RM plc (RM.)
RM plc: Final Results
14-March-2024 / 07:03 GMT/BST
14 March 2024
RM plc
Final Results for the year ended 30
November 2023
Solid transformation progress,
business stabilised and clear strategic path to deliver
growth
RM plc (‘RM’), a leading global educational technology
(‘EdTech’), digital learning and assessment solution provider,
reports its full year results for the year ended 30 November 2023
and outlines its new strategic development programme following a
fundamental review of the business by its newly established
leadership team.
Stabilised the business and made
significant operational progress following severely demanding
operational challenges
-
Consortium business ceased
trading in December 2023 following FY23 losses of
c.£10m.
-
Over-specified ERP system
implementation permanently ceased to avoid significant additional
costs.
-
Two into one distribution centre
consolidation commenced, realising £1.5m annualised
savings.
-
Transformation driven
restructuring delivering additional annualised savings of £8.5m, as
announced, with further gross annualised cost synergies of £10m
identified and commencing in FY24, with plans to reinvest £5m in
the business to support growth.
-
Established and embedded new
leadership team alongside the completion of a thorough strategic
review of the business.
Clear strategy unveiled – to become
a leading EdTech company serving global customers
-
Strategic Plan unveiled to build
a Global Accreditation Platform to take advantage of the education
transformation towards fully on-screen examinations. Strategic
Portfolio Roadmap of RM developed IP, products and solutions
delivered to accreditors, educators and directly to learners for
adjacent solutions.
-
Further international expansion
with strategic aim of capturing the significant future growth
opportunities in the $222 billion Global EdTech
market1.
-
New wins with strategic customers
as foundation customers move towards fully digital assessment and
accreditation processes. New wins are proof of the expertise and
customer appeal of the new RM.
-
RM signs amended and extended
agreement with lenders in support of strategy.
-
Move towards a streamlined and
customer-centric target operating model, creating greater agility
and gross cost synergies of £20m.
Financial highlights
-
Revenue from continuing
operations2
of £195.2m, down 8.9% (FY22:
£214.2m), revenue growth of 8.7% in the strategic RM Assessment
business and 5.8% in TTS International partially offsetting revenue
decline of 42.8% in the troubled Consortium business and challenges
in UK schools budgets impacting revenues for Technology managed
services and TTS UK.
-
Adjusted
operating profit from continuing operations decreased by 96.0% to
£0.3m (FY22: £7.5m) predominately driven by the lower trading
volumes in the Consortium business and increased Corporate costs
linked to rebuilding the finance and management teams, offset by
the various divisional savings initiatives commenced during the
year.
-
Excluding the recently closed
Consortium business, the Group had revenues of £175.9m (FY22:
£180.4m) and adjusted operating profit of £10.0m (FY22: £12.5m) in
the year. Exceptional impairment costs of £38.9m relate to the
closure of the Consortium school supply business in December 2023.
Total exceptional costs of £46.9m comprise £41.4m non-cash and
£5.4m cash.
-
Adjusted EBITDA of £7.0m (FY22:
£12.9m).
-
Statutory loss of £(29.1)m (FY22:
loss of £14.5m) driven by a £10.4m impact from adjusted loss before
tax, a £38.9m impairment relating to the decision to close the
Consortium business offset by lower ERP replacement programme and
warehouse strategy costs, a £10.6m gain from the sale of IP
addresses and a £13.4m gain on the sale of RM Integris and RM
Finance, and a £1.8m tax charge.
-
Adjusted net debt
of £45.6m (HY23: £52.0m) reflecting improved profitability in H2,
lower exceptional spend following actions taken to cease ERP
implementation and closure of Consortium.
-
Source: IMARC Group
-
Continuing operations for the years ended 30 November 2023
and 2022 include 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 and have been included in discontinued
operations.
New strategy unveiled to build a
simpler, customer-centric business
-
Simplified business will focus on
end customers: learners, educators, and accreditors.
-
Further gross annualised cost
savings of £10m to be realised through a number of strategic
initiatives identified including a new target operating model in
FY24, with up to £5m reinvested annually in Sales & Marketing
to support the new strategy. This is in addition to the £10m
annualised cost savings already announced and delivered in
FY23.
-
Plans to further simplify group,
de-leverage, return to growth, and enrich the RM products and
solutions to greater profitability.
-
A new Strategic Portfolio Roadmap
to build a broader platform of RM owned and developed IP, products,
and solutions to capture the digital transformation opportunity
across the world of learning, educating and accrediting – to
include a Global Accreditation Platform and adjacent digital
solutions in development aimed at an untapped global learner
customer base. Strong focus on RM owned and designed IP with target
to become 80% of revenue.
-
International expansion in the
Global EdTech market by leveraging RM’s existing global footprint,
following British and international curricula.
-
Build upon the company’s 50-year
history of EdTech knowledge and innovation by investing in employee
capability, learning, development and EdTech expertise.
Current trading and FY24
outlook
Trading in the first months of the year has been in line with
our expectations and full-year outlook remains in line with market
expectations. The ongoing business is expected to recover a
significant proportion of the lost Consortium revenue. During FY24
we expect to operate within our banking covenants for adjusted net
debt, allowing for working capital and capital expenditure required
to fund our future growth plans, plus continuing interest payments
and committed pension contributions.
Mark Cook, Chief Executive of
RM, said
“Following a turbulent period, we
have taken decisive action to transform and stabilise RM, including
the difficult decision to cease trading in the Consortium business,
permanently close down the EVO ERP system and consolidate our
distribution centre estate.
“With the business in an improved
financial and operational position, I am delighted to unveil our
new strategic plan to deliver growth. This will create a simpler
and more customer-centric business, with a focus on investing in
RM-owned and designed IP, to take advantage of structural digital
growth drivers across the education sector in the UK and
internationally.
“While we have made significant
progress over the past year there is still much to be done, but I
am confident that our newly appointed and invigorated management
team can build on RM’s 50-year heritage of innovation and capture
the scale of the global growth opportunity we see.
“I’d like to take this opportunity
to thank all my colleagues and stakeholders for their hard work and
support during what has been both a challenging but
transformational period for the business.”
Financial summary
£m
|
FY23
|
FY22
|
Variance
|
Revenue from continuing
operations
|
195.2
|
214.2
|
(8.9%)
|
Loss before tax from continuing
operations
|
(41.2)
|
(20.8)
|
98.1%
|
Discontinued
operations1
|
14.2
|
1.6
|
787.5%
|
Statutory loss after
tax
|
(29.1)
|
(14.5)
|
100.7%
|
Diluted EPS from continuing
operations
|
(51.8)p
|
(19.3)p
|
168.4%
|
Adjusted performance measures2:
|
|
|
|
Adjusted operating profit from continuing
operations
|
0.3
|
7.5
|
(96.0%)
|
Adjusted operating profit
margin
|
0.2%
|
3.5%
|
(3.3%)
|
Adjusted EBITDA
|
7.0
|
12.9
|
(45.7%)
|
Adjusted (loss)/profit before
tax from continuing operations
|
(5.2)
|
5.3
|
(198.1%)
|
Adjusted diluted EPS from
continuing operations
|
(15.8)p
|
4.2p
|
(476.2%)
|
Adjusted net
debt3
|
45.6
|
46.8
|
2.6%
|
1
Discontinued
operations include the results and net gain on disposal arising
from the sale of the RM Integris and RM Finance Businesses and
related assets on 31 May 2023.
2 Throughout
this statement, adjusted operating profit, adjusted EBITDA,
adjusted (loss)/profit before tax and adjusted EPS are Alternative
Performance Measures, stated after adjusting items (See Note 3)
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.
3 Adjusted
net debt is defined as the total of borrowings less capitalised
fees, cash and cash equivalents and overdrafts (see Note 3).
Lease
liabilities of £16.5m (2022: £19.1m) are excluded from this measure
as they are not included in the measurement of adjusted net debt
for the purpose of covenant calculations (see Note 13).
Presentation
details
A presentation by Management for
investors and analysts will be published on the company website
later this morning at https://www.rmplc.com/.
Contacts:
RM
plc 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
(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. 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 80 countries
internationally.
-
Technology - a
market-leading advisor and enabler of ICT software, technology and
bespoke services to UK schools and colleges.
Chief
Executive’s Statement
Group Performance
Overview
A year of
stabilising, simplifying, and strengthening
2023 in review
When I joined RM in January 2023, the business was facing
unprecedented operational challenges which have impacted our
financial performance in the year. We took considered, but decisive
actions to address these issues through our Transformation
programme, as well as embarking on a cost reduction and efficiency
drive across our entire business. As we closed the year these
inherited challenges have now been addressed, and we emerge with
clarity on our strategic direction with a more focused stable
platform for future growth and strategic development.
During the year, through our actions, we mitigated the
considerable negative financial impact of Consortium, which
continued to hold back the overall performance of the Group,
culminating in the difficult decision in November to cease trading
in the loss-making business, which stopped taking orders at the end
of December 2023. This decision has also avoided further losses
with additional cost benefit, already reflected in market
expectations for FY24. Following the failed go-live of the
over-specified ERP system within Consortium in FY22, we permanently
closed down the roll out to the Group, capping the budget over runs
and subsequently cancelled the project, to avoid significant
additional costs. This decision to cease trading in Consortium will
allow RM Resources’ management to focus on its successful TTS
business, which is profitable and has significant international
growth potential. In the second half of the year, we focused on
strengthening RM’s internal capabilities and leadership team,
implemented further significant cost savings, and secured the
support of our lenders for our future strategic plans (details of
which can be found below). This includes: commencing a two into one
distribution centre consolidation, realising £1.5m annualised
savings and a Transformation driven restructure delivering
additional annualised savings of c.£8.5m, as announced at our half
year results. The closure of Consortium has culminated in non-cash
goodwill and asset impairments of £38.9m.
The new management team’s focus on the foundational
strengths, intellectual property, and assets of the business will
drive RM’s return to revenue and profitability growth. The strength
of our underlying business is demonstrated by the major strategic
and long-term customer contracts we have won in our Assessment
business towards the end of the year which are core to RM’s
strategic growth plans.
Financial and operational
performance
As expected, our financial performance reflected the impact
of the critical actions taken to stabilise the business, and I am
pleased that we finished the year in line with our updated
guidance, following the decisive cost actions taken in the second
half. Our Group revenue was £195.2m, down8.9%, reflecting the
continued decline in Consortium trading, challenges in UK schools’
budgets which impacted our TTS UK and Technology managed services
revenues, but with growth across both our Assessment and TTS
International businesses. Adjusted operating profit from continuing
operations was £0.3m, and adjusted EBITDA was £7.0m. We finished
the year with a slightly improved adjusted net debt position of
£45.6m.
The new management team made significant inroads into the
transformation and continuous improvement programme. These
management actions have provided a more stable business, identified
cost savings, and started on the road of continuous efficiency
improvements across the entire business. The underlying RM business
today (ex-Consortium) is healthy, with FY23 revenue of £175.9m
(FY22: £180.4m) and adjusted operating profit of £10.0m (FY22:
£12.5m), with strong revenue and margin growth prospects in the UK
and internationally. With trading ceased in the loss-making
Consortium business, we expect to see a measured improvement to our
financial performance going forward.
Divisional performance
The RM
Assessment division, a
global leader in platform delivery of digital assessment and exam
marking solutions continues to grow, with revenue increased by
nearly 9% to £42.3m (FY22: £38.9m) and adjusted operating profit up
39% to £10.3m (FY22: £7.4m), an adjusted operating margin of 24.2%
(FY22: 18.9%), reflecting the emerging opportunities in the global
digital assessment market.
This business has made strong progress throughout the year,
with continuing successful delivery of live exam and marking
sessions worldwide, including the first full session delivery for
three new clients across school exams, vocational exams, and
learners training for accountancy qualifications.
Customer contract renewal performance continued to be strong
throughout the year with over £16m of renewals in FY23 and only one
small contract loss. We also achieved 8 contracts for new services
with new and existing clients, expanding our set of solutions
within support of schools, further education, and professional
qualifications.
The business’ focus on leading customers through the journey
to digital assessment maturity was recognised by an award at the
e-Assessment Association conference, for the ‘Most Innovative Use
of Technology in Assessment’ for its exam malpractice service,
commending our commitment to overcoming the challenges of digital
adoption in the education industry.
The year ended on a high with two further contracts in the
professional qualifications market at ‘preferred bidder’ status,
and post year end we achieved preferred bidder status with another
two major strategic customers for their long-term digital
transformation programmes, providing good momentum into
FY24.
Following the closure of Consortium, our RM Resources division now consists
solely of our flagship brand TTS which operates both within the
UK and internationally. TTS’s UK business was also impacted by
challenges in UK schools’ budgets. The business collaborates with
teachers and educational experts from across the globe to create
unique and innovative learning resources and learning environments
for children in more than 100 countries. This includes the TTS
programming journey, which is an innovative robotics range designed
to develop computational thinking and programming skills, from
early years to primary and for children with special educational
needs. Our FY23 performance includes the Consortium business, now
closed, with revenue of £19.3m, down 43% (FY22: £33.7m) and an
adjusted operating loss of £9.7m (FY22: loss of £5.0m).
TTS International saw a strong performance in the year with
continued growth in key market territories through our
international schools and distributors channels. The business
remains focused on the continued development of its own designed
TTS product ranges, which drive continued growth worldwide, and
access to Education Ministries and Government bodies with greater
buying power. The growth in TTS International is being built from a
platform of 130 global distributors in 115 countries serving tens
of thousands of schools and educators.
Our RM
Technology division is
a strategic partner for schools, helping them to drive more engaged
learning, more collaborative teaching, and better outcomes through
technology. We completed the redesign of the business’ operating
model and improved its efficiency during the year, and the sale of
RM Integris and Finance was also completed, generating net cash
proceeds of £10.8m. As anticipated, the Technology division
returned to profitability in the second half as a result of the
impact of the cost savings initiated earlier in the year, and on
the back of higher revenue largely from "Connect the Classroom"
projects. It is expected to be sustainably profitable on an ongoing
basis.
Revenue was £57.7m, down 5.3% (FY22: £60.9m), reflecting a
challenging market for managed services due to pressures on school
budgets due to inflation and infrastructure, although revenue grew
marginally in the second half. Adjusted operating profit was £0.7m
(FY22: £2.2m), reflecting a return to profitability following the
losses incurred in the first half. Given the efficiency
improvements made during the year we expect adjusted operating
margin to improve going forward from the 1.3% achieved in
FY23.
We were pleased to have extended our relationships with
Education Scotland (Glow) and Brooke Weston Trust (BWT). Customer
retention remains strong at 95% with more customers starting to
explore and take an interest in other product lines as part of our
upsell program and we are excited by the opportunities to grow our
new managed and professional services portfolio in FY24. The focus
remains on Multi Academy Trusts and public sector customers (e.g.
local authorities) and internationally offering managed services,
‘tech in a box’ solutions.
New Strategic Plan
Creating a leading
global educational technology, digital learning and assessment
solution provider
RM started its journey in 1973 as a pioneer of EdTech in
Oxford, building computers and networks for the education sector,
as technology emerged as a key business enabler. Our educational
resources have been supplied to support school curricula with
hundreds of RM own-designed products, resources and solutions
supporting accreditors, such as awarding bodies, and educators such
as teachers; growing internationally to support country wide
education curricula in the Americas, Middle East and
Australia.
The assessment of a learner’s abilities is a key element of
RM’s solution set and this is evolving from end point assessment
(i.e. the exam or awarding point) for both paper-based and online
marking into a full end to end digital process for the collation
and marking of exams and ongoing assessment towards the end point
exam. RM is enhancing its current accreditation platform to enable
global scale and end-to-end digital process that transitions all
paper exams to be authored and delivered on screen over the next 10
years – this will enable our customers to have 100% of exams on
screen by the turn of the decade, with the exciting possibilities
that digital examinations bring for innovative new ways to assess
students.
Today, RM is a partner of choice for thousands of educators
globally, with 50 years of educational experience and being a
trusted advisor to learners, educators, and accreditors.
As we plan for the future RM, our core ambition will be to
support learners with a ‘lifetime of learning experience’ with the
purpose of enriching the lives of learners globally. 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.
These new guiding principles underpin our new
strategy:
-
Build a Global Accreditation
Platform to enable end-to-end digital examinations, authoring and
accreditations.
-
Building a more customer-centric
company focused on accreditors, educators, and adjacent learner
direct solutions.
-
High proportion
of RM designed and owned IP in the delivered product and solution
portfolio.
-
Build on the global opportunity
embedded within our deep experience of the British and other
international curricula from our customer base.
-
Addressing the needs of learners,
educators, and accreditors, while supporting the lifetime of
learning, from pre-school to higher education and professional
qualifications.
-
Realising growth opportunities in
the $222 billion Global EdTech market through international
expansion.
Product and Solution
Roadmap
RM operates in the Global EdTech market valued at $222
billion, which has structural growth drivers, strong market
positions and, as a result of the continued advancement of
technology across the education sector, is expected to grow at a
CAGR of c.12% from 2024 to 2032. Key market drivers include the
digitalisation of assessment, the expansion of technology in
education worldwide and a continued focus on developing IP
resources, particularly for the early years and SEN
sectors.
There is a digital transformation taking place in the
assessment area of EdTech and RM is very well placed to support
accreditors’ digital transformation journey over the next decade.
We have been providing platform solutions such as Assessor© and
Assessment Master© to enable our global customers to embark on a
digital transformation of their learning, marking and end-to-end
business process. RM’s 50 years of knowledge and experience is
being encapsulated in an advisory and consulting capability that
will enable our customers and prospects to tap into RM’s research,
innovation, and development centres.
With the support of RM’s lenders and funding from the
transformation driven cost savings, the strategy programme will
look to enhance and build out these core EdTech solutions,
supported by our teams in UK, Europe, Middle East, America,
Australia, and Asia. This investment will consist of re-investment
of cost savings into the capability of Sales & Marketing and
go-to-market initiatives within the customer facing units to
support global growth plans.
FY24 Strategic Programme
actions
RM has evolved over time, creating three EdTech businesses,
serving markets in the UK, Europe, Middle East, America, Australia,
and Asia, with a central group structure. With our clearer core
strategy and a clean line of sight to the three customer groups –
learners, educators, and accreditors – the business will continue
to have three customer facing go-to-market units but only with
their associated marketing and sales costs. To support the new
strategy, a new Target Operating Model will be introduced during
the coming year, flattening the internal back office corporate
functions which will focus on core processes to enable the optimum
customer solution, creating additional gross cost synergies of
c.£10m, with £5m to be reinvested in Sales & Marketing to
support growth.
We have the right people, the right core solutions, a global
market opportunity, and a shared ambition across the organisation
to deliver a higher performing, more profitable RM. Whilst we have
achieved much in the last year, there is still much to be done and
our turnaround will take some time to translate to a high
performing new RM business, with good progress expected from
FY25.
Board and Senior Leadership
changes
Following the operational and liquidity challenges of FY22 it
was necessary to review the expertise and relevant experience of
the Board and the Executive Committee to have a technology and
growth mindset as RM embarked on its strategic
transformation.
Simon Goodwin joined the Board and Executive Committee as
Chief Financial Officer in August 2023. Simon brings over 15 years
of experience in finance leadership roles and will be central to
the Group’s strategy and helping to drive value across the
business.
Further Executive Committee appointments during FY23
included: Gauri Chandra as CEO of our India operations in January
2023; Dr Grainne Watson to the new role of Chief Digital Officer in
June 2023; Sarah Fawsitt as our new Chief People Officer in
September 2023; followed by Daniel Fattal who was appointed in
November 2023 as Director of Legal and Company
Secretary.
These new additions, along with six out of seven board
members being appointed in FY23, provide us with a senior
leadership team that contains a broad range of talent and relevant
experiences to help drive the business forward.
Financial
review
Having joined RM during Q4 of
the financial year, I was immediately impressed by the decisive
decisions that Mark and the Board had already made to combat the
financial challenges that the business faced. Together we then made
the difficult decision to cease trading in the loss-making
Consortium business shortly after the end of the financial year;
ending a lengthy period of financial losses and significant
distraction for the Resources division and RM as a
whole.
FY23 was a challenging year
financially for RM; caused primarily, by the material
underperformance of the Consortium business. However, RM was also
impacted by an increasingly challenging domestic education market;
characterised by falling budgets and competing demands for
expenditure, as UK schools dealt with cost inflation and
infrastructure challenges. That pressure directly impacted TTS’ UK
business, as well as the RM Technology business; both of which saw
revenues decline. Internationally, FY23 was a much more encouraging
year with significant growth in both TTS International and the RM
Assessment business.
Despite these extremely
challenging circumstances, we managed to close the year with a
small, but positive adjusted operating profit from continuing
operations and in line with the market expectations which were
updated at the Half Year. Actions taken to increase efficiency and
to reduce the cost base of the business have contributed to that
result and will have further benefit as we head into
FY24.
RMs long term banking partners,
HSBC and Barclays continued to demonstrate their support for the
business throughout the year. Our lenders have granted waivers to
EBITDA covenants during H2, have demonstrated pragmatism in their
handling of soft liquidity covenant breaches from the end of the
year, and have swiftly granted an extension to our banking
facility, which now runs to July 2026, with a new set of covenants
better aligned to the business’ outlook.
We ended FY23 with an adjusted
net debt slightly improved on FY22, and, again, in line with the
half year guidance. One off cash generation from the sale of RM
Integris, RM Finance, and excess IPv4 licences; was offset by the
reversal of significant working capital decisions taken at the end
of FY22, as well as higher interest payments and meeting our
pension obligations.
Finally, as previously
identified, the financial control environment within RM was below
the required standard, as a result of the business’ focus over
several years on the failed rollout of the Evo ERP project. The RM
finance team have worked extremely hard to support the business
during this challenging year, but to also make improvements to this
controls environment. While there is still further improvement
required, I am confident that the team will continue to demonstrate
the required focus and diligence, and that we will deliver further
improvements through the coming year.
Financial
performance
£m
|
FY23
|
FY22
|
Variance
|
Revenue from continuing
operations
|
195.2
|
214.2
|
(8.9%)
|
Loss before tax from continuing
operations
|
(41.2)
|
(20.8)
|
98.1%
|
Discontinued
operations1
|
14.2
|
1.6
|
787.5%
|
Statutory loss after
tax
|
(29.1)
|
(14.5)
|
100.7%
|
Diluted EPS from continuing
operations
|
(51.8)p
|
(19.3)p
|
168.4%
|
Adjusted performance measures2:
|
|
|
|
Adjusted operating profit from continuing
operations
|
0.3
|
7.5
|
(96.0%)
|
Adjusted operating profit
margin
|
0.2%
|
3.5%
|
(3.3%)
|
Adjusted EBITDA
|
7.0
|
12.9
|
(45.7%)
|
Adjusted (loss)/profit before
tax from continuing operations
|
(5.2)
|
5.3
|
(198.1%)
|
Adjusted diluted EPS from
continuing operations
|
(15.8)p
|
4.2p
|
(476.2%)
|
Adjusted net
debt3
|
45.6
|
46.8
|
2.6%
|
1
Discontinued
operations include the results and net gain on disposal arising
from the sale of the RM Integris and RM Finance Businesses and
related assets on 31 May 2023.
2 Throughout
this statement, adjusted operating profit, adjusted EBITDA,
adjusted (loss)/profit before tax and adjusted EPS are Alternative
Performance Measures, stated after adjusting items (See Note 3)
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.
3 Adjusted
net debt is defined as the total of borrowings less capitalised
fees, cash and cash equivalents and overdrafts (see Note 3).
Lease
liabilities of £16.5m (2022: £19.1m) are excluded from this measure
as they are not included in the measurement of adjusted net debt
for the purpose of covenant calculations (see Note 13).
Divisional
performance
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 is being closed. Prior year revenue and adjusted
operating profit/(loss) comparatives have been restated
accordingly.
£m
|
FY23
|
FY
22
|
Variance
|
RM
TTS:
|
|
|
|
Revenue
|
75.9
|
80.6
|
(5.8%)
|
TTS
|
52.2
|
58.2
|
(10.3%)
|
International
|
23.7
|
22.4
|
5.8%
|
Adjusted operating
profit
|
6.0
|
7.8
|
(23.1%)
|
Adjusted operating profit
margin
|
7.9%
|
9.7%
|
(1.8%)
|
RM
Consortium:
|
|
|
|
Revenue
|
19.3
|
33.7
|
(42.8%)
|
Adjusted operating
(loss)/profit
|
(9.7)
|
(5.0)
|
94.0%
|
Adjusted operating profit
margin
|
(50.3%)
|
(14.8%)
|
(35.5%)
|
RM
Assessment:
|
|
|
|
Revenue
|
42.3
|
38.9
|
8.7%
|
Adjusted operating
profit
|
10.3
|
7.4
|
39.0%
|
Adjusted operating profit
margin
|
24.2%
|
18.9%
|
5.3%
|
RM
Technology:
|
|
|
|
Revenue:
|
57.7
|
60.9
|
(5.3%)
|
Adjusted operating
profit
|
0.7
|
2.2
|
(65.5%)
|
Adjusted operating profit
margin
|
1.3%
|
3.6%
|
(2.3%)
|
Group revenue from continuing
operations decreased by 8.9% to £195.2m (FY22: £214.2m) largely
driven by lower trading volumes in the UK elements of the Resources
division, with the continued decline of the Consortium business,
challenging market conditions in the TTS UK business, and lower
services revenue in the Technology division following contract
losses in FY22. FY22 also included £1.3m revenue related to the
sale of IPv4 addresses that have subsequently been classified as
other income. RM Assessment & the TTS International business
both grew year on year, up 8.7% and 5.8% respectively, following
new contract wins and increased sales activity.
Adjusted operating profit from
continuing operations decreased by 96.0% to £0.3m (FY22: £7.5m)
predominately driven by the lower trading volumes in the Consortium
business and increased Corporate costs linked to rebuilding the
finance and management teams, offset by the various divisional
savings initiatives commenced during the year.
RM TTS revenues decreased by 5.8% to £75.9m (FY22: £80.6m)
driven by challenging UK education market conditions. Whilst
overall TTS declined year-on-year, the International business saw
growth of 5.8% with strong performance in the distributor channel.
Divisional adjusted operating profit decreased to £6.0m (FY22:
£7.8m) and adjusted operating margin decreased to 7.9% (FY22: 9.7%)
driven predominantly by lower revenue volumes.
RM Consortium revenues decreased by 42.8% to £19.3m (FY22:
£33.7m) as the business struggled to recover from the past
mismanagement of the IT implementation programme and challenging
education market conditions. Divisional adjusted operating loss
increased to £9.7m (FY22: loss of £5.0m) and adjusted operating
margin decreased to a loss of 50.3% (FY22: loss of 14.8%)
reflecting the lower revenue performance.
RM Assessment revenues improved by 8.7% to £42.3m (FY22:
£38.9m) driven by contract wins in FY22 and FY23 and a year-on-year
increase in marking and test volumes. Divisional adjusted operating
profit increased to £10.3m (FY22: £7.4m) and adjusted operating
margin increased to 24.2% (FY22: 18.9%) driven by increased
revenue, improved efficiency in hosting, and contractor costs
linked to data study contracts in FY22 not repeating.
RM Technology revenues decreased by 5.3% to £57.7m (FY22:
£60.9m) reflecting contract losses in the Service business in FY22
and the inclusion of £1.3m relating to the sales of excess IPv4
address in H1 FY22. Subsequent sales have been classified as other
income. Divisional adjusted operating profit decreased to £0.7m
(FY22: £2.2m) and adjusted operating margin decreased to 1.3%
(FY22: 3.6%). Excluding the £1.3m IPv4 sales, adjusted operating
profit and margin were in line with FY22 reflecting the actions
management have taken to improve the efficiency of the business in
H2 given the lower revenue volumes.
Adjusted loss before tax was
£5.2m (FY22: profit of £5.3m), which was due to higher losses in
Consortium and increased Corporate costs relating to the rebuild of
the management and finance teams.
Statutory loss after tax was
£29.5m (FY22: loss of £14.5m), which was driven by the £10.4m
impact from adjusted loss before tax (see above), a
£38.9mimpairment relating to the decision to close the Consortium
business, offset by lower ERP replacement programme and warehouse
strategy costs, a £10.6m gain from the sale of IP addresses (see
adjusting items below), a £13.4m gain on the sale of RM Integris
and RM Finance, and a £1.8m tax charge.
Adjusted diluted loss per share
was (15.9)p (FY22: earnings per share of 4.2p).
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.
Following the announcement of
the closure of the Consortium business and the subsequent
termination of the ERP replacement programme, management performed
an impairment review resulting in the Group recognising a total
impairment charge of £38.9m, including £10.6m of goodwill relating
to the RM Consortium business (see Note 10), £17.8m of intangible
assets including all remaining Consortium brand and ERP assets,
£5.9m of property, plant and equipment at the RM Consortium
warehouse, £2.8m of RM Consortium inventory write downs to net
realisable value, £0.7m of other current assets, and an onerous
contract provision of £1.5m in respect of IT licences associated
with the Group’s ERP solution.
In addition, 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 is being closed. Prior year revenue and
adjusted operating profit/(loss) comparatives have been restated
accordingly.
The liquidation of RM
Consortium inventories continues and is expected to be completed
during the second half of the 2024 financial year, after which the
Group expects to treat the RM Consortium business as discontinued
for financial reporting purposes.
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
|
FY23
|
FY22
|
Amortisation of
acquisition-related intangible assets
|
1.7
|
1.8
|
Impairment of RM Consortium
assets1
|
38.9
|
-
|
Restructuring
costs2
|
2.7
|
0.3
|
Configuration of SaaS licences
(ERP)3
|
3.1
|
17.4
|
Independent business review related costs
|
0.5
|
-
|
Dual running costs related to
investment strategy
|
-
|
5.4
|
Impairment of ERP
solution
|
-
|
2.2
|
Onerous provision for IS
licences
|
-
|
1.2
|
Disposal related
costs
|
-
|
0.8
|
Total
adjustments to administrative expenses
|
46.9
|
29.1
|
Sale of IP
addresses4
|
(10.6)
|
(2.8)
|
Gain on disposal of
operations
|
(0.2)
|
-
|
Gain on sale of
property
|
-
|
(0.2)
|
Total
adjustments
|
36.1
|
26.1
|
Tax impact
|
(6.0)
|
(6.5)
|
Total
adjustments after tax – continuing operations
|
30.1
|
19.6
|
Gain on disposal of
discontinued operations5
|
(13.4)
|
-
|
Total
adjustments after tax
|
16.7
|
19.6
|
1 Includes
£10.6m of goodwill impairment (see Note 10), £17.4m of impairment
of other intangible assets, £5.9m of impairment of property, plant
and equipment, £2.8m of inventory write downs, £0.7 write off of
other current assets and an onerous contract provision of £1.5m in
respect of IT licences.
2 Restructuring
costs of £2.7m of which £0.6m related to the Group’s decision to
close the RM Consortium business.
3 The
configuration and customisation costs relating to the ERP
replacement programme, which have been 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 warehouse strategy. These costs total £2.7m (2022:
£17.4m) based on the development work undertaken.
4 Income
generated following the completion of the sale of IP
addresses.
5 During
the year Group completed the disposal of the Integris and Finance
business which generated a gain on sale of operations of
£13.4m.
Inventory
Inventories decreased by 47.0%
to £14.0m (FY22: £26.4m) primarily as a result of improved working
capital management and the closure of the RM Consortium
business.
Corporate Costs
Corporate costs in the period were £7.0m, up from £4.9m in
2022, as a result of the rebuilding of the management and finance
teams.
Taxation
The total tax charge for the year for continuing operations
was a £2.1m charge (FY22: £4.7m credit). 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. These effects are explained in more detail in the tax
note (see Note 6) in the Financial Statements.
Disposals
During the prior year, the
Group agreed to sell the RM Integris and RM Finance businesses from
within the RM Technology Division, completed on 31 May 2023, which
generated a net gain on sale of operations of £13.4m during the
year ended 30 November 2023. The performance of these businesses in
both 2023 and 2022 have been classified and presented as
discontinued operations within the Financial Statements. In the
year these businesses generated £2.4m of revenue (FY22: £4.9m) and
£0.8m of adjusted operating profit (FY22: £1.6m).
Cash flow, Net Debt and
Lender Agreement
On a statutory basis, net cash
outflow from operating activities was £10.6m (FY22: £20.8m) which
included working capital outflow primarily linked to bringing
supplier payments up to date following cash protection activities
ahead of FY22 year end, not repeated ahead of FY23 year end. This
includes £4.5m (FY22: £4.5m) of deficit recovery payments made to
the Group’s defined benefit pension schemes during the
year.
Adjusted net debt closed the
year at £45.6m (FY22: £46.8m) as the £10.6m net cash outflow from
operating activities (see above), £5.0m (FY22: £2.3m) of interest
paid, £1.7m of facility arrangement fees and £3.4m of lease
repayments were offset by proceeds from the sale of the RM Integris
and RM Finance businesses (£10.9m) and the sale of IP addresses
(£10.7m).
In March 2023, the Group
secured an agreement with lenders to extend the existing £70.0m
facility to 5 July 2025, subject to the addition of a further
‘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.
In April 2023, the Group agreed
with the Trustee 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 lower than
3.2x at that date. No such payment was made during the year ended
30 November 2023. See Note 13 for further details.
The business operated within
its existing financial covenants for the first half of 2023 but
indicated that a breach was expected for the facility’s LTM EBITDA
covenant from the third quarter of the year ended 30 November 2023
in its interim financial statements. EBITDA waivers were granted by
lenders for the August and November 2023 periods and the Group
continues to comply with the conditions of each lender with regards
to any waivers and the respective facility agreement. At the end of
November 2023, the minimum EBITDA covenant required was £8.6m
versus actual EBITDA of £7.0m. In addition, during November 2023,
the soft liquidity covenant limit was forecast to be exceeded for
the first time, resulting in a meeting held with lenders under the
terms of the facility.
Since the year end, the Group
has secured an agreement with Lenders, which extends the existing
£70.0m 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 £17.8m at
30 November 2023 (FY22: £60.6m). The
balance sheet includes non-current assets of £81.5m (FY22:
£133.3m), of which £38.5m (FY22: £49.4m) is goodwill and £12.8m
(FY22: £24.0m) relates to the Group’s defined benefit pension
scheme which is discussed further below.
Operating PPE, intangible and right-of-use assets total
£27.8m (FY22: £57.8m) and includes acquired brands, customer
relationships and Intellectual property as well as costs relating
to the warehouse consolidation and IT implementation programme. The
reduction during the year is largely due to the impairment arising
from the Group’s decision to close its loss-making RM Consortium
business in November 2023 including £10.6m in respect of goodwill
(see Note 10), £17.8m in respect of intangible assets and £5.9m in
respect of property, plant, and equipment.
IP Address assets utilised as part of the Connectivity
business are included at £nil cost.
Net current assets of £8.9m (FY22: net current liabilities of
£49.2m) includes borrowings of £nil (FY22: £48.7m) following their
reclassification to non-current liabilities during the year (see
below) and a number of lower balances predominately resulting from
the IT systems implementation programme and the closure of the RM
Consortium business, including inventory, trade receivables and
trade payables.
Non-current liabilities of £72.6m (FY22: £23.4m) includes
borrowings of £53.7m (FY22: £nil) following the reclassification
from current liabilities during the year (see above) and lease
liabilities of £14.3m (FY22: £16.0m) which is 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, see note 13) 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.
RM plc is a non-trading investment holding Company and
derives its profits from dividends paid by subsidiary companies.
The Company has £nil (FY22: £30.8m) distributable reserves as at 30
November 2023. The Directors regularly review the Group’s capital
structure and dividend policy, ahead of announcing results and
during the annual budgeting process, looking at longer-term
sustainability. The Directors do so in the context of the Company’s
ability to execute the strategy and to invest in opportunities to
grow the business and enhance shareholder value.
The dividend policy is influenced by a number of the
principal risks identified in the table of ‘Principal and Emerging
Risks and Uncertainties’ detailed within the Group’s 2023 Annual
Report which could have a negative impact on the performance of the
Group or its ability to distribute profits.
Pension
The Company operates two defined benefit pension schemes (“RM
Education 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 16, the IAS19 net position (pre-tax)
across the Group reduced by £10.2m to a surplus of £12.4m (30
November 2022: £22.6m) with both the RM Education Scheme and the
Platinum Scheme being in surplus. The reduction has been driven by
a decrease in the value of scheme assets more than offsetting the
positive impact of higher discount rates which are based on
corporate bond yields.
The 31 May 2021 triennial valuation for the current 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 continued to evolve its control
framework following the findings of previous years, with specific
focus on controls considered most important to reduce the risk of
material misstatements in these accounts. These included supplier
statement reconciliations, controls over revenue recognition and
balance sheet reconciliations.
The Audit and Risk Committee is being updated regularly with
respect to progress related to remediation activities as well as
reviewing ongoing control improvements identified. Because a number
of controls are only in place from the balance sheet date, no
reliance has been placed on those controls for the
audit.
The Committee has assessed that the Group still relies on
controls that require enhanced documentation and formalisation, and
in specific areas, redesign. The control improvement plan is
ongoing, and the Committee is engaged in ensuring that management
have the appropriate resource and an appropriate remediation
timeline.
Management have provided the committee with assurance that
where controls were not designed, implemented or operating
effectively there were appropriate mitigating actions in place to
conclude that the Financial Statements do not contain material
errors.
Going
concern
The Financial Statements have been prepared on a going
concern basis which the Directors consider to be appropriate for
the following reasons.
The Directors have prepared cash flow forecasts for the
period to the end of March 2025 which indicate that taking into
account reasonably plausible downsides as discussed below, the
Company 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.
In assessing the going concern position the Directors have
considered the balance sheet position as included on page 20, the
headroom to the hard liquidity covenant within the Banking
Agreement, and compliance with the LTM EBITDA covenant. Exceeding
the hard liquidity or the LTM EBITDA covenant would constitute a
material breach of the agreement and consequently the facility
would be repayable on demand.
As at 30 November 2023, the Group had adjusted net debt of
£45.6m (2022: £46.8m) and drawn facilities of £55.0m (2022:
£49.0m). Average adjusted net debt over the year to 30 November
2023 was £55.9m (2022: £46.8m) with a maximum borrowings position
of £64.8m (2022: £64.1m). 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.
Since the year end, the Group has secured an agreement with
Lenders, as detailed above.
The Chief Financial Officer’s statement outlines the
performance of the Group in the year to 30 November
2023.
This statement highlights the material impact of the ongoing
issues within the Consortium brand and underperformance relative to
prior year forecasts in both the RM Technology and TTS
businesses.
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.
Revenue growth in the base case is driven from the following
key areas:
• Growth from existing customers and new customer wins in the
Assessment division;
• Increased hardware and infrastructure revenues in the
Technology division, including further wins under the UK
government’s Connect the Classroom programme; and
• Growth from 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 Resources
business.
Operating profit margin growth in the base case includes, in
addition to the revenue assumptions outlined above, annualised
savings benefit from restructuring programmes commenced in the year
to 30 November 2023. As the target operating model changes did not
commence until 2024 the impact of these changes are not captured in
the base case, rather these are incorporated as an upside in the
reasonable worst-case scenario. Net debt is not expected to reduce
within the assessment period, as the conversion of profits will be
offset by further capital investment, interest and pension
payments.
As part of the Group’s business planning process, the Board
has closely monitored the Group’s financial forecasts, key
uncertainties, and sensitivities. As part of this exercise, the
Board has 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 Assessment
division, a reduction in
revenue arising because of:
- A faster runoff of one key contract which has
not been renewed;
- New contract wins not at preferred bidder
status reduced by 50%; and
- One-off revenues associated with changing
terms on a large multi-year contract delayed to FY25.
-
In the 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 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
- Increases in costs associated with new
product development, carriage, and an inability to pass on 1.5% of
inflationary increases.
The reasonable worst downside case scenarios have the
following impact on the base case budget:
• 2024: A revenue reduction of £31.2m, an EBITDA reduction of
£8.2m, and cash reduction of £7.5m.
• 2025: A revenue reduction of £41.5m, an EBITDA reduction of
£8.4m, and cash reduction of £6.0m.
While the Board believes 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 February 2025 there would
be no headroom on the LTM EBITDA
covenant, and in December 2024 limited headroom on the hard
liquidity covenant. The Board’s assessment of the likelihood of a
further downside scenario is remote. Management have undertaken
reverse stress testing that demonstrates that even if no sales are
made by the TTS business in the month of May 2024, the covenants
would still be complied with for that quarter.
The Board has also considered a number of mitigating actions
which could be enacted, if necessary, to ensure that reasonable
headroom against the facility is maintained in reasonable worst
cases and the Group complies with covenants. These mitigating
actions include not paying discretionary bonuses, the sale of
further IP licences, and extending payment terms with key
suppliers, albeit at a much lower level for the latter than were
taken in FY23. These are actions that the Group has taken before
and therefore the Board are confident of their ability to deliver
these mitigating actions if required. Further actions could include
reduction in capital expenditure and delaying recruitment. These
actions are expected to have little to no implications to the
ongoing business in the going concern period.
Therefore, the Board has a reasonable expectation that the
Company 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, having considered both the availability of financial
facilities and the forecast liquidity and expected future covenant
compliance. For this reason, the Company continues to adopt the
going concern basis of accounting in preparing the annual Financial
Statements.
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 will be detailed within the Group’s 2023 Annual
Report, which will be issued in April 2024.
Directors’
Responsibility Statement
The 2023 Annual Report and Accounts which will be issued in
April 2024, contains a responsibility statement in compliance with
DTR 4.1.12 of the Listing Rules which sets out that as at the date
of approval of the Annual Report on 14 March 2024, the Directors’
confirm to the best of their knowledge:
-
the Group and unconsolidated
Company financial statements, prepared in accordance with the
applicable set of accounting standards, give a true and fair view
of the assets, liabilities, financial position and profit or loss
of the Group and Company, and the undertakings included in the
consolidation taken as a whole; and
-
the performance review contained
in the Annual Report and Accounts includes a fair review of the
development and performance of the business and the position of the
Group and the undertakings including the consolidation taken as a
whole, together with a description of the principal risks and
uncertainties they face.
Mark Cook
Chief Executive Officer
14 March 2024
|
Simon Goodwin
Chief Financial Officer
|
CONSOLIDATED INCOME STATEMENT
|
|
Year ended 30 November
2023
|
Year ended 30 November 2022 (Restated)
|
|
|
Adjusted
|
Adjustments
|
Total
|
Adjusted
|
Adjustments
|
Total
|
|
Note
|
£000
|
£000
|
£000
|
£000
|
£000
|
£000
|
Continuing operations
|
|
|
|
|
|
|
|
Revenue
|
2
|
195,186
|
-
|
195,186
|
214,167
|
-
|
214,167
|
Cost of sales
|
|
(129,103)
|
-
|
(129,103)
|
(145,663)
|
-
|
(145,663)
|
Gross profit
|
|
66,083
|
-
|
66,083
|
68,504
|
-
|
68,504
|
Operating expenses
|
|
(66,612)
|
(7,905)
|
(74,517)
|
(60,171)
|
(26,833)
|
(87,004)
|
Expected credit loss
|
|
840
|
-
|
840
|
(850)
|
-
|
(850)
|
Impairment losses
|
|
-
|
(38,949)
|
(38,949)
|
-
|
(2,236)
|
(2,236)
|
Profit/(loss) from
operations
|
|
311
|
(46,854)
|
(46,543)
|
7,483
|
(29,069)
|
(21,586)
|
Finance income
|
4
|
1,105
|
-
|
1,105
|
614
|
-
|
614
|
Other income
|
2
|
-
|
10,785
|
10,785
|
-
|
3,010
|
3,010
|
Finance costs
|
5
|
(6,585)
|
-
|
(6,585)
|
(2,825)
|
-
|
(2,825)
|
(Loss)/profit before tax
|
|
(5,169)
|
(36,069)
|
(41,238)
|
5,272
|
(26,059)
|
(20,787)
|
Tax
|
6
|
(8,072)
|
6,002
|
(2,070)
|
(1,760)
|
6,458
|
4,698
|
Loss/(profit) for the year from
continuing operations
|
|
(13,241)
|
(30,067)
|
(43,308)
|
3,512
|
(19,601)
|
(16,089)
|
Discontinued operations
|
7
|
760
|
13,444
|
14,204
|
1,590
|
-
|
1,590
|
Loss)/profit for the year
|
|
(12,481)
|
(16,623)
|
(29,104)
|
5,102
|
(19,601)
|
(14,499)
|
|
|
|
|
|
|
|
|
Earnings per ordinary share on continuing
operation
|
8
|
|
|
|
|
|
|
- basic
|
|
(15.9)p
|
|
(52.0)p
|
4.2p
|
|
(19.3)p
|
- diluted
|
|
(15.8)p
|
|
(51.8)p
|
4.2p
|
|
(19.3)p
|
Earnings per ordinary share on discontinuing
operations
|
8
|
|
|
|
|
|
|
- basic
|
|
0.9p
|
|
17.1p
|
1.9p
|
|
1.9p
|
- diluted
|
|
0.9p
|
|
17.0p
|
1.9p
|
|
1.9p
|
Earnings per ordinary share on total operations
|
8
|
|
|
|
|
|
|
- basic
|
|
(15.0)p
|
|
(34.9)p
|
6.1p
|
|
(17.4)p
|
- diluted
|
|
(14.9)p
|
|
(34.8)p
|
6.0p
|
|
(17.4)p
|
Paid and proposed
dividends per share
|
9
|
|
|
|
|
|
|
- Interim
|
|
|
|
-
|
|
|
-
|
- Final
|
|
|
|
-
|
|
|
-
|
The prior year restatement is detailed in Note 17.
Throughout this statement, adjusted profit and EPS measures
are stated after adjusting items which are identified by virtue of
their size, nature and/or incidence. The treatment of adjusted
items is applied consistently period on period and are used by the
Board to monitor and manage the performance of the Group (see Note
3 for details).
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
|
|
Year ended
30 November 2023
|
Year ended
30 November 2022
|
|
Note
|
£000
|
£000
|
Loss for the year
|
|
(29,104)
|
(14,499)
|
Items that will not be reclassified
subsequently to profit or loss
|
|
|
|
Defined benefit pension scheme
remeasurements1
|
16
|
(15,771)
|
(12,157)
|
Tax on items that will not be reclassified subsequently to
profit or loss
|
6
|
2,790
|
2,914
|
Items that are or may be
reclassified subsequently to profit or loss
|
|
|
|
Fair value (loss)/gain on hedged instruments
|
|
(402)
|
4
|
Fair value gain/(loss) on hedged instruments transferred to
the income statement
|
|
272
|
(444)
|
Tax on items that are or may be reclassified subsequently to
profit or loss2
|
6
|
-
|
11
|
Exchange (loss)/gain on translation of overseas
operations
|
|
(287)
|
301
|
Other comprehensive
expense
|
|
(13,398)
|
(9,371)
|
Total comprehensive expense
attributable to owners of the parent
|
(42,502)
|
(23,870)
|
1 Year
ended 30 November 2023 includes £15,771,000 expense
(2022:£12,846,000 expense) in respect of defined benefit pension
schemes (see note 16(c)) and £nil (2022: £689,000 gain) in respect
of Local Government Pension Schemes (see Note 16(b)).
2 Principally
includes the impact of the Group’s cash flow hedges deferred to
other comprehensive income during the year.
CONSOLIDATED BALANCE SHEET
|
|
|
At 30 November 2023
|
At 30 November 2022
|
|
|
Note
|
£’000
|
£’000
|
Non-current assets
|
|
|
|
|
Goodwill
|
|
10
|
38,538
|
49,401
|
Other intangible assets
|
|
|
5,224
|
25,510
|
Property, plant and equipment
|
|
|
8,271
|
15,892
|
Right-of-use asset
|
|
|
14,275
|
16,364
|
Defined benefit pension scheme surplus
|
|
16
|
12,796
|
23,959
|
Other receivables
|
|
11
|
240
|
290
|
Contract fulfilment assets
|
|
|
1,959
|
1,713
|
Deferred tax assets
|
|
6
|
170
|
174
|
|
|
|
81,473
|
133,303
|
Current assets
|
|
|
|
|
Inventories
|
|
|
13,959
|
26,359
|
Trade and other receivables
|
|
11
|
32,333
|
36,203
|
Contract fulfilment assets
|
|
|
1,949
|
1,727
|
Assets held for sale
|
|
7
|
-
|
418
|
Tax assets
|
|
|
1,988
|
2,733
|
Cash and cash equivalents
|
|
|
8,062
|
1,911
|
|
|
|
58,291
|
69,351
|
Total assets
|
|
|
139,764
|
202,654
|
|
|
|
|
|
Current liabilities
|
|
|
|
|
Trade and other payables
|
|
12
|
(46,372)
|
(65,639)
|
Provisions
|
|
14
|
(2,993)
|
(2,142)
|
Borrowings
|
|
13
|
-
|
(48,728)
|
Liabilities directly associated with assets classified as
held for sale
|
|
7
|
-
|
(2,082)
|
|
|
|
(49,365)
|
(118,591)
|
Net current
assets/(liabilities)
|
|
|
8,926
|
(49,240)
|
|
|
|
|
|
Non-current liabilities
|
|
|
|
|
Lease liabilities
|
|
12
|
(14,297)
|
(15,998)
|
Other payables
|
|
12
|
(2,463)
|
(3,096)
|
Provisions
|
|
14
|
(1,749)
|
(666)
|
Deferred tax liability
|
|
6
|
-
|
(2,306)
|
Defined benefit pension scheme obligation
|
|
16
|
(411)
|
(1,354)
|
Borrowings
|
|
13
|
(53,651)
|
-
|
|
|
|
(72,571)
|
(23,420)
|
Total liabilities
|
|
|
(121,936)
|
(142,011)
|
Net assets
|
|
|
17,828
|
60,643
|
|
|
|
|
|
Equity attributable to
shareholders
|
|
|
|
|
Share capital
|
|
15
|
1,917
|
1,917
|
Share premium account
|
|
|
27,080
|
27,080
|
Own shares
|
|
|
(444)
|
(444)
|
Capital redemption reserve
|
|
|
94
|
94
|
Hedging reserve
|
|
|
(393)
|
(263)
|
Translation reserve
|
|
|
(868)
|
(581)
|
Retained earnings
|
|
|
(9,558)
|
32,840
|
Total equity
|
|
|
17,828
|
60,643
|
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
|
|
Share capital
|
Share premium
|
Own shares
|
Capital redemption
reserve1
|
Hedging reserve2
|
Translation
reserve3
|
Retained earnings
|
Total
|
|
Note
|
£000
|
£000
|
£000
|
£000
|
£000
|
£000
|
£000
|
£000
|
At 1 December 2021
|
|
1,917
|
27,080
|
(444)
|
94
|
177
|
(882)
|
59,029
|
86,971
|
Loss for the year
|
|
-
|
-
|
-
|
-
|
-
|
-
|
(14,499)
|
(14,499)
|
Other comprehensive (expense)/income
|
|
-
|
-
|
-
|
-
|
(440)
|
301
|
(9,232)
|
(9,371)
|
Total comprehensive (expense)/income
|
|
-
|
-
|
-
|
-
|
(440)
|
301
|
(23,731)
|
(23,870)
|
Transactions with owners of the Company:
|
|
|
|
|
|
|
|
|
|
Share-based payment fair value charges
|
|
-
|
-
|
-
|
-
|
-
|
-
|
40
|
40
|
Ordinary dividends paid
|
9
|
-
|
-
|
-
|
-
|
-
|
-
|
(2,498)
|
(2,498)
|
At 30 November 2022
|
|
1,917
|
27,080
|
(444)
|
94
|
(263)
|
(581)
|
32,840
|
60,643
|
Loss for the year
|
|
-
|
-
|
-
|
-
|
-
|
-
|
(29,104)
|
(29,104)
|
Other comprehensive
income
|
|
-
|
-
|
-
|
-
|
(130)
|
(287)
|
(12,981)
|
(13,398)
|
Total comprehensive
income
|
|
-
|
-
|
-
|
-
|
(130)
|
(287)
|
(42,085)
|
(42,502)
|
Transactions with owners of the
Company:
|
|
|
|
|
|
|
|
|
|
Share-based payment fair value charges
|
|
-
|
-
|
-
|
-
|
-
|
-
|
(364)
|
(364)
|
Share-based payment - tax
|
|
-
|
-
|
-
|
-
|
-
|
-
|
11
|
11
|
Unclaimed dividends
|
|
-
|
-
|
-
|
-
|
-
|
-
|
40
|
40
|
At 30 November 2023
|
|
1,917
|
27,080
|
(444)
|
94
|
(393)
|
(868)
|
(9,558)
|
17,828
|
|
|
|
|
|
|
|
|
|
|
|
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 distributable in the entities in which it
arises unless it relates to unrealised gains.
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.
CONSOLIDATED CASH FLOW STATEMENT
|
|
At 30 November 2023
|
At 30 November 2022
|
|
Note
|
£’000
|
£’000
|
Loss before tax from continuing
operations
|
|
(41,238)
|
(20,787)
|
Profit before tax from discontinuing
operations
|
|
14,204
|
1,590
|
Gain on disposal of intangible licences
|
3
|
(10,614)
|
(2,791)
|
Gain on disposal of property
|
3
|
-
|
(221)
|
Gain on disposal of operations
|
|
(13,615)
|
-
|
Finance income
|
4
|
(1,105)
|
(612)
|
Finance costs
|
5
|
6,585
|
2,825
|
Loss from operations, including
discontinued operations
|
|
(45,783)
|
(19,996)
|
Adjustments for:
|
|
|
|
Amortisation and impairment of intangible assets
|
|
31,050
|
4,354
|
Depreciation and impairment of property, plant and
equipment
|
|
11,564
|
5,149
|
Impairment of inventory and other current assets
|
|
4,476
|
-
|
Utilisation of contract fulfilment asset
|
|
2,513
|
2,326
|
(Gain)/loss on disposal of property, plant and
equipment
|
|
(265)
|
41
|
Loss/(gain) on foreign exchange
|
|
570
|
(648)
|
Share-based payment(credit)/charge
|
|
(364)
|
40
|
Increase in provisions
|
|
3,825
|
1,469
|
Defined benefit pension scheme administration cost
|
14
|
6
|
8
|
Operating cash flows before
movements in working capital
|
|
7,592
|
(7,257)
|
Decrease/(increase) in inventories
|
|
8,624
|
(7,304)
|
Decrease/(increase) in receivables
|
|
2,804
|
(4,095)
|
Increase in contract fulfilment assets
|
|
(3,035)
|
(2,920)
|
(Decrease)/increase in trade and other payables
|
|
(17,844)
|
5,517
|
Utilisation of provisions
|
|
(2,824)
|
(1,514)
|
Cash used by operations
|
|
(4,683)
|
(17,573)
|
Cash from settlement of derivative instruments
|
|
(879)
|
444
|
Defined benefit pension scheme cash contributions
|
16
|
(4,496)
|
(4,537)
|
Tax (paid)/credit
|
|
(397)
|
880
|
Net cash used by operating
activities
|
|
(10,455)
|
(20,786)
|
|
|
|
|
Investing activities
|
|
|
|
Interest received
|
|
9
|
3
|
Proceeds on disposal of intangible licences
|
|
10,745
|
2,791
|
Proceeds on disposal of property, plant and
equipment
|
|
300
|
3,299
|
Proceeds on sale of operations
|
|
10,899
|
-
|
Purchases of property, plant and equipment
|
|
(642)
|
(1,575)
|
Purchases of other intangible assets
|
|
(457)
|
(3,627)
|
Net cash generated from investing
activities
|
|
20,854
|
891
|
|
|
|
|
Financing activities
|
|
|
|
Dividends unclaimed/(paid)
|
|
40
|
(2,498)
|
Drawdown of borrowings
|
13
|
30,167
|
73,000
|
Repayment of borrowings
|
13
|
(24,167)
|
(44,000)
|
Borrowing facilities arrangement and commitment
fees
|
|
(1,716)
|
(436)
|
Interest paid
|
|
(4,955)
|
(2,312)
|
Payment of leasing liabilities – capital element
|
|
(3,179)
|
(3,114)
|
Payment of leasing liabilities – interest element
|
|
(331)
|
(347)
|
Net cash (used by)/generated from
financing activities
|
|
(4,141)
|
20,293
|
|
|
|
|
Net increase in cash and cash equivalents
|
|
6,258
|
398
|
Cash and cash equivalents at the beginning of the
year
|
|
1,911
|
1,478
|
Effect of foreign exchange rate changes
|
|
(107)
|
35
|
Cash and cash equivalents at the end
of the year
|
|
8,062
|
1,911
|
|
|
|
|
Bank overdraft
|
|
-
|
-
|
Cash at bank
|
|
8,062
|
1,911
|
Cash and cash equivalents at the end
of the year
|
|
8,062
|
1,911
|
1.
Preliminary announcement
The consolidated preliminary results are based on
International Financial Reporting Standards (IFRS) as adopted by
the EU and were also in accordance with international financial
reporting standards adopted pursuant to Regulation (EC) No
1606/2002 as it applies in the European Union.
The Group expects to publish a full Strategic Report,
Directors’ Report and financial statements which will be delivered
before the Company’s Annual General Meeting on 9 May 2024. The full
Strategic Report and Directors’ Report and financial statements
will be published on the Group’s website at
www.rmplc.com.
The financial information set out in this preliminary
announcement does not constitute the Group's statutory accounts for
the year ended 30 November 2023. Statutory accounts for 2022 have
been delivered to the Registrar of Companies and those for 2023
will be delivered following the Company's Annual General
Meeting.
The 2022 statutory accounts have been restated to reflect a
revised split of cost of sales and operating expenses to improve
the presentation and comparability of results as set out in Note
17. The auditor’s reports on both the 2023 and 2022 accounts were
unqualified, did not draw attention to any matters by way of
emphasis without qualifying their report and did not contain
statements under s498(2) or (3) of the Companies Act
2006.
This Preliminary announcement was approved by the Board of
Directors on 14 March 2024.
Consolidated Income Statement
presentation
The Directors assess the performance of the Group using an
adjusted operating profit and profit before tax. 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 assists in providing supplementary information that
assists the user to understand the underlying financial
performance, position and trends of the Group. Further details are
provided in Note 3.
Basis of preparation
The Financial Statements have been prepared in accordance
with international accounting standards in conformity with the
requirements of the Companies Act 2006. They are prepared on a
historical cost basis except for certain financial instruments,
share-based payments and pension assets and liabilities which are
measured at fair value. In addition, assets held for sale are
stated at the lower of previous carrying amount and the fair value
less costs to sell. The preparation of Financial Statements, in
conformity with generally accepted accounting principles, requires
the use of estimates and assumptions that affect the reported
amounts of assets and liabilities and disclosure of contingent
assets and liabilities at the date of the Financial Statements and
the reported amounts of revenues and expenses during the reporting
period. Although these estimates are based on the Directors’ best
knowledge of current events and actions, actual results ultimately
may differ from those estimates.
The application of these new standards and amendments is not
expected to have a material impact on the Group.
Going concern
The Financial Statements have been prepared on a going
concern basis which the Directors consider to be appropriate for
the following reasons.
The Directors have prepared cash flow forecasts for the
period to the end of March 2025 which indicate that taking into
account reasonably plausible downsides as discussed below, the
Company 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.
In assessing the going concern position the Directors have
considered the balance sheet position as included on page 20, the
headroom to the hard liquidity covenant within the Banking
Agreement, and compliance with the LTM EBITDA covenant. Exceeding
the hard liquidity or the LTM EBITDA covenant would constitute a
material breach of the agreement and consequently the facility
would be repayable on demand.
At 30 November 2023, the Group had adjusted net debt of
£45.6m (2022: £46.8m) and drawn facilities of £55.0m (2022:
£49.0m). Average adjusted net debt over the year to 30 November
2023 was £55.9m (2022: £46.8m) with a maximum borrowings position
of £64.8m (2022: £64.1m). 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.
As set out in note 13, RM Group had a £70.0m (2022: £70.0m)
committed bank facility (the facility) at 30 November 2023. At the
date of this report, the Group has secured an agreement with
Lenders, which extends the existing £70.0m facility to July 2026.
This agreement is secured against the shares of each of the obligor
companies (except for RM plc) and by way of a fixed and floating
charge over all assets of the obligors, and has reset the covenants
under the facility. For going concern purposes the Board have
assessed performance against the following covenants:
-
A quarterly LTM EBITDA (excluding
discontinued operations) 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.
The Chief Financial Officer’s statement outlines the
performance of the Group in the year to 30 November
2023.
This statement highlights the material impact of the ongoing
issues within the Consortium brand and underperformance relative to
prior year forecasts in both the RM Technology and TTS
businesses.
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.
Revenue growth in the base case is driven from the following
key areas:
-
Growth from existing customers
and new customer wins in the Assessment division;
-
Increased hardware and
infrastructure revenues in the Technology division, including
further wins under the UK government’s Connect the Classroom
programme; and
-
Growth from 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 Resources
business.
Operating profit margin growth in the base case includes, in
addition to the revenue assumptions outlined above, annualised
savings benefit from restructuring programmes commenced in the year
to 30 November 2023. As the target operating model changes did not
commence until 2024 the impact of these changes are not captured in
the base case, rather these are incorporated as an upside in the
reasonable worst-case scenario. Net debt is not expected to reduce
within the assessment period, as the conversion of profits will be
offset by further capital investment, interest and pension
payments.
As part of the Group’s business planning process, the Board
has closely monitored the Group’s financial forecasts, key
uncertainties, and sensitivities. As part of this exercise, the
Board has 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 Assessment
division, a reduction in
revenue arising because of:
- A faster runoff of one key contract which has
not been renewed;
- New contract wins not at preferred bidder
status reduced by 50%; and
- One-off revenues associated with changing
terms on a large multi-year contract delayed to FY25.
-
In the 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 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
- Increases in costs associated with new
product development, carriage, and an inability to pass on 1.5% of
inflationary increases.
The reasonable worst downside case scenarios have the
following impact on the base case budget:
-
2024: A revenue reduction of
£31.2m, an EBITDA reduction of £8.2m, and cash reduction of
£7.5m.
-
2025: A revenue reduction of
£41.5m, an EBITDA reduction of £8.4m, and cash reduction of
£6.0m.
While the Board believes 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 February 2025 there would be no headroom on the LTM EBITDA
covenant, and in December 2024 limited headroom on the hard
liquidity covenant. The Board’s assessment of the likelihood of a
further downside scenario is remote. Management have undertaken
reverse stress testing that demonstrates that even if no sales are
made by the TTS business in the month of May 2024, the covenants
would still be complied with for that quarter.
The Board has also considered a number of mitigating actions
which could be enacted, if necessary, to ensure that reasonable
headroom against the facility is maintained in reasonable worst
cases and the Group complies with covenants. These mitigating
actions include not paying discretionary bonuses, the sale of
further IP licences, and extending payment terms with key
suppliers, albeit at a much lower level for the latter than were
taken in FY23. These are actions that the Group has taken before
and therefore the Board are confident of their ability to deliver
these mitigating actions if required. Further actions could include
reduction in capital expenditure and delaying recruitment. These
actions are expected to have little to no implications to the
ongoing business in the going concern period.
Therefore, the Board has a reasonable expectation that the
Company 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, having considered both the availability of financial
facilities and the forecast liquidity and expected future covenant
compliance. For this reason, the Company continues to adopt the
going concern basis of accounting in preparing the annual Financial
Statements.
Significant accounting
policies
The accounting policies used for the preparation of this
announcement have been applied consistently.
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
-
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 3.
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). 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. 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.
2.
Operating Segments
The Group's business is supplying products, services and
solutions to the UK and international education markets. The Chief
Executive is the Chief Operating Decision Maker. Information
reported to the Group's Chief Executive 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 is being closed. Prior year
revenue and adjusted operating profit/(loss) comparatives have been
restated accordingly.
The Chief Operating Decision Maker reviews segments at an
adjusted operating profit level and adjustments are not allocated
to segments. Adjustments includes the impairment of intangible
assets as set out in Note 3, which is not allocated by segment nor
may be broken out by segment.
A full description of each revenue-generating Division,
together with comments on its performance and outlook, is given in
the Strategic Report. Corporate Services consists of central
business costs associated with being a listed company and
non-division-specific pension costs.
This Segmental analysis shows the result and assets of these
Divisions. Revenue is that earned by the Group from third parties.
Net financing costs and tax are not allocated to segments as the
funding, cash and tax management of the Group are activities
carried out by the central treasury and tax functions.
Segmental
results
Year ended
30 November 2023
|
RM
TTS1
|
RM Consortium
|
RM Assessment
|
RM Technology
|
Corporate Services
|
Total
|
|
£000
|
£000
|
£000
|
£000
|
£000
|
£000
|
Revenue
|
|
|
|
|
|
|
UK
|
52,229
|
19,300
|
24,756
|
57,545
|
-
|
153,830
|
Europe
|
12,757
|
-
|
10,315
|
86
|
-
|
23,158
|
North
America
|
4,722
|
-
|
131
|
32
|
-
|
4,885
|
Asia
|
1,049
|
-
|
1,219
|
-
|
-
|
2,268
|
Middle
East
|
3,730
|
-
|
157
|
-
|
-
|
3,887
|
Rest of
the world
|
1,397
|
-
|
5,761
|
-
|
-
|
7,158
|
|
75,884
|
19,300
|
42,339
|
57,663
|
-
|
195,186
|
Adjusted profit/(loss) from
operations
|
5,946
|
(9,679)
|
10,252
|
749
|
(6,960)
|
311
|
Finance income
|
|
|
|
|
|
1,105
|
Finance costs
|
|
|
|
|
|
(6,585)
|
Adjusted loss before tax
|
|
|
|
|
|
(5,169)
|
Adjustments (see Note 3)
|
|
|
|
|
|
(36,069)
|
Loss before tax
|
|
|
|
|
|
(41,238)
|
1 Included
in UK are International Sales via UK Distributors of
£755,000.
Year ended
30 November 2022
|
RM
TTS1
|
RM Consortium
|
RM Assessment
|
RM Technology
|
Corporate Services
|
Total
|
(Restated)
|
£000
|
£000
|
£000
|
£000
|
£000
|
£000
|
Revenue
|
|
|
|
|
|
|
UK
|
58,232
|
33,707
|
23,324
|
59,416
|
-
|
174,679
|
Europe
|
12,907
|
12
|
8,153
|
71
|
-
|
21,143
|
North
America
|
3,555
|
-
|
142
|
1,374
|
-
|
5,071
|
Asia
|
879
|
1
|
1,299
|
-
|
-
|
2,179
|
Middle
East
|
3,284
|
21
|
167
|
-
|
-
|
3,472
|
Rest of
the world
|
1,762
|
6
|
5,855
|
-
|
-
|
7,623
|
|
80,619
|
33,747
|
38,940
|
60,861
|
-
|
214,167
|
Adjusted profit/(loss) from operations
|
7,817
|
(5,006)
|
7,378
|
2,173
|
(4,879)
|
7,483
|
Finance income
|
|
|
|
|
|
614
|
Finance costs
|
|
|
|
|
|
(2,825)
|
Adjusted profit before tax
|
|
|
|
|
|
5,272
|
Adjustments (see Note 3)
|
|
|
|
|
|
(26,059)
|
Loss before tax
|
|
|
|
|
|
(20,787)
|
1 Included
in UK are International Sales via UK Distributors of
£687,000.
Segmental assets
At 30 November 2023
|
RM
TTS
|
RM
Consortium
|
RM Assessment
|
RM Technology
|
Corporate Services
|
Total
|
|
£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
|
At 30 November 2022
|
RM
TTS
|
RM
Consortium
|
RM Assessment
|
RM Technology
|
Corporate Services
|
Total
|
|
£000
|
£000
|
£000
|
£000
|
£000
|
£000
|
|
|
|
|
|
|
|
Segmental
|
33,373
|
61,499
|
16,315
|
10,936
|
51,640
|
173,763
|
Other
|
|
|
|
|
|
28,891
|
Total assets
|
|
|
|
|
|
202,654
|
Included within the disclosed segmental assets are
non-current assets (excluding defined benefit pension surplus and
deferred tax assets) of £61.7m (2022: £109.1m) located in the
United Kingdom, £5.8m (2022: £9.0m) located in Australia and £1.0m
(2022: £1.0m) located in India. Other non-segmented assets include
defined benefit pension surplus, other receivables, tax assets and
cash and short-term deposits. Goodwill is included within the
Corporate Services segment. Consortium segmental assets include a
leased warehouse which has been repurposed to be used by TTS after
the year-end.
3.
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.
|
|
Year ended
30 November 2023
|
Year ended
30 November 2022
|
|
|
£000
|
£000
|
Adjustments to operating
expenses
|
|
|
|
Amortisation of acquisition-related intangible
assets
|
|
1,691
|
1,839
|
Impairment of RM Consortium assets1
|
(a)
|
38,949
|
-
|
Restructuring costs
|
(b)
|
2,678
|
254
|
Configuration of SaaS licences (ERP)
|
(c)
|
3,063
|
17,355
|
Independent business review related costs
|
(d)
|
473
|
-
|
Dual
running costs related to investment strategy
|
(e)
|
-
|
5,372
|
Impairment of ERP solution
|
(f)
|
-
|
2,236
|
Onerous provision for IS licences
|
(g)
|
-
|
1,168
|
Disposal related costs
|
(k)
|
-
|
845
|
Total adjustments to operating
expenses
|
|
46,854
|
29,069
|
|
|
|
|
Other income
|
|
|
|
Sale
of IP addresses
|
(h)
|
(10,614)
|
(2,791)
|
Gain
on disposal of operations
|
(i)
|
(171)
|
-
|
Gain
on sale of property
|
(j)
|
-
|
(219)
|
Total adjustments to other
income
|
|
(10,785)
|
(3,010)
|
|
|
|
|
Total adjustments
|
|
36,069
|
26,059
|
Tax impact (Note 6)
|
|
(6,002)
|
(6,458)
|
Total adjustments after tax –
continuing operations
|
|
30,067
|
19,601
|
Gain on disposal of discontinued operations
|
(k)
|
(13,444)
|
-
|
Total adjustments after
tax
|
|
16,623
|
19,601
|
|
|
|
|
|
-
Includes £10,575,000 of goodwill impairment (see Note 10),
£17,431,000 of impairment of other intangible assets, £5,881,000 of
impairment of property, plant and equipment, £2,827,000 of
inventory write downs, £737,000 write off of other current assets
and an onerous contract provision of £1,498,000 in respect of IT
licences. See (a) below for further details.
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.
During the year ended 30 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:
-
Following the announcement of the closure of the Consortium
business and the subsequent termination of the ERP replacement
programme, management performed an impairment review resulting in
the Group recognising a total impairment charge of £38.9m including
£10.6m of goodwill relating to the RM Consortium business (see Note
10), £17.4m of intangible assets including all remaining Consortium
brand and ERP assets, £5.9m of property, plant and equipment at the
RM Consortium warehouse, £2.8m of RM Consortium inventory write
downs to net realisable value,
£0.7m of other current assets and an onerous contract provision of
£1.5m in respect of IT licences associated with the Group’s ERP
solution.
-
Restructuring costs of £2.7m (2022: £0.3m) of which £0.8m
related to the Group’s decision to close the RM Consortium
business.
-
The configuration and customisation costs relating to the ERP
replacement programme, which have been 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 warehouse strategy. These costs total £2.7m (2022:
£17.4m) based on the development work undertaken.
-
Independent Business Review related costs totalling £0.5m
(2022: £nil) undertaken on behalf of the lenders and pension
scheme.
-
Dual running costs in 2022 of £5.4m related to the Group’s
warehouse strategy, which became fully operational that year. Costs
included £2.8m associated with the new warehouse including items
such as utilities, security and increased warehouse staff to test
the new facility and to transfer inventory and £2.6m of IT costs
(excluding configuration costs of SaaS licences) being expensed
that relate to running of IT systems not yet in use.
-
In 2022, the Group impaired £2.2m of ERP replacement
programme costs, previously capitalised within the RM Technology
Division, which related to functionality that was paused and where
the Group had no active plans to proceed to implement.
-
In 2022, the Group recognised an onerous contract provision
of £1.2m in respect of IT licences associated with its ERP
solution.
-
Income generated following the completion of the sale of IP
addresses totalling £10.6m (2022: £2.8m).
-
Gain on disposal of operations of £0.2m (2022: £nil)
following the completion of the iCase business
disposal.
-
In 2022, the Group disposed of a warehouse that was no longer
required following the estates strategy review. This warehouse sale
generated proceeds of £3.3m and a profit after direct selling costs
and costs of moving from the warehouse of £0.2m.
-
During the year ended 30 November 2023, the Group completed
the disposal of the RM Integris and RM Finance business which
generated a gain on sale of operations of £13.4m (2022: loss of
£0.8m) representing proceeds of £15.3m (2022: £nil) less £1.9m
(2022: £0.8m) of costs associated with the disposal.
Adjusted net debt of £45.6m (2022: £46.8m) is the total of
borrowings less capitalised fees of £53.7m (2022: £48.7m) and cash
at bank of £8.1m (2022: £1.9m). Lease liabilities of £16.5m (2022:
£19.1m) 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 details of
the covenant calculations are set out in
Note 13.
Average adjusted net debt is calculated by taking the
adjusted net debt on a daily basis and dividing by number of
days.
The above adjustments have the following impact on the cash
flow statement:
|
Year ended 30 November
2023
|
Year ended 30 November 2022
|
|
Statutory Measure
|
Adjustment
|
Adjusted cash flows
|
Statutory Measure
|
Adjustment
|
Adjusted cash flows
|
|
£000
|
£000
|
£000
|
£000
|
£000
|
£000
|
(Loss)/profit before tax
|
(41,238)
|
(36,069)
|
(5,169)
|
(20,787)
|
(26,059)
|
5,272
|
(Loss)/profit from operations
|
(46,543)
|
(46,854)
|
311
|
(21,586)
|
(29,069)
|
7,483
|
Cash consumed by operations
|
(4,683)
|
(5,107)
|
424
|
(17,129)
|
(24,480)
|
7,351
|
Net cash used by operating activities
|
(10,455)
|
(5,107)
|
(5,348)
|
(20,786)
|
(24,480)
|
3,694
|
Net cash generated from investing activities
|
20,854
|
24,218
|
(3,364)
|
891
|
(1,403)
|
(512)
|
Net cash used by financing activities
|
(4,141)
|
-
|
(4,141)
|
20,293
|
-
|
20,293
|
Net increase in cash and cash equivalents
|
6,258
|
19,111
|
(12,853)
|
398
|
23,077
|
23,475
|
The adjustments have the following impact on key
metrics:
|
Year ended 30 November
2023
|
Year ended 30 November 2022 (Restated)
|
|
Statutory Measure
|
Adjustment
|
Adjusted measure
|
Statutory Measure
|
Adjustment
|
Adjusted measure
|
|
|
£000
|
£000
|
£000
|
£000
|
£000
|
£000
|
|
Gross profit
|
66,083
|
-
|
66,083
|
68,504
|
-
|
68,504
|
|
(Loss)/profit from operations
|
(46,543)
|
(46,854)
|
311
|
(21,586)
|
(29,069)
|
7,483
|
|
Operating margin (%)
|
(23.8)%
|
(24.0)%
|
0.2%
|
(10.1)%
|
(13.6)%
|
3.5%
|
|
Adjusted EBITDA
|
(3,383)
|
(10,372)
|
6,989
|
(12,083)
|
(24,994)
|
12,911
|
|
(Loss)/profit before tax
|
(41,238)
|
(36,069)
|
(5,169)
|
(20,787)
|
(26,059)
|
5,272
|
|
Tax
|
(2,070)
|
6,002
|
(8,072)
|
4,698
|
6,458
|
(1,760)
|
|
(Loss)/profit after tax
|
(43,308)
|
(30,067)
|
(13,241)
|
(16,089)
|
(19,601)
|
3,512
|
|
|
|
|
|
|
|
|
|
Earnings per share (see
Note 8)
|
|
|
|
|
|
|
|
Basic (Pence)
|
(52.0)
|
|
(15.9)
|
(19.3)
|
|
4.2
|
|
Diluted (Pence)
|
(51.8)
|
|
(15.8))
|
(19.3)
|
|
4.2
|
|
|
|
|
|
|
|
|
|
|
|
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.
Adjusted EBITDA is defined as the profit from operations
before impairment, amortisation and depreciation costs including
£10,575,000 of goodwill impairment (see Note 10), £17,431,000 of
impairment of other intangible assets, £2,686,000 of amortisation
of other intangible assets, £5,881,000 of impairment of property,
plant and equipment, £2,448,000 of depreciation of property, plant
and equipment and £3,235,000 of depreciation of right-of-use
assets.
The impact of tax is set out in Note 6.
4.
Finance income
|
|
Year ended
30 November 2023
|
Year ended
30 November 2022
|
|
Note
|
£000
|
£000
|
Bank
interest
|
|
9
|
5
|
Other
finance income
|
|
5
|
2
|
Total
income from financial assets measured at amortised cost
|
|
14
|
7
|
Net
investment income on defined benefit pension scheme
|
16
|
1,091
|
607
|
|
|
1,105
|
614
|
|
|
|
|
|
|
|
5.
Finance costs
|
|
Year ended
30 November 2023
|
Year ended
30 November 2022
|
|
Note
|
£000
|
£000
|
Borrowing facilities arrangement fees and commitment
fees
|
|
491
|
425
|
Unwinding of discount on provisions
|
14
|
89
|
-
|
Net
finance costs on defined benefit pension scheme
|
16
|
-
|
39
|
Foreign
exchange
|
|
441
|
-
|
Interest on lease liabilities
|
|
330
|
347
|
Interest on bank loans and overdrafts
|
|
5,234
|
2,014
|
|
|
6,585
|
2,825
|
|
|
|
|
|
|
|
Foreign exchange for the year
ended 30 November 2023 includes exchange differences arising on an
intercompany loan with a foreign subsidiary which is now treated as
finance income or finance costs in line with the underlying asset.
This represents a new accounting policy. In prior periods, this
exchange difference of £80,000 was recorded in operating costs but
as the amount is not considered material, management has not
restated the prior year results.
6.
Tax
-
Analysis of tax (credit)/charge in the Consolidated Income
Statement
|
|
Year ended
30 November 2023
|
Year ended
30 November 2022
|
|
|
£000
|
£000
|
Current taxation
|
|
|
|
UK
corporation tax
|
|
296
|
303
|
Adjustment in respect of prior years
|
|
796
|
121
|
Foreign tax
|
|
479
|
495
|
Total current tax charge
|
|
1,571
|
919
|
Deferred taxation
|
|
|
|
Temporary differences
|
|
(23)
|
(4,856)
|
Adjustment in respect of prior years
|
|
527
|
(109)
|
Overseas tax
|
|
(5)
|
(652)
|
Total deferred (credit)/charge
|
|
499
|
(5,617)
|
Total Consolidated Income Statement tax
charge/(credit)
|
|
2,070
|
(4,698)
|
|
|
|
|
|
|
|
-
Analysis of tax (credit)/charge in the Consolidated Statement
of Comprehensive Income
|
|
Year ended
30 November 2023
|
Year ended
30 November 2022
|
|
|
£000
|
£000
|
Deferred tax
|
|
|
|
Defined
benefit pension scheme movements
|
|
(2,790)
|
(2,407)
|
Fair
value movements of hedging instruments
|
|
-
|
(11)
|
Deferred tax relating to the change in rate
|
|
-
|
(507)
|
Total Consolidated Statement of
Comprehensive Income tax credit
|
(2,790)
|
(2,925)
|
-
Reconciliation of Consolidated Income Statement tax
charge
The tax charge in the Consolidated Income Statement
reconciles to the effective rate applied by the Group as
follows:
|
Year ended 30 November
2023
|
Year ended 30 November 2022
|
|
Adjusted
|
Adjustment
|
Total
|
Adjusted
|
Adjustment
|
Total
|
|
£000
|
£000
|
£000
|
£000
|
£000
|
£000
|
(Loss)/profit on ordinary activities
before tax1
|
(4,409)
|
(22,625)
|
(27,034)
|
6,862
|
(26,059)
|
(19,197)
|
Tax at 23.01% (2022: 19%)
thereon:
|
(1,105)
|
(5,206)
|
(6,221)
|
1,304
|
(4,951)
|
(3,647)
|
Effects of:
|
|
|
|
|
|
|
-
Change in tax rate on carried
forward deferred tax assets
|
267
|
-
|
267
|
-
|
-
|
-
|
-
Expenses not deductible for tax
purposes
|
206
|
2,446
|
2,652
|
14
|
100
|
114
|
|
(42)
|
(3,094)
|
(3,136)
|
-
|
(43)
|
(43)
|
-
Impact of super
deduction
|
-
|
-
|
-
|
(56)
|
-
|
(56)
|
-
Change in rate on current year
movements
|
-
|
-
|
-
|
64
|
(1,564)
|
(1,500)
|
-
Other temporary timing
differences: UK
|
2,498
|
(97)
|
2,401
|
-
|
-
|
-
|
-
Other temporary timing
differences: Overseas
|
1,138
|
(51)
|
1,087
|
396
|
-
|
396
|
-
Effect of (profits)/losses in
various overseas tax jurisdictions
|
(324)
|
-
|
(324)
|
60
|
-
|
60
|
-
Previously recognised deferred
tax now unrecognised
|
3,857
|
-
|
3,857
|
-
|
-
|
-
|
-
Prior period adjustments -
UK
|
1,259
|
-
|
1,259
|
(153)
|
-
|
(153)
|
-
Prior period adjustments -
overseas
|
64
|
-
|
64
|
131
|
-
|
131
|
|
164
|
-
|
164
|
|
|
|
Tax (credit)/charge in the
Consolidated Income Statement
|
8,072
|
(6,002)
|
2,070
|
1,760
|
(6,458)
|
(4,698)
|
1 Includes
discontinued operations
The above reconciliation of tax relates to continuing
operations and as set out in Note 7,
no corporation tax balances will be impacted by
disposal.
d) Deferred tax
The Group has recognised deferred tax assets as these are
anticipated to be recognised against future periods.
The major deferred tax assets and liabilities recognised by
the Group and the movements thereon are as follows:
|
Accelerated depreciation
|
Defined-benefit pension scheme
obligation
|
Share-based payments
|
Short-term timing
differences
|
Losses
|
Acquisition-related intangible
assets
|
Total
|
|
£000
|
£000
|
£000
|
£000
|
£000
|
£000
|
£000
|
At 1 December 2021
|
(235)
|
(7,588)
|
236
|
657
|
-
|
(3,744)
|
(10,674)
|
(Charge)/credit to income
|
(556)
|
-
|
(177)
|
164
|
5,842
|
344
|
5,617
|
Credit/(charge) to other comprehensive income
|
-
|
1,937
|
-
|
(319)
|
1,307
|
-
|
2,925
|
At 30 November 2022
|
(791)
|
(5,651)
|
59
|
502
|
7,149
|
(3,400)
|
(2,132)
|
Credit /charge) to income
|
1,400
|
(97)
|
16
|
(336)
|
(4,415)
|
2,933
|
(499)
|
Credit/(charge) to other comprehensive income
|
-
|
2,790
|
-
|
-
|
-
|
-
|
2,790
|
Credit/(charge) to equity
|
-
|
-
|
11
|
-
|
-
|
-
|
11
|
At 30 November 2023
|
609
|
(2,958)
|
86
|
166
|
2,734
|
(467)
|
170
|
Analysed on the balance sheet as:
|
|
|
|
|
|
2023
|
2022
|
|
|
|
|
|
|
£000
|
£000
|
Deferred tax asset
|
|
|
|
|
|
170
|
174
|
Deferred tax liabilities
|
|
|
|
|
|
-
|
(2,306)
|
At 30 November 2023
|
|
|
|
|
|
170
|
(2,132)
|
Certain deferred tax assets and liabilities have been offset
above.
The Group has recognised deferred tax assets in jurisdictions
where these are expected to be recoverable against profits in
future periods.
The rate of UK Corporation Tax increased to 25% from 1 April
2023. Taxation for other jurisdictions is calculated at the rates
prevailing in the respective territories.
Deferred tax assets and liabilities have been offset where
the group has a legally enforceable right to set off current tax
assets against current tax liabilities an where the deferred tax
assets and the deferred tax liabilities relates to income taxes
levied by the same tax authority on the same taxable
entity.
No deferred tax liability is recognised on temporary
differences of £678,000 (2022: £445,000) relating to the unremitted
earnings of overseas subsidiaries as the Group is able to control
the timings of the reversal of these temporary differences and it
is probable that they will not reverse in the foreseeable
future.
A deferred tax asset of £10,542,000 (2022: £396,000) has not
been recognised due to uncertainty that the asset will be utilised
in the foreseeable future. This deferred tax asset relates to UK
and Australia split and includes £312,000 in respect of tangible
and intangible assets, £313,000 in respect of pension schemes,
£9,108,000 in respect of tax credits and loss carry forwards and
£807,000 of disallowed tax in respect of interest
expenses.
7.
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
£16.0m on a cash free/debt free basis of which £12.0m 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
|
|
Year ended
30 November 2023
|
Year ended
30 November 2022
|
|
|
£000
|
£000
|
Revenue
|
|
2,410
|
4,871
|
Cost of
sales
|
|
(988)
|
(1,894)
|
Gross
profit
|
|
1,422
|
2,977
|
Operating expenses
|
|
(662)
|
(1,387)
|
Profit
before tax
|
|
760
|
1,590
|
Tax
|
|
-
|
-
|
Profit for the year from discontinued
operations
|
|
760
|
1,590
|
Gain on disposal of
discontinued operations
|
|
Year ended
30 November 2023
|
Year ended
30 November 2022
|
|
|
£000
|
£000
|
Gain on
disposal of discontinued operations before taxation
|
|
15,330
|
-
|
Costs
associated with the disposal
|
|
(1,886)
|
-
|
Net gain on disposal of discontinued
operations
|
|
13,444
|
-
|
Profit for the year from
discontinued operations
|
|
Year ended
30 November 2023
|
Year ended
30 November 2022
|
|
|
£000
|
£000
|
Profit
for the year from discontinued operations
|
|
760
|
1,590
|
Net
gain on disposal of discontinued operations
|
|
13,444
|
-
|
Net gain on disposal of discontinued
operations
|
|
14,204
|
1,590
|
Total comprehensive income
for the financial year from discontinued operations
|
|
Year ended
30 November 2023
|
Year ended
30 November 2022
|
Group
|
|
£000
|
£000
|
Attributable to owners of the parent
|
|
14,204
|
1,590
|
Cash flows from
discontinued operations
During the year, RM Integris and RM Finance contributed
£1,633,000 (2022: £1,533,000) to the Group’s net operating cash
flows, paid £nil (2022: £nil) in respect of investing activities
and paid £nil (2022: £nil) in respect of financing activities. As
the sale to Schools Educational Software Limited was an asset sale,
cash and corporation tax balances related to the business were
retained within the Group. Included in the sale agreement were
Group owned intellectual properties and the related assets. These
assets are fully amortised and depreciated.
The net gain on disposal of
discontinued operations represents the net cash proceeds of
£12,672,000, plus net liabilities disposed of £2,658,000 and less
costs associated with the disposal of £1,886,000.
Assets and liabilities held for
sale
Details of RM Integris and RM Finance Business assets and
liabilities classified as held for sale in the prior year were as
follows:
|
|
At
30 November 2023
|
At
30 November 2022
|
Group
|
|
£000
|
£000
|
Assets:
|
|
|
|
Trade
receivables
|
|
-
|
172
|
Prepayments
|
|
-
|
114
|
Accrued
income
|
|
-
|
132
|
Assets classified as held for sale
|
|
-
|
418
|
|
|
|
|
Liabilities:
|
|
|
|
Trade
payables
|
|
-
|
(65)
|
Other
taxation and social security
|
|
-
|
(32)
|
Other
payables
|
|
-
|
(31)
|
Deferred income
|
|
-
|
(1,954)
|
Liabilities directly associated with
assets classified as held for sale
|
|
-
|
(2,082)
|
|
|
|
|
|
8.
Earnings per share
|
Year ended 30 November
2023
|
Year ended
30 November 2022
|
|
(Loss)/profit for the
year
|
Weighted average number of
shares
|
Pence per share
|
(Loss)/profit for the year
|
Weighted average number of shares
|
Pence per share
|
|
£000
|
£000
|
£000
|
£000
|
£000
|
£000
|
Basic earnings per ordinary
share
|
|
|
|
|
|
|
Basic earnings from continuing operations
|
(43,308)
|
83,256
|
(52.0)
|
(16,089)
|
83,256
|
(19.3)
|
Adjustments (see Note 3)
|
30,067
|
-
|
36.1
|
19,601
|
-
|
23.5
|
Adjusted basic earnings from
continuing
operations
|
(13,241)
|
83,256
|
(15.9)
|
3,512
|
83,256
|
4.2
|
Basic earnings from discontinuing operations
|
14,204
|
83,256
|
17.1
|
1,590
|
83,256
|
1.9
|
Adjusted basic earnings from discontinuing
operations
|
760
|
83,256
|
0.9
|
1,590
|
83,256
|
1.9
|
|
|
|
|
|
|
|
Diluted earnings per ordinary
share
|
|
|
|
|
|
|
Basic earnings from continuing operations
|
(43,308)
|
83,256
|
(52.0)
|
(16,089)
|
83,256
|
(19.3)
|
Effect of dilutive potential ordinary shares - share-based
payment awards
|
-
|
343
|
0.2
|
-
|
1,335
|
0.3
|
Diluted earnings from continuing
operations
|
(43,308)
|
83,599
|
(51.8)
|
(16,089)
|
84,591
|
(19.0)
|
Adjustments (see Note 3)
|
30,067
|
-
|
36.0
|
19,601
|
-
|
23.2
|
Adjusted diluted earnings from
continuing operations
|
(13, 241)
|
83,599
|
(15.8)
|
3,512
|
84,591
|
4.2
|
Basic diluted earnings from discontinuing
operations
|
14,204
|
83,599
|
17.0
|
1,590
|
84,591
|
1.9
|
Adjusted diluted earnings from discontinuing
operations
|
760
|
83,599
|
0.9
|
1,590
|
84,591
|
1.9
|
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.
9.
Dividends
|
|
Year ended
30 November 2023
|
Year ended
30 November 2022
|
|
|
£000
|
£000
|
Final
dividend for the year ended 30 November 2022 – Nil p per share
(2021: 3.0p)
|
|
-
|
2,498
|
|
|
|
|
|
|
|
The Directors do not propose a final dividend for the year
ended 30 November 2023.
10.
Goodwill
|
|
|
£000
|
Cost
|
|
|
|
At 1
December 2021
|
|
|
58,896
|
Foreign exchange differences
|
|
|
199
|
At 30
November 2022
|
|
|
59,095
|
Foreign exchange differences
|
|
|
(288)
|
At 30 November 2023
|
|
|
58,807
|
|
|
|
|
Accumulated impairment
|
|
|
|
At 1
December 2021 and 30 November 2022
|
|
|
9,694
|
Impairment charge
|
|
|
10,575
|
At 30 November 2023
|
|
|
20,269
|
|
|
|
|
Carrying amount
|
|
|
|
At 30 November 2023
|
|
|
38,538
|
At 30
November 2022
|
|
|
49,401
|
|
|
|
|
|
|
At 30 November 2022, the carrying amount of goodwill was
allocated to RM Resources and RM Assessment as set out in the table
below.
The decision by management to separately monitor the results
of the Consortium and TTS brands in June 2023 required that
goodwill previously monitored at the RM Resources CGU level was
required to be allocated between Consortium and TTS. This was
performed on the basis of the relative values of the two
businesses, determined using the relative material profits of the
two businesses from 1 June 2023 to 30 November 2023 excluding the
second half of FY22 where trading performance was most negatively
impacted by the rollout of the Evolution programme. Material profit
is defined as revenue less material cost and less other margin
factors such as customer rebates, supplier rebates and purchase
price variance, and carriage in costs. Goodwill allocated to RM
Consortium was £10,575,000 and the remaining goodwill of
£31,633,000 was allocated to RM TTS. Following the announcement of
the closure of the Consortium business, management performed an
impairment review which resulted in the goodwill allocated to RM
Consortium of £10,575,000 being fully impaired.
The carrying amount of goodwill is allocated to
cash-generating units as follows:
|
2023
|
2022
|
|
Year ended 30 November
|
Pre-tax discount rate
|
Headroom
|
Year ended 30 November
|
Pre-tax discount rate
|
Headroom
|
Group
|
£000
|
£000
|
£000
|
£000
|
£000
|
£000
|
RM Resources
|
N/A
|
N/A
|
N/A
|
42,208
|
13.2%
|
16,400
|
RM TTS
|
31,633
|
14.2%
|
811
|
N/A
|
N/A
|
N/A
|
RM Assessment
|
6,905
|
14.2%
|
54,138
|
7,193
|
12.6%
|
65,400
|
Further information pertaining to the performance and future
strategy of the Divisions can be found within the Strategic
Report.
The recoverable amounts of the Cash Generating Units (‘CGU’)
are determined from value in use calculations. The key assumptions
for the value in use calculations are those regarding the cash
flows, the discount rates and the growth rates. Historically the
Group has taken cash flow forecasts derived from the most recent
annual financial budget approved by the Board, which also contains
forecasts for the two years following, and extrapolates cash flows
based on terminal rates which align to market growth and inflation
expectations. This approach continues to be used to test impairment
of the RM Assessment CGU. Given the
performance of the Resources division in recent years, the
Directors have reassessed the level of uncertainty associated with
the cashflow forecasts of TTS in the outer years of that budget.
Whilst the company aims to achieve those budgets, the most
supportable (and therefore reliable) budget is that which has been
prepared for the purpose of the going concern review. For the
purpose of the impairment test of the TTS CGU at 30 November 2023,
a value in use has been derived by taking the forecast for the year
ended 30 November 2024, removing cashflows which do not comply with
the requirements of IAS36, and calculating a terminal value
assuming the long-term growth rate and pre-tax discount rate set
out below.
The Group monitors its post-tax Weighted Average Cost of
Capital and those of its competitors using market data. In
considering the discount rates applying to CGUs, the Directors have
considered the relative sizes and risks of its CGUs and their
relatively narrow operation within the education products and
services market. The impairment reviews use a discount rate
adjusted for pre-tax cash flows.
Year ended 30 November
2023
The table below shows key assumptions used in the value in
use calculations for the year ended 30 November 2023:
|
RM TTS
|
RM Assessment
|
Pre-tax discount rate
|
14.2%
|
14.2%
|
Long-term growth rate
|
2.4%
|
2.4%
|
RM TTS
If the long term growth rate reduced by 0.18% (i.e. a long
term growth rate of 2.22%) or if a pre-tax discount rate increased
by 0.2% (i.e. a pre-tax discount rate of 14.4%), the headroom would
be eliminated. The FY24 cashflow assumption used in the impairment
model is £6m. A reduction of 1.6% would erode headroom.
Given the limited headroom the cashflows, long term growth
rates and pre-tax discount rates represent key sources of
estimation uncertainty. A material impairment would be recorded if
the long term growth rate reduced to 2.11%, the pre-tax discount
rate increased to 14.53%, or the cashflow forecasts reduced by
2.6%
The cashflow forecast is also sensitive to costs incurred by
the Group on behalf of TTS. The FY24 forecasts do not take into
consideration future potential efficiency savings in group costs as
those plans were not enacted at 30 November 2023. Central support
costs currently allocated to TTS in the FY24 cashflow forecasts
total £1.3m. If these costs increased by £100,000, headroom would
be eroded.
If the cashflows in RM TTS were to increase over three years
in line with the three-year budget, headroom would increase to
£14.3m. If the cashflows in RM TTS were to reduce as set out within
the reasonable worst-case scenario approved by the Board for
inclusion in the going concern review, headroom would be eroded and
an impairment of £23.2m would be required to be recorded. The
impairment in a mitigated reasonable worst-case scenario would be
£17.1m.
RM Assessment
The sensitivity of the RM Assessment carrying values to
reasonably possible changes in key assumptions, including the
reasonably possible downside risks applied as part of the going
concern review, has been performed and would not cause the carrying
value to exceed its recoverable amount. No reasonably possible
change in the pre-tax discount rate or long-term growth rate would
lead to an impairment and accordingly these sensitivities have not
been provided.
Year ended 30 November
2022
The table below shows key assumptions used in the value in
use calculations for the year ended 30 November 2022:
|
RM Resources
(combined)
|
RM Assessment
|
Pre-tax discount rate
|
13.2%
|
12.6%
|
Long-term growth rate
|
2.5%
|
2.5%
|
RM Resources
The key assumptions used within the cash flow forecasts
included:
-
Price rises during the year ended
30 November 2023 ranging from 12% to 14% depending upon the
brand;
-
Prices rise during the years
ended 30 November 2024 and 2025 ranging from 0% to 3% depending on
the brand; and
-
Volume changes during the three
years ended 30 November 2025 ranging from a contraction of 8% to
growth of 7% dependent upon brand.
The weighted average annualised price increase over the
three-year period and the assumed volume increases, along with the
change in assumption which, taken in isolation, would give rise to
an impairment are set out below.
|
Annualised weighted average price
increase
|
Annualised weighted average volume
increase
|
Assumption in forecasts
|
6.2%
|
1.4%
|
Change in forecasts required for carrying value to equal
recoverable amount
|
(1.6%)
|
(5.5%)
|
If the cash flows in RM Resources were to reduce as set out
within the reasonable worst-case scenario approved by the Board for
inclusion in the working capital and going concern testing, as
disclosed in the Annual Report and Accounts for the year ended 30
November 2022, plus a 10% reduction of cash flows in perpetuity,
headroom would be eroded and an immaterial impairment would be
required to be recorded. If estimated cash flows were to reduce by
15% in every future period an impairment of £1.1m would be
required.
No reasonably possible change in the pre-tax discount rate or
long-term growth rate would lead to an impairment and accordingly
this sensitivity has not been provided.
RM Assessment
The sensitivity of the RM Assessment goodwill carrying values
to reasonably possible changes in key assumptions, including the
reasonably possible downside risks applied as part of the going
concern review, has been performed and would not cause the carrying
value to exceed its recoverable amount. No reasonably possible
change in long-term growth rates or pre-tax discount rates would
lead to an impairment and accordingly these sensitivities have not
been provided.
11.
Trade and other receivables
|
|
|
2023
|
2022
|
|
|
|
£000
|
£000
|
Current assets
|
|
|
|
|
Financial assets
|
|
|
|
|
Trade receivables
|
|
|
21,207
|
24,441
|
Other receivables
|
|
|
1,160
|
1,934
|
Accrued income from customer contracts
|
|
|
2,860
|
2,288
|
|
|
|
25,227
|
28,663
|
Non-financial assets
|
|
|
|
|
Prepayments
|
|
|
7,106
|
7,540
|
Total current assets
|
|
|
32,333
|
36,203
|
|
|
|
|
|
Non-current assets
|
|
|
|
|
Financial assets
|
|
|
|
|
Other receivables
|
|
|
240
|
290
|
Total non-current assets
|
|
|
240
|
290
|
Total trade and other
receivables
|
|
|
32,573
|
36,493
|
12.
Trade and other payables
|
|
|
2023
|
2022
|
|
|
|
£000
|
£000
|
Current liabilities
|
|
|
|
|
Financial liabilities
|
|
|
|
|
Trade payables
|
|
|
16,441
|
34,269
|
Lease liabilities
|
|
|
2,194
|
3,144
|
Other payables
|
|
|
2,757
|
2,721
|
Derivative financial instruments
|
|
|
278
|
272
|
Accruals
|
|
|
7,708
|
10,516
|
|
|
|
|
|
|
|
|
29,378
|
50,922
|
Non-financial liabilities
|
|
|
|
|
Other taxation and social security
|
|
|
4,702
|
3,149
|
Deferred income from customer contracts
|
|
|
12,292
|
11,568
|
|
|
|
46,372
|
65,639
|
|
|
|
|
|
Non-current liabilities
|
|
|
|
|
Financial liabilities
|
|
|
|
|
Lease liabilities
|
|
|
|
|
-
due after one year but within two
years
|
|
|
1,819
|
2,062
|
-
due after two years but within
five years
|
|
|
4,107
|
4,366
|
|
|
|
8,371
|
9,570
|
Non-financial liabilities
|
|
|
|
|
Deferred income from customer contracts
|
|
|
|
|
-
due after one year but within two
years
|
|
|
1,027
|
1,357
|
-
due after two years but within
five years
|
|
|
1,436
|
1,473
|
|
|
|
-
|
266
|
|
|
|
16,760
|
19,094
|
|
|
|
63,132
|
84,733
|
13.
Borrowings
|
|
2023
|
2022
|
|
|
£000
|
£000
|
Bank
loan
|
|
55,000
|
49,000
|
Less
capitalised fees
|
|
(1,349)
|
(272)
|
Borrowings
|
|
53,651
|
48,728
|
|
|
|
|
|
At 30 November 2023, the Group had drawn down £55.0m (2022:
£49.0m) of the facility.
Bank and professional service fees relating to securing the
loan have been capitalised and are amortised over the length of the
loan of which £141,000 (2022: £138,000) relates to the unamortised
original facility agreement and £1,208,000 is the unamortised
arrangement fee relating to the extension during the current year
(2022: £134,000).
In March 2023, the Group secured an agreement with lenders to
extend the existing £70.0m facility to 5 July 2025, subject to the
addition of a further ‘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.
In April 2023, the Group agreed with the Trustee 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 lower than 3.2x at that date.
The definition of adjusted leverage is aligned to the banking
facility as set out below. No such payment was made during the year
ended 30 November 2023.
The business operated within its existing financial covenants
for the first half of 2023 but indicated in its interim financial
statements that a breach was expected for the facility’s LTM EBITDA
covenant from the third quarter of the year ended 30 November 2023.
EBITDA waivers were granted by lenders for the August and November
2023 periods and the Group continues to comply with the conditions
of each lender with regards to any waivers and the respective
facility agreement. At the end of November 2023, the minimum EBITDA
covenant required was £8.6m versus EBITDA of £7.0m. In addition,
during November 2023, the soft liquidity covenant limit on
forecasted liquidity was exceeded for the first time, resulting in
a meeting held with lenders under the terms of the
facility.
Since the year end, the Group has secured an agreement with
Lenders, which extends the existing £70.0m facility to
July
2026. This agreement is secured against the shares of each of
the obligors (other than RM plc) and by way of a fixed
and
floating charge over all assets of the obligors, and has
reset the covenants under the facility 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.
14.
Provisions
|
Dilapidations
|
Employee-related
restructuring
|
Contract risk provisions
|
Total
|
Group
|
£000
|
£000
|
£000
|
£000
|
At 1 December 2021
|
1,450
|
916
|
1,175
|
3,541
|
Increase in provisions
|
219
|
254
|
1,227
|
1,700
|
Utilisation of provisions
|
(239)
|
(960)
|
(317)
|
(1,516)
|
Release of provisions
|
(159)
|
-
|
(758)
|
(917)
|
At 30 November 2022
|
1,271
|
210
|
1,327
|
2,808
|
Increase in provisions
|
978
|
2,322
|
1,498
|
4,798
|
Utilisation of provisions
|
(27)
|
(1,716)
|
(1,160)
|
(2,903)
|
Reclassification of provision1
|
-
|
-
|
(30)
|
(30)
|
Release of provisions
|
(18)
|
-
|
-
|
(18)
|
Unwinding of discount on provisions
|
89
|
-
|
-
|
89
|
Foreign exchange
|
(1)
|
-
|
(1)
|
(2)
|
At 30 November 2023
|
2,292
|
816
|
1,634
|
4,742
|
1 Contract
risk provisions at 1 December 2021 and 30 November 2022 include
TUPE unfunded pension related balances of £719,000 and £30,000
respectively, with the movements recognised in Other Comprehensive
Income. As set out in Note 16(a), these balances were transferred
to defined benefit pension scheme obligations during the year ended
30 November 2023 as they are estimated on an IAS 19
basis.
Dilapidations provisions, which result in the recognition of
corresponding right-of-use assets, increased by £1.0m (2022: £0.2m)
during the year following the reassessment of dilapidations
provisions across the Group’s real estate portfolio. Of the £2.3m
total dilapidations provisions at 30 November 2023, £1.0m is
expected to be utilised in 2024, £0.9m in 2025 and the remainder in
2035. In the prior year, the exit of a lease in accordance with the
2018 estates strategy (see Note 3), resulted in the utilisation and
release of provisions noted above. Settlement discussions with
landlords are ongoing and the outcome of these could result in an
increase or decrease in the dilapidations provision by
approximately £0.3m, which would then be fully recognised in the
income statement.
Employee-related restructuring provisions refer to costs
arising from restructuring to meet the future needs of the Group.
As set out in Note 3, following the Group’s decision to close the
RM Consortium business as well as the continuation of the Group’s
2022 transformation programme during 2023, restructuring provisions
of £2.2m were recognised during the year ended 30 November 2023, of
which £1.6m had been utilised by the year end. In the prior year,
the Group completed the sale of warehouses planned in the 2018
estates review and therefore utilised the provision held in 2021 as
well as commencing further restructuring of £0.3m as part of the
Group’s 2022 transformation programme (see Note 3). All of these
restructuring activities are expected to be completed during
2024.
Contract risk provisions includes items not covered by any
other category of which the majority relates to provisions for
onerous IT licence contracts, which increased by £1.5m during the
year following the Group’s decision to close the RM Consortium
business. In the prior year, the provision increased by £1.2m as a
result of an onerous contract provision associated with the Group’s
warehouse strategy, the majority of which was utilised during the
year ended 30 November 2023.
Disclosure of provisions
|
|
2023
|
2022
|
Group
|
|
£000
|
£000
|
Current
liabilities
|
|
2,993
|
2,142
|
Non-current liabilities
|
|
1,749
|
666
|
|
|
4,742
|
2,808
|
|
|
|
|
|
|
|
The non-current liabilities include dilapidations provisions
of £1.2m (2022: £0.6m) which are anticipated to be paid over 2-12
years, with the remaining non-current provisions relating to
certain contract risk provisions.
15.
Share capital
|
|
Ordinary shares of
22/7p
|
Group
|
|
Number
‘000
|
£000
|
Authorised, allotted, called-up and fully paid:
|
|
|
|
At 1 December 2021, 30 November 2022
and 30 November 2023
|
83,875
|
1,917
|
|
|
|
|
|
The valuation of the shares is weighted average cost.
Ordinary shares issued carry no right to fixed income.
16.
Pension schemes
a. Defined contribution
schemes
The Group operates or contributes to a number of defined
contribution schemes for the benefit of qualifying employees. The
assets of these schemes are held separately from those of the
Company. The total cost charged to income of £2,427,000 (2022:
£2,047,000) represents contributions payable to these schemes by
the Group at rates specified in employment contracts. At 30
November 2023 £334,000 (2022: £262,000) due in respect of the
current financial year had not been paid over to the
schemes.
b. Local government pension
schemes
The Group has TUPE employees who retain membership of local
government pension schemes, many of which have a customer
contractual guarantee whereby RM reimburses for any IAS 19 deficit
when RM ceases to be a participating employer and are therefore
accounted for as a defined benefit arrangement, with actuarial
movements recognised through Other Comprehensive Income. As a
participant in a multi-employer defined benefit pension scheme, the
Group estimates the position on an IAS 19 basis by using the most
recent triennial valuation but with appropriate and up-to-date
actuarial inputs (such as discount rate, CPI/RPI movements),
internal information (such as employee related data) but not IAS 19
inputs such as scheme asset and liability movements, mortality
assumptions that relate to participating employees. The Group is
not the main sponsoring employer in these schemes and therefore
does not have an unconditional right to recover surpluses, either
during the life of the scheme, when all the members have left the
plan or on a plan wind-up. Similarly, the Group is not liable for
other entities’ obligations in these schemes.
The Group makes payments to these schemes for current service
costs in accordance with its contractual obligations. The amount
due in respect of these schemes at 30 November 2023 was £62,000
(2022: £40,000). The amounts recognised in the Income Statement and
in the Statement of Comprehensive Income in respect of the Local
Government Pension Schemes are set out below:
|
|
Year ended
30 November 2023
|
Year ended
30 November 2022
|
Group
|
|
£000
|
£000
|
Current
service cost
|
|
(69)
|
(180)
|
Expense recognised in the Income
Statement
|
|
(69)
|
(180)
|
Release of Local Government Pension Scheme
provisions
|
|
-
|
689
|
Income recognised in the Statement of
Comprehensive Income
|
|
-
|
689
|
(Expense)/income recognised in Total
Comprehensive Income
|
|
(69)
|
509
|
|
|
|
|
|
At 30 November 2023, the defined benefit pension scheme
obligations liability incorporated information from 23 Local
Government Pension Schemes based on the most recent triennial
valuations performed as at 31 March 2023 and, based on the
assumptions above, led to a calculation of an unfunded liability
position as set out below:
|
|
Year ended
30 November 2023
|
Year ended
30 November 20221
|
Group
|
|
£000
|
£000
|
Obligations (unfunded)
|
|
|
|
At 1
December
|
|
(30)
|
(719)
|
Actuarial gains/(losses)
|
|
-
|
689
|
At 30 November
|
|
(30)
|
(30)
|
|
|
|
|
|
1 The
unfunded liability position for the year ended 30 November 2022 was
previously included in provisions (see Note 14 for details) but
were transferred to defined benefit pension scheme obligations
during the year ended 30 November 2023 as they are estimated on an
IAS 19 basis.
c. Defined benefit pension
schemes
The Group has both defined benefit and defined contribution
pension schemes. There are three defined benefit pension
schemes.
The Research Machines plc
1988 Pension Scheme (RM Scheme)
The Scheme provides benefits to qualifying employees and
former employees of RM Education Limited but was closed to new
members with effect from 1 January 2003 and closed to future
accrual of benefits from 31 October 2012. The assets of the Scheme
are held separately from RM Education Limited's assets in a
trustee-administered fund. The Trustee is a limited company.
Directors of the Trustee company are appointed by RM Education
Limited and by members. The Scheme is a funded scheme.
Under the Scheme, employees were entitled to retirement
benefits of 1/60th of final salary for each qualifying year on
attainment of retirement age of 60 or 65 years and additional
benefits based on the value of individual accounts. No other
post-retirement benefits were provided by the Scheme.
The most recent actuarial valuation of Scheme assets and the
present value of the defined benefit obligation was carried out for
statutory funding purposes at 31 May 2021 by a qualified
independent actuary. IAS 19 Employee Benefits (revised) liabilities
at 30 November 2023 have been rolled forward based on this
valuation’s base data.
As at 31 May 2021, the triennial valuation for statutory
funding purposes showed a deficit of £15,386,000. The Group agreed
with the Scheme Trustees that it will repay this amount via deficit
catch-up payments of £3,200,000 per annum until 31 December 2024.
The next triennial valuation will be due as at 31 May
2024. At 30 November 2023 there was
an amounts outstanding of £266,667 (2022: £266,667) representing
one month's deficit payment.
The Company has entered into a pension protection fund
compliant guarantee in respect of scheme liabilities. No liability
has been recognised for this within the Company as the Directors
consider that the likelihood of it being called upon is
remote.
The Consortium CARE Scheme
(CARE Scheme)
Until 31 December 2005, The Consortium for Purchasing and
Distribution Limited (“The Consortium”, acquired by the Company on
30 June 2017 and now RM Educational Resources Limited) operated a
pension scheme (the “Consortium CARE” scheme) providing benefits on
both a defined benefit (final salary-linked) and a defined
contribution basis. From 1 January 2006, the defined benefit (final
salary-linked) and defined contribution sections were closed and
all employees, subject to the eligibility conditions set out in the
Trust Deed and Rules, joined a new defined benefit (Career Average
Revalued Earnings) section. From 28 February 2011 the scheme was
closed to future accruals.
The most recent actuarial valuation of Scheme assets and the
present value of the defined benefit obligation was carried out for
statutory funding purposes at 31 May 2021 by a qualified
independent actuary. IAS 19 Employee Benefits (revised) liabilities
at 30 November 2023 have been rolled forward based on this
valuation’s base data.
As at 31 May 2021, the triennial valuation for statutory
funding purposes showed a deficit of £6,240,000. The Group agreed
with the Scheme Trustees that it will repay this amount via deficit
catch-up payments of £1,200,000 per annum until 31 December 2026.
The next triennial valuation will be due as at 31 May 2024. At 30
November 2023 there was an amount outstanding of £100,000 (2022:
£100,000) representing one month's deficit payment.
Prudential Platinum Pension
(Platinum Scheme)
The Consortium acquired West Mercia Supplies in April 2012
(prior to the Company acquiring The Consortium). Upon acquisition
by The Consortium of West Mercia Supplies, a pension scheme (the
Platinum scheme) was set up providing benefits on both a defined
benefit (final salary-linked) and a defined contribution basis for
West Mercia employees. The most recent full actuarial valuation was
carried out by the independent actuaries XPS Pensions Group on 31
December 2021. The scheme is administered within a legally separate
trust from The Consortium and the Trustees are responsible for
ensuring that the correct benefits are paid, that the scheme is
appropriately funded and that the scheme assets are appropriately
invested. The triennial valuation of the Scheme for statutory
funding purposes at 31 December 2021 was a surplus of
£71,800.
Amounts recognised in the Income
Statement and in the Statement of Comprehensive Income
|
|
Year ended
30 November 2023
|
Year ended
30 November 2022
|
Group
|
Note
|
£000
|
£000
|
Administrative expenses and taxes
|
|
(6)
|
(7)
|
Operating expense
|
|
(6)
|
(7)
|
Interest cost
|
|
(8,269)
|
(5,326)
|
Interest on scheme assets
|
|
9,360
|
5,894
|
Net
interest income
|
4, 5
|
1,091
|
568
|
Income recognised in the Income
Statement
|
|
1,085
|
561
|
Effect of changes in demographic assumptions
|
|
3,400
|
2,053
|
Effect of changes in financial assumptions
|
|
23,820
|
135,098
|
Effect of experience adjustments
|
|
(6,152)
|
(20,544)
|
Total
actuarial gains
|
|
21,068
|
116,607
|
Return on scheme assets excluding interest on scheme
assets
|
|
(36,839)
|
(129,453)
|
Expense recognised in the Statement of
Comprehensive Income
|
|
(15,771)
|
(12,846)
|
Expense recognised in Total Comprehensive
Income
|
|
(14,686)
|
(12,285)
|
|
|
|
|
|
The effect of changes in financial assumptions is principally
due to the increase in the discount rates - see sensitivity
information further below. The discount rates have increased as a
result of an increase in corporate bond yields over the period,
which have led to a lower value being placed on the Schemes’
liabilities. This has been more than offset by falls in asset
values reflecting low returns on growth assets such as equities, as
well as returns on Liability Driven Investment (LDI) holdings which
are designed to move in the same way as liabilities following
changes to interest rates and market-implied inflation – see LDI
information below.
Reconciliation of the scheme assets
and obligations through the year
|
RM Scheme
|
CARE Scheme
|
Platinum Scheme
|
Total
|
|
£000
|
£000
|
£000
|
£000
|
Assets
|
|
|
|
|
At 1 December 2021
|
316,722
|
17,858
|
3,061
|
337,641
|
Interest on scheme assets
|
5,524
|
316
|
54
|
5,894
|
Return on scheme assets, excluding interest on scheme
assets
|
(123,023)
|
(5,335)
|
(1,095)
|
(129,453)
|
Administrative expenses
|
-
|
20
|
(27)
|
(7)
|
Contributions from Group
|
3,452
|
1,059
|
26
|
4,537
|
Benefits paid
|
(5,331)
|
(625)
|
(14)
|
(5,970)
|
At 30 November 2022
|
197,344
|
13,293
|
2,005
|
212,642
|
Interest on scheme assets
|
8,670
|
602
|
88
|
9,360
|
Return on scheme assets, excluding interest on scheme
assets
|
(34,841)
|
(1,721)
|
(277)
|
(36,839)
|
Administrative expenses
|
-
|
-
|
(6)
|
(6)
|
Contributions from Group
|
3,200
|
1,216
|
80
|
4,496
|
Benefits paid
|
(3,827)
|
(725)
|
(16)
|
(4,568)
|
At 30 November 2023
|
170,546
|
12,665
|
1,874
|
185,085
|
|
|
|
|
|
Obligations
|
|
|
|
|
At 1 December 2021
|
(282,178)
|
(22,544)
|
(2,568)
|
(307,290)
|
Interest cost
|
(4,892)
|
(389)
|
(45)
|
(5,326)
|
Actuarial gains/(losses)
|
107,713
|
7,661
|
1,235
|
116,609
|
Benefits paid
|
5,331
|
625
|
14
|
5,970
|
|
(174,026)
|
(14,647)
|
(1,364)
|
(190,037)
|
Interest cost
|
(7,574)
|
(636)
|
(59)
|
(8,269)
|
Actuarial gains/(losses)
|
19,386
|
1,512
|
170
|
21,068
|
Benefits paid
|
3,827
|
725
|
16
|
4,568
|
|
(158,387)
|
(13,046)
|
(1,237)
|
(172,670)
|
|
|
|
|
|
-
Net pension
surplus/(deficit)
|
|
|
|
|
|
|
|
|
|
Pension deficit
|
-
|
(381)
|
-
|
(381)
|
Pension surplus
|
12,159
|
-
|
637
|
12,796
|
Net pension
surplus/(deficit)
|
12,159
|
(381)
|
637
|
12,415
|
|
|
|
|
|
|
|
|
|
|
Pension deficit
|
-
|
(1,354)
|
-
|
(1,354)
|
Pension surplus
|
23,318
|
-
|
641
|
23,959
|
Net pension
surplus/(deficit)
|
23,318
|
(1,354)
|
641
|
22,605
|
Included within the CARE Scheme obligations is an unfunded
liability of £88,000 (2022: £98,000) which is a liability of the
Group and not the Scheme.
Reconciliation of net defined
benefit obligation
|
|
Year ended
30 November 2023
|
Year ended
30 November 2022
|
Group
|
|
£000
|
£000
|
Net
surplus/(obligation) at the start of the year
|
|
22,605
|
30,351
|
Cost
included in Income Statement
|
|
1,085
|
561
|
Scheme remeasurements included in the Statement of
Comprehensive Income
|
(15,771)
|
(12,845)
|
Cash
contribution
|
|
4,496
|
4,538
|
Net pension surplus
|
|
12,415
|
22,605
|
|
|
|
|
|
Obligation by participant
status
|
|
At
30 November 2023
|
At
30 November 2022
|
Group
|
|
£000
|
£000
|
Vested
deferreds
|
|
133,122
|
145,134
|
Retirees
|
|
39,548
|
44,903
|
|
|
172,670
|
190,037
|
|
|
|
|
|
Value of scheme assets
|
|
At
30 November 2023
|
At
30 November 2022
|
Group
|
Fair value hierarchy
|
£000
|
£000
|
Cash
and cash equivalents, including escrow
|
Level 1
|
20,920
|
6,691
|
Equity
instruments
|
Level 2
|
16,796
|
18,459
|
Equity
instruments - pooled investment vehicle
|
Level 3
|
51,729
|
73,447
|
Debt
instruments
|
Level 2
|
1,874
|
2,005
|
Liability driven investments
|
Level 1
|
-
|
79,476
|
Liability driven investments
|
Level 2
|
76,556
|
13,270
|
Insurance contract
|
Level 3
|
17,210
|
19,294
|
|
|
185,085
|
212,642
|
|
|
|
|
|
Liability driven
investments (LDI)
The RM Scheme and the CARE Scheme assets include an LDI
portfolio totalling £76.6m at 30 November 2023 (2022: £92.7m). The
portfolio is valued at market value as no bid valuation is
available. The components of the LDI portfolio are determined by
the Trustee’s investment adviser with the aim to provide a good
match to the Scheme’s exposure to interest rate and inflation risks
within the value of its liabilities.
Liability driven investments are expected to move broadly in
line with the rise and fall in liability values, thus providing a
degree of protection to the Scheme’s funding position.
The Trustees continue to work closely with their investment
advisers to regularly rebalance the portfolio in order to maintain
a healthy level of collateral backing for the LDI portfolio in
light of changes to interest rates and inflation and work to
maintain the overall asset allocations broadly in line with the
long-term return target. The Trustees are also closely monitoring
the Scheme’s funding position in light of the recent market
volatility.
Insurance assets
The RM Scheme also holds insurance policies covering benefits
for some pensions in payment. The value of these annuities is
£17.2m at 30 November 2023 (2022: £19.3m). This value has been
calculated using the same assumptions as used to value the
liabilities. The method of determining the value of the insurance
annuities is determined by projecting the expected benefit payments
using the agreed assumptions and then discounting the resulting
cash flows back to 30 November 2023.
Significant actuarial
assumptions
Group
|
Year ended
30 November 2023
|
Year ended
30 November 2022
|
Discount rate (RM Scheme)
|
5.15%
|
4.40%
|
Discount rate (CARE Scheme)
|
5.15%
|
4.45%
|
Discount rate (Platinum Scheme)
|
5.10%
|
4.35%
|
Rate of
RPI price inflation (RM Scheme)
|
3.10%
|
3.05%
|
Rate of
RPI price inflation (CARE Scheme)
|
3.15%
|
3.10%
|
Rate of
RPI price inflation (Platinum Scheme)
|
3.10%
|
3.00%
|
Rate of
CPI price inflation - period before 1 January 2030
|
2.10%
|
2.05%
|
Rate of
CPI price inflation - period after 1 January 2030
|
3.10%
|
3.05%
|
Rate of
salary increases (Platinum Scheme)
|
N/A
|
N/A
|
Rate of
pensions increases pre-6 April 1997 service
|
1.50%
|
1.50%
|
pre-1
June 2005 service
|
2.90%
|
2.90%
|
post 31
May 2005 service
|
1.95%
|
1.95%
|
Post
retirement mortality table
|
S3PA CMI 2022 1.00% 2020 and 2021
weight parameters of 10%,
2022 of 35%
|
S3PA CMI 2021 1.25% 2020 and 2021 weight parameters of
10%
|
Weighted average duration of defined benefit
obligation
|
16 years
|
18 years
|
Assumed
life expectancy on retirement at age 65:
|
|
|
Retiring at the accounting date (male member aged
65)
|
21.0
|
21.6
|
Retiring 20 years after the accounting date (male member aged
45)
|
21.9
|
22.8
|
Expected cash flows
|
|
Year ended
30 November 2023
|
Year ended
30 November 2022
|
Group
|
|
£000
|
£000
|
Expected employer contributions for the following year ended
30 November
|
4,400
|
4,450
|
Expected total benefit payments
|
|
|
|
Year
1
|
|
4,661
|
4,316
|
Year
2
|
|
4,926
|
4,534
|
Year
3
|
|
5,224
|
4,791
|
Year
4
|
|
5,762
|
5,142
|
Year
5
|
|
6,299
|
5,682
|
Years 6
- 10
|
|
37,603
|
34,679
|
|
|
|
|
|
During the year ended 30 November 2023, the Group has agreed
with the Trustee 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. The definition of adjusted leverage is aligned
to the banking facility as set out in Note 13. No such payment was
made during the year ended 30 November 2023.
17.
Prior year restatement
The comparative period Financial Statements have been
restated to reflect a revised split of cost of sales and operating
expenses to improve the presentation and comparability of results,
as set out below.
Cost of sales and operating
expenses
Following a review of costs in the RM Technology division
during the year ended 30 November 2023, the split of costs between
cost of sales and operating expenses was amended to align more
closely with how the division now operates and to improve
presentation and comparability of results. The results for the year
ended 30 November 2022 above have been adjusted to reflect the
impact if this change which was to move £1,215,000 of costs not
directly related to the sale of products and services from cost of
sales to operating expenses for the year ended 30 November 2022
(2021: £1,157,000).
These adjustments have the following impact on the primary
statements for the year ended
30 November 2022
and the year ended 30 November 2021:
Consolidated Income
Statement
|
|
Year ended 30 November 2022
|
Year ended 30 November 2021
|
|
|
As reported
|
Restatement impact
|
Restated
|
As reported
|
Restatement impact
|
Restated
|
|
|
£000
|
£000
|
£000
|
£000
|
£000
|
£000
|
Continuing operations
|
|
|
|
|
|
|
Revenue
|
214,167
|
-
|
214,167
|
206,149
|
-
|
206,149
|
Cost of sales
|
(146,878)
|
1,215
|
(145,663)
|
(138,771)
|
1,157
|
(137,614)
|
Gross profit
|
67,289
|
1,215
|
68,504
|
67,378
|
1,157
|
68,535
|
Operating expenses
|
(85,789)
|
(1,215)
|
(87,004)
|
(63,634)
|
(1,157)
|
(64,791)
|
Increase in allowance for receivables
|
(850)
|
-
|
(850)
|
(157)
|
-
|
(157)
|
Impairment losses
|
(2,236)
|
-
|
(2,236)
|
-
|
-
|
-
|
(Loss)/profit from operations
|
(21,586)
|
-
|
(21,586)
|
3,587
|
-
|
3,587
|
Finance income
|
614
|
-
|
614
|
28
|
-
|
28
|
Other income
|
3,010
|
-
|
3,010
|
1,399
|
-
|
1,399
|
Finance costs
|
(2,825)
|
-
|
(2,825)
|
(1,396)
|
-
|
(1,396)
|
(Loss)/profit before tax
|
(20,787)
|
-
|
(20,787)
|
3,618
|
-
|
3,618
|
Tax
|
4,698
|
-
|
4,698
|
(1,424)
|
-
|
(1,424)
|
(Loss)/profit from the year from
continuing operations
|
(16,089)
|
-
|
(16,089)
|
2,194
|
-
|
2,194
|
Profit for the year from
discontinuing operations
|
1,590
|
-
|
1,590
|
2,000
|
-
|
2,000
|
(Loss)/profit from the
year
|
(14,499)
|
-
|
(14,499)
|
4,194
|
-
|
4,194
|
|
|
|
|
|
|
|
|
Earnings per ordinary share on continuing
operation
|
|
|
|
|
|
- basic
|
(19.3)p
|
|
(19.3)p
|
2.6p
|
|
2.6p
|
- diluted
|
(19.3)p
|
|
(19.3)p
|
2.6p
|
|
2.6p
|
Earnings per ordinary share on discontinuing
operations
|
|
|
|
|
|
- basic
|
1.9p
|
|
1.9p
|
2.4p
|
|
2.4p
|
- diluted
|
1.9p
|
|
1.9p
|
2.4p
|
|
2.4p
|
Earnings per ordinary share on total operations
|
|
|
|
|
|
- basic
|
(17.4)p
|
|
(17.4)p
|
5.0p
|
|
5.0p
|
- diluted
|
(17.4)p
|
|
(17.4)p
|
5.0p
|
|
5.0p
|
The prior year adjustment does not impact the Consolidated
Statement of Comprehensive Income, Consolidated Balance Sheet or
Consolidated Cash Flow Statement for the year ended 30 November
2022 or year ended 30 November 2021.
18.
Post balance sheet events
On 6 March 2024, the Group announced the extension and
amendment of the banking facility with its lenders to 5 July 2026,
with key changes disclosed in Note 13.
There are no other post balance sheet events.
Dissemination of a Regulatory Announcement, transmitted by EQS
Group.
The issuer is solely responsible for the content of this
announcement.
|