Preliminary Results
06 February 2012
RM plc
Preliminary Results for the fourteen month period ending
30 November 2011
RM plc ("RM") reports its results for the 14 months ending 30 November 2011*. Comparator period of 12 months to 30 September 2010 unless otherwise stated.
SUMMARY
· Group restructuring completed with four operating divisions established for FY12 and significant reduction in cost base
· Cash and cash equivalents at 30 November 2011 of £24.5 million and net funds less deferred consideration of £11.3 million (30 September 2010: £13.8 million and £0.5 million respectively)
· Revenue of £350.8 million (2010: £380.1 million)
· Adjusted operating profit of £10.0 million for the 14 months ending 30 November 2011 (2010: £22.6 million). Loss before tax of £23.4 million, including restructuring costs, excess property provisions and goodwill/intangible impairment (2010: Profit before tax of £23.9 million)
· Proforma adjusted operating profit for the 12 months ending 30 November 2011 of £14.1 million on revenues of £310.1 million (£21.4 million on revenues of £376.1 million for the 12 months ending 30 November 2010)
· Disposal completed of USA hardware business and Australian business. Post period end, disposals completed of DACTA, LEGO Education Europe and AMI(Easytrace)
· New committed revolving 3 year bank facility of £30m signed to replace previous committed acquisition facility and uncommitted sterling dealing line
· Diluted loss per share of 25.3 pence (2010: Diluted earnings per share of 19.7 pence). Adjusted diluted earnings per share 7.3 pence (2010: 18.8 pence)
· Proposed final dividend of 1.53 pence per share (2010: 5.25 pence). Total dividend (paid and proposed) of 3.00p per share (2010: 6.64p).
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Contacts RM plc |
08450 700300 |
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Martyn Ratcliffe, Executive Chairman |
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Iain McIntosh, Chief Financial Officer |
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FTI Consulting |
020 7831 3113 |
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James Melville-Ross |
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Sophie McMillan |
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*Throughout this statement, unless defined otherwise, references to 2011 refer to the 14 month period ending 30 November 2011 and references to 2010 refer to the 12 month period ending 30 September 2010. References to adjusted profit exclude: amortisation charges relating to acquisition related intangible assets; impairment of goodwill, intangible assets and investment; exceptional pension credits; restructuring costs; share-based payment charges; and movements in property related provisions. 2010 adjusted profit has been restated to remove share-based payment charges and all restructuring costs. FY12 refers to the financial year ending 30 November 2012.
Executive Chairman's Statement
The past year has been challenging for RM resulting in significant changes throughout the Group. The impact of the market environment, reversing from an extended period of increasing expenditure on education to a severe tightening of public sector budgets, became very apparent during this time. In recent years, while recognising that the market was changing, the severity of the changes was not fully appreciated by the business, exacerbated by the continuing positive effect of the Building Schools for the Future ("BSF") programme which mitigated the effects of the slow down. This situation was compounded by an unsuccessful international expansion programme and a lack of innovation in recent years, whereby few new growth opportunities in the core UK market were created to offset the foreseeable decline in BSF.
Consequently a strategic review was undertaken during the summer of 2011 which concluded that RM should concentrate on its core UK education market, restructure into four operating divisions, dispose of a number of business operations and integrate the remaining activities more fully. In addition, it became apparent that a greater emphasis on working capital management was required in some areas and a significant cost reduction programme was necessary. The resulting actions were primarily undertaken during the autumn, including the disposal of the Group's US hardware business and the Australian operations before the period end, followed by the sale of the DACTA/Lego and AMI (Easytrace) businesses since the period end. The ISIS business is currently held for sale and the Group will, in due course, seek to realise its 25% holding in Inclusive. All of the operations to be exited were either loss-making or of marginal profitability during 2011 and, together with the redundancy/restructuring programme and a general tightening of cost controls, a substantial reduction in the Group's cost base has been achieved. The restructuring resulted in a number of charges being incurred in the 2011 financial year, including the cost of the redundancy programme, an onerous property provision arising from the closure and consolidation of a number of office facilities and impairment of goodwill, intangibles and investments. In addition, provisions relating to overdue debtors and slow-moving inventory have been reviewed in light of the current market conditions.
Despite this challenging environment, RM's underlying business remains profitable, reporting £10.0 million of adjusted operating profit for the 14 month period (2010: £22.6 million for the 12 month period) and generating cash from operations of £24.8 million (2010: £23.7 million). The increased focus on working capital, together with the disposal programme, have resulted in a significant improvement in the Group's cash position, such that cash and cash equivalents at 30 November 2011 were £24.5 million (30 September 2010: £13.8 million) with net funds less deferred consideration of £11.3 million (30 September 2010: £0.5 million), the highest period end level since 2008.
Reflecting the operating performance and the difficult market conditions, the Board is recommending a reduction in the final dividend to 1.53 pence per share, making a total of 3.00 pence per share for the period (2010: total of 6.64 pence). Subject to shareholder approval, the final dividend will be payable on 13 April 2012 to shareholders on the register at the close of business on 16 March 2012.
The actions taken have stabilised the Group and have established a stronger platform for the future. Furthermore, despite the market environment and the internal organisational changes, RM has maintained its unparalleled position in the UK education market which is a reflection of the resilience and commitment of the management and staff throughout the Group. Looking to the future, there are already several innovative new opportunities being evaluated which, in the medium term, provide potential to leverage the unique relationship between RM and its customer base. Such creativity and innovation, based on a more robust foundation and a leading market position, offers an exciting opportunity for the future.
Review of Operations
In order to provide maximum transparency for shareholders, the review of operations below provides information on both the three division structure under which the Group operated in 2011, on a 14 month basis and a comparative 12 month basis, in accordance with statutory reporting, together with the new four division structure which became effective on 1 December 2011, the start of the 2012 financial year. An explanation of the changes to the business structure is also provided.
Learning Technologies
The Learning Technologies division was severely affected by the market conditions and experienced a very difficult year with revenue falling in all categories. Overall revenue declined by 21.1% from November 2010 to November 2011, comprising a decline of 16.6% in the UK and a 67.6% decline in the USA.
For the 14 month period to 30 November 2011, the Learning Technologies division reported an adjusted operating profit of £5.4 million on revenue of £243.0 million (2010: adjusted operating profit of £10.5 million on revenue of £274.0 million for the 12 month period to 30 September 2010). For the 12 month period to 30 November 2011, the Learning Technologies division reported an adjusted operating profit of £8.7 million on revenue of £214.4 million compared to the 12 month period to 30 November 2010 when operating profit was £9.7 million on revenue of £271.8 million. Included in the 2011 results are the losses associated with the USA, Australian and AMI businesses and an increased provision for overdue debtors, partially offset by reductions in warranty and related provisions in the first half of the year. In addition, due to its relative size, the Learning Technologies division was the major beneficiary of the Group not paying senior management and other profit related bonuses for the period.
The operations of the Learning Technologies division comprised:
· RM-branded and third-party computing products, together with maintenance and warranty and other third-party classroom equipment, all of which transferred to the new Education Technology division. In 2011, these activities experienced difficult market conditions with revenue declining by approximately 11% on a comparable basis (November 2010 to November 2011);
· Network Solutions, Internet Hosting and related services, which also transferred to the new Education Technology division, suffered from the market conditions and declined by approximately 13% on a comparable basis;
· The Group's BSF and managed service contracts reported a revenue decline of approximately 18% on a comparable basis due to the scheduled roll-out of BSF implementations. These activities operate under a different business model with long term contract accounting and therefore, following the strategic review, a new Managed Services division was established through which this business will be reported for FY 12;
· The School Management Systems and Learning Platform software businesses, which transferred to the new Education Software division, declined by approximately 14% on a comparable basis; and
· The USA hardware and Australian business operations were sold in October and November 2011 respectively, with AMI (Easytrace) being sold in January 2012. The USA software business and the AMI Ranger network management business are being retained by the Group, with the former transferring to the new Software division and the latter transferring to the Network Solutions business within the Education Technology division.
Education Resources
The Education Resources division comprised a diversity of businesses which operated as independent business units in 2011. Although the TTS business has dominated the results of this division for a number of years, the weaker performance of some of the smaller operations has been an impediment to the reported figures for the division and the success of TTS has not therefore been recognised historically. In fact, despite the deteriorating market environment, TTS reported growth in revenue of approximately 4% on a comparable basis. However inventory and supply chain management require further improvement and increasing return on capital is a key focus for 2012.
For the 14 month period to 30 November 2011, the Education Resources division reported an adjusted operating profit of £3.0 million on revenue of £83.9 million (2010: adjusted operating profit of £9.2 million on revenue of £83.3 million for the 12 month period to 30 September 2010). For the 12 month period to 30 November 2011, the Education Resources division reported an adjusted operating profit of £3.9 million on revenue of £74.4 million compared to the 12 month period to 30 November 2010 when adjusted operating profit was £8.8 million on revenue of £81.6 million. Included in the 2011 results are the losses associated with the DACTA business, an increased provision against slow-moving inventory and provisions taken against some OEM partner software contracts where payment for licence royalties was not received in 2011 or is considered to be at risk. In the light of greater payment risks in the current market, the Board has now adopted a more conservative approach to revenue recognition on such contracts.
Following the period end, in January 2012, the DACTA business and the Group's investment in Lego Education Europe were sold. In addition, a sale process for Isis, which provides classroom furniture, is currently underway. The Lightbox business, providing software publishing and contract services, was included in the Education Resources division in 2011 but transferred to the new Education Software division in the new structure. As a result, the new Education Resources division retains TTS and RM-Spacekraft, a small, specialist business which supplies products and services for Special Educational Needs environments.
Assessment and Data
The Assessment and Data division had a mixed performance in the period, with the Assessment Services business experiencing only a modest decline in revenue and winning a number of new contracts for e-marking services. However the Data Solutions activities experienced a more challenging period when compared to the prior year which benefited from some large one-off projects.
For the 14 month period to 30 November 2011, the Assessment and Data division reported an adjusted operating profit of £1.6 million on revenue of £23.9 million (2010 : adjusted operating profit of £3.0 million on revenue of £22.9 million for the 12 month period to 30 September 2010). For the 12 month period to 30 November 2011, the division reported an adjusted operating profit of £1.6 million on revenue of £21.3 million compared to the 12 month period to 30 November 2010 when adjusted operating profit was £2.9 million on revenue of £22.7 million. Included within the 2011 results is a £1.4 million write-off associated with development work undertaken on a partnership basis which had previously been included in work in progress.
RM India
The Group's operation in Trivandrum, India, RM Education Solutions India ("RMESI"), was established in 2003 and had 476 employees at period end. For the 14 month period ending 30 November 2011, the total cost of RMESI was £6.2 million.
RMESI provides services solely to RM Group companies. Approximately 55% of RMESI employees are engaged in software development for the operating divisions, and 18% in customer and operational support with the remainder providing back office shared service support (e.g. customer order entry, IT, finance and HR) and administration.
2012 Organisation Structure
As RM enters the new year, the Group has been restructured into four operating divisions, each with a Managing Director and management team. Wherever appropriate, staff functions are provided by a central service in order to benefit from economies of scale and consistency across the Group. In addition approximately 20% of the Group headcount is based in RMESI in India, providing support services and software development to the operating divisions.
In order to provide an understanding of the Group in the new structure, the following commentary and figures reflect the twelve month period to 30 November 2011 ("Nov-2011"), not the 14 month statutory period. The figures stated below provide a proforma estimate and do not reflect the organisation structures in place during the period, since the new organisation was introduced at the start of the 2012 financial year.
Education Technology
The Education Technology division is a UK-focused business supplying IT hardware, networks, internet services and related installation and support. In the Nov-2011 financial year, on a pro-forma basis, the division's continuing operations would have reported revenue of £125.7 million. In FY12, revenue from the division is anticipated to decline as budget reductions continue to impact negatively on IT expenditure in schools. Margins are also anticipated to remain under pressure. In terms of seasonality, the Education Technology hardware and network businesses, together with related services, operate at a broadly consistent level throughout three-quarters of the year with a significant seasonal increase over the summer, while the internet hosting business is relatively constant throughout the year.
The Education Technology division comprises four main operating areas, namely Hardware, Network Solutions, Internet Hosting and Support services.
· Revenue derived from Hardware (RM-branded and third-party computing products, together with maintenance and warranty and other third-party classroom equipment) would have accounted for approximately 62% of the division's revenue in Nov-2011. The RM-branded computer product shipments continue to decline, partially offset by growth in third-party products, which due to the lower margin on third-party products has an impact on overall gross margins. In the current market, both revenue and gross margins for hardware products are anticipated to remain under pressure in the year ahead.
· Network Solutions, which provides network management software to approximately 5,700 schools, would have contributed approximately 10% of the division's revenue in Nov-2011 and revenue is anticipated to decline in FY12. While gross margins in this business in FY12 should benefit from BSF projects coming on stream, underlying gross margins may experience continued pressure.
· The Internet Hosting Group, where RM has a strong position as a service provider to approximately 8,000 schools, would have contributed 16% of the Education Technology division revenue in Nov-2011 and is anticipated to be broadly flat in the year ahead but with pressure on margins consistent with market trends for internet services.
· The remaining revenue of the Education Technology division is derived from associated support services.
While the Education Technology division is anticipated to have the lowest operating margins in the new Group structure, at rates comparable to other UK hardware-oriented businesses, the division has a greater strategic importance to the RM Group as the major sales channel to UK schools and provides products and services to the Managed Services division.
Managed Services
The Managed Services division comprises implementation, management and support of IT infrastructure within schools and colleges, including the BSF contracts. In the Nov-2011 financial year, on a pro-forma basis, the division would have reported revenue of £61.5 million. This division has a service-based revenue stream which, excluding BSF, should be less sensitive to market variability and seasonality than product-based businesses. However, the BSF programme drives a substantial summer seasonality due to the requirement for school installations during the summer holidays and is subject to long term project accounting.
The division has approximately 30 contracts covering over 750 schools and colleges, including BSF and PFI contracts, which consist of multi-year support arrangements. Resources are geographically aligned to the schools, often with permanent on-site staff. The BSF contracts provide milestone receipts for the implementation of capital equipment followed by typically five years of managed service fees. The PFI contracts consist of capital investment in equipment and software, typically combined with a five year managed service. The division also services a number of smaller contracts which vary in duration from single year extensions to contracts of five years or more.
Following another successful summer implementation period, BSF contract activities would have accounted for approximately 65% of the division's revenue in Nov-2011 and is therefore a material influence on near term performance. Due to the contract roll-out schedule, it is anticipated that BSF revenue will peak in 2012 but will decline significantly thereafter with only modest revenue from BSF implementations after 2014. In cash terms however, a cash inflow is anticipated in 2013 and 2014 due to the working capital profile of the BSF implementations, although this is partially offset by contractual obligations for provision of technology refresh programmes.
While the completion of the BSF programme creates challenges for the Managed Services division in the future, BSF has enabled RM to establish an efficient infrastructure to be able to offer competitive outsourced IT support services to schools, which could partially offset the reduction in future years as BSF revenues decline.
Education Resources
Following the restructuring of the Group and the disposals, the Education Resources division now comprises just two operating businesses: TTS and RM-Spacekraft. In the Nov-2011 financial year, on a pro-forma basis, the division would have reported revenue of £58.0 million, of which TTS would have accounted for approximately 91%.
TTS is a value-added distribution business offering a wide range of curriculum products and materials to schools for both general and departmental use. TTS has excellent market penetration supplying products to approximately 90% of all primary schools and 45% of secondary schools. Despite being a distribution-oriented business, TTS is a very profitable operation with an outstanding customer base, although in the past, inventory and supply chain management have not received adequate focus with a corresponding impact on return on capital. Actions are currently in process to improve these areas with satisfactory progress being made. TTS experiences two seasonal cycles in the year with peaks in February/March and August/September.
RM-Spacekraft is a modest business, supplying products and installation services for the Special Educational Needs market. The new management team appointed in 2010 has made good progress in improving the financial performance of the business over the past year, although better inventory management offers the potential to improve return on capital in this business. The RM-Spacekraft business seasonality peaks in February and March with its low period over the summer.
Education Software
The Education Software division comprises Assessment Services, Data Solutions, School Management Systems ("SMS"), Learning Platforms, Software Publishing (including Easiteach and RM Easimaths) and other software (excluding network-related software which is within the Education Technology division). Distribution for the Education Software division's offerings is through direct and indirect sales channels and also via the Group's other divisional sales operations. In the Nov-2011 financial year, on a pro-forma basis, the division would have reported revenue of £38.5 million. The underlying business is less seasonal than other RM businesses and actions have also been taken to reduce the revenue volatility of Easiteach, although the Education market for software is anticipated to remain challenging in the year ahead.
The largest contributor of revenue to the division (approximately 36%) is the Assessment Services business, providing e-marking and e-testing solutions and services for examining boards where RM has established a strong position in the UK and is now building an international presence to offset the limited future growth in the UK market. The first international contract was signed during the past year, although it is anticipated that international opportunities will evolve more as a software rather than service-oriented activity.
Data Solutions provides database-oriented consultancy solutions and services to public sector organisations primarily, but not exclusively, in the Education sector. Data Solutions experienced a difficult year compared to 2010 when the business benefited from some large data migration projects. The business is also very dependent on one public sector customer and the renewal of this contract (tender anticipated in 2012) is critical to the future of this activity.
RM is the second largest provider of School Management Systems in the UK, although its market share is modest. In recent years RM has migrated the SMS software to a software-as-a-service ("SaaS") model and this approach offers schools a cost-effective solution with the ability for new customers to be operational in a very short period of time.
Learning Platforms, providing on-line teaching and learning environments for a school or education authority, were previously considered to be a growth area enabling school-parent-pupil interaction. However, with tightening of education budgets the product category has proven to be subject to budget cuts, with a major existing customer in Scotland indicating that it will not re-procure the existing service after the end of the current contract in September 2012. Furthermore, where Learning Platforms are being retained, the revenue per pupil is under significant pressure.
RM Easiteach products are typically bundled with interactive whiteboards or similar devices such as projectors with a current installed base of approximately 350,000. Since the UK education sector has a high penetration of interactive whiteboards in schools, the primary market opportunity for Easiteach is for distribution on a licence royalty model through third-party suppliers of interactive hardware in the international market. The timing and recognition of such licence contracts has historically exacerbated the seasonality of the Group's profitability and collectability of licence royalty payments has sometimes been difficult. As a result, a more conservative approach has now been adopted.
The next generation of the division's maths product, RM Easimaths, was launched in January as a hosted service for schools and is being promoted as the upgrade to the current RM Maths product which is currently installed in approximately 4,000 schools. In parallel, the remaining portfolio of curriculum software products has been reviewed and a number of minor product lines are being phased out in the year ahead.
Non-Recurring Charges
As indicated in the strategic review, the Group has incurred a number of significant, non-recurring costs including:
· The impairment of goodwill, acquisition related intangible assets, other intangible assets and investments principally arising from the disposal programme (£12.4m);
· Loss on sale of operations (£4.4m);
· Provisions for dilapidations on leased properties and onerous lease contracts on surplus property (£6.0m); and
· Restructuring costs largely relating to the redundancy programmes during the period (£8.8m)
Board Changes
John Leighfield retired in May after 17 years as Chairman and I was appointed Non-Executive Chairman from 1 June 2011. John Windeler and Sir Tim Brighouse retired in October 2011 and November 2011 respectively each having completed nine years as Non-Executive Directors of RM. Sir Bryan Carsberg has also advised the Board that he will not be standing for re-election at the forthcoming annual general meeting, having been a Non-Executive Director and Chairman of the Audit Committee for over nine years.
Following the strategic review and after 13 years with RM, in October 2011, Terry Sweeney resigned as Chief Executive Officer to pursue his career outside of the Group. Subsequent to the period end, after 21 years with the Group, Rob Sirs decided that it was now the right time for him to leave the Group.
The Board would like to acknowledge the contribution of all of these Directors and thank them for their long service to RM.
In addition to my appointment as Chairman (subsequently becoming Executive Chairman in October 2011), Deena Mattar was appointed a Non-Executive Director in June 2011 and will take over the chair of the Audit Committee following the annual general meeting, and Lord Andrew Adonis was appointed a Non-Executive Director in October 2011.
Summary
In summary, 2011 has been a difficult period for the Group. Nevertheless, it is a credit to RM management and staff that they have shown resilience and commitment to the restructuring and recovery programme and the Group is now looking to the future.
The operational restructuring of the Group is now almost complete and provides a more balanced structure with each division being more focused and having a clear strategy. While the Board anticipates that the difficult market conditions will continue for the foreseeable future, the Group's BSF contract profile provides some resilience in 2012, although the anticipated decline in 2013 and 2014 is material. However, the leaner organisation and reduced cost base provide a more robust platform to manage the challenges ahead, supported by a strong cash position and increased emphasis on working capital management.
Notwithstanding all of the challenges, RM retains an unparalleled market position in the UK education sector and this brand presence offers considerable opportunities for the Group. RM is now moving forward and is actively pursuing new initiatives to restore growth in the medium term. While cautious regarding near-term expectations, particularly in the ongoing public sector climate, the Board remains optimistic and ambitious for the future of RM.
Martyn Ratcliffe
Executive Chairman
Group Financial Performance and Chief Financial Officer's Report
As previously announced, RM has changed its financial year end from 30 September to 30 November. This separates both annual financial year planning and financial year end activity from the busiest operational period of the Group's year. As a result, the financial statements are for the 14 month period to 30 November 2011. However to aid year-on-year comparisons, pro forma information for the 12 months to 30 November 2010 and 2011 is also provided.
To provide a better guide to underlying business performance, the income statement amortisation charges relating to acquisition related intangible assets, goodwill and other asset impairment charges, exceptional pension credits, redundancy costs, share-based payment charges and movements in property related provisions have been disclosed in the adjustments column in the income statement to give 'Adjusted' results. In previous years, share-based payment charges and redundancy costs (except those incurred as part of a major exceptional programme as with the end of BSF) had been included in adjusted operating profits. The comparative figures have therefore been restated on a consistent basis.
Group revenues for the 14 months to 30 November 2011 were £350.8 million (2010: £380.1 million). Pro-forma revenues were £310.1 million for the 12 months to 30 November 2011, a decline of 17.6% from the corresponding period in 2010.
The Group incurred an unadjusted loss before tax of £23.4 million for the 14 months to 30 November 2011 (2010: profit of £23.9 million). This loss was after significant non-recurring costs, most of which derived from the implementation of the strategic review set out in the Executive Chairman's statement, including a £12.4 million charge for the impairment of the value of goodwill and intangible assets, a £4.4 million loss on the sale of operations, £6.0 million increase in property related provisions and £8.8 million of restructuring costs, principally related to redundancy payments.
Adjusted operating profit for the 14 months to 30 November 2011 was £10.0 million. Adjusted operating profit for the 12 months to 30 November declined to £14.1 million from £21.4 million in the corresponding period in 2010. Adjusted operating profit margins decreased from 5.7% in the year to 30 November 2010 to 4.6% in the year to 30 November 2011.
The total tax credit for the 14 months to 30 November 2011 was £0.3 million (2010: charge of £5.8 million). The Group's tax credit for the 14 months to 30 November 2011, measured as a percentage of profit/loss before tax, was 1% (2010: 24% tax charge). This tax rate has been below the standard UK corporation tax rate for a number of years, principally due to the benefit the Group gains from enhanced tax deductions on qualifying research & development activities. In addition many of the losses incurred as a result of actions following the strategic review, such as goodwill impairments, are not tax deductible and some tax losses in overseas jurisdictions have not been recognised.
Adjusted basic and diluted earnings per share declined to 7.3p for the 14 months to 30 November 2011 (2010: 18.8p). Reflecting the deterioration in the market and trading performance, total dividend (paid and proposed) has been reduced to 3.00p per share (2010: 6.64p). This comprises an already paid interim dividend of 1.47p per share, and, subject to shareholder approval, a proposed final dividend of 1.53p per share. The estimated total cost of dividends paid and proposed for 2011 is £2.7 million (2010: £6.1 million).
Average Group headcount for the 14 month period was 2,799 (2010: 2,864). At 30 November 2011 headcount was 2,358 a 17% reduction from 2,855 on 30 November 2010. The November 2011 headcount comprises 2,113 permanent and 245 temporary or contract staff, of which 1,865 were located in the UK, 476 in India and 17 in other locations.
Despite challenging trading conditions, cash generated by operations for the 14 months to 30 November 2011 was £24.8 million (2010: £23.7 million). In addition, proceeds from the US and Australian businesses sold in the period totalled £3.8 million. As a result, cash and cash equivalents at 30 November 2011 improved significantly to £24.5 million (30 September 2010: £13.8m) and net funds less deferred consideration at 30 November 2011 were £11.3 million, compared to £0.5 million at 30 September 2010 and £(15.7) million at 30 November 2010.). Seasonal cash flows reach a low point over the peak summer period and the maximum bank overdraft reached £11.8 million in the period (2010: £26.8 million).
In order to strengthen the Group's financing structure, in January 2012, the Group signed a £30 million unsecured revolving credit facility with Barclays bank, committed until 27 March 2015. Together with an existing £3 million annual Barclays overdraft these facilities will replace the uncommitted US $39.5 million HSBC sterling dealing line and committed £25 million acquisition facility (of which £13 million had been drawn at 30 November 2011). The principal financial covenants remain at 2.5 times Net Debt/Earnings before Interest, Taxation, Depreciation and Amortisation ('EBITDA') and 4.0 times interest cover. The interest rate over LIBOR is 2.75%, which can reduce to 2.5% after 12 months whenever Net Debt/EBITDA falls below 0.5 times.
Regarding the RM defined benefit pension scheme, this was closed to new entrants in 2003 and a number of actions have been taken in recent years to mitigate the Group's exposure to the pension liabilities, including increasing member contributions and introducing pensionable salary caps. Following a review with the Group's pension advisors, and in order to mitigate the growth in future liabilities and to manage the risk associated with the Scheme, the Board has entered into discussions with the Scheme Trustees regarding the potential closure of the Scheme to future accrual of benefits. At 30 November 2011 the IAS 19 scheme deficit (pre tax) was £21.2 million (30 September 2010: £12.4 million), the increased deficit being primarily due to the impact of lower corporate bond yields used in the calculation of the Scheme's liabilities. The next triennial valuation of the Scheme's position is due at 31 May 2012.
Iain McIntosh
Chief Financial Officer
Directors' responsibilities statement
The responsibility statement below has been prepared in connection with the Company's full Annual Report for the 14 months to 30 November 2011. 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 IFRS, as adopted by the EU, give a true and fair view of the assets, liabilities, financial position and performance of the Group; and
· the information contained within the Annual Report includes a fair review of the development and performance of the business and the position of the Group, together with a description of the principal risks and uncertainties that it faces.
The responsibility statement was approved by the Board of Directors on 6 February 2012 and is signed on its behalf by:
Iain McIntosh
Chief Financial Officer
Consolidated income statement
for the 14 months ended 30 November 2011
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|
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Notes |
Adjusted £000 |
Adjustments £000 |
14 months ended 30 November 2011
Total £000 |
Adjusted £000 (Restated) |
Adjustments £000 (Restated) |
Year ended 30 September 2010
Total £000 (Restated) |
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Revenue |
|
350,785 |
- |
350,785 |
380,124 |
- |
380,124 |
|
Cost of sales |
|
(260,113) |
- |
(260,113) |
(279,537) |
- |
(279,537) |
|
Gross profit |
|
90,672 |
- |
90,672 |
100,587 |
- |
100,587 |
|
Operating expenses |
|
(80,655) |
- |
(80,655) |
(78,025) |
- |
(78,025) |
|
- Amortisation of acquisition related intangible assets |
|
- |
(728) |
(728) |
- |
(1,273) |
(1,273) |
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- Impairment of goodwill, acquisition related intangible assets, other intangible assets and investments |
|
- |
(12,370) |
(12,370) |
- |
- |
- |
|
- Loss on sale of operations |
|
- |
(4,391) |
(4,391) |
- |
- |
- |
|
- Share-based payment charges |
|
- |
(1,378) |
(1,378) |
- |
(1,417) |
(1,417) |
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- Restructuring costs |
|
- |
(8,773) |
(8,773) |
- |
(1,344) |
(1,344) |
|
- Increase in provision for dilapidations on leased properties and onerous lease contracts |
|
- |
(5,986) |
(5,986) |
- |
- |
- |
|
- Exceptional costs relating to curtailment of Building Schools for the Future programme |
|
- |
- |
- |
- |
(1,474) |
(1,474) |
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- Exceptional pension credit |
|
- |
- |
- |
- |
7,056 |
7,056 |
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Share of results of associate and joint venture |
|
32 |
(32) |
- |
67 |
(28) |
39 |
|
|
|
(80,623) |
(33,658) |
(114,281) |
(77,958) |
1,520 |
(76,438) |
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Profit/(loss) from operations |
|
10,049 |
(33,658) |
(23,609) |
22,629 |
1,520 |
24,149 |
|
Investment income |
3 |
1,079 |
- |
1,079 |
1,091 |
- |
1,091 |
|
Finance costs |
4 |
(850) |
- |
(850) |
(1,321) |
- |
(1,321) |
|
Profit/(loss) before tax |
|
10,278 |
(33,658) |
(23,380) |
22,399 |
1,520 |
23,919 |
|
Tax |
5 |
(3,616) |
3,887 |
271 |
(5,086) |
(674) |
(5,760) |
|
Profit/(loss) for the period attributable to equity holders of the parent |
|
6,662 |
(29,771) |
(23,109) |
17,313 |
846 |
18,159 |
|
|
|
|
|
|
|
|
|
|
Earnings/(loss) per ordinary share: |
6 |
|
|
|
|
|
|
|
Basic |
|
7.3p |
(32.6)p |
(25.3)p |
18.8p |
0.9p |
19.7p |
|
Diluted |
|
7.3p |
(32.6)p |
(25.3)p |
18.8p |
0.9p |
19.7p |
|
|
|
|
|
|
|
|
|
|
Paid and proposed dividends per share: |
7 |
|
|
|
|
|
|
|
Interim |
|
|
|
1.47p |
|
|
1.39p |
|
Final |
|
|
|
1.53p |
|
|
5.25p |
Results for the year to 2010 have been restated to reflect current period treatment of restructuring costs and share-based payment charges as adjustments with costs of £1,344,000 and £1,417,000 being reallocated respectively. These costs had previously been allocated to adjusted cost of sales (£866,000) or adjusted operating expenses (£1,895,000) according to the employee's role. The restatement is a reallocation only and there is no change to profit from operations, profit before tax or profit attributable to equity holders of the parent as a result.
Adjustments to profit have been presented to give a better guide to business performance.
Consolidated statement of comprehensive income
for the 14 months ended 30 November 2011
|
|
Notes |
14 months ended 30 November 2011 £000 |
Year ended 30 September 2010 £000 |
|
(Loss)/profit for the period |
|
(23,109) |
18,159 |
|
|
|
|
|
|
Exchange (loss)/gain on translation of foreign operations |
|
(105) |
505 |
|
Transfer of exchange reserves to income statement on sale of foreign operations |
|
(1,409) |
- |
|
Actuarial gains and (losses) on defined benefit pension scheme |
12 |
(10,215) |
(7,913) |
|
Fair value gain/(loss) on interest rate swap |
|
145 |
(128) |
|
Current tax on items taken directly to equity |
|
(67) |
(9) |
|
Deferred tax on items taken directly to equity |
5 |
2,049 |
2,218 |
|
Other comprehensive income/(expense) for the period |
|
(9,602) |
(5,327) |
|
|
|
|
|
|
Total comprehensive (expense)/income for the period attributable to equity holders of the parent |
|
(32,711) |
12,832 |
Total tax credited to equity in the period was £1,982,000 (2010: credit of £2,209,000).
Consolidated balance sheet
as at 30 November 2011
|
|
Notes |
At 30 November 2011 £000 |
At 30 September 2010 £000 |
|
Non-current assets |
|
|
|
|
Goodwill |
8 |
17,349 |
34,220 |
|
Acquisition related intangible assets |
|
1,202 |
3,690 |
|
Other intangible assets |
|
3,607 |
3,186 |
|
Property, plant and equipment |
|
16,600 |
21,054 |
|
Interest in associate |
|
316 |
1,013 |
|
Other receivables |
9 |
2,590 |
- |
|
Deferred tax assets |
5 |
6,973 |
4,859 |
|
|
|
48,637 |
68,022 |
|
Current assets |
|
|
|
|
Inventories |
|
18,827 |
25,079 |
|
Trade and other receivables |
9 |
62,270 |
97,838 |
|
Tax assets |
|
2,058 |
877 |
|
Cash and cash equivalents |
|
24,529 |
13,814 |
|
Assets held for sale |
|
6,791 |
- |
|
|
|
114,475 |
137,608 |
|
|
|
|
|
|
Total assets |
|
163,112 |
205,630 |
|
|
|
|
|
|
Current liabilities |
|
|
|
|
Trade and other payables |
10 |
(77,781) |
(106,554) |
|
Provisions |
|
(7,752) |
(536) |
|
Tax liabilities |
|
- |
(1,878) |
|
Liabilities directly associated with assets held for sale |
|
(2,914) |
- |
|
|
|
(88,447) |
(108,968) |
|
|
|
|
|
|
Net current assets |
|
26,028 |
28,640 |
|
|
|
|
|
|
Non-current liabilities |
|
|
|
|
Retirement benefit obligation |
12 |
(21,174) |
(12,380) |
|
Bank loans |
|
(13,026) |
(11,507) |
|
Deferred tax liabilities |
5 |
- |
(34) |
|
Other payables |
10 |
(6,286) |
(5,918) |
|
Provisions |
|
(5,661) |
(678) |
|
|
|
(46,147) |
(30,517) |
|
|
|
|
|
|
Total liabilities |
|
(134,594) |
(139,485) |
|
|
|
|
|
|
Net assets |
|
28,518 |
66,145 |
|
|
|
|
|
|
Equity attributable to equity holders of the parent |
|
|
|
|
Share capital |
|
1,869 |
1,868 |
|
Share premium account |
|
26,963 |
26,918 |
|
Own shares |
|
(3,202) |
(3,805) |
|
Capital redemption reserve |
|
94 |
94 |
|
Hedging reserve |
|
(44) |
(189) |
|
Translation reserve |
|
115 |
1,629 |
|
Retained earnings |
|
2,723 |
39,630 |
|
Total equity |
|
28,518 |
66,145 |
Consolidated cash flow statement
as at 30 November 2011
|
|
Notes |
14 months ended 30 November 2011 £000 |
Year ended 30 September 2010 £000 |
|
(Loss)/profit from operations |
|
(23,609) |
24,149 |
|
Adjustments for: |
|
|
|
|
Loss on foreign exchange derivatives |
|
234 |
160 |
|
Share of results of associate and joint venture |
|
- |
(39) |
|
Impairment of investment in associate |
|
660 |
- |
|
Amortisation of acquisition related intangible assets |
|
728 |
1,273 |
|
Impairment of acquisition related intangible assets |
|
443 |
- |
|
Impairment of goodwill |
|
10,992 |
- |
|
Amortisation of other intangible assets |
|
1,272 |
1,180 |
|
Impairment of other intangible assets |
|
275 |
- |
|
Depreciation of property, plant and equipment |
|
8,173 |
7,554 |
|
Gain on disposal of property, plant and equipment |
|
(147) |
(322) |
|
Loss on disposal of other intangible assets |
|
62 |
- |
|
Loss on sale of operations |
11a |
4,391 |
- |
|
Increase in provisions |
|
11,660 |
737 |
|
Share-based payment charges |
|
1,378 |
1,417 |
|
Exceptional pension credit |
|
- |
(7,267) |
|
Operating cash flows before movements in working capital |
|
16,512 |
28,842 |
|
Decrease/(Increase) in inventories |
|
3,079 |
(5,174) |
|
Decrease/(Increase) in receivables |
|
29,589 |
(11,773) |
|
(Decrease)/Increase in payables |
|
(24,337) |
11,825 |
|
Cash generated by operations |
|
24,843 |
23,720 |
|
Defined benefit pension contribution in excess of current service cost |
12 |
(1,768) |
(1,682) |
|
Tax paid |
|
(2,341) |
(3,526) |
|
Income on sale of finance lease debt |
3 |
817 |
795 |
|
Interest paid: |
|
|
|
|
- bank overdrafts and loans |
4 |
(483) |
(627) |
|
- other |
4 |
(20) |
(64) |
|
Net cash inflow from operating activities |
|
21,048 |
18,616 |
|
|
|
|
|
|
Investing activities |
|
|
|
|
Interest received |
3 |
141 |
65 |
|
Proceeds on disposal of property, plant and equipment |
|
483 |
583 |
|
Purchases of property, plant and equipment |
|
(4,526) |
(7,744) |
|
Purchases of other intangible assets |
|
(2,055) |
(1,525) |
|
Amounts advanced to joint venture undertaking |
|
(1,880) |
- |
|
Net cash used in investing activities |
|
(7,837) |
(8,621) |
|
|
|
|
|
|
Financing activities |
|
|
|
|
Dividends paid |
7 |
(6,128) |
(5,764) |
|
Proceeds from share capital issue, net of share issue costs |
|
46 |
198 |
|
Proceeds from sale of operations |
11a |
3,775 |
- |
|
Increase in borrowings |
|
1,507 |
3,161 |
|
Purchase of own shares |
|
(212) |
(3,362) |
|
Repayment of loan notes and deferred consideration |
|
(1,574) |
(3,841) |
|
Net cash used in financing activities |
|
(2,586) |
(9,608) |
|
|
|
|
|
|
Net increase in cash and cash equivalents |
|
10,625 |
387 |
|
|
|
|
|
|
Cash and cash equivalents at the beginning of period |
|
13,814 |
13,297 |
|
Effect of foreign exchange rate changes |
|
90 |
130 |
|
Cash and cash equivalents at the end of period |
|
24,529 |
13,814 |
Group net funds
for the 14 months ended 30 November 2011
|
|
At 30 September 2010 £000 |
Cash flow £000 |
Non-cash movements
|
At 30 November 2011 £000 |
|
|
Foreign exchange £000 |
Other £000 |
||||
|
Cash and cash equivalents |
13,814 |
10,625 |
90 |
- |
24,529 |
|
Borrowings |
(11,507) |
(1,507) |
(12) |
- |
(13,026) |
|
Net cash |
2,307 |
9,118 |
78 |
- |
11,503 |
|
Loan notes |
(1,379) |
1,379 |
- |
- |
- |
|
Net funds |
928 |
10,497 |
78 |
- |
11,503 |
|
Deferred consideration |
(390) |
195 |
- |
- |
(195) |
|
Net funds less deferred consideration |
538 |
10,692 |
78 |
- |
11,308 |
Consolidated statement of changes in equity
for the 14 months ended 30 November 2011
|
|
Notes |
Share capital £000 |
Share premium account £000 |
Own shares £000 |
Capital redemption reserve £000 |
Hedging Reserve £000 |
Translation reserve £000 |
Retained earnings £000 |
Total equity £000 |
|
Group |
|
|
|
|
|
|
|
|
|
|
At 1 October 2009 |
|
1,863 |
26,725 |
(1,246) |
94 |
(61) |
1,124 |
32,325 |
60,824 |
|
|
|
|
|
|
|
|
|
|
|
|
Profit for the year |
|
- |
- |
- |
- |
- |
- |
18,159 |
18,159 |
|
|
|
|
|
|
|
|
|
|
|
|
Other comprehensive income |
|
|
|
|
|
|
|
|
|
|
Exchange differences on translation of foreign operations |
|
- |
- |
- |
- |
- |
505 |
- |
505 |
|
Actuarial gains and (losses) on defined benefit scheme |
|
- |
- |
- |
- |
- |
- |
(7,913) |
(7,913) |
|
Fair value loss on interest rate swap |
|
- |
- |
- |
- |
(128) |
- |
- |
(128) |
|
Tax credit on items taken directly to equity |
|
- |
- |
- |
- |
- |
- |
2,209 |
2,209 |
|
Total other comprehensive income/ (expense) |
|
- |
- |
- |
- |
(128) |
505 |
(5,704) |
(5,327) |
|
|
|
|
|
|
|
|
|
|
|
|
Transactions with owners of the Company |
|
|
|
|
|
|
|
|
|
|
Purchase of shares |
|
- |
- |
(3,213) |
- |
- |
- |
- |
(3,213) |
|
Share issues |
|
5 |
193 |
- |
- |
- |
- |
- |
198 |
|
Share-based payment awards exercised in year |
|
- |
- |
654 |
- |
- |
- |
(803) |
(149) |
|
Share-based payment fair value charges |
|
- |
- |
- |
- |
- |
- |
1,417 |
1,417 |
|
Dividends paid |
7 |
- |
- |
- |
- |
- |
- |
(5,764) |
(5,764) |
|
At 1 October 2010 |
|
1,868 |
26,918 |
(3,805) |
94 |
(189) |
1,629 |
39,630 |
66,145 |
|
|
|
|
|
|
|
|
|
|
|
|
Loss for the period |
|
- |
- |
- |
- |
- |
- |
(23,109) |
(23,109) |
|
|
|
|
|
|
|
|
|
|
|
|
Other comprehensive income |
|
|
|
|
|
|
|
|
|
|
Exchange differences on translation of foreign operations |
|
- |
- |
- |
- |
- |
(105) |
- |
(105) |
|
Transfer of exchange reserves to income statement on sale of foreign operations |
|
- |
- |
- |
- |
- |
(1,409) |
- |
(1,409) |
|
Actuarial gains and (losses) on defined benefit scheme |
|
- |
- |
|
- |
- |
- |
(10,215) |
(10,215) |
|
Fair value gain/(loss) on interest rate swap |
|
- |
- |
- |
- |
145 |
- |
- |
145 |
|
Tax credit on items taken directly to equity |
|
- |
- |
- |
- |
- |
- |
1,982 |
1,982 |
|
Total other comprehensive income/ (expense) |
|
- |
- |
- |
- |
145 |
(1,514) |
(8,233) |
(9,602) |
|
|
|
|
|
|
|
|
|
|
|
|
Transactions with owners of the Company |
|
|
|
|
|
|
|
|
|
|
Purchase of shares |
|
- |
- |
(212) |
- |
- |
- |
- |
(212) |
|
Share issues |
|
1 |
45 |
- |
- |
- |
- |
- |
46 |
|
Share-based payment awards exercised in period |
|
- |
- |
815 |
- |
- |
- |
(815) |
- |
|
Share-based payment fair value charges |
|
- |
- |
- |
- |
- |
- |
1,378 |
1,378 |
|
Dividends paid |
7 |
- |
- |
- |
- |
- |
- |
(6,128) |
(6,128) |
|
At 30 November 2011 |
|
1,869 |
26,963 |
(3,202) |
94 |
(44) |
115 |
2,723 |
28,518 |
Company balance sheet
as at 30 November 2011
|
|
|
At 30 November 2011 £000 |
At 30 September 2010 £000 |
|
Non-current assets |
|
|
|
|
Investments |
|
58,735 |
55,640 |
|
Trade and other receivables |
|
712 |
- |
|
|
|
59,447 |
55,640 |
|
Current assets |
|
|
|
|
Trade and other receivables |
|
31 |
10,108 |
|
Tax assets |
|
48 |
28 |
|
|
|
79 |
10,136 |
|
|
|
|
|
|
Total assets |
|
59,526 |
65,776 |
|
|
|
|
|
|
Current liabilities |
|
|
|
|
Trade and other payables |
|
(4,700) |
(686) |
|
|
|
(4,700) |
(686) |
|
|
|
|
|
|
Net current (liabilities)/assets |
|
(4,621) |
9,450 |
|
|
|
|
|
|
Non-current liabilities |
|
|
|
|
Other payables |
|
- |
(195) |
|
Provisions |
|
(126) |
- |
|
|
|
(126) |
(195) |
|
|
|
|
|
|
Total liabilities |
|
(4,826) |
(881) |
|
|
|
|
|
|
Net assets |
|
54,700 |
64,895 |
|
|
|
|
|
|
Equity attributable to equity holders of the parent |
|
|
|
|
Share capital |
|
1,869 |
1,868 |
|
Share premium account |
|
26,963 |
26,918 |
|
Own shares |
|
(3,202) |
(3,805) |
|
Capital redemption reserve |
|
94 |
94 |
|
Retained earnings |
|
28,976 |
39,820 |
|
Total equity |
|
54,700 |
64,895 |
Notes to the report and accounts
1. Preliminary announcement
The preliminary results for the 14 month period ended 30 November 2011 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 full financial statements which will be delivered before the Company's annual general meeting on 26 March 2012. These full financial statements will be published on the Group's website at www.rmeducation.com/investors.
The financial information set out in the preliminary announcement does not constitute the Group's statutory accounts for the 14 month period ended 30 November 2011 or for the year ended 30 September 2010. Statutory accounts for 2010 have been delivered to the Registrar of Companies and those for 2011 will be delivered following the Company's annual general meeting. The auditor's reports on both the 2011 and 2010 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 6 February 2012.
Change of year end
The financial year end of the Company and its subsidiaries has changed from 30 September to 30 November. Following the change of accounting reference date, this preliminary announcement discloses the financial performance and cash flows for the 14 months ended 30 November 2011 and the financial position as at 30 November 2011. As a result, the comparative financial information which is for the year to 30 September 2010 covers an indirectly comparable time period. Proforma financial information for the comparable year ended 30 November 2011 and the year ended 30 November 2010 has been included within an appendix to this announcement and is unaudited. The decision to change the financial year end was made in order to separate both the annual financial year planning and financial year end activity from the busiest operational period of the Group's year.
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 amortisation of acquisition related intangible assets; the impairment of goodwill, acquisition related intangible assets, other intangible assets and investments; the loss on sale of operations; share-based payment charges; restructuring costs; and the increase in provision for dilapidations on leased properties and onerous lease contracts. In the prior year exceptional costs relating to curtailment of Building Schools for the Future programme; and an exceptional pension credit on the Group's defined benefit pension scheme were also separately identified. The columns extend down the income statement to allow the tax and earnings per share impacts of these transactions to be understood.
Adoption of new and revised International Financial Reporting Standards
The Group has adopted no new standards that impact reported results or financial position in the current financial period.
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 and disposal groups held for sale which are measured at the lower of their carrying amount and fair value less costs to sell. 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.
The Directors have assessed forecast future cash flows over the coming year 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, 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.
2. Operating segments
The Group's business is supplying products and services to the UK and international education markets.
For the period covered by these financial statements, the Group has operated Learning Technologies (which includes US and Asia-Pacific operations), Education Resources and Assessment and Data divisions and this is the basis under which segmental information has been presented to the chief operating decision maker, via Group consolidated management accounts. These are the segments that the Group has determined are its reportable segments.
The nature of the products/services sold within each segment is explained below:
· Learning Technologies - provides schools with classroom technology (including learning platforms, computer systems and interactive teaching equipment), infrastructure (including networking, MIS software, access control and cashless catering) and managed services
· Education Resources - provides schools with curriculum focussed classroom resources including teaching equipment and materials, furniture and educational software
· Assessment and Data - provides systems, platforms and outsourcing for testing and qualifications, and performs the collection, analysis and distribution of educational performance data
The following disclosure shows the result and total assets of these segments:
Segmental result
|
|
Learning Technologies £000 |
Education Resources £000 |
Assessment and Data £000 |
Total £000 |
|
14 months ended 30 November 2011 Revenue |
242,986 |
83,936 |
23,863 |
350,785 |
|
Adjusted operating profit* |
5,444 |
3,041 |
1,564 |
10,049 |
|
Investment income (note 3) |
|
|
|
1,079 |
|
Finance costs (note 4) |
|
|
|
(850) |
|
Adjusted profit before tax* |
|
|
|
10,278 |
|
Adjustments* |
|
|
|
(33,658) |
|
Loss before tax |
|
|
|
(23,380) |
|
|
|
|
|
|
|
Group loss before tax |
|
|
|
(23,380) |
|
Share of associate result |
|
|
|
- |
|
Loss before tax |
|
|
|
(23,380) |
|
|
|
|
|
|
|
|
Learning Technologies £000 (Restated) |
Education Resources £000 (Restated) |
Assessment and Data £000 (Restated) |
Total £000 (Restated) |
|
Year ended 30 September 2010 Revenue |
273,950 |
83,288 |
22,886 |
380,124 |
|
Adjusted operating profit* |
10,454 |
9,186 |
2,989 |
22,629 |
|
Investment income (note 3) |
|
|
|
1,091 |
|
Finance costs (note 4) |
|
|
|
(1,321) |
|
Adjusted profit before tax* |
|
|
|
22,399 |
|
Adjustments* |
|
|
|
1,520 |
|
Profit before tax |
|
|
|
23,919 |
|
|
|
|
|
|
|
Group profit before tax |
|
|
|
23,880 |
|
Share of associate result |
|
|
|
39 |
|
Profit before tax |
|
|
|
23,919 |
* Refer to note 1 for an explanation of adjustments to profit.
Results for the year to September 2010 have been restated to reflect current period treatment of restructuring costs and share-based payment charges as adjustments with costs of £1,344,000 and £1,417,000 being reallocated respectively. These costs had previously been allocated to adjusted operating profit according to the employee's role. The restatement has resulted in a corresponding change to adjusted operating profit. As a reallocation only there is no change to profit before tax.
Segmental assets
Segmental assets include all assets except for tax balances, balance due from joint venture and investment undertakings and cash and cash equivalents which are shown as non-segmental balances:
|
|
Learning Technologies £000 |
Education Resources £000 |
Assessment and Data £000 |
Total £000 |
|
At 30 November 2011 Total assets - Segmental |
69,111 |
49,809 |
8,005 |
126,925 |
|
- Other |
|
|
|
36,187 |
|
|
|
|
|
163,112 |
|
|
|
|
|
|
|
At 30 September 2010 Total assets - Segmental |
111,146 |
63,579 |
11,355 |
186,080 |
|
- Other |
|
|
|
19,550 |
|
|
|
|
|
205,630 |
The Group's operations are predominately located in the United Kingdom, with operations also in the United States of America and India. The Group sells to the markets of these countries and also the European, North American, Asian and Australasian continents. Revenues of £30.2m (2010: £49.6m) were earned on non-UK sales and include RM Learning Technologies sales of £18.4m (2010: £34.0m) largely in the United States of America, £9.6m (2010: £14.3m) of RM Education Resources sales largely in Europe and £2.2m (2010: £1.3m) of RM Assessment and Data sales largely in Europe.
Included within the disclosed segmental assets are non current assets (excluding financial instruments, deferred tax assets and other financial assets) of £41.3m (2010: £57.0m) located in the United Kingdom, £1.0m (2010: £0.7m) located in India, £nil (2010: £2.8m) in the United States of America and £nil (2010: £2.7 m) in Australasia.
Following the September 2011 Strategic Review, from 1 December 2011 the Group was restructured into four operating divisions: Education Technology, Managed Services, Education Resources and Education Software. For results after 1 December 2011 the Group has moved to this basis of responsibility and reporting and segmental information for the Group will be reported on this basis in the future. Proforma information contained within the Appendix to this preliminary announcement gives derived segmental performance under this new basis. The Strategic Review identified a number of businesses to be exited by the Group and these have either been sold at the balance sheet date or identified as held for sale. The results of exited businesses are included above within the division in which they have been historically reported. Proforma segmental information, within the Appendix, separately identifies the performance of these exited businesses.
3. Investment income
|
|
14 months 2011 £000 |
12 months 2010 £000 |
|
Bank interest |
141 |
92 |
|
Income from sale of finance lease debt |
817 |
795 |
|
Other finance income |
121 |
204 |
|
|
1,079 |
1,091 |
4. Finance costs
|
|
14 months 2011 £000 |
12 months 2010 £000 |
|
Interest on bank overdrafts and loans |
483 |
627 |
|
Interest on loan notes |
20 |
64 |
|
Net finance costs on defined benefit pension scheme |
347 |
630 |
|
|
850 |
1,321 |
5. Tax
a) Income statement
Analysis of tax charged in income statement:
|
|
14 months 2011 £000 |
12 months 2010 £000 |
|
|
|
|
Current taxation |
|
|
|
UK corporation tax |
(489) |
4,185 |
|
Adjustment in respect of prior years |
(194) |
(620) |
|
Overseas tax - current period |
184 |
(374) |
|
Total current tax (credit)/charge |
(499) |
3,191 |
|
|
|
|
Deferred taxation |
|
|
|
Temporary differences |
189 |
2,491 |
|
Adjustment in respect of prior years |
(175) |
78 |
|
Overseas tax - current period |
214 |
- |
|
Total deferred tax charge |
228 |
2,569 |
|
|
|
|
|
Total income statement tax (credit)/charge |
(271) |
5,760 |
In addition to the amount charged to the income statement, £1,982,000 of tax has been credited to equity through the statement of comprehensive income (2010: £2,209,000).
Further analysis of the Group's deferred tax assets and liabilities is shown below.
b) Reconciliation to standard UK tax rate
The difference between the total tax shown above and the amount calculated by applying the standard rate of UK corporation tax to the profit before tax is as follows:
|
|
Adjusted £000 |
Adjustments £000 |
Total £000 |
|
14 months ended 30 November 2011 |
|
|
|
|
Profit/(loss) before tax |
10,278 |
(33,658) |
(23,380) |
|
|
|
|
|
|
Tax at 26.86% thereon: |
2,761 |
(9,041) |
(6,280) |
|
|
|
|
|
|
Effects of: |
|
|
|
|
- impact of change in tax rate on carried forward deferred tax asset |
145 |
(42) |
103 |
|
- other expenses not deductible for tax purposes |
228 |
150 |
378 |
|
- temporary differences unrecognised for deferred tax |
1,388 |
191 |
1,579 |
|
- other temporary timing differences |
54 |
367 |
421 |
|
- research and development tax credit - current period |
(775) |
- |
(775) |
|
- research and development tax credit - prior period adjustment |
(76) |
- |
(76) |
|
- effect of profits/losses in various overseas tax jurisdictions |
184 |
- |
184 |
|
- impairments |
- |
3,215 |
3,215 |
|
- loss on sale of operations |
|
1,273 |
1,273 |
|
- prior period adjustments - other |
(293) |
- |
(293) |
|
Tax charge/(credit) |
3,616 |
(3,887) |
(271) |
|
|
|
|
|
|
Effective tax rate |
35.2% |
11.5% |
1.2% |
|
|
Adjusted £000 (Restated) |
Adjustments £000 (Restated) |
Total £000 |
|
Year ended 30 September 2010 |
|
|
|
|
Profit before tax |
22,399 |
1,520 |
23,919 |
|
|
|
|
|
|
Tax at 28% thereon: |
6,271 |
426 |
6,697 |
|
|
|
|
|
|
Effects of: |
|
|
|
|
- impact of change in tax rate on carried forward deferred tax asset |
195 |
(30) |
165 |
|
- other expenses not deductible for tax purposes |
340 |
- |
340 |
|
- other temporary timing differences |
63 |
272 |
335 |
|
- research and development tax credit - current period |
(890) |
- |
(890) |
|
- research and development tax credit - prior period adjustment |
(548) |
- |
(548) |
|
- effect of profits/losses in various overseas tax jurisdictions |
(345) |
- |
(345) |
|
- prior period adjustments - other |
- |
6 |
6 |
|
Tax charge |
5,086 |
674 |
5,760 |
|
|
|
|
|
|
Effective tax rate |
22.7% |
44.3% |
24.1% |
As explained within the income statement, results for the year to 30 September 2010 have been restated to reflect the current period treatment of restructuring costs and share-based payments as adjustments. The related tax credit has also been restated. There is no change to the tax charge as a result of this reallocation.
c) Deferred tax
The following are the major deferred tax assets and liabilities recognised by the Group and movements thereon during the current period and prior reporting year.
|
|
Accelerated tax depreciation £000 |
Retirement benefit obligations £000 |
Share-based payment £000 |
Short-term timing differences £000 |
Acquisition related intangible assets £000 |
Total £000 |
|
|
|
|
|
|
|
|
|
At 1 October 2009 |
1,271 |
3,580 |
645 |
1,072 |
(1,392) |
5,176 |
|
(Charge)/credit to income |
(195) |
(2,454) |
(75) |
(203) |
358 |
(2,569) |
|
(Charge)/credit to equity |
- |
2,216 |
10 |
- |
(8) |
2,218 |
|
At 1 October 2010 |
1,076 |
3,342 |
580 |
869 |
(1,042) |
4,825 |
|
(Charge)/credit to income |
14 |
(387) |
(138) |
(77) |
360 |
(228) |
|
(Charge)/credit to equity |
- |
2,339 |
(290) |
- |
- |
2,049 |
|
Disposed on sale of business |
- |
- |
- |
- |
156 |
156 |
|
Reclassified to held for sale |
(16) |
- |
(2) |
(38) |
227 |
171 |
|
At 30 November 2011 |
1,074 |
5,294 |
150 |
754 |
(299) |
6,973 |
Certain deferred tax assets and liabilities have been offset above. The following analysis shows the deferred tax balances before offset, as shown in the balance sheet:
|
|
At 30 Nov 2011 £000 |
At 30 Sept 2010 £000 |
|
|
|
|
|
Deferred tax assets |
6,973 |
4,859 |
|
Deferred tax liabilities |
- |
(34) |
|
|
6,973 |
4,825 |
d) Tax assets/liabilities
Corporation tax balances are offset when there is a legally enforceable right to set off current tax assets against current tax liabilities. The following is an analysis of the current tax assets and liabilities for financial reporting purposes:
|
|
At 30 Nov 2011 £000 |
At 30 Sept 2010 £000 |
|
|
|
|
|
Current tax assets |
2,058 |
877 |
|
Current tax liabilities |
- |
(1,878) |
|
|
2,058 |
(1,001) |
6. Earnings per ordinary share
The calculation of basic and diluted earnings per ordinary share is shown below: As explained in note 1, adjusted earnings per share have also been presented.
Basic earnings per ordinary share:
|
|
(Loss)/profit after tax £000 |
14 months 2011 Weighted average number of shares '000 |
Pence per share |
Profit after tax £000 (Restated) |
12 months 2010 Weighted average number of shares '000 |
Pence per share (Restated) |
|
Basic (loss)/earnings per ordinary share |
(23,109) |
91,260 |
(25.3) |
18,159 |
92,121 |
19.7 |
|
Effect of adjustments* |
29,771 |
- |
32.6 |
(846) |
- |
(0.9) |
|
Adjusted basic earnings per ordinary share* |
6,662 |
91,260 |
7.3 |
17,313 |
92,121 |
18.8 |
Diluted earnings per ordinary share:
|
|
(Loss)/profit after tax £000 |
14 months 2011 Weighted average number of shares '000 |
Pence per share |
Profit after tax £000 (Restated*) |
12 months 2010 Weighted average number of shares '000 |
Pence per share (Restated*) |
|
Basic (loss)/earnings per ordinary share |
(23,109) |
91,260 |
(25.3) |
18,159 |
92,121 |
19.7 |
|
Effect of dilutive potential ordinary shares: share options |
- |
27 |
- |
- |
92 |
- |
|
Diluted (loss)/earnings per ordinary share |
(23,109) |
91,287 |
(25.3) |
18,159 |
92,213 |
19.7 |
|
Effect of adjustments* |
29,771 |
- |
32.6 |
(846) |
- |
(0.9) |
|
Adjusted diluted earnings per ordinary share* |
6,662 |
91,287 |
7.3 |
17,313 |
92,213 |
18.8 |
* Adjustments made to profit after tax are as set out within the Income Statement. The effect of adjustments on prior period adjusted earnings per share has been restated, consistent with the treatment of restructuring costs and share-based payment costs within the Income Statement. There has been no change to the basic or diluted earnings per share presented in the prior period.
7. Dividends
Amounts recognised as distributions to equity holders in the period:
|
|
14 months 2011 £000 |
12 months 2010 £000 |
|
|
|
|
|
Final dividend for the year ended 30 September 2010 of 5.25p (2009: 4.85p) per share |
4,786 |
4,492 |
|
Interim dividend for the 14 months ended 30 November 2011 of 1.47p (2010: 1.39p) per share |
1,342 |
1,272 |
|
|
6,128 |
5,764 |
The proposed final dividend of 1.53p per share was approved by the Board on 3 February 2012. The dividend is subject to approval by shareholders at the annual general meeting and the expected cost of £1.4m has not been included as a liability as at 30 November 2011.
8. Goodwill
|
|
£000 |
|
Cost |
|
|
At 1 October 2009 |
36,287 |
|
Exchange differences |
270 |
|
Change in estimated deferred consideration payable |
132 |
|
At 1 October 2010 |
36,689 |
|
Exchange differences |
176 |
|
Derecognised on disposal of operations |
(4,103) |
|
Derecognised on dissolution of subsidiary |
(1,247) |
|
Assets reclassified as held for sale |
(6,532) |
|
At 30 November 2011 |
24,983 |
|
|
|
|
Accumulated impairment losses |
|
|
At 1 October 2009 and 1 October 2010 |
(2,469) |
|
Impairment losses in the period |
(10,992) |
|
Derecognised on dissolution of subsidiary |
1,247 |
|
Assets reclassified as held for sale |
4,580 |
|
At 30 November 2011 |
(7,634) |
|
|
|
|
Carrying amount |
|
|
At 30 November 2011 |
17,349 |
|
At 30 September 2010 |
34,220 |
Goodwill acquired in a business combination is allocated, at acquisition, to the cash generating units ('CGUs') that are expected to benefit from that business combination. As explained within note 2, for the period to 30 November 2011 the Group has operated under Learning Technologies, Assessment and Data and Education Resources segments.
Over the course of the period and with developments in the Group's ability to allocate net assets to sub-segmental level, the Group's CGUs have been lowered to sub-segment Business Unit level and it is this level to which goodwill has been allocated. This was reinforced in the Group's September 2011 Strategic Review where certain operations were identified as being non-core to the Group's continuing strategy and an active disposal programme was initiated, with a number of subsidiaries and businesses being sold in the period to 30 November 2011 and others identified as held for sale and hence transferred to this category. Goodwill attaching to the relevant CGUs has been allocated to the subsidiary or business being sold.
The carrying amount of goodwill has been allocated as follows:
|
|
Pre-tax discount rate |
At 30 Nov 2011 £000 |
|
Assessment and Data: |
|
|
|
- RM Data Solutions |
13.8% |
2,956 |
|
Education Resources: |
|
|
|
- RM Education - RM Software |
13.8% |
1,550 |
|
- TTS Group |
13.5% |
11,111 |
|
- RM-SpaceKraft |
13.4% |
1,732 |
|
|
|
17,349 |
|
|
Pre-tax discount rate |
At 30 Sept 2010 £000 |
|
Learning Technologies |
15.6% |
9,904 |
|
Assessment and Data |
15.6% |
2,956 |
|
Education Resources |
15.6% |
21,360 |
|
|
|
34,220 |
The Group tests goodwill annually for impairment or more frequently if there are indications that goodwill might be impaired. This includes assessment following the Group's September 2011 Strategic Review, where impairment indicators were evident. The Review was performed in response to recent unpredictability within the Education market, with the Group's performance being dependent upon the UK macro-economic environment and particularly public sector spending on Education. This suggested that operating results were anticipated to be below analyst forecasts at the time. The following impairments have been recognised in the period:
Learning Technologies
· In advance of the balance sheet date the hardware element of the Group's US business was sold to Troxell Communications Inc and the Group's Australian subsidiary was sold to Civica Pty Ltd. Goodwill relating to these businesses of £1.7m and £2.4m respectively was included within the loss on sale.
· On 1 December 2011, certain trade and assets of AMI Education Solutions Ltd, representing the Ranger business were transferred to RM Education plc. Following an assessment of the likely future cash flows from these assets an impairment charge of £4.2m was recognised on goodwill allocated to the Ranger business.
· The remaining trade of AMI Education Solutions Ltd being the Easytrace business was sold to Jonas Computing (UK) Ltd on 19 January 2012. This business was recorded as held for sale at the balance sheet date (refer to note 11b). A goodwill impairment of £1.7m, reflecting the ultimate sales price of this business, has been recognised. As a result the goodwill relating to Easytrace is fully impaired.
Assessment and Data
· The goodwill within this segment relates to Group subsidiary RM Data Solutions Ltd. After considering the likely future cash flows of this business it was determined that no impairment was required. The business is heavily reliant on one public sector contract and it is likely that, in the event this contract is not renewed a goodwill impairment charge will be recorded.
Education Resources
· An impairment of £2.3m, representing full impairment, has been recognised in relation to goodwill allocated to the Isis Concepts Ltd business, which is being actively marketed for sale. This reflects an assessment of the estimated sales proceeds.
· Following a review of forecast future cash flows the goodwill on RM Education plc's Software Products business and on SpaceKraft Ltd subsidiary related goodwill has been impaired by £1.1m and £1.0m respectively.
· Since the balance sheet date, the Group's 49% investment in Lego Education Europe Ltd and associated support provided through Group subsidiary DACTA Ltd has been sold to Lego A/S. The business is recorded within held for sale at the balance sheet date. A goodwill impairment of £0.5m reflecting the ultimate sales price of the business has been recognised. The remaining goodwill on the DACTA business of £2.0m has been transferred to assets held for sale (refer to note 11b).
· Following a review of the forecast future cash flows, no impairment was required on Group subsidiary TTS Group Ltd.
The total impact of the items identified above is an impairment charge on the carrying value of goodwill of £11.0m (2010: £nil), which has been recognised in the period within operating expenses in the consolidated income statement.
The recoverable amounts of the CGUs are determined from value in use calculations or, where assets are classified as held for sale, the estimated sales proceeds. The key assumptions for the value in use calculations are those regarding the discount rates and growth rates.
The Group monitors its post-tax Weighted Average Cost of Capital and those of its competitors using market data. This measure has been subject to downward pressure as a result of reduced yields on UK Government Gilts and, for RM specifically, reductions in RM plc's equity beta. In considering the discount rates applying to CGUs, the Directors have considered the relative sizes, risks and the inter-dependencies of its CGUs and their relatively narrow operation within the Education products and services market. The impairment reviews use a discount rate adjusted for pre-tax cash flows. Analysis of the sensitivity of the resultant impairment reviews to changes in the discount rate is included below.
The Group prepares cash flow forecasts derived from the most recent financial plan approved by the Board and extrapolates cash flows for the following two years based on forecast growth rates of the CGUs. The growth rates are based on internal growth forecasts of between -7% and 3% (2010: 3% and 8%). The terminal rates used for the value in use calculation are between 0% and 3% (2010: 3%).
Sensitivity
The table below shows the sensitivity of the impairment reviews to the discount rate used:
|
£000 |
Carrying amount at 30 November 2011 £'000 |
Reduction in carrying amount from 1% increase in discount rate £'000 |
Increase in carrying amount from 1% decrease in discount rate £'000 |
|
Assessment and Data: |
|
|
|
|
- RM Data Solutions |
2,956 |
- |
- |
|
Education Resources: |
|
|
|
|
- RM Education - RM Software |
1,550 |
(99) |
114 |
|
- TTS Group |
11,111 |
- |
- |
|
- RM-SpaceKraft |
1,732 |
(277) |
344 |
|
|
17,349 |
(376) |
458 |
9. Trade and other receivables
|
|
At 30 Nov 2011 £000 |
At 30 Sept 2010 £000 |
|
Current |
|
|
|
Financial assets: |
|
|
|
Trade receivables |
43,938 |
75,076 |
|
Long-term contract balances |
9,407 |
13,856 |
|
Other receivables |
2,046 |
1,914 |
|
Derivative financial instruments: forward foreign exchange contracts |
67 |
73 |
|
Accrued income |
782 |
1,636 |
|
Prepayments |
6,030 |
5,283 |
|
|
62,270 |
97,838 |
|
|
|
|
|
Non-current |
|
|
|
Other receivables - amount owed by joint venture undertaking |
1,878 |
- |
|
Other receivables - other |
712 |
- |
|
|
2,590 |
- |
10. Trade and other payables
|
|
At 30 Nov 2011 £000 |
At 30 Sept 2010 £000 (Restated) |
|
Current |
|
|
|
Financial liabilities: |
|
|
|
Trade payables |
16,206 |
34,379 |
|
Other taxation and social security |
5,307 |
12,341 |
|
Other payables - other |
2,628 |
2,780 |
|
Derivative financial instruments: |
|
|
|
- Forward foreign exchange contracts |
273 |
73 |
|
- Interest rate swap |
72 |
189 |
|
Accruals |
22,327 |
25,276 |
|
Long-term contract balances |
6,895 |
5,888 |
|
Loan notes |
- |
1,379 |
|
Deferred consideration |
195 |
195 |
|
Deferred income |
23,878 |
24,054 |
|
|
77,781 |
106,554 |
|
|
|
|
|
Non-current |
|
|
|
Other payables - deferred consideration |
- |
195 |
|
Deferred income: |
|
|
|
- due after one year but within two years |
3,627 |
3,014 |
|
- due after two years but within five years |
2,576 |
2,633 |
|
- due after five years |
83 |
76 |
|
|
6,286 |
5,918 |
Within the prior year comparators, an amount of £5.3m has been reclassified from accruals to long-term contract balances reflecting the nature of the balance.
11. Held for sale and exited businesses
As a result of the September 2011 Strategic Review, the Board concluded that several Group subsidiaries and businesses would be disposed. These have been determined to not meet the IFRS 5 Non-Current Assets Held for Sale and Discontinued Operations definition of discontinued operations.
a) Loss on disposals
On 21 October 2011, the Group entered into a sale agreement to dispose of the hardware element of its US business for a cash consideration of £2,872,000. On 8 November 2011, the Group entered into a sale agreement to dispose of its subsidiary RM Asia-Pacific for a cash consideration of £903,000. The net assets disposed and the impact on the income statement of these disposals are detailed below:
|
|
RM Asia Pacific £000 |
US hardware £000 |
Total £000 |
|
14 months to 30 November 2011 |
|
|
|
|
Goodwill |
2,382 |
1,721 |
4,103 |
|
Other intangible assets |
- |
411 |
411 |
|
Property, plant and equipment |
280 |
113 |
393 |
|
Deferred tax liabilities |
- |
(156) |
(156) |
|
Inventories |
26 |
2,031 |
2,057 |
|
Trade and other receivables |
1,996 |
379 |
2,375 |
|
Trade and other payables |
(2,171) |
(83) |
(2,254) |
|
Net Assets disposed |
2,513 |
4,416 |
6,929 |
|
|
|
|
|
|
Other exit costs |
127 |
2,519 |
2,646 |
|
Foreign exchange reserve - reclassified to income |
(1,217) |
(192) |
(1,409) |
|
|
|
|
|
|
Total consideration |
903 |
2,872 |
3,775 |
|
Loss on disposal |
(520) |
(3,871) |
(4,391) |
Other exit costs principally relate to asset impairments, and termination and exit costs and provisions.
b) Held for sale operations
At the balance sheet date certain businesses identified for disposal were being actively marketed for sale but had not been disposed. These are recorded as held for sale:
Investment in joint venture
At the balance sheet date the Group held a 49% equity holding with equivalent voting power in Lego Education Europe Ltd, a joint venture incorporated in the United Kingdom. The joint venture was incorporated on 9 September 2010 with a financial year end of 31 December. The joint venture commenced trading on 1 January 2011 and the results for the 11 months ended 30 November 2011 have been equity accounted in the consolidated financial statements.
Following the Group's September 2011 Strategic Review, it was concluded that the investment in joint venture was non-core to the Group's continuing strategy and an active disposal programme was initiated. At 30 November 2011, the investment in joint venture was classified as held for sale and was subsequently disposed on 3 January 2012.
Investment in subsidiaries
The following subsidiaries were identified as held for sale at 30 November 2011:
|
|
Principal activity
|
Type of sale
|
Proportion of voting rights and shares held at 30 Nov 2011 |
|
AMI Education Solutions Ltd |
Software, services and systems |
Sale of shares |
100% |
|
Isis Concepts Ltd |
Resource supply |
n/a |
100% |
|
DACTA Ltd |
Resource supply |
Sale of trade and assets |
100% |
These operations, which are anticipated to be sold within 12 months, have been classified as a disposal group held for sale and presented separately in the balance sheet. The estimated proceeds on disposal are expected to be lower than the book value of the related net assets and accordingly an impairment of £5.0 million has been recognised to goodwill and acquisition related intangible assets on the classification of these operations as held for sale.
The major classes of assets and liabilities comprising the operations classified as held for sale are as follows:
|
|
Net assets before impairment on classification to held for sale £000 |
Impairment on classification to held for sale £000 |
Net assets held for sale at 30 November 2011 Total £000 |
|
|
|
|
|
|
Goodwill |
6,532 |
(4,580) |
1,952 |
|
Intangible assets |
1,373 |
(443) |
930 |
|
Property, plant and equipment |
319 |
- |
319 |
|
Deferred tax assets |
33 |
- |
33 |
|
Investment in joint venture |
37 |
- |
37 |
|
Inventories |
727 |
- |
727 |
|
Trade and other receivables |
2,793 |
- |
2,793 |
|
Total assets held for sale |
11,814 |
(5,023) |
6,791 |
|
|
|
|
|
|
Trade and other payables |
(2,617) |
- |
(2,617) |
|
Provisions |
(93) |
- |
(93) |
|
Deferred tax liabilities |
(204) |
- |
(204) |
|
Total liabilities directly associated with assets held for sale |
(2,914) |
- |
(2,914) |
|
|
|
|
|
|
Net assets of disposal group |
8,900 |
(5,023) |
3,877 |
12. Retirement benefit obligation
Defined benefit scheme
The Group operates one defined benefit pension scheme, the Research Machines plc 1988 Pension Scheme. The scheme provides benefits to qualifying employees and former employees of RM Education plc, 3T Productions Ltd and Softease Ltd, but was closed to new members with effect from 1 January 2003. RM Education plc is the only company currently with qualifying employees. Under the scheme, employees are entitled to retirement benefits of 1/60th of final pensionable 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 scheme is a funded scheme.
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 2009 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 2011. The present value of the defined benefit obligation and the related current service cost was measured using the projected unit credit method.
As at 31 May 2009, the triennial valuation for statutory funding purposes showed a deficit of £16.6 million (31 May 2006: £12.7 million). The Group agreed with the Scheme Trustees to repay this amount via deficit catch up payments of £1.7 million per annum until 31 May 2017.
The cost of future provision, on a valuation basis as a percentage of pension contribution salary, is 19.0% for Normal Retirement Age 60 (2009: 20.9%, 2006: 21.4%, 2003: 20.4%) and 13.0% for Normal Retirement Age 65 (2009: 15.1%, 2006: 15.3%, 2003: 13.1%). The costs post 2006 and pre 2010 take into account the benefit of the implementation of a contribution salary cap at 5% per annum and from 2010 the lowering of the cap to 2.5%.
During the period, following the UK Government's publication and application, the statutory inflation rate applying to increases in pensions in payment and for revaluing deferred benefits changed from the Retail Prices Index to the Consumer Prices Index. The impact of the change, being a £4.7m actuarial gain on liabilities, has been recognised in the Statement of Other Comprehensive Income.
The Group announced in its September 2011 Strategic Review that it had begun discussing with Scheme Trustees the potential closure of the Scheme to future accrual, with the objectives of long-term risk reduction and the provision of equal benefits to employees. These discussions are ongoing.
IAS 19 valuation
Defined benefit pension scheme charges/(credits) recognised in income are as follows:
|
|
14 months 2011 £000 |
12 months 2010 £000 |
|
Current service cost, recognised within operating profit |
3,122 |
3,247 |
|
Curtailment gain |
- |
(7,267) |
|
Operating (income)/charge |
3,122 |
(4,020) |
|
|
|
|
|
Interest cost |
7,137 |
5,716 |
|
Expected return on scheme assets |
(6,790) |
(5,086) |
|
Expense recognised within finance cost |
347 |
630 |
|
|
|
|
|
|
3,469 |
(3,390) |
Of the £3.1m (2010: £3.2m) current service cost, £1.6m (2010: £1.7m) is included in cost of sales and £1.5m (2010: £1.5m) in operating expenses.
The amount included within the balance sheet arising from the Group's obligations in respect of its defined benefit scheme, and the expected rate of return on scheme assets are as follows:
|
|
At 30 Nov 2011 |
At 30 Sept 2010 |
||
|
|
% |
£000 |
% |
£000 |
|
Equities |
6.5% |
54,594 |
7.2% |
51,109 |
|
Bonds, gilts and cash |
3.4% |
56,821 |
3.9% |
51,183 |
|
Total fair value of scheme assets |
|
111,415 |
|
102,292 |
|
Present value of defined benefit obligations |
|
(132,589) |
|
(114,672) |
|
Deficit in scheme and liability recognised in balance sheet |
|
(21,174) |
|
(12,380) |
|
Related deferred tax asset |
|
5,294 |
|
3,342 |
|
Net pension deficit |
|
(15,880) |
|
(9,038) |
The actual return on scheme assets in the period was a gain of £5.9 million (2010: gain of £8.8 million). The expected return on scheme equity assets is based upon the expected out-performance of equities over government bonds over the long term and includes an allowance for future expenses. The bond rate is based on the addition of a risk loading to the long term risk free rate of return and also includes an allowance for future expenses.
Amounts recognised directly in equity in respect of the defined benefit pension scheme are as follows:
|
|
14 months 2011 £000 |
12 months 2010 £000 |
|
Actuarial gains and (losses) |
(10,215) |
(7,913) |
|
Experience gains and (losses) |
- |
- |
|
|
(10,215) |
(7,913) |
Cumulative actuarial gains and losses recognised in the statement of recognised income and expense since 1 October 2004 are losses of £32.9m (2010: losses of £22.7m).
Key assumptions used:
|
|
At 30 Nov 2011 |
At 30 Sept 2010 |
|
Rate of increase in salaries |
2.4% |
2.4% |
|
Rate of increase of pensions (pre 6 April 1997, pre 1 June 2005, post 31 May 2005) |
1.3%, 2.9%, 2.0% |
1.3%, 3.2%, 2.3% |
|
Discount rate |
4.8% |
5.3% |
|
Inflation assumption: |
|
|
|
- CPI |
2.3% |
n/a |
|
- RPI |
3.0% |
3.3% |
Mortality assumptions align with those used in the triennial valuation and are the SAPS 03 Normal year of birth, medium cohort tables with a 1% mortality improvement underpin. These give average life expectancies as follows:
|
|
At 30 Nov 2011 |
At 30 Sept 2010 |
||
|
|
Male |
Female |
Male |
Female |
|
Pensioner member age 65 (current life expectancy) |
21.3 |
24.1 |
21.3 |
24.1 |
|
Non-pensioner member age 45 (life expectancy at 65) |
23.2 |
26.0 |
23.2 |
26.0 |
Movements in fair value of scheme assets were as follows:
|
|
14 months 2011 £000 |
12 months 2010 £000 |
|
At start of period |
102,292 |
89,880 |
|
Expected return on scheme assets |
6,790 |
5,086 |
|
Actuarial gains and (losses) - actual return less expected return |
(927) |
3,695 |
|
Contributions from sponsoring companies: |
|
|
|
- In respect of current service cost |
3,122 |
3,247 |
|
- In excess of current service cost |
1,768 |
1,682 |
|
|
4,890 |
4,929 |
|
|
|
|
|
Contributions from scheme members |
36 |
18 |
|
Benefits paid |
(1,666) |
(1,316) |
|
At end of period |
111,415 |
102,292 |
Movements in fair value of defined benefit obligations were as follows:
|
|
14 months 2011 £000 |
12 months 2010 £000 |
|
At start of period |
114,672 |
102,666 |
|
Current service costs |
3,122 |
3,247 |
|
Curtailment gain - exceptional credit from lowering inflation cap to 2.5% per annum |
- |
(7,267) |
|
Interest cost |
7,137 |
5,716 |
|
Contributions from scheme members |
36 |
18 |
|
Actuarial (gains) and losses: |
|
|
|
- Movement from RPI to CPI |
(4,714) |
- |
|
- Other |
14,002 |
11,608 |
|
|
9,288 |
11,608 |
|
|
|
|
|
Benefits paid |
(1,666) |
(1,316) |
|
At end of period |
132,589 |
114,672 |
The history of experience adjustments is as follows:
|
|
14 months 2011 |
12 months 2010 |
12 months 2009 |
12 months 2008 |
12 months 2007 |
|
Difference between expected and actual return on scheme assets: |
|
|
|
|
|
|
- amount (£000) |
(927) |
3,695 |
4,540 |
(15,189) |
1,102 |
|
- as a percentage of scheme assets |
(1)% |
4% |
5% |
(20)% |
1% |
|
Experience gains and (losses) on scheme liabilities: |
|
|
|
|
|
|
- amount (£000) |
- |
- |
(1,100) |
- |
- |
|
- as a percentage of scheme liabilities |
- |
- |
(1)% |
- |
- |
The amount of contributions expected to be paid to the Scheme during the year to 30 November 2012 are contingent upon the ongoing discussions with the Scheme Trustees over the potential closure of the Scheme to future accrual, the timing of any closure and the up-coming triennial valuation of the Scheme as at 31 May 2012. The Company is committed via the Scheme's current Schedule of Contributions to make deficit reduction payments of £1.7m per annum on a funding basis of valuing liabilities to May 2017.
Defined benefit pension parameters
The defined benefit pension scheme accounting entries require a number of estimates to be made including the discount rate applied to liabilities, the current and past service costs and appropriate mortality assumptions. The financial position and performance of the scheme are sensitive to these parameters owing to the long duration of the liabilities.
Sensitivity to these assumptions is shown in the table below:
|
|
Current assumption
|
Increase/(decrease) in pre-tax deficit £000 |
|
Discount rate increase of 0.1% |
4.80% |
(3,421) |
|
Inflation increase of 0.1% |
3.0% |
3,485 |
|
1 year additional life expectancy |
SAPS normal with 1% mortality improvement underpin |
2,142 |
If the above assumptions were decreased by 0.1%, this would result in an approximately equal and opposite effect on the pre-tax deficit.
Risk of deficit increase on distributable reserves
RM plc Company has distributable reserves of £29m, representing approximately nine years of dividend payments at the current proposed levels. RM plc has direct investment in TTS Group Ltd and SpaceKraft Ltd and these investments are expected to continue to remit dividends to RM plc. RM plc's main operating subsidiary, RM Education plc, which is also a direct investment, is the principal employer to the Research Machines plc 1988 Pension Scheme. At the balance sheet date RM Education plc has negative distributable reserves of £25m and as a consequence is blocked from paying dividends to RM plc. There is a risk that, despite continuing to trade profitably and generate cash, increases in the value of the deficit in the pension scheme may mean that RM Education plc remains blocked from paying dividends to RM plc and there is a remote risk that this block may ultimately restrict RM plc's ability to pay dividends to shareholders.
13. Subsequent events disclosure
In the period between the balance sheet date and the date of signing the accounts the Group has sold two operations which were held for sale at the balance sheet date. These were: the Group's 49% stake in Lego Education Europe and the business assets and employees of Dacta to Lego A/S for €4.36 million; and 100% of the equity of AMI Education Solutions Ltd, containing the Easytrace trade to Jonas Computing (UK) Ltd for £0.65 million plus working capital. Note 11b contains details of the assets held for sale. There were no significant differences between the assumed sales proceeds within these calculations and the considerations obtained.
RM Board director Rob Sirs resigned from the Company effective 31 January 2012.
Subsequent to the balance sheet date, on 27 January 2012 the Group signed a £30 million committed revolving credit facility with Barclays Bank which runs until March 2015. Together with an existing £3 million annual Barclays overdraft facility these will replace the $39.5m uncommitted HSBC dealing line and the £25 million committed acquisition borrowing facility (of which £13.0 million had been drawn at 30 November 2011).
Appendix to the financial statements
Proforma financial information
for the year ended 30 November 2011
On 20 October 2010 following a detailed review and consultation with major shareholders, the Board agreed to change the Company and Group's year end to 30 November. As explained in the Business Review: Finance within the 2010 Annual Report and Accounts, the change of year end means that 2011 is a fourteen month period from 1 October 2010 to 30 November 2011.
In order to present data for comparable time periods, proforma financial information showing the Group's financial performance and cash flows for the year ended 30 November 2011 and the financial position at 30 November 2011 is presented below with comparative financial information for the year ended 30 November 2010. This data has been prepared as if the Group had always had a 30 November year end.
This proforma financial information is unaudited.
Proforma consolidated income statement
for the year ended 30 November 2011
|
|
Notes |
Adjusted £000 |
Adjustments £000 |
Year ended 30 November 2011 Total £000 |
Adjusted £000 (Restated) |
Adjustments £000 (Restated) |
Year ended 30 November 2010 Total £000 (Restated) |
|
Revenue |
|
310,055 |
- |
310,055 |
376,105 |
- |
376,105 |
|
Cost of sales |
|
(228,686) |
- |
(228,686) |
(276,916) |
- |
(276,916) |
|
Gross profit |
|
81,369 |
- |
81,369 |
99,189 |
- |
99,189 |
|
Operating expenses |
|
(67,264) |
- |
(67,264) |
(77,806) |
- |
(77,806) |
|
- Amortisation of acquisition related intangible assets |
|
- |
(604) |
(604) |
- |
(1,114) |
(1,114) |
|
- Impairment of goodwill, acquisition related intangible assets, other intangible assets and investments |
|
- |
(12,370) |
(12,370) |
- |
- |
- |
|
- Loss on sale of operations |
|
- |
(4,391) |
(4,391) |
- |
- |
- |
|
- Share-based payment charges |
|
- |
(1,087) |
(1,087) |
- |
(1,501) |
(1,501) |
|
- Restructuring costs |
|
- |
(8,576) |
(8,576) |
- |
(1,286) |
(1,286) |
|
- Increase in provision for dilapidations on leased properties and onerous lease contracts |
|
- |
(5,986) |
(5,986) |
- |
- |
- |
|
- Exceptional costs relating to curtailment of Building Schools for the Future programme |
|
- |
- |
- |
- |
(1,474) |
(1,474) |
|
- Exceptional pension credit |
|
- |
- |
- |
- |
7,056 |
7,056 |
|
Share of results of associate and joint venture |
|
37 |
(28) |
9 |
63 |
(28) |
35 |
|
|
|
(67,227) |
(33,042) |
(100,269) |
(77,743) |
1,653 |
(76,090) |
|
Profit/(loss) from operations |
|
14,142 |
(33,042) |
(18,900) |
21,446 |
1,653 |
23,099 |
|
Investment income |
|
940 |
- |
940 |
984 |
- |
984 |
|
Finance costs |
|
(510) |
- |
(510) |
(1,579) |
- |
(1,579) |
|
Profit/(loss) before tax |
|
14,572 |
(33,042) |
(18,470) |
20,851 |
1,653 |
22,504 |
|
Tax |
16 |
(4,724) |
3,868 |
(856) |
(4,830) |
(752) |
(5,582) |
|
Profit/(loss) for the year attributable to equity holders of the parent |
|
9,848 |
(29,174) |
(19,326) |
16,021 |
901 |
16,922 |
|
|
|
|
|
|
|
|
|
|
Earnings/(loss) per ordinary share: |
|
|
|
|
|
|
|
|
Basic |
|
10.8p |
(32.0)p |
(21.2)p |
17.6p |
1.0p |
18.6p |
|
Diluted |
|
10.8p |
(32.0)p |
(21.2)p |
17.4p |
1.0p |
18.4p |
On 16 May 2011 within the Group's interim results publication, proforma information was presented showing the profit for the year to 30 November 2010. To ensure consistency with the Income Statement presentation for the 14 months to 30 November 2011, this comparative data has been restated with share-based payment charges and restructuring costs, of £1,501,000 and £1,286,000 respectively, being reallocated from adjusted profit to adjustments, along with their related tax position. There is no change to the profit from operations, profit before tax or profit attributable to equity holders of the parent from this reallocation.
Proforma consolidated balance sheet
as at 30 November 2011
|
|
Notes |
As at 30 November 2011 £000 |
As at 30 November 2010 £000 |
|
Non-current assets |
|
|
|
|
Goodwill |
|
17,349 |
34,255 |
|
Acquisition related intangible assets |
|
1,202 |
3,573 |
|
Other intangible assets |
|
3,607 |
3,499 |
|
Property, plant and equipment |
|
16,600 |
20,365 |
|
Interest in associate |
|
316 |
1,004 |
|
Other receivables |
17 |
2,590 |
- |
|
Deferred tax assets |
|
6,973 |
3,897 |
|
|
|
48,637 |
66,593 |
|
Current assets |
|
|
|
|
Inventories |
|
18,827 |
25,461 |
|
Trade and other receivables |
17 |
62,270 |
77,866 |
|
Tax assets |
|
2,058 |
1,143 |
|
Cash and cash equivalents |
|
24,529 |
3,669 |
|
Assets held for sale |
|
6,791 |
- |
|
|
|
114,475 |
108,139 |
|
|
|
|
|
|
Total assets |
|
163,112 |
174,732 |
|
|
|
|
|
|
Current liabilities |
|
|
|
|
Bank overdraft |
|
- |
(6,083) |
|
Trade and other payables |
18 |
(77,781) |
(75,019) |
|
Provisions |
|
(7,752) |
(220) |
|
Tax liabilities |
|
- |
(523) |
|
Liabilities directly associated with assets held for sale |
|
(2,914) |
- |
|
|
|
(88,447) |
(81,845) |
|
|
|
|
|
|
Net current assets |
|
26,028 |
26,294 |
|
|
|
|
|
|
Non-current liabilities |
|
|
|
|
Retirement benefit obligation |
|
(21,174) |
(8,575) |
|
Bank loans |
|
(13,026) |
(12,419) |
|
Deferred tax liabilities |
|
- |
(32) |
|
Other payables |
18 |
(6,286) |
(5,556) |
|
Provisions |
|
(5,661) |
(678) |
|
|
|
(46,147) |
(27,260) |
|
|
|
|
|
|
Total liabilities |
|
(134,594) |
(109,105) |
|
|
|
|
|
|
Net assets |
|
28,518 |
65,627 |
|
|
|
|
|
|
Equity attributable to equity holders of the parent |
|
|
|
|
Share capital |
|
1,869 |
1,868 |
|
Share premium account |
|
26,963 |
26,918 |
|
Own shares |
|
(3,202) |
(3,805) |
|
Capital redemption reserve |
|
94 |
94 |
|
Hedging reserve |
|
(44) |
(156) |
|
Translation reserve |
|
115 |
1,613 |
|
Retained earnings |
|
2,723 |
39,095 |
|
Total equity |
|
28,518 |
65,627 |
Proforma consolidated cash flow statement
for the year ended 30 November 2011
|
|
|
Year ended 30 November 2011 £000 |
Year ended 30 November 2010 £000 |
|
(Loss)/profit from operations |
|
(18,900) |
23,099 |
|
Adjustments for: |
|
|
|
|
Loss/(gain) on foreign exchange derivatives |
|
607 |
(498) |
|
Share of results of associate and joint venture |
|
(9) |
(35) |
|
Impairment of investment in associate |
|
660 |
- |
|
Amortisation of acquisition related intangible assets |
|
604 |
1,114 |
|
Impairment of acquisition related intangible assets |
|
443 |
- |
|
Impairment of goodwill |
|
10,992 |
- |
|
Amortisation of other intangible assets |
|
1,114 |
1,150 |
|
Impairment of other intangible assets |
|
275 |
- |
|
Depreciation of property, plant and equipment |
|
7,051 |
7,408 |
|
Gain on disposal of property, plant and equipment |
|
(125) |
(372) |
|
Loss on disposal of other intangible assets |
|
62 |
- |
|
Loss on sale on operations |
|
4,391 |
- |
|
Increase in provisions |
|
11,660 |
737 |
|
Share-based payment charge |
|
1,087 |
1,501 |
|
Exceptional pension credit |
|
- |
(7,267) |
|
Operating cash flows before movements in working capital |
|
19,912 |
26,837 |
|
Decrease/(increase) in inventories |
|
3,461 |
(4,533) |
|
Decrease/(increase) in receivables |
|
9,316 |
(1,161) |
|
Increase/(decrease) in payables |
|
6,801 |
(6,961) |
|
Cash generated by operations |
|
39,490 |
14,182 |
|
Defined benefit pension contribution in excess of current service cost |
|
(1,638) |
(1,730) |
|
Tax paid |
|
(1,698) |
(4,477) |
|
Income on sale of finance lease debt |
|
683 |
705 |
|
Interest paid: |
|
|
|
|
- bank overdrafts and loans |
|
(396) |
(627) |
|
- other |
|
(12) |
(64) |
|
Net cash inflow from operating activities |
|
36,429 |
7,989 |
|
|
|
|
|
|
Investing activities |
|
|
|
|
Interest received |
|
136 |
48 |
|
Proceeds on disposal of property, plant and equipment |
|
412 |
675 |
|
Purchases of property, plant and equipment |
|
(4,055) |
(6,894) |
|
Purchases of other intangible assets |
|
(1,579) |
(1,891) |
|
Amounts advanced to joint venture undertaking |
|
(1,880) |
- |
|
Net cash used in investing activities |
|
(6,966) |
(8,062) |
|
|
|
|
|
|
Financing activities |
|
|
|
|
Dividends paid |
|
(6,128) |
(5,764) |
|
Proceeds from share capital issue, net of share issue costs |
|
46 |
198 |
|
Proceeds from sale of operations |
|
3,775 |
- |
|
Increase in borrowings |
|
670 |
4,019 |
|
Purchase of own shares |
|
(212) |
(3,214) |
|
Repayment of loan notes and deferred consideration |
|
(670) |
(4,386) |
|
Net cash used in financing activities |
|
(2,519) |
(9,147) |
|
|
|
|
|
|
Net increase/(decrease) in cash and cash equivalents |
|
26,944 |
(9,220) |
|
|
|
|
|
|
Cash and cash equivalents at the beginning of year |
|
(2,414) |
6,620 |
|
Effect of foreign exchange rate changes |
|
(1) |
186 |
|
Cash and cash equivalents at the end of year |
|
24,529 |
(2,414) |
Proforma group net funds
for the year ended 30 November 2011
|
|
As at 30 November 2010 £000 |
Cash flow £000 |
Non-cash movements
|
As at 30 November 2011 £000 |
|
|
Foreign exchange £000 |
Other £000 |
||||
|
Cash at bank |
3,669 |
20,861 |
(1) |
- |
24,529 |
|
Bank overdraft |
(6,083) |
6,083 |
- |
- |
- |
|
Cash and cash equivalents |
(2,414) |
26,944 |
(1) |
- |
24,529 |
|
Borrowings |
(12,419) |
(670) |
63 |
|
(13,026) |
|
Net cash |
(14,833) |
26,274 |
62 |
- |
11,503 |
|
Loan notes |
(475) |
475 |
- |
- |
- |
|
Net funds |
(15,308) |
26,749 |
62 |
- |
11,503 |
|
Deferred consideration |
(390) |
195 |
- |
- |
(195) |
|
Net funds less deferred consideration |
(15,698) |
26,944 |
62 |
- |
11,308 |
Notes to the proforma financial information
14. General information
The proforma financial information for the year ended 30 November 2011 does not constitute statutory accounts as defined in section 434 of the Companies Act 2006.
The annual financial statements of the Group are prepared in accordance with International Financial Reporting Standards (IFRSs) as adopted by the European Union. The proforma financial information has been prepared applying the accounting policies and presentation that were applied in the preparation of the Group's published consolidated financial statements for the 14 months ended 30 November 2011.
15. Operating segments
Segmental results within this proforma statement are presented in accordance with the Group's revised management structure which applied from 1 December 2011 and as explained within note 2 is a different basis of presentation from the statutory segmental information:
Segmental result
|
Year ended 30 November 2011 |
Education Technology £000 |
Managed Services £000 |
Education Resources £000 |
Education Software £000 |
Corporate Services £000 |
Exited operations** £000 |
Total
£000 |
|
Revenue |
125,712 |
61,487 |
57,961 |
38,538 |
- |
26,357 |
310,055 |
|
Adjusted operating profit/(loss)* |
8,303 |
6,137 |
5,415 |
3,229 |
(3,420) |
(5,522) |
14,142 |
|
Investment income |
|
|
|
|
|
|
940 |
|
Finance costs |
|
|
|
|
|
|
(510) |
|
Adjusted profit before tax* |
|
|
|
|
|
|
14,572 |
|
Adjustments* |
|
|
|
|
|
|
(33,042) |
|
Loss before tax |
|
|
|
|
|
|
(18,470) |
* Adjustments to profit are as stated within the income statement.
** Exited operations represent the results from operations sold or classified as held for sale at 30 November 2011
16. Tax
The effective tax rate for the 12 months ended 30 November 2011 is shown below:
|
|
|
|
Year ended 30 November 2011 |
|
|
Year ended 30 November 2010 |
|
|
Adjusted £000 |
Adjustments £000 |
Total £000 |
Adjusted* £000 |
Adjustments* £000 |
Total £000 |
|
Profit/(loss) before tax |
14,572 |
(33,042) |
(18,470) |
20,851 |
1,653 |
22,504 |
|
Tax (charge)/credit |
(4,724) |
3,868 |
(856) |
(4,830) |
(752) |
(5,582) |
|
Effective tax rate |
32.4% |
11.7% |
(4.6)% |
23.2% |
45.5% |
24.8% |
* Adjustments and their related tax impact for the year to 30 November 2010 have been restated from the amounts disclosed within the Group's 16 May 2011 interim results announcement, as explained within the note to the proforma Income Statement. There has been no change to the total tax charge as a result of this reallocation.
17. Trade and other receivables
|
|
As at 30 November 2011 £000 |
As at 30 November 2010 £000 |
|
Current |
|
|
|
Trade receivables |
43,938 |
51,972 |
|
Long-term contract balances |
9,407 |
13,869 |
|
Other receivables |
2,046 |
2,045 |
|
Derivative financial instruments: forward foreign exchange contracts |
67 |
373 |
|
Accrued income |
782 |
2,247 |
|
Prepayments |
6,030 |
7,360 |
|
|
62,270 |
77,866 |
|
|
|
|
|
Non-current |
|
|
|
Other receivables - amount owed by joint venture undertaking |
1,878 |
- |
|
Other receivables - other |
712 |
- |
|
|
2,590 |
- |
18. Trade and other payables
|
|
As at 30 November 2011 £000 |
As at 30 November 2010 £000 |
|
Current |
|
|
|
Trade payables |
16,206 |
16,309 |
|
Other taxation and social security |
5,307 |
7,342 |
|
Other payables - other |
2,628 |
2,627 |
|
Derivative financial instruments: |
|
|
|
- Forward foreign exchange contracts |
273 |
- |
|
- Interest rate swap |
72 |
153 |
|
Accruals |
22,327 |
21,036 |
|
Long-term contract balances |
6,895 |
6,485 |
|
Loan notes |
- |
475 |
|
Deferred consideration |
195 |
195 |
|
Deferred income |
23,878 |
20,397 |
|
|
77,781 |
75,019 |
|
|
|
|
|
Non-current |
|
|
|
Other payables - deferred consideration |
- |
195 |
|
Deferred income: |
|
|
|
- due after one year but within two years |
3,627 |
3,042 |
|
- due after two years but within five years |
2,576 |
2,319 |
|
- due after five years |
83 |
- |
|
|
6,286 |
5,556 |
This information is provided by RNS
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