Interim Results

RM PLC 16 May 2005 16 May 2005 RM announces Interim Results for the six months to 31 March 2005 RM plc, the leading supplier of information and communications technology (ICT) and other services to education announces results for the six months to 31 March 2005. Highlights â€¢ Results in line with management's expectations - with, after last year's one-off benefits, a return to a more normal seasonal pattern with a small first half loss â€¢ Progress across the business: customer satisfaction, innovation and delivery â€¢ Increasing investment in Building Schools for the Future programme â€¢ Turnover: Â£109.2 million (2004: Â£108.9 million) â€¢ Loss before tax (before goodwill charges*): Â£0.3 million (2004: profit Â£2.7million) â€¢ Loss before tax (after goodwill charges*): Â£4.8 million (2004: profit Â£0.8 million) â€¢ Net funds at 31 March 2005: Â£12.7 million (31 March 2004: Â£34.4 million) - after Â£27 million investment in acquisitions and long term contracts over the last 12 months â€¢ Dividend per share up 5% to 1.05p (2004: 1.00p) *goodwill amortisation and impairment of Â£4.5 million (2004: Â£2.0 million) Commenting, Tim Pearson, CEO of RM, said: 'Our focus this year is on delivering improving levels of performance for all our stakeholders. With underlying growth in the business, increasing levels of customer satisfaction and success in delivering our education projects, we're making good progress. RM is a seasonal business, so we still have the majority of the year's orders - and all of the year's profit - to get in the second half. However, having successfully replaced the one-off turnover that was a feature of last year's first half, we expect modest turnover growth for the year as a whole. 'The government's Building Schools for the Future programme represents a major long term opportunity for RM. The Group's combination of educational focus, scale and technical expertise means that we are uniquely well suited to achieve our aim of being the leading provider of educational ICT to the programme. We won't see material revenues from BSF until 2007 though and, in the meantime, we need to increase our already significant level of investment to secure our position.' - Ends - For further information, please contact: Tim Pearson, CEO RM plc 08709 200200 Mike Greig, Group Finance Director Phil Hemmings, Director of Corporate Affairs Andrew Fenwick Brunswick 020 7404 5959 Fiona Laffan Mark Antelme A briefing to analysts will take place at 9.30 am on Monday 16 May 2005 at Brunswick, 16 Lincoln's Inn Fields, London WC2A 3ED. A live audio feed will be available to analysts and shareholders who are unable to attend this meeting in person. Please dial telephone number: +44 (0) 1452 561263 to access this facility. A copy of the presentation will be available on www.rm.com at 9.30 am. Results As we commented at the time, RM's performance in the first half of last year benefited from non-recurring, one-off factors. This year there has been a return to a more normal seasonal pattern, with a small first half loss. Group turnover increased by Â£0.3 million to Â£109.2 million (2004: Â£108.9 million). This increase reflects a combination of contributions from recent acquisitions and growth in education projects revenue replacing the one-off hardware shipments that were a feature of last year's first half. Gross profit percentage was up slightly at 26.9% (2004: 26.6%), resulting in gross profit of Â£29.4 million (2004: Â£29.0 million). Operating costs excluding goodwill charges increased by Â£3.3 million to Â£30.0 million (2004: Â£26.7 million). Of this increase, Â£2.1 million is directly attributable to recent acquisitions, with the balance of the increase reflecting the Group's priority investment areas - research and development and establishing RM as the leading provider of ICT to the government's Building Schools for the Future (BSF) programme. As expected, the seasonal nature of RM's business resulted in a small loss before tax (excluding goodwill charges) of Â£0.3 million (2004: Â£2.7 million profit). Reflecting RM's practice of amortising goodwill arising from acquisitions over five years, and including an impairment charge of Â£1.1 million relating to peakschoolhaus, goodwill amortisation and impairment increased to Â£4.5 million (2004: Â£2.0 million). After this charge the loss before tax was Â£4.8 million (2004: profit of Â£0.8 million). Net funds at 31 March 2005 were Â£12.7 million compared to Â£34.4 million a year earlier. This reflects the investment of Â£27 million in acquisitions and long term contracts over the twelve month period. The Board has declared an increased interim dividend of 1.05p per share (2004: 1.0p) payable on 1 July 2005 to shareholders on the register at 3 June 2005. Market Education remains a public sector spending priority, with the most recent Comprehensive Spending Review allocating real-terms budget increases of 4.4% in each of government years 2005/06 and 2006/07. Of particular importance to RM is the BSF programme, a Â£30 billion, 15-year initiative to rebuild or refurbish all English secondary schools; the 2005 Budget further reinforced the Labour Government's commitment to BSF and provided additional funding from 2009 for primary school renewal. ICT continues to have a high profile in education policy, with the recently published Department for Education and Skills (DfES) e-Learning Strategy clearly positioning ICT as a fundamental enabler of the government's education plans. As part of its workforce remodelling programme, the DfES has identified ICT as a key factor in managing schools efficiently and effectively. However, phase three of the programme, which requires that all teachers have at least 10% of their timetabled teaching time available for planning, preparation and assessment, is likely to result in increased pressures on school budgets in the immediate short term. The increasing focus on public service efficiency is resulting in greater central government engagement in education procurement. RM's scale means that we are better placed to respond to centrally-driven purchasing initiatives than many of our competitors; however, there remains a risk that poorly conceived initiatives will cause turbulence in the market and reduce educational value. At individual school level, changes in the school funding mechanism mean that head teachers will have three-year visibility of their budgets. The ability to make medium-term investment decisions is particularly helpful in allowing schools to construct strategic investment plans for ICT. Delivery We commented at the time of the 2004 preliminary results that our number one focus in 2005 would be delivering improving levels of performance for all our stakeholders. Progress has been strong across the business: our seven established long-term education projects are all on plan and are delivering real benefits for our customers; whilst customer satisfaction levels continue to rise across the business. Education project highlights include: â€¢ Dudley LEA managed service: mid-term refresh completed to plan; â€¢ South Lanarkshire Council managed service: first major refresh of all networks completed; â€¢ UCLES e-assessment project: scaling to 1,000+ examiners, 500,000 scripts over Summer 2005; â€¢ QCA Key Stage 3 ICT assessment service: 500 schools participating in the 2005 summative test; â€¢ Warwickshire LEA ICT PFI project: >800 'teacher toolkits' installed in over 100 schools; â€¢ South Yorkshire eLearning Program: 4,500 ICT level 2 qualifications achieved. Building a track record for delivering complex education projects is important in the current market environment. The BSF programme is focusing both bidders and clients on identifying high quality partners to work with. Our aim is to become the leading ICT supplier to the BSF programme and our combination of relative scale, education focus and technical capability means that we are better placed than many of our competitors to achieve this. Innovation Customer Success, by which we mean providing products and services that help teachers to teach and learners to learn, is one of RM's core values. Our products and services have received an unprecedented number of external awards and accolades over the last six months, clearly indicating that we are widely viewed as a leading educational ICT innovator. The Group's educational software products took four prestigious BETT Awards (the DfES-endorsed awards given to the year's most innovative and educationally effective products at the annual BETT exhibition). In addition, both the RM One (our unique 'all-in-one' PC designed specifically for education) and classroom resources from our recent acquisition TTS have won Education Resources Awards (the annual industry awards presented at the Education Show). Excellent service is the best way of retaining customers and building customer satisfaction. Over the last three years we have worked hard to improve the quality of our technical support. Support Online, our Internet-delivered technical support operation, has been named one of the world's Ten Best Web Support Sites for the second year running, whilst our telephone support team was a finalist in the Help Desk Institute's UK Help Desk Support Excellence Awards. We have also improved the geographical spread of our support operations with significant growth of our support team in Bellshill near Glasgow. Research and development is a priority investment area for RM. During the first half we have enhanced our range of education software products, launching Discover Alive and extensions to the Easiteach range at BETT in January 2005. We have also continued to develop Kaleidos Portal Plus, the sophisticated 'learning platform' which as at the heart of several of our education projects; this learning platform approach is fundamental to the proposition we are developing for the BSF programme. International We have made good progress in the initial steps of establishing Easiteach, our ground-breaking interactive whole-class teaching software range, as a world product. The opportunity for Easiteach in the USA is significant: only 4% of approximately 1.8 million classrooms in the USA currently have whiteboards, compared with approximately 20% of the 300,000 classrooms in the UK. We now have contractual agreements in place with four of the five leading North American whiteboard suppliers who between them represent 20% of the USA market; and each of them will be bundling Easiteach Studio with all of their educational sales. Business developments Our recent acquisitions TTS Group, a distributor of general educational resources, and Sentinel Products, which provides the Ranger suite of network management software for educational establishments, are progressing to plan and have made good contributions to the business in the first half. In February 2005 we signed a Â£17.1 million / 8-year PFI contract with Lambeth LEA. The Lambeth project was the last of four DfES-funded contracts, all of which aim to raise educational standards through the innovative use of technology. RM has bid for, and won, three of these four contracts. Other business developments during the first half include: PANDA/PAT, a Â£1.9 million development and process outsourcing project for Ofsted; a further two FE college outsourced managed service contracts reaching preferred bidder status; and the appointment of both RM and our 3T subsidiary as preferred direct suppliers for the BBC Digital Curriculum. As previously announced, peakschoolhaus, which we acquired in October 2003, was not selected by Ofsted as a preferred regional inspection services partner. We have now decided to close this business, which has resulted in a goodwill impairment charge of Â£1.1 million. Outlook and prospects Education continues to represent a positive market opportunity: education spending is growing and the opportunities for ICT to deliver educational improvement continue to expand. The BSF programme is likely to define the secondary school market for the next ten years; it is our major focus area and we believe we are well placed to achieve our aim to be the leading provider of educational ICT to the programme. We will not, however, see material revenues from BSF before 2007 and in the interim we will need to increase our investment in further developing technical and educational solutions and in bidding for contracts. As always, the seasonality of RM's business, which reflects school buying patterns, with more than half of the Group's orders expected to occur in the second half, means that first half results are not a good indicator of the full-year outcome. In the first half we have successfully replaced the one-off turnover relating to project shipments that was a feature of the comparative period last year. The factors that have allowed this - the contribution from acquisitions and growing education project revenues - will continue in the second half and we continue to anticipate modest turnover growth for the year as a whole. John Leighfield 16 May 2005 CONSOLIDATED PROFIT AND LOSS ACCOUNT ----------------------------- ------ --- -------- ---- ------- --- -------- Half year ended Year ended 31 March 31 March 30 September Â£000 2005 2004 2004 Turnover 109,211 108,944 263,264 Operating (loss)/profit (5,128) 247 5,983 ----------------------------- ------ --- -------- ---- ------- --- -------- Operating (loss)/profit analysed: Before goodwill charges (595) 2,222 10,502 Goodwill charges (4,533) (1,975) (4,519) -------- ---- ------- --- -------- Total operating (loss)/profit (5,128) 247 5,983 ----------------------------- ------ --- -------- ---- ------- --- -------- Net interest receivable 340 519 1,071 ----------------------------- ------ --- -------- ---- ------- --- -------- (Loss)/Profit on ordinary activities before taxation (4,788) 766 7,054 ----------------------------- ------ --- -------- ---- ------- --- -------- (Loss)/Profit on ordinary activities before taxation analysed: Before goodwill charges (255) 2,741 11,573 Goodwill charges (4,533) (1,975) (4,519) -------- ---- ------- --- -------- Total (loss)/profit on ordinary (4,788) 766 7,054 activities before taxation ------ --- -------- ---- ------- --- -------- ----------------------------- Tax credit/(charge) on (loss)/profit on ordinary activities 71 (765) (3,162) ----------------------------- ------ --- -------- ---- ------- --- -------- (Loss)/Profit on ordinary activities after taxation (4,717) 1 3,892 Dividends paid and proposed (932) (881) (4,075) ----------------------------- ------ --- -------- ---- ------- --- -------- Retained loss (5,649) (880) (183) ----------------------------- ------ --- -------- ---- ------- --- -------- (Loss)/Earnings per ordinary share: Basic (5.3p) 0.0p 4.4p Diluted (5.3p) 0.0p 4.3p Diluted - before goodwill charges (0.2p) 2.2p 9.4p CONSOLIDATED BALANCE SHEET ------------------------------ -------- ------- -------- As at As at As at 31 March 31 March 30 September Â£000 2005 2004 2004 Fixed assets Intangible fixed assets 20,151 16,344 24,737 Tangible fixed assets 24,420 15,179 20,202 ------------------------------ -------- ------- -------- 44,571 31,523 44,939 Current assets Stocks 17,928 11,997 16,492 Debtors 31,745 30,096 51,538 Investments - short-term cash deposits - 7,738 5,000 Cash at bank and in hand 13,849 27,479 22,480 ------------------------------ -------- ------- -------- 63,522 77,310 95,510 Creditors Amounts falling due within one year (60,962) (55,404) (86,442) ------------------------------ -------- ------- -------- Net current assets 2,560 21,906 9,068 ------------------------------ -------- ------- -------- Total assets less current liabilities 47,131 53,429 54,007 Creditors Amounts falling due after more than one year (9,851) (10,152) (11,086) Provisions for liabilities and charges (2,264) (3,174) (2,320) ------------------------------ -------- ------- -------- Net assets 35,016 40,103 40,601 ------------------------------ -------- ------- -------- Capital and reserves Called up share capital 1,795 1,794 1,794 Share premium account 20,464 20,349 20,349 Capital redemption reserve 94 94 94 ESOP shareholding (996) (849) (1,010) Profit and loss account 13,659 18,715 19,374 ------------------------------ -------- ------- -------- Equity shareholders' funds 35,016 40,103 40,601 ------------------------------ -------- ------- -------- CONSOLIDATED CASH FLOW STATEMENT ------------------------------ ---- -------- ---- ------- ---- -------- Half year ended Year ended 31 March 31 March 30 September Â£000 2005 2004 2004 Net cash (outflow)/inflow from operating activities (631) 7,863 22,399 Returns on investments and servicing of finance 340 519 1,071 Taxation (1,468) (1,583) (3,532) Capital expenditure and financial investment (8,136) (1,818) (9,691) Acquisitions - (5,715) (16,873) Equity dividends paid (3,195) (3,020) (3,909) ------------------------------ ---- -------- ---- ------- ---- -------- Net cash outflow before use of liquid resources and financing (13,090) (3,754) (10,535) Management of liquid resources 5,000 5,387 8,125 Financing (549) (1,633) (2,607) ------------------------------ ---- -------- ---- ------- ---- -------- Decrease in cash in the period (8,639) - (5,017) ------------------------------ ---- -------- ---- ------- ---- -------- RECONCILIATION OF NET CASH FLOW TO MOVEMENT IN NET FUNDS ------------------------------ ---- -------- ---- ------- ---- -------- Half year ended Year ended 31 March 31 March 30 September Â£000 2005 2004 2004 Decrease in cash in the period (8,639) - (5,017) Cash outflow from change in liquid resources (5,000) (5,387) (8,125) Settlement of loan notes 600 1,422 2,208 ------------------------------ ---- -------- ---- ------- ---- -------- Change in net cash resulting from cash flows (13,039) (3,965) (10,934) Issue of loan notes - - (1,699) Exchange translation 8 (21) (3) ------------------------------ ---- -------- ---- ------- ---- -------- Movement in net funds in the period (13,031) (3,986) (12,636) Net funds brought forward 25,781 38,417 38,417 ------------------------------ ---- -------- ---- ------- ---- -------- Net funds carried forward 12,750 34,431 25,781 ------------------------------ ---- -------- ---- ------- ---- -------- NOTES TO THE FINANCIAL INFORMATION -------------------------------------------------------------------------------- 1. Basis of preparation The financial information for the half years ended 31 March 2004 and 31 March 2005 has been prepared on a basis consistent with the statutory accounts for the year ended 30 September 2004. The financial information contained in this statement does not constitute statutory accounts within the meaning of section 240 of the Companies Act 1985. The information for the six months ended 31 March 2004 and 31 March 2005 has not been audited. The information relating to the year ended 30 September 2004 is an extract from the audited statements for that year on which the auditors gave an unqualified audit report and did not contain a statement under section 237(2) of the Companies Act 1985. A copy of those financial statements has been filed with the Registrar of Companies. 2. Additional profit and loss account information Half year ended Year ended 31 March 31 March 30 September Â£000 2005 2004 2004 -------------------------------- -------- --- -------- --- --------- Cost of sales 79,856 79,976 194,757 -------------------------------- -------- --- -------- --- --------- -------------------------------- -------- --- -------- --- --------- Gross profit 29,355 28,968 68,507 -------------------------------- -------- --- -------- --- --------- Operating expenses: --------------------- Selling & distribution 16,095 15,090 32,746 Research & development 7,523 6,614 14,546 -------------------------------- -------- --- -------- --- --------- Administrative expenses - excluding goodwill charges 6,332 5,042 10,713 Administrative expenses - goodwill charges 4,533 1,975 4,519 -------------------------------- -------- --- -------- --- --------- Total administrative expenses 10,865 7,017 15,232 -------------------------------- -------- --- -------- --- --------- Total operating expenses 34,483 28,721 62,524 -------------------------------- -------- --- -------- --- --------- 3. Goodwill The Group continues to amortise goodwill at rates estimated to write off the cost of goodwill on a straight-line basis over a period of five years. The charge for the half year ended 31 March 2005 has increased as a result of the inclusion of charges for the full period on goodwill arising on the acquisitions of TTS Group Limited and Sentinel Products Limited and also an impairment of the goodwill arising on peakschoolhaus Limited. At the 31 March 2005, a Group company peakschoolhaus was engaged in bidding to be a preferred partner to Ofsted for regional inspection services. On 7 April 2005 the Group announced that peakschoolhaus had been unsuccessful in its bid. An impairment review was performed on the goodwill arising on the acquisition of peakschoolhaus using cash flows updated to reflect the status of the bid. This review indicated that the unamortised goodwill of Â£1.1m was impaired. Consequently, an impairment charge of Â£1.1m has been made to operating profit for the period. 4. Tax credit on loss on ordinary activities The tax credit for the half year ended 31 March 2005 has been provided at the estimated effective rate for the full year of 28% (2004: 28%) of profit before goodwill charges. NOTES TO THE FINANCIAL INFORMATION CONTINUED ---------------------------------------------------- 5. Dividend The proposed interim dividend of 1.05p per ordinary share (2004: 1.0p) will be paid on 1 July 2005 to shareholders on the register on 3 June 2005. 6. (Loss)/Earnings per share (Loss)/Earnings per share for the half year ended 31 March 2005 are based on a loss of Â£4,717,000 (2004: profit of Â£1,000). Basic (loss)/earnings per share is based on 88,750,795 ordinary shares (2004: 88,927,918), being the weighted average number of ordinary shares in issue during the half year ended 31 March 2005. The diluted (loss)/earnings per share is based on a weighted average of 89,704,258 (2004: 89,313,849) ordinary shares issued and issuable. An additional (loss)/earnings per share measure before goodwill charges is disclosed to give a clearer understanding of underlying trading performance. A reconciliation of basic (loss)/ earnings per share with diluted (loss)/earnings per share is as follows: Half year ended 31 March 2005 Half year ended 31 March 2004 Loss No. of Pence Profit No. of Pence after tax Shares Per share after tax shares per share Â£000 ('000) Â£000 ('000) Basic (loss)/ earnings per share (4,717) 88,751 (5.3) 1 88,928 0.0 Impact of share options - 953 - - 386 - ----------------------- ------ ------- ------- ---- ------ ------ ------- Diluted (loss)/ earnings per share (4,717) 89,704 (5.3) 1 89,314 0.0 ----------------------- ------ ------- ------- ---- ------ ------ ------- Supplementary (loss)/earnings per share before goodwill charges: Diluted (loss)/ earnings per share (4,717) 89,704 (5.3) 1 89,314 0.0 Effect of goodwill charges 4,533 - 5.1 1,975 - 2.2 ----------------------- ------ ------- ------- ---- ------ ------ ------- Diluted (loss)/ earnings per share before goodwill charges (184) 89,704 (0.2) 1,976 89,314 2.2 ----------------------- ------ ------- ------- ---- ------ ------ ------- NOTES TO THE FINANCIAL INFORMATION CONTINUED ----------------------------------------------------- 7. Reserves and reconciliation of movements in equity shareholders' funds Half year ended Called Profit 31 March 2005 up Share Capital and Total equity share premium redemption ESOP loss shareholders' Â£000 capital account reserve s/holding account Funds Beginning of the period 1,794 20,349 94 (1,010) 19,374 40,601 Retained loss for the period - - - - (5,649) (5,649) Share issues 1 50 - - - 51 Transfer in respect of issue of shares to employee trusts - 65 - - (65) - ESOP reserve transfer - - - 14 (14) - Other - - - - 13 13 End of the period 1,795 20,464 94 (996) 13,659 35,016 8. Reconciliation of operating (loss)/profit to operating cash flows Half year ended Year ended 31 March 31 March 30 September Â£000 2005 2004 2004 Operating (loss)/profit (5,128) 247 5,983 Depreciation charge 4,066 3,822 7,805 Goodwill charges 4,533 1,975 4,519 Profit on sale of fixed assets (112) (47) (205) (Increase)/Decrease in stock (1,436) 1,762 (1,952) Decrease/(Increase) in debtors 19,909 14,448 (5,168) (Decrease)/Increase in creditors (22,463) (14,344) 11,417 ----------------------------- ---- ------- ---- ------- ----------- Net cash (outflow)/inflow from operating activities (631) 7,863 22,399 ----------------------------- ---- ------- ---- ------- ----------- INDEPENDENT REVIEW REPORT TO RM PLC --------------------------------------------------- Introduction We have been instructed by the company to review the financial information for the six months ended 31 March 2005 which comprises the profit and loss account, the balance sheet, the cash flow statement and related notes 1 to 8. We have read the other information contained in the interim report and considered whether it contains any apparent misstatements or material inconsistencies with the financial information. This report is made solely to the company in accordance with Bulletin 1999/4 issued by the Auditing Practices Board. Our work has been undertaken so that we might state to the company those matters we are required to state to them in an independent review report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company, for our review work, for this report, or for the conclusions we have formed. Directors' responsibilities The interim report, including the financial information contained therein, is the responsibility of, and has been approved by, the directors. The directors are responsible for preparing the interim report in accordance with the Listing Rules of the Financial Services Authority which require that the accounting polices and presentation applied to the interim figures are consistent with those applied in preparing the preceding annual accounts except where any changes, and the reasons for them, are disclosed. Review work performed We conducted our review in accordance with the guidance contained in Bulletin 1999/4 issued by the Auditing Practices Board for use in the United Kingdom. A review consists principally of making enquiries of group management and applying analytical procedures to the financial information and underlying financial data and, based thereon, assessing whether the accounting policies and presentation have been consistently applied unless otherwise disclosed. A review excludes audit procedures such as tests of controls and verification of assets, liabilities and transactions. It is substantially less in scope than an audit performed in accordance with United Kingdom auditing standards and therefore provides a lower level of assurance than an audit. Accordingly, we do not express an audit opinion on the financial information. Review conclusion On the basis of our review we are not aware of any material modifications that should be made to the financial information as presented for the six months ended 31 March 2005. Deloitte & Touche LLP Chartered Accountants Reading 13 May 2005 This information is provided by RNS The company news service from the London Stock Exchange

Companies

RM (RM.)

Wednesday, 11th December 2024

COMPANIES COVERED:

AHT KNOS EDV

Kainos shares advance as former CEO returns and Endeavour Mining finds support off positive survey findings for gold mine site, but pressures persist on Ashtead as company starts latest share buyback round.

Full Archive

UK 100

Latest directors dealings

58 minutes ago Pennant International Group
58 minutes ago B90 Holdings NPV
58 minutes ago Ashtead Group
14 hours ago Banco Santander S.A.
14 hours ago Renew Holdings

All directors dealings today