Preliminary Results

RNS Number : 0605Z

RM PLC

03 February 2014

 



3 February 2014

RM plc

Preliminary Results for the year ending

30 November 2013

RM plc ("RM") reports its results for the year ending 30 November 2013.

SUMMARY

•     Revenue excluding exited businesses fell as anticipated by 8.4% to £261.7m (2012: £285.9m)

•     Adjusted operating margins increased with adjusted operating profit* rising to £17.2m (2012: £12.7m)

•     Adjusted profit before tax* increased to £16.4m (2012: £12.1m).  Statutory profit before tax* increased to £9.4m (2012: £7.4m)

•     Cash generated by operations £34.7m (2012: £33.5m).  Cash and short term deposits at Nov 2013 £63.2m (2012: £37.8m) 

•     Full year paid and proposed dividend per share increased 10% to 3.30 pence (2012: 3.00 pence)

•     Diluted earnings per share* increased to 6.6 pence (2012: 4.3 pence).  Diluted adjusted earnings per share increased to 12.4 pence (2012: 9.8 pence)

•     Special dividend of 16.00 pence per share (£15m) proposed

•     Pension deficit before tax reduced to £15.8m (2012: £20.4m)

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

"The repositioning of our Education Technology division towards software and services is on track. Looking forward, these changes will have an impact in 2014, but will provide us with a more robust business in 2015 and beyond.  Assessment and Data Services and Education Resources are expected to continue to perform well in the year ahead."

Contacts RM plc	08450 700300
David Brooks, Chief Executive Officer
Iain McIntosh, Chief Financial Officer
FTI Consulting
Sophie McMillan / Tracey Bowditch	020 7831 3113

* References to adjusted profit exclude: amortisation charges relating to acquisition related intangible assets; gains/losses on sale of operations; impairment of goodwill, intangible assets and investment; exceptional pension credits; restructuring costs; share-based payment charges; movements in property related provisions; and other non-operational items. FY13 refers to the financial year ending 30 November 2013.  The Group has early adopted the IAS19(Revised) accounting standard changes with respect of the defined benefit pension scheme. The prior year financials have been revised for comparability.

Extract from Chairman's Statement

2013 has been an eventful but positive year for RM plc.

Trading performance, which is detailed below, showed revenues down as anticipated, but sharply improved profitability, together with good cash generation. The well-signalled decline in the Building Schools for the Future ('BSF') programme was the major contributor to revenue reduction, but was equally a valuable source of profit and cash.

The strategic decision within the Group's Education Technology division to discontinue the manufacture and distribution of computer hardware in order to expand software and service offerings represented a major change, and was received with understanding in the marketplace. The operational reorganisation consequent upon this decision is in the process of implementation and is on track in respect of timing and cost.

The other two divisions, Assessment and Data Services ('ADS') and Education Resources, acquitted themselves well.  ADS has extended contractual relationships with existing customers and increased margins.  Education Resources has delivered good margins despite a large Corporate Social Responsibility ('CSR') programme, sponsored by a major corporate, not being repeated this year.

The Group has a strong balance sheet with cash and short term deposits at year end of £63.2 million.

The Board is recommending a final dividend of 2.46 pence per share which would, in total, constitute an increase of 10% over the prior year. In addition, recognising that the Group's cash resources are greater than those required to meet the prudent requirements of the business, the Board is proposing to pay a special dividend of 16.00 pence per share (£15 million) at the same time as the final dividend.

The Board is proposing the establishment of an escrow account to be utilised for initiatives to reduce the risks related to the RM defined benefit pension scheme which was closed to new entrants in 2003 and to accrual of benefits in 2012.  It is anticipated that an amount of £8 million will be paid into this account by the Group in 2014.

With reference to the Board, I became Chairman of RM and David Brooks took over as Chief Executive in Spring 2013. Jo Connell will be retiring from the Board at the Annual General Meeting in March 2014. Substantial thanks are due to her for her service to the Group over the past six years. Patrick Martell has been appointed to the Board with effect from 1 January 2014.

Looking forward, the changes to the Education Technology division will, as announced, impact 2014 but create a more robust business for the future.  ADS and Education Resources are expected to continue to perform well.

John Poulter

Chairman

3 February 2014

Extract from Strategic Report

Group Financial Performance

Group revenues excluding businesses exited in 2012 declined by 8.4% to £261.7 million (2012: £285.9 million, £288.7 million including exited businesses).

To provide a better guide to underlying business performance, the Income Statement amortisation charges relating to acquisition related intangible assets, share-based payment charges and other items of a non-operational nature have been disclosed in an adjustments column in the Income Statement to give 'Adjusted' results.

The Group has adopted the provisions of the recently revised International Accounting Standard 19 ('IAS19R') with respect to treatment of defined benefit pension schemes.  This accounting change has no impact on total distributable reserves but does affect where certain costs appear in the Income Statement.  The impact of this change on the results for the years ended 30 November 2012 and 2013 are set out in more detail in Note 2. 

Adjusted operating profit margins increased from 4.4% in 2012 to 6.6%.  Adjusted operating profit increased to £17.2 million (2012: £12.7 million).  The Group generated an unadjusted statutory profit before tax of £9.4 million (2012: £7.4 million).  Significant exceptional items included £5.1 million of restructuring costs following the strategic review of the Education Technology division and the associated impact on central services.  In addition, there was an increase in property-related provisions of £2.6 million, principally related to provision for onerous leases on surplus property.

The total tax charge within the Income Statement for the year was £3.3 million (2012: £3.5 million).  The Group's tax charge for the period, measured as a percentage of profit before tax, was 35% (2012: 47%).  This decrease is principally due to a higher proportion of 'Adjustments' to operating profit being tax deductible.  Excluding the impact of such adjustments, the tax charge on adjusted profit before tax was at an effective rate of 30% (2012: 26%).  Statutory basic earnings per share were 6.7 pence (2012: 4.3 pence) and statutory diluted earnings per share were 6.6 pence (2012: 4.3 pence).

RM delivered another year of strong cash generation with cash generated by operations for the year of £34.7 million (2012: £33.5 million).  As a result, cash and short term deposits increased to £63.2 million (2012: £37.8 million).  The lowest cash position during the year due to seasonal cash flows was £33.0 million (2012: £6.5 million).

Working capital efficiency improved further.  Specific elements include inventory levels reducing by 29% year on year and trade receivables reducing by 35%.

Dividends

The total dividend paid and proposed for the year has been increased by 10% to 3.30 pence per share (2012: 3.00 pence).  This comprises an already paid interim dividend of 0.84 pence per share and, subject to shareholder approval, a proposed final dividend of 2.46 pence per share.  The estimated total cost of normal dividends paid and proposed for 2013 is £3.0 million (2012: £2.8 million).

In addition, recognising that the Group's cash resources are greater than those required to meet the prudent requirements of the business, the Board is proposing to pay a special dividend of 16.00 pence per share (£15 million) at the same time as the annual dividend in April 2014.  The Board will also recommend that the special dividend is combined with a share consolidation.  This is common in such circumstances and is intended to maintain the comparability of the Company's share price before and after the special dividend.

Defined Benefit Pension Scheme

The RM defined benefit pension scheme was closed to new entrants in 2003.  An agreement was reached with the Trustees to close the scheme to future accrual of benefits from 31 October 2012.  At 30 November 2013 the IAS 19R scheme deficit (pre-tax) was £15.8 million (2012: £20.4 million). The triennial valuation of the scheme's position at 31 May 2012 for statutory funding purposes showed a scheme deficit of £53.5 million.  A deficit recovery plan over 15 years was agreed with the Trustees for future annual deficit recovery payments of £3.6 million, these amounts being guaranteed by the parent company.  The Group also pays the Scheme's expenses, including the Payment Protection Fund levy.  Total cash payments including expenses for the year were £4.4 million (2012: £7.3 million payments in excess of current service cost).

The Board has proposed the establishment of an escrow account to be utilised for initiatives to reduce the risks related to the scheme.  It is anticipated that an amount of £8 million will be paid into this account in 2014 in addition to the annual deficit recovery payments.

Divisional Review

The Group is structured in three operating divisions, each with its own Managing Director and management team.  Some staff functions are provided centrally.  In addition approximately 25% of Group headcount is based in India, providing support services and software development to the operating divisions.

Education Technology

The Education Technology division is a UK-focused business supplying IT and related services to schools and colleges.  The sale of personal computing devices was discontinued from December 2013.  Going forward the Education Technology division will focus on four distinct product groups: IT Services, Digital Platforms and Content, Infrastructure solutions and Internet services.  The business has experienced declining transactional volumes for hardware over many years, apart from demand derived from new school openings under the Building Schools for the Future ('BSF') programme which is coming to a close.  Existing contractual commitments to provide personal computing devices will be fulfilled and the division will continue to provide third party infrastructure hardware as part of its Infrastructure and Services businesses.  The divisional strategy is to continue to develop and encourage adoption of its portfolio of software products and services through new and existing propositions which meet the needs of UK schools.

Market trends affecting the business include increasing interest in schools towards adoption of Bring Your Own Device ('BYOD') policies.  This offers RM an opportunity to supply both services and network infrastructure solutions to facilitate this complex transition.  In addition, purchasing decisions in England have been increasingly devolved to schools and academy groups and away from central government and local authorities.  This required a change in the way RM engages with its market and the review has resulted in an increased focus on marketing and telephone sales over face to face sales, though direct contact will still be necessary when complex solutions are involved.

As anticipated, continued funding pressures in the UK education sector led to overall revenue in the Education Technology division declining by 10.6% to £181.2 million (2012: £202.7 million).  However, adjusted operating profit margins increased from 2.6% to 4.8%.  In large part this was due to improved margins on long term contracts within the Services part of the business, including BSF contracts, where profitability in 2012 was negatively impacted by provision for costs forecast to migrate customers from learning platform offerings, combined with lower than expected final costs on projects completing in 2013.  Adjusted operating profit was £8.6 million (2012: £5.4 million).

The performance of the four retained product groups and the personal computing hardware business, which is in the process of being exited, are reviewed below.

Services

These include implementation, management and support of IT infrastructure within schools and colleges, including BSF contracts.  As anticipated, revenues in 2013 declined with a reduction in new school openings under the BSF programme.  Due to the contract roll-out schedule it is anticipated that BSF revenue will decline significantly over the next year with only modest revenue from BSF implementations after 2014.  Services revenues decreased by 14% to £85.7 million (2012: £99.1 million).

RM's strong record of extending contractual relationships with existing Services customers has continued, including a new seven year ICT managed services contract signed with South Lanarkshire Council.

Long-term managed services are subject to long-term project accounting policies and revenues and profits were positively affected by good operational performance and cost control in completing BSF contracts.

New service propositions have been launched in the year including a mixed remote/onsite support service for primary schools which allows them to select from a range of service levels and gain the benefits of wider access to knowledge available across RM while maintaining continuity of elements of on-site service.

Digital Platforms and Content

These include established products such as RM Integris (RM's cloud-based school management system), RM Easimaths curriculum software and RM EasiTeach whole class teaching software but also newer offerings including RM Books and RM Unify.  Digital Platforms and Content revenues decreased by 17% to £7.3 million reflecting the run down of learning platforms and reduced curriculum software sales.

Revenue from RM Integris increased following customer wins including schools across Oxfordshire.  The strategy is to increase RM's market share in a market dominated by a competitor and with low levels of switching between suppliers.  RM Integris is a cloud based Software as a Service offering with annual licences.

RM Unify is a product launched by RM in 2013 as a technology solution to allow customers easy access to the varied digital, cloud based, educational specific content and materials now available.  RM Unify incorporates a cloud-based 'launchpad' and 'application store' enabling schools to procure and access a wide variety of applications in a secure, single sign-on environment.  As part of an extension to a contract with the Scottish Government, RM Unify has been made available to all schools in Scotland.  Since the year end RM has also been awarded a new contract to provide RM Unify to all schools in Scotland until January 2016.  In addition, RM Unify has been chosen by a number of existing managed services customers as the replacement for their learning platform.  Over 90 third party applications are now available for use through RM Unify.  Revenue is derived from annual school subscriptions and from fees from sales of third party applications.  The division's strategy is generally not to develop its own curriculum software but to provide the best of what is available from third parties via RM Unify.

RM Books, launched last year, is still in the early stages of adoption.  RM Books provides the first e-book solution designed for UK schools.  The launch has been well received by publishers with the majority of leading UK textbook publishers now participating.  Approximately 5,000 titles are currently available through RM Books.  The service is free to schools with RM taking a share of revenue from content sold through the system.  The market penetration of e-books in consumer markets has increased dramatically in recent years but e-book adoption in schools is currently limited.  The current focus is on securing a share of 'early adopters' and demonstrating the educational value added.  Revenues remain small and RM Books is expected to remain an area of investment going forward.

Infrastructure Solutions

Infrastructure Solutions include sales of RM's Community Connect and Ranger network management tools and related provision of hardware such as routers and wireless systems.  Existing products are typically sold as perpetual licences with annual maintenance contracts.  Revenues decreased by 7% to £15.7 million (2012: £16.9 million) as demand for established products reduced year on year.

In the year the division invested in a significant new proposition, RM Neon, which has been launched since the year end.  RM Neon provides a new generation of network and device monitoring tools to schools and is available via an annual subscription.  Consistent with Education Technology's wider strategy, these tools allow network managers to incorporate the best of third party and 'home grown' applications and scripts.

Internet

RM is a broadband and e-safety service provider to approximately 7,000 schools.  RM designs and manages networks, procuring and integrating bandwidth and e-safety products from third parties.  Competitors include regional educational aggregators and some of the large telecom providers who sell to schools directly.  The devolution of purchasing decisions to individual schools is reducing the likelihood of local authorities procuring services centrally on their behalf.

RM's business is dominated by one large regional consortium which accounts for the majority of its revenue.  This relationship is underpinned by a contract which runs until 2018 though volumes are variable.

Revenues decreased by 5% to £19.3 million (2012: £20.2 million).

Personal Computing Hardware

Revenue derived from hardware (RM-branded and third-party computing products, together with maintenance and warranty and other third-party classroom equipment) decreased by 8% to £53.1 million (2012: £57.7 million).

As discussed above, the division will exit the declining and low margin sale and manufacture of personal computing devices over the course of FY14.  Where required under wider managed services contracts, RM will contract third parties to provide such devices or offer a procurement service.

The expected rundown in BSF activity combined with exiting personal computing device sales will result in a c.50% reduction in the Education Technology division's revenue between FY13 and FY15.  FY14 will be a year of transition with cost reductions lagging reduced revenues as existing commitments are met and manufacturing and warehousing facilities are closed.

Education Resources

The Education Resources division comprises two operating businesses: TTS and SpaceKraft.

TTS provides resources used in schools through a mainly direct marketing business model with goods supplied from large centralised UK warehouse operations.  Products supplied are a mix of third party branded and TTS branded items manufactured by a network of third party suppliers.

The division's strategy is to grow market share in the provision of resources to the UK schools, early years and Special Educational Needs markets via direct catalogue and on-line sales and marketing channels as well as through selective supply of products to UK trade and international schools and distributors.

As anticipated, divisional revenue declined year on year with the absence of a contribution from an annual contract providing educational products for a Corporate Social Responsibility ('CSR') programme sponsored by a major UK group which was discontinued by the customer.  Revenues fell by 9.7% to £54.0 million (2012: £59.8 million) in a declining UK market.

Despite lower revenues at SpaceKraft, which was loss-making, divisional adjusted operating margins remained strong at 13.3% compared with 14.8% in the prior year.  Adjusted operating profit was £7.2 million (2012: £8.8 million). 

Inventory and supply chain management remained strong.  A new warehouse management system was successfully introduced during the year which has improved delivery performance and operational efficiency such as warehouse space utilisation.

TTS UK Catalogues and Online

Revenues from TTS UK catalogues and on-line sales increased by 2% to £37.0 million (2012: £36.4 million).  During the period, TTS experienced the impact of reduced funding streams to Early Years and nurseries, though revenue from primary and secondary schools increased.

A new parent focused programme was launched in the year.  This allows parents to purchase from catalogues distributed by schools with a percentage of revenues provided back to the schools via credits to purchase TTS products.

Product ranges have been expanded through the addition of more high volume products in everyday demand, some of which are provided via direct shipment from third party suppliers.

TTS International

Revenues from international sales to overseas resellers and to international schools increased by 11% to £7.0 million (2012: £6.3 million).  This was driven by growth in Europe, the Middle East and Asia.

TTS CSR and Trade

Revenues from UK trade and the provision of a Corporate Social Responsibility programme to a major UK group decreased in aggregate from £13.1 million to £6.6 million.  The CSR programme mentioned above represented over 10% of TTS revenues in FY12.

SpaceKraft

SpaceKraft supplies products and installation services for the Special Educational Needs market.  Products are a mix of own brand manufactured items and third party sourced.  Sales of installations are made direct with other products supplied through catalogues and on-line.

Revenues declined in the year by 15% to £3.4 million (2012: £4.0 million) with budgetary reductions in this area particularly impacting installation services.  The business was loss-making in the year.  Following a significant cost base reduction exercise, a new management team was appointed to the business in the second half of the year and back-office support activities are being more closely integrated with the TTS business.

Assessment and Data Services ('ADS')

The ADS business provides onscreen exam marking, onscreen testing and the management and analysis of educational data.  Its customers include government ministries, exam boards and professional awarding bodies around the world improving the efficiency, accuracy and clarity of the assessment cycle.

The strategy in the Assessment side of the business is to expand the scope of services to existing customers through provision of leading software products and services and to win new customers in both the UK and overseas.  Software is proprietary while other services such as image scanning are outsourced to third parties.  Internationally the business is anticipated to evolve through partnerships and software licencing rather than as a service based activity.

The business was successful in securing contract extensions with several existing customers including Cambridge Assessment and the Association of Chartered Certified Accountants ('ACCA').  Revenues rose in the year through a combination of increased examination volumes and customer change requests.

Internationally the business is pursuing opportunities for the onscreen marking of paper based exams. In the UK examination and curricula changes introduced by the English Department for Education will reduce the number of exam retakes while a move away from modular courses to final exam based assessment will also impact the business in the medium term.  There is a long term trend from paper based to onscreen testing though this adoption, for school based examinations, is slow.

The Data side of the business is highly dependent on one public sector customer, the Department for Education.  RM was successful in winning a new School Performance Data Programme contract which runs to 2018 with an option to extend to 2020.  This is the successor to the National Pupil Database contract and includes the capture and publishing of data for the school performance tables in England. 

ADS brought together all its propositions under the RM Results brand during the year.  While the business has an excellent record in extending existing contractual relationships, the rate of contract wins with new customers and for onscreen testing has been weaker than anticipated and is an important area of focus for the future.  Pilots with two new awarding bodies, in the UK and overseas, are underway.

Revenues increased by 13.8% to £26.5 million (2012: £23.3 million).  Adjusted operating margins increased further to 15.6% (2012: 10.8%).  Adjusted operating profit was £4.1 million (2012: £2.5 million).

RM India

At 30 November 2013, RM's operation in Trivandrum accounted for approximately 25% of Group headcount (2012: 23%).

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

David Brooks

Chief Executive Officer

3 February 2014

Directors' Responsibilities Statement

The responsibility statement below has been prepared in connection with the Company's full Annual Report for the year ended 30 November 2013. Certain parts thereof are not included within this announcement.

We confirm to the best of our knowledge:

·      the Group financial statements, which have been prepared in accordance with IFRSs, as adopted by the EU, give a true, balanced and fair view of the assets, liabilities, financial position and performance of the Group; and

·      the information contained in the Annual Report includes a true, balanced and fair review of the development and performance of the business and the position of the Group, together with a description of the principal risks and uncertainties that it faces.

The responsibility statement was approved by the Board of Directors on 3 February 2014 and is signed on its behalf by:

Iain McIntosh

Chief Financial Officer

CONSOLIDATED INCOME STATEMENT
for the year ended 30 November 2013
		Year ended 30 November 2013				Year ended 30 November 2012
	Note	Adjusted	Adjustments      Total			Adjusted	Adjustments        Total
						Restated (note 2)		Restated (note 2)
		£000	£000	£000		£000	£000	£000
Revenue		261,759	-	261,759		288,688	-	288,688
Cost of sales		(187,793)	-	(187,793)		(217,868)	-	(217,868)
Gross profit		73,966	-	73,966		70,820	-	70,820
Operating expenses		(56,757)	-	(56,757)		(58,115)	-	(58,115)
Amortisation of acquisition related intangible assets		-	(195)	(195)		-	(244)	(244)
Impairment of goodwill, acquisition related intangible assets and investments		-	(328)	(328)		-	(3,212)	(3,212)
Gain/(loss) on sale of operations		-	1,387	1,387		-	(2,448)	(2,448)
Share-based payment charges		-	(507)	(507)		-	(129)	(129)
Restructuring costs		-	(5,128)	(5,128)		-	(312)	(312)
Increase in provision for dilapidations on leased properties and onerous lease contracts		-	(2,627)	(2,627)		-	(457)	(457)
Exceptional credit on settlement		-	543	543		-	715	715
Release of deferred consideration		-	-	-		-	195	195
Exceptional net credit on defined benefit pension scheme		-	-	-		-	1,324	1,324
		(56,757)	(6,855)	(63,612)		(58,115)	(4,568)	(62,683)
Profit from operations		17,209	(6,855)	10,354		12,705	(4,568)	8,137
Investment income	4	730	-	730		926	-	926
Finance costs	5	(1,490)	(159)	(1,649)		(1,510)	(181)	(1,691)
Profit before tax		16,449	(7,014)	9,435		12,121	(4,749)	7,372
Tax	6	(4,910)	1,643	(3,267)		(3,160)	(301)	(3,461)
Profit for the year		11,539	(5,371)	6,168		8,961	(5,050)	3,911
Earnings per ordinary share	7
- basic		12.6p	(5.9)p	6.7p		9.8p	(5.5)p	4.3p
- diluted		12.4p	(5.8)p	6.6p		9.8p	(5.5)p	4.3p
Paid and proposed dividends per share	8
- interim				0.84p				0.75p
- final				2.46p				2.25p
- special				16.00p				-
Adjustments to results have been presented to give a better guide to business performance (see note 1).
All amounts were derived from continuing operations.

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
			Year ended 30 November 2013			Year ended  30 November 2012
			Note					Restated (note 2)
				£000				£000
Profit for the year				6,168				3,911
Items that will not be reclassified subsequently to profit and loss:
Defined benefit pension scheme remeasurements			13	1,442				(6,586)
Tax on items that will not be reclassified subsequently to profit and loss				(799)				1,492
Items that are or may be reclassified subsequently to profit and loss:
Fair value (loss)/gain on hedged instruments				(435)				5
Exchange loss on translation of overseas operations				(329)				(171)
Tax on items that are or may be reclassified subsequently to profit and loss				73				(11)
Other comprehensive expense				(48)				(5,271)
Total comprehensive income/(expense) for the year attributable to equity holders				6,120				(1,360)

CONSOLIDATED BALANCE SHEET
At 30 November 2013
			2013	2012
				Restated  (note 2)
		Note	£000	£000
Non-current assets
Goodwill			14,067	14,395
Acquisition related intangible assets			764	960
Other intangible assets			1,026	2,278
Property, plant and equipment			9,099	11,440
Interest in associate			-	58
Other receivables		9	1,911	1,911
Deferred tax assets		6	4,622	6,331
			31,489	37,373
Current assets
Inventories			10,549	14,787
Trade and other receivables		9	35,134	55,604
Tax assets			340	847
Cash and short-term deposits		10	63,169	37,823
			109,192	109,061
Total assets			140,681	146,434
Current liabilities
Trade and other payables		11	(78,917)	(88,098)
Provisions		12	(7,201)	(4,108)
			(86,118)	(92,206)
Net current assets			23,074	16,855
Non-current liabilities
Retirement benefit obligation		13	(15,828)	(20,433)
Other payables		11	(3,455)	(3,634)
Provisions		12	(6,255)	(4,929)
			(25,538)	(28,996)
Total liabilities			(111,656)	(121,202)
Net assets			29,025	25,232
Equity attributable to equity holders
Share capital			1,870	1,870
Share premium account			26,997	26,997
Own shares			(2,972)	(2,972)
Capital redemption reserve			94	94
Hedging reserve			(474)	(39)
Translation reserve			(385)	(56)
Retained earnings			3,895	(662)
Total equity			29,025	25,232
These financial statements of RM plc, registered number 01749877,  were approved and authorised for issue by the Board of Directors on 3 February 2014.

CONSOLIDATED CASH FLOW STATEMENT
for the year ended 30 November 2013
						Year ended 30 November 2013			Year ended 30 November 2012
									Restated  (note 2)
						Note	£000		£000
Profit from operations							10,354		8,137
Adjustments for:
Loss/(gain) on foreign exchange derivatives							75		(250)
Impairment of investment in associate							-		258
Impairment of goodwill							328		2,954
Impairment of property, plant and equipment							-		144
Amortisation of acquisition related intangible assets							195		244
Amortisation of other intangible assets							582		1,254
Depreciation of property, plant and equipment							3,919		5,701
(Gain)/loss on sale of operations							(1,387)		2,448
Loss on disposals of other intangible assets							736		496
(Gain)/loss on disposals of property, plant and equipment							(118)		302
Share-based payment charge							507		129
Increase in provisions							7,777		841
Defined benefit pension administration cost						13	391		866
Exceptional pension fund credit							-		(1,824)
Release of deferred consideration							-		(195)
Operating cash flows before movements in working capital							23,359		21,505
Decrease in inventories							4,238		3,610
Decrease in receivables							20,383		3,895
(Decrease)/increase in payables							(13,317)		4,529
Cash generated by operations							34,663		33,539
Defined benefit pension cash contribution (2012: in excess of current service cost)						13	(4,384)		(7,279)
Tax paid							(1,790)		(59)
Borrowing facilities arrangement and commitment fees							(451)		(658)
Interest paid							(20)		(92)
Income on sale of finance lease debt						4	289		644
Net cash inflow from operating activities							28,307		26,095
Investing activities:
Interest received						4	441		258
Proceeds of sale of operations							336		2,481
Proceeds on disposal of property, plant and equipment							420		856
Purchases of property, plant and equipment							(1,980)		(1,852)
Purchases of other intangible assets							(68)		(400)
Increase in short-term deposits						10	(6,000)		-
Amounts received from joint venture undertaking							-		1,878
Amounts advanced to third parties							-		(919)
Net cash (used in)/generated by investing activities							(6,851)		2,302
Financing activities
Dividends paid						8	(2,834)		(2,090)
Net proceeds from sale and leaseback of vehicles							771		-
Proceeds of share capital issue, net of share issue costs							-		35
Decrease in borrowings							-		(13,005)
Net cash used in financing activities							(2,063)		(15,060)
Net increase in cash and cash equivalents							19,393		13,337
Cash and cash equivalents at the beginning of the year							37,823		24,529
Effect of foreign exchange rate changes							(47)		(43)
Cash and cash equivalents at the end of the year						10	57,169		37,823
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
for the year ended 30 November 2013
		Share capital	Share premium	Own shares	Capital redemption reserve	Hedging reserve		Translation reserve	Retained earnings	Total
									Restated (note 2)
	Note	£000	£000	£000	£000	£000		£000	£000	£000
At 1 December 2011		1,869	26,963	(3,202)	94	(44)		115	2,723	28,518
Profit for the year		-	-	-	-	-		-	3,911	3,911
Other comprehensive income/(expense)		-	-	-	-	5		(171)	(5,105)	(5,271)
Total comprehensive income		-	-	-	-	5		(171)	(1,194)	(1,360)
Transactions with owners of the Company
Shares issued		1	34	-	-	-		-	-	35
Share-based payment awards exercised		-	-	230	-	-		-	(230)	-
Share-based payment fair value charges		-	-	-	-	-		-	129	129
Dividends paid	8	-	-	-	-	-		-	(2,090)	(2,090)
At 30 November 2012		1,870	26,997	(2,972)	94	(39)		(56)	(662)	25,232
Profit for the year		-	-	-	-	-		-	6,168	6,168
Other comprehensive income/(expense)		-	-	-	-	(435)		(329)	716	(48)
Total comprehensive income		-	-	-	-	(435)		(329)	6,884	6,120
Transactions with owners of the Company
Share-based payment fair value charges		-	-	-	-	-		-	507	507
Dividends paid	8	-	-	-	-	-		-	(2,834)	(2,834)
At 30 November 2013		1,870	26,997	(2,972)	94	(474)		(385)	3,895	29,025

1. Preliminary announcement

The preliminary results for the year ended 30 November 2013 have been prepared in accordance with the accounting principles of International Financial Reporting Standards (IFRS) as adopted by the European Union and applied in accordance with the Companies Act 2006. However, this announcement does not contain sufficient information to comply with IFRS. The Group expects to publish a full Strategic report, Directors' report and financial statements which will be delivered before the Company's annual general meeting on 19 March 2014. The full Strategic report and Directors' report and  financial statements will be published on the Group's website at www.rmplc.com.

The financial information set out in this preliminary announcement does not constitute the Group's statutory accounts for the year ended 30 November 2013.  Statutory accounts for 2012 have been delivered to the Registrar of Companies and those for 2013 will be delivered following the Company's annual general meeting. The auditor's reports on both the 2013 and 2012 accounts were unqualified, did not draw attention to any matters by way of emphasis without qualifying their report and did not contain statements under s498(2) or (3) of the Companies Act 2006 or equivalent preceding legislation.

This Preliminary Announcement was approved by the Board of Directors on 3 February 2014.

Going concern

The Directors have assessed forecast future cash flows for the foreseeable future, being a period of at least a year following the approval of the Accounts, and are satisfied that the Group's agreed working capital facilities are sufficient to meet these cash flows. Given the Group's continued seasonality and long-term education project contractual commitments, operational cash flows are forecast to be at their highest outflow between July and September.

Considering the above, the Directors believe that the Group is well placed to manage its business risks successfully despite the continued current uncertain economic outlook and have a reasonable expectation that the Group has adequate resources to continue in operational existence for the foreseeable future. Therefore, they continue to adopt the going concern basis of accounting in preparing the annual financial statements.

Consolidated income statement presentation

The income statement is presented in three columns. This presentation is intended to give a better guide to business performance by separately identifying the following adjustments to profit: the amortisation of acquisition related intangible assets; the impairment of goodwill, acquisition related intangible assets, other intangible assets and investments; the gain/loss on sale of operations; share-based payment charges; restructuring costs; increase in provision for dilapidations on leased properties and onerous lease contracts; exceptional credit on settlement; release of deferred consideration; and an exceptional net pension credit on the Group's defined benefit pension scheme. The columns extend down the income statement to allow the tax and earnings per share impacts of these transactions to be understood.

Basis of preparation

The financial statements have been prepared on the historical cost basis except for certain financial instruments, share-based payments and pension assets and liabilities which are measured at fair value. The preparation of financial statements, in conformity with generally accepted accounting principles, requires the use of estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Although these estimates are based on the Directors' best knowledge of current events and actions, actual results ultimately may differ from those estimates.

Significant accounting policies

The accounting policies used for the preparation of this announcement have been applied consistently, except for the adjustments in note 2 to this announcement.

2. Prior year adjustments
a. Employee Benefits
The adjustments made as a result of adopting IAS 19 Employee Benefits (as revised in June 2011) in the Consolidated Income Statement and Consolidated Statement of Comprehensive Income are as follows:
Year ended   30 November 2013			Year ended 30 November 2012
		Effect	As reported	Adjustment	Restated
		£000	£000	£000	£000
Consolidated Income Statement
Operating expenses		(391)	(57,249)	(866)	(58,115)
		_______		_______
Profit from operations		(391)		(866)
Finance costs		(486)	(1,540)	(151)	(1,691)
		_______		_______
Profit before tax and profit attributable to equity holders		(877)		(1,017)
Consolidated Statement of Comprehensive Income
Defined benefit pension scheme remeasurements		877	(7,603)	1,017	(6,586)
Total comprehensive income for the year attributable to equity holders-				-
The reduction in profit attributable to equity holders has reduced Basic and Diluted earnings per share by 1.0 pence in the year ended 30 November 2013 (2012: 1.1 pence).
Segmental results
Segmental Adjusted profit in note 3 is stated after the following adjustments to operating expenses:
	Year ended   30 November 2013		Year ended 30 November 2012
		£000		£000
Education Technology		352		779
Assessment and Data Services		39		87
		391		866
These adjustments have no impact on the Consolidated Balance Sheet at 30 November 2013 or 30 November 2012.

b. Long-term contracts
The classification of certain balances relating to long-term contracts has been changed this year to improve the Consolidated Balance Sheet presentation by presenting all long-term contract balances together.  To give consistency, the equivalent balances as at 30 November 2012 have been restated, as detailed below.  This re-presentation of the balances had no impact on reserves or equity.
						30 November 2012
					As reported		Adjustment	Restated
						£000	£000	£000
Trade and other receivables:
Long-term contract balances						8,748	(2,290)	6,458
Accrued income						334	(106)	228
							_______
Trade and other receivables, Current assets and Total assets							(2,396)
Trade and other payables:
Long-term contract balances						(17,646)	(7,872)	(25,518)
Deferred income - current						(26,400)	7,117	(19,283)
							_______
Trade and other payables and Current liabilities							(755)
Other payables:
Deferred income - due after one year but within two years						(3,799)	1,405	(2,394)
Deferred income - due after two years but within five years						(2,986)	1,746	(1,240)
							_______
Other payables, Non-current liabilities and Total liabilities							3,151
Net assets							-

3. Operating segments
The Group's business is supplying products, services and solutions to the UK and international education markets.
Following a review of the Group's divisional structure in November 2012, from 1 December 2012 the Group was restructured into three operating divisions: Education Technology, Education Resources, and Assessment and Data Services. From 1 December 2012, the Group changed the presentation of financial information included in the consolidated management accounts to reflect the new reporting structure with this information being presented to the chief operating decision maker. Segmental information for the Group is reported on this basis for the year ended 30 November 2013 and prior year financial information has been restated to be in line with this new basis.
The nature of the products/services sold within each segment is explained below:
Education Technology - a UK focused business supplying schools with ICT managed services, internet services, network software, digital platforms, hardware and related services, including implementation and support. The division also includes the implementation, management and support of IT infrastructure as part of the Building Schools for the Future contracts.
Education Resources - provides schools with curriculum focused classroom resources including teaching equipment and materials.
Assessment and Data Services - Supplies government ministries, exam boards and professional awarding organisations with technology and expertise creating high stakes exams and tests, onscreen testing, onscreen marking and management and analysis of educational data.
The November 2012 review also identified certain central costs and assets which had previously been allocated across the divisions and were considered more appropriately reported within Corporate Services. The segmental results for the year ended 30 November 2013 include these costs and assets within Corporate Services and the segmental results for the year ended 30 November 2012 have been restated to be in line with this new basis.
The following disclosure shows the result and total assets of these segments (2012 is restated based on the new divisional structure, and incorporates the prior year adjustments (note 2)):

The revenue disclosed below is that earned by the Group from third parties.
Segmental results
	Education Technology	Education Resources	Assessment & Data Services	Corporate Services	Exited operations **	Total
	£000	£000	£000	£000	£000	£000
Year ended 30 November 2013
Revenue	181,171	54,008	26,545	-	35	261,759
Adjusted profit from operations	8,643	7,164	4,134	(2,738)	6	17,209
Investment income						730
Finance costs						(1,490)
Adjusted profit before tax						16,449
Adjustments *						(7,014)
Profit before tax						9,435
Year ended 30 November 2012
Revenue	202,731	59,809	23,335	-	2,813	288,688
Adjusted profit from operations	5,363	8,825	2,522	(3,554)	(451)	12,705
Investment income						926
Finance costs						(1,510)
Adjusted profit before tax						12,121
Adjustments *						(4,749)
Profit before tax						7,372
Segmental assets
Group
30 November 2013
Segmental	33,728	31,794	6,890	221	-	72,633
Other						68,048
Total assets						140,681
30 November 2012
Segmental	58,074	36,438	6,957	48	-	101,517
Other						44,917
Total assets						146,434
* Refer to note 1 for an explanation of adjustments to profit.
** Exited operations represent the results from operations sold following the September 2011 Strategic Review.

 

The Group's operations are predominately located in the United Kingdom, with operations also in India. The Group sells to the UK  market and also in the European, North American, Asian and Australasian continents. Revenues of £11.1 million (2012: £10.6 million) were earned on non-UK sales and include Education Technology sales of £0.5 million (2012: £0.3 million) largely in Europe, £7.6 million (2012: £7.2 million) of Education Resources sales largely in Europe, £3.0 million (2012: £3.1 million) of Assessment and Data Services 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 £26.3 million (2012: £28.3 million) located in the United Kingdom and £0.6 million (2012: £0.8 million) located in India.  Other non-segmented assets materially includes deferred tax and cash and short-term deposits.

4. Investment income
	Year ended 30 November 2013		Year ended 30 November 2012
		£000	£000
Bank interest		223	258
Income on sale of finance lease debt		289	644
Other finance income		218	24
		730	926
5. Finance costs
	Year ended 30 November 2013		Year ended 30 November 2012
			Restated  (note 2)
	Note	£000	£000
Interest on bank overdrafts and loans		15	176
Borrowing facilities arrangement fees and commitment fees		495	424
Cost of leasing finance		130	-
Finance lease interest		20	-
Net finance costs on defined benefit pension scheme	13	830	910
Unwind of discount on provisions		159	181
		1,649	1,691

6. Tax
a) Analysis of tax charge in the Consolidated Income Statement
	Year ended 30 November 2013		Year ended 30 November 2012
		£000	£000
Current taxation
UK corporation tax		1,707	3,124
Adjustment in respect of prior years		859	(154)
Overseas tax		453	411
Total current tax charge		3,019	3,381
Deferred taxation
Temporary differences		206	348
Adjustment in respect of prior years		93	(288)
Overseas tax		(51)	20
Total deferred tax charge		248	80
Total Consolidated Income Statement tax charge		3,267	3,461

b) Analysis of tax charge/(credit) in the Consolidated Statement of Comprehensive Income
					Year ended 30 November 2013				Year ended 30 November 2012
							£000		£000
UK corporation tax
Defined benefit pension scheme							(735)		(2,086)
Deferred tax
Defined benefit pension scheme							1,534		594
Share based payments							(73)		11
Total Consolidated Statement of Comprehensive Income tax charge/(credit)							726		(1,481)
c) Reconciliation of Consolidated Income Statement tax charge
The tax charge in the Consolidated Income Statement reconciles to the effective rate applied by the Group as follows:
	Year ended 30 November 2013						Year ended 30 November 2012
		Adjusted	Adjustments      Total				Adjusted	Adjustments        Total
							Restated (note 2)			Restated (note 2)
		£000	£000	£000			£000	£000		£000
Profit on ordinary activities before tax		16,449	(7,014)	9,435			12,121	(4,749)		7,372
Tax at 23.33% (2012: 24.67%) thereon:		3,839	(1,637)	2,202			2,990	(1,172)		1,818
Effects of:
- change in tax rate on carried forward    deferred tax asset		224	(23)	201			157	(19)		138
- other expenses not deductible for tax    purposes		373	(186)	187			351	32		383
- temporary timing differences unrecognised    for deferred tax		(331)	-	(331)			107	-		107
- other temporary timing differences		-	-	-			211	112		323
- R&D tax credit		(242)	-	(242)			(468)	-		(468)
- impairments		(29)	297	268			(58)	792		734
- overseas tax		124		124			312	-		312
- loss on sale of operations		-	(94)	(94)			-	556		556
- prior period adjustments		952	-	952			(442)	-		(442)
Tax charge in the Consolidated Income Statement		4,910	(1,643)	3,267			3,160	301		3,461

Factors that may affect future tax charges

The Budget Statement on 20 March 2013 announced that the UK corporation tax rate will reduce to 21% by 2014 and 20% by 2015.  A reduction in the rate from 24% (effective from 1 April 2012) to 23% (effective from 1 April 2013) was substantively enacted on 3 July 2012.

This will reduce the company's future current tax charge accordingly.  The deferred tax asset at 30 November 2013 has been calculated based on the rate of 20% which had been substantively enacted at the balance sheet date.

The Group incurs higher effective tax rates on its operations in India than in the UK. The Group's effective tax rate will tend to increase as the Indian operations become a larger proportion of its activities.

d) Deferred tax
The Group has recognised deferred tax assets as these are anticipated to be recoverable against profits in future periods. The major deferred tax assets and liabilities recognised by the group and movements thereon are as follows:
	£000	£000	£000	£000	£000	£000
At 1 December 2011	1,074	5,294	150	754	(299)	6,973
(Charge)/credit to income	137	-	(110)	(185)	78	(80)
(Charge)/credit to equity	-	(594)	(11)	-	-	(605)
Disposed on sale of business	12	-	1	30	-	43
At 30 November 2012	1,223	4,700	30	599	(221)	6,331
(Charge)/credit to income	(235)	-	78	(159)	68	(248)
(Charge)/credit to equity	-	(1,534)	73	-	-	(1,461)
At 30 November 2013	988	3,166	181	440	(153)	4,622
Certain deferred tax assets and liabilities have been offset above.

The Group has recognised deferred tax assets in jurisdictions where these are expected to be recoverable against profits in future periods. At the balance sheet date, the Group also has an unrecognised gross deferred tax asset of £1.2 million (2012: £2.4 million) which is available for offset against future profits within the United States of America. Included within this balance are unrecognised tax losses of £1.5 million (2012: £1.7 million). A deferred tax asset has not been recognised in respect of any of this amount due to uncertainty surrounding the future use of these losses.

No deferred tax liability is recognised on temporary differences of £247,000 (2012: £240,000) relating to the unremitted earnings of overseas subsidiaries as the Group is able to control the timings of the reversal of these temporary differences and it is probable that they will not reverse in the foreseeable future.

7. Earnings per ordinary share on profit for the year
	Year ended 30 November 2013					Year ended 30 November 2012
Basic earnings per ordinary share:	Profit for the year		Weighted average number of shares	Pence per share	Profit for the year		Weighted average number  of shares	Pence  per share
		£000	'000			£000	'000
Basic earnings		6,168	91,718	6.7p		3,911	91,543	4.3p
Adjustments*		5,371	-	5.9p		5,050	-	5.5p
Adjusted basic earnings		11,539	91,718	12.6p		8,961	91,543	9.8p
Diluted earnings per ordinary share:
Basic earnings		6,168	91,718	6.7p		3,911	91,543	4.3p
Effect of dilutive potential ordinary shares: share based payment awards		-	1,153	(0.1)p		-	116	-
Diluted earnings per ordinary share:		6,168	92,871	6.6p		3,911	91,659	4.3p
Adjustments*		5,371	-	5.8p		5,050	-	5.5p
		11,539	92,871	12.4p		8,961	91,659	9.8p
* Refer to note 1 for an explanation of adjustments to profits.

8. Dividends
Amounts recognised as distributions to equity holders were:
			Year ended 30 November 2013			Year ended 30 November 2012
				£000		£000
Final dividend for the year ended 30 November 2012 of 2.25p (2011: 1.53p) per share				2,064		1,402
Interim dividend for the year ended 30 November 2013 of 0.84p (2012: 0.75p) per share				770		688
				2,834		2,090
The proposed final dividend of 2.46p per share for the year ended 30 November 2013 was approved by the Board on 31 January 2014.  The dividend is subject to approval by shareholders at the annual general meeting.  The anticipated cost of this dividend is £2.3 million.  The Board is also proposing a special dividend of 16.00p per share, which will cost £15 million; this is also subject to approval by shareholders.  Neither of these proposed dividends has been included as a liability at 30 November 2013. The Board will also recommend that the special dividend is combined with a share consolidation. This is common in such circumstances and is intended to maintain the comparability of the Company's share price before and after a special dividend.
9. Trade and other receivables
					2013		2012
							Restated (note 2)
					£000		£000
Current
Financial assets
Trade receivables					27,432		41,978
Long-term contract balances					671		6,458
Other receivables					474		760
Accrued income					157		228
Non-financial assets
Prepayments					6,400		6,180
					35,134		55,604
Non-current
Financial assets
Other receivables					1,911		1,911
					37,045		57,515
Currency profile of receivables
Sterling					36,748		56,545
US Dollar					17		626
Euro					56		65
Indian Rupee					224		279
					37,045		57,515
The Directors consider that the carrying amounts of trade and other receivables approximates their fair values.

Analysis of trade receivables by type of customer
		2013	2012
		£000	£000
Government		10,482	27,540
Commercial		16,950	14,438
		27,432	41,978
Trade receivables included an allowance for estimated irrecoverable amounts at 30 November 2013 of £1,777,000 (2012: £1,624,000), based on management's knowledge of the customer, externally available information and expected payment likelihood.  This allowance has been determined by reference to specific receivable balances and past default experience.  New customers are subject to credit checks where available, using third party databases prior to being accepted.
Ageing of unimpaired trade receivables
		2013	2012
		£000	£000
Not past due		21,106	34,734
Overdue by less than 60 days		5,622	5,697
Overdue by between 60 and 90 days		323	733
Overdue by more than 90 days		381	814
		27,432	41,978

Other non-current receivables includes £1.7 million (2012: £1.7 million) of gross amounts receivable from the Group's equity investments in BSF delivery companies, Newham Learning Partnership (PSP) Ltd and Essex Schools (Holdings) Ltd.  The interest charged on these receivables is 11.75% pa.

10. Cash and short-term deposits
				2013	2012
				£000	£000
Cash and  cash equivalents				57,169	37,823
Short-term deposits				6,000	-
				63,169	37,823
The short-term deposits are for a period of 6 months at interest rates of 0.80-0.85%.

11. Trade and other payables
									2013		2012
											Restated (note 2)
									£000		£000
Current liabilities
Financial liabilities
Trade payables									12,163		14,302
Other taxation and social security									3,019		5,857
Other payables									1,848		574
Accruals									18,395		22,533
Obligations under finance leases									350		-
Derivative financial instruments									544		31
Long-term contract balances									27,708		25,518
									64,027		68,815
Non-financial liabilities
Deferred income									14,890		19,283
									78,917		88,098
Non-current liabilities
Financial liabilities
Obligations under finance leases									438		-
Non-financial liabilities:
Deferred income:
- due after one year but within two years									1,827		2,394
- due after two years but within five years									1,190		1,240
									3,455		3,634
									82,372		91,732
Currency profile of trade and other payables
										2013	2012
											Restated (note 2)
										£000	£000
Sterling										80,284	89,804
US Dollar										1,364	1,279
Euro										193	98
Indian rupee										531	551
										82,372	91,732
The Directors consider that the carrying amount of trade and other payables approximates their fair value.

Obligations under finance leases
The Group sold part of its vehicle fleet to a finance lease provider during the year. Interest rates on finance lease contracts are charged at the Bank of England base rate + 2%, which is fixed at the date of acquiring the asset, and the lease term is four years.
			2013				2012
			Minimum lease payments		Present value of minimum lease payments		Minimum  lease payments	Present value of minimum lease payments
			£000		£000		£000	£000
Amounts payable under finance lease contracts:
Within one year			373		350		-	-
In the second to fifth years inclusive			446		438		-	-
			819		788		-	-
Less: finance charges allocated to future periods			(31)		-		-	-
Present value of minimum lease payments			788		788		-	-
12. Provisions
				Employee-related restructuring		Onerous lease  and dilapidations	Other		Total
				£000		£000	£000		£000
At 1 December 2011				3,769		7,497	2,147		13,413
Release of provisions				(677)		(389)	(788)		(1,854)
Utilisation of provisions				(3,103)		(1,656)	(187)		(4,946)
Increase in provisions				464		776	1,003		2,243
Unwind of discount				-		181	-		181
At 30 November 2012				453		6,409	2,175		9,037
Release of provisions				-		-	(1,092)		(1,092)
Increase in provisions				4,942		2,627	320		7,889
Utilisation of provisions				(1,154)		(1,331)	(52)		(2,537)
Effect of movements in exchange rates				-		21	(21)		-
Unwind of discount				-		159	-		159
At 30 November 2013				4,241		7,885	1,330		13,456
Employee-related restructuring provisions refer to costs arising from restructuring to meet the future needs of the Group and are all expected to be utilised during the following financial year.
Provisions for onerous leases and dilapidations have been recognised at the present value of the expected obligation at discount rates of 3% reflecting a risk free discount rate, applicable to the liabilities. These discounts will unwind to their undiscounted value over the remaining lives of the leases via a finance cost within the income statement.  At 30 November 2013, £5.6 million (2012: £4.2 million) of the provision refers to onerous leases, and £2.3 million (2012: £2.2 million) refers to dilapidations.
As a result of the restructure of the Education Technology division announced in October 2013 the Group expects to provide for an onerous lease provision on one further building in the second half of 2014. The additional provision is expected to be circa £1.5 million.
The average remaining life of the leases at 30 November 2013 is 2.1 years (2012: 3.8 years).
Other provisions includes one-off items not covered by any other category and the significant elements relate to on-going legal activity in connection with the defined benefit pension scheme of £0.5 million, and to provisions recognised as part of the exit of operations, both of which were included in the previous year. All provisions in this category, other than those held by the parent company, are classified as current. The  release of provisions within Other provisions category includes £1.0 million (2012: £0.7 million) which has been recognised on the exit of operations and included within the gain on sale of operations in the Consolidated Income Statement and Cash Flow Statement.

Disclosure of provisions
		2013	2012
		£000	£000
Current liabilities		7,201	4,108
Non-current liabilities		6,255	4,929
		13,456	9,037
The Directors consider that the carrying amount of provisions approximates their fair value.

13. Retirement benefit scheme - defined benefit scheme

The Group has one defined benefit pension scheme, the Research Machines plc 1988 Pension Scheme. The scheme is a funded scheme.  The scheme provides benefits to qualifying employees and former employees of RM Education Limited, but was closed to new members with effect from 1 January 2003 and closed to future accrual of benefits from 31 October 2012.  The assets of the scheme are held separately from those of the Group in a trustee-administered fund.

The most recent actuarial valuation of plan assets and the present value of the defined benefit obligation were carried out for statutory funding purposes at 31 May 2012 by a qualified independent actuary. IAS 19 Employee Benefits liabilities have been rolled forward based on this valuation's base data. Plan assets are measured at bid-price at 30 November 2013. The present value of the defined benefit obligation and the related current service cost up to the date of curtailment of accrual was measured using the projected unit credit method.

As at 31 May 2012, the triennial valuation for statutory funding purposes showed a deficit of £53.5 million (31 May 2009: £16.6 million). The Group agreed with the Scheme Trustees to repay this amount via deficit catch up payments of £4 million per annum until 31 May 2013 and thereafter at £3.6m per annum until 31 May 2027.

Under the scheme employees were entitled to retirement benefits of 1/60th of final salary for each qualifying year on attainment of retirement age of 60 or 65 years and additional benefits based on the value of individual accounts. No other post-retirement benefits are provided.

The Group holds the entire deficit position of the scheme on its balance sheet as it is the principal employer and in substance bears all of the material risks associated with the scheme.

The Group has adopted IAS 19 Employee Benefits, amended June 2011.  The transition effect of adoption is shown in note 2. above.

RM plc has entered into a guarantee to irrevocably undertake with the Trustee that, if ever the RM Education Limited does not pay any amount when due in respect of its Guaranteed Obligations, it must immediately on demand by the Trustees pay that amount (that was due but unpaid) as if it were the principal obligor.  The guarantee for the deficit recovery remains in place on condition that the assumptions underlying the valuation in 2012 remain materially unchanged for all subsequent triennial valuations undertaken.

Amounts recognised within operating profit and in the Statement of Comprehensive Income
			Year ended 30 November 2013	Year ended 30 November 2012
				Restated (note 2)
			£000	£000
Amounts recognised within operating profit
Current service cost			-	2,209
Administrative expenses and taxes			391	866
Curtailment gain			-	(1,824)
Operating expense			391	1,251
Interest cost			6,722	6,327
Interest on plan assets			(5,892)	(5,417)
Net interest expense			830	910
			1,221	2,161
Amounts recognised in the Statement of Comprehensive Income
Effect of changes in demographic assumptions			-	5,528
Effect of changes in financial assumptions			8,199	10,120
Effect of experience adjustments			-	(3,252)
Total actuarial losses			8,199	12,396
Return on plan assets			(9,641)	(5,810)
			(1,442)	6,586
Total defined benefit (credit)/cost			(221)	8,747
Reconciliation of the scheme assets and obligations through the year
			Year ended 30 November 2013	Year ended 30 November 2012
				Restated (note 2)
			£000	£000
Assets
At start of period			129,710	111,415
Interest on plan assets			5,892	5,417
Actual return on plan assets less interest on plan assets			9,641	5,810
Administrative expenses paid from plan assets			(391)	(866)
Contributions from employer			4,384	9,488
Contributions from scheme members			-	10
Benefits paid			(1,548)	(1,564)
At end of period			147,688	129,710
Obligations
At start of period			150,143	132,589
Current service costs			-	2,209
Curtailment gain resulting from closure to future accrual			-	(1,824)
Interest cost			6,722	6,327
Contributions from scheme members			-	10
Actuarial losses			8,199	12,396
Benefits paid			(1,548)	(1,564)
At end of period			163,516	150,143
Deficit in scheme and liability recognised in the balance sheet			(15,828)	(20,433)

Reconciliation of net defined benefit liability
			Year ended 30 November 2013	Year ended 30 November 2012
				Restated (note 2)
			£000	£000
Net defined benefit liability at the start of the year			(20,433)	(21,174)
Defined benefit cost included in operating profit			(1,221)	(2,161)
Defined benefit pension scheme remeasurements included in Consolidated Statement of Other Comprehensive Income			1,442	(6,586)
Cash outflow in respect of current service cost			-	2,209
Cash outflow in excess of current service cost			4,384	7,279
Net defined benefit liability at the end of the year			(15,828)	(20,433)
Defined benefit obligation by participant status
			30 November 2013	30 November 2012
			£000	£000
Active members			-	-
Vested deferreds			145,944	132,765
Retirees			17,572	17,383
			163,516	150,148
Fair value of plan assets with a quoted market price
			30 November 2013	30 November 2012
			£000	£000
Cash and cash equivalents			416	98
Equity instruments			74,840	64,820
Debt instruments			72,432	64,792
			147,688	129,710

Significant actuarial assumptions
		Year ended 30 November 2013		Year ended 30 November 2012
Weighted average to determine benefit obligations
Discount rate			4.65%	4.50%
Rate of salary increases			n/a	n/a
Rate of RPI price inflation			3.45%	2.85%
Rate of CPI price inflation			2.55%	2.15%
Rate of pensions increases
pre 6 April 1997 service			1.35%	1.35%
pre 1 June 2005 service			3.30%	2.80%
post 31 May 2005 service			2.25%	2.00%
Post retirement mortality table		- - - S1NA CMI 2011 1.25% - - -
Weighted average to determine defined benefit cost
Discount rate			4.50%	4.80%
Rate of salary increases			n/a	n/a
Rate of RPI price inflation			2.85%	3.00%
Rate of CPI price inflation			2.15%	2.30%
Rate of pensions increases (post 31 May 2005 service)			2.00%	2.00%
Post retirement mortality table		- - - S1NA CMI 2011 1.25% - - -
Weighted average duration of defined benefit obligation			24 years	24 years
Assumed life expectancy on retirement at age 65
Retiring today (male member aged 65)			22.5	22.4
Retiring in 20 years (male member aged 45)			24.2	24.1

Expected cash flows
				£000
Expected employer contributions				4,384
Expected total benefit payments
Year 1				1,590
Year 2				1,636
Year 3				1,682
Year 4				1,729
Year 5				1,778
Next 5 years				9,671

Membership statistics
1. Census date										31 May 2012
2. Actives
a. Number											371
b. Total annual pensionable pay											£12.7 m
c. Average annual pensionable pay											£34,247
d. Average age											43 years
e. Average past service											14.1 years
3. Vested deferreds
a. Number											1,259
b. Average annual pension											£4,135
c. Average age											44 years
4. Retirees
a. Number											136
b. Average annual pension											£6,880
c. Average age											62 years
Sensitivities at 30 November 2013 - one item changed with all others held constant
		30 November 2012		30 November 2013
				Base	-0.1% discount rate	+0.1% discount rate			-0.1% RPI	+0.1% RPI		Life +1 yr
		£ m		£ m	£ m	£ m			£ m	£ m		£ m
Analysis of net balance sheet position
Fair value of plan assets		129.7		147.7	147.7	147.7			147.7	147.7		147.7
Present value of plan obligations		150.1		163.5	167.5	159.6			160.1	166.9		166.2
Deficit		20.4		15.8	19.8	11.9			12.4	19.2		18.5
	Year ended
30 November 2012				Year ended 30 November 2013
Actuarial assumptions
Discount rate		4.50%		4.65%	4.55%	4.75%			4.65%	4.65%		4.65%
Rate of RPI		2.85%		3.45%	3.45%	3.45%			3.35%	3.55%		3.45%
Rate of CPI		2.15%		2.55%	2.55%	2.55%			2.45%	2.65%		2.55%
Mortality table		- - - - - - - - - - - - - - - - - - - S1NA CMI 2011 1.25% - - - - - - - - - - - - - - - - - - - - -

 

END

 

 

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