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Adjustments Total Adjusted Adjustments Total
Note £000 £000 £000 £000 £000 £000
Revenue 2 185,863 - 185,863 167,615 - 167,615
Cost of sales (112,857) - (112,857) (100,365) - (100,365)
Gross profit 73,006 - 73,006 67,250 - 67,250
Operating expenses (50,908) (5,904) (56,812) (48,421) (2,907) (51,328)
Profit from operations 2 22,098 (5,904) 16,194 18,829 (2,907) 15,922
Investment income 3 365 - 365 279 - 279
Finance costs 4 (1,920) (45) (1,965) (1,012) (74) (1,086)
Profit before tax 20,543 (5,949) 14,594 18,096 (2,981) 15,115
Tax 5 (2,594) 851 (1,743) (3,941) 472 (3,469)
Profit for the year 17,949 (5,098) 12,851 14,155 (2,509) 11,646
Earnings per ordinary share
- basic 6 22.0p 15.8p 17.4p 14.4p
- diluted 6 21.9p 15.7p 17.4p 14.4p
Paid and proposed dividends per share 7
- interim 1.65p 1.50p
- final 4.95p 4.50p
Adjustments to results have been presented to give a better guide to business performance (see note 2).
All amounts were derived from continuing operations.
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
for the year ended 30 November 2017
Year ended Year ended
30 November 2017 30 November 2016
Note £000 £000
Profit for the year 12,851 11,646
Items that will not be reclassified subsequently to profit or loss
Defined Benefit Pension Scheme remeasurements 12 17,960 (23,555)
Tax on items that will not be reclassified subsequently to profit or loss 5 (3,123) 3,970
Items that are or may be reclassified subsequently to profit or loss
Fair value (loss)/gain on hedged instruments (1,306) 515
Exchange (loss)/gain on translation of overseas operations (36) 261
Tax on items that are or may be reclassified subsequently to profit or loss 5 (80) 32
Other comprehensive income/(expense) 13,415 (18,777)
Total comprehensive income/(expense) for the year attributable to equity holders 26,266 (7,131)
CONSOLIDATED BALANCE SHEET
At 30 November 2017 At 30 November 2016
Note £000 £000
Non-current assets
Goodwill 45,164 14,067
Intangible assets 20,377 704
Property, plant and equipment 10,369 6,219
Defined Benefit Pension Scheme surplus 12 495 -
Other receivables 8 1,144 1,153
Deferred tax assets 5 6,484 8,793
84,033 30,936
Current assets
Inventories 19,413 10,689
Trade and other receivables 8 29,147 24,403
Cash and short-term deposits 1,797 39,987
50,357 75,079
Total assets 134,390 106,015
Current liabilities
Trade and other payables 9 (57,636) (54,521)
Tax liabilities (632) (1,259)
Provisions 10 (3,436) (3,536)
Overdraft (2,028) -
(63,732) (59,316)
Net current (liabilities)/assets (13,375) 15,763
Non-current liabilities
Other payables 9 (852) (971)
Provisions 10 (3,019) (3,157)
Deferred tax liability 5 (2,993) -
Defined Benefit Pension Scheme obligation 12 (20,731) (34,775)
Loan 14 (13,188) -
(40,783) (38,903)
Total liabilities (104,515) (98,219)
Net assets 29,875 7,796
Equity attributable to shareholders
Share capital 11 1,890 1,890
Share premium account 27,035 27,035
Own shares (1,406) (1,987)
Capital redemption reserve 94 94
Hedging reserve (427) 879
Translation reserve (159) (123)
Retained earnings - (deficit) 2,848 (19,992)
Total equity 29,875 7,796
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
for the year ended 30 November 2017
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 year - - - - - - 11,646 11,646
Other comprehensive (expense)/income - - - - 515 261 (19,553) (18,777)
Total comprehensive (expense)/income - - - - 515 261 (7,907) (7,131)
Transactions with owners of the Company
Share-based payment awards exercised - - 840 - - - (1,450) (610)
Purchase of own shares - - (317) - - - - (317)
Share-based payment fair value charges - - - - - - 1,006 1,006
Ordinary dividends paid 7 - - - - - - (4,299) (4,299)
At 30 November 2016 1,890 27,035 (1,987) 94 879 (123) (19,992) 7,796
Profit for the year - - - - - - 12,851 12,851
Other comprehensive (expense)/income - - - - (1,306) (36) 14,757 13,415
Total comprehensive (expense)/income - - - - (1,306) (36) 27,608 26,266
Transactions with owners of the Company
Share-based payment awards exercised - - 581 - - - (581) -
Share-based payment fair value charges - - - - - - 821 821
Ordinary dividends paid 7 - - - - - - (5,008) (5,008)
At 30 November 2017 1,890 27,035 (1,406) 94 (427) (159) 2,848 29,875
CONSOLIDATED CASH FLOW STATEMENT
for the year ended 30 November 2017 Year ended Year ended
30 November 2017 30 November 2016
Note £000 £000
Profit before tax 14,594 15,115
Investment income 3 (365) (279)
Finance costs 4 1,965 1,086
Profit from operations 16,194 15,922
Adjustments for:
Acquisition related costs 2 2,643 525
Impairment of intangible assets 33 77
Amortisation of intangible assets 1,107 247
Depreciation and impairment of property, plant and equipment 2,289 2,223
Gain on sale of operations - (135)
Loss on disposal of other intangible assets 21 -
Loss/(gain) on disposal of property, plant and equipment 135 (5)
(Gain)/loss on foreign exchange derivatives (1,306) 684
Share-based payment charge 821 1,006
Increase in provisions 1,997 2,557
Defined Benefit Pension Scheme administration cost 12 552 845
Operating cash flows before movements in working capital 24,486 23,946
(Decrease)/increase in inventories (27) 173
Decrease in receivables 5,443 1,056
Decrease in trade and other payables (7,129) (10,863)
Utilisation of onerous lease and dilapidations provisions 10 (308) (345)
Utilisation of employee-related restructuring provisions 10 (1,697) (184)
Utilisation of other provisions 10 (236) (396)
Cash generated from operations 20,532 13,387
Defined benefit pension scheme cash contributions 12 (4,187) (11,984)
Tax paid (2,019) (3,567)
Income on sale of finance lease debt 9 6
Net cash inflow from operating activities 14,335 (2,158)
Investing activities
Interest received 307 255
Repayment of loans by third parties 16 16
Acquisition net of cash acquired 13 (58,407) -
Acquisition related costs (2,834) -
Proceeds from sale of operations - 759
Proceeds on disposal of property, plant and equipment 12 43
Purchases of property, plant and equipment (1,150) (1,333)
Purchases of other intangible assets (176) (456)
Amounts transferred from short term deposits 3,014 2,986
Net cash generated by/(used in) investing activities (59,218) 2,270
Financing activities
Dividends paid 7 (5,008) (4,299)
Drawdown of borrowings 14 14,000 -
Borrowing facilities arrangement and commitment fees (1,098) (422)
Interest paid (224) -
Purchase of own shares - (317)
Satisfaction of share-based payment awards - (610)
Net cash used in financing activities 7,670 (5,648)
Net (decrease)/increase in cash and cash equivalents (37,213) (5,536)
Cash and cash equivalents at the beginning of the year 36,973 42,320
Effect of foreign exchange rate changes 9 189
Cash and cash equivalents at the end of the year (231) 36,973
1. Preliminary announcement
The preliminary results for the year ended 30 November 2017 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 21
March 2018. 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 2017.
Statutory accounts for 2016 have been delivered to the Registrar of Companies
and those for 2017 will be delivered following the Company's annual general
meeting. The auditor's reports on both the 2017 and 2016 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 5 February 2018.
Consolidated Income Statement presentation
The Directors assess the performance of the Group using an adjusted operating
profit and profit before tax. The Directors use this measurement basis as it
excludes the effect of transactions that could distort the understanding of
the Group's performance for the year and comparability between periods. This
includes making certain adjustments for income and expense which are one-off
in nature, or non-cash items and those with potential variability year on year
which might mask underlying performance. Further details are provided in Note
2.
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. Information reported to the Group's Chief
Executive for the purposes of resource allocation and assessment of segmental
performance is focussed on the nature of each type of activity.
The Group is structured into three operating divisions: RM Resources, RM
Results and RM Education. The exited business in the year relates to
SpaceKraft.
A full description of each division, together with comments on its performance
and outlook, is given in the Strategic Report. Corporate Services consists of
central business costs associated with being a listed company and non-specific
pension costs.
This Segmental analysis shows the results and assets of these divisions.
Revenue is that earned by the Group from third parties.
Net financing costs and tax are not allocated to segments as the funding, cash
and tax management of the Group are activities carried out by the central
treasury and tax functions.
Segmental results
RM RM RM Corporate Exited Total
Year ended 30 November 2017 Resources Results Education Services Businesses
£000 £000 £000 £000 £000 £000
Revenue
UK 67,826 26,566 68,828 - - 163,220
Europe 7,413 3,258 678 - - 11,349
North America 1,618 - 231 - - 1,849
Asia 1,226 204 691 - - 2,121
Middle East 3,922 - 8 - - 3,930
Rest of the world 1,627 1,590 177 - - 3,394
83,632 31,618 70,613 - - 185,863
Adjusted profit from operations 11,604 7,761 6,552 (3,819) - 22,098
Investment income 365
Adjusted finance costs (1,920)
Adjusted profit before tax 20,543
Adjustments (see note 2) (5,949)
Profit before tax 14,594
RM RM RM Corporate Exited Total
Year ended 30 November 2016 Resources Results Education Services Businesses
£000 £000 £000 £000 £000 £000
Revenue
UK 46,779 26,925 75,450 - 151 149,305
Europe 5,249 3,231 1,138 - - 9,618
North America 1,723 - 232 - - 1,955
Asia 981 117 50 - - 1,148
Middle East 2,815 - 9 - - 2,824
Rest of the world 1,288 1,307 170 - - 2,765
58,835 31,580 77,049 - 151 167,615
Adjusted profit from operations 10,156 6,798 5,820 (3,926) (19) 18,829
Investment income 279
Adjusted finance costs (1,012)
Adjusted profit before tax 18,096
Adjustments (see note 2) (2,981)
Profit before tax 15,115
Segmental assets
RM RM RM Corporate Exited
Resources Results Education Services Businesses Total
£000 £000 £000 £000 £000 £000
At 30 November 2017
Segmental 103,935 6,324 15,627 205 - 126,091
Other 8,299
Total assets 134,390
RM RM RM Corporate Exited
Resources Results Education Services Businesses Total
£000 £000 £000 £000 £000 £000
At 30 November 2016
Segmental 31,968 7,085 17,803 217 - 57,073
Other 48,942
Total assets 106,015
Adjustments to administrative expenses
Year ended Year ended
30 November 2017 30 November 2016
£000 £000
Amortisation of acquisition-related intangible assets 503 8
Gain on sale of operations - (135)
Share-based payment charges 821 1,006
Net increase/(release) of provisions for onerous lease contracts 353 (90)
Acquisition related costs 2,643 525
Restructuring costs 1,584 1,593
5,904 2,907
Recurring items:
These are items which occur regularly but which management judge to have a
distorting effect on the underlying results of the Group or are not regularly
monitored for the purpose of determining business performance. These items
include the amortisation of acquisition related intangible assets and
share-based payment charges.
Recurring items are adjusted each year irrespective of materiality to ensure
consistent treatment.
Highlighted items:
These are items which are non-recurring and are identified by virtue of either
their size or their nature. These items can include, but are not restricted
to, impairment of held for sale assets and related transaction costs; changes
in the provision for onerous lease contracts; the gain/loss on sale of
operations and restructuring and acquisition costs. As these items are one-off
or non-operational in nature, management considers that they would distort the
Group's underlying business performance.
During the year an onerous provision was created for the top floor of the head
office property and an onerous provision release was made for the continued
sub-letting of one of the Group's properties. For further details see Note
10.
During the year, the Group incurred professional advisor costs relating to the
acquisition and integration of The Consortium, see Note 13 for further
details. Restructuring costs were incurred during the year which also relate
to the integration of The Consortium.
In the prior year, the restructuring of the Infrastructure part of the RM
Education division was undertaken to move away from some of the lowest margin
transactional elements such as network infrastructures, network installation
and third-party hardware sales. This lead to a reduction of broadly 10% of
the RM Education UK staff and a one-off exceptional charge of £1.6m.
3. Investment income
Year ended Year ended
30 November 2017 30 November 2016
£000 £000
Bank interest 47 123
Income on sale of finance lease debt 168 46
Other finance income 150 110
365 279
4. Finance costs
Year ended Year ended
30 November 2017 30 November 2016
Note £000 £000
Borrowing facilities arrangement fees and commitment fees 524 421
Net finance costs on defined benefit pension scheme 12 1,049 498
Unwind of discount on long term contract provisions 49 37
Unwind of discount on onerous lease and dilapidations provisions 10 91 84
Interest on bank loans and overdrafts 229 -
Other finance costs 23 46
1,965 1,086
5. Tax
a) Analysis of tax charge in the Consolidated Income Statement
Year ended Year ended
30 November 2017 30 November 2016
£000 £000
Current taxation
UK corporation tax 2,976 2,924
Adjustment in respect of prior years (1,555) 302
Overseas tax 387 296
Total current tax charge 1,808 3,522
Deferred taxation
Temporary differences (6) 173
Adjustment in respect of prior years 104 (237)
Overseas tax (163) 11
Total deferred tax (credit) (65) (53)
Total Consolidated Income Statement tax charge 1,743 3,469
b) Analysis of tax charge/(credit) in the Consolidated Statement of Comprehensive Income
Year ended Year ended
30 November 2017 30 November 2016
£000 £000
UK corporation tax
Defined benefit pension scheme (428) (1,241)
Share based payments - (142)
Deferred tax
Defined benefit pension scheme movements 3,481 (2,325)
Defined benefit pension scheme escrow - (749)
Share based payments 80 110
Deferred tax relating to the change in rate 70 345
Total Consolidated Statement of Comprehensive Income tax charge/(credit) 3,203 (4,002)
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 2017 Year ended 30 November 2016
Adjusted Adjustments Total Adjusted Adjustments Total
£000 £000 £000 £000 £000 £000
Profit on ordinary activities before tax 20,543 (5,949) 14,594 18,096 (2,981) 15,115
Tax at 19.33% (2016: 20%) thereon: 3,971 (1,150) 2,821 3,619 (596) 3,023
Effects of:
- change in tax rate on carried forward - - - 65 - 65
deferred tax assets
- other expenses not deductible for tax 211 321 532 110 - 110
purposes
- other temporary timing differences (38) (22) (60) - 151 151
- R&D tax credit - - - (10) - (10)
- effect of profits/losses in various overseas tax jurisdictions (100) - (100) 81 - 81
- gain on sale of operations - - - - (27) (27)
- Prior period adjustments - UK (280) - (280) (28) - (28)
- Prior period adjustments - overseas (1,170) - (1,170) 104 - 104
Tax charge in the Consolidated Income Statement 2,594 (851) 1,743 3,941 (472) 3,469
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:
Group Accelerated tax depreciation Defined Share-based payments Short-term timing differences Acquisition related intangible assets Total
benefit pension scheme obligation
£000 £000 £000 £000 £000 £000
At 1 December 2015 734 3,932 423 1,033 (1) 6,121
Credit/(charge) to income
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