REG - RM PLC - Interim Results <Origin Href="QuoteRef">RM.L</Origin> - Part 2
06/09/2014 02:36
- Part 2: For the preceding part double click ID:nRSG5546La
Defined Benefit Pension Scheme remeasurements 415 (6,936) 489 (6,447)
Total comprehensive income for the period attributable to equity holders - -
The reduction in profit attributable to equity holders has reduced Basic and Diluted earnings per share by 0.6 pence in the half-year ended 31 May 2013.
The restatement has the following impact on Segmented Adjusted Operating Profit for the half-year ended 31 May 2013, with the effect on the half-year ended 31 May 2014 again being shown for comparison.
Half-year ended Half-year ended
31 May 2014 31 May 2013
£000 £000
Education Technology (135) (211)
Assessment and Data Services (24) (37)
(159) (248)
These adjustments have no impact on the Condensed Consolidated Balance Sheet.
b. Long-term contracts
In the 2013 Annual Report the classification of certain balances relating to long-term contracts was changed to improve the Condensed Consolidated Balance Sheet presentation by presenting all long-term contract balances together. To give consistency, the equivalent balances as at 31 May 2013 have been restated, as detailed below. This re-presentation of the balances had no impact on reserves or equity.
31 May 2013
Note As reported Adjustment Restated
£000 £000 £000
Trade and other receivables:
Trade receivables 9 29,365 (2,747) 26,618
Long-term contract balances 9 4,374 - 4,374
Accrued income 9 1,018 (867) 151
Trade and other receivables, Current assets and Total assets (3,614)
Trade and other payables:
Other taxation and social security 10 (5,270) 458 (4,812)
Long-term contract balances 10 (20,741) (5,474) (26,215)
Deferred income - current 10 (22,916) 5,647 (17,269)
Trade and other payables and Current liabilities 631
Other payables:
Deferred income - due after one year but within two years 10 (3,095) 1,195 (1,900)
Deferred income - due after two years but within five years 10 (2,674) 1,788 (886)
Other payables, Non-current liabilities and Total liabilities 2,983
Net assets -
4. Operating segments
The Group's business is supplying products, services and solutions to the UK market and international education markets.
The nature of the products/services sold within each segment is explained below:
Assessment and Data Services - comprises Assessment Services and Data Solutions with the largest contributor of revenue being the Assessment business, providing e-marking and e-testing solutions and services for examining boards.
Education Resources - provides schools with curriculum focussed classroom resources including teaching equipment and materials.
Education Technology - a UK focused business supplying schools with ICT managed services, internet services, network software, digital platforms, hardware and related services, including implementation and support. The division also includes the implementation, management and support of IT infrastructure as part of the Building Schools for the Future contracts.
The following disclosure shows the result and total assets of these segments .
Inter-segment revenue has been eliminated in the segment in which it is generated hence the revenue disclosed below is that earned by the Group from third parties.
Half-year ended 31 May 2014 Assessment and Data Services£000 Education Resources£000 Education Technology£000 Corporate Services £000 Total £000
Revenue 10,115 29,329 52,666 - 92,110
Adjusted operating profit* 1,958 3,828 3,021 (1,480) 7,327
Investment income 280
Finance costs (575)
Adjusted profit before tax* 7,032
Adjustments* (360)
Profit before tax 6,672
Half-year ended 31 May 2013 Assessment and Data ServicesRestated (note 3)£000 Education ResourcesRestated (note 3)£000 Education TechnologyRestated (note 3)£000 Corporate ServicesRestated (note 3)£000 Total £000
Revenue** 9,820 26,358 82,594 34 118,806
Adjusted operating profit* 820 2,987 2,484 (1,380) 4,911
Investment income 221
Finance costs (687)
Adjusted profit before tax* 4,445
Adjustments* 106
Profit before tax 4,551
Year ended 30 November 2013 Assessment and Data Services£000 Education Resources£000 Education Technology£000 Corporate Services £000 Total £000
Revenue** 26,545 54,008 181,171 35 261,759
Adjusted operating profit* 4,134 7,164 8,643 (2,732) 17,209
Investment income 730
Finance costs (1,490)
Adjusted profit before tax* 16,449
Adjustments* (7,014)
Profit before tax 9,435
* Refer to note 1 for an explanation of adjustments to profit.
** 2013 Corporate Services balances include immaterial revenue and operating profits relating to businesses exited as part
of the 2011 strategic review.
4. Business segments
(continued)
Segmental assets
Segmental assets include all assets except for tax balances, balances due from investment undertakings and cash and
short-term deposits which are shown as non-segmental balances:
As at 31 May 2014 Assessment and Data Services£000 Education Resources£000 Education Technology£000 Corporate Services £000 Total £000
Total assets- Segmental 7,040 33,796 28,312 164 69,312
- Other 45,757
115,069
As at 31 May 2013 Assessment and Data Services£000 Education Resources£000 Education Technology£000 Corporate Services £000 Total £000
Total assets- Segmental 5,552 32,499 45,953 231 84,235
- Other 60,800
145,035
As at 30 November 2013 Assessment and Data Services£000 Education Resources£000 Education Technology£000 Corporate Services £000 Total £000
Total assets
- Segmental 6,890 31,794 33,728 221 72,633
- Other 68,048
140,681
5. Tax
Corporation tax for the interim period is charged at the expected effective tax rate for the full financial period, which
is the year ending 30 November 2014, based upon adjusted profit as explained within note 1. The charge incorporates both
current and deferred taxation:
Half-year ended Half-year ended Year ended
31 May 31 May 30 November
2014 2013 2013
Adjusted Adjust-ments Total Adjusted Adjust-ments Total Adjusted Adjust-ments Total
£000 £000 £000 £000 £000 £000 £000 £000 £000
Profit before tax 7,032 (360) 6,672 4,445 106 4,551 16,449 (7,014) 9,435
Tax charge 1,479 (43) 1,436 1,174 33 1,207 4,910 (1,643) 3,267
Effective rate 21.0% (11.9)% 21.5% 26.4% 31.1% 26.5% 29.8% (23.4)% 34.6%
6. Earnings per ordinary share
The calculation of the basic and diluted earnings per ordinary share is shown below. As explained in note 1, adjusted basic
and diluted earnings per share have also been presented. The 2014 weighted average number of shares reflect the impact of
the 20 March 2014 seven for eight share consolidation associated with the special dividend.
Half-year ended Half-year ended Year ended
31 May 31 May 30 November
2014 2013 2013
Profit after tax£000 Weighted average number of shares000 Pence per share Profit after tax£000 Weighted average number of shares000 Pence per share Profit after tax£000 Weighted average number of shares000 Pence per share
Basic earnings per ordinary share:
Basic earnings 5,236 87,167 6.0 3,344 91,718 3.6 6,168 91,718 6.7
Adjustments* 317 - 0.4 (73) - - 5,371 - 5.9
Adjusted basic earnings per ordinary share 5,553 87,167 6.4 3,271 91,718 3.6 11,539 91,718 12.6
Diluted earnings per ordinary share:
Basic earnings 5,236 87,167 6.0 3,344 91,718 3.6 6,168 91,718 6.7
Effect of dilutive potential ordinary shares: share based payment awards - 2,149 (0.1) - - - - 1,153 (0.1)
Diluted earnings per ordinary share 5,236 89,316 5.9 3,344 91,718 3.6 6,168 92,871 6.6
Adjustments* 317 - 0.3 (73) - - 5,371 - 5.8
Adjusted diluted earnings per ordinary share 5,553 89,316 6.2 3,271 91,718 3.6 11,539 92,871 12.4
* Adjustments made to Profit after tax are explained within note 1.
7. Dividends
Amounts recognised as distributions to equity holders in the period:
Half-year ended Half-year ended Yearended
31 May 31 May 30 November
2014 2013 2013
£000 £000 £000
Final dividend for the year ended 30 November 2013 of 2.46p (year ended 30 November 2012: 2.25p) per share 2,257 2,063 2,064
Special dividend for the year ended 30 November 2013 of 16.00p per share 14,679 - -
Interim dividend for the half-year ended 31 May 2013 of 0.84p per share - - 770
16,936 2,063 2,834
The proposed interim dividend of 0.96p per share was approved by the Board on 4 July 2014. The expected cost of £771,000
has not been included as a liability at 31 May 2014.
8. Cash and short-term deposits
Cash and short-term deposits comprises cash and cash equivalents of £34.3m with an original maturity of three months or
less and short-term deposits of £6.0m which have a maturity period of 6 months.
The Group meets its seasonal working capital requirements through two facilities. On 22 January 2014 the Group signed a one
year extension to its £30m committed revolving credit facility with Barclays Bank which will now expire in March 2017 (£nil
drawn down at 31 May 2014). The Group also has a £3m uncommitted Barclays overdraft facility. The Group has allocated the
£3m overdraft to the revolving credit facility, reducing the available revolving credit facility to £27m, maintaining a
combined £30m of working capital facilities.
The covenants under the Group's £30m Barclays Bank facility contain measurements against net debt, which is to be less than
2.5 times earnings before interest, tax, depreciation and amortisation (EBITDA) and net debt interest, which is to be less
than 0.25 times EBITDA. Based on the results to 31 May 2014 and management's plan for 2014 and subsequent years, there is
adequate headroom over these covenant measures.
The Group's cash and short-term deposits of £40.3m (31 May 2013: £51.8m, 30 November 2013: £63.2m) comprise £39.7m in
Sterling, £0.2m in US dollars and £0.4m in other operating currencies (31 May 2013: £50.6m, £0.9m and £0.3m respectively,
30 November 2013: £62.2m, £0.5m and £0.5m respectively).
9. Trade and other receivables
31 May 2014 31 May 2013 30 November 2013
Current £000 Restated (note 3)£000 Restated £000
Financial assets:
Trade receivables 23,861 26,618 24,599
Long-term contract balances 1,133 4,374 671
Other receivables 398 819 474
Derivative financial instruments 270 311 -
Accrued income 1,602 151 2,990
27,264 32,273 28,734
Non-financial assets:
Prepayments 5,244 6,283 6,400
32,508 38,556 35,134
Non-current
Other receivables - other 1,911 1,911 1,911
34,419 40,467 37,045
The Directors consider that the carrying value of trade and other receivables approximates their fair values.
In association with the November 2013 restatement of long-term contract balances (see note 3 for impact on May 2013), an
additional reclassification has been made to move £2.4m of balances previously classified within trade receivables to
accrued income reflecting the un-billed nature of these recoverable amounts.
10. Trade and other payables
31 May 2014 31 May 2013 30 November 2013
Current £000 Restated £000
(note 3)
£000
Financial liabilities:
Trade payables 9,344 14,452 12,163
Other taxation and social security 3,451 4,812 3,019
Other payables 2,507 2,453 1,848
Derivative financial instruments 86 178 544
Accruals 14,567 21,316 18,395
Obligations under financial leases 297 - 350
Long-term contract balances 32,767 26,215 27,708
63,019 69,426 64,027
Non-financial assets:
Deferred income 12,121 17,269 14,890
75,140 86,695 78,917
14,890
75,140
86,695
78,917
10. Trade and other payables (continued)
31 May 2014 31 May 2013 30 November 2013
Restated
(note 3)
£000 £000 £000
Non-current
Financial liabilities:
Obligations under financial leases 162 - 438
Non-financial assets:
Deferred income:
- Due after one year but within two years 3,578 1,900 1,827
- Due after two years but within five years 1,912 886 1,190
5,652 2,786 3,455
1,190
5,652
2,786
3,455
The directors consider that the carrying value of trade and other payables approximates their fair values.
11. Defined benefit pension scheme
In the half-years ended 31 May 2014 and 31 May 2013 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 updated in line with S1NA (YoB) CMI 2013 projections with long term improvement trend of 1.25% p.a.
The last triennial valuation at 31 May 2012 was used as the basis for the 30 November 2013 IAS 19 valuation and the
roll-forward to 31 May 2014.
As at 31 May 2012, the triennial valuation for statutory funding purposes showed a deficit of £53.5 million (31 May 2009:
£16.6 million). The Group agreed with the Scheme Trustees to repay this amount via deficit catch up payments of £4 million
per annum until 31 May 2013 and thereafter at £3.6m per annum until 31 May 2027. In addition the Group pays the
administration costs of the scheme including the Payment Protection Fund levy. In the half-year to 31 May 2014 total
payments of £1.9m were made under this arrangement.
The Scheme is closed to future accrual of benefits.
In the period to 31 May 2014 the Board and Scheme Trustees agreed a further £8.0m contribution the form of use of which
within the Scheme is required to be agreed by the Board and the Scheme Trustees. As at 31 May 2014 the full £8.0m remained
unutilised in a blocked escrow account and has been included within the calculation of the Scheme assets under IAS 19.
During the year to 30 November 2013, the Group adopted IAS 19 Employee Benefits, amended June 2011. The impact of adoption
is shown in note 3.
12.
Related party transactions
Transactions between the Company and its subsidiaries, which are related parties, have been eliminated on consolidation.
TSL Education Limited
RM plc Board Director Lord Andrew Adonis is a member of the Advisory Board of TSL Education Limited, from which the Group
made purchases of £4,410 (2013: £26,094) during the period. Sales with a value of £1,778 were also made in the period.
PricewaterhouseCoopers LLP
The Group uses PricewaterhouseCoopers LLP to provide certain consultancy and assurance services, but excluding external
audit services. RM Board Director Iain McIntosh's wife is an equity partner in PricewaterhouseCoopers. She has not been
involved in any services provided to the Group.
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 half-yearly financial report
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,
Iain McIntoshChief Financial Officer
7 July 2014
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 2014 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 to assist the company in meeting
the requirements of the Disclosure and Transparency Rules ("the DTR") of the UK's Financial Conduct Authority ("the UK
FCA"). 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 34Interim 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 2014 is not prepared, in all material
respects, in accordance with IAS 34 as adopted by the EU and the DTR of the UK FCA.
Tudor Aw
For and on behalf of KPMG LLP
Chartered Accountants
Arlington Business Park, Theale
Reading RG7 4SD
7 July 2014
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