Preliminary Results

RNS Number : 5242N
RM PLC
01 February 2016
 

1 February 2016

 

RM plc

Preliminary Results for the period ending 30 November 2015

 

RM plc ("RM"), the leading educational IT and resources group, reports its results for the year ending 30 November 2015.

 

HIGHLIGHTS

 

 

Financial

 

 

2015

 

 

2014

 

 

Change

 

 

Revenue

 

RM Resources

RM Results

RM Education

 

Adjusted* operating profit

 

Adjusted* operating profit margins

 

£178.2m

 

£63.5m

£30.7m

£80.2m

 

£18.2m

 

10.2%

 

 

£202.5m

 

£59.1m

£27.8m

£111.9m

 

£18.5m

 

9.1%

 

-12.0%

 

+7.6%

+10.4%

-28.3%

 

-1.8%

 

+1.1pp

 

 

Adjusted* basic EPS

 

Basic EPS

 

Paid and proposed dividend per share

 

16.2p

 

18.5p

 

5.00p

 

 

16.4p

 

13.9p

 

4.00p

 

-1%

 

+33%

 

+25%

 

 

Operational

 

·      Strong organic growth in RM Resources and RM Results

 

·      RM Education stabilised with satisfactory margins

 

·      Adjusted* operating margins continue to improve moving from 9.1% to 10.2%

 

·      Cash remains strong at £48.3m

 

·      Disposal of SpaceKraft, the small specialist manufacturing and distribution business

 

·      Pension triennial valuation agreed with recovery plan reduced to 9 years

 

 

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

"2015 was another good year of progress for the Group.  Both RM Resources and RM Results grew organically and RM Education has been reshaped and is now on a stable platform for the future.  The Group's profit margins reaching double digits is a positive milestone.

Market conditions in the UK Education sector will continue to be subdued as a result of increased pressure on school budgets.  Our strategy continues to focus on retaining a leading market position for all three businesses whilst maintaining our stronger operating margins."

 

* Adjusted operating profit is before the amortisation of acquisition related intangible assets; impairment of held for sale assets and related transition costs; the gain/(loss) on sale of operations; share-based payment charges; restructuring provision movements; changes in the provision for dilapidations and onerous lease contracts and exceptional credit on Defined Benefit Pension Scheme.

 

Contacts

RM plc

 

FTI Consulting

08450 700300

David Brooks, Chief Executive Officer

Chris Lane / Antonia Gray 

Neil Martin, Chief Financial Officer

08450 700300

020 3727 1000

 

 

 

Extract from Strategic Report

 

RM's objective is to create shareholder value through the provision of education resources, IT software and IT services to the education sector. 

 

Operating Review

 

The Group is structured in three operating divisions, each with its own managing director and management team.  Some staff functions are provided centrally.  Approximately 33% (2014: 28%) of Group headcount is based in India, providing support services and software development to the operating divisions.

 

RM Resources

 

The RM Resources Division consists of the operating business TTS.  In December 2015 we divested our small special educational needs business, SpaceKraft, for £0.8m which is separately identified as Held for Sale as at 30 November 2015. This enables the RM Resources management team to focus on the much larger TTS operation and exit from manufacturing activities that were required as part of the SpaceKraft business model.

 

TTS provides education resources used in schools through a mainly direct marketing business model with goods supplied from large, centralised UK distribution centres.  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 UK schools, early years and special educational needs markets via direct catalogue and online sales.  TTS also supplies a subset of these products through UK and international distributors as well as directly to international schools.

 

Divisional revenue increased by 7.6% to £63.5 million (2014: £59.1 million), with UK market share gains and a 31.6% increase in international revenues.  Divisional revenue increased by 12.2% in the first six months but only by 3.7% in the second half of the year as first half sales benefited from the curriculum changes that drove strong sales of new products.

 

Divisional adjusted operating margins remained consistent at 17.5% reflecting the benefits of continued growth and strong control over costs.  Adjusted operating profit was £11.1 million (2014: £10.3 million). 

 

TTS UK Direct Marketing

Revenue from TTS UK direct marketing increased by 4.0% to £48.3 million (2014: £46.4 million).  The first half of the year was very strong, showing 11.9% year on year increase, with the last effects of the uplift supported by changes to the curriculum in English primary schools.  However, in the second half revenue in this area decreased by 2.9% reflecting the tighter budgets within schools.

 

We continue to make significant investment in TTS' online channel.  Online orders now make up 30% of direct marketing sales and a completely new e-commerce platform will be released this year. 

 

We expect the UK education resources market to continue to be subdued as a result of increased pressure on the discretionary element of school budgets.  Our focus will be on maintaining sector leading margins while looking to retain our strong market position.

 

TTS International

Revenue from international sales to overseas resellers and to international schools increased by 31.6% to £11.1 million (2014: £8.5 million).  This was driven by growth in Europe and the Americas and included a large contract in the Middle East.  We expect international revenues to continue to grow in the coming year.

 

TTS UK Distributors

Revenue from sales to UK trade partners decreased by 1.5% to £4.1 million (2014: £4.2 million), reflecting the tightness of budgets in the wider UK education resources marketplace.

 

RM Results

 

The RM Results business provides IT software and 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 around the world.

 

The strategy is to primarily grow the e-assessment side of the business through expanding the scope of solutions to existing customers through the provision of leading software products and services and to win new customers in both the UK and overseas markets.  Software and services are provided through a combination of proprietary and third party, in-house and outsourced arrangements.  Internationally the business is expected to develop through partnerships and software licensing rather than as a service based activity.

 

Revenue increased by 10.4% to £30.7 million (2014: £27.8 million).  Adjusted operating margins increased further to 18.1% (2014: 16.7%).  Adjusted operating profit increased by 19.5% on the prior year to £5.6 million (2014: £4.6 million).

 

During the year the business was successful in securing a three year contract with the education charity, AQA, the largest UK schools exam awarding body, to provide e-marking services alongside the current provider.

 

Internationally, the business is pursuing opportunities for the onscreen marking of paper-based exams as well as onscreen testing, often bidding with partner organisations.  In the UK, examination and curricula changes introduced by the English Department for Education have significantly changed the phasing of exams so that the vast majority are taken in the summer term, which has moved revenue phasing into the second half of the year.  There is a long-term trend from paper-based to onscreen testing in the e-assessment market, though the adoption of such systems for school based examinations is low.

 

The educational data side of the business is heavily dependent on the Department for Education, principally through the National Pupil Database and RAISE Online contracts. These contracts include the capture and publishing of data for the school performance tables in England and both are up for retender in the next twelve months. However, we have successfully managed these contracts for over 10 years.  We are in the process of exiting a number of other smaller data services, non-profit making contracts.

 

We are targeting the growth opportunities in e-assessment to more than outweigh reduced revenues in the educational data business, thereby allowing us to maintain good operating margins.

 

RM Education

 

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

 

The Division's strategy is to return to sustainable top line growth by developing the adoption of its portfolio of software products and services to existing and new UK school and college customers.

 

Market trends affecting the business include the demand from schools for solutions which are low-cost yet can cope with an increasingly diverse range of hardware and software.  In addition, purchasing decisions in England have been increasingly devolved to schools and academy groups and away from central government and local authorities.  This has required a change in the way the Division engages with its market and has resulted in an increased focus on the top c.2,000 customers. 

 

As anticipated, the change of strategy away from selling hardware devices and a reduction in new school openings under the Building Schools for the Future (BSF) scheme led to overall revenue in RM Education declining by 28.3% to £80.2 million (2014: £111.9 million).  However, adjusted operating profit margins remained stable at 6.8% (2014: 6.9%)  Adjusted operating profit was £5.5 million (2014: £7.7 million).

 

Managed Services

The Managed Services offering is primarily the provision of full IT outsourcing services to schools and colleges.  As anticipated, revenues in 2015 again declined with a reduction in new school openings under the BSF programme.  Managed Services revenues decreased by 35.5% to £32.2 million (2014: £50.0 million).  However, the retention rates of existing customers increased significantly during the year to over 80%.  In addition, 44 new schools signed managed services contracts in the year. 

 

A proportion of our managed service contracts are subject to long-term project accounting policies, in particular those relating to BSF.  Consequently, as these contracts progress towards completion, profits continue to benefit from the effects of good operational performance and cost control. 

 

Digital Platforms

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 as well as newer offerings including RM Unify.  Digital Platforms revenues increased by 1.4% to £7.7 million (2014: £7.6 million).

 

Revenue from RM Integris increased following good market share gains including over 350 schools in Derbyshire.  The strategy is to increase RM's market share by focussing on its cloud-based platform, competitive price point and investing to develop its relevance across primary, secondary and multi academy school customers in a market currently dominated by a large competitor and with low levels of switching between suppliers. 

 

RM Unify is a technology platform to allow customers easy access to the varied digital, cloud-based, educational specific content and materials that are now available online. During the year the Scottish government chose to extend its contract (providing RM Unify to all schools in Scotland) by another two years to January 2018.

 

Going forward the priority areas of focus are on winning new RM Integris primary, secondary and multi academy school customers and on progressing the RM Unify proposition and profile through embedding and expanding system usage amongst existing customers.

 

Infrastructure

Infrastructure includes the tools, products and services to help schools manage their own IT.  RM Education's internet business is also included as well as the provision of third party hardware that allows RM to meet all the ICT needs of its customers. Revenues decreased by 25.8% to £40.3 million (2014: £54.3 million) as we continue the transition from manufacturing our own PC client devices and associated warranties and installations and move to a more technology agnostic services and support provider.

 

On the support and network tools side the focus is on ensuring that existing customers renew their support contracts and are on the latest version of our software.

 

RM is an internet broadband and e-safety service provider to approximately 5,000 schools.  RM designs and manages networks, procuring and integrating bandwidth and provides its own and third party e-safety products.    This business is underpinned by one large regional consortium which accounts for a large share of its revenue.   The contract runs until 2018 though volumes are variable.  The priority in this area is on growing customer numbers and improving retention rates.

 

RM no longer manufactures computers.  However, some customers do still want RM to provide all their ICT needs, including PC client devices.  RM therefore sources third party hardware which is shipped directly to customer sites when required. This is a low margin activity but is seen to be supportive of the broader relationship with our customers which is a critical success factor in being an infrastructure partner of choice to schools.

 

RM India

 

As at 30 November 2015, RM's operation in Trivandrum accounted for 33% of Group headcount (2014: 28%).

 

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.

 

Employees

 

Average Group headcount for the year was 1,860 (2014: 1,870) which is comprised of 1,645 (2014: 1,640) permanent and 215 (2014: 230) temporary or contract staff, of which 1,294 (2014: 1,360) were located in the UK and 566 (2014: 510) in India. At 30 November 2015 headcount was 1,899 (2014: 1,778).

 

The following table sets out a more detailed summary of the permanent staff employed as at 30 November 2015:

 

 

Male

Female

Directors

2 (100%)

0 (0%)

Senior Managers (excluding Directors)

54 (81%)

13 (19%)

All employees

1,113 (66%)

583 (34%)

 

The Group is committed to offering equal employment opportunities and its policies are designed to attract, retain and motivate the best staff regardless of gender, sexual orientation, race, religion, age or disability.  The Group gives proper consideration to applications for employment when these are received from disabled persons and will employ them in posts whenever suitable vacancies arise.  Employees who become disabled are retained whenever possible through retraining, use of appropriate technology and making available suitable alternative employment.

 

The Group encourages the participation of all employees in the operation and development of the business and has a policy of regular communications.  The Group incentivises employees and senior management through the payment of bonuses linked to performance objectives, together with the other components of remuneration detailed in the Remuneration Report.

The Group has a wide range of other written policies, designed to ensure that it operates in a legal and ethical manner.  These include policies related to health and safety, 'whistle blowing', anti-bribery and corruption, business gifts, grievance, career planning, parental leave, systems and network security.  All of RM's employment policies are published internally.

 

Group Financial Performance

 

Group revenue declined by 12.0% to £178.2 million (2014: £202.5 million) as anticipated.

 

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

 

Adjusted operating profit margins increased again this year from 9.1% in 2014 to 10.2%.  Despite the decline in revenue, adjusted operating profit decreased only marginally to £18.2 million (2014: £18.5 million). On a statutory basis, operating profit was £19.6 million (2014: £16.5 million) with adjustments principally benefiting from a release of a £2.4 million provision for dilapidations on leased properties and onerous lease contracts more than offsetting the share based payments charge of £0.9 million.

 

The Group generated an increased unadjusted statutory profit before tax of £19.2 million (2014: £15.8 million).

 

The total tax charge within the Income Statement for the year was £4.3 million (2014: £4.2 million).  The Group's tax charge for the period, measured as a percentage of profit before tax, was 22% (2014: 26%). The decrease is principally due to the reduction in the UK corporate tax rate and an adjustment on finalisation of a prior year corporation tax return. Adjusted basic earnings per share were 16.2 pence (2014: 16.4 pence).  Statutory basic earnings per share were 18.5 pence (2014: 13.9 pence) and statutory diluted earnings per share were 17.8 pence (2014: 13.0 pence).

 

RM generated cash from operations for the year of £10.9 million (2014: £19.1 million). Cash and short-term deposits increased to £48.3 million (2014: £47.9 million). The lowest cash and short-term deposit position during the year due to seasonal cash flows was £34.0 million (2014: £25.9 million).

 

Cash generated from operations is expected to continue to be less than operating profit in the year ahead, reflecting the reversal of a favourable working capital position related to long-term contracts.

 

Dividends

The total dividend paid and proposed for the year has been increased by 25% to 5.00 pence per share (2014: 4.00 pence).  This comprises an already paid interim dividend of 1.20 pence per share and, subject to shareholder approval, a proposed final dividend of 3.80 pence per share.  The estimated total cost of normal dividends paid and proposed for 2015 is £4.1 million (2014: £3.2 million). This increased dividend proposal reduces the dividend cover ratio from 4.1 to 3.2.

 

Defined Benefit Pension Scheme

At 30 November 2015 the IAS 19 scheme deficit (pre-tax) was £21.9 million (2014: £26.8 million). This reduction in Scheme deficit results from the reduction in liabilities due to beneficial membership experience over the three year valuation period ended May 2015, better than assumed returns on the Scheme assets and the shortfall contributions paid by the Company. These have been partially offset by the change in the mortality assumptions and a reduction in the inflation risk premium.

 

On 11 December 2015, agreement was reached with the Trustee of the RM defined benefit pension scheme ("Scheme") with regards to the triennial valuation as at 31 May 2015. The deficit was agreed at £41.8 million (31 May 2012: £53.5 million).  The deficit recovery plan comprises an initial cash contribution of £4.0 million into the Scheme and £4.0 million into the escrow account previously established for the purposes of further risk mitigation exercises, together with deficit recovery payments remaining at £3.6 million per annum until 2024 (previously 2027).  These funding plans will be assessed at future triennial reviews.

 

Going Concern

 

The Directors, having made appropriate enquiries, consider that the Company and the Group have 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 financial statements.

 

Financial Viability Statement

 

In accordance with the UK Corporate Governance code, in addition to an assessment of going concern, the Directors have also considered the prospects of the Company over a longer time period. The period of assessment chosen is three years, which is consistent with the time over which the Company's medium-term financial plans are prepared. These financial plans include Income Statements, Balance Sheets and Cash Flow Statements. They have been assessed by the Board in conjunction with the principal risks of the Company, which are documented within the Principal Risks and Uncertainties section below, along with their mitigating actions.

 

The Board considers that the principal risks which have the potential to threaten the Company's business models, future performance, solvency or liquidity over the three year period are:

 

1.     Public policy risk - UK education policy priority changes or restrictions in government funding due to fiscal policy

2.     Operational execution - including:

a.     RM Results operational performance over peak examination marking periods

b.     Significantly increased working capital requirements within the RM Education and RM Results long-term contract portfolios and requirements in evolving RM Education business models

c.     major adverse performance in a key contract or product which results in negative publicity and which damages the Group's brand

3.     Business continuity - an event impacting the Group's major buildings, systems or infrastructure components. This would include a major incident at TTS' warehouse

4.     Strategic risks - loss of a significant contract which underpins an element of a Division's activity

5.     Defined Benefit Pension Scheme - funding of the Scheme deficit in adverse market conditions

Having assessed the above risks, singularly and in combination, and via sensitivity analysis, the Directors have a reasonable expectation that the Company will be able to continue in operation and meet its liabilities as they fall due over the three year period of assessment and are not aware of any reason that viability would be an issue for the foreseeable period after this.

 

Environmental Matters

 

The Group's impact on the environment, and its policy in relation to such matters, are noted in the Directors' Report.

 

Principal Risks and Uncertainties

 

The management of the business and the execution of the Group's strategy are subject to a number of risks.  Risks are reviewed by the Audit Committee and Board. The Board confirms that it has carried out a robust assessment of the principal risks facing the Company and appropriate processes have been put in place to monitor and mitigate them, further details of which are given in the Corporate Governance Report.  The key business risks for the Group are set out in the table below.

 

 

Risk

Description

Mitigation

Public policy

The majority of RM's business is funded from UK government sources.  Changes in political administration, or changes in policy priorities, might result in a reduction in education spending.

 

UK government funding in the education sector is constrained by fiscal policy.

 

Global economic conditions might result in a reduction in budgets available for public spending generally and education spending specifically.

The Group seeks to understand the education policy environment by regular monitoring of policy positions and by building relationships with education policy makers.

 

The Group's three Divisions have diverse revenue streams and product/service offerings.

 

The Group's strategy is to focus on areas of education spend which are important to meet customers' objectives. Where an individual business' revenues are in decline, management seek to ensure that the cost base supporting these is adjusted accordingly.

 

Education practice

Education practices and priorities may change and, as a result, RM's products and services may no longer meet customer requirements.

The Group seeks to maintain knowledge of current education practice and priorities by maintaining close relationships with customers.

Operational execution

RM provides sophisticated products and services, which require a high level of technical expertise to develop and support, and on which its customers place a high level of reliance.

 

RM is engaged in the delivery of large, multi-year education projects, typically involving the development and integration of complex ICT systems, and may have liability for failure to deliver on time.

 

The Group invests in maintaining a high level of technical expertise. 

 

Internal management control processes are in place to govern the delivery of projects, including regular reviews by relevant management.  The operational and financial performance of projects, including future obligations, the expected costs of these and potential risks are regularly monitored by management.

 

 

Data and business continuity

RM is engaged in storing and processing sensitive data, where accuracy, privacy and security are important.

 

The Group would be significantly impacted if, as a result of a major incident, one of its major buildings, systems or infrastructure components could not function for a long period of time.

The Group's IS function has invested in developing its Data Centres, and has been successfully certified to ISO/IEC 27001:2005 for the provision of systems, information and hosting services.

 

The Group has established a Security and Business Continuity Committee to oversee the security aspects of the Group's information systems.  This covers data integrity and protection, defence against external threats (including cyber risks) and disaster recovery.

 

The Group seeks to protect itself against the consequences of a major incident by implementing a series of back up and safety measures.

 

The Group has property and business interruption insurance cover.

People

RM's business depends on highly skilled employees.

The Group seeks to be an attractive employer and regularly monitors the engagement of its employees.  The Group has talent management and career planning programmes.

Innovation

The IT market is subject to rapid, and often unpredictable, change.  As a result of inappropriate technology choices, the Group's products and services might become unattractive to its customer base.

 

The Group's continued success depends on developing and/or sourcing a stream of innovative and effective products for the education market and marketing these effectively to customers.

The Group monitors technology and market developments and invests to keep its existing products, services and sales methods up-to-date as well as seeking out new opportunities and initiatives. 

 

The Group works with teachers and educators to understand opportunities and requirements.

 

Dependence on key contracts

The performance of the RM Education and RM Results Divisions are dependent on the winning and extension of long-term contracts with government,
local authorities, examination boards and commercial customers.

The Group invests in maintaining a high level of technical expertise and on building effective working relationships with its customers.  The Group has in place a range of customer satisfaction programmes, which include management processes designed to address the causes of customers' dissatisfaction.

Pension

The Group operates a defined benefit pension scheme in the UK, which is in deficit.  The scheme deficit can adversely impact the net assets position of the trading subsidiary RM Education Ltd.

The Scheme was closed to new entrants in 2003 and closed to future accrual of benefits in October 2012.

 

A pension escrow account was established in 2014 to fund risk mitigation exercises.  The first of these was completed in October 2014 with the purchase a pensioner buy-in from an insurance company and a flexible retirement option exercise is currently in progress.

 

The Group evaluates risk mitigation proposals with the Scheme trustee.

Financial - liquidity    

The Group is exposed to counterparty risk on liquid assets.

Limits are placed on the level of deposit with any one counterparty.  Bank selection takes into account credit ratings.

Financial - capital

The Group's ability to pay dividends to shareholders depends on having sufficient distributable reserves in the holding company, RM plc.  Additional losses incurred as a result of significant increases in the pension scheme deficit could further impair the ability of RM Education Ltd to pay dividends up to RM plc.

The Group monitors the level of distributable reserves in subsidiary companies and considers their ability to make dividend payments to the holding company.

 

 

David Brooks

Chief Executive Officer

1 February 2016

 

Directors' responsibilities statement

 

The responsibility statement below has been prepared in connection with the Company's full Annual Report and Accounts for the year ended 30 November 2015. Certain parts are not included within this announcement.

 

Each of the Directors, whose names and functions are listed at the front of the Annual Report, confirm that, to the best of their knowledge:

 

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

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

 

The responsibility statement was approved by the Board of Directors on 1 February 2016 and is signed on its behalf by:

Greg Davidson

Company Secretary

 

CONSOLIDATED INCOME STATEMENT

 

 

 

 

 

 

 

 

for the year ended 30 November 2015

 

 

 

 

 

 

 

 

 

 

Year ended 30 November 2015

 

 Year ended 30 November 2014

 

 

Adjusted

Adjustments      Total

 

Adjusted

Adjustments        Total

 

Note

£000

£000

£000

 

£000

£000

£000

 

 

 

 

 

 

 

 

 

Revenue

2

178,228

-

178,228

 

202,544

-

202,544

Cost of sales

 

(109,316)

-

(109,316)

 

(126,974)

-

(126,974)

Gross profit

 

68,912

-

68,912

 

75,570

-

75,570

Operating expenses

 

(50,713)

-

(50,713)

 

(57,044)

-

(57,044)

Amortisation of acquisition related intangible assets

 

-

(303)

(303)

 

-

(303)

(303)

Impairment of held for sale assets and related transition costs

 

-

(323)

(323)

 

-

-

-

Gain on sale of operations

 

-

65

65

 

-

429

429

Share-based payment charges

 

-

(864)

(864)

 

-

(932)

(932)

Release of/(increase in) provisions for dilapidations on leased properties and onerous lease contracts

 

-

2,368

2,368

 

-

(774)

(774)

Restructuring provision release/(charge)

 

-

243

243

 

-

(472)

(472)

Exceptional credit on Defined Benefit Pension Scheme

 

-

206

206

 

-

-

-

 

 

(50,713)

1,392

(49,321)

 

(57,044)

(2,052)

(59,096)

Profit from operations

 

18,199

1,392

19,591

 

18,526

(2,052)

16,474

Investment income

3

409

894

1,303

 

476

-

476

Finance costs

4

(1,510)

(149)

(1,659)

 

(924)

(269)

(1,193)

Profit before tax

 

17,098

2,137

19,235

 

18,078

(2,321)

15,757

Tax

5

(3,984)

(289)

(4,273)

 

(4,359)

201

(4,158)

Profit for the year

 

13,114

1,848

14,962

 

13,719

(2,120)

11,599

 

 

 

 

 

 

 

 

 

Earnings per ordinary share

6

 

 

 

 

 

 

 

- basic

 

16.2p

2.3p

18.5p

 

16.4p

(2.5)p

13.9p

- diluted

 

15.6p

2.2p

17.8p

 

15.4p

(2.4)p

13.0p

 

 

 

 

 

 

 

 

 

Paid and proposed dividends per share

7

 

 

 

 

 

 

 

- interim

 

 

 

1.20p

 

 

 

0.96p

- final

 

 

 

3.80p

 

 

 

3.04p

 

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

for the year ended 30 November 2015

 

 

 

 

 

 

 

 

 

 

 

Year ended
30 November 2015

 Year ended
30 November 2014

 

 

 

 

Note

 

£000

 

£000

 

 

 

 

 

 

 

 

 

Profit for the year

 

 

 

 

 

14,962

 

11,599

Items that will not be reclassified subsequently to profit or loss

 

 

 

 

 

 

Defined Benefit Pension Scheme re-measurements

 

 

 

 

 

2,402

 

(21,892)

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

 

5

 

(950)

 

4,378

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

 

 

 

 

 

Fair value (loss)/gain on hedged instruments

 

 

 

 

 

(180)

 

1,018

Exchange (loss)/gain on translation of overseas operations

 

 

 

(80)

 

81

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

 

5

 

(36)

 

657

Other comprehensive income/(expense)

 

 

 

 

 

1,156

 

(15,758)

Total comprehensive income/(expense) for the year attributable to equity holders

 

 

16,118

 

(4,159)

                   

 

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

 

 

 

 

 

 

 

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 2013

 

1,870

26,997

(2,972)

94

(474)

(385)

3,895

29,025

 

Profit for the year

 

-

-

-

-

-

-

11,599

11,599

 

Other comprehensive income/(expense)

 

-

-

-

-

1,018

81

(16,857)

(15,758)

 

Total comprehensive income/(expense)

 

-

-

-

-

1,018

81

(5,258)

(4,159)

 

Transactions with owners of the Company

 

 

 

 

 

 

 

 

 

 

Shares issued

 

19

21

(18)

-

-

-

-

22

 

Share-based payment awards exercised

 

-

-

40

-

-

-

(40)

-

 

Share-based payment fair value charges

 

-

-

-

-

-

-

932

932

 

Dividends paid

7

-

-

-

-

-

-

(17,706)

(17,706)

 

At 30 November 2014

 

1,889

27,018

(2,950)

94

544

(304)

(18,177)

8,114

 

Profit for the year

 

-

-

-

-

-

-

14,962

14,962

 

Other comprehensive (expense)/income

 

-

-

-

-

(180)

(80)

1,416

1,156

 

Total comprehensive (expense)/income

 

-

-

-

-

(180)

(80)

16,378

16,118

 

Transactions with owners of the Company

 

 

 

 

 

 

 

 

 

 

Shares issued

13

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

7

-

-

-

-

-

-

(3,424)

(3,424)

 

At 30 November 2015

 

1,890

27,035

(2,510)

94

364

(384)

(7,342)

19,147

 

                                     

 

CONSOLIDATED BALANCE SHEET

 

 

 

 

at 30 November 2015

 

 

 

 

 

 

 

At 30 November 2015

At 30 November 2014

 

 

Note

£000

£000

Non-current assets

 

 

 

 

Goodwill

 

 

14,067

14,067

Acquisition related intangible assets

 

 

8

461

Other intangible assets

 

 

562

537

Property, plant and equipment

 

 

7,059

8,040

Other receivables

 

8

1,168

1,878

Deferred tax assets

 

5

6,121

8,147

 

 

 

28,985

33,130

Current assets

 

 

 

 

Inventories

 

 

10,862

10,604

Trade and other receivables

 

8

25,592

32,928

Tax assets

 

 

-

821

Cash and short-term deposits

 

9

48,320

47,893

Assets held for sale

 

10

1,162

-

 

 

 

85,936

92,246

Total assets

 

 

114,921

125,376

Current liabilities

 

 

 

 

Trade and other payables

 

11

(64,974)

(79,085)

Tax liabilities

 

 

(2,787)

(600)

Provisions

 

12

(2,077)

(3,660)

Liabilities directly associated with assets classified as held for sale

 

10

(549)

-

 

 

 

(70,387)

(83,345)

Net current assets

 

 

15,549

8,901

Non-current liabilities

 

 

 

 

Other payables

 

11

(662)

(1,657)

Provisions

 

12

(2,864)

(5,507)

Defined Benefit Pension Scheme obligation

 

 

(21,861)

(26,753)

 

 

 

(25,387)

(33,917)

Total liabilities

 

 

(95,774)

(117,262)

Net assets

 

 

19,147

8,114

 

 

 

 

 

Equity attributable to shareholders

 

 

 

 

Share capital

 

13

1,890

1,889

Share premium account

 

 

27,035

27,018

Own shares

 

 

(2,510)

(2,950)

Capital redemption reserve

 

 

94

94

Hedging reserve

 

 

364

544

Translation reserve

 

 

(384)

(304)

Retained earnings - (deficit)

 

 

(7,342)

(18,177)

Total equity

 

 

19,147

8,114

 

 

CONSOLIDATED CASH FLOW STATEMENT

 

 

 

for the year ended 30 November 2015

 

 

 

 

Year ended
30 November 2015

Year ended
30 November 2014

 

Note

£000

£000

Profit before tax

 

19,235

15,757

Investment income

 

(1,303)

(476)

Finance costs

 

1,659

1,193

Profit from operations

 

19,591

16,474

Adjustments for:

 

 

 

Impairment of acquisition related intangible assets

 

150

-

Amortisation of acquisition related intangible assets

 

303

303

Amortisation of other intangible assets

 

297

417

Depreciation and impairment of property, plant and equipment

 

2,406

3,415

Gain on sale of operations

 

(65)

(429)

Loss on disposal of other intangible assets

 

-

73

Gain on disposal of property, plant and equipment

 

(95)

(398)

Loss/(gain) on foreign exchange derivatives

 

133

(83)

Share-based payment charge

 

864

932

(Decrease)/increase in provisions

 

(716)

1,339

Defined Benefit Pension Scheme administration cost

 

530

475

Operating cash flows before movements in working capital

 

23,398

22,518

Increase in inventories

 

(707)

(55)

Decrease in receivables

 

6,102

2,792

Decrease in trade and other payables

 

(14,369)

(708)

Utilisation of onerous lease and dilapidations provisions

12

(2,186)

(836)

Utilisation of employee-related restructuring provisions

12

(1,166)

(4,348)

Utilisation of other provisions

12

(132)

(289)

Cash generated from operations

 

10,940

19,074

Defined benefit pension scheme cash contributions (2014: including £8m escrow payment)

 

(3,984)

(11,821)

Tax paid

 

(171)

(2,527)

Borrowing facilities arrangement and commitment fees

 

(447)

(353)

Income on sale of finance lease debt

 

45

55

Net cash inflow from operating activities

 

6,383

4,428

Investing activities

 

 

 

Interest received

 

364

403

Repayment of loans by third parties

 

18

33

Proceeds from sale of other receivables

 

1,586

-

Proceeds on disposal of property, plant and equipment

 

165

661

Purchases of property, plant and equipment

 

(1,576)

(2,597)

Purchases of other intangible assets

 

(322)

(1)

Net cash generated by/(used in) investing activities

 

235

(1,501)

Financing activities

 

 

 

Ordinary and Special dividends paid

7

(3,424)

(17,706)

Repayment of capital obligations under vehicle finance leases

 

(244)

(530)

Proceeds of share capital issue, net of share issue costs

 

18

22

Proceeds from sale of shares held in Staff Share Scheme

 

55

-

Purchase of own shares

 

(2,470)

-

Satisfaction of share-based payment awards

 

(128)

-

Net cash used in financing activities

 

(6,193)

(18,214)

Net increase/(decrease) in cash and cash equivalents

 

425

(15,287)

Cash and cash equivalents at the beginning of the year

 

41,893

57,169

Effect of foreign exchange rate changes

 

2

11

Cash and cash equivalents at the end of the year

9

42,320

41,893

 

1. Preliminary announcement

The preliminary results for the year ended 30 November 2015 have been prepared in accordance with those International Accounting Standards (IAS) and International Financial Reporting Standards (IFRS) issued by the International Accounting Standards Board (IASB) and adopted for use in the EU and therefore comply with Article 4 of the EU IAS Regulation applied in accordance with the provisions of 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 23 March 2016. 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 2015.  Statutory accounts for 2014 have been delivered to the Registrar of Companies and those for 2015 will be delivered following the Company's annual general meeting. The auditor's reports on both the 2015 and 2014 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 1 February 2016.

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; impairment of held for sale assets and related transition costs; the gain/(loss) on sale of operations; share-based payment charges; restructuring provision movements, changes in the provision for dilapidations and onerous lease contracts and exceptional credit on 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 disclosed.  Equivalent 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 year ended 30 November 2015 adjustments to profit include:

·      In March 2015 the Group's interests in Newham Learning Partnership (PSP) Ltd were sold for a total cash consideration of £1.6m; and a profit of £0.9m was recorded as an adjustment to investment income.

·      In May 2015 the Group's 135 Milton Park leased premises were sub-let to South Oxfordshire District Council for a minimum period of 3 years. The premises are onerous to the Group's requirements, as they were at 30 November 2014, and on sub-letting £2.4m has been released from the onerous lease provision in the year.

At the balance sheet date, the Group's 100% investment in SpaceKraft Ltd was identified for disposal and was subsequently disposed in December 2015. Assets and liabilities relating to SpaceKraft Ltd have been transferred to held for sale at the balance sheet date. An impairment of £233,000 has been recognised in acquisition related intangible assets and property, plant and equipment and charged to the income statement in addition to related transition costs.

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.

2. Operating segments

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.

A full description of each division, together with comments on its performance and outlook, is given in the Strategic Report.

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

Exited businesses in both years include the results and assets of operations held for sale at 30 November 2015 and other exited businesses.

 

 

 

 

 

 

 

 

 

RM

RM

RM

Corporate

Exited

Total

Year ended 30 November 2015

Resources

Results

Education

Services

Businesses

 

£000

£000

£000

£000

£000

£000

Revenue

 

 

 

 

 

 

UK

52,391

26,508

79,285

-

3,279

161,463

Europe

4,062

3,039

423

-

165

7,689

North America

932

-

272

-

64

1,268

Asia

678

109

171

-

22

980

Middle East

4,555

-

7

-

18

4,580

Rest of the world

925

1,069

85

-

169

2,248

 

63,543

30,725

80,243

-

3,717

178,228

Adjusted profit from operations

11,107

5,554

5,494

(4,140)

184

18,199

Investment income

 

 

 

 

 

409

Adjusted finance costs

 

 

 

 

 

(1,510)

Adjusted profit before tax

 

 

 

 

 

17,098

Adjustments  (see note 1)

 

 

 

 

 

2,137

Profit before tax

 

 

 

 

 

19,235

 

 

 

 

 

 

 

 

RM

RM

RM

Corporate

Exited

Total

Year ended 30 November 2014

Resources

Results

Education

Services

Businesses

 

£000

£000

£000

£000

£000

£000

Revenue

 

 

 

 

 

 

UK

50,601

27,136

110,712

-

3,302

191,751

Europe

3,885

37

315

-

167

4,404

North America

943

-

206

-

51

1,200

Asia

2,977

119

-

-

3

3,099

Rest of the world

653

535

680

-

222

2,090

 

59,059

27,827

111,913

-

3,745

202,544

Adjusted profit before tax

10,314

4,648

7,700

(4,152)

16

18,526

Investment income

 

 

 

 

 

476

Adjusted finance costs

 

 

 

 

 

(924)

Adjusted profit before tax

 

 

 

 

 

18,078

Adjustments  (see note 1)

 

 

 

 

 

(2,321)

Profit before tax

 

 

 

 

 

15,757

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Segmental assets

RM

RM

RM

Corporate

Exited

 

 

Resources

Results

Education

Services

Businesses

Total

 

£000

£000

£000

£000

£000

£000

At 30 November 2015

 

 

 

 

 

 

Segmental

32,962

7,732

16,539

700

1,162

59,095

Other

 

 

 

 

 

55,826

Total assets

 

 

 

 

 

114,921

 

 

 

 

 

 

 

 

RM

RM

RM

Corporate

Exited

 

 

Resources

Results

Education

Services

Businesses

Total

 

£000

£000

£000

£000

£000

£000

At 30 November 2014

 

 

 

 

 

 

Segmental

32,734

6,636

27,334

353

1,236

68,293

Other

 

 

 

 

 

57,083

Total assets

 

 

 

 

 

125,376

 

 

 

 

 

 

3. Investment income

 

 

 

 

Year ended
30 November 2015

Year ended
30 November 2014

 

 

£000

£000

 

 

 

 

Bank interest

 

224

242

Income on sale of finance lease debt

 

45

55

Income from sale of other receivables (see note 1)

 

894

-

Other finance income

 

140

179

 

 

1,303

476

             

 

4. Finance costs

 

 

 

 

Year ended
30 November 2015

Year ended
30 November 2014

 

Note

£000

£000

 

 

 

 

Borrowing facilities arrangement fees and commitment fees

 

467

467

Finance lease interest

 

5

21

Net finance costs on defined benefit pension scheme

 

964

379

Unwind of discount on long term contract provisions

 

74

57

Unwind of discount on onerous lease and dilapidations provisions

12

149

269

 

 

1,659

1,193

 

5. Tax

 

 

 

a) Analysis of tax charge in the Consolidated Income Statement

 

 

 

 

Year ended
30 November 2015

Year ended
30 November 2014

 

 

£000

£000

Current taxation

 

 

 

UK corporation tax

 

3,684

3,117

Adjustment in respect of prior years

 

297

627

Overseas tax

 

278

437

Total current tax charge

 

4,259

4,181

Deferred taxation

 

 

 

Temporary differences

 

259

34

Adjustment in respect of prior years

 

(213)

(57)

Overseas tax

 

(32)

-

Total deferred tax charge/(credit)

 

14

(23)

Total Consolidated Income Statement tax charge

 

4,273

4,158

 

 

 

 

b) Analysis of tax charge/(credit) in the Consolidated Statement of Comprehensive Income

 

Year ended
30 November 2015

Year ended
30 November 2014

 

 

£000

£000

UK corporation tax

 

 

 

Defined benefit pension scheme

 

(469)

(1,533)

Share based payments

 

(504)

-

 

 

 

 

Deferred tax

 

 

 

Defined benefit pension scheme movements

 

949

(2,185)

Defined benefit pension scheme escrow

 

-

(660)

Share based payments

 

540

(657)

Deferred tax relating to the change in rate*

 

470

-

Total Consolidated Statement of Comprehensive Income tax charge/(credit)

 

986

(5,035)

 

          * Relates entirely to the defined benefit pension scheme.

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 2015

 

 Year ended 30 November 2014

 

 

Adjusted

Adjustments      Total

 

Adjusted

Adjustments        Total

 

 

£000

£000

£000

 

£000

£000

£000

 

 

 

 

 

 

 

 

 

Profit on ordinary activities before tax

 

17,098

2,137

19,235

 

18,078

(2,321)

15,757

 

 

 

 

 

 

 

 

 

Tax at 20.33% (2014: 21.67%) thereon

 

3,476

434

3,910

 

3,918

(503)

3,415

Effects of:

 

 

 

 

 

 

 

 

- change in tax rate on carried forward
  deferred tax assets

 

123

-

123

 

-

-

-

- other expenses not deductible for tax
  purposes

 

50

-

50

 

104

-

104

- temporary timing differences unrecognised
  for deferred tax

 

-

-

-

 

4

-

4

- other temporary timing differences

 

(7)

1

(6)

 

-

28

28

- R&D tax credit

 

4

            -

           4

 

(77)

-

(77)

- impairments

 

12

36

48

 

-

-

-

- overseas tax

 

246

-

246

 

207

-

207

- gain on sale of operations

 

-

(182)

(182)

 

-

(93)

(93)

- prior period adjustments

 

80

-

80

 

203

367

570

Tax charge in the Consolidated Income Statement

 

3,984

     289

    4,273

 

4,359

(201)

4,158

                               

 

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:

 

Accelerated tax depreciation

Defined
 benefit pension scheme obligation

Share-based payments

Short-term timing differences

Acquisition related intangible assets

Total

 

 

£000

£000

£000

£000

£000

 

 

 

 

 

 

 

 

 

At 1 December 2013

988

3,166

181

440

(153)

4,622

 

Credit/(charge) to income

(201)

-

178

(15)

61

23

 

Credit to equity

-

2,185

657

660

-

3,502

 

At 30 November 2014

787

5,351

1,016

1,085

(92)

8,147

 

Credit/(charge) to income

-

-

(53)

(52)

91

(14)

 

Charge to equity

-

(1,419)

(540)

-

-

(1,959)

 

Transfer to assets held for sale

(53)

-

-

-

-

(53)

 

At 30 November 2015

734

3,932

423

1,033

(1)

6,121

 

Certain deferred tax assets and liabilities have been offset above.

 

 

 

 

 

                           

 

 

6. Earnings per ordinary share

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Year ended 30 November 2015

 

Year ended 30 November 2014

 

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 per ordinary share

 

 

 

 

 

 

 

 

Basic earnings

 

14,962

80,954

18.5

 

11,599

83,702

13.9

Adjustments (see note 1)

 

(1,848)

-

(2.3)

 

2,120

-

2.5

Adjusted basic earnings

 

13,114

80,954

16.2

 

13,719

83,702

16.4

Diluted earnings per ordinary share

 

 

 

 

 

 

 

 

Basic earnings

 

14,962

80,954

18.5

 

11,599

83,702

13.9

Effect of dilutive potential ordinary shares: share based payment awards

-

3,080

(0.7)

 

-

5,346

(0.9)

Diluted earnings

 

14,962

84,034

17.8

 

11,599

89,048

13.0

Adjustments (see note 1)

 

(1,848)

-

(2.2)

 

2,120

-

2.4

Adjusted diluted earnings

 

13,114

84,034

15.6

 

13,719

89,048

15.4

 

 

 

 

 

 

 

 

 

The weighted average number of shares for the year ended 30 November 2015 has been calculated based upon the weighted average of the number of ordinary shares of 22/7p each.

 

 

 

7. Dividends

 

 

 

 

Amounts recognised as distributions to equity holders were:

 

 

 

 

 

Year ended
30 November 2015

Year ended
30 November 2014

 

 

 

£000

£000

 

 

 

 

 

 

Final dividend for the year ended 30 November 2014 - 3.04p per share (2013: 2.46p)

 

2,451

2,257

 

Special dividend for the year ended 30 November 2013 - 16.00p per share

 

-

14,678

 

Interim dividend for the year ended 30 November 2015 - 1.20p per share (2014: 0.96p)

 

973

771

 

 

 

3,424

17,706

 

 

 

 

 

 

The proposed final dividend of 3.80p per share for the year ended 30 November 2015 was approved by the Board on 1 February 2016. The dividend is subject to approval by Shareholders at the annual general meeting. The anticipated cost of this dividend is £3,079,000 which is not included as a liability at 30 November 2015.

 

                                     

 

8. Trade and other receivables

 

 

 

 

 

 

 

 

 

 

 

2015

2014

 

 

 

£000

£000

 

Current

 

 

 

 

Financial assets

 

 

 

 

Trade receivables

 

17,303

24,830

 

Long-term contract balances

 

138

154

 

Other receivables

 

1,048

743

 

Derivative financial instruments

 

138

565

 

Accrued income

 

1,489

1,571

 

 

 

20,116

27,863

 

Non-financial assets

 

 

 

 

Prepayments

 

5,476

5,065

 

 

 

25,592

32,928

 

Non-current

 

 

 

 

Financial assets

 

 

 

 

Other receivables

 

1,168

1,878

 

 

 

26,760

34,806

 

 

 

 

 

 

Currency profile of receivables

 

 

 

 

Sterling

 

26,303

34,387

 

US Dollar

 

150

163

 

Euro

 

44

-

 

Indian Rupee

 

263

256

 

 

 

26,760

34,806

 

 

 

 

 

 

9. Cash and short-term deposits

 

 

 

 

 

 

 

 

 

2015

2014

 

 

£000

£000

Cash and cash equivalents

 

42,320

41,893

Short-term deposits

 

6,000

6,000

 

 

48,320

47,893

 

 

 

 

The short-term deposits are for a maximum period of 6 months at interest rates of 0.80-0.85%.

 

                   

 

10. Held for sale operations

 

 

 

 

 

 

 

 

 

 

 

At the balance sheet date, the Group's 100% investment in SpaceKraft Limited was identified for disposal by the Board and was being actively marketed for sale but had not been disposed. This has been determined not to meet the IFRS 5 Non-current Assets Held for Sale and Discontinued Operations definition of discontinued operations but has been recorded as held for sale and presented separately in the balance sheet. In December 2015, the entire share capital of SpaceKraft Limited was disposed. The proceeds on disposal were lower than the combined book value of the net assets of the company and of the Group relating specifically to the company. Accordingly, an impairment of £233,000 has been recognised in acquisition related intangible assets and property, plant and equipment. The corresponding deferred tax liability on the acquisition related intangible assets has also been released.

The major classes of assets and liabilities comprising the operations classified as held for sale at 30 November 2015 are as follows:

 

 

 

 

 

 

Net assets of entity before impairment on classification to held for sale

Net assets arising on consolidation

Impairment on classification to held for sale

Net assets held for sale

 

£000

£000

£000

£000

Acquisition related intangible assets

-

150

(150)

-

Property, plant and equipment

155

-

(83)

72

Deferred tax assets

53

-

-

53

Inventories

454

-

-

454

Trade and other receivables

583

-

-

583

Total assets held for sale

1,245

150

(233)

1,162

Trade and other payables

(437)

-

-

(437)

Provisions

(112)

-

-

(112)

Deferred tax liabilities

-

(30)

30

-

Total liabilities directly associated with assets held for sale

(549)

(30)

30

(549)

Net assets held for sale

696

120

(203)

613

                           

 

The total pre-tax charge in the income statement relating to the assets held for sale is £323,000, comprising an impairment charge of £233,000 as detailed above and related transition costs.

11. Trade and other payables

 

 

 

 

 

 

 

 

 

2015

2014

 

 

£000

£000

Current liabilities

 

 

 

Financial liabilities

 

 

 

Trade payables

 

11,518

12,793

Other taxation and social security

 

4,010

4,673

Other payables

 

761

2,066

Accruals

 

12,525

14,041

Obligations under finance leases

 

40

230

Derivative financial instruments

 

5

3

Long-term contract balances

 

25,509

31,320

 

 

54,368

65,126

Non-financial liabilities

 

 

 

Deferred income

 

10,606

13,959

 

 

64,974

79,085

Non-current liabilities

 

 

 

Financial liabilities

 

 

 

Obligations under finance leases

 

-

49

Non-financial liabilities:

 

 

 

Deferred income:

 

 

 

 - due after one year but within two years

 

472

1,077

 - due after two years but within five years

 

190

531

 

 

662

1,657

 

 

65,636

80,742

 

12. Provisions

 

Onerous lease and dilapidations

Employee-related restructuring

Other

Total

Group

 

£000

£000

£000

£000

 

 

 

 

 

 

At 1 December 2013

 

7,885

4,241

1,330

13,456

Utilisation of provisions

 

(836)

(4,348)

(289)

(5,473)

Release of provisions

 

(524)

(366)

(431)

(1,321)

Increase in provisions

 

1,298

838

95

2,231

Effect of movements in exchange rates

 

2

-

3

5

Unwind of discount

 

269

-

-

269

At 30 November 2014

 

8,094

365

708

9,167

Increase in provisions

 

-

1,070

1,025

2,095

Utilisation of provisions

 

(2,186)

(1,166)

(132)

(3,484)

Release of provisions

 

(2,368)

(85)

(423)

(2,876)

Effect of movements in exchange rates

 

-

-

2

2

Transfer to held for sale liabilities

 

(110)

-

(2)

(112)

Unwind of discount

 

149

-

-

149

At 30 November 2015

 

3,579

184

1,178

4,941

 

 

 

 

 

 

Disclosure of provisions

 

 

 

2015

2014

 

 

 

 

£000

£000

 

 

 

 

 

 

Current liabilities

 

 

 

2,077

3,660

Non-current liabilities

 

 

 

2,864

5,507

 

 

 

 

4,941

9,167

 

 

 

 

 

 

Provisions for onerous leases and dilapidations have been recognised at the present value of the expected obligation at discount rates of 2.6% per annum 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 2015, £1,829,000 (2014: £5,738,000) of the provision refers to onerous leases, and £1,750,000 (2014: £2,356,000) refers to dilapidations. The major release in the year relates to the successful sub-letting of one of the Group's properties.

 

The average remaining life of the leases at 30 November 2015 is 3.5 years (2014: 5.1 years).

 

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.

 

Other provisions includes one-off items not covered by any other category. The major release of Group provisions during the year relates to the successful completion of certain legal activities and a re-assessment of provisions recognised as part of the exit of operations following the 2011 Strategic Review.  The significant elements in the provision at 30 November 2015 and the increase in the year are related to regulatory initiatives.

 

             

 

13. Share capital

 

 

 

 

 

 

 

 

 

Ordinary shares of 2p

Ordinary shares of 22/7p

Total

 

 

Number

£000

Number

£000

£000

Allotted, called-up and fully paid:

 

'000

'000

At 1 December 2013

 

93,515

1,870

-

-

1,870

Share consolidation

 

(93,515)

(1,870)

81,826

1,870

-

Issued in the year

 

-

-

814

19

19

At 30 November 2014

 

-

-

82,640

1,889

1,889

Issued in the year

 

-

-

10

1

1

At 30 November 2015

 

-

-

82,650

1,890

1,890

 

During the year 10,000 ordinary shares of 22/7p each were issued following the exercise of options under the RM plc 2004 Company Share Option Plan. The exercise price was £1.742 per option.

Ordinary shares issued carry no right to fixed income.


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