Interim Results

RNS Number : 0613D
RM PLC
04 July 2016
 

 

4th July 2016

 

RM plc

Interim Results for the period ending 31 May 2016

RM plc ("RM"), the leading education software, services and resources group, reports its interim results for the 6 months ended 31 May 2016.

 

HIGHLIGHTS

 

 

Financial

 

 

2016

 

 

2015

 

 

Change

 

 

Revenue1

 

RM Resources

RM Results

RM Education

 

Adjusted* operating profit

 

Adjusted* operating profit margin

 

£76.6m

 

£29.3m

£13.2m

£34.2m

 

£7.1m

 

9.3%

 

 

£77.7m

 

£30.6m

£10.6m

£36.5m

 

£6.9m

 

8.9%

 

-1.4%

 

-4.4%

+23.6%

-6.4%

 

+2.9%

 

+0.4pp

 

Adjusted* diluted EPS

6.1p

5.8p

+5.2%

Interim dividend

1.50p

1.20p

+25%

1 The highlights set out above exclude the results of exited businesses. Revenue including exited businesses was £76.8m (H1 2015: £79.8m). Including the results of exited businesses does not change the adjusted operating profit as shown above.

 

Operational

 

·      Strong revenue growth in RM Results partially offsetting expected reductions in RM Resources and RM Education

 

·      Adjusted* operating profit improved to £7.1m (H1 2015: £6.9m)

 

·      Adjusted* operating margin continues to improve to 9.3% (H1 2015: 8.9%)

 

·      Cash remains strong at £32.1m

 

·      Interim dividend increased by 25% to 1.50p (H1 2015: 1.20p)

 

·      Confident of meeting full year expectations

 

 

 

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

"Trading in the first six months of 2016 has been as expected.  We have seen strong growth in RM Results, RM Resources has protected its robust margins despite a modest decline in revenues and RM Education continues to stabilise.  Despite a subdued UK education market, our balance sheet remains strong and we are confident of meeting expectations for the full year."

Contacts

RM plc

 

FTI Consulting

08450 700300

David Brooks, Chief Executive Officer

Chris Lane / Antonia Gray 

Neil Martin, Chief Financial Officer

020 3727 1000

 

08450 700300


 

* Throughout this statement, adjusted profit and adjusted EPS are stated before adjustments to profit which are considered exceptional in nature or with potential significant variability year on year in non-cash items which might mask underlying trading performance: the amortisation of acquisition related intangible assets; impairment of held for sale assets and related transition costs; the gain on sale of operations; share-based payment charges; restructuring program release and changes in the provisions for dilapidations and onerous lease contracts.

 

 

RM plc

Interim results for the 6 months ended 31 May 2016

Results


6 months to

May 2016

6 months to

May 2015


12 months to

November 2015

Revenue

£76.8m

£79.8m


£178.2m

Revenue excluding exited business

£76.6m

£77.7m


£174.5m

Adjusted* operating profit

£7.1m

£6.9m


£18.2m

Adjusted* profit before tax

£6.5m

£6.3m


£17.1m

Profit before tax

£6.0m

£9.2m


£19.2m

Adjusted* diluted Earnings per share

6.1p

5.8p


15.6p

Ordinary dividend per share

1.50p

1.20p


5.00p

Cash and short term deposits

£32.1m

£43.1m


£48.3m

 

Revenue declined by 3.8% to £76.8m compared with £79.8m for the same period last year (or by 1.4% when excluding the exited business, SpaceKraft that was sold in December 2015), with growth in the RM Results division being more than offset by the expected decline in the RM Resources and RM Education divisions.

Adjusted* operating profit was £7.1m (H1 2015: £6.9m).  Adjusted* profit before tax was £6.5m (H1 2015: £6.3m). 

Cash used in operations of £0.4m (H1 2015: cash generated £1.7m) reflects a reduction in the negative working capital associated with long-term contracts and the unwinding of related cash balances. Net cash and short-term deposits at 31 May 2016 was £32.1m (2015: £43.1m at 31 May 2015, £48.3m at 30 November 2015) which follows a one off additional pension payment of £8m agreed as part of the 2015 triennial agreement. 

Adjusted* diluted earnings per share increased by 5% to 6.1p (H1 2015: 5.8p).

 

Pension

The IAS 19 deficit relating to RM's defined benefit pension scheme has increased since 30 November 2015 by £1.1m to £23.0m (£21.9m at 30 November 2015), primarily due to increased liabilities arising from a reduction in market discount rates more than offsetting cash contributions of £10m and beneficial inflation factors. The deficit net of deferred tax was £18.8m (£17.9m at 30 November 2015).

 

Dividend

The interim dividend per share has been increased by 25% to 1.50p (H1 2015: 1.20p) reflecting the commitment to reduce dividend cover. The dividend will be payable on 9 September 2016 to shareholders on the register on 12 August 2016.

 

RM Resources

RM Resources consists of the operating business TTS.  TTS provides education resources used in schools in the UK and internationally through a mainly direct marketing business.  Products supplied are a mix of third party branded and TTS branded items manufactured from a network of third party suppliers.


6 months to

May 2016

6 months to

May 2015


12 months to

November 2015

RM Resources revenue

£29.3m

£30.6m


£63.5m

RM Resources adjusted* operating profit

£4.3m

£4.5m


£11.1m

 

The above excludes the exited SpaceKraft business which was sold in December 2015.

As anticipated, RM Resources reported a revenue decline of 4.4% to £29.3m (H1 2015: £30.6m).  TTS UK direct marketing fell by 8% as a result of the end of the benefit driven by significant curriculum change in UK primary schools and continued tightening of UK schools budgets.  Online ordering continues to be strong and now represents 34% of UK orders (28% for the same period in 2015).  International revenue grew 18% driven primarily by increased sales of proprietary products in Europe and sales to International schools.

Despite declining revenue, focus on tight cost control has protected the strong margins with adjusted* operating margin remaining constant at 14.6%.

 

RM Results

The RM Results business provides IT software and e-Assessment services to enable onscreen exam marking (e-marking), onscreen testing (e-testing) and the management and analysis of educational data.  Its customers include government ministries, exam boards and professional awarding bodies in the UK and overseas.


6 months to

May 2016

6 months to

May 2015


12 months to

November 2015

RM Results revenue

£13.2m

£10.6m


£30.7m

RM Results adjusted* operating profit

£2.4m

£1.6m


£5.6m

 

Revenue in this division increased by 23.6% to £13.2m (H1 2015: £10.6m). This resulted from growth of 46% in e-Assessment revenues driven by a greater proportion of revenues accounted for in H1 compared to the prior year (+34%) and increased e-testing revenues (+12%). Data revenues declined by 6% as a result of planned contract exits which will also impact revenues in the second half.  Adjusted* operating profit increased from £1.6m for the first half of 2015 to £2.4m as a result of the increased revenue.

Increased revenues in e-testing were driven by an expanded 5 year managed services contract for English language exams with Cambridge Assessment.

 

RM Education

RM Education is a UK focused business supplying ICT software and services to schools and colleges.


6 months to

May 2016

6 months to

May 2015


12 months to

November 2015

RM Education revenue

£34.2m

£36.5m


£80.2m

RM Education adjusted* operating profit

£2.3m

£2.6m


£5.5m

 

As expected revenues in RM Education reduced by 6.4% reflecting the continued transition away from legacy offerings. This reduction reflects a significant slowdown in the revenue decline experienced in this division compared to previous years.  The decline was experienced on the back of the government's Building Schools for the Future (BSF) programme stopping and the change of strategy away from making and selling PC client devices.

Good progress was made in the half year in relation to pursuing the division's priority areas in software and services.  In particular we extended or renewed all long term managed service contracts that ended in the period including those previously under the BSF programme.

The division generated an adjusted* operating profit of £2.3m (H1 2015: £2.6m) with operating margins of 6.6%.  The division includes services subject to long-term project accounting and, as in 2015, profits were positively affected by good operational performance and cost control in long term contract completions.

 

Corporate Costs

Corporate costs have remained stable at £1.8m (H1 2015: £1.8m).

 

Statement on Principal Risks and Uncertainties

Pursuant to the requirements of the Disclosure and Transparency Rules, the Group provides the following information on its principal risks and uncertainties. The Group considers strategic, operational and financial risks and identifies actions to mitigate those risks. These risk profiles are updated at least annually. The principal risks and uncertainties detailed within the Group's 2015 Annual Report remain applicable. This is available from the RM website: www.rmplc.com.

 

Outlook

Whilst market conditions in the UK Education sector continue to be subdued as a result of pressure on school budgets we are confident of delivering results for the year in line with expectations. Our balance sheet remains strong and the Board is focusing on the right balance of investing in the three divisions while ensuring that margins can be maintained or improved in 2016.

 

 

Condensed Consolidated Income Statement









for the 6 months ended 31 May 2016












6 months ended 31 May 2016

6 months ended 31 May 2015

Year ended 30 November 2015



Adjusted

Adjustments

Total

Adjusted

Adjustments

Total

Adjusted

Adjustments

Total


Note

£000

£000

£000

£000

£000

£000

£000

£000

£000

Revenue


76,759

-

76,759

79,806

-

79,806

178,228

-

178,228

Cost of sales


(44,774)

-

(44,774)

(47,612)

-

(47,612)

(109,316)

-

(109,316)












Gross profit


31,985

-

31,985

32,194

-

32,194

68,912

-

68,912

Operating expenses


(24,910)

-

(24,910)

(25,246)

-

(25,246)

(50,713)

-

(50,713)

Amortisation of acquisition related intangible assets


-

(8)

(8)

-

(152)

(152)

-

(303)

(303)

Impairment of held for sale assets and related transition costs


-

-

-

 -

 -

 -

-

(323)

(323)

Gain on sale of operations


-

136

136

-

-

-

65

Share-based payment charges


-

(700)

(700)

-

(385)

(385)

-

(864)

(864)

Release of provisions for dilapidations on leased properties and onerous lease contracts


-

79

79

-

2,393

2,393

-

2,368

2,368

Restructuring program release


-

-

-

-

213

213

-

243

243

Exceptional credit on Defined Benefit Pension Scheme


-

-

-

-

-

-

-

206

206



(24,910)

(493)

(25,403)

(25,246)

2,069

(23,177)

(50,713)

1,392

(49,321)












Profit from operations


7,075

(493)

6,582

6,948

2,069

9,017

18,199

1,392

19,591

Investment income


114

-

114

180

894

1,074

409

894

1,303

Finance costs


(657)

(38)

(695)

(782)

(88)

(870)

(1,510)

(149)

(1,659)












Profit before tax


6,532

(531)

6,001

6,346

2,875

9,221

17,098

2,137

19,235












Tax

4

(1,372)

(9)

(1,381)

(1,488)

(375)

(1,863)

(3,984)

(289)

(4,273)












Profit for the period


5,160

(540)

4,620

4,858

2,500

7,358

13,114

1,848

14,962












Earnings per ordinary share:

5










Basic


6.4p


5.7p

6.0p


9.1p

16.2p


18.5p

Diluted


6.1p


5.4p

5.8p


8.8p

15.6p


17.8p

Paid and proposed dividends per share:

6










Interim




1.50p



1.20p



1.20p

Final




-



-



3.80p












Adjustments to results have been presented to give a better guide to business performance (see note 1).




Results from exited business are shown in note 3 to these financial statements.

 

 

Condensed Consolidated Statement of Comprehensive Income





 

for the 6 months ended 31 May 2016



  




6 months ended

6 months ended

Year ended



31 May 2016

31 May 2015

30 November 2015



£000

£000

£000






Profit for the period


4,620

7,358

14,962






Items that will not be reclassified subsequently to profit or loss:










Defined benefit pension scheme re-measurements


(10,279)

(4,553)

2,402

Tax on items that will not be reclassified subsequently to profit or loss


1,932

911

(950)






Items that are or may be reclassified subsequently to profit or loss:









Fair value gain/(loss) on hedged instruments


56

(114)

(180)

Exchange gain/(loss) on translation of overseas operations


60

(15)

(80)

Tax on items that are or may be reclassified subsequently to profit or loss


17

(27)

(36)

Other comprehensive (expense)/income


(8,214)

(3,798)

1,156

Total comprehensive (expense)/income


(3,594)

3,560

16,118

 

 

Condensed Consolidated Balance Sheet





At 31 May 2016











Note

31 May 2016

31 May 2015

30 November 2015

£000

£000

£000

Non-current assets





Goodwill


14,067

14,067

14,067

Acquisition related intangible assets


-

310

8

Other intangible assets


812

553

562

Property, plant and equipment


6,950

7,695

7,059

Other receivables

9

1,166

1,172

1,168

Deferred tax assets


7,189

8,256

6,121



30,184

32,053

28,985

Current assets





Inventories


10,805

12,846

10,862

Trade and other receivables

9

25,815

24,606

25,592

Tax assets


-

545

-

Cash and short-term deposits

7

32,118

43,103

48,320

Assets held for sale


-

-

1,162



68,738

81,100

85,936






Total assets


98,922

113,153

114,921






Current liabilities





Trade and other payables

10

(56,719)

(68,888)

(64,974)

Tax liabilities


(1,280)

(780)

(2,787)

Provisions

11

(1,132)

(2,828)

(2,077)

Liabilities directly associated with assets classified as held for sale


-

-

(549)



(59,131)

(72,496)

(70,387)






Net current assets


9,607

8,604

15,549






Non-current liabilities





Other payables

10

(690)

(963)

(662)

Provisions

11

(2,948)

(2,507)

(2,864)

Defined Benefit Pension Scheme obligation

12

(22,958)

(30,016)

(21,861)



(26,596)

(33,486)

(25,387)






Total liabilities


(85,727)

(105,982)

(95,774)






Net assets


13,195

7,171

19,147






Equity attributable to shareholders




Share capital


1,890

1,889

1,890

Share premium account


27,035

27,018

27,035

Own shares


(2,510)

(2,667)

(2,510)

Capital redemption reserve


94

94

94

Hedging reserve


420

430

364

Translation reserve


(324)

(319)

(384)

Retained earnings - (deficit)


(13,410)

(19,274)

(7,342)

Total equity


13,195

7,171

19,147

 

Condensed Consolidated Statement of Changes in Equity


















for the 6 months ended 31 May 2016


Share capital

Share premium

Own shares

Capital redemption reserve

Hedging reserve

Translation reserve

Retained earnings

Total


Note

£000

£000

£000

£000

£000

£000

£000

£000











At 1 December 2015


1,890

27,035

(2,510)

94

364

(384)

(7,342)

19,147

Profit for the period


-

-

-

-

-

-

4,620

4,620

Other comprehensive income/(expense)


-

-

-

-

56

60

(8,330)

(8,214)

Total comprehensive income/(expense)


-

-

-

-

56

60

(3,710)

(3,594)

Transactions with owners of the Company:









Sale of shares held in staff share scheme


-

-

-

-

-

-

21

21

Share-based payment fair value charges


-

-

-

-

-

-

700

700

Ordinary dividends paid

6

-

-

-

-

-

-

(3,079)

(3,079)

At 31 May 2016


1,890

27,035

(2,510)

94

420

(324)

(13,410)

13,195











for the 6 months ended 31 May 2015


Share capital

Share premium

Own shares

Capital redemption reserve

Hedging reserve

Translation reserve

Retained earnings

Total


Note

£000

£000

£000

£000

£000

£000

£000

£000











At 1 December 2014


1,889

27,018

(2,950)

94

544

(304)

(18,177)

8,114

Profit for the period


-

-

-

-

-

-

7,358

7,358

Other comprehensive expense


-

-

-

-

(114)

(15)

(3,669)

(3,798)

Total comprehensive income/(expense)


-

-

-

-

(114)

(15)

3,689

3,560

Transactions with owners of the Company:









Share-based payment awards exercised


-

-

2,592

-

-

-

(2,720)

(128)

Purchase of own shares


-

-

(2,309)

-

-

-

-

(2,309)

Share-based payment fair value charges


-

-

-

-

-

-

385

385

Ordinary dividends paid

6

-

-

-

-

-

-

(2,451)

(2,451)

At 31 May 2015


1,889

27,018

(2,667)

94

430

(319)

(19,274)

7,171

 








for the year ended 30 November 2015


Share capital

Share premium

Own shares

Capital redemption reserve

Hedging reserve

Translation reserve

Retained earnings

Total

 


Note

£000

£000

£000

£000

£000

£000

£000

£000

 











 

At 1 December 2014


1,889

27,018

(2,950)

94

544

(304)

(18,177)

8,114

 

Profit for the year


-

-

-

-

-

-

14,962

14,962

 

Other comprehensive income/(expense)


-

-

-

-

(180)

(80)

1,416

1,156

 

Total comprehensive income/(expense)


-

-

-

-

(180)

(80)

16,378

16,118

 

Transactions with owners of the Company:









 

Shares issued


1

17

-

-

-

-

-

18

 

Sale of shares held in staff share scheme


-

-

-

-

-

-

55

55

 

Share-based payment awards exercised


-

-

2,910

-

-

-

(3,038)

(128)

 

Purchase of own shares


-

-

(2,470)

-

-

-

                 -

(2,470)

 

Share-based payment fair value charges


-

-

-

-

-

-

864

864

 

Ordinary dividends paid

6

-

-

-

-

-

-

(3,424)

(3,424)

 

At 30 November 2015


1,890

27,035

(2,510)

94

364

(384)

(7,342)

19,147

 

 

 

Condensed Consolidated Cash Flow Statement





for the 6 months ended 31 May 2016







6 months ended

6 months ended

Year ended



31 May 2016

31 May 2015

30 November 2015


Note

£000

£000

£000

Profit before tax


6,001

9,221

19,235

Investment income


(114)

(1,074)

(1,303)

Finance costs


695

870

1,659

Profit from operations


6,582

9,017

19,591

Adjustments for:





Impairment of acquisition related intangible assets


-

-

150

Amortisation of acquisition related intangible assets


8

152

303

Amortisation of other intangible assets


120

154

297

Depreciation and impairment of property, plant and equipment


 

1,057

1,138

2,406

Gain on sale of operations


(136)

-

(65)

Loss/(gain) on disposal of property, plant and equipment


 

42

(75)

(95)

Loss on foreign exchange derivatives


133

134

133

Share-based payment charge


700

385

864

Decrease in provisions

11

(79)

(2,258)

(716)

Defined Benefit Pension Scheme administration cost

12

 

480

205

530

Operating cash flows before movements in working capital


 

8,907

8,852

23,398

Decrease/(increase) in inventories


57

(2,242)

(707)

(Increase)/decrease in receivables


(353)

7,594

6,102

Movement in payables:





 - decrease in trade and other payables


(8,233)

(10,805)

(14,369)

 - utilisation of onerous lease and dilapidations provisions

11

 

(306)

(959)

(2,186)

 - utilisation of employee-related restructuring provisions

11

 

(94)

(599)

(1,166)

 - utilisation of other provisions

11

(381)

(105)

(132)

Cash (used in)/generated by operations


(403)

1,736

10,940

Defined Benefit Pension Scheme cash contributions


 

(9,992)

(1,992)

(3,984)

Tax paid


(1,882)

(632)

(171)

Borrowing facilities arrangement and commitment fees


 

(365)

(183)

(447)

Income on sale of finance lease debt


16

-

45

Net cash (outflow)/inflow from operating activities


(12,626)

(1,071)

6,383

Investing activities





Interest received


98

163

364

Repayment of loans by third parties


-

14

18

Proceeds from sale of other receivables


-

1,586

1,586

Proceeds from sale of operations


759

-

-

Proceeds on disposal of property, plant and equipment


13

122

165

Purchases of property, plant and equipment


(1,019)

(370)

(1,576)

Purchases of other intangible assets


(369)

(170)

(322)

Net cash (used in)/generated by investing activities


(518)

1,345

235

Financing activities





Ordinary dividends paid

6

(3,079)

(2,451)

(3,424)

Repayment of capital obligations under vehicle finance leases


-

(177)

(244)

Proceeds of share capital issue, net of share issue costs


-

-

18

Proceeds from sale of shares held in Staff Share Scheme


21

-

55

Purchase of own shares


-

(2,309)

(2,470)

Satisfaction of share-based payment awards


-

(128)

(128)

Net cash used in financing activities


(3,058)

(5,065)

(6,193)

Net (decrease)/ increase in cash and cash equivalents


(16,202)

(4,791)

425

Cash and cash equivalents at the beginning of the period/year


42,320

41,893

41,893

Effect of foreign exchange rate changes


-

1

2

Cash and cash equivalents at the end of period/ year

7

26,118

37,103

42,320

 

 

Notes to the Condensed Interim Financial Statements


1. General information

RM plc ('Company') is incorporated in the United Kingdom and listed on the London Stock Exchange. The unaudited Condensed Consolidated Interim Financial Statements as at 31 May 2016 and for the 6 months then ended comprise those of the Company and its subsidiaries (together 'the Group').


Condensed 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 which are considered exceptional in nature or with potential significant variability year on year in non-cash items which might mask underlying trading performance: the amortisation of acquisition related intangible assets; the impairment of held for sale assets and related transition costs, the gain on sale of operations; share-based payment charges; restructuring program releases; and movements in the provisions for dilapidations and onerous lease contracts. The columns extend down the Income Statement to allow the tax and earnings per share impacts of these transactions to be disclosed.  Equivalent material adjustments to profit arising in future years, including increases in or reversals of items recorded, will be disclosed in a consistent manner.


Adjustments to profit

During the 6 months ended 31 May 2016 adjustments to profit include a £0.7m share based payment fair value charge in accordance with IFRS 2 and a £0.1m profit on the disposal of investment in subsidiary entity, SpaceKraft Limited.

 

Other Comprehensive Income

Also during the period, £10.3m of actuarial losses relating to the defined benefit pension scheme deficit have been recognised in Other Comprehensive Income. These have been mainly offset by deficit reduction payments of £10.0m.


2. Accounting policies

This condensed set of financial statements has been prepared in accordance with IAS 34 Interim Financial Reporting as adopted by the European Union.

The annual financial statements of the Group are prepared in accordance with International Financial Reporting Standards (IFRSs) as adopted by the European Union. As required by the Disclosure and Transparency Rules of the Financial Conduct Authority (FCA), the condensed set of financial statements 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 year ended 30 November 2015.

The preparation of the Condensed Consolidated Interim 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 Interim 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.

In preparing these Condensed Consolidated Interim Financial Statements, the significant judgements made by management in applying the Group's accounting policies and the key sources of estimation uncertainty were the same as those that applied to the Consolidated Financial Statements as at and for the year ended 30 November 2015.


Going concern

The Directors, having made appropriate enquiries, consider that the Group has adequate resources to continue in operational existence for the foreseeable future and that therefore it is appropriate to adopt the going concern basis in preparing the Interim Financial Statements.

 

3. Segmental results

 

The Group's business is supplying products, services and solutions to the UK and international education markets.

The Group is structured into three operating divisions:  RM Resources, RM Results and RM Education.

 

This Segmental analysis shows the results and assets of these divisions.  Revenue is that earned by the Group from third parties.

 

6 months ended 31 May 2016


RM Resources

RM Results

RM Education

Corporate Services

Exited Businesses

Total



£'000

£'000

£'000

£'000

£'000

£'000

Revenue


29,265

13,155

34,188

-

151

76,759

Adjusted profit/(loss) from operations


4,272

2,364

2,264

(1,806)

(19)

7,075

Adjusted investment income







114

Adjusted finance costs







(657)

Adjusted profit before tax







6,532

Adjustments  (see note 1)







(531)

Profit before tax







6,001









6 months ended 31 May 2015


RM Resources

RM Results

RM Education

Corporate Services

Exited Businesses

Total



£'000

£'000

£'000

£'000

£'000

£'000

Revenue


30,574

10,640

36,516

-

2,076

79,806

Adjusted profit/(loss) from operations


4,468

1,610

2,571

(1,756)

               55

6,948

Adjusted investment income







180

Adjusted finance costs







(782)

Adjusted profit before tax







6,346

Adjustments  (see note 1)







2,875

Profit before tax







9,221














 

Year ended 30 November 2015


RM Resources

RM Results

RM Education

Corporate Services

Exited Businesses

Total

 



£'000

£'000

£'000

£'000

£'000

£'000

 

Revenue


63,543

30,725

80,243

-

3,717

 

Adjusted profit/(loss) from operations


11,107

5,554

5,494

(4,140)

184

18,199

 

Investment income







409

 

Adjusted finance costs







 

Adjusted profit before tax







17,098

 

Adjustments  (see note 1)







 

Profit before tax







19,235

 

 

 

 

 









 

 

Segmental assets







 

 



RM

 Resources

RM Results

RM Education

Corporate Services

Exited Businesses

Total

 

 

At 31 May 2016

£000

£000

£000

£000

£000

£000

 

 

Segmental


34,444

5,662

15,949

3,362

-

59,417

 

 

Other


39,505

 

 

Total assets






98,922

 

 









 

 









 

 



RM

Resources

RM Results

RM Education

Corporate Services

Exited Businesses

Total

 

 

At 31 May 2015

£000

£000

£000

£000

£000

£000

 

 

Segmental


34,553

6,067

17,422

409

1,416

59,867

 

 

Other



53,286

 

 

Total assets







113,153

 

 









 

 









 

 



RM

Resources

RM Results

RM Education

Corporate Services

Exited Businesses

Total

 

 

At 30 November 2015

£000

£000

£000

£000

£000

£000

 

 

Segmental


32,962

7,732

16,539

700

1,162

59,095

 

 

Other



55,826

 

 

Total assets







114,921

 

 









 

 

Other non-segmented assets includes tax assets, cash and short-term deposits and other non division-specific assets.

 

 

4. Tax










 

Corporation tax for the interim period is charged at the expected effective tax rate for the financial year ending 30 November 2016, based upon adjusted profit as explained within note 1. The charge incorporates both current and deferred taxation:

 











 


6 months ended 31 May 2016

6 months ended 31 May 2015

           Year ended 30 November 2015


Adjusted

Adjustments

Total

Adjusted

Adjustments

Total

Adjusted

Adjustments

Total

 


£'000

£'000

£'000

£'000

£'000

£'000

£'000

£'000

£'000

 











 

Profit before tax

6,532

(531)

6,001

6,346

2,875

9,221

17,098

2,137

19,235

 

Tax charge

(1,372)

(9)

(1,381)

(1,488)

(375)

(1,863)

(3,984)

(289)

(4,273)

 











 

Effective tax rate

21.0%

-1.7%

23.0%

23.4%

13.0%

20.2%

23.3%

13.5%

22.2%

 

 

 

 

 

5. Earnings per ordinary share





















6 months ended 31 May 2016

6 months ended 31 May 2015

Year ended 30 November 2015


Profit after tax

Weighted average number of shares

Pence per share

Profit after tax

Weighted average number of shares

Pence per share

Profit after tax

Weighted average number of shares

Pence per share


£000

000


£000

000


£000

000


Basic earnings per ordinary share:










Basic earnings

4,620

80,954

5.7

7,358

80,913

9.1

14,962

80,954

18.5

Adjustments (see note 1)

540

-

0.7

(2,500)

-

(3.1)

(1,848)

-

(2.3)

Adjusted basic earnings

5,160

80,954

6.4

4,858

80,913

6.0

13,114

80,954

16.2











Diluted earnings per ordinary share:










Basic earnings

4,620

80,954

5.7

7,358

80,913

9.1

14,962

80,954

18.5

Effect of dilutive potential ordinary shares: share-based payment awards

-

4,245

(0.3)

-

3,010

(0.3)

-

3,080

(0.7)

Diluted earnings per ordinary share

4,620

85,199

5.4

7,358

83,923

8.8

14,962

84,034

17.8

Adjustments (see note 1)

540

-


(2,500)

-


(1,848)

-


Adjusted diluted earnings

5,160

85,199

6.1

4,858

83,923

5.8

13,114

84,034

15.6

 

6. Dividends




 

Amounts recognised as distributions to equity holders were:




 


6 months ended

6 months ended

Year ended


31 May 2016

31 May 2015

30 November
2015


£000

£000

£000





Final dividend for the year ended 30 November 2015 - 3.80p per share (2014: 3.04p)

3,079

2,451

2,451





Interim dividend for the year ended 30 November 2015 - 1.20p per share

-

-

973






3,079

2,451

3,424

The proposed interim dividend of 1.50p per share was approved by the Board on 4 July 2016. The anticipated cost of £1,214,000 has not been included as a liability at 31 May 2016.

 

 

 

 

7. Cash and short-term deposits












31 May 2016

31 May 2015

30 November 2015



£000

£000

£000

Cash and cash equivalents


26,118

37,103

42,320

Short-term deposits


6,000

6,000

6,000

Cash and short-term deposits


32,118

43,103

48,320











8. Long-term contracts







31 May 2016

31 May 2015

30 November 2015


Note

£000

£000

£000

Amounts due from contract customers included in trade and other receivables

9

1

83

138

Amounts due to contract customers included in trade and other payables

10

(21,664)

(29,245)

(25,509)



(21,663)

(29,162)

(25,371)






 

 

9. Trade and other receivables












31 May 2016

31 May 2015

30 November 2015



£000

£000

£000

Current





Financial assets





Trade receivables


18,319

17,264

17,303

Long-term contract balances


1

83

138

Other receivables


1,796

826

1,048

Derivative financial instruments


-

340

138

Accrued income


762

2,155

1,489



20,878

20,668

20,116

Non-financial assets





Prepayments


4,937

3,938

5,476



25,815

24,606

25,592






Non-current





Financial assets





Other receivables


1,166

1,172

1,168

 

 

10. Trade and other payables












31 May 2016

31 May 2015

30 November 2015


£000

£000

£000

Current





Financial liabilities





Trade payables


11,707

9,748

11,518

Other payables


315

1,053

761

Derivative financial instruments


-

26

5

Accruals


8,813

12,507

12,525

Obligations under finance leases


-

106

40



20,835

23,440

24,849

Non-financial liabilities





Other taxation and social security


4,006

4,059

4,010

Long-term contract balances


21,664

29,245

25,509

Deferred income


10,214

12,144

10,606



35,884

45,448

40,125



56,719

68,888

64,974






Non-current





Non-financial liabilities





Deferred income:





- due after one year but within two years


422

667

472

- due after two years but within five years


268

296

190



690

963

662











11. Provisions











Onerous lease and dilapidations

Employee-related restructuring

Other

Total


£000

£000

£000

£000






At 1 December 2015

                3,579

                       184

           1,178

                     4,941

Utilisation of provisions

(306)

(94)

(381)

(781)

Release of provisions

(150)

                            -

(58)

(208)

Increase in provisions

                        -

                            -

                90

                          90

Unwind of discount

                     38

                            -

                   -

                          38

At 31 May 2016

3,161

90

829

4,080

 

12. Defined Benefit Pension scheme

In the half-years ended 31 May 2016 and 31 May 2015 the financial position of the Group's Defined Benefit Pension Scheme has been rolled forward from the respective prior period end. The roll forward includes updating for actual investment returns for the periods; market derived discount rates on liabilities; and market derived inflation assumptions. Mortality assumptions have been held in line with those applied at 30 November 2015 of the preceding financial year.

The last triennial valuation at 31 May 2015 was used as the basis for the 30 November 2015 IAS 19 valuation and the roll-forward to 31 May 2016.

As at 31 May 2015, the triennial valuation for statutory funding purposes showed a deficit of £41.8 million (31 May 2012: £53.5 million). The Group agreed with the Scheme Trustees to repay this amount via deficit catch up payments of £4.0 million in December 2015 and £3.6 million per annum until 30 September 2024. In addition the Group pays the administration costs of the scheme including the Payment Protection Fund levy. In the half-year to 31 May 2016 total payments of £6.0 million were made under this arrangement.

In addition to the £4.0 million of catch up payments in December 2015, a further £4.0 million contribution was paid in December 2015 into an escrow account established in March 2014, the use of which within the Scheme is required to be agreed by RM Education Limited and the Scheme Trustee. As at 31 May 2016 £7.0 million remained unutilised in an escrow account and has been included within the calculation of the Scheme assets under IAS 19.

The Scheme is closed to future accrual of benefits.

 

13. Related party transactions

Transactions between the Company and its subsidiaries, which are related parties, have been eliminated on consolidation.

The Group encourages its Directors and employees to be Governors, Trustees or equivalent of educational establishments. The Group trades with these establishments in the normal course of its business.

 

 

Responsibility statement of the directors in respect of the interim financial statements

We confirm that to the best of our knowledge:

·      the condensed set of financial statements has been prepared in accordance with IAS 34 Interim Financial Reporting as adopted by the EU;

·      the interim management report includes a fair review of the information required by:

(a)   DTR 4.2.7R of the Disclosure and Transparency Rules, being an indication of important events that have occurred during the first six months of the financial period and their impact on the condensed set of financial statements; and a description of the principal risks and uncertainties for the remaining six months of the period; and

(b)   DTR 4.2.8R of the Disclosure and Transparency Rules, being related party transactions that have taken place in the first six months of the current financial period and that have materially affected the financial position or performance of the entity during that period; and any changes in the related party transactions described in the last annual report that could do so.

                                          

By order of the Board,

Neil Martin

Chief Financial Officer




4 July 2016

 

 

INDEPENDENT REVIEW REPORT TO RM PLC

 

Introduction

We have been engaged by the Company to review the condensed set of financial statements in the half-yearly financial report for the six months ended 31 May 2016 which comprises the Condensed Consolidated Income Statement, Condensed Consolidated Statement of Comprehensive Income, Condensed Consolidated Balance Sheet, Condensed Consolidated Cash Flow Statement, Condensed Consolidated Statement of Changes in Equity and the related explanatory notes. We have read the other information contained in the half-yearly financial report and considered whether it contains any apparent misstatements or material inconsistencies with the information in the condensed set of financial statements.

This report is made solely to the Company in accordance with the terms of our engagement. Our review has been undertaken so that we might state to the Company those matters we are required to state to it in this report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the Company for our review work, for this report, or for the conclusions we have reached.

Directors' responsibilities

The half-yearly financial report is the responsibility of, and has been approved by, the directors. The directors are responsible for preparing the half-yearly financial report in accordance with the DTR of the UK FCA.

As disclosed in note 2, the annual financial statements of the group are prepared in accordance with IFRSs as adopted by the EU. The condensed set of financial statements included in this half-yearly financial report has been prepared in accordance with IAS 34 Interim Financial Reporting as adopted by the EU.

Our responsibility

Our responsibility is to express to the Company a conclusion on the condensed set of financial statements in the half-yearly financial report based on our review.

Scope of review

We conducted our review in accordance with International Standard on Review Engagements (UK and Ireland) 2410 Review of Interim Financial Information Performed by the Independent Auditor of the Entity issued by the Auditing Practices Board for use in the UK. A review of interim financial information consists of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing (UK and Ireland) and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

Conclusion

Based on our review, nothing has come to our attention that causes us to believe that the condensed set of financial statements in the half-yearly financial report for the six months ended 31 May 2016 is not prepared, in all material respects, in accordance with IAS 34 as adopted by the EU and the DTR of the UK FCA.

 

John Bennett

For and on behalf of KPMG LLP
Chartered Accountants
Arlington Business Park, Theale

Reading RG7 4SD

4 July 2016 

 


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