring today (male member aged 65) | 22.5 | 22.4 | ||
| Retiring in 20 years (male member aged 45) | 24.2 | 24.1 | ||
| Expected cash flows | ||||
| £000 | ||||
| Expected employer contributions | 4,384 | |||
| Expected total benefit payments | ||||
| Year 1 | 1,590 | |||
| Year 2 | 1,636 | |||
| Year 3 | 1,682 | |||
| Year 4 | 1,729 | |||
| Year 5 | 1,778 | |||
| Next 5 years | 9,671 |
| Membership statistics | |||||||||||||
| 1. Census date | 31 May 2012 | ||||||||||||
| 2. Actives | |||||||||||||
| a. Number | 371 | ||||||||||||
| b. Total annual pensionable pay | £12.7 m | ||||||||||||
| c. Average annual pensionable pay | £34,247 | ||||||||||||
| d. Average age | 43 years | ||||||||||||
| e. Average past service | 14.1 years | ||||||||||||
| 3. Vested deferreds | |||||||||||||
| a. Number | 1,259 | ||||||||||||
| b. Average annual pension | £4,135 | ||||||||||||
| c. Average age | 44 years | ||||||||||||
| 4. Retirees | |||||||||||||
| a. Number | 136 | ||||||||||||
| b. Average annual pension | £6,880 | ||||||||||||
| c. Average age | 62 years | ||||||||||||
| Sensitivities at 30 November 2013 - one item changed with all others held constant | |||||||||||||
| 30 November 2012 | 30 November 2013 | ||||||||||||
| Base | -0.1% discount rate |
+0.1% discount rate |
-0.1% RPI | +0.1% RPI | Life +1 yr | ||||||||
| £ m | £ m | £ m | £ m | £ m | £ m | £ m | |||||||
| Analysis of net balance sheet position | |||||||||||||
| Fair value of plan assets | 129.7 | 147.7 | 147.7 | 147.7 | 147.7 | 147.7 | 147.7 | ||||||
| Present value of plan obligations | 150.1 | 163.5 | 167.5 | 159.6 | 160.1 | 166.9 | 166.2 | ||||||
| Deficit | 20.4 | 15.8 | 19.8 | 11.9 | 12.4 | 19.2 | 18.5 | ||||||
| Year ended | |||||||||||||
| 30 November 2012 | Year ended 30 November 2013 | ||||||||||||
| Actuarial assumptions | |||||||||||||
| Discount rate | 4.50% | 4.65% | 4.55% | 4.75% | 4.65% | 4.65% | 4.65% | ||||||
| Rate of RPI | 2.85% | 3.45% | 3.45% | 3.45% | 3.35% | 3.55% | 3.45% | ||||||
| Rate of CPI | 2.15% | 2.55% | 2.55% | 2.55% | 2.45% | 2.65% | 2.55% | ||||||
| Mortality table | - - - - - - - - - - - - - - - - - - - S1NA CMI 2011 1.25% - - - - - - - - - - - - - - - - - - - - - | ||||||||||||
This information is provided by RNS
The company news service from the London Stock Exchange
END
FR DFLFXZFFFBBQ
//<![CDATA[$.ajaxSetup({headers: {'__RequestVerificationToken':'sNU1IpunJwI9yLFL2cRNT-gGSPWrohbNjypW9fmh7ooIIYrdFBc1ma-e8b7NB4jgeWu_GCxy49IG3x_cx_ktklLklaBb5ZtUgxrnKgI4ebo1:Au2OpwJXZvVlnW2p9xEV8yHKZhGAtmLAFLbA54s_4x-7xgEhkZ0sRbK6zHLz6H_o954Ul2-5flMqGnBNMW5F8KqnOHb1O87BosecbcO9n3E1'}});//]]>