REG-RM plc Interim Results
16/07/2024 07:15
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RM plc (RM.)
Interim Results
16-Jul-2024 / 07:00 GMT/BST
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16 July 2024
RM plc
Interim Results for the six months ended 31 May 2024
Strategic plan driving strong progress in contract wins and business transformation
RM plc (‘RM’), a leading global educational technology (‘EdTech’), digital learning and
assessment solution provider, reports its interim results for the six months ended 31 May
2024.
Financial highlights
£m HY24 HY23 Variance
Revenue from continuing operations 79.2 87.6 (9.6%)
Loss before tax from continuing operations1 (6.8) (3.1) (121.9%)
Discontinued operations2 - 10.3 n/a
Statutory (loss)/profit after tax1 (6.8) 8.2 (183.0%)
Diluted EPS from continuing operations1 (8.1)p (2.5)p (224.0%)
Adjusted performance measures3:
Adjusted operating loss from continuing operations (0.6) (4.5) 86.3%
Adjusted EBITDA 1.9 (1.5) 227.2%
Adjusted loss before tax from continuing operations (3.7) (6.7) 45.5%
Adjusted diluted EPS from continuing operations (4.1)p (6.7)p 38.8%
Adjusted net debt 1,4 52.7 50.7 1.3%
Overview
• HY financial performance reflects the extent of the transformation RM has undergone,
and the actions taken to set the business up for growth in the future
• Revenue from continuing operations1 of £79.2m, down 9.6% (HY23: £87.6m), predominantly
reflecting the closure of the Consortium business at the start of the period and to an
extent the changing nature of contracts in Assessment won during the first half, for
which revenue will be recognised in future periods
• Adjusted operating loss improved by 86.3% to £0.6m (HY23: loss of £4.5m), driven by
the closure of the Consortium business and higher underlying profitability of the
ongoing business
• Statutory loss after tax of £6.8m (HY23: profit of £8.2m), with the swing reflecting
the inclusion in HY23 of £8.5m of income generated from IP sales and a £10.3m gain on
the sale of RM Integris and RM Finance
• Adjusted net debt of £52.7m (FY23: £45.6m / HY23: £50.7m)
• Signed amended and extended banking agreement providing a firm foundation to execute
against new strategic plan
Good progress made against the strategic plan set out in March 2024
• Encouraging early momentum in the new business pipeline:
◦ In Assessment, contract wins have moved towards longer-term, recurring,
contracted relationships, with a contracted order book5 of £66.9m - 51% higher
than the £44.2m at the start of the period and a pipeline of opportunities valued
at £170m
◦ Signed a flagship long-term contract with International Baccalaureate to support
its move towards fully digital assessment and accreditation processes across all
geographies. This win is the first for our Global Accreditation Platform, which
lies at the heart of our strategic growth plans
◦ Despite H1’s revenue dip, TTS had strong growth in France, Switzerland and
Ireland where Robotics is a key focus and has an encouraging order book for H2
◦ Continued growth from international schools in UAE and a 3-year extension to the
GEMS Education contract with exclusivity in early years and primary; RM is also
establishing a legal entity in Dubai to better service customers in the region
• Expanded product portfolio across all divisions, powered by own-IP technology and with
a strong customer focus:
◦ RM Technology launched NX-Generation Services, its first holistic IT services
portfolio including AI modules, aimed at Multi-Academy Trust schools to drive
efficiencies and technological improvements
◦ 100 new products launched by TTS in key strategic areas of Early Years, Special
Educational Needs and Robotics during the half, with a further 50 to be released
in H2
◦ Established RM Consulting, a new business unit which will support Assessment
clients moving forward with their digital assessment journey
• Strong progress made in cost-saving programme, with £6.6m of annualised cost savings
identified and initiated, on track towards £10m target
• Design work for streamlined target operating model established, which once implemented
will create greater agility and gross cost synergies of £4m (being part of the £10m
target)
Current trading and outlook
• Reflecting the shift to longer-term recurring contracts in Assessment, leading to
revenue on H1 contract wins being accounted for in future periods, and uncertainty
regarding the timing of a general election having impacted UK schools’ spending in H1,
the Board now expects full-year revenue to be broadly flat year on year (excluding
Consortium)
• Trading in H2 to date has started on an upward trajectory in line with our expectation
for like-for-like revenue decline in H1 to be offset by H2 performance
• Adjusted Operating Profit for the full year is expected to be in line with market
expectations
• During FY24 we fully expect to operate within our banking covenants, allowing for
working capital and capital expenditure required to fund our future growth plans,
alongside continuing interest payments and committed pension contributions
Mark Cook, Chief Executive of RM, said:
“Our first half performance reflects the extent of the transformation RM has undergone,
and the action we have taken to set the business up for growth in the future.
“I am delighted that during the period, International Baccalaureate has become a
foundation customer of our Global Accreditation Platform for digital assessments, with a
long-term strategic relationship. In addition, we have grown the pipeline of assessment
platform customers by 70% to £170m, and the Assessment contracted order book by 50%.
“Looking ahead, we see significant opportunities to expand our use of AI, both to create
efficiencies within the business and to enhance solutions to drive improved outcomes for
educators, assessors and learners with time-saving and adaptive tools.
“This is an exciting period for RM, and although it will take time for the financial
benefits to flow through, I am confident that our strategy for growth will deliver for all
our stakeholders. I’d like to take this opportunity to thank everyone for their
significant contribution and hard work.”
Notes
1. HY23 restated for the capitalisation of £1.3m of independent business review costs,
previously expensed as described in Note 12.
2. Continuing operations includes the results of RM’s TTS, Consortium, Assessment and
Technology businesses. Continuing operations excludes the results of the RM Integris
and RM Finance businesses which were sold on 31 May 2023.
3. Throughout this statement, adjusted operating (loss)/profit, adjusted EBITDA, adjusted
(loss)/profit before tax and adjusted EPS are Alternative Performance Measures, stated
after adjusting items (See Note 4 to the financial statements) which are identified by
virtue of their size, nature and/or incidence. The Group reports adjusting items which
are used by the Board to monitor and manage the performance of the Group, in order to
ensure that decisions taken align with the Group’s long-term interests. Adjusting
items are identified by virtue to the size, nature or incidence at a segment level and
their treatment is applied consistently year-on-year.
4. Adjusted net debt is defined as the total of borrowings less capitalised fees, cash
and cash equivalents and overdrafts. Lease liabilities of £15.6m (30 November 2023:
£16.5m) are excluded from this measure as they are not included in the measurement of
adjusted net debt for the purpose of covenant calculations.
5. Contracted order book represents secured revenue, supported by a contract, that is yet
to be recognised as revenue in the financial statements. We have introduced this
metric for our Assessment division to provide greater visibility of the increasing
trend towards securing longer-term strategic contractual revenue.
Presentation details
A presentation by Management for investors and analysts is available on the company
website at 1 https://www.rmplc.com/.
Contacts:
RM plc 2 investorrelations@rm.com
Mark Cook, Chief Executive Officer
Simon Goodwin, Chief Financial Officer
Fiona O’Nolan, Investor Relations
Headland Consultancy (Financial PR) +44 203 805 4822
Stephen Malthouse (smalthouse@headlandconsultancy.com)
Chloe Francklin ( 3 cfrancklin@headlandconsultancy.com)
Dan Mahoney (dmahoney@headlandconsultancy.com)
Notes to Editors:
About RM
RM was founded in 1973, with a mission to improve the educational outcomes of learners
worldwide. More than fifty years on, we are a trusted global EdTech, digital learning and
assessment solution provider, transforming learners, educators, and accreditors to be more
productive, resilient, and sustainable. Our simple approach enables us to deliver best in
class solutions to optimise accreditation outcome.
RM is focused on delivering a consistently high-quality digital experience, acting as a
trusted consultative partner to provide solutions that deliver real impact for learners
worldwide. Our three businesses include:
• Assessment - a global provider of assessment software, supporting exam awarding
bodies, universities, and governments worldwide to digitise their assessment delivery.
• TTS (Technical Teaching Solutions) – an established provider of education resources
for early years, primary schools, and secondary schools across the UK and to
ministries of education and independent institutions worldwide.
• Technology - a market-leading advisor and enabler of ICT software, technology and
bespoke services to UK schools and colleges.
Chief Executive’s Review
Business review
I am pleased with our performance in the first half, as RM executes its new Strategic Plan
for revenue and profit growth, as announced at our full-year results in March, with a
focus on securing longer-term contracts in our core Assessment business. This included the
contract with International Baccalaureate to support their move towards fully digital
assessment and accreditation processes across all geographies. The business continued to
make good progress towards its financial and operational turnaround, and we saw improved
margin performance across our customer facing services and products despite some
pre-election uncertainty in UK school budget spending and the impact from the Consortium
business which ceased trading in December 2023.
We delivered a solid performance in the half following the decisive cost actions taken
last year, which continue into FY24. Revenue (excluding Consortium) was £78.3m, down 3.2%
(HY23: £80.9m), adjusted operating loss (including Consortium) was £(0.6)m, improved 86.3%
(HY23: loss of £(4.5)m), and we grew total Group adjusted EBITDA by 227% to £1.9m (HY23:
£(1.5)m). Revenue has been impacted by the continued pressure on UK schools’ budgets, with
some pre-election uncertainty affecting our Technology and TTS UK businesses, and the
changes in our revenue mix, moving towards recurring and longer-term contracts in our
Assessment business, where new strategic contract wins in the first half will start to
contribute to revenue over a longer time period as customers get access to, and utilise
our Global Accreditation Platform. As a result, we now expect revenue for the full year to
be broadly flat. Adjusted Operating Profit for the full year remains in line with
expectations.
Due to this change in the revenue mix, we are introducing a new Assessment revenue metric,
with the contract order book at 31 May 2024 of £66.9m, an increase of over 50% since 30
November 2023, with good momentum in strategic contracts, cross selling to existing
customers and customer renewals. The majority of this new revenue is derived from our own
IP. In addition, we have a pipeline of active opportunities in Assessment valued at £170m,
defined as opportunities where we are preferred bidder or in bid. This strengthening of
revenue visibility is largely due to the commitment we have made to building a Global
Accreditation Platform for our Assessment clients and our focus on building a stronger
sales & marketing function facing into our customer groups.
Strategic Plan update
In March, we unveiled our Strategic Plan for growth, to capitalise on the significant
future growth opportunities in the $222 billion Global EdTech market1, with our core
ambition to support learners with a ‘lifetime of learning experience,’ enriching the lives
of learners globally. We unveiled our intention to become a leading global EdTech company
with significant investment in our Portfolio of Products and Solutions for the coming
years. This new strategic and operational focus will enable RM to unlock its true value.
Underpinning this transformation are a number of key priorities for FY24 and beyond to
deliver on our intent to become a company that has 3-4 times the value that it has today,
de-leveraged, a dividend paying company delivering double digit growth with EBITDA 5x that
of FY23.
1. Build an organisation for success
As we progress with the delivery of our new strategy, we are reviewing and refining our
execution to best enable us to respond in the most agile way to the ever-changing EdTech
and education landscape, an approach adopted to ensure we make the right decisions with
the right information to create a sustainable business.
We are taking our current global award-winning assessment solution and developing it to
become a truly scalable, end-to-end digital accreditation platform. Core to the future of
RM, are the digital solutions that support a learner’s assessment of progress towards an
examination, as well as the accreditor’s ability to provide a platform to enable and
enhance their examination assessment to take advantage of the education transformation
towards fully on-screen digital examinations.
As announced in May, RM signed a significant new contract expansion with International
Baccalaureate (‘IB’) to deepen its longstanding partnership of more than 15 years. The new
agreement includes the transformational delivery of IB’s Diploma and Career-Related
Programmes as digital assessments, marking a significant milestone for both organisations.
For RM, this project is fully aligned with its strategy to build a Global Accreditation
Platform that enables the digital transformation towards fully digital on-screen
examinations, which in turn will provide IB learners with enhanced opportunities
throughout their programmes. In the first half of the financial year, our Assessment
business commenced the platform development project with IB as the first foundational
customer and we are forming a new development team who will be responsible for the new
end-to-end Global Accreditation Platform. In addition to new strategic customer wins, our
Assessment business has grown its contract order book to £66.9m as it continues to be the
preferred partner of choice to global accreditors.
2. Create clear line of sight to three customer groups – accreditors, educators and
learners
In the past RM has spoken about how we are organised rather than the customers we serve.
We now have a single clear go to market approach; for our products and solutions, serving
customers from early years to industry and professional qualifications with a clear and
unified portfolio roadmap, a company ethos that is much simpler with a cleaner line of
sight to our customers, and with a new target operating model framework.
The design work to deliver this streamlined and customer-centric target operating model
(TOM) commenced in the half, creating greater agility on completion.
Aimed at Multi-Academy Trust schools, our Technology business launched NX-Generation
Services - its first holistic IT services portfolio, which includes AI modules and which
promotes continual improvement across technology, skills and security. NX-Generation
Services will transform education systems, making them more efficient and equitable whilst
unlocking cost and time savings for our clients.
3. Develop services and solutions to drive revenue
Supporting this strategy, we have a Strategic Portfolio Roadmap of RM owned and developed
IP; with products and solutions to be delivered to accreditors, educators, and directly to
learners for adjacent solutions.
A core component of the future RM portfolio is to build, at scale, our Global
Accreditation Platform and we already have customers, with new, long-term commitments, as
future users of the platform as part of our digital assessment solution.
In June, we announced the launch of RM Consulting, a new business unit which will work
with assessors and awarding bodies to help them define, design and deliver digital
programmes, maximising the benefits realised for educators and learners alike, and
allowing our clients to fully benefit from our well-established expertise in education and
the use of technology. RM Consulting will form a key pillar of the Group’s growth
strategy, working alongside, and being supported by the building of our Global
Accreditation Platform.
TTS launched 100 new products in our key strategic areas of Early Years, Special
Educational Needs and Robotics during the half, with a further 50 to be released in H2.
We have developed an RM AI large language model that has been implemented with a new AI /
human interface, curriculum rich solution. This is now being used to generate content for
the TTS website and optimises the linkage between over 8,000 products and the National
Curriculum. Using this solution has significantly increased the efficiency of deploying
National Curriculum enhanced product descriptions and by adding in National Curriculum
content to the AI engine, we will be able to develop further product enhancements aimed at
helping teachers improve their teaching resources e.g. subscription model for educators
and learners to digital curriculum resources to supplement RM physical resources.
4. Build a stronger financial platform
We are focused on building a stronger financial platform to support our strategic growth
plans. In March our lenders gave us their support with an amended and extended banking
agreement to 2026. We continue to work hard to deleverage the business through operating
cash flow and will continue to seek to reduce this. During the period, we have identified
£6.6m of annualised cost savings across a number of operational areas, following a review
by our strengthened executive leadership team. We realised £1.8m of annualised savings
relating to the closure of the Consortium business on top of the two-into-one distribution
centre consolidation which realised £1.5m annualised savings (previously announced). We
initiated further areas of efficiency within Assessment, Technology, Group Costs and
further consolidated our property portfolio, realising other cost savings of £4.8m. Plans
are still in progress to identify further annualised savings in the second half towards
the stated target of £10m of annualised savings identified during the current financial
year, bringing the total to £20m of annualised savings since I joined RM.
Note:
1. Source: IMARC Group
Building a sustainable organisation
Building RM into a sustainable organisation is a critical outcome of the successful
execution of our strategic plans, and our people are fundamental to achieving our plans.
Our new Chief People Officer and strengthened Senior Leadership team have made
communication and engagement across the organisation a priority. We established a
Workforce Engagement Group to coordinate initiatives with Board sponsorship. In our recent
Employee Engagement Survey in May, where 84% of the organisation shared feedback with us,
our score improved by 7pts to 63. The most significant increases in survey scores were
linked to Executive Leadership keeping people informed and communicating an inspiring
vision, as well as Company Confidence in that we are focused on long-term success and will
have the potential to succeed over the next three years. We have optimised our office
footprint – ‘mothballing’ our London office and a floor of the Head Office in Abingdon,
bringing teams together and increasing collaboration, while also reflecting our hybrid
working and we closed TTS’ distribution centre in Nottingham to increase efficiency.
We have made good progress on our carbon reduction, with additional benefit from the
reduced office footprint. In the first half we saw a 417 tonne reduction in our CO2
emissions, benefiting from our recently signed Zero Carbon Electricity contract. This
represents a 27% reduction since FY23.
Financial Review
Group financial performance
£m HY24 HY23 Variance
Revenue from continuing operations 79.2 87.6 (9.6%)
Loss before tax from continuing operations1 (6.8) (3.1) (121.9%)
Discontinued operations2 - 10.3 n/a
Statutory (loss)/profit after tax1 (6.8) 8.2 (183.0%)
Diluted EPS from continuing operations1 (8.1)p (2.5)p (224.0%)
Adjusted performance measures3:
Adjusted operating loss from continuing operations (0.6) (4.5) 86.3%
Adjusted EBITDA 1.9 (1.5) 227.2%
Adjusted loss before tax from continuing operations (3.7) (6.7) 45.5%
Adjusted diluted EPS from continuing operations (4.1)p (6.7)p 38.8%
Adjusted net debt1,4 52.7 50.7 1.3%
1. HY23 restated for the capitalisation of £1.3m of independent business review costs,
previously expensed as described in Note 12.
2. Continuing operations includes the results of RM’s TTS, Consortium, Assessment and
Technology businesses. Continuing operations excludes the results of the RM Integris
and RM Finance businesses which were sold on 31 May 2023.
3. Throughout this statement, adjusted operating (loss)/profit, adjusted EBITDA, adjusted
(loss)/profit before tax and adjusted EPS are Alternative Performance Measures, stated
after adjusting items (See Note 4) which are identified by virtue of their size,
nature and/or incidence. The Group reports adjusting items which are used by the Board
to monitor and manage the performance of the Group, in order to ensure that decisions
taken align with the Group’s long-term interests. Adjusting items are identified by
virtue to the size, nature or incidence at a segment level and their treatment is
applied consistently year-on-year.
4. Adjusted net debt is defined as the total of borrowings less capitalised fees, cash
and cash equivalents and overdrafts. Lease liabilities of £15.6m (30 November 2023:
£16.5m) are excluded from this measure as they are not included in the measurement of
adjusted net debt for the purpose of covenant calculations.
Divisional performance1,2
£m HY24 HY23 Variance
RM TTS:
Revenue 33.6 35.4 (5.2%)
TTS 25.2 25.1 0.4%
International 8.4 10.3 (18.8%)
Adjusted operating profit 0.1 1.7 (92.6%)
Adjusted operating profit margin 0.4% 4.7% (4.3%)
RM Consortium:
Revenue 0.8 6.7 (87.4%)
Adjusted operating loss (0.3) (6.2) (94.9%)
Adjusted operating profit margin (37.2%) (91.9%) 54.7%
RM Assessment:
Revenue 19.7 19.7 (0.3%)
Adjusted operating profit 2.3 3.2 (28.8%)
Adjusted operating profit margin 11.6% 16.2% (4.6%)
RM Technology:
Revenue: 25.1 25.7 (2.4%)
Adjusted operating profit/(loss) 0.8 (0.5) (275.2%)
Adjusted operating profit margin 3.2% (1.8%) 5.0%
1. Following the decision by management to separately monitor the results of the
Consortium and TTS brands in June 2023, the previously reported RM Resources segment
has been allocated between the RM TTS segment, which continues to be operated by the
Group, and the RM Consortium segment which has ceased trading. Prior period revenue
and adjusted operating profit/(loss) comparatives have been restated accordingly.
2. Due to the changes in structure of the group, and following the Consortium business
ceasing trading, the allocation of central overheads has changed within the period,
with both Assessment and TTS taking an increased share versus the prior year.
Group revenue from continuing operations decreased by 9.6% to £79.2m (HY23: £87.6m)
reflecting the changing shape of revenue recognition in Assessment, for which revenue will
be recognised in future periods, and we ceased trading in the Consortium business at the
start of the period. Adjusted revenue excluding Consortium was down 3.2% to £78.3m from
£80.9m in HY23.
Adjusted operating loss from continuing operations improved by 86.3% to £(0.6)m (HY23:
£(4.5)m) predominately driven by the lower operating loss for Consortium.
RM TTS revenues decreased by 5.2% to £33.6m (HY23: £35.4m) driven by the timing of large
International orders and revenue recognition. TTS International (down £1.9m) has built the
pipeline for H2 with a growing order book that will convert to revenue in H2, producing
growth on a year-on-year basis. While the UK education market continues to be challenging,
the business outperformed the market and revenues in the UK were broadly flat year-on-year
with market share up to 16.6% (HY23: 15.3%), despite heavy discounting by peers. Following
the closure of the Consortium business, TTS has experienced a positive halo effect,
benefiting from new customers buying Consortium-like products through TTS, then buying TTS
products in addition. Divisional adjusted operating profit decreased to £0.1m (HY23:
£1.7m) and adjusted operating margin decreased to 0.4% (HY23: 4.7%) driven predominantly
by reduced revenues and due to TTS bearing the full cost of both operating warehouses,
prior to the merger into a single warehouse late in H1.
RM Consortium revenues decreased by 87.4% to £0.8m (HY23: £6.7m) following the decision to
cease trading in December 2023.
RM Assessment revenues were flat year on year at £19.7m (HY23: £19.7m) driven by natural
declines in legacy projects coming to an end (£0.9m), offset by long term contract wins in
both FY23 and HY24. These wins drove significant growth in the underlying business from
contracted customers (+11%) with both UK (+17%) and International (+9%) revenue streams
performing strongly. Divisional adjusted operating profit decreased to £2.3m (HY23: £3.2m)
and adjusted operating margin decreased to 11.6% (HY23: 16.2%) driven by increased
allocations of corporate overheads.
RM Technology revenues decreased slightly to £25.1m down 2.4% (HY23: £25.7m) reflecting a
further stabilisation of the business and the ongoing strategy of focusing on larger MAT
customers as opposed to individual schools, within a market which continues to have
budgetary challenge and uncertainty arising from the General Election. Divisional adjusted
operating profit increased to £0.8m (HY23: loss of £0.5m) and adjusted operating margin
increased to 3.2% (HY23: (1.8)%).
Adjusted operating loss improved by 86.3% to £0.6m (HY23: loss of £4.5m) predominately
driven by the closure of the Consortium business and higher underlying profitability of
the ongoing business.
Further good progress has been made on delivering the target £10m annualised savings, of
which £6.6m has been identified and progressed in HY24, mainly from property
rationalisation, cost reduction in Technology and Consortium, with the remaining savings
to be determined by the end of the financial year.
Adjusted EBITDA increased to £1.9m (HY23: £(1.5)m) reflecting improvement in our
operational efficiency.
Loss before tax from continuing operations grew to £6.8m, despite improvements in adjusted
operating losses from the closure of the Consortium business and higher underlying
profitability of the ongoing business, however the comparable loss of £4.4m in HY23
included £8.5m of income generated from the sale of IP addresses.
Adjusted loss before tax was £3.7m (HY23: £6.7m), which was due to reduced adjusted
operating losses in HY24 (see above), partly offset by higher finance costs.
Statutory loss after tax was £6.8m (HY23: profit after tax of £8.2m), which was driven by
£3.0m reduced adjusted loss before tax (see above) and the inclusion in HY23 of £8.5m of
income generated from the sale of IP addresses and a £10.3m total gain on the sale of RM
Integris and RM Finance.
Adjusted diluted loss per share was (4.1)p (HY23: (6.7)p).
RM Consortium closure
On 24 November 2023, the Group announced the decision to close the RM Consortium business,
part of the RM Resources division, with trading ceasing on 8 December 2023 after which all
unfulfilled orders were cancelled. The liquidation of RM Consortium inventories continues.
Adjusting items
To provide an understanding of business performance excluding the effect of significant
change programmes and material transactions, certain costs are identified as ‘adjustments’
to business performance as set out below:
£m HY24 HY23
Amortisation of acquisition-related intangible assets 0.2 0.8
Restructuring costs1 3.0 0.3
Impairment of RM Consortium assets2 (0.1) -
Independent business review related costs3 - 0.5
Configuration of SaaS licences (ERP)4 - 3.5
Dual running costs related to investment strategy - (0.1)
Total adjustments to administrative expenses 3.1 5.0
Sale of IP addresses5 - (8.5)
Gain on sale of property - (0.2)
Total adjustments 3.1 (3.7)
Tax impact 0.3 0.2
Total adjustments after tax – continuing operations 3.4 (3.5)
Gain on disposal of discontinued operations6 - (9.5)
Total adjustments after tax 3.4 (13.0)
1 Restructuring costs in HY24 relate to the implementation of the Group’s new Target
Operating Model announced last year. The HY23 costs relate to previous initiatives.
2 During the six months ended 31 May 2024, the Group released £0.1m of onerous contract
provisions previously recognised in the year ended 30 November 2023 as part of the £38.9m
charge arising from the announcement of the closure of the Consortium business and the
subsequent termination of the ERP replacement programme.
3 Independent Business Review related costs undertaken on behalf of the lenders and
pension scheme.
4 The configuration and customisation costs relating to the ERP replacement programme
incurred in the prior period, which were expensed in accordance with IAS 38: Intangible
Assets and IFRIC agenda decisions but have been treated as adjusting items as they were a
significant component of the Group’s historic warehouse strategy. These costs totalled
£3.5m in 2023 based on the development work undertaken.
5 Income generated in 2023 following the completion of the sale of IP addresses totalling
£8.5m.
6 During 2023, Group completed the disposal of the Integris and Finance business which
generated a gain on sale of operations of £9.5m.
Inventory
Inventories remained broadly flat at £14.4m (FY23: £14.0m) in line with revenues.
Corporate Costs
Corporate costs in the period were £3.5m, up from £2.8m in HY 2023, as a result of
increased allocations for certain overhead functions, along with the cost associated with
share plan awards for management.
Taxation
The total tax charge for the year for continuing operations was £0.0m (HY23: £0.9m). There
are multiple tax effects influencing the tax rate in income, costs, deferred tax effects
and the impact of no tax charge in the discontinued businesses.
Cash flow, Net Debt and Lender Agreement
The first half of the financial year is normally a working capital outflow period for the
Group, with inventory purchases ahead of the second half peak selling period, with the
majority of cash inflow from the examinations sessions also coming in the second half.
This seasonality continued in the first half of 2024 with net cash outflow from operating
activities of £0.4m (HY23: £18.1m) during the half. The operating cash outflow in HY23 was
offset by proceeds from the sale of further surplus IPv4 assets (£8.5m) and the sale of RM
Integris and RM Finance (£8.8m), which completed in the period. These sales were not
repeated in HY24.
As a result of this return to more normal seasonal working capital movements, we closed
the period at £52.7m of net debt (HY23: £50.7m, FY23: £45.6m), in line with expectations.
Since the year end, the Group has secured an agreement with Lenders, which extends the
existing £70.0m bank facility to July 2026. The fixed charge over the shares of each of
the obligor companies (except for RM plc), and the fixed and floating charge over all
assets of the obligor companies granted previously to Lenders, remains in place. Under the
amended facility covenants have been reset as follows:
• A quarterly LTM EBITDA (excluding discontinued operations & Consortium) covenant test
from February 2024 to November 2025, which is then replaced by a quarterly EBITDA
leverage test and interest cover, which are required to be below and above 4x
respectively from February 2026; and
• A ‘hard’ liquidity covenant test requiring the Group to have liquidity greater than
£7.5m on the last business day of the month, and liquidity not be below £7.5m at the
end of two consecutive weeks within a month, with a step-down period applying from 15
September 2024 to 24 October 2024 and 1 January 2025 to 21 March 2025, during which
the minimum liquidity requirement is reduced from £7.5m to £5.0m.
Balance Sheet
The Group had net assets of £12.2m at 31 May 2024 (FY23: £17.8m). The balance sheet
includes non-current assets of £83.4m (FY23: £81.5m), of which £38.5m (FY23: £38.5m) is
goodwill and £15.4m (FY23: £12.8m) relates to the Group’s defined benefit pension scheme
which is discussed further below.
Operating PPE, intangible and right-of-use assets total £27.1m (FY23: £27.8m) and includes
acquired brands, customer relationships and Intellectual property as well as costs
relating to the warehouse consolidation.
Net current liabilities of £0.1m (FY23: net current assets of £8.9m) includes cash and
cash equivalents of £nil (FY23: £8.1m) and bank overdrafts of £0.6m (FY23: £nil).
Non-current liabilities of £71.2m (FY23: £72.6m) includes borrowings of £52.1m (FY23:
£53.7m) and lease liabilities of £13.3m (FY23: £14.3m) which are predominately associated
with the Group utilisation of properties.
Dividend
A condition of the previously extended and amended banking facility agreement remains the
same, which was to restrict dividend distribution until the Company has reduced its net
debt to LTM EBITDA (post IFRS 16) leverage to less than 1x for two consecutive quarters,
and therefore we are not currently able to recommend the payment of a final dividend. The
Board understands the importance of dividends to our shareholders and are clear that
reinstating the dividend is a key milestone on our recovery path.
Pension
The Company operates two defined benefit pension schemes (“RM Scheme” and “CARE Scheme”)
and participates in a third, multi-employer, defined benefit pension scheme (the “Platinum
Scheme”). All schemes are now closed to future accrual of benefits.
As set out in Note 10, the net IAS 19 surplus increased by £3.0m to £15.4m during the
period with the RM Scheme, CARE Scheme and Platinum Scheme now in surplus. The increases
were driven by returns on scheme assets and cash contributions, which more than offset the
negative impact of higher price inflation assumptions.
The 31 May 2021 triennial valuation for the RM and CARE schemes was completed in 2022,
with the total scheme deficit reducing from £46.5m to £21.6m. The deficit recovery
payments of £4.4m per annum will continue until the end of 2024, before reducing to £1.2m
until the end of 2026 when recovery payments cease.
Internal Controls
During the year, the Group has continued to evolve its commitment to document and embed
financial and governance controls. The project, will roll out across the key business
processes of purchase-to-pay, order-to-cash, forecast-to-fulfil and record-to-report, and
will document the end-to-end workstreams, with education and reference materials hosted in
a dedicated portal, and collate control evidence. Additional resource has been added to
the Internal Audit & Internal Controls team in order to carry out regularised walkthroughs
of the processes and validate that controls are operating as designed, and the evidence of
these controls is appropriate.
As a by-product of providing greater assurance to management over the effectiveness of
financial controls, the Group also expects, in time, to transition to a controls-based
audit approach.
The Audit and Risk Committee is being updated regularly with respect to progress of the
project and ongoing improvements to the control environment. Where controls currently are
not designed, implemented, or operating as effectively as they should, management have
provided the Committee with assurance that appropriate mitigating actions are in place to
conclude that these Financial Statements do not contain material errors.
Going Concern
In assessing the going concern position, the Directors have considered the balance sheet
position as included on page 14 and the level of available finance not drawn down. The net
current liabilities and adjusted net debt for the Group at 31 May 2024 were £0.1m and
£52.7m respectively (30 November 2023: net current assets of £8.9m and £45.6m
respectively). RM Group plc has a bank facility (“the facility”) which totalled £70.0m at
the date of this report. The facility maturity was extended in March 2024 and is committed
until July 2026. The terms of the revised facility are as disclosed in Note 31 of the 2023
Annual Report and Financial Statements.
The debt facilities are subject to financial covenants. Details of these covenants can be
found in the ‘Cash Flow, Net Debt and lender agreement’ section above.
The Directors have prepared cash flow forecasts for the period to 12 months from the date
of this report which indicate there is headroom for both covenants at each measurement
period. A number of reasonably plausible downside scenario sensitivities have been
assessed, alongside a review of mitigating actions which are within management’s control.
If the downside scenarios are all applied together without mitigation actions, which
management believe is unlikely, the covenants would remain complied with but without any
headroom on the liquidity covenant in December 2024. Applying the mitigating actions the
Directors are satisfied that the company would have sufficient funds to meet its
liabilities as they fall due for at least 12 months from the date of this report.
Further detail on the Directors assessment of going concern, including details in relation
to the base assessment and the reasonably plausible downside scenario are set out in Note
1 to the financial statements below.
Principal risks and uncertainties
Pursuant to the requirements of the Disclosure and Transparency Rules, the Group provides
the following information on its principal risks and uncertainties. The Board considers
that the categories of principal risks and uncertainties which could have a material
impact on the Group's performance in the remaining six months of the financial year remain
in line with those stated on pages 38 to 41 of the 2023 Annual Report and Financial
Statements, which is available at: 4 https://www.rmplc.com/reports
Directors’ Responsibility Statement
We confirm that to the best of our knowledge:
• the condensed set of financial statements has been prepared in accordance with United
Kingdom adopted IAS 34 Interim Financial Reporting;
• the interim management report includes a fair review of the information required by:
a. DTR 4.2.4R of the Disclosure Guidance and Transparency Rules, being the condensed set
of financial statements have been prepared in accordance with the applicable set of
accounting standards, gives a true and fair view of the assets, liabilities, financial
position and profit or loss of the issuer, or the undertakings included in the
consolidation as a whole;
b. 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
c. 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,
Mark Cook Simon Goodwin
Chief Executive Officer Chief Financial Officer
15 July 2024
UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
CONDENSED CONSOLIDATED INCOME STATEMENT
Six months ended 31 May 2024 Six months ended 31 May 2023
(Restated)
Adjusted Adjustments Total Adjusted Adjustments Total
Note £000 £000 £000 £000 £000 £000
Continuing operations
Revenue 2, 3 79,150 - 79,150 87,564 - 87,564
Cost of sales (49,083) - (49,083) (60,044) - (60,044)
Gross profit 30,067 - 30,067 27,520 - 27,520
Operating expenses (30,510) (3,118) (33,628) (32,542) (5,019) (37,561)
Expected credit loss (181) - (181) 480 - 480
Loss from operations 2 (624) (3,118) (3,742) (4,542) (5,019) (9,561)
Finance income 435 - 435 569 - 569
Other income - - - - 8,702 8,702
Finance costs (3,484) - (3,484) (2,771) - (2,771)
(Loss)/profit before tax (3,673) (3,118) (6,791) (6,744) 3,683 (3,061)
Tax 5 256 (250) 6 1,149 (202) 947
(Loss)/profit for the
period from continuing (3,417) (3,368) (6,785) (5,595) 3,481 (2,114)
operations
Discontinued operations 6 - - - 757 9,534 10,291
(Loss)/profit for the (3,417) (3,368) (6,785) (4,838) 13,015 8,177
period
Earnings per ordinary
share on continuing 7
operations:
- Basic (4.1)p (8.1)p (6.7)p (2.5)p
- Diluted (4.1)p (8.1)p (6.7)p (2.5)p
Earnings per ordinary
share on discontinuing 7
operations:
- Basic - - 0.9p 12.4p
- Diluted - - 0.9p 12.2p
Earnings per ordinary
share on total 7
operations:
- Basic (4.1)p (8.1)p (5.8)p 9.9p
- Diluted (4.1)p (8.1)p (5.8)p 9.7p
The restatement is detailed in Note 12.
CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME/(EXPENSE)
Six months ended
Six months ended
31 May 2024 31 May 2023
(Restated)
£000 £000
(Loss)/profit for the period (6,785) 8,177
Items that will not be reclassified subsequently to
profit or loss
Defined benefit pension scheme remeasurements 654 (7,462)
Tax on items that will not be reclassified (164) 2,015
subsequently to profit or loss
Items that are or may be reclassified subsequently to
profit or loss
Fair value gain/(loss) on hedged instruments 32 (669)
Fair value gain on hedged instruments transferred to 268 380
the income statement
Tax on items that are or may be reclassified - (15)
subsequently to profit or loss
Exchange loss on translation of overseas operations (30) (11)
Other comprehensive income/(expense) 760 (5,762)
Total comprehensive (expense)/income attributable to (6,025) 2,415
owners of the parent
The restatement is detailed in Note 12.
The accompanying notes are an integral part of the unaudited condensed consolidated
financial statements.
UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
CONDENSED CONSOLIDATED BALANCE SHEET
At 31 May 2024 At 30 November At 31 May 2023
2023 (Restated)
Note £000 £000 £000
Non-current assets
Goodwill 38,523 38,538 49,104
Other intangible assets 6,685 5,224 24,446
Property, plant and equipment 7,832 8,271 15,133
Right-of-use asset 12,553 14,275 14,804
Defined benefit pension scheme surplus 10 15,446 12,796 18,537
Other receivables 239 240 281
Contract fulfilment assets 1,952 1,959 1,582
Deferred tax assets 170 170 10,101
83,400 81,473 133,988
Current assets
Inventories 14,432 13,959 24,153
Trade and other receivables 30,827 32,333 33,705
Contract fulfilment assets 1,276 1,949 1,824
Tax assets 1,169 1,988 2,305
Cash and cash equivalents - 8,062 3,190
47,704 58,291 65,177
Total assets 131,104 139,764 199,165
Current liabilities
Trade and other payables (45,143) (46,372) (53,340)
Provisions 9 (2,042) (2,993) (1,314)
Bank overdraft (577) - (2,465)
(47,762) (49,365) (57,119)
Net current (liabilities)/assets (58) 8,926 8,058
Non-current liabilities
Lease liabilities (13,307) (14,297) (14,923)
Other payables (4,190) (2,463) (3,058)
Provisions 9 (1,512) (1,749) (592)
Deferred tax liability - - (8,838)
Defined benefit pension scheme 10 (30) (411) (595)
obligation
Borrowings 8 (52,149) (53,651) (51,401)
(71,188) (72,571) (79,407)
Total liabilities (118,950) (121,936) (136,526)
Net assets 12,154 17,828 62,639
Equity attributable to shareholders
Share capital 1,917 1,917 1,917
Share premium account 27,080 27,080 27,080
Own shares (444) (444) (444)
Capital redemption reserve 94 94 94
Hedging reserve (93) (393) (552)
Translation reserve (898) (868) (592)
Retained earnings (15,502) (9,558) 35,136
Total equity 12,154 17,828 62,639
The restatement is detailed in Note 12.
The accompanying notes are an integral part of the unaudited condensed consolidated
financial statements.
UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Share Share Own Capital Hedging Translation Retained
capital premium shares redemption reserve2 reserve3 earnings Total
reserve1
£000 £000 £000 £000 £000 £000 £000 £000
At 1 December 1,917 27,080 (444) 94 (263) (581) 32,840 60,643
2022
Profit for the
period - - - - - - 8,177 8,177
(Restated)
Other
comprehensive - - - - (289) (11) (5,462) (5,762)
expense
Total
comprehensive - - - - (289) (11) 2,715 2,415
(expense)/income
Transactions
with owners of
the Company:
Share-based
payment fair - - - - - - (419) (419)
value charges
At 31 May 2023 1,917 27,080 (444) 94 (552) (592) 35,136 62,639
(Restated)
At 1 December 1,917 27,080 (444) 94 (393) (868) (9,558) 17,828
2023
Loss for the - - - - - - (6,785) (6,785)
period
Other
comprehensive - - - - 300 (30) 490 760
income/(expense)
Total
comprehensive - - - - 300 (30) (6,295) (6,025)
income/(expense)
Transactions
with owners of
the Company:
Share-based
payment fair - - - - - - 254 254
value charges
Share-based - - - - - - 97 97
payment - tax
At 31 May 2024 1,917 27,080 (444) 94 (93) (898) (15,502) 12,154
1 The capital redemption reserve arose from the repurchase of issued share capital. It is
not distributable.
2 The Group hedging reserve arises from cash flow hedges entered into by the Group. The
reserve is not distributable as the gains and losses are unrealised.
3 The Group translation arises on consolidation from the unrealised movement of foreign
exchange on the net assets of overseas entities. This reserve is not distributable.
The restatement is detailed in Note 12.
The accompanying notes are an integral part of the unaudited condensed consolidated
financial statements.
UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
CONDENSED CONSOLIDATED CASH FLOW STATEMENT
Six months ended
Six months ended
31 May 2023
31 May 2024
(Restated)
Note £’000 £’000
Loss before tax from continuing operations (6,791) (3,061)
Profit before tax from discontinuing operations - 10,291
Gain on disposal of intangible licences - (8,531)
Gain on disposal of operations - (9,705)
Finance income (435) (569)
Finance costs 3,484 2,771
Loss from operations, including discontinued (3,742) (8,804)
operations
Adjustments for:
Amortisation and impairment of intangible assets 255 1,203
Depreciation and impairment of property, plant and 2,456 2,736
equipment
Gain on disposal of property, plant and equipment - (4)
Loss on foreign exchange 317 1,478
Share-based payment charge/(credit) 254 (419)
Increase in provisions 9 411 331
Defined benefit pension scheme administration cost 10 27 (6)
Operating cash flows before movements in working (22) (3,485)
capital
(Increase)/decrease in inventories (473) 2,205
Decrease in receivables 1,507 2,926
Decrease in contract fulfilment assets 727 33
Increase/(decrease) in trade and other payables 298 (15,654)
Utilisation of provisions 9 (1,360) (1,234)
Cash generated from/(used by) operations 677 (15,209)
Cash consumed by settlement of derivative financial (268) (380)
instruments
Defined benefit pension scheme cash contributions 10 (2,063) (2,275)
Tax credit/(paid) 1,225 (241)
Net cash used by operating activities (429) (18,105)
Investing activities
Interest received 94 6
Proceeds on disposal of intangible licences - 8,531
Proceeds on disposal of property, plant and - 32
equipment
Proceeds on sale of operations - 8,828
Purchases of property, plant and equipment (404) (463)
Purchases of other intangible assets (1,720) (279)
Net cash (used by)/generated from investing (2,030) 16,655
activities
Financing activities
Drawdown of borrowings 1,000 13,000
Repayment of borrowings (2,000) (8,717)
Borrowing facilities arrangement and commitment (1,040) (379)
fees
Interest paid (2,865) (2,393)
Payment of leasing liabilities – capital element (1,096) (1,024)
Payment of leasing liabilities – interest element (154) (158)
Net cash (used by)/generated from financing (6,155) 329
activities
Net decrease in cash and cash equivalents (8,614) (1,121)
Cash and cash equivalents at the beginning of the 8,062 1,911
period
Effect of foreign exchange rate changes (25) (65)
Cash and cash equivalents at the end of the period (577) 725
Bank overdraft (577) (2,465)
Cash at bank - 3,190
Cash and cash equivalents at the end of the period (577) 725
The restatement is detailed in Note 12.
The accompanying notes are an integral part of the unaudited condensed consolidated
financial statements.
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
1. Basis of preparation
The unaudited condensed consolidated financial statements for the six months ended 31 May
2024:
• Are prepared in accordance with International Accounting Standard 34 ‘Interim
Financial Reporting’ (‘IAS 34’) as issued by the International Accounting Standards
Board (‘IASB’) and as adopted by the United Kingdom;
• Are presented on a condensed basis as permitted by IAS 34 and therefore do not include
all disclosures that would otherwise be required in a full set of financial statements
and should be read in conjunction with the Group’s Annual Report and Financial
Statements for the year ended 30 November 2023;
• Applies the same accounting policies, presentation and methods of calculation as those
followed in the preparation of the Group’s Annual Report and Financial Statements for
the year ended 30 November 2023, which were prepared in accordance with UK-adopted
International Accounting Standards (‘IAS’), with International Financial Reporting
Standards (‘IFRS’) as issued by the IASB, and with the requirements of the UK
Companies Act 2006;
• Income taxes are accrued using the tax rate that is expected to be applicable for the
full financial year, adjusted for certain discrete items which occurred in the interim
period in accordance with IAS 34;
• Include all adjustments, consisting of normal recurring adjustments, necessary for a
fair statement of the results for the periods presented;
• Do not constitute statutory accounts within the meaning of section 434(3) of the UK
Companies Act 2006; and
• Were approved by the Board of directors on 15 July 2024.
The information relating to the year ended 30 November 2023 is extracted from the Group’s
published Annual Report and Financial Statements for that year, which has been delivered
to the Registrar of Companies, and on which the auditors’ report was unqualified and did
not contain any emphasis of matter or statements under section 498(2) or 498(3) of the UK
Companies Act 2006.
Deloitte, the Company's auditors, have not undertaken an independent review of the
condensed set of financial statements in this interim report, consistent with the same
period in the prior year.
The preparation of the unaudited condensed consolidated financial statements requires
management to make estimates and assumptions that affect the reported amounts of assets
and liabilities and disclosure of contingent assets and liabilities at the end of the
reporting period, and the reported amounts of revenue and expenses during the period.
Actual results could vary from these estimates. These estimates and underlying assumptions
are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the
period in which the estimate is revised if the revision affects only that period, or in
the period of the revision and future periods if the revision affects both current and
future periods.
Principal risks and uncertainties
Pursuant to the requirements of the Disclosure and Transparency Rules, the Group provides
the following information on its principal risks and uncertainties. The Group considers
strategic, operational and financial risks and identifies actions to mitigate those risks.
Risk management systems are monitored on an ongoing basis. The principal risks and
uncertainties detailed within the Group’s Annual Report and Financial Statements for the
year ended 30 November 2023 remain applicable. This is available from the RM website:
5 www.rmplc.com.
The principal risks and uncertainties that could have a significant effect on the Group’s
financial performance, include the following:
• A range of factors such as adverse market conditions, operational failures, not
winning new business, or a lack of investment in our digital capability, could cause a
failure to deliver the new strategic programme unveiled in FY2024 to deliver revenue
growth, a return to profitability and a reduction in debt.
• The Group’s ability to trade may be compromised should there be a lack of cash funds.
• If RM’s security controls are inadequate then a cyber-attack on internal or
customer-facing systems might be successful.
• If RM fails to maintain the required levels of technical and delivery expertise, then
the implementation of sophisticated and complex services to customers, or large-scale
business transformation projects, could be threatened.
• Due to RM’s dependency on an extensive supply chain, including overseas providers,
delivery of products and services could be affected by political, economic and global
factors beyond its control.
• A failure to recruit, retain and protect highly skilled employees could have a range
of negative operational impacts.
• If the Group does not have adequate monitoring and compliance processes in place,
there is a risk that we could become non-compliant with one or more of the many legal
and regulatory obligations to which we are subject.
• Since the financial performance of the Assessment and Technology divisions is
dependent on the winning and extension of long-term contracts, a failure to invest in
developing innovative and industry-leading solutions to enhance our service offering,
could weaken our competitiveness.
• Pension scheme deficits could adversely affect the net assets position of the trading
subsidiaries RM Education Limited and RM Educational Resources Limited, as could
increase costs resulting from the transfer of staff from Local Authority pension
schemes.
• The macroeconomic environment which has included high inflation in recent times could
impact profitability due to higher costs and constraints on spending by schools and
education bodies.
Going concern
The unaudited condensed consolidated financial statements for the six months ended 31 May
2024 have been prepared on a going concern basis which the Directors consider to be
appropriate for the following reasons.
At 31 May 2024, the Group had net debt of £52.7m (30 November 2023: £45.6m) and drawn
facilities of £54.0m (30 November 2023: £55.0m). Average Group net debt over the six
months to 31 May 2024 was £51.9m (year to 30 November 2023: £55.9m) with a maximum
borrowings position of £57.4m (year to 30 November 2023: £64.8m).
The Group has a £70.0m (2023: £70.0m) committed bank facility (“the facility”) at the date
of this report. During the period the Group’s debt facilities were subject to financial
covenants on a minimum rolling 12-month historical period (“LTM EBITDA”) which varied over
time (quarter ended May 2024: requirement of £7.5m), a hard liquidity requirement to
maintain net debt below £62.5m and a soft liquidity covenant of £57.5m. The soft liquidity
covenant was a limit used for lender reporting, whereas breaching the hard liquidity
covenant could constitute an event of default.
Due to a deterioration of financial performance of the Consortium business, the Group
breached the facility’s LTM EBITDA covenant from the third quarter of the financial year
ended 30 November 2023. It successfully received waivers from its lenders for both the
third and fourth quarters of the financial year.
On 6 March 2024 the Group secured an extension of the existing £70.0m facility to July
2026. This agreement provides lenders a fixed and floating charge over the shares of all
obligor companies (except for RM plc), and reset the covenants under the facility. For
going concern purposes the Board have assessed the Group’s forecast performance against
the following covenants:
• A quarterly LTM EBITDA (excluding discontinued operations) covenant test to November
2025, which is then replaced by a quarterly EBITDA leverage test and interest cover
test, which are required to be below and above 4x respectively from February 2026; and
• A ‘hard’ liquidity covenant test requiring the Group to have liquidity greater than
£7.5m on the last business day of the month, and liquidity not be below £7.5m at the
end of two consecutive weeks within a month, with a step down period applying from 15
September 2024 to 24 October 2024 and 1 January 2025 to 21 March 2025, during which
the minimum liquidity requirement is reduced from £7.5m to £5.0m.
The Directors of the Group have prepared cash flow forecasts for the period of 12 months
after the date of this report which indicate that taking into account the aggregate impact
of reasonably plausible downsides as discussed below, the Group is expected to comply with
all debt covenants in place and will have sufficient funds to meet its liabilities as they
fall due for at least 12 months from the date of this report. These cashflows utilise a
base case and reasonably possible downside scenario case. For going concern purposes, the
Group has assessed a base case scenario that assumes no significant downturn in UK or
International markets from that experienced in the year to 30 November 2023 and assumes a
broadly similar macroeconomic environment to that currently being experienced.
The drawn facilities are expected to fluctuate over the period considered for going
concern, but remain within the covenants, and are not anticipated to be fully repaid in
this period.
The Group is assuming revenue growth across all businesses in the base case, driven from
the following key areas:
• Growth from existing customers and new customer wins in the RM Assessment division;
• Increased hardware and infrastructure revenues in the RM Technology division; and
• Growth from TTS UK sales and international partnerships, where the base case assumes
an increase in market share through customer wins and new product launches as well as
higher average order values, in the RM Resources business.
Operating profit margin growth in the base case includes annualised savings from
restructuring programmes commenced in the period.
As part of the Group's business planning process, the Directors of the Group have closely
monitored the Group's financial forecasts, key uncertainties, and sensitivities. As part
of this exercise, the Directors of the Group reviewed a number of scenarios, including the
base case and reasonable worst-case downside scenarios.
The aggregate impact of reasonably plausible downsides has been taken together to form a
reasonable worst-case scenario that removes a number of the growth assumptions from the
base case including:
• In the RM Assessment division, a reduction in revenue arising because of:
• delay in the delivery of a large contract in H2 FY24;
• new contract revenues not at preferred bidder status reduced by 50%; and
• revenues associated with changing terms on a large multi-year contract delayed to
FY25.
• In the RM Technology division, aligning forecast hardware sales with the average of
the last five years, rather than the future growth assumed in the base case, and
reducing contract renewal rates by 5%.
• In the RM Resources division:
• UK market share growth does not occur, market continues to decline and revenues
delivered by new products are reduced by 50%;
• no growth in international revenues; and
• increase in costs associated with new product development, carriage, and an inability
to pass on 1.5% of inflationary increases.
The reasonable worst-case scenario has the following impact on the base case budget for
the Group:
• 2024: A revenue reduction of £12.0m, an EBITDA reduction of £4.6m, and cash reduction
of £2.2m.
• 2025: A revenue reduction of £28.2m, an EBITDA reduction of £6.0m, and cash reduction
of £7.2m.
While the Directors of the Group believe that all reasonable worst-case downside scenarios
occurring together is highly unlikely, the Group would continue to comply with covenants
under the facility, albeit in December 2024 with no headroom on the hard liquidity
covenant. The Directors of the Group’s assessment of the likelihood of a further downside
scenario is remote.
The Directors of the Group also considered a number of mitigating actions which could be
enacted, if necessary, to ensure that reasonable headroom against the facility and
associated covenants is maintained in all cases. These mitigating actions include not
paying discretionary bonuses and extending payment terms with key suppliers, albeit at a
much lower level for the latter than were taken in FY23.
These are actions the Group has taken before and therefore the Directors are confident of
their ability to deliver these mitigating actions if required.
Having considered both the availability of financial facilities and the forecast liquidity
and expected future covenant compliance, including the trading results of the Group
between the date of the balance sheet and date of signature of this report, the Directors
of the Group have a reasonable expectation that the Group has adequate resources to
continue in operational existence and meet its liabilities as they fall due for a period
of not less than 12 months from the date of approval of these financial statements. For
this reason, the Group continues to adopt the going concern basis of accounting in
preparing these financial statements.
Alternative Performance Measures (APMs)
In response to the Guidelines on APMs issued by the European Securities and Markets
Authority (ESMA) and the Financial Reporting Council (FRC), additional information on the
APMs used by the Group is provided below. The following APMs are used by the Group:
• Adjusted profit from operations
• Adjusted operating margin
• Adjusted profit before tax
• Adjusted tax
• Adjusted profit after tax
• Adjusted earnings per share
• Adjusted diluted earnings per share
• Adjusted cash conversion
• Adjusted EBITDA
• Adjusted net debt
• Average adjusted net debt
Further explanation of what each APM comprises and reconciliations between statutory
reported measures and adjusted measures are shown in Note 4.
The Board believes that presentation of the Group results in this way is relevant to an
understanding of the Group’s financial performance (and that of each segment). Underlying
performance excludes adjusted items which are identified by virtue of their size, nature
and/or incidence. The treatment of adjusted items is applied consistently period on
period. This presentation is consistent with the way that financial performance is
measured by management, reported to the Board, the basis of financial measures for senior
management’s compensation schemes and provides supplementary information that assists the
user to understand the underlying financial performance, position and trends of the Group.
The APMs used by the Group are not defined terms under IFRS and may therefore not be
comparable with similarly titled measures reported by other companies. They are not
intended to be a substitute for, or superior to, GAAP measures. All APMs relate to the
current year results and comparative periods where provided.
New accounting pronouncements adopted
On 1 December 2023, the Group adopted certain new accounting policies, including IFRS 17:
Insurance Contracts, Amendment to IAS 8: Definition of Accounting Estimates and Amendments
to IAS 12: Deferred Tax Related to Assets and Liabilities arising from a Single
Transaction, to comply with amendments to IFRS, none of which had a material impact on the
consolidated results, financial position or cash flows of the Group. Further details are
provided in the Group’s Annual Report and Financial Statements for the year ended 30
November 2023.
Key sources of estimation uncertainty
In applying the Group’s accounting policies the Directors are required to make estimates
and assumptions. Actual results may differ from these estimates. The following are
considered key sources of estimation uncertainty:
• Retirement benefit scheme valuation – The present value of post-employment benefit
obligations is determined on an actuarial basis using various assumptions, including
the discount rate, inflation rate and mortality assumptions. Any changes in these
assumptions will impact the carrying amount as well as the net pension finance cost or
income. Key assumptions and sensitivities for post-employment benefit obligations are
disclosed in Note 10.
• Revenue from RM Assessment contracts which contain variable revenues based on the
number of exam scripts – There is estimation relating to total script volumes to
determine the transaction price over the life of the contract and the standalone
selling price for scanning and the use of the residual method to determine a value for
the provision of technology and support services. The sensitivity analysis related to
future script volumes show that if UK and International exams increased by 5% against
assumed volumes from 2025 onwards, then revenue in 2024 would be increased by c.£0.3m.
Critical accounting judgements
In applying the Group’s accounting policies the Directors are required to make judgements
and assumptions, actual results may differ from these. The following are considered key
critical accounting judgments:
• Going concern – In concluding the going concern assessment was appropriate, the
Directors have made a number of significant judgements as set out above.
• Revenue from RM Assessment contracts – A number of judgements are made in the
application of IFRS 15 Revenue from contracts with customers to certain RM Assessment
contracts. The most significant judgements relate to contracts with multiple
performance obligations and where there is a variable transaction price based on the
number of exam scripts. In these contracts there is judgement in the determination
that the provision of technology is a right-to-access arrangement and therefore should
be recognised over time. The factors considered in making this judgement were the
nature of services provided, including hosting, ongoing maintenance and system
support.
• Revenue from RM Technology contracts – A number of judgements are made in the
application of IFRS 15 Revenue from contracts with customers to certain RM Technology
contracts. The most significant judgement relates to the determination that the
provision of technology is a right-to access arrangement and therefore should be
recognised over time. The factors considered in making this judgement were the nature
of services provided, i.e., licensed on a subscription basis, being centrally hosted
and the customer is unable to take possession of the software.
• Recognition of pension surplus – The Group has determined that when all members leave
the various defined benefit pension schemes, any surplus remaining would be returned
to the Group in accordance with the trust deed. As such, the full economic benefit of
any surplus under IAS 19 is deemed available to the Group and is recognised in the
balance sheet.
• International Baccalaureate AOS – Management have assessed that as no distinct
performance obligation to enable the recognition of revenue had been met at 31 May
2024, development work to date of £3.6m should continue to be recognised as intangible
assets in accordance with IAS 38 and £4.0m of amounts received should continue to be
recognised as deferred revenue.
• Classification of adjusting items – A number of judgements are made in the preparation
of these unaudited condensed consolidated financial statements, in the presentation of
both certain costs and income as adjustments. The factors considered in making this
judgement are the size or nature of the adjustment and their impact on the segment.
These are fully set out in Note 4.
2. Operating Segments
The Group’s business is supplying products, services and solutions to the UK and
international education markets. The Chief Executive Officer is the Chief Operating
Decision Maker. The Chief Operating Decision Maker reviews segments at an adjusted
operating profit level and adjustments are not allocated to segments. Information reported
to the Group’s Chief Executive Officer for the purposes of resource allocation and
assessment of segmental performance is focused on the nature of each type of activity.
The Group was historically structured into three operating Divisions: RM Resources, RM
Assessment and RM Technology, however, following the decision by management to separately
monitor the results of the Consortium and TTS brands in June 2023, the previously reported
RM Resources segment has been allocated between the RM TTS segment, which continues to be
operated by the Group, and the RM Consortium segment which has ceased trading.
Typically, two of the divisions are impacted by seasonality trends. RM TTS experiences
increased revenues in March, June, July and October in line with customer financial and
academic years. In RM Assessment scanning revenues are recognised over the period of the
scanning activity and create seasonality depending on the timing of exam sessions and the
number and type of examinations being sat. UK government assessment scanning revenues are
spread typically between May to July.
This Segmental analysis shows the result 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 RM Corporate
Six months ended 31 May 2024 Services Total
TTS1 Consortium Assessment Technology
£000 £000 £000 £000 £000 £000
Revenue
UK 25,198 844 11,175 25,004 - 62,221
Europe 5,396 - 5,117 46 - 10,559
North America 1,155 - 11 - - 1,166
Asia 391 - 429 - - 820
Middle East 920 - 76 - - 996
Rest of the world 531 - 2,857 - - 3,388
33,591 844 19,665 25,050 - 79,150
Adjusted profit/(loss) from 123 (314) 2,281 799 (3,513) (624)
operations
Finance income 435
Finance costs (3,484)
Adjusted loss before tax (3,673)
Adjustments (see Note 4) (3,118)
Loss before tax (6,791)
1 Included in UK are International Sales via UK Distributors of £542,000.
RM RM RM RM Corporate
Six months ended 31 May 2023 Services Total
TTS Consortium Assessment Technology
(Restated)2 £000 £000 £000 £000 £000 £000
Revenue
UK 25,107 6,710 12,014 25,624 - 69,455
Europe 6,480 - 4,383 32 - 10,895
North America 1,608 - 62 19 - 1,689
Asia 440 - 517 - - 957
Middle East 1,082 - 79 - - 1,161
Rest of the world 731 - 2,676 - - 3,407
35,448 6,710 19,731 25,675 - 87,564
Adjusted profit/(loss) from 1,661 (6,169) 3,202 (456) (2,780) (4,542)
operations
Finance income 569
Finance costs (2,771)
Adjusted loss before tax (6,744)
Adjustments (see Note 4) 3,683
Loss before tax (3,061)
1 Included in UK are International Sales via UK Distributors of £315,000.
2 The restatement is detailed in Note 12. In addition, following the decision by
management to separately monitor the results of Consortium and TTS brands in June 2023,
the previously reported RM Resources segment has been allocated between the RM TTS
segment, which continues to be operated by the Group, and the RM Consortium segment which
has ceased trading. Prior year comparatives have been restated accordingly.
Segmental assets
RM RM RM RM
At 31 May 2024 Corporate Services Total
TTS Consortium Assessment Technology
£000 £000 £000 £000 £000 £000
Segmental 44,103 125 18,337 12,682 39,112 114,359
Other 16,745
Total assets 131,104
RM RM RM RM
At 30 November 2023 Corporate Services Total
TTS Consortium Assessment Technology
£000 £000 £000 £000 £000 £000
Segmental 28,286 17,353 15,067 16,158 39,617 116,481
Other 23,283
Total assets 139,764
3. Revenue
RM RM RM RM RM
Six months
ended 31 May TTS Consortium Technology Technology Assessment Total
2024 Transactional Over Time
Transactional Transactional Over Time
£000 £000 £000 £000 £000 £000
Supply of 33,591 844 5,360 - - 39,795
products
Rendering - - 2,366 11,832 18,519 32,717
services
Licences - - 2,931 2,561 1,146 6,638
33,591 844 10,657 14,393 19,665 79,150
RM RM RM RM RM
Six months ended
31 May 2023 TTS Consortium Technology Technology Assessment Total
Transactional Over Time
Transactional Transactional Over Time (restated)2
(Restated)1 £000 £000 £000 £000 £000 £000
Supply of 35,155 6,710 6,782 - - 48,647
products
Rendering 293 - 1,464 12,859 19,301 33,917
services
Licences - - 1,722 2,848 430 5,000
35,448 6,710 9,968 15,707 19,731 87,564
1. Following the decision by management to separately monitor the results of Consortium
and TTS brands in June 2023, the previously reported RM Resources segment has been
allocated between the RM TTS segment, which continues to be operated by the Group, and
the RM Consortium segment which has ceased trading. Prior year comparatives have been
restated accordingly. In addition, to be consistent with the FY23 Annual Report &
Financial Statements, certain balances previously recorded in the H1 FY23 interim
financial statements as licence revenue have now been restated as rendering of
services.
4. Alternative Performance Measures
As set out in Note 1, the Group uses alternative performance measures that the Board
believes reflects the trading performance of the Group, and it is these adjusted measures
that the Board use as the primary measures of performance measurement during the year.
Six months ended
Six months ended
31 May 2023
31 May 2024
(Restated)
£000 £000
Adjustments to operating expenses:
Amortisation of acquisition-related intangible 235 853
assets
Restructuring costs (a) 2,966 295
Impairment of RM Consortium assets (b) (93) -
Independent business review related costs (c) 10 473
Configuration of SaaS licences (ERP) (d) - 3,497
Dual running costs related to investment strategy (e) - (99)
Total adjustments to operating expenses 3,118 5,019
Adjustments to other income:
Sale of IP addresses (f) - (8,531)
Gain on disposal of operations (g) - (171)
Total adjustments to other income - (8,702)
Total adjustments 3,118 (3,683)
Tax impact (Note 5) 250 202
Total adjustments after tax – continuing operations 3,368 (3,481)
Gain on disposal of discontinued operations (h) - (9,534)
Total adjustments after tax 3,368 (13,015)
The restatement is detailed in Note 12.
Adjusted items:
These are items which are identified by virtue of either their size or their nature to be
important to understanding the performance of the business including the comparability of
the results year on year. These items can include, but are not restricted to, impairment;
gain on held-for-sale assets and related transaction costs; changes in the provision for
exceptional property costs; the gain/loss on sale of operations; and restructuring and
acquisition costs.
On 24 November 2023, the Group announced the closure of the RM Consortium business and the
consequent termination of the Group’s ERP programme which had formed part of the Group's
2018 warehouse strategy to transfer all its previous warehouse operations into one new
automated warehouse together with an interlinked ERP solution which was planned to be
rolled out to the whole Group. The Group believes that the size, complexity and number of
unusual costs associated with these developments, were material to the understanding of
the trading performance of the business including the comparability of results
year-on-year. As a result, all significant costs relating to these developments have also
been treated as an adjustment to profit, consistently period to period.
The amortisation of acquisition related intangible assets is an annual recurring
adjustment to profit that is a non-cash charge arising from historical investing
activities. This adjustment is made to clearly highlight the amounts relating to
historical acquisitions and is in common with peer companies across the technology sector.
The income generated from the use of these intangible assets is, however, included in the
adjusted profit measures.
The following costs and income were identified as adjusted items:
a. Restructuring costs of £3.0m (2023: £0.3m) relating to the implementation of the
Group’s new Target Operating Model announced last year. £1.2m of these costs relate to
impairments and provisions for exited properties to the end of their leases in 2026.
£0.7m relate to redundancies which were all paid during the period. £0.4m related to
the consolidation of the TTS distribution centre in March 2024.
b. During the six months ended 31 May 2024, the Group released £0.1m of onerous contract
provisions previously recognised in the year ended 30 November 2023 as part of the
£38.9m charge arising from the announcement of the closure of the Consortium business
and the subsequent termination of the ERP replacement programme, as set out in the
Group’s Annual Report and Financial Statements for the year ended 30 November 2023.
c. Independent Business Review related costs undertaken on behalf of the lenders and
pension scheme totalled £0.5m in 2023.
d. The configuration and customisation costs relating to the ERP replacement programme
incurred in the prior period, which were expensed in accordance with IAS 38:
Intangible Assets and IFRIC agenda decisions but have been treated as adjusting items
as they were a significant component of the Group’s historic warehouse strategy. These
costs totalled £3.5m in 2023 based on the development work undertaken.
e. Dual run related credits in 2023 of £0.1m related to the Group’s warehouse strategy,
which became fully operational that year.
f. Income generated in 2023 following the completion of the sale of IP addresses
totalling £8.5m.
g. Gain on disposal of operations in 2023 of £0.2m following the completion of the iCase
business disposal.
h. During 2023, the Group completed the disposal of the RM Integris and RM Finance
business which generated a gain on sale of operations of £9.5m representing profit of
£11.3m less £1.8m of costs associated with the disposal.
Adjusted net debt of £52.7m (30 November 2023: £45.6m) is the total of borrowings less
capitalised fees of £52.1m (30 November 2023: £53.7m), bank overdraft of £0.6m (30
November 2023: £nil) and cash at bank of £nil (30 November 2023: £8.1m). Lease liabilities
of £15.6m (30 November 2023: £16.5m) are excluded from this measure as they are not
included in the measurement of adjusted net debt for the purpose of covenant calculations.
Adjusted net debt is a key metric measured by management as it is used in covenant
calculations.
The above adjustments have the following impact on key metrics:
Six months ended 31 May 2024 Six months ended 31 May 2023
(Restated)
Statutory Adjustment Adjusted Statutory Adjustment Adjusted
Measure measure Measure measure
£000 £000 £000 £000 £000 £000
Revenue 79,150 - 79,150 87,564 - 87,564
Loss from operations (3,742) (3,118) (624) (9,561) (5,019) (4,542)
Operating margin (%) -4.7% -3.9% -0.8% -10.9% -5.7% -5.2%
(Loss)/profit before tax (6,791) (3,118) (3,673) (3,061) 3,683 (6,744)
Tax 6 (250) 256 947 (202) 1,149
(Loss)/profit after tax (6,785) (3,368) (3,417) (2,114) 3,481 (5,595)
Loss from operations (3,742) (3,118) (624) (9,561) (5,019) (4,542)
Amortisation and
impairment of intangible 255 235 20 1,203 853 350
assets
Depreciation and
impairment of property, 2,456 - 2,456 2,736 - 2,736
plant and equipment
Adjusted EBITDA (1,031) (2,883) 1,852 (5,622) (4,166) (1,456)
Earnings per share:
Basic (Pence) (8.1)p (4.1)p (2.5)p (6.7)p
Diluted (Pence) (8.1)p (4.1)p (2.5)p (6.7)p
The restatement is detailed in Note 12.
Adjusted operating profit is defined as the profit from continuing operations before
excluding the adjustments referred to above. Operating margin is defined as the operating
profit as a percentage of revenue.
5. Tax
Six months ended 31 May 2024 Six months ended 31 May 2023
(Restated)
Statutory Measure Adjustment Adjusted Statutory Adjustment Adjusted
measure Measure measure
£000 £000 £000 £000 £000 £000
(Loss)/profit (6,791) (3,118) (3,673) (3,061) 3,683 (6,744)
before tax
Tax charge 6 (250) 256 947 (202) 1,149
Effective tax rate (0.1)% 6.9% (7.0)% (30.9%) (13.9)% (17.0%)
The restatement is detailed in Note 12.
For the interim periods, the ETR is calculated by applying a forecast full year ETR to the
interim results.
The standard rate of corporation tax in the UK for the period is 25% (2023: 25%).
6. Discontinuing Operations and Assets held for sale
Discontinued operations
On 31 May 2023, the Group completed the sale of the RM Integris and RM Finance Businesses
and related assets, to The Key Support Services Limited. Total consideration for the sale
was £16.0 million on a cash free/debt free basis of which £12.0 million was received on
completion subject to at £3.3m normalised working capital adjustment and £4.0m receivable
subject to satisfaction of certain conditions, including those related to competition
clearance in cash, of which £3.5m was received in June 2023 and £0.5m was received in July
2023.
Income statement analysis of discontinued operations
Six months ended Six months ended
31 May 2024 31 May 2023
£000 £000
Revenue - 2,412
Cost of sales - (928)
Gross profit - 1,484
Operating expenses - (727)
Profit before tax - 757
Tax - -
Profit for the year from discontinued operations - 757
Gain on disposal of discontinued operations
Six months ended Six months ended
31 May 2024 31 May 2023
£000 £000
Gain on disposal of discontinued operations before - 11,345
taxation
Costs associated with the disposal - (1,811)
Net gain on disposal of discontinued operations - 9,534
Profit for the year from discontinued operations
Six months ended Six months ended
31 May 2024 31 May 2023
£000 £000
Profit for the year from discontinued operations - 757
Net gain on disposal of discontinued operations - 9,534
Total gain on disposal of discontinued operations - 10,291
Total comprehensive income for the financial year from discontinued operations
Six months ended Six months ended
31 May 2024 31 May 2023
Group £000 £000
Attributable to owners of the parent - 10,291
7. Earnings per share
Six months ended 31 May 2024 Six months ended 31 May 2023
(Restated)
Weighted Pence Weighted Pence
(Loss)/profit average per (Loss)/profit average per
for the year number of share for the year number of share
shares shares
£000 £000 £000 £000 £000 £000
Basic earnings per ordinary
share
Basic earnings from continuing (6,785) 83,256 (8.1) (2,114) 83,256 (2.5)
operations
Adjustments (see Note 4) 3,368 - 4.0 (3,481) - (4.2)
Adjusted basic earnings from
continuing (3,417) 83,256 (4.1) (5,595) 83,256 (6.7)
operations
Basic earnings from - 83,256 - 10,291 83,256 12.4
discontinuing operations
Adjusted basic earnings from - 83,256 - 757 83,256 0.9
discontinuing operations
Diluted earnings per ordinary
share
Basic earnings from continuing (6,785) 83,256 (8.1) (2,114) 83,256 (2.5)
operations
Effect of dilutive potential
ordinary shares - share-based - 544 - - 1,420 -
payment awards
Diluted earnings from (6,785) 83,800 (8.1) (2,114) 84,676 (2.5)
continuing operations
Adjustments (see Note 4) 3,368 - 4.0 (3,481) - (4.2)
Adjusted diluted earnings from (3,417) 83,800 (4.1) (5,595) 84,676 (6.7)
continuing operations
Basic diluted earnings from - 83,800 - 10,291 84,676 12.2
discontinuing operations
Adjusted diluted earnings from - 83,800 - 757 84,676 0.9
discontinuing operations
The restatement is detailed in Note 12.
In accordance with IAS 33 the diluted loss per share is corrected on the face of the
Income Statement to reflect the undiluted figure as a loss should not be diluted.
8. Borrowings
At At
31 May 2024 30 November 2023
£000 £000
Bank loan 54,000 55,000
Less: capitalised fees (1,851) (1,349)
52,149 53,651
At 31 May 2024, the Group had drawn down £54.0m (30 November 2023: £55.0m) of the £70.0m
committed revolving credit facility, which expires in July 2026. For further details of
committed revolving credit facility please see Note 31 in the Group’s Annual Report and
Financial Statements for the year ended 30 November 2023.
9. Provisions
Dilapidations Employee-related Contract risk Total
restructuring provisions
Group £000 £000 £000 £000
At 1 December 2023 2,292 816 1,634 4,742
Increase in provisions 596 - 10 606
Utilisation of - (712) (648) (1,360)
provisions
Release of provisions (200) (76) (194) (470)
Unwinding of discount 36 - - 36
on provisions
At 31 May 2024 2,724 28 802 3,554
Disclosure of provisions
At At
31 May 2024 30 November 2023
£000 £000
Current liabilities 2,042 2,993
Non-current liabilities 1,512 1,749
3,554 4,742
10. Defined benefit pension schemes
There are three defined benefit pension schemes: The Research Machines plc 1988 Pension
Scheme (RM Scheme), The Consortium CARE Scheme (CARE Scheme) and The Prudential Platinum
Pension (Platinum Scheme). In addition, the Group has TUPE employees who retain membership
of Local Government Pension Schemes, many of which have a customer contractual guarantee
whereby the Group reimburses for any IAS 19 deficit when it ceases to be a participating
employer and are therefore accounted for as a defined benefit arrangement, with actuarial
movements recognised through Other Comprehensive Income.
For further details of each of these schemes please see Note 26 in the Group’s Annual
Report and Financial Statements for the year ended 30 November 2023.
Reconciliation of net defined benefit obligation
CARE Platinum Local
RM Scheme Scheme Scheme Government Total
Pension Schemes
£000 £000 £000 £000 £000
Net surplus/(obligation) at 1 December 12,159 (381) 637 (30) 12,385
2023
Cost included in Income Statement:
Administrative expenses - - (27) - (27)
Net interest income 327 (2) 16 - 341
Scheme remeasurements included in the
Statement of Comprehensive Income:
Effect of changes in demographic 49 10 1 - 60
assumptions
Effect of changes in financial (2,016) (175) (2) - (2,193)
assumptions
Effect of experience adjustments - (98) (11) - (109)
Return on scheme assets excluding 2,540 340 16 - 2,896
interest on scheme assets
Cash contributions 1,427 608 28 - 2,063
Net pension surplus/(obligation) at 31 14,486 302 658 (30) 15,416
May 2024
At 31 May 2024:
Pension deficit - - - (30) (30)
Pension surplus 14,486 302 658 - 15,446
Net pension surplus/(deficit) 14,486 302 658 (30) 15,416
At 30 November 2023:
Pension deficit - (381) - (30) (411)
Pension surplus 12,159 - 637 - 12,796
Net pension surplus/(deficit) 12,159 (381) 637 (30) 12,385
The effect of changes in financial assumptions is principally due to increases in the RPI
price inflation assumptions during the period, which have to a higher value being placed
on the Schemes’ liabilities. This increased liability has been more than offset by higher
assets driven by cash contributions and increases in asset values reflecting higher
returns on growth assets such as equities.
Significant actuarial assumptions
RM Scheme CARE Scheme Platinum Scheme
Discount rate:
At 31 May 2024 5.15% 5.15% 5.15%
At 30 November 2023 5.15% 5.15% 5.10%
Rate of RPI price inflation:
At 31 May 2024 3.25% 3.30% 3.20%
At 30 November 2023 3.10% 3.15% 3.10%
The Group has agreed with the RM Scheme Trustees that it will make catch-up payments of
£3,200,000 per annum until 31 December 2024 and with the CARE Scheme Trustees that it will
make catch-up payments of £1,200,000 per annum until 31 December 2026.
During the year ended 30 November 2023, the Group agreed with the Trustees of the RM and
CARE Schemes to provide the Schemes with a second ranking fixed and floating charge over
the shares of all obligor companies (except for RM plc) and a payment of £0.5m each at
bi-annual intervals starting on August 2023 which is contingent upon the adjusted debt
leverage ratio being less than 3.2x at that date. No such payments were made in August
2023 or February 2024.
11. 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.
The sole significant related party transaction relates to the provision of contract staff
by Searchlight Business Services Limited, of which Mark Cook (the Chief Executive Officer
of RM plc) is non-Executive Chairman. In the six months to 31 May 2024 the Group purchased
services totalling £0.3m. Mr Cook is not involved in the commercial discussions relating
to this supply.
12. Restatement for accounting error and classification
The comparative Interim Results for the six months ended 31 May 2023 have been restated to
reflect a prior period accounting error relating to the treatment of £1,342,000 of
independent business review costs which were previously expensed to operating profit (and
included in adjustments to operating expenses in the Group’s alternative performance
measures as set out in Note 4), but which should instead have been capitalised as part of
the related borrowing facility in accordance with IFRS.
This prior period year accounting error was fully corrected in the results for the year
ended 30 November 2023.
In addition:
• The fair value gain/(loss) on hedged instruments and fair value loss on hedged
instruments transferred to the income statement in the Condensed Consolidated
Statement of Comprehensive Income/(Expense) for the six months ended 31 May 2023 has
also been restated as previously these balances were netted.
• The comparative loss on foreign exchange and cash consumed by settlement of derivative
financial instruments, and the capital and interest elements of leasing liability
payments in the Condensed Consolidated Cash Flow Statement for the six months ended 31
May 2023 have also been restated as previously these balances were netted.
These adjustments have the following impact on the primary statements for the six months
ended 31 May 2023:
•
Condensed Consolidated Income Statement
Six months ended 31 May 2023
As reported Restatement impact Restated
£’000 £’000 £’000
Continuing operations
Revenue 87,564 - 87,564
Cost of sales (60,044) - (60,044)
Gross profit 27,520 - 27,520
Operating expenses (38,903) 1,342 (37,561)
Expected credit loss 480 - 480
Loss from operations (10,903) 1,342 (9,561)
Finance income 569 - 569
Other income 8,702 - 8,702
Finance costs (2,771) - (2,771)
Loss before tax (4,403) 1,342 (3,061)
Tax 947 - 947
Loss for the period from continuing operations (3,456) 1,342 (2,114)
Discontinued operations 10,291 - 10,291
Profit for the period 6,835 1,342 8,177
Condensed Consolidated Statement of Comprehensive Income
Six months ended 31 May 2023
As reported Restatement impact Restated
£’000 £’000 £’000
Profit for the period 6,835 1,342 8,177
Items that will not be reclassified subsequently -
to profit or loss
Defined benefit pension scheme remeasurements (7,462) - (7,462)
Tax on items that will not be reclassified 2,015 - 2,015
subsequently to profit or loss
Items that are or may be reclassified subsequently -
to profit or loss
Fair value loss on hedged instruments (289) (380) (669)
Fair value gain on hedged instruments transferred - 380 380
to the income statement
Tax on items that are or may be reclassified (15) - (15)
subsequently to profit or loss
Exchange loss on translation of overseas (11) - (11)
operations
Other comprehensive expense (5,762) - (5,762)
Total comprehensive income attributable to owners 1,073 1,342 2,415
of the parent
Condensed Consolidated Balance Sheet
Six months ended 31 May 2023
As reported Restatement impact Restated
£’000 £’000 £’000
Non-current assets
Goodwill 49,104 - 49,104
Other intangible assets 24,446 - 24,446
Property, plant and equipment 15,133 - 15,133
Right-of-use asset 14,804 - 14,804
Defined benefit pension scheme surplus 18,537 - 18,537
Other receivables 281 - 281
Contract fulfilment assets 1,582 - 1,582
Deferred tax assets 10,101 - 10,101
133,988 - 133,988
Current assets
Inventories 24,153 - 24,153
Trade and other receivables 33,705 - 33,705
Contract fulfilment assets 1,824 - 1,824
Tax assets 2,305 - 2,305
Cash and cash equivalents 3,190 - 3,190
65,177 - 65,177
Total assets 199,165 - 199,165
Current liabilities
Trade and other payables (53,340) - (53,340)
Provisions (1,314) - (1,314)
Bank overdraft (2,465) - (2,465)
(57,119) - (57,119)
Net current assets 8,058 - 8,058
Non-current liabilities
Lease liabilities (14,923) - (14,923)
Other payables (3,058) - (3,058)
Provisions (592) - (592)
Deferred tax liability (8,838) - (8,838)
Defined benefit pension scheme obligation (595) - (595)
Borrowings (52,743) 1,342 (51,401)
(80,749) 1,342 (79,407)
Total liabilities (137,868) 1,342 (136,526)
Net assets 61,297 1,342 62,639
Equity attributable to shareholders
Share capital 1,917 - 1,917
Share premium account 27,080 - 27,080
Own shares (444) - (444)
Capital redemption reserve 94 - 94
Hedging reserve (552) - (552)
Translation reserve (592) - (592)
Retained earnings 33,794 1,342 35,136
Total equity 61,297 1,342 62,639
Condensed Consolidated Cash Flow Statement
Six months ended 31 May 2023
As reported Restatement impact Restated
£’000 £’000 £’000
Loss before tax from continuing operations (4,403) 1,342 (3,061)
Profit before tax from discontinuing operations 10,291 - 10,291
Gain on disposal of intangible licences (8,531) - (8,531)
Gain on disposal of operations (9,705) - (9,705)
Finance income (576) 7 (569)
Finance costs 2,778 (7) 2,771
Loss from operations, including discontinued (10,146) 1,342 (8,804)
operations
Adjustments for:
Amortisation and impairment of intangible assets 1,203 - 1,203
Depreciation and impairment of property, plant and 2,736 - 2,736
equipment
Gain on disposal of property, plant and equipment (4) - (4)
Loss on foreign exchange 1,098 380 1,478
Share-based payment credit (419) - (419)
Increase in provisions 331 - 331
Defined benefit pension scheme administration cost (6) - (6)
Operating cash flows before movements in working (5,207) 1,722 (3,485)
capital
Decrease in inventories 2,205 - 2,205
Decrease in receivables 2,926 - 2,926
Decrease in contract fulfilment assets 33 - 33
Increase in trade and other payables (14,312) (1,342) (15,654)
Utilisation of provisions (1,234) - (1,234)
Cash used by operations (15,589) 380 (15,209)
Cash from settlement of derivative financial - (380) (380)
instruments
Defined benefit pension scheme cash contributions (2,275) - (2,275)
Tax paid (241) - (241)
Net cash used by operating activities (18,105) - (18,105)
Investing activities
Interest received 6 - 6
Proceeds on disposal of intangible licences 8,531 - 8,531
Proceeds on disposal of property, plant and 32 - 32
equipment
Proceeds on sale of operations 8,828 - 8,828
Purchases of property, plant and equipment (463) - (463)
Purchases of other intangible assets (279) - (279)
Net cash generated from investing activities 16,655 - 16,655
Financing activities
Drawdown of borrowings 13,000 - 13,000
Repayment of borrowings (8,717) - (8,717)
Borrowing facilities arrangement and commitment (379) - (379)
fees
Interest paid (2,393) - (2,393)
Payment of leasing liabilities – capital element (1,182) 158 (1,024)
Payment of leasing liabilities – interest element - (158) (158)
Net cash generated from financing activities 329 - 329
Net decrease in cash and cash equivalents (1,121) - (1,121)
Cash and cash equivalents at the beginning of the 1,911 - 1,911
year
Effect of foreign exchange rate changes (65) - (65)
Cash and cash equivalents at the end of the year 725 - 725
13. Post balance sheet events
There are no post balance sheet events.
══════════════════════════════════════════════════════════════════════════════════════════
Dissemination of a Regulatory Announcement, transmitted by EQS Group.
The issuer is solely responsible for the content of this announcement.
══════════════════════════════════════════════════════════════════════════════════════════
ISIN: GB00BJT0FF39
Category Code: IR
TIDM: RM.
LEI Code: 2138005RKUCIEKLXWM61
OAM Categories: 1.2. Half yearly financial reports and audit
reports/limited reviews
Sequence No.: 334245
EQS News ID: 1946637
End of Announcement EQS News Service
══════════════════════════════════════════════════════════════════════════
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