REG - RM PLC - Interim Results <Origin Href="QuoteRef">RM.L</Origin> - Part 2
04/07/2017 07:06
- Part 2: For the preceding part double click ID:nRSD9934Ja
£000 £000 £000 £000 £000
Segmental 31,968 7,085 17,803 217 - 57,073
Other 48,942
Total assets 106,015
Other non-segmented assets includes tax assets, cash and short-term deposits
and other non division-specific assets.
4. Adjustments to Consolidated Income Statement
6 months ended 6 months ended Year ended
31 May 2017 31 May 2016 30 November 2016
Operating expenses £000 £000 £000
Amortisation of acquisition related intangible assets - (8) (8)
Gain on sale of operations - 136 135
Share-based payment charges (558) (700) (1,006)
(Increase)/decrease of provisions for dilapidations on leased properties and onerous lease contracts (884) 79 90
Acquisition costs (1,324) - (525)
Restructuring costs - - (1,593)
(2,766) (493) (2,907)
Finance costs (36) (38) (74)
(2,802) (531) (2,981)
Tax 435 (9) 472
(2,367) (540) (2,509)
In the 6 months ended 31 May 2017 notable adjustments to profit include:
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, share-based
payment charges, finance costs and changes in the provision for dilapidations
and onerous lease contracts.
Recurring items are adjusted each year irrespective of materiality to ensure
consistent treatment.
Non-recurring items:
These are items which are non-recurring and are identified by virtue of their
size or their nature. These items can include, but are not restricted to,
impairment of held for sale assets and related transition costs, 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.
5. Tax
Corporation tax for the interim period is charged at the expected effective
tax rate for the financial year ending 30 November 2017, based upon adjusted
profit as explained within note 4. The charge incorporates both current and
deferred taxation:
6 months ended 31 May 2017 6 months ended 31 May 2016 Year ended 30 November 2016
Adjusted Adjustments Total Adjusted Adjustments Total Adjusted Adjustments Total
£000 £000 £000 £000 £000 £000 £000 £000 £000
Profit before tax 6,560 (2,802) 3,758 6,532 (531) 6,001 18,096 (2,981) 15,115
Tax charge (373) 435 62 (1,372) (9) (1,381) (3,941) 472 (3,469)
Effective tax rate 5.7% 15.5% (1.6%) 21.0% (1.7%) 23.0% 21.8% 15.8% 23.0%
The reduction in our tax rate reflects the one-time benefit of £978,000, due
to a reduction in the transfer pricing tax provision associated with cross
border intra-group transactions between the UK and India.
6. Earnings per ordinary share
6 months ended 31 May 2017 6 months ended 31 May 2016 Year ended 30 November 2016
Profit after tax Weighted average number of shares Pence per share Profit after tax Weighted average number of shares Pence per share Profit after tax Weighted average number of shares Pence per share
£000 '000 £000 '000 £000 '000
Basic earnings per ordinary share:
Basic earnings 3,820 81,324 4.7 4,620 80,954 5.7 11,646 81,144 14.4
Adjustments (see note 4) 2,367 - 2.9 540 - 0.7 2,509 - 3.0
Adjusted basic earnings 6,187 81,324 7.6 5,160 80,954 6.4 14,155 81,144 17.4
Diluted earnings per ordinary share:
Basic earnings 3,820 81,324 4.7 4,620 80,954 5.7 11,646 81,144 14.4
Effect of dilutive potential ordinary shares: share-based payment awards - 1,248 (0.1) - 4,245 (0.3) - - -
Diluted earnings per ordinary share 3,820 82,572 4.6 4,620 85,199 5.4 11,646 81,144 14.4
Adjustments (see note 4) 2,367 - 2.9 540 - 0.7 2,509 - 3.0
Adjusted diluted earnings 6,187 82,572 7.5 5,160 85,199 6.1 14,155 81,144 17.4
7. Dividends
Amounts recognised as distributions to equity holders were:
6 months ended 6 months ended Year ended
31 May 2017 31 May 2016 30 November 2016
£000 £000 £000
Final dividend for the year ended 30 November 2016 - 4.50p per share (2015: 3.80p) 3,660 3,079 3,079
Interim dividend for the year ended 30 November 2016 - 1.50p per share (2015: 1.20p) - - 1,220
3,660 3,079 4,299
The proposed interim dividend of 1.65p per share was approved by the Board on
30 June 2017. The anticipated cost of £1,342,000 has not been included as a
liability at 31 May 2017.
8. Cash and short-term deposits
6 months ended 31 May 2017 6 months ended 31 May 2016 Year ended 30 November 2016
£000 £000 £000
Cash and cash equivalents 29,268 26,118 36,973
Short-term deposits - 6,000 3,014
29,268 32,118 39,987
9. Long-term contracts
6 months ended 31 May 2017 6 months ended 31 May 2016 Year ended 30 November 2016
Note £000 £000 £000
Amounts due from contract customers included in trade and other receivables 10 206 1 -
Amounts due to contract customers included in trade and other payables 11 (12,389) (21,664) (16,766)
(12,183) (21,663) (16,766)
10. Trade and other receivables
6 months ended 31 May 2017 6 months ended 31 May 2016 Year ended 30 November 2016
Note £000 £000 £000
Current
Financial assets
Trade receivables 16,896 18,319 15,060
Long-term contract balances 9 206 1 -
Other receivables 1,214 1,796 1,294
Derivative financial instruments 362 - 685
Accrued income 1,681 762 1,824
20,359 20,878 18,863
Non-financial assets
Prepayments 4,540 4,937 5,540
24,899 25,815 24,403
Non-current
Financial assets
Other receivables 1,144 1,166 1,153
26,043 26,981 25,556
11. Trade and other payables
6 months ended 31 May 2017 6 months ended 31 May 2016 Year ended 30 November 2016
Note £000 £000 £000
Current
Financial liabilities
Trade payables 11,525 11,707 13,777
Other payables 964 315 2,284
Derivative financial instruments 45 - 45
Accruals 8,336 8,813 9,096
Long-term contract balances 9 12,389 21,664 16,766
33,259 42,499 41,968
Non-financial liabilities
Deferred income 10,993 10,214 9,711
Other taxation and social security 3,867 4,006 2,842
14,860 14,220 12,553
48,119 56,719 54,521
Non-current
Non-financial liabilities
Deferred income:
- due after one year but within two years 603 422 462
- due after two years but within five years 448 268 509
1,051 690 971
49,170 57,409 55,492
12. Provisions
Onerous lease and dilapidations Employee-related restructuring Other Total
£000 £000 £000 £000
At 1 December 2016 3,157 1,844 1,692 6,693
Utilisation of provisions (15) (1,752) (295) (2,062)
Release of provisions (66) - (364) (430)
Increase in provisions 870 - 3 873
Unwind of discount 41 - - 41
At 31 May 2017 3,987 92 1,036 5,115
13. Defined Benefit Pension scheme
One Group sponsored defined benefit pension scheme is in operation, the
Research Machines plc 1988 Pension Scheme ("Scheme").
The Scheme is a funded scheme. The Scheme provides benefits to qualifying
employees and former employees of RM Education Limited, but was closed to new
members with effect from 1 January 2003 and closed to future accrual of
benefits from 31 October 2012.
The assets of the Scheme are held separately from RM Education Limited's in a
trustee-administered fund. The Trustee is a limited company. Directors of the
Trustee company are appointed by RM Education Ltd and by members.
The most recent actuarial valuation of Scheme assets and the present value of
the defined benefit obligation was carried out for statutory funding purposes
at 31 May 2015 by a qualified independent actuary, this was used as the basis
for the 30 November 2016 IAS 19 valuation and the roll forward to 31 May
2017.
As at 31 May 2015, the triennial valuation for statutory funding purposes
showed a deficit of £41.8m (31 May 2012: £53.5m). The Group agreed with the
Scheme Trustees that it will repay this amount via deficit catch-up payments
of £4.0m in December 2015 and £3.6m per annum until 30 September 2024. The
next triennial valuation of the Scheme is due as at 31 May 2018 and may result
in changes to the level of deficit catch-up payments required.
In the half year to 31 May 2017, total payments of £2.0m were paid into the
Scheme under this arrangement. As at 31 May 2017 there is £7.0m in an escrow
account which has been included in the calculation of the Scheme assets, the
use of which within the Scheme is required to be agreed by RM Education
Limited and the Scheme Trustee.
The entire deficit position of the Scheme is held within these financial
statements on the balance sheet as RM Education Limited in substance bears all
of the material risks associated with the Scheme.
The parent company RM plc has entered into a pension protection fund
compliance guarantee in respect of scheme liabilities. No liability has been
recognised for this within the Company as the Directors consider that the
likelihood of it being called upon is remote.
14. Related party transactions
Transactions between the Company and its subsidiaries, which are related
parties, have been eliminated on consolidation.
The Group encourages its Directors and employees to be Governors, Trustees or
equivalent of educational establishments. The Group trades with these
establishments in the normal course of its business.
15. Events after the reporting period
On 7 February 2017, the Company agreed to acquire the entire issued share
capital of Hedgelane Limited (including its principal trading subsidiary known
as The Consortium) from Smiths News Holdings Limited (the Education and Care
part of the Connect Group PLC group of companies) (the "Acquisition"). In
connection with the Acquisition, the Company has entered into a £75 million
revolving credit facility (the "New Facility") with Barclays Bank plc and HSBC
Bank plc. The Acquisition received clearance from the Competition and Markets
Authority on 1 June 2017 and the New Facility came into use as at 30th June
2017 and will expire 36 months from this date.
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 Guidance and Transparency Rules, being an
indication of important events that have occurred during the first six months
of the financial year 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 year; and
b) DTR 4.2.8R of the Disclosure Guidance and Transparency Rules, being
related party transactions that have taken place in the first six months of
the current financial year and that have materially affected the financial
position or performance of the entity during that period; and any changes in
the related party transactions described in the last annual report that could
do so.
By order of the Board,
Neil Martin
Chief Financial Officer
4 July 2017
INDEPENDENT REVIEW REPORT TO RM PLC
Conclusion
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
2017 which comprises Condensed Consolidated Income Statement, Condensed
Consolidated Statement of Comprehensive Income, Condensed Consolidated Balance
Sheet, Condensed Consolidation Cash Flow Statement, Condensed Consolidated
Statement of Change in Equity and the related explanatory notes.
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 2017 is not prepared, in all
material respects, in accordance with IAS 34 Interim Financial Reporting as
adopted by the EU and the Disclosure Guidance and Transparency Rules ("the
DTR") of the UK's Financial Conduct Authority ("the UK FCA").
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.
We read the other information contained in the half-yearly financial report
and consider whether it contains any apparent misstatements or material
inconsistencies with the information in the condensed set of financial
statements.
A review is substantially less in scope than an audit conducted in accordance
with International Standards on Auditing (UK) 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. .
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 International Financial Reporting Standards as
adopted by the EU. The directors are responsible for preparing the condensed
set of financial statements included in the half-yearly financial report in
accordance with IAS 34 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.
The purpose of our review work and to whom we owe our responsibilities
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 DTR of 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.
John Bennett
for and on behalf of KPMG LLP
Chartered Accountants
Arlington Business Park, Theale
Reading, RG7 4SD
4 July 2017
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